DCIT, CHENNAI V. PVP Ventures Ltd., CHENNAI

ITA 1899/CHNY/2014

• Counselvise Citation: 189921714 RSA 2014
• Duration Of Justice: 1 year(s) 2 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-09-2015
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 17-07-2015
• Assessment Year: 2008-2009
• Appeal Filed On: 04-07-2014
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: P B SEKARAN
• Assessee Lawyers: B RAMAKRISHNAN
• Keywords: Capital asset; Depreciation; Source of fund; Bad and doubtful debts; Onus to prove; Revenue expenditure
• Section: 37; 28

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, CHENNAI . . . , . !'# ! , % !& BEFORE SHRI N.R.S. GANESAN, JUDICIAL MEMBER AND SHRI A. MOHAN ALANKAMONY, ACCOUNTANT MEMBER ./ ITA NO.1115/MDS/2014 ( )( / ASSESSMENT YEAR : 2008-09 M/S PVP VENTURES LTD., KRM CENTRE, 9 TH FLOOR, 2, HARRINGTON ROAD, CHETPET, CHENNAI - 600 031. PAN : AAACS 3101 P V. THE DEPUTY COMMISSIONER OF INCOME TAX, COMPANY CIRCLE V(2), CHENNAI - 600 034. (+,/ APPELLANT) (-.+,/ RESPONDENT) ./ ITA NO.1899/MDS/2014 ( )( / ASSESSMENT YEAR : 2008-09 THE DEPUTY COMMISSIONER OF INCOME TAX, COMPANY CIRCLE V(2), CHENNAI - 600 034. V. M/S PVP VENTURES LTD., KRM CENTRE, 9 TH FLOOR, 2, HARRINGTON ROAD, CHETPET, CHENNAI - 600 031. (+,/ APPELLANT) (-.+,/ RESPONDENT) (/0 1 2 /ASSESSEE BY : SH. B. RAMAKRISHNAN, CA 3 1 2 /REVENUE BY : SHRI P.B. SEKARAN, CIT 4 1 0% / DATE OF HEARING : 17.07.2015 5') 1 0% / DATE OF PRONOUNCEMENT : 16.09.2015 2 I.T.A. NO.1115/MDS/14 I.T.A. NO.1899/MDS/14 / O R D E R PER N.R.S. GANESAN, JUDICIAL MEMBER: BOTH ASSESSEE AND REVENUE HAVE FILED THE PRESENT APPEALS AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS) V, CHENNAI, DATED 27.03.2014, FOR THE ASSESSMENT YEAR 2008-09. THEREFORE, WE HEARD BOTH THE APPEALS TOGETHER AND D ISPOSING OF THE SAME BY THIS COMMON ORDER. LETS FIRST TAKE ASSESSEES APPEAL IN I.T.A. NO.1115/MDS/2014. 2. THE FIRST ISSUE ARISES FOR CONSIDERATION IS WITH REGARD TO DISALLOWANCE OF ` 3,70,36,474/- BEING THE UNRECOVERABLE ADVANCE. 3. SH. B. RAMAKRISHNAN, THE LD. REPRESENTATIVE FOR THE ASSESSEE, SUBMITTED THAT UNDER THE HEAD ADMINISTRA TIVE AND OTHER EXPENSES, THE ASSESSEE HAD CLAIMED ` 3,70,36,474/-. THE TAX DEDUCTED AT SOURCE RECEIVABLE AMOUNTING TO ` 1,76,13,603/- WAS ALSO PART OF THE SALES ALREADY OFFERED IN THE EARLI ER YEAR. THEREFORE, THE SAME QUALIFIES FOR WRITTEN OFF UNDER SECTION 36 (1)(VII) READ WITH SECTION 36(2) OF THE INCOME-TAX ACT, 1961 (IN SHORT 'THE ACT'). THE 3 I.T.A. NO.1115/MDS/14 I.T.A. NO.1899/MDS/14 LD. REPRESENTATIVE FURTHER SUBMITTED THAT THE WORK- IN-PROGRESS TO THE EXTENT OF ` 1,94,12,871/- WAS ALSO WRITTEN OFF IN THE BOOKS OF ACCOUNT. SINCE THE PROJECT COULD NOT BE COMPLETED AS CONTEMP LATED BY THE COMPANY, THE PROJECT WAS ABANDONED, THEREFORE, THE EXPENDITURE INCURRED BY THE ASSESSEE, NAMELY, THE WORK-IN-PROGR ESS FOR THE PROJECT ABANDONED HAS TO BE ALLOWED AS REVENUE EXPE NDITURE EITHER UNDER SECTION 28 OR UNDER SECTION 37 OF THE ACT. R EFERRING TO THE INOPERATIVE BANK ACCOUNT TO THE EXTENT OF ` 10,000/-, THE LD. REPRESENTATIVE SUBMITTED THAT THIS ALSO FORMS PART OF INCOME OF THE ASSESSEE, THEREFORE, IT CANNOT BE DISALLOWED. 4. ON THE CONTRARY, SHRI P.B. SEKARAN, THE LD. DEPA RTMENTAL REPRESENTATIVE, SUBMITTED THAT THE CIT(APPEALS) CAL LED FOR REMAND REPORT FROM THE ASSESSING OFFICER. THE ASSESSING O FFICER CLARIFIED THAT IN RESPECT OF RECEIVABLE TO THE EXTENT OF ` 1,76,13,603/-, THE ASSESSEE HAS NOT FURNISHED ANY EVIDENCE EITHER BEFO RE THE ASSESSING OFFICER OR BEFORE THE CIT(APPEALS). IN T HE ABSENCE OF ANY DETAILS, THE CIT(APPEALS) CONFIRMED THE ADDITIO N MADE BY THE ASSESSING OFFICER. REFERRING TO BANK BALANCE TO TH E EXTENT OF ` 10,000/- IN THE INOPERATIVE BANK ACCOUNT AND WORK-I N-PROGRESS TO THE EXTENT OF ` 1,94,12,871/-, THE LD. D.R. SUBMITTED THAT THESE AR E 4 I.T.A. NO.1115/MDS/14 I.T.A. NO.1899/MDS/14 ALL CAPITAL IN NATURE. THEREFORE, IT CANNOT BE ALL OWED AS REVENUE EXPENDITURE. THEREFORE, THE CIT(APPEALS) HAS RIGHT LY CONFIRMED THE ADDITION MADE BY THE ASSESSING OFFICER. 5. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS ON EITH ER SIDE AND PERUSED THE RELEVANT MATERIAL ON RECORD. THE ASSES SEE CLAIMS THAT A SUM OF ` 1,76,13,603/- WAS PART OF THE SALES ALREADY OFFERED IN THE EARLIER YEARS. HOWEVER, NO DETAILS WERE FILED BY T HE ASSESSEE EITHER BEFORE THE LOWER AUTHORITIES OR BEFORE THIS TRIBUNA L. IN THE ABSENCE OF ANY PARTICULARS WITH REGARD TO INCLUSION OF INCO ME IN THE EARLIER ASSESSMENT YEAR AS CLAIMED BY THE ASSESSEE, THIS T RIBUNAL DO NOT FIND ANY REASON TO INTERFERE WITH THE ORDER OF THE LOWER AUTHORITY. 6. NOW COMING TO THE BALANCE AMOUNT STANDING AS INO PERATIVE BANK ACCOUNT TO THE EXTENT OF ` 10,000/- AND WORK-IN-PROGRESS TO THE EXTENT OF ` 1,94,12,871/-, THE ASSESSEE CLAIMS THAT THE PROJECT COULD NOT BE COMPLETED AS CONTEMPLATED BY THE COMPANY. T HE FACT REMAINS IS THAT THE INVESTMENT MADE BY THE ASSESSEE IS IN THE CAPITAL ASSET. THE ASSESSEE CLAIMS THE SAME UNDER THE HEAD ADMINISTRATIVE AND OTHER EXPENSES. SINCE THE EXP ENDITURE RELATES TO CAPITAL ASSET, THIS TRIBUNAL IS OF THE CONSIDERE D OPINION THAT THE CIT(APPEALS) HAS RIGHTLY CONFIRMED THE ADDITION MAD E BY THE 5 I.T.A. NO.1115/MDS/14 I.T.A. NO.1899/MDS/14 ASSESSING OFFICER. THEREFORE, THIS TRIBUNAL DO NOT FIND ANY REASON TO INTERFERE WITH THE ORDER OF THE LOWER AUTHORITY IN CONFIRMING THE ADDITION OF ` 3,70,36,474/- BEING THE UNRECOVERABLE ADVANCE UNDER THE HEAD ADMINISTRATIVE AND OTHER EXPENSES. 7. THE NEXT GROUND OF APPEAL IS WITH REGARD TO DISA LLOWANCE OF ` 50 LAKHS CLAIMED AS BAD DEBT. DURING THE COURSE OF HEARING, SH. B. RAMAKRISHNAN, THE LD. REPRESENTATIVE FOR THE ASSESS EE, SUBMITTED THAT HE WAS INSTRUCTED NOT TO PRESS THIS GROUND BEF ORE THIS TRIBUNAL. THE LD. REPRESENTATIVE ALSO CLARIFIED IN THE NOTE F ILED BEFORE THIS TRIBUNAL DURING THE COURSE OF HEARING THAT THE GROU ND RELATING TO BAD DEBTS OF ` 50 LAKHS IS NOT PRESSED. 8. IN VIEW OF THE ABOVE, THIS GROUND OF THE APPEAL WITH REGARD TO DISALLOWANCE OF BAD DEBTS IS DISMISSED AS NOT PRESS ED. 9. THE NEXT GROUND OF APPEAL IS WITH REGARD TO ADDI TION MADE BY THE ASSESSING OFFICER TO THE EXTENT OF ` 31,07,20,000/- UNDER SECTION 69A OF THE ACT. 10. SH. B. RAMAKRISHNAN, THE LD. REPRESENTATIVE FOR THE ASSESSEE, SUBMITTED THAT THE ASSESSEE PURCHASED THE PROPERTY IN THE ASSESSMENT YEAR 2008-09 AND SOLD THE SAME IN TH E VERY SAME 6 I.T.A. NO.1115/MDS/14 I.T.A. NO.1899/MDS/14 ASSESSMENT YEAR. THE ASSESSEE OFFERED THE PROFIT O N SALE OF THE LAND UNDER THE HEAD SHORT TERM CAPITAL GAINS IN T HE RETURN OF INCOME. THE LD. REPRESENTATIVE SUBMITTED THAT A CO PY OF THE RETURN FILED BY THE ASSESSEE IS AVAILABLE AT PAGES 1 TO 4 OF THE PAPER-BOOK. THE LD. REPRESENTATIVE FURTHER SUBMITTED THAT THE A GREEMENT FOR SALE OF THE PROPERTY AND POWER OF ATTORNEY WAS DATED 4.2 .2008, A COPY OF WHICH IS AVAILABLE AT PAGES 7-12 OF THE PAPER-BOOK. THE SALE DEED DATED 28.03.2008 IS AVAILABLE IN PAGES 13 TO 28 OF THE PAPER-BOOK. SINCE THE PROPERTY WAS PURCHASED AND SOLD IN THE VE RY SAME ASSESSMENT YEAR, IT WAS NOT REFLECTED IN THE FIXED ASSET SCHEDULE AND IN DEPRECIATION STATEMENT. THE LD. REPRESENTAT IVE FURTHER SUBMITTED THAT BOTH THE AUTHORITIES BELOW FAILED TO APPRECIATE THE FACT THAT ONCE THE PROPERTY WAS SOLD IN THE VERY SA ME YEAR IN WHICH IT WAS PURCHASED, IT WILL NOT BE REFLECTED IN THE F IXED ASSET STATEMENT AND DEPRECIATION SCHEDULE. THEREFORE, BOTH THE AUT HORITIES BELOW ARE NOT CORRECT IN TREATING THE PROFIT ON SALE OF T HE LAND AS UNDISCLOSED INCOME UNDER SECTION 69A OF THE ACT. 11. ON THE CONTRARY, SHRI P.B. SEKARAN, THE LD. D.R . SUBMITTED THAT THE AGREEMENT DATED 04.02.2008 SHOWS THAT THE ASSESSEE AGREED TO PURCHASE THE PROPERTY. IT IS NOT KNOWN W HETHER THIS 7 I.T.A. NO.1115/MDS/14 I.T.A. NO.1899/MDS/14 AGREEMENT WAS AVAILABLE BEFORE THE ASSESSING OFFICE R OR NOT. REFERRING TO THE ASSESSMENT ORDER, THE LD. D.R. SUB MITTED THAT THERE WAS NO REFERENCE OF AGREEMENT IN THE ASSESSMENT ORD ER. THE ASSESSING OFFICER FOUND THAT IN THE FIXED ASSET SCH EDULE OF THE COMPANY FOR THE RELEVANT ASSESSMENT YEAR, NO LAND W AS SHOWN AS DISPOSED OF. IF THE LAND WAS PURCHASED DURING THE YEAR UNDER CONSIDERATION AND DISPOSED OF IN THE VERY SAME YEAR , THE SAME SHOULD BE REFLECTED IN THE FIXED ASSET SCHEDULE. I N OTHER WORDS, ACCORDING TO THE LD. D.R., ONCE THE LAND WAS PURCHA SED BY THE ASSESSEE, IT SHOULD FORM PART OF THE FIXED ASSET OF THE ASSESSEE AND WHEN IT WAS SOLD, IT HAS TO BE SHOWN AS DISPOSE OF. IT IS NOT THE CASE OF THE ASSESSEE THAT THE PROPERTY WAS PURCHASE D AND SOLD ON THE SAME DAY. IN FACT, THERE WAS A CONSIDERABLE TIM E GAP BETWEEN THE DATE OF AGREEMENT FOR PURCHASE OF PROPERTY AND THE DATE ON WHICH THE SALE WAS EXECUTED. MOREOVER, THE DETAILS OF ADVANCE RECEIVED AND THE BALANCE AMOUNT RECEIVED WERE NOT R EFLECTED IN THE BOOKS OF THE ASSESSEE. IN THE ABSENCE OF ANY DETAI LS OF TRANSACTION RELATING TO SALE OF LAND TO M/S ARIHANT HOSPITALITY (CHENNAI) PRIVATE LIMITED, THE CIT(APPEALS) FOUND THAT THE ASSESSING OFFICER HAS RIGHTLY UPHELD THE ADDITION MADE UNDER SECTION 69A OF THE ACT. EVEN BEFORE THIS TRIBUNAL, THE ASSESSEE COULD NOT F ILE ANY DETAILS 8 I.T.A. NO.1115/MDS/14 I.T.A. NO.1899/MDS/14 WITH REGARD TO THE AMOUNT SAID TO BE RECEIVED ON SA LE OF PROPERTY. THEREFORE, ACCORDING TO THE LD. D.R., THE CIT(APPEA LS) HAS RIGHTLY CONFIRMED THE ADDITION. 12. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS ON EIT HER SIDE AND PERUSED THE RELEVANT MATERIAL ON RECORD. THE ASSES SING OFFICER DISALLOWED THE CLAIM OF THE ASSESSEE AND MADE ADDIT ION OF ` 31,07,20,000/- UNDER SECTION 69A OF THE ACT ON THE GROUND THAT THE PURCHASE AND SALE OF THE PROPERTY WAS NOT REFLECTED IN THE FIXED ASSET SCHEDULE OF THE COMPANY. THE CIT(APPEALS) FO UND THAT THE ASSESSEE HAS NOT FILED ANY DETAILS BEFORE THE LOWER AUTHORITIES. THE CIT(APPEALS) FURTHER FOUND THAT THE DATE ON WHICH T HE ADVANCE WAS RECEIVED AS WELL AS THE BALANCE AMOUNT WAS RECEIVED WERE NOT REFLECTED IN THE BOOKS OF THE ASSESSEE-COMPANY. TH E CIT(APPEALS) ALSO FOUND THAT UNLESS AND UNTIL THE ASSESSEE FURNI SHES THE DETAILS OF THE TRANSACTION OF SALE MADE TO M/S ARIHANT HOSP ITALITY (CHENNAI) PRIVATE LIMITED FOR A CONSIDERATION OF ` 31,07,20,000/-, IT CANNOT BE DECIDED WITH REGARD TO THE ACTUAL AMOUNT RECEIVED B Y THE ASSESSEE AT THE END OF THE TRANSACTION. IN THE ABSENCE OF A NY DETAILS, THE ADDITION MADE BY THE ASSESSING OFFICER UNDER SECTIO N 69A OF THE ACT WAS CONFIRMED BY THE CIT(APPEALS). WE HAVE GON E THROUGH THE 9 I.T.A. NO.1115/MDS/14 I.T.A. NO.1899/MDS/14 AGREEMENT SAID TO BE ENTERED BETWEEN M/S AGS PROPER TIES DEVELOPMENT (INDIA) PVT. LTD. AND THE ASSESSEE-COMP ANY ON 04.02.2008. THE ASSESSEE AGREED TO PURCHASE THE PR OPERTY FOR A TOTAL CONSIDERATION OF ` 16,26,00,084/-. A COPY OF THE SALE DEED IS AVAILABLE AT PAGES 13 TO 28 OF THE PAPER-BOOK SHOWS THAT M/S AGS PROPERTIES DEVELOPMENT (INDIA) PVT. LTD. IN FACT EX ECUTED A SALE DEED THROUGH THEIR POWER OF ATTORNEY AGENT IN FAVOU R OF ARIHANT HOSPITALITY (CHENNAI) PVT. LTD. FOR A TOTAL CONSIDE RATION OF ` 31,07,20,000/-. THIS REGISTERED SALE DEED DOES NOT SHOW THAT THE ASSESSEE BECAME THE OWNER AT ANY POINT OF TIME. TH E AGREEMENT FOR SALE OF THE PROPERTY DISCLOSES THE SALE CONSIDE RATION AT ` 16,26,00,084/-. IT IS NOT KNOWN HOW THE VERY SAME PROPERTY WAS SOLD FOR ` 31,07,20,000/-. THAT MEANS, THE ASSESSEE IS NOT WI LLING TO DISCLOSE ALL THE MATERIAL FACTS RELATING TO THE ABO VE SAID TRANSACTION. THE SALE DEED DATED 28.03.2008 WAS EXECUTED WITHIN TWO MONTHS FROM THE DATE OF THE AGREEMENT, I.E. ON 04.02.2008. WITHIN TWO MONTHS PERIOD FROM THE DATE OF AGREEMENT, THE VALUE OF THE PROPERTY WILL NOT GO TO THE EXTENT OF ` 31,07,20,000/-. THEREFORE, THE ASSESSEE OBVIOUSLY INVESTED UNDISCLOSED MONEY IN THE TRANSAC TION AND ON SALE OF THE PROPERTY, NOW BRINGING THE SAME AS SHOR T TERM CAPITAL GAINS. THE SALE DEED DATED 28.03.2008 WAS EXECUTED IN FAVOUR OF 10 I.T.A. NO.1115/MDS/14 I.T.A. NO.1899/MDS/14 M/S AGS PROPERTIES DEVELOPMENT (INDIA) PRIVATE LIMI TED BY ONE SHRI R.R. AROONKUMAR. THE POWER OF ATTORNEY WAS EX ECUTED IN THE INDIVIDUAL CAPACITY OF SHRI AROONKUMAR. THEREFORE, THE ASSESSEE- COMPANY INVESTED ITS FUNDS FROM UNDISCLOSED SOURCE IN THE PROPERTY AND THE SAME WAS SOUGHT TO BE BROUGHT ON ACCOUNTS I N GUISE OF SHORT TERM CAPITAL GAINS. THEREFORE, THIS TRIBUNAL IS OF THE CONSIDERED OPINION THAT THE CIT(APPEALS) HAS RIGHTL Y CONFIRMED THE ADDITION MADE BY THE ASSESSING OFFICER UNDER SECTIO N 69A OF THE ACT. THIS TRIBUNAL DO NOT FIND ANY INFIRMITY IN TH E ORDER OF THE CIT(APPEALS) AND ACCORDINGLY, THE SAME IS CONFIRMED . 13. THE NEXT GROUND OF APPEAL IS WITH REGARD TO ADD ITION OF ` 2,28,18,258/-. 14. DURING THE COURSE OF HEARING, SH. B. RAMAKRISHN AN, THE LD. REPRESENTATIVE FOR THE ASSESSEE, SUBMITTED THAT HE WAS INSTRUCTED BY THE ASSESSEE NOT TO PRESS THIS GROUND OF APPEAL. T HE LD. REPRESENTATIVE HAS ALSO FILED A NOTE OF AGREEMENT B EFORE THIS TRIBUNAL DURING THE COURSE OF HEARING SAYING THAT T HE GROUND RELATING TO WRITING OFF OF CAPITAL WORK-IN-PROGRESS TO THE E XTENT OF ` 2,28,18,258/- IS NOT PRESSED. 11 I.T.A. NO.1115/MDS/14 I.T.A. NO.1899/MDS/14 15. IN VIEW OF THE ABOVE, THE ADDITION MADE BY THE ASSESSING OFFICER TO THE EXTENT OF ` 2,28,18,258/- IS CONFIRMED AND THE GROUND OF APPEAL RAISED BY THE ASSESSEE IS DISMISSED AS NO T PRESSED. 16. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS DI SMISSED. 17. NOW COMING TO DEPARTMENTS APPEAL IN I.T.A. NO.1899/MDS/2014, SHRI P.B. SEKARAN, THE LD. D.R. S UBMITTED THAT THE ASSESSEE-COMPANY IS ENGAGED IN THE BUSINESS OF INFRASTRUCTURE DEVELOPMENT. IN THE COURSE OF ASSESSMENT PROCEEDIN GS, THE ASSESSING OFFICER FOUND THAT THE ASSESSEE HAS RECEI VED A SUM OF ` 377,71,78,316/- FROM M/S PLATEX LIMITED INCORPORATE D IN MAURITIUS. THE ASSESSEE CLAIMED BEFORE THE ASSESSING OFFICER T HAT THE MAURITIUS COMPANY M/S PLATEX LIMITED INVESTED THE A BOVE SUM OF ` 377,71,78,316/- BY WAY OF FOREIGN DIRECT INVESTMENT FOR SUBSCRIPTION TOWARDS CONVERTIBLE DEBENTURES. THE ASSESSEE WAS ASKED TO PRODUCE THE CREDITWORTHINESS OF M/S PLATEX LIMITED, MAURITIUS AND GENUINENESS OF TRANSACTION. THE ASSE SSEE-COMPANY HAS PRODUCED ONLY PROVISIONAL ACCOUNTS OF M/S PLATE X LTD., MAURITIUS FOR THE FINANCIAL YEAR 2007-08. THE PROVISIONAL AC COUNTS PRODUCED BY THE ASSESSEE DOES NOT SUPPORT THE CLAIM OF THE A SSESSEE THAT IT HAS RECEIVED ` 377,71,78,316/- FROM M/S PLATEX LTD., MAURITIUS. T HE 12 I.T.A. NO.1115/MDS/14 I.T.A. NO.1899/MDS/14 LD. D.R. FURTHER SUBMITTED THAT M/S PLATEX LTD., MA URITIUS WAS CARRYING ON ITS BUSINESS ON THE BORROWED FUNDS FROM DEUTSCHE BANK. M/S PLATEX LTD., MAURITIUS DID NOT HAVE ANY SURPLUS FUND TO MAKE INVESTMENT IN ASSESSEE-COMPANY. SINCE THE M/S PLATEX LTD., MAURITIUS HAD NO SOURCE IN MAKING INVESTMENT, THE A SSESSING OFFICER FOUND THAT THE SAID COMPANY HAD NO FINANCIA L CAPACITY TO INVESTMENT IN ASSESSEE-COMPANY. THEREFORE, THE ASS ESSING OFFICER CAME TO A CONCLUSION THAT THE SO-CALLED CREDITOR HA S NO CREDITWORTHINESS TO MAKE INVESTMENT IN THE ASSESSEE -COMPANY AND THE TRANSACTION WAS ALSO NOT GENUINE. 18. SHRI P.B. SEKARAN, THE LD. D.R. FURTHER SUBMITT ED THAT ONE SHRI PRASAD V. POTLURI IS A COMMON DIRECTOR IN M/S PLATEX LTD., MAURITIUS AND IN THE ASSESSEE-COMPANY. THE FINANCI AL STATEMENT OF M/S PLATEX LTD., MAURITIUS CLEARLY INDICATES THAT T HERE WAS NO GENERATION OF INCOME OTHER THAN THE SO-CALLED INVES TMENT SAID TO BE MADE IN THE ASSESSEE-COMPANY. THEREFORE, THE ASSES SING OFFICER FOUND THAT THE ASSESSEE HAS NOT DISCHARGED IT ONUS TO PROVE THE SOURCE OF FUND CLAIMED TO BE RECEIVED FROM M/S PLAT EX LTD., MAURITIUS TO THE EXTENT OF ` 377,71,78,316/-. HOWEVER, ON APPEAL BY THE ASSESSEE, THE CIT(APPEALS) FOUND THAT THE LOAN WAS SANCTIONED 13 I.T.A. NO.1115/MDS/14 I.T.A. NO.1899/MDS/14 BY DEUTSCHE BANK WHICH WAS INVESTED IN M/S PVP ENTE RPRISES PVT. LTD., WHICH WAS SUBSEQUENTLY MERGED WITH THE ASSESS EE-COMPANY. THEREFORE, UNDER SECTION 170 OF THE ACT, IF AT ALL ANY ADDITION WAS TO BE MADE, IT HAS TO BE MADE IN THE HANDS OF M/S PVP ENTERPRISES PVT. LTD. AND NOT IN THE HANDS OF THE ASSESSEE. RE FERRING TO SECTION 170 OF THE ACT, THE LD. D.R. POINTED OUT THAT IN CA SE OF SUCCESSION OF BUSINESS, BY WAY OF TRANSFER AND THE PREDECESSOR-CO MPANY WAS IN EXISTENCE, SUCH PREDECESSOR SHALL BE ASSESSED IN RE SPECT OF THE INCOME OF THE PREVIOUS YEAR IN WHICH THE SUCCESSION TOOK PLACE, UPTO THE DATE OF SUCCESSION. THE LD. D.R. CLARIFIE D THAT IT IS NOT A TRANSFER OF BUSINESS. IT IS A MERGER OF ONE COMPAN Y INTO ANOTHER COMPANY, NAMELY, M/S PVP ENTERPRISES PVT. LTD. MERG ED WITH ASSESSEE-COMPANY BY WAY OF AMALGAMATION. THEREFORE , THERE IS NO TRANSFER OF BUSINESS INVOLVED IN THIS CASE. IT IS A CASE OF MERGER OF M/S PVP ENTERPRISES PVT. LTD. INTO M/S PVP VENTURES LTD. THEREFORE, ON THE DATE OF MERGER, M/S PVP ENTERPRIS ES PVT. LTD. LOOSES ITS IDENTITY AND IT IS NO LONGER IN EXISTENC E. ONCE THE PREDECESSOR IS NOT IN EXISTENCE, IN THE EYE OF LAW, NO ASSESSMENT COULD BE MADE IN THE HANDS OF THE PREDECESSOR-COMPA NY. IF AT ALL ANY ASSESSMENT WAS MADE IN THE HANDS OF M/S PVP ENT ERPRISES PVT. LTD., THEN THAT WOULD AMOUNT TO MAKING ASSESSM ENT IN FAVOUR OF 14 I.T.A. NO.1115/MDS/14 I.T.A. NO.1899/MDS/14 THE COMPANY, WHICH IS NOT IN EXISTENCE. THEREFORE, THE ASSESSMENT ORDER WOULD BE NULLITY IN THE EYE OF LAW. IN FACT, WHILE CONSIDERING THE ISSUE, THE HYDERABAD BENCH OF THIS TRIBUNAL IN I.T.A. NO.1159/HYD/2010 DATED 31.07.02013 FOUND THAT WHEN M/S PVP ENTERPRISES PVT. LTD. MERGED WITH THE ASSESSEE-COMP ANY BY WAY OF AMALGAMATION, FROM THE DATE OF AMALGAMATION, THE AS SESSMENT HAS TO BE MADE IN THE HANDS OF THE ASSESSEE-COMPANY AT CHENNAI. AFTER MERGER, M/S PVP ENTERPRISES PVT. LTD. HAS NO INDEPENDENT EXISTENCE. THEREFORE, IT HAS TO BE ASSESSED AT CHE NNAI IN THE NAME OF PVP VENTURES LTD. THEREFORE, THE HYDERABAD BENC H FOUND THAT THE ORDER PASSED BY THE ADDL. DIRECTOR OF INCOME TA X (INTERNATIONAL TAXATION) IS WITHOUT AUTHORITY. ACCORDINGLY, IT WA S ANNULLED. 19. IN VIEW OF THE ABOVE, ACCORDING TO THE LD. D.R. , THE CIT(APPEALS) IS NOT JUSTIFIED IN OBSERVING THAT THE ASSESSMENT HAS TO BE MADE IN THE HANDS OF M/S PVP ENTERPRISES PVT. LT D. AND NOT IN THE HANDS OF THE ASSESSEE-COMPANY. THEREFORE, THE LD. D.R. SUBMITTED THAT THE ORDER OF THE CIT(APPEALS) CANNOT BE UPHELD IN THE EYE OF LAW. 20. ON THE CONTRARY, SH. B. RAMAKRISHNAN, THE LD. REPRESENTATIVE FOR THE ASSESSEE, SUBMITTED THAT M/S PVP VENTURES 15 I.T.A. NO.1115/MDS/14 I.T.A. NO.1899/MDS/14 PVT. LTD. WAS A PRIVATE LIMITED COMPANY ASSESSED IN HYDERABAD. DEUTSCHE BANK, SINGAPORE, SANCTIONED ` 508.72 CRORES TO M/S PLATEX LTD., MAURITIUS. M/S PLATEX LTD., MAURITIUS , IN TURN, INVESTED THE ENTIRE AMOUNT OF ` 508.72 CRORES IN M/S PVP VENTURES PVT. LTD. IN HYDERABAD. THE LD. REPRESENTATIVE FURTHER SUBMI TTED THAT THE ASSESSEE-COMPANY WAS EARLIER KNOWN AS SSI LIMITED. M/S PVP VENTURES PVT. LTD. MERGED WITH SSI LTD. BY ORDER OF AMALGAMATION APPROVED BY MADRAS HIGH COURT. ONCE M/S PVP VENTUR ES PVT. LTD. MERGED WITH SSI LTD., TILL THE DATE OF MERGER, THE ASSESSMENT IF ANY, HAS TO BE MADE ONLY IN THE HANDS OF M/S PVP VENTURE S PVT. LTD. AND NOT IN THE HANDS OF M/S SSI LTD. THE SSI LTD. SUB SEQUENTLY CHANGED ITS NAME AS M/S PVP VENTURES LTD., THE PRES ENT ASSESSEE. THEREFORE, ACCORDING TO THE LD. REPRESENTATIVE, IN VIEW OF SECTION 170 OF THE ACT, THE PREDECESSOR-COMPANY, NAMELY, M/ S PVP VENTURES PVT. LTD. HAS TO BE ASSESSED IN RESPECT OF ITS RECEIPTS TILL THE DATE OF AMALGAMATION. THEREFORE, THE CIT(APPEA LS) HAS RIGHTLY FOUND THAT NO ADDITION CAN BE MADE IN THE HANDS OF THE PRESENT ASSESSEE. REFERRING TO PAGE 161 OF THE PAPER-BOOK, THE LD. REPRESENTATIVE SUBMITTED THAT THE ASSESSING OFFICER , WHILE CONSIDERING THE ASSESSMENT OF M/S PVP VENTURES PVT. LTD. FOR THE ASSESSMENT YEAR 2007-08, ADMITTED THE RECEIPT OF ` 508.72 CRORES 16 I.T.A. NO.1115/MDS/14 I.T.A. NO.1899/MDS/14 FROM M/S PLATEX LTD., MAURITIUS. REFERRING TO PARA GRAPH 9 OF THE ORDER, THE LD. REPRESENTATIVE SUBMITTED THAT IN VIE W OF THE ADMISSION MADE BY THE ASSESSING OFFICER WITH REGARD TO RECEIP T OF ` 508.72 CRORES FROM M/S PLATEX LTD., MAURITIUS, THE GENUINE NESS CANNOT BE DOUBTED AT THIS STAGE. THE LD. REPRESENTATIVE FURT HER SUBMITTED THAT THE ASSESSING OFFICER HAS ALSO MADE ASSESSMENT WITH REGARD TO INTEREST INCOME OF PLATEX LTD., MAURITIUS IN THE HA NDS OF THE PRESENT ASSESSEE AND ALSO MADE PROTECTIVE ASSESSMENT IN THE HANDS OF M/S PLATEX LTD., MAURITIUS. THESE ORDERS OF ASSESSING OFFICER WERE ANNULLED BY THIS TRIBUNAL AT HYDERABAD ON THE GROUN D THAT THERE WS NO JURISDICTION FOR THE ASSESSING OFFICER AT HYDERA BAD AFTER MERGER OF M/S PVP VENTURES PVT. LTD. 21. REFERRING TO FACILITY AGREEMENT SAID TO BE ENTE RED INTO BY M/S PLATEX LTD., MAURITIUS WITH DEUTSCHE BANK, SING APORE BRANCH, THE LD. REPRESENTATIVE FOR THE ASSESSEE SUBMITTED T HAT DEUTSCHE BANK PROVIDED LOAN TO M/S PLATEX LTD., MAURITIUS. REFERRING TO PAGE 84 OF THE PAPER-BOOK, THIS IS THE BANK STATEMENT FR OM DEVELOPMENT CREDIT BANK LTD. WHICH SHOWS THAT M/S PVP VENTURES PVT. LTD., THE PREDECESSOR-COMPANY OF THE ASSESSEE, RECEIVED CREDI T FROM M/S PLATEX LTD., MAURITIUS THROUGH DEUTSCHE BANK TO THE EXTENT OF 17 I.T.A. NO.1115/MDS/14 I.T.A. NO.1899/MDS/14 ` 40,87,50,000/-. A SIMILAR CREDIT WAS RECEIVED SUBS EQUENTLY. THEREFORE, ALL TRANSACTIONS WERE RECEIVED BY M/S PV P VENTURES PVT. LTD. FROM M/S PLATEX LTD., MAURITIUS. HENCE, THE T RANSACTIONS ARE GENUINE. THE SOURCE FOR MAKING INVESTMENT IN M/S P VP VENTURES PVT. LTD. WAS THE LOAN BORROWED BY M/S PLATEX LTD., MAURITIUS FROM DEUTSCHE BANK. THEREFORE, ACCORDING TO THE LD. REP RESENTATIVE, THE ASSESSEE HAS DISCHARGED ITS ONUS BY PROVING THAT TH E ENTIRE CREDIT OF ` 377,71,78,316/- WAS THE LOAN RECEIVED BY M/S PLATEX LTD., MAURITIUS FROM DEUTSCHE BANK. IF GENUINENESS OF TH E TRANSACTION, NAMELY, THE RECEIPT OF LOAN IS DOUBTED, ACCORDING T O THE LD. REPRESENTATIVE, AT THE BEST THE ADDITION COULD BE M ADE ONLY IN THE HANDS OF M/S PVP VENTURES PVT. LTD., SINCE THE LOAN WAS ADMITTEDLY RECEIVED BY M/S PVP VENTURES PVT. LTD. AND NOT BY T HE ASSESSEE- COMPANY. THEREFORE, ACCORDING TO THE LD. REPRESENT ATIVE, UNDER SECTION 170 OF THE ACT, THE ADDITION, IF ANY, HAS T O BE MADE ONLY IN THE HANDS OF M/S PVP VENTURES PVT. LTD. AND NOT IN THE HANDS OF THE PRESENT ASSESSEE. THEREFORE, THE CIT(APPEALS) HAS RIGHTLY DELETED THE ADDITION MADE BY THE ASSESSING OFFICER. 22. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS ON EIT HER SIDE AND PERUSED THE RELEVANT MATERIAL ON RECORD. M/S PVP V ENTURES PVT. 18 I.T.A. NO.1115/MDS/14 I.T.A. NO.1899/MDS/14 LTD., HYDERABAD WAS AMALGAMATED WITH SSI LIMITED WI TH EFFECT FROM 01.10.2007 BY ORDER OF MADRAS HIGH COURT. THE ASSE SSEE CLAIMS THAT M/S PVP VENTURES PVT. LTD. RECEIVED ` 377,71,78,316/- FROM M/S PLATEX LTD., MAURITIUS. THE SOURCE FOR MAKING INVE STMENT IN M/S PVP VENTURES PVT. LTD. WAS THE LOAN SAID TO BE BORR OWED BY M/S PLATEX LTD., MAURITIUS FROM DEUTSCHE BANK. THE ASS ESSEE HAS PRODUCED A STATEMENT FROM BANK, NAMELY, DEVELOPMENT CREDIT BANK LTD., HYDERABAD, TO SHOW THAT ALL THE FUNDS WERE TR ANSFERRED TO M/S PVP VENTURES PVT. LTD. THROUGH BANKING CHANNEL. TH E FIRST CONTENTION OF THE ASSESSEE IS THAT IF AT ALL ANY AD DITION HAS TO BE MADE, IT HAS TO BE MADE ONLY IN THE HANDS OF THE PR EDECESSOR- COMPANY, NAMELY, M/S PVP VENTURES PVT. LTD. AND NOT IN THE HANDS OF THE PRESENT ASSESSEE. IT IS ALSO PERTINENT TO N OTE THAT AFTER AMALGAMATION OF M/S PVP VENTURES PVT. LTD. WITH M/S SSI LIMITED, CHENNAI, THE NAME OF THE COMPANY WAS CHANGED TO M/S PVP VENTURES LTD. FROM SSI LIMITED. NOW, WHEN THE COMP ANY M/S PVP VENTURES PVT. LTD. IS NOT IN EXISTENCE, THE QUESTIO N ARISES FOR CONSIDERATION IS WHETHER THE ADDITION, IF ANY, COUL D BE MADE IN THE HANDS OF M/S PVP VENTURES PVT. LTD. OR IN THE HANDS OF M/S PVP VENTURES LTD., CHENNAI. 19 I.T.A. NO.1115/MDS/14 I.T.A. NO.1899/MDS/14 23. WE HAVE GONE THROUGH THE PROVISIONS OF SECTION 170 OF THE ACT, WHICH READS AS FOLLOWS:- 170. (1) WHERE A PERSON CARRYING ON ANY BUSINESS OR PROFESSION (SUCH PERSON HEREINAFTER IN THIS SECTION BEING REFERRED TO AS THE PREDECESSOR) HAS BEEN SUCCEEDED THEREIN BY ANY OTHER PERSON (HEREINAFTER IN THIS SECTION RE FERRED TO AS THE SUCCESSOR) WHO CONTINUES TO CARRY ON THAT BU SINESS OR PROFESSION,-- (A) THE PREDECESSOR SHALL BE ASSESSED IN RESPECT OF THE INCOME OF THE PREVIOUS YEAR IN WHICH THE SUCCESSION TOOK PLACE UP TO THE DATE OF SUCCESSION; (B) THE SUCCESSOR SHALL BE ASSESSED IN RESPECT OF T HE INCOME OF THE PREVIOUS YEAR AFTER THE DATE OF SUCCESSION. (2) NOTWITHSTANDING ANYTHING CONTAINED IN SUB-SECTIO N (1), WHEN THE PREDECESSOR CANNOT BE FOUND, THE ASSESSMEN T OF THE INCOME OF THE PREVIOUS YEAR IN WHICH THE SUCCES SION TOOK PLACE UP TO THE DATE OF SUCCESSION AND OF THE PREVI OUS YEAR PRECEDING THAT YEAR SHALL BE MADE ON THE SUCCESSOR IN LIKE MANNER AND TO THE SAME EXTENT AS IT WOULD HAVE BEEN MADE ON THE PREDECESSOR, AND ALL THE PROVISIONS OF THIS ACT SHALL, SO FAR AS MAY BE, APPLY ACCORDINGLY. (3) WHEN ANY SUM PAYABLE UNDER THIS SECTION IN RESPE CT OF THE INCOME OF SUCH BUSINESS OR PROFESSION FOR THE P REVIOUS YEAR IN WHICH THE SUCCESSION TOOK PLACE UP TO THE D ATE OF SUCCESSION OR FOR THE PREVIOUS YEAR PRECEDING THAT YEAR, ASSESSED ON THE PREDECESSOR, CANNOT BE RECOVERED FR OM HIM, THE ASSESSING OFFICER SHALL RECORD A FINDING TO THA T EFFECT AND THE SUM PAYABLE BY THE PREDECESSOR SHALL THEREA FTER BE PAYABLE BY AND RECOVERABLE FROM THE SUCCESSOR, AND THE SUCCESSOR SHALL BE ENTITLED TO RECOVER FROM THE PRE DECESSOR ANY SUM SO PAID. (4) WHERE ANY BUSINESS OR PROFESSION CARRIED ON BY A HINDU UNDIVIDED FAMILY IS SUCCEEDED TO, AND SIMULTANEOUSL Y WITH 20 I.T.A. NO.1115/MDS/14 I.T.A. NO.1899/MDS/14 THE SUCCESSION OR AFTER THE SUCCESSION THERE HAS BE EN A PARTITION OF THE JOINT FAMILY PROPERTY BETWEEN THE MEMBERS OR GROUPS OF MEMBERS, THE TAX DUE IN RESPECT OF THE INCOME OF THE BUSINESS OR PROFESSION SUCCEEDED TO, UP TO T HE DATE OF SUCCESSION, SHALL BE ASSESSED AND RECOVERED IN T HE MANNER PROVIDED IN SECTION 171, BUT WITHOUT PREJUDIC E TO THE PROVISIONS OF THIS SECTION. EXPLANATION FOR THE PURPOSES OF THIS SECTION, 'INCOME' INCLUDES ANY GAIN ACCRUING FROM THE TRANSFER, IN AN Y MANNER WHATSOEVER, OF THE BUSINESS OR PROFESSION AS A RESU LT OF THE SUCCESSION. A BARE READING OF SECTION 170 OF THE ACT SHOWS THAT THIS PROVISION IS NOT APPLICABLE IN RESPECT OF SUCCESSION WHICH TAKES PLACE ON DEATH OF A PERSON. WHEN THE BUSINESS OR PROFESSION WAS S UCCEEDED BY OTHER PERSON, THE PREDECESSOR SHALL BE ASSESSED IN RESPECT OF PREVIOUS YEAR IN WHICH THE SUCCESSION TOOK PLACE, U PTO THE DATE OF SUCCESSION. HOWEVER, THE SUCCESSOR-COMPANY SHALL B E ASSESSED IN RESPECT OF THE INCOME OF THE PREVIOUS YEAR AFTER TH E DATE OF SUCCESSION. SUB-SECTION (2) OF SECTION 170 OF THE ACT CLEARLY SAYS THAT NOTWITHSTANDING ANYTHING CONTAINED IN SUB-SECT ION (1) OF SECTION 170, WHEN THE PREDECESSOR CANNOT BE FOUND, THE ASSESSMENT OF THE INCOME OF THE PREVIOUS YEAR IN WH ICH THE SUCCESSION TOOK PLACE UP TO THE DATE OF SUCCESSION AND OF THE PREVIOUS YEAR PRECEDING THAT YEAR SHALL BE MADE ON THE SUCCESSOR IN LIKE MANNER AND TO THE SAME EXTENT AS IT WOULD H AVE BEEN MADE 21 I.T.A. NO.1115/MDS/14 I.T.A. NO.1899/MDS/14 ON THE PREDECESSOR-COMPANY. IN VIEW OF THE EXPRESS LANGUAGE IN SECTION 170(2) OF THE ACT, WHENEVER THE PREDECESSOR -COMPANY WAS NOT FOUND OR NOT IN EXISTENCE, THEN THE ASSESSMENT HAS TO BE MADE ONLY IN THE HANDS OF THE SUCCESSOR-COMPANY. IN THE CASE BEFORE US, THE AMALGAMATION ADMITTEDLY TOOK PLACE ON 01.10.200 7. THEREFORE, ON AND FROM 01.10.2007, M/S PVP VENTURES PVT. LTD. IS NOT IN EXISTENCE. THEREFORE, THE QUESTION ARISES FOR CONS IDERATION IS WHEN A COMPANY IS NOT IN EXISTENCE DUE TO AMALGAMATION W ITH EFFECT FROM 01.10.02007, WHETHER STILL THE ASSESSMENT CAN BE MA DE IN THE HANDS OF THE PREDECESSOR-COMPANY? THIS ISSUE WAS C ONSIDERED BY THE KOLKATA BENCH OF THIS TRIBUNAL IN PAMPASAR DIST ILLERY LTD. V. ACIT (2007) 15 SOT 331. AFTER REFERRING TO SECTION 170 OF THE ACT, MORE PARTICULARLY, SECTION 170(2) OF THE ACT, FOUND THAT IN THE CASE OF AMALGAMATION, WHEN ONE ENTITY TAKES OVER THE BUSINE SS OF ANOTHER ENTITY, THE SAME MAY BE THE CASE OF SUCCESSION OF B USINESS. REFERRING TO THE AMALGAMATION, THE TRIBUNAL FOUND T HAT THE AMALGAMATING COMPANY IS NOT IN EXISTENCE, THEREFORE , NO ASSESSMENT CAN BE MADE IN THE HANDS OF NON-EXISTING COMPANY. THE TRIBUNAL FOUND THAT IF AT ALL ANY ASSESSMENT CA N BE MADE, IT SHOULD BE MADE IN THE HANDS OF THE AMALGAMATED COMP ANY, NAMELY, THE SUCCESSOR COMPANY. IN THIS CASE ALSO, M/S PVP 22 I.T.A. NO.1115/MDS/14 I.T.A. NO.1899/MDS/14 VENTURES PVT. LTD. IS NOT IN EXISTENCE AS ON 01.10. 2007. THEREFORE, NO ASSESSMENT CAN BE MADE IN THE HANDS OF M/S PVP V ENTURES PVT. LTD. IN FACT, ORDER PASSED BY THE DIRECTOR OF INCO ME TAX (INTERNATIONAL TAXATION) WAS QUASHED BY THE HYDERAB AD BENCH ON THE GROUND THAT M/S PVP VENTURES PVT. LTD. IS NOT I N EXISTENCE. THEREFORE, IN VIEW OF SECTION 170(2) OF THE ACT, TH E INCOME OF M/S PVP VENTURES PVT. LTD. HAS TO BE ASSESSED ONLY IN T HE HANDS OF THE PRESENT ASSESSEE UPTO THE DATE OF AMALGAMATION AND ALSO SUBSEQUENT TO THE DATE OF AMALGAMATION. IN OTHER W ORDS, THERE CANNOT BE ANY ASSESSMENT ORDER IN FAVOUR OF THE COM PANY WHICH IS NOT IN EXISTENCE ON AND AFTER 01.10.2007. THEREFOR E, THIS TRIBUNAL IS OF THE CONSIDERED OPINION THAT THE CIT(APPEALS) IS NOT CORRECT IN HOLDING THAT THE ASSESSMENT, IF ANY, HAS TO BE MADE IN THE HANDS OF M/S PVP VENTURES PVT. LTD. AND IN THE HANDS OF THE PRESENT ASSESSEE. THE OBSERVATION MADE BY THE CIT(APPEALS) THAT THE ASSESSMENT, IF ANY, HAS TO BE MADE IN THE HANDS OF M/S PVP VENTURES PVT. LTD. AMOUNTS TO MAKING AN ASSESSMENT IN THE CASE OF NON-EXISTING COMPANY. THEREFORE, IN VIEW OF NON-OB STANTE CLAUSE IN SECTION 170(2) OF THE ACT, THIS TRIBUNAL IS OF THE CONSIDERED OPINION THAT THE PROVISIONS OF SECTION 170(2) WILL OVERRIDE THE PROVISIONS OF SECTION 170(1) OF THE ACT. THEREFORE, THE ASSESSME NT HAS TO BE 23 I.T.A. NO.1115/MDS/14 I.T.A. NO.1899/MDS/14 MADE ONLY IN THE HANDS OF THE PRESENT ASSESSEE IN V IEW OF THE PROVISIONS OF SECTION 170(2) OF THE ACT. THE CIT(A PPEALS) IS NOT JUSTIFIED IN HOLDING THAT THE ASSESSMENT HAS TO BE MADE ONLY IN THE HANDS OF THE PREDECESSOR-COMPANY. 24. NOW COMING TO THE GENUINENESS OF THE LOAN, IT I S A FACT THAT SHRI PRASAD V. POTLURI IS A COMMON DIRECTOR IN ALL THE COMPANIES, NAMELY, M/S PLATEX LTD., MAURITIUS, M/S PVP ENTERPR ISES PVT. LTD., M/S PVP VENTURES PVT. LTD. AND PRESENT M/S PVP VENT URES LTD. THIS FACT IS NOT DISPUTED BY THE ASSESSEE. IT IS A LSO NOT IN DISPUTE THAT M/S PLATEX LTD., MAURITIUS DID NOT HAVE NET WO RTH TO SUPPORT THE CLAIM OF INVESTMENT MADE TO THE EXTENT OF ` 377,71,78,316/-. THE FINANCIAL STATEMENT SAID TO HAVE BEEN FILED BEFORE THE ASSESSING OFFICER SHOWS THAT THERE WAS NO GENERATION OF INCOM E BY M/S PLATEX LTD., MAURITIUS. THEREFORE, IT IS DOUBTFUL THAT DE UTSCHE BANK GRANTED LOAN TO M/S PLATEX LTD., MAURITIUS BY WAY OF FACILI TY AGREEMENT. WHEN M/S PLATEX LTD., MAURITIUS HAS NO NET WORTH AN D IT COULD NOT GENERATE ANY INCOME OF ITS OWN, IT IS NOT KNOWN HOW DEUTSCHE BANK COULD COME FORWARD TO SANCTION MORE THAN ` 500 CRORES AS LOAN BY WAY OF FACILITY AGREEMENT. IN VIEW OF FINANCIAL ST ATEMENT OF M/S PLATEX LTD., MAURITIUS AND THE FACT THAT SHRI PRASA D V. POTLURI IS A 24 I.T.A. NO.1115/MDS/14 I.T.A. NO.1899/MDS/14 COMMON DIRECTOR IN ALL THE THREE COMPANIES, NAMELY, M/S PLATEX LTD., MAURITIUS, M/S PVP VENTURES PVT. LTD. AND M/S PVP VENTURES LTD., CHENNAI, CREATES A DOUBT THAT THE MONEY MIGHT HAVE BEEN FLOWN FROM THE ASSESSEE-COMPANY TO M/S PLATEX LTD., MAURITIUS AND BY WAY OF INVESTMENT WOULD HAVE COME BACK TO CHENNA I THROUGH BANKING CHANNEL. UNFORTUNATELY, THIS FACT WAS NOT EXAMINED BY THE LOWER AUTHORITIES. THEREFORE, THIS TRIBUNAL IS OF THE CONSIDERED OPINION THAT THE MATTER NEEDS AN INVESTIGATION BY T HE ASSESSING OFFICER AS IT WAS DONE IN THE CASE BEFORE APEX COUR T IN CIT V. P. MOHANAKALA (2007) 291 ITR 278. THE ASSESSING OFFIC ER HAS TO EXAMINE WHEN M/S PLATEX LTD., MAURITIUS HAD NO NET WORTH AND IT COULD NOT GENERATE ANY INCOME OF ITS OWN, HOW DEUTS CHE BANK WAS ABLE TO SANCTION LOAN FACILITY OF MORE THAN ` 500 CRORES. IT ALSO NEEDS TO BE EXAMINED WHETHER ANY LOAN WAS SANCTIONE D AND DISBURSED BY DEUTSCHE BANK TO M/S PLATEX LTD., MAUR ITIUS. FURTHER, IT IS TO BE EXAMINED WHETHER ANY MONEY WAS FLOWN FR OM INDIA TO MAURITIUS IN ORDER TO ENABLE THE DEUTSCHE BANK TO S ANCTION THE LOAN TO M/S PLATEX LTD., MAURITIUS. THESE ASPECTS WERE NOT EXAMINED BY THE ASSESSING OFFICER. THEREFORE, THIS TRIBUNAL IS OF THE CONSIDERED OPINION THAT THE MATTER NEEDS TO BE RE-EXAMINED AS OBSERVED BY THE APEX COURT IN CIT V. P. MOHANAKALA (SUPRA). MERELY BECAUSE THE 25 I.T.A. NO.1115/MDS/14 I.T.A. NO.1899/MDS/14 FUNDS WERE TRANSFERRED THROUGH BANKING CHANNEL, THA T ALONE WILL NOT PROVE THE GENUINENESS OF TRANSACTION. IT IS A MAND ATORY REQUIREMENT FOR THE ASSESSEE TO ESTABLISH THE CREDI TWORTHINESS OF THE CREDITOR, GENUINENESS OF THE TRANSACTION AND TH E IDENTITY OF THE CREDITORS. THEREFORE, THIS TRIBUNAL IS OF THE CONS IDERED OPINION THAT THE MATTER NEEDS A THOROUGH INVESTIGATION BY THE AS SESSING OFFICER. ACCORDINGLY, THE ORDERS OF THE LOWER AUTHORITIES AR E SET ASIDE AND THE ENTIRE ISSUE IS REMITTED BACK TO THE FILE OF THE AS SESSING OFFICER. THE ASSESSING OFFICER SHALL RE-EXAMINE THE ISSUE AFRESH AND BRING ON RECORD ALL MATERIAL FACTS AS INDICATED ABOVE. THE ASSESSING OFFICER SHALL THEREAFTER DECIDE THE ISSUE AFRESH IN ACCORDA NCE WITH LAW, AFTER GIVING REASONABLE OPPORTUNITY TO THE ASSESSEE. 25. IN THE RESULT, THE ASSESSEES APPEAL IN I.T.A. NO.1115/MDS/2014 IS DISMISSED AND THE REVENUES APP EAL IN I.T.A. NO.1899/MDS/2014 IS ALLOWED FOR STATISTICAL PURPOSE S. ORDER PRONOUNCED ON 16 TH SEPTEMBER, 2015 AT CHENNAI. SD/- SD/- (. !'# ! ) ( . . . ) (A. MOHAN ALANKAMONY) (N.R.S. GANESAN) % / ACCOUNTANT MEMBER /JUDICIAL MEMBER /CHENNAI, 7 /DATED, THE 16 TH SEPTEMBER, 2015. 26 I.T.A. NO.1115/MDS/14 I.T.A. NO.1899/MDS/14 KRI. 1 -089 :9)0 /COPY TO: 1. (/0 /ASSESSEE 2. ASSESSING OFFICER 3. 4 ;0 () /CIT(A)-V, CHENNAI 4. 4 ;0 /CIT-V, CHENNAI-34 5. 9< -0 /DR 6. =( > /GF.