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TMI Blog2024 (4) TMI 352X X X X Extracts X X X X X X X X Extracts X X X X ..... neficiary of the same. Coming to the fact that the addition made in the hands of the VMS Industries of these funds stood deleted by the ld.CIT(A), we have been informed that the Department had gone in appeal against the order of the ld.CIT(A), but during the pendency of the appeal, the assessee settled the dispute under VSVS scheme. Therefore, no benefit can be derived from the appellate order passed in the case of VMS industries. Ignoring thus the appellate order passed in the case of M/s VMS Industries and considering the entire facts and circumstances of the case, which had been extracted from the inquiry from the Department itself, by conducting survey on all the persons concerned in the money trail including the ultimate beneficiary and intermediary i.e. the assessee and the SCMPL , the preponderance of probability is to the effect that the money introduced to the assessee-company from JDS Industries was not its own income. For this proposition, we heavily rely on the decision of Sumati Dayal [ 1995 (3) TMI 3 - SUPREME COURT ] The addition made in the present case is held to be not sustainable and is directed to be deleted. Decided in favour of assessee. - Smt. Annapurna Gup ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... addition was confirmed by the ld.CIT(A). 4. Before us, ground no.1 raised by the assessee, challenging the validity of the assessment framed under section 147 of the Act was not pressed, and therefore, the same is dismissed as not pressed. 5. The only effective ground agitated therefore before us is against the addition made to the income of the assessee of Rs. 4,45,17,089/- received by the assessee from JDS and its associates, treated as own income of the assessee. 6. The contention of the ld.counsel for the assessee before us was that the addition was totally unjustified, because, the AO was aware of the fact that these funds were only being routed through the assessee to the ultimate beneficiary i.e M/s.VMS industries, Ahmedabad, and this fact had been pointed out to the ld.CIT(A) during the appellate proceedings, and demonstrated by filing various evidences in this regard; that despite the assessee demonstrating through circumstantial evidences that the assesse was only a conduit of all the funds which actually belonged to the VMS Industries, which was very much in the knowledge of the Department, as was evident from the information collected by the Department during the survey ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es only facilitating the transfer of funds to the ultimate beneficiary i.e. M/s.VMS Industries. 8. The ld.counsel for the assessee, thereafter, pointed out that the ld.CIT(A) was also made aware of the fact that during the survey action conducted on the assessee and SCMPL statement of the common director of both the entities was recorded who had stated that Shri Manojkmar Jain, director of the VMS Industries had requested to accommodate by issuing cheques through companies for which the credits were arranged by Shri Manojkumar Jain through the accounts of JD Steel and other associate firms, and routed through the assessee company for safety. Even the relevant portion of the statement of Shri Sandeep Mehta was produced before the ld.CIT(A). The ld.counsel for the assessee contended that the ld.CIT(A) was, thus, made aware of the fact that the investigation conducted on VMS Industries revealed the fact that the funds infused in the assessee company through JDS and other associate firms was for the ultimate beneficiary i.e. M/s.VMS industries. That this fact was further corroborated by the investigation conducted on the assessee and SCMPL , when the director of both the companies had ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . The ld.counsel for the assessee also pointed out that it had been brought to the ld.CIT(A) that basis the survey conducted on the VMS Industries and its associate firms, the share capital received by it was subjected to tax in its hands, as its own income, and that in appellate proceedings in the case of M/s.VMS Industries, the addition was deleted, but the Revenue had contested the matter before the ITAT. 9. Having so pointed out from the pleadings made before the ld.CIT(A), the ld.counsel for the assessee added to the above contentions by pointing out that while the appeal of the Department in the case of VMS Industries was pending before the ITAT, the assessee had settled the dispute under Vivad se Vishwas Scheme ( VSVS ) in the case of VMS Industries by paying 50% of the tax demand. 10. The ld.counsel for the assessee also pointed out another very pertinent fact that in the assessment of the VMS Industries made under section 147 of the Act, the AO added the entire share application money received including the amount received from SCMPL routed through the assessee, identifying entire money trail of the transaction. 11. He drew our attention to the copy of the order of the AO ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mar and his firms, was added in the hands of SCMPL . The ld.CIT(A) also confirmed the addition on the basis that identical addition in the assessee s own case for Asst.Year 2004-05 was confirmed in the first appeal. 13. On the other hand, the ld.DR relied on the order of the ld.CIT(A). 14. We have heard contentions of both the parties carefully, and have also gone through the orders of the authority below. On a careful consideration of all the above facts, we are inclined to agree with the ld.counsel for the assessee that it was reasonably demonstrated to the ld.CIT(A) that the Department/AO was fully aware of the fact of the funds infused in the assessee company from JDS associates being for the benefit of M/s VMS Industries. The assessment order in the case of M/s VMS Industries, copy of which was placed before us clearly notes the entire trail of money trail belonging to M/s VMS Industries moving from dummy concerns of one Mr Parmar in whose bank account cash is found to be deposited immediately before the movement of funds further. And moving from there to the ultimate beneficiary M/ s VMS Industries, involving the assessee and M/s SMCPL as intermediaries in the money trail. Th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e situation that despite the assessee having incurred huge loss on account of selling shares of VMS Industries Ltd. ,bought at huge premium, at very low price below par, yet had not claimed any loss on account of the same in its return of income filed. It was also pointed out to the ld.CIT(A) that no prudent man would indulge in such a transaction, throwing away huge funds in such a manner. We completely agree with the ld.counsel for the assessee that the entire facts and situation were in the knowledge of the Department including the AO of the assessee i.e. Global Trade P. Ltd., and SCMPL and the AO of the VMS Industries corroborating the modus operandi adopted by the promoters of M/s.VMS Industries routing back their unaccounted funds into the company; that the entire money trail was completely unravelled by the Department, and the same clearly disclosed that the money that was received by the assessee company as unsecured loans from JDS and other Associates of Rs. 3.43 crores did not remain/retain with the assessee, and the assessee had immediately passed it on to SCMPL , which in turn, had transferred the funds to VMS by way of acquiring share capital therein. 18. In the light ..... X X X X Extracts X X X X X X X X Extracts X X X X
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