M/s M.S. Continental Pvt. Ltd., Ludhiana V. ACIT-Circle-7, Ludhiana

ITA 192/CHANDI/2020

• Counselvise Citation: [2023] 102 COUNSELVISE.COM (IT) 0822 (ITAT-CHANDIGARH)
• Duration Of Justice: 3 year(s) 7 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-10-2023
• Appeal Filed By: Assessee
• Order Result: PartlyAllowed
• Bench Allotted: B
• Next Hearing Date: 22-08-2023
• Assessment Year: 2012-2013
• Appeal Filed On: 23-02-2020
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Income from undisclosed sources; TDS
• Section: 131; 68; 148; 143(3); 143(2); 13

Judgement Text

आयकर अपीलȣय अͬधकरण,चÖडीगढ़ Ûयायपीठ, चÖडीगढ़ IN THE INCOME TAX APPELLATE TRIBUNAL DIVISION BENCH, “B” CHANDIGARH BEFORE SHRI SANJAY GARG, JUDICIAL MEMBER AND SHRI VIKRAM SINGH YADAV, ACCOUNTANT MEMBER आयकर अपील सं./ ITA No.192/CHANDI/2020 Ǔनधा[रण वष[ / Assessment Year : 2012-13 M/s M. S. Continental Pvt. Ltd. B-34/2622, New Tagore Nagar, Haibowal Kalan, Ludhiana-141001. बनाम ACIT, Circle-7, Ludhiana èथायी लेखा सं./PAN NO: AAGCM1356G अपीलाथȸ/Appellant Ĥ×यथȸ/Respondent Ǔनधा[ǐरती कȧ ओर से/Assessee by : Shri Gaurav Sharma, CA राजèव कȧ ओर से/ Revenue by : Shri Dharam Vir, JCIT- Sr. DR स ु नवाई कȧ तारȣख/Date of Hearing : 23.08.2023 उदघोषणा कȧ तारȣख/Date of Pronouncement : 12.10.2023 आदेश/ORDER Per Sanjay Garg, Judicial Member: The present appeal has been preferred by the assessee against the order dated 01.09.2019 of the Commissioner of Income Tax (Appeals)-3, Ludhiana [hereinafter referred to as the ‘CIT(A)’] passed u/s 143(3) of the Income Tax Act (hereinafter referred to as the ‘Act’). 2. The assessee in this appeal has taken the following grounds of appeal: “1. That the Learned Commissioner of Income Tax (Appeals) ITA No.192/CHANDI/2020 Assessment Year : 2012-13 M/s M. S. Continental Pvt. Ltd. Page 2 of 16 has erred in treating the License Fee amounting to Rs. 14.07,936/- received by the Appellant Company as Income under the head Income from House Property, instead of Income under the head Profits and Gain from Business Profession. 2. That the Learned Commissioner of Income Tax (Appeals) has erred in sustaining the addition of Rs. 1,57,78,300/- on account of Unexplained Unsecured Loan taken by the Appellant Company from Ex-director Mr. Manjit Singh under section 68 of the Act. 3. That the Learned Commissioner of Income Tax (Appeals) has erred in sustaining the addition of Unsecured Loan in spite of the fact that the case of Mr. Manjit Singh for the year under consideration has been opened by his concerned Assessing Officer under section 148 of the Act, the time barring date of which was 31.12.2019. 4. That the Learned Commissioner of Income Tax (Appeals) has erred sustaining the above addition under section 68 of the Act, in spite of the fact that the Appellant Company was incorporated on 28.04.2009, whereas, it has started receiving License Fee (being the only source of Income) from September 2011 and was in initial stages of business and had received License Fee of Rs. 14,07,936/- only during the relevant Assessment Year and it is impossible to earn Rs. 1,57,78,300/- from the above. 5. That the addition made under section 68 of the Act, in the case of the Appellant Company is against the facts and circumstances of the Case. 6. The addition made under section 68 of the Act, is on the basis of probabilities, presumptions, surmises and conjectures. 7. That the Appellant Company craves leave to add or amend any grounds of appeal later during the course of Appellate Proceedings.” 3. Ground No.1 – The ld. Counsel for the assessee has stated at bar that as per the instruction of his client, this ground is not pressed. Ground No.1 is therefore dismissed ITA No.192/CHANDI/2020 Assessment Year : 2012-13 M/s M. S. Continental Pvt. Ltd. Page 3 of 16 as not pressed. 4. Ground No.2 to 6 – The sole issue raised by the assessee through these grounds is relating to the sustaining of addition of Rs.1,57,78,300/- made by the Assessing Officer on account of unexplained unsecured loan taken by the assessee company from its ex-director Shri Manjit Singh treating the same as unexplained income of the assessee u/s 68 of the Act. 5. The assessee firm had engaged in the business of rental income from M/s Connnaught Plaza Restaurants Pvt. Ltd. during the year under consideration and filed its return declaring total income of Nil on 25.09.2012. The Assessing Officer has noted the following facts and points for making the impugned additions: “1. The assessee company was established on 28.04.2009. The authorized capital of assessee company was Rs.50,00,000/- and issued and subscribed capital was Rs. 42,00,000/-. 2. The main object of the assessee company was to do the franchisee business for all types of food items with multinational and domestic companies in India and abroad (Annexure 1). 3. At the time of formation of company, the bank account was opened in HDFC Bank on 19.10.2009. However the mail correspondence reflects that process of opening bank account was started on 10.05.2009 and completed on 19.10.2009 as there were problems in identification and processing of the documents submitted for the opening of account. 4. The account opening form was signed by authorizes signatory Sh. Ramandeep Singh Sandhu. The scanned copy ITA No.192/CHANDI/2020 Assessment Year : 2012-13 M/s M. S. Continental Pvt. Ltd. Page 4 of 16 of board's resolution nominating the authorized signatory and list of directors along with their 'signatures, as submitted in the bank is reproduced as Annexure 2 of this order. 5. In common language, Sh Manjit Singh and Sh. Ramandeep Singh Sandhu were owner of the assessee company till they sold it. Out of issued capital of Rs.200000/-, Rs 100000/- was subscribed by Sh Manjit Singh and remaining Rs.100000/- was subscribed by Sh Ramandeep Singh Sandhu as per the detail given in the memorandum of Association (MOA). 6. The founding directors of the assessee company were Sh Manjit Singh and Sh. Ramandeep Singh Sandhu. The profession of Sh Manjit Singh was business and Sh Ramandeep Singh Sandhu was Agriculturist. The scanned copy has been reproduced at Annexure 3 of this order. 7. The assessee company purchased shop in the omaxe mall situated at Patiala. The shop was purchased on 05.01.2012 at a price of Rs.3,31,77,670/- (Rs. 2,24,16,003/- for the ground floor 34-35-36, Rs. 672500/- for stamp duty and Rs. 2100000/- for use of basement while the other amount spent on furniture and fixtures). The assessee company had capital of Rs.42,00,000/- while loan of Rs.25874900/- was shown from Sh Manjit Singh. Sh. Anil Sood S/o Sh. Krishan Kumar, C.A. was the witness to the said transaction. 8. There was a tripartite agreement between M/s Omaxe Limited, M/s Connaught plaza Restaurant Pvt. Limited and M/s M.S. Continental Pvt. Limited for giving the space on rent to M/s Connaught plaza Restaurant Pvt. Limited for the purpose of running outlet of Mcdonald. It is pertinent to mention here that original agreement was made by M/s Connaught plaza Restaurant Pvt. Limited on 03.11.2005 with M/s Omaxe Limited. The Tripartite agreement was signed on 28.12.2012 after the said space, which was let out to M/s Connaught Plaza Restaurant Pvt. Limited, was sold to M/s M.S. Continental Pvt. Ltd. it is pertinent to mention here that M/s Connaught Plaza Restaurant Pvt. Ltd. is running the chains of outlets of Mcdonald in northern India. ITA No.192/CHANDI/2020 Assessment Year : 2012-13 M/s M. S. Continental Pvt. Ltd. Page 5 of 16 9. M/s Connaught plaza Restaurant Pvt. Limited has taken the space on rent from M/s Omaxe Limited on 03.11.2005. However the registered deed of the space was signed in the favor of assessee company on 05.01.2012 therefore before the signing of registered deed in the favor of assessee company the rental income was credited to M/s Omaxe Limited by M/s Connaught plaza Restaurant Pvt Limited and in turn M/s Omaxe Limited credited such rental income to the account of assessee company after deducting TDS u/s 194I (applicable to Rent expense). 10. After signing of registered deed in the favor of Assessee Company the rental income was credited to Assessee Company directly by M/s Connaught plaza Restaurant Pvt. Limited after deducting TDS u/s 1941 (applicable to Rent expense). 11. The total share capital of Assessee Company was transferred to new shareholder cum directors namely Sh Balwant Singh and Sh Sarb Singh. The share capital of Rs.1433600/- (@Rs. 10 per share) from Sh. Ramandeep Singh was transferred to Sh Balwant Singh (@Rs. 5 per share) and the share capital of Rs.2766400/-(@Rs. 10 per shart) of Sh. Manjeet Singh was transferred to Sh Sarb Singh (@Rs. 5 per share). It is pertinent to mention here that it is not merely the transfer of shares but in fact the transfer of shop/space along with the running McDonald restaurant which was generating the fixed rental income from M/s Connaught plaza Restaurant Pvt. as there was transfer of 100% shareholding of the assessee company. 12. It is relevant to mention here that the old directors choose to sale their share @ Rs. 5 which was purchased by them @ Rs. 10 and that too when the assessee company was having a property worth 3.2 Crores and fetching higher market value since there is already a existing contract from M/s Connaught Plaza Restaurant Pvt. Ltd, for the running of Mcdonald Restaurant in the said property thus generating fixed rental income. The total share capital of Rs. 4200000/- was sold at Rs, 2100000/- when the bare cost of assets of the company was more than 4 crores, the sale of shop/space was made to the new director at the highly low price which strongly suggests the possibility of huge cash transfer in this cash. This matter is under investigation by the income tax department and necessary ITA No.192/CHANDI/2020 Assessment Year : 2012-13 M/s M. S. Continental Pvt. Ltd. Page 6 of 16 action against the Old Directors Sh. Ramandeep Singh Sandhu, Sh.Manjeet Singh as well as new directors Sh Balwant Singh and Sh Sarb Singh is under contemplation by the department. 13. After such transfer, there remained no share holding of Sh Ramandeep Singh Sandhu and Sh Manjit Singh nor did they remain director in the said company. In other words, they have sold the company to the new owners and their complete interest ceased from the date of sale of their share in the assessee company. 14. In the balance sheet of assessee company, a loan of Rs. 10096,600/- was shown to be due as on 31.03.2011 which was reduced to NIL as on 31.03.2012. 15. The current liabilities of the assessee company were shown as Rs.Nil which was increased to Rs.26060678/- as on 31.03.2012. Which included interest accrued but not due of Rs. 157778/-, audit fee payable of Rs. 28000/- and loan of Rs. 25874900/- from Sh. Manjit Singh. 16. It is also borne out from the analysis of bank statement of Sh Manjit Singh, the submissions made during the assessment proceedings and the Income Tax record that Sh. Manjit Singh left the country thereafter with no intention of coming back. The assessment of Sh. Manjit Singh was completed under ex-parte under section 144/148 of the Income Tax Act vide order dated 24.03.2014 by the Income tax department resulting into demand of Rs. 27,84,974/- which is still unpaid by him till date. 17. The Income Tax records of Sh. Manjit Singh have reflected that Sh. Anil Sood, who is the counsel of Assessee Company, has filed the return of Sh manjit Singh as well. However during assessment proceedings, he could not file any documentary evidence to establish that he is the authorized representative of Sh Manjit Singh. Even during the re-assessment proceedings of Sh Manjit Singh for the AY 2011-12 he did not appear before the AO and the re- assessment was completed ex-parte u/s 144/148 of the Income Tax Act vide order dated 24.03.2014 by the Income tax department resulting into demand of Rs.27,84,974/- of the IT Act 1961. 18. The income tax returns of A.Y. 2012-13 and 2013-14 ITA No.192/CHANDI/2020 Assessment Year : 2012-13 M/s M. S. Continental Pvt. Ltd. Page 7 of 16 are filed on the same date i.e. 18.01.2014 and the income tax returns of A.Y. 2010-11 and 2011-12 are filed on the same date i.e. 31.07.2011. It is relevant to mention here that Notice u/s 143(2) in the case of assessee company was issued on 10.08.2013 and served on 21.08.2013, therefore, the return of income of the Loanee Sh Manjit Sing was filed only when assessee's counsel was well aware the case of assessee company is under scrutiny and the return of income of Sh Manjit Singh will be required in assessment proceedings to establish the identity and creditworthiness of Sh Manjit Singh. 19. The income was shown as Rs. Nil, agriculture income Rs. 765000/- (AY 2013-14), Rs.Nil, agriculture income Rs. 715000/- (AY 2012-13), Rs. 155740/-, agriculture Income 539000/-(AY 2011-12 ), Rs. 140480/- agriculture income 514500/-(AY 2010-11). The income of Sh Manjit Singh was shown from interest and Agricultural income. After A.Y 2013-14 no return of income was filed by the Sh Manjit Singh. 20. The Director of assessee company was summoned and his statement was recorded u/s 131 of the Income Tax Act 1961. The statement of the director is annexed as Annexure 4 and is made a part of this assessment order. It is also pertinent to mention here that counsel of the assessee company has also made a submission that director was not involved in day to day affairs and may not know the true picture of affairs of the assessee company. However this contention of the assessee company was not tenable as there are no employees in the assessee company this fact is further reflecting in the profit and loss account of the Assessee Company where no expenses on account of salary was shown and directors is the only working employees. Even otherwise it is very ridiculous to claim that director of closely held private company did not know anything about the company when there are only two share holders who are directors as well in the assessee company.” 5.1 Having noted the aforesaid facts, the Assessing Officer observed that the assessee had outstanding unsecured loans to be paid in the previous year of Rs.15778300/-. These unsecured loans have been completely paid off in the current ITA No.192/CHANDI/2020 Assessment Year : 2012-13 M/s M. S. Continental Pvt. Ltd. Page 8 of 16 assessment year 2012-13. Vide order sheet noting dated 25.07.2014, the assessee was asked by the Assessing Officer regarding the source of payment of unsecured loans. In this reply dated 05.08.2014, the assessee replied to this query as follows: “In respect of source of payment of unsecured loans of Rs.15778300/- it is submitted that no unsecured loan has been repaid during the year, it is just there classification that has been changed to other current liabilities from unsecured loans. Copy of account is enclosed herewith”. 5.2 The Assessing Officer, however, doubted the unsecured loans received by the assessee company from its director Shri Manjit Singh. The Assessing Officer not only doubted the identity of Shri Manjit Singh, director of the assessee company, but also doubted the creditworthiness of Shri Manjit Singh, observing that from the income tax returns of Shri Manjit Singh for A.Y 2010-11, 2011-12, 2012-13 and 2013-14, it was revealed that the income of Shri Manjit Singh was nominal and it was highly improbable that a person with a nominal income could give a huge unsecured loan of Rs.15778300/- to assessee company. The Assessing Officer also doubted the genuineness of the transaction observing that the assessee could not produce Shri Manjit Singh stating that he was not residing in India. The Assessing Officer also noted that this fact that Shri Manjit Singh was not residing in India was also corroborated from the analysis of bank statement of Shri Manjit Singh, wherein all entries in the last many years were from abroad location. The Assessing Officer observed that it was difficult to understand that why a person who reside abroad would give so much of loan to assessee company and then simply forget about ITA No.192/CHANDI/2020 Assessment Year : 2012-13 M/s M. S. Continental Pvt. Ltd. Page 9 of 16 it without charging any interest on it or without asking any favour in return of loan unless the loan is repaid by the assessee in cash. The Assessing Officer further observed that the ownership of the company (the commercial space in reality) was changed from Shri Manjit Singh and Shri Raman Jeet Singh Sandu (the ex-directors) to the present director Shri Sarb Singh and Sh Balwant Singh. He further observed that Shri Manjit Singh had sold his entire share in the company at throw-away prices, which in fact was the sale of commercial space in the shopping mall and did not have any relation with the sale of shares of assessee company. The Assessing Officer observed that the entire transaction of sale of share was doubtful as Shri Manjit Singh had sold his share at unreasonably low price and there was a high probability of cash payment in lieu of loan entries in the books of account of the assessee. He further observed that since Shri Manjit Singh had left India then why he would like to leave a loan of Rs.2.57 crore including loan entry of earlier years on an entity in which he has no relation left. Therefore, the Assessing Officer observed that the genuineness of the transaction was not proved. He accordingly held that the unsecured loans of Rs.15778300/- received during the financial year relevant to assessment year under consideration as unexplained income of the assessee u/s 68 of the Act and made the impugned addition. 6. The ld. CIT(A) confirmed the addition so made by the Assessing Officer. Being aggrieved, the assessee has come in appeal before us. 7. We have heard the rival contentions and gone through the ITA No.192/CHANDI/2020 Assessment Year : 2012-13 M/s M. S. Continental Pvt. Ltd. Page 10 of 16 record. The undisputed facts of the present case are that earlier during the F.Y 2009-09, Shri Manjit Singh and Shri Ramandeep Singh Sandhu contributed Rs.44,00,000/- and Rs.36,86,600/- and paid the said money as advance to M/s Omaxe Ltd. for purchase of shop no.34,35 and 36 on the ground floor of Omaxe Mall, Patiala. Thereafter, the aforesaid two persons i.e Shri Manjit Singh and Shri Ramandeep Singh Sandhu, incorporated the assessee company on 28.04.2009 with its main object to do the franchisee business for all types of food items with multinational and domestic companies. The aforesaid total advance of Rs.80,86,600/- was shown as an asset in the books of account of the assessee company. Shri Manjit Singh and Shri Ramandeep Singh Sandhu were allotted 2666640 shares and 133360 shares respectively of the assessee company. Thereafter, the unsecured loan of Rs.1,00,00,000/- was advanced by Shri Manjit Singh to the assessee company which was further given to Omaxe Ltd. in relation to the advance for the sale consideration of the aforesaid property at Omaxe Mall, Patiala. Thereafter, during the F.Y 2011-12, Shri Manjit Singh paid the amount of Rs.1,57,78,300/- towards the sale consideration of the said property to M/s Omaxe Ltd. which was shown as unsecured loan by Shri Manjit Singh to the assessee company. The property was registered through sale deed in the name of assessee company on 05.01.2012. The property, in question, was already leased out by M/s Omaxe Ltd. to M/s Connaught Plaza Pvt. Ltd and after the registration of the said property in the name of the assessee, the assessee started to receive lease rent from M/s Connaught Plaze Pvt. Ltd. On 10.01.2012, Shri Manjit Singh sold his shares in the assessee company as noted above. ITA No.192/CHANDI/2020 Assessment Year : 2012-13 M/s M. S. Continental Pvt. Ltd. Page 11 of 16 8. At the outset, the ld. Counsel for the assessee has submitted that so far as the identity of the creditor i.e. Shri Manjit Singh was concerned, admittedly Shri Manjit Singh was the founder director of the assessee company. There was no question of doubting of his identity. Further, Shri Manjit Singh was an income tax assessee and he has filed his income tax returns for A.Ys 2010-11, 2011-12, 2012-13 and 2013-14 showing income of Rs.6,54,980/-, Rs.694740/-, Rs.75,100/- and Rs.7,65,000/- respectively, mainly as income from other sources and agricultural income. The another important factor noted by the Assessing Officer, himself, was that Shri Manjit Singh was not residing in India, therefore, apart from the said income shown in India, Shri Manjit Singh might be having another income earned in foreign countries. The ld. Counsel for the assessee has further invited our attention to pages 12 to 17 of paper-book to submit that after the assessment proceedings of the assessee company for the year under consideration, the ld. Assessing Officer had opened the cases of the assessee company for the last two years i.e. A.Y 2011-12 and A.Y 2010- 11 u/s 147/148 of the Act on the issue of introduction of unsecured loans and share capital by Shri Manjit Singh in those years, however, no addition has been made by the Assessing Officer in those years. 9. From the above documents and submissions, it is an established fact on the file that Shri Manjit Singh being founder director and promoter of the assessee company had introduced his capital in the assessee company and the loans have been advanced by Shri Manjit Singh in the earlier assessment years also, which have been accepted by the ITA No.192/CHANDI/2020 Assessment Year : 2012-13 M/s M. S. Continental Pvt. Ltd. Page 12 of 16 Assessing Officer/Department. 9.1 It is also undisputed fact on the file that the said amount was paid to M/s Omaxe Ltd towards sale consideration of the property purchased in the name of the assessee company. Therefore, the identity and the reasons for which the loan was advanced by Shri Manjit Singh to the assessee company and further investment of the said loan in the property, has been established. It is further pertinent to mention here that the assessee company has referred to the bank statement of Shri Manjit Singh, copy of which has been placed at page 8 to 10 of the paper-book to show that the amount of Rs.15778300/- was paid in three instalments and out of which the amount of Rs.14,600,000/- was paid on 1.09.2011 through cheque and further the amount of Rs.4,64,800/- was also paid on 02.11.2011 through cheque, the third installment of Rs.7,14,500/- was paid directly towards stamp duty etc. by Shri Manjit Singh on 05.01.2012 on the date of the registration of the sale deed which was shown as credit to the assessee company as the property was purchased in the name of the assessee company. From the aforesaid undisputed facts, there remains no doubt about the identity of the creditor and the purpose/genuineness of the transaction. 9.2 The another undisputed fact in this case, as noted by the Assessing Officer also is that the assessee company did not commence any business except that the assessee company started receiving lease rent from the property purchased by it on 05.01.2012. The assessee company did not have any other business. The property, in question, was purchased from the amount received from its directors as noted above, therefore, ITA No.192/CHANDI/2020 Assessment Year : 2012-13 M/s M. S. Continental Pvt. Ltd. Page 13 of 16 there was no question of assessee company having any unaccounted income. Therefore, the addition, under such circumstances, in the name of the assessee company on account of unexplained unaccounted income, even otherwise, is not warranted. The source of funds, admittedly, is from Shri Manjit Singh, the ex-director, promoter of the assessee company. 9.3. So far as the contention that Shri Manjit Singh has introduced his unaccounted income, in that event, the addition, if any, could be made in the hands of the director, Shri Manjit Singh and not in the hands of the assessee company. When the assessee company did not commence its business except receipt of rental income and hence, there was no source of income of the assessee company either explained or unexplained. 9.4 Further, the ld. Counsel has heavily placed reliance in this case on the assessment order passed in the case of Shri Manjit Singh, the ex-director of the company (creditor) vide order dated 28.12.2019, wherein, the assessment was reopened u/s 147 r.w.s 148 of the Act regarding the unsecured loan advanced by Shri Manjit Singh to the assessee company. The reason recorded by the Assessing Officer in the case of Shri Manjit Singh for reopening of the assessment are reproduced as under: “As per information and documents available with the department, assessee had introduced Rs.15778300/- as unsecured loan in the company M/s M.S. Continental Pvt. Ltd. during F.Y 2011-12. As per office records, the assessee has not filed his return of income for the relevant assessment year i.e. 2012-13. ITA No.192/CHANDI/2020 Assessment Year : 2012-13 M/s M. S. Continental Pvt. Ltd. Page 14 of 16 In view of the above facts, I have reasons to believe that income of Rs.15778300/- chargeable to tax has escaped assessment for the financial year 2011-12 relevant to the assessment year 2012-13 and the case needs to be reopened u/s 147. In order to assess this income and to assess any other income chargeable to tax which has escaped assessment and which comes to notice during the course of proceedings subsequently, proceedings u/s 147 are required to be initiated by way of issue of notice u/s 148 for the assessment year 2012-13.” 9.4.1 Thereafter, the assessment made u/s 143(3) of the Act and addition of Rs.2,07,04,500/- has been made in the hands of Shri Manjit Singh which included cash deposits in the bank account of Shri Manjit Singh out of which the loan was advanced to the assessee company. 9.4.2 Once the addition has been made in the hands of Shri Manjit Singh, then, under such circumstances, the source of loans in the hands of the assessee company from Shri Manjit Singh stand established. Hence, making the addition of the said amount again in the hands of the assessee company as its unexplained income would amount to double addition of the same amount, which is not sustainable in the eyes of law. 9.4.3 Further, the assessee has duly proved the source of the funds i.e. loan from Shri Manjit Singh. The assessment year under consideration is A.Y 2012-13. The amendment brought to section 68, whereby, the source of source is also required to be proved has been brought in force w.e.f. 01.04.2013. Therefore, for the year under consideration, there was no statutory duty cast upon the assessee to prove the source of source. Even otherwise as observed above, since the assessee company had no business other than the rental income of the property, in ITA No.192/CHANDI/2020 Assessment Year : 2012-13 M/s M. S. Continental Pvt. Ltd. Page 15 of 16 question, there cannot be any assumption of unexplained income of the assessee. 10. So far as the observation of the Assessing Officer that Shri Manjit Singh has sold its share in the assessee company and virtually the share in the property in question to other persons at a very nominal rate, that transaction, in our view, has no implication so far as the assessment of income of the assessee company is concerned. It was a transaction between two individuals. Shri Manjit Singh for the reasons best known to him might have sold his share in the assessee company at a lesser rate than the market rate and it may be a matter of consideration for assessing the income of Shri Manjit Singh or that of purchaser of the shares, but the said transaction of sale of shares at lesser rate by Shri Manjit Singh, would not have any implication so far as the assessment of income of the assessee company was concerned. Therefore, the question that why a foreign resident would sell his property at a lesser rate, is not detrimental for the purpose of assessment of income of the assessee company. 11. So far as the observation of the Assessing Officer that Shri Manjit Singh was not residing in India and therefore, the tax due from him could not be recovered, that cannot be a basis or excuse to make addition in the hands of the assessee company. 12. In view of the above observation, the addition made in the hands of the assessee company on the issue of unsecured loan from Shri Manjit Singh is not warranted as per law and the same is accordingly ordered to be deleted. 13. Ground No.7 is general in nature. ITA No.192/CHANDI/2020 Assessment Year : 2012-13 M/s M. S. Continental Pvt. Ltd. Page 16 of 16 14. In the result, the appeal of the assessee is treated as partly allowed. Order pronounced in the Open Court on 12 th October, 2023. Sd/- ( VIKRAM SINGH YADAV) लेखा सदèय/ Accountant Member Sd/- ( SANJAY GARG) ÛयाǓयक सदèय/ Judicial Member Dated: 12.10.2023. RS आदेशकȧĤǓतͧलͪपअĒेͪषत/ Copy of the order forwarded to : 1. अपीलाथȸ/ The Appellant 2. Ĥ×यथȸ/ The Respondent 3. आयकरआय ु Èत/ CIT 4. ͪवभागीय ĤǓतǓनͬध, आयकर अपीलȣय आͬधकरण, चÖडीगढ़/ DR, ITAT, CHANDIGARH 5. गाड[फाईल/ Guard File आदेशान ु सार/ By order, सहायकपंजीकार/ Assistant Registrar