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2022 (11) TMI 223 - AT - Income TaxAddition u/s 68 - unexplained cash credit - Share premium received from foreign investor - HELD THAT:- The share capital premium to the extent of Rs.63,32,28,987/- pertained to earlier years; and the nature & source of the same had already been examined and verified in the income tax assessments for the earlier years, and therefore the same is directed to be deleted, since no addition u/s 68 of the Act was legally permissible in the relevant AY 2018-19. Share premium received from the founder promoter, Mr. Anuj Rakyan it is noted that the assessee has discharged its burden of proving his identity, genuineness and creditworthiness, and both the lower authorities could not find any defects or fault therein and therefore the aforesaid addition is also directed to be deleted. Share premium received from three (3) foreign investor, we once again deprecate the inaction and non-application of mind to the facts of the case by the lower authorities, particularly when the revenue has accepted the identity and genuineness of these investors in the past years. Having held so, we also cannot lose sight of the fact that the assessee by their own admission was unable to provide all the primary evidences Viz, income tax returns, bank statement, etc of the foreign investors concerning the relevant year for verification. Understandably, these foreign investors are of repute and given the fact that the assessee was only as start-up, it may not be in a position to obtain from them all relevant documents, as desired by the AO/NFAC. However, this cannot absolve the foreign investors from verification of their creditworthiness by the income tax authorities. In our humble opinion, the right course of action for the revenue was to make independent enquiries from these investors through appropriate channel such as FT & TR etc, particularly when such manner and line of enquiry had already been laid down by the CBDT in their SOP dated 19.11.2020 or from the AO’s of the respective foreign investors. I Revenue ought not to have simply pushed the entire burden on to the assessee to provide the details and documents of foreign share holders, particularly when the CBDT empowered them to make independent enquiries from them. With these observations, we set aside the addition to the extent being the share premium received from foreign investors back to the file of the AO/NFAC for de-novo assessment in respect of the credit in assessee’s book, in a fair and reasonable manner and in accordance to law. Needless to say, the assessee shall be provided with reasonable opportunity of being heard. As the share premium relating to Ms. Jaqualine Fernandez is concerned, in the light of the facts discussed (supra) in respect of Ms. Jaqualine Fernandez, AO/NFAC is directed to confine their inquiries only to the genuineness of the arrangement by enquiring as to whether the agreed consideration had indeed been subjected to Goods Service Tax [GST] and TDS, as claimed by the assessee; and also the manner in which the consideration has been accounted by the assessee and the share-holder in their respective books. If the arrangement is found to be in accordance to law, then no addition shall be made on this count. The AO/NFAC may make enquiries directly from the share-holder as well, but at the same time, AO/NFAC shall allow sufficient opportunity of being heard to the assessee. Appeal of the assessee is partly allowed for statistical purposes
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