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TMI Blog2025 (4) TMI 1215X X X X Extracts X X X X X X X X Extracts X X X X ..... ct while, the issue was limitedly directed by the ITAT to be examined only from the angle of whether said sum of Rs. 34,71,33,750/- is unclaimed and only in case, it is unclaimed, then only, to the extent it is unclaimed, should be added." 2. Brief facts of the case relating to the issue raised by the assessee are, assessee is an investment company, the nature of activities is tree plantation on behalf of clients and to return the plant/sale value of plant (with assured amount) after 20 years under the scheme known as Kuber Dhanvarsha Scheme which was started in FY 1995-96. The assessee in various years from FY 1995-96 to FY 1997-98 received various deposits under various plantation schemes total amounting to Rs. 86,37,28,750/-. It included Rs. 34,71,33,700/- received in the impugned AY 1997-98 under consideration. 3. In the current assessment year, assessee filed its return of income for AY 1997-98 on 20.04.1998 declaring loss of Rs. 97,55,580. The case was selected for scrutiny. Notices u/s 143(2) and 142(1) of the Income-tax Act, 1961 (for short 'the Act') were issued and served on the assessee. Subsequently, order u/s 143(3) was passed on 31.03.2000 at an income of Rs. 34,82, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssions as under :- "7.2 During the course of appellate proceedings, notice for hearing was issued to the appellant on 23.12.2020. In response to the same appellant filed submission. Relevant portion of the same is reproduced as under. GN-7-Addition of Rs. 34,71,33,750/- Assessee received advance of Rs. 34,71,33,750/- for sale of units (trees) during the year. In the current assessment, AO repeated the addition as made in the earlier rounds. In earlier assessments AO made the addition u/s 68 as the assessee failed to substantiate the identity and creditworthiness of depositors. Now, the specific direction of Hon'ble Delhi Tribunal while setting aside the issue is as under:- "ITAT order dated 11.01.2018 in ITA No. 6551Del12011 Para-38, Page-18- .................................................................... The finding of A.O is erroneous and liable to be deleted for the following submissions:- 1. Complete amount is claimed by the Depositors It is submitted that there is no amount which can be termed as unclaimed by the depositors. Complete deposit amount is claimed by the respective depositors and recovery proceedings are also going on. It is also import ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ,28,750/-. This included Rs. 34,71,33,750/- (under consideration) in A. Y 1997-98. The auditor quantified complete amt. as payable/refundable to depositors. The main report consisted 24 Pgs. It further contained many bulky Annex. In ''Annex.-10'', on Pg.53, the auditor quantified the payable amt., under various schemes w.r.t. various years. The auditor on above Pg., calculated, scheme wise, amt. which became payable, on yearly basis. The impugned scheme was for 20 years. The deposits were taken in FY 1996-97. The same were to mature in FY.2016-17 (A.Y.17- 18). The auditor, for the amts. 34,7133,750/- recd. in F. Y.16-17 calculated the payable amt at Rs. 2239.51 Cr. Accepting this report, the SEBI created a liability on assessee Co. at Rs. 2462 17 Cr. as under:- As per auditor 2339.51 Cr. + 10% penalty 223.95 Cr Total 2463.46 Cr. (due to arithmetical calculation error, SEBI in his order wrongly totalled this amt. as Rs. 2462.17) The above fact shows that the complete amt. has been claimed as well as determined payable. In view of this, as p as per the directions of Hon'ble ITAT, since the complete amt. is payable, rather against receipt of Rs. 34,71,33, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mid-term return, buy back amount and guaranteed annual return to any of the investors under any of its scheme. Appellant is relying on the Annexure- 10 of the audit report which shows scheme wise/ year wise details of estimated amount of maturity and mid-term returns payable by the company. This is only an estimation (only an assessment based on macro accounts) as the assessee has never given details of specific claimed investors, neither to I T authorities nor to SEBI, not even in the present proceedings. Therefore not even an iota of basic onus to explain the Credits u/s 68 have been fulfilled by the appellant. Further, the said Special Auditor's report appointed by SEBI was available during the proceedings before the Hon'ble Delhi ITAT and still the ITAT directed the appellant to submit the details of unclaimed deposits/ advances. The appellant has once again failed to provide the required details. Further, the issue for AY 1996-97, appellant company collected amount from depositors/ investor of Rs. 2,07,71,250/- only and this was not the issue before Hon'ble ITAT. The issue was of addition on account accrual of income @1/20th of the deposit which has been directe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s reproduced at para 1. 12. We observed during the proceedings that assessee was taking various adjournments without properly representing the case and on 19.09.2024, the Bench remanded the matter to the AO to collect information from the assessee and submit the report as per the directions of the coordinate Bench vide order dated 11.01.2018 within three months. Accordingly, the case was posted for hearing on 19.12.2024. Finally, on 23.01.2025, the matter was heard and concluded. At the time of hearing, we observed that assessee has not submitted any information before AO and AO was not able to submit any report. However, ld. AR of the assessee submitted as under:- "1. A.O. was directed to submit his report by 16.12.24 Vide O/S Dtd.19.09.24 A.O. was directed to submit the report on unclaimed deposits by 16.12.2024. However till date no such report has been provided to the assessee. Assessee vide letter Dtd.04.12.24 to A.O. filed on 06.12.24, vide Para-6 requested A.O. to collect the information from SEBI, for the reasons mentioned in the said letter. (1-2/P/B-2) Again, reminder letter Dtd./Filed to A.O. on 13.01.25. (83/P/B-2) Assessee also requested SEBI for furnishing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o the folder no.1 submitted before us containing details of 1,67,907 depositors. 14. On the other hand, ld. DR of the Revenue brought to our notice page 58 of the paper book submitted by the assessee wherein it was submitted that ITAT has remanded the issue back to AO to confine the same to the extent of unclaimed deposits to be considered as income of the assessee. However, it was submitted that AO has sustained whole deposits against the direction of the ITAT. On this count, he submitted that assessee has not submitted any information before the authorities to comply with the directions of the ITAT. Further he brought to our notice recent decision of SEBI in the case of the assessee and its Directors and they held that they have not returned any funds to the depositors nor they intend to return the same. Accordingly, they convicted the company and also imposed heavy penalty on them. He finally rest his case by heavily relying on the findings of ld. CIT (A). 15. Considered the rival submissions and material placed on record. We observed that assessee has launched open ended scheme titled CIS and mobilized more than Rs. 86.37 crores which include Rs. 34.71 crores relevant to the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Section 24 of SEBI Act and accused no.3 Rowena Sharma is held guilty of the offence under Section 11B, 12(1B) of SEBI Act and Regulation 5(1) r/w Regulation 68(1), 68(2), 73 and 74 of CIS Regulations, punishable under Section 24 r/w Section 27 of SEBI Act and convicted accordingly." 16. From the above, we observed that SEBI has clearly held that the assessee has trapped innocent public by promising them return which were unrealistic and could never be given. The assessee had failed to prove that any payment to any of the investors under the scheme floated was made at any point of time. It is an admitted fact that no winding up report was filed by the assessee before the SEBI. From the above decision of the SEBI, it clearly shows that assessee has no inclination to return the deposit. Further, before us, assessee has submitted Balance Sheet as on 31.03.2018 and 31.03.2023. Ld. DR also filed Balance Sheet as on 31.03.1997. (Amount in Lakhs) (Amount in Lakhs) (Amount in Lakhs) Particulars Note As at March 31, 2023 As at March 31, 2018 As at March 31, 1997 EQUITY AND LIABLITIES (1) Shareholder's Funds & ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ve, it is clear that assessee has not repaid any deposits to the depositors and there is some movement of assets being encashed during the period. After considering the detailed findings of the SEBI, it is clear that assessee has no intention to return any deposits. At the same time, before us, Folder No.1 of details of 14296 depositors were filed before us. A sample of details of depositors and the same are extracted below :- 18. From the above, we noticed that assessee has collected various deposits from small time depositors ranging from Rs. 1,250/- to Rs. 10,000/- in various denomination and the addresses were recorded also in very cryptic and in our view, it is very difficult to trace back most of the depositors and from the decision of Additional Sessions Judge, 03/Special Judge Companies Act, Dwarka Courts, New Delhi, they have clearly held that assessee has no intention to return back the funds and from the attitude and behaviour of the assessee, they are not demonstrated that they are inclined to return any deposit. It is also held that they were not implemented the proposed scheme and they are anyway not in a position to refund any of the deposits forget about the quanti ..... X X X X Extracts X X X X X X X X Extracts X X X X
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