GOVERNMENT OF INDIA

MINISTRY OF FINANCE
INCOME TAX DEPARTMENT

To,
NISCHAY SOFTWARE SOLUTIONS PRIVATE
LIMITED
Flat.No. F 1704 Aparna Sarovar Grande Apts
,Kanchi Gachibowli Road Nallagandla
*ITBA100076278978*

Hyderabad 500019 ,Telangana

India

PAN: Assessment Year: Date: DIN:

AAHCN2845C 2022-23 10/03/2024 ITBA/AST/F/143(3)(SCN)/20
23-24/1062339655(1)

Show cause Notice as to why the proposed variation should not be made

Ms/ Mr/ M/s,

Kindly refer to ongoing assessment proceedings in your case for the Assessment Year 2022-23.

2. The following variation(s) prejudicial to your interest are proposed to be made in your case:-

Details of opportunities given:

Type of notice/ Date of notice/ Date of Response Date of Response type Remarks if
communication communication compliance of the response if (Full/part/ any
given assessee received adjournment)
received/
not received

--

Notice u/s 143(2) of 02/06/2023 17/06/2023 Not received NA

IT Act

Notice u/s 142(1) of 31/08/2023 15/09/2023 Not received NA NA --

IT Act

Centralised 26/10/2023 NA Not received NA

communication letter
in nonresponsive
case

Note:- The website address of the e-filing portal has been changed from www.incometaxindiaefiling.gov.in to www.incometax.gov.in.
 AAHCN2845C- NISCHAY SOFTWARE SOLUTIONS PRIVATE LIMITED
A.Y. 2022-23
ITBA/AST/F/143(3)(SCN)/2023-24/1062339655(1)

Notice u/s 142(1) of 22/02/2024 Not received NA NA --

IT Act

--

--

2. Variation proposed:

2.1 Complete description of issues involved:

a) The assessee has for the year shown business income as per IT Act at
Rs.26,83,31,823/- and long term capital gain of Rs.8,94,71,561/- and has shown Gross total
income of Rs.35,78,03,384/- and after claim of set off of brought forward losses of
Rs.35,78,03,384/-. However from the ITR of the assessee for the earlier year it is seen that
the assessee was incorporated only in November 2020 and there was no business activity in
earlier years.

The case was selected for the scrutiny on the following issues as under :

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2.3 Summary of information/evidence collected which proposed to be used

against it:

2.3.1 Documents available on the various portals i.e., 360 degree portal, Insight portal
and e-fling portal .

2.4 Variation proposed on the basis of inference drawn:

During the course of assessemnt proceeding, notice u/s.142(1) of the I.T.Act, was
issued whrein you were asked to furnish details of nature of buisnes carried, assessee
sought adjournment online on 15.09.2023 and was granted further time. However there was
no response for substantial period and accordingly a reminder was sent on 26.10.2023 by
NfAC requesting compliance to the notice u/s 142(1). However there was no compliance and
accordingly a notice u/s 133(6) was issued to the Director Shri Sudhakar Reddy Chirra vide
notice u/s 133(6) dated 22.01.2024 requiring to provide the requisite details related to the
assessee.However there was no response to the notice and consequently a letter was again
issued on 23.02.2024 requiring to ensure compliance.

In response the assessee has filed certain details including an order from the Hon’ble
NCLT Hyderabad Bench dated 05.09.2022 indicating the demerging of the demerged
business undertaking of the company M/s Abhibus Services (India)Pvt Ltd being the
transferor company with the assessee being the resulting company and the remaining
undertaking being amalgamated with one M/s Nischay Expert Services Pvt Ltd being the
transferee company with effect from 1st April 2021.It is however seen that though the order
mentions of attachment of the balance sheet prior to the demerger/amalgamation there is no
attachment filed with the submission.

Further the assessee has filed a Business Transfer Agreement executed on 22.07.
2021 between M/s Le Travenues Technology Pvt Ltd (Purchaser) and Abhibus Services
(India) Pvt Ltd (seller) wherein the undertaking of the seller is proposed to be transferred to
the purchaser for a consideration of Rs.130,04,50,000/-. It indicates payment of sale
consideration in the form of shares of the purchaser to the extent of Rs.61,29,50,000/- at the
rate of Rs.28,731/- per share. It is further seen from the BTA that there are many
Annexures/Attachments thereto but none has been filed by the assessee alongwith the BTA.

The assessee has also filed a Non Compete Agreement between M/s Le Travenues
Technology Pvt Ltd and Abhibus Services (India) Pvt Ltd whereby the former was to pay to
Abhibus Services (India) Pvt Ltd an amount of Rs.40 crores as non compete fees.

The assessee has for the year shown business income as per IT Act at
Rs.26,83,31,823/- and long term capital gain of Rs.8,94,71,561/- and has shown Gross total

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income of Rs.35,78,03,384/- and after claim of set off of brought forward losses of
Rs.35,78,03,384/-. However from the ITR of the assessee for the earlier year it is seen that
the assessee was incorporated only in November 2020 and there was no business activity in
earlier years. Accordingly the claim of set off of losses should relate to the demerged entity
into the assessee. It is also seen that the assessee has claimed various expenses in the P&L
account which is not verifiable regarding the claims including claim u/s 40 of
Rs.11,27,36,764/- and 43B of Rs.1,75,53,475/-. Besides it is seen that the assessee has
shown net consideration from slump sale at Rs.145,65,82,700/-on the basis of fair market
value of the undertaking as per Rule 11UAE(3) of the IT Rules and the net worth has been
shown as Rs.136,71,11,139/- calculated on the basis of Rule 11UAE(2) for purpose of
computing the capital gain at Rs.8,94,71,561/-. As evident from the details of opportunities
the assessee was granted sufficient opportunities to explain the correctness of the income
shown for the year including from the purported sale of the undertaking of the demerged
entity of the entity merged into the assessee company but most of the details have not been
provided. On the basis of the details provided the following variation is proposed to the
returned Business Income and Capital gain:

1. Business Income:

a) Difference in receipts as per 26AS/TDS2 and P&L account:

It is seen from the details as per TDS2 and 26AS that the assessee is in receipt of
Rs.186,62,87,902/-. However in the receipts for the year as per ITR the assessee has shown
only the following receipts under the head Business Income:

The assessee has not provided the reconciliation of the difference between the total business

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receipts as per TDS /26AS of Rs.186,62,87,902/- and the receipts shown of Rs.
45,32,94,297/-. In view of the same an amount of Rs. 141,29,93,605/- ( 186,62,87,902-
45,32,94,297) is proposed to be added as business income of the assessee.

Penalty proceedings u/s 270A is proposed to be initiated for under reporting of income as a
consequence of misreporting of income.

b) Claim of deduction u/s 40/43B in computation of income:

It is seen from the computation of income that the assessee has claimed deduction u/s 40 of
the Act at Rs.11,27,36,764/- and u/s 43B at Rs.1,75,53,475/-. However the ITR of the
preceding year of the assessee does not indicate any turnover for the assessee to make
such claim in this year. The assessee has not provided the financials or ITR of the business
merged with the assessee and accordingly the eligibility of the same cannot be verified. In
view of the same the said claim totalling to Rs. 13,02,90,239/- is disallowed in computing the
business income.

Penalty proceedings u/s 270A is proposed to be initiated for under reporting of income as a
consequence of misreporting of income.

c) Claim of expenses on account of professional fees and consideration under BTA:

It is seen from the P&L account that the assessee has claimed Professional fees of
Rs.1,07,39,268/- and consideration under BTA of Rs.7,25,58,000/-.The assessee has not
provided any supporting for the claim and allowability of the said expenses. The
nomenclature with respect to the latter indicates that it relates to the Business Transfer
Agreement and not to the regular business of the assessee. Further considering that there
was a lot of transfer and merger related activity during the year it is not ascertainable whether
the entire professional fees relate to regular business activity. In view of the same the entire
expenditure claimed as Consideration under BTA at Rs.7,25,58,000/- and 25% of the
professional fees claimed i.e Rs.26,84,817/- is proposed to be disallowed u/s 37 of the Act as
not related to the business of the assessee. The total disallowance on this account shall be
Rs. 75242817/-(72558000+2684817).

Penalty proceedings u/s 270A is proposed to be initiated for under reporting of income.

d) Consideration claimed to be on account of sale of unit:

The assessee has for the year shown an amount of Rs.146,04,50,000/- as the fair market
value of consideration receivable for transfer of asset and the assessee has claimed the cost
of the asset transferred as Rs.1,36,71,11,139/-. However the Balance sheet of the preceding
year of the assessee does not indicate any asset of worth to be transferred . The other
documents filed indicate that there was a BTA for transfer of the entity which is stated to
have merged its part of demerged entity to the assessee. However the details including the
Balance sheet of the transferor company , details of assets/liabilities transferred to other
entity and basis of valuation etc has not been provided. In the absence of any details or
supporting the amount of Rs.146,04,50,000/- is proposed to be added as income from

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business u/s 28 of the Act.

Penalty proceedings u/s 270A is proposed to be initiated for under reporting of income.

2. Income from other sources:

a) Credit in books on account of intangible asset at Rs.154,55,00,000/-:

The assessee has in the balance sheet in its assets credited an amount of
Rs.154,55,00,000/- as intangible asset. The basis of the same is not ascertainable and
accordingly the amount incurred for acquisition of the same is proposed to be added as
unexplained expenditure u/s 69C of the Act.

Penalty proceedings u/s 271AAC is proposed to be initiated for the same.

b) Income u/s 56(2)(x) of the IT Act.

It is seen from the balance sheet of the assessee that it is shown to have made investment in
unlisted equity shares at Rs.69,29,47,154/-. The limited documents filed indicate a mention
of the same in the BTA between M/s Le Travenues Technology Pvt Ltd (Purchaser) and
Abhibus Services (India) Pvt Ltd (seller) wherein the undertaking of the seller is proposed to
be transferred to the purchaser for a consideration of Rs.130,04,50,000/- and part of sale
consideration in the form of shares of the purchaser to the extent of Rs.61,29,50,000/- at the
rate of Rs.28,731/- per share. However no details have been provided as to how the same
ahs devolved to the assessee. Moreover the fair market value of the shares transferred has
not been substantiated and accordingly it is not ascertainable as to whether the rate of
Rs.28,731/- is the correct fair market value of the shares after the transfer of the demerged
unit to the company which has allotted the shares. In view of the same the Fair market value
of the shares is proposed to be estimated at 25% higher than the value shown by the
assessee and an amount of Rs. 17,32,36,789/- is proposed to be added u/s 56(2)(x) of the
Income tax Act under the head income from other sources.

3. Claim of set off of losses:

The assessee has for the year claimed set off of brought forward losses of Rs.35,78,03,384/-
against the income for the year. It is however seen from the ITR of the assessee for the
earlier year that there was no major activity and no losses for set off. Accordingly the losses
in all probability pertains to the demerged business entity. However there are various criteria
to be fulfilled for eligibility of such set of of losses of other undertakings including compliance
of the provisions of section 72A/79 of the Act. As you have has not provided any details to
substantiate that the conditions for allowability of the brought forward losses of the other
entity has been fulfilled the claim of set off of brought forward losses of other entity,
Therefore, you are given a show cause why the claim of set off of brought forward losses of
other entity same should not be disallowed.

Penalty proceedings u/s 270A is proposed to be initiated for under reporting of income.

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You are hereby given an opportunity to show cause why proposed variation should not be made and
the assessment should not be completed accordingly.

3. Kindly submit your response through your registered e-filing account at www.incometax.gov.in by
11:00 hours of 15/03/2024, whereby you may either:-

a. accept the proposed variation; or

b. file your written reply objecting to the proposed variation; or
c.If required, in addition to filing written reply you may request for personal hearing so as to make oral
submissions or present your case. The request can only be made by clicking the Seek Video
Conferencing button available against the SCN , in the view notices of this proceeding in the e-
proceedings tab on efiling portal. The request can be made only before expiry of compliance date &
time through video conference.

4. In case no response is received by the given time and date, the assessment shall be finalized taking
into account the variation(s) stated above.

Assessment Unit
Income Tax Department

Digitally signed by
ASSESSMENT UNIT, INCOME
TAX DEPARTMENT
Date: 10-03-2024 17:37:30 IST
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