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2021 (8) TMI 926 - AT - Income TaxAddition u/s 68 - unexplained cash credit - amount received by the assessee from the NRIs - creditworthiness of the parties who have subscribed the shares of the assessee company - HELD THAT:- On making the reference to the average conversion rate of the dollar into Indian currency, on the basis of information available on Google as applicable for the year 2011 and 2012. The return of income in Indian currency works out at ₹ 2,25,14,877/- only ( $ 2,20,215* ₹ 47 + $ 2,29,524* ₹ 53) for Shri Mayur Patel and ₹ 1,29,44,382/- only for Shri Vimal Patel. Based on these documents, we can draw an inference that there were sufficient funds available with these investors namely Shri Mayur Patel and Shri Vimal Patel for acquiring the shares of the assessee company. Accordingly, we do not find any infirmity in the order of the learned CIT (A) for the deletion made by him with respect to these two investor. Coming to the remaining three investors namely Shri Divyesh Patel, Ketu Patel and Rima Patel who have subscribed shares of the assessee company. In this connection we note that the assessee has not filed any copy of the income tax return filed by them in their country of residence i.e. USA. Likewise, the assessee has also not filed the bank statement of these parties maintained by them in their country of residence except the NRE accounts maintained in India. Admittedly, all the transactions were routed through the banking channel i.e. NRE account. In this regard, we find that there is a circular issued by the CBDT bearing number 05 of 1969 dated 20-02-1969 wherein it was instructed that there cannot be any tax liability on the amount remitted by the NRI in India for investment in India Thus the amount received by the assessee from the NRIs in the manner as discussed above cannot be treated as unexplained cash credit under the provisions of section 68 of the Act. Accordingly, there is no question for treating the amount of share capital received by the assessee as unexplained cash credit under section 68 - Appeal of the assessee is allowed.
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