TMI Blog2019 (1) TMI 16X X X X Extracts X X X X X X X X Extracts X X X X ..... by non-residents for investment or other purposes is not liable to Indian Income Tax. In this view of the matter, the Ground of the assessee is allowed. - ITA No. 279/JP/2018 - - - Dated:- 19-7-2018 - Shri Vijay Pal Rao, JM And Shri Bhagchand, AM For the Assessee : Shri S.L. Poddar, Advocate and Ms. Eisha Kanoongo, Advocate For the Revenue : Shri A.S. Nehra, JCIT - DR ORDER PER BHAGCHAND, AM The appeal filed by the assessee emanates from the order of the ld. CIT(A)-3, Jaipur dated 24-01-2018 for the Assessment Year 2013- 14 raising therein following grounds of appeal. 1. That under the facts and circumstances of the case, the ld. CIT(A) has erred in deciding the appeal ex-parte whereas no notice was served to the assessee or to the counsel of the assessee. 2. That under the facts and circumstances of the case the ld. CIT(A) has erred in confirming the addition of ₹ 85,23,000/- u/s 68 of the I.T. Act, 1961. 3. That under the facts and circumstances of the case, the ld. CIT(A) has erred in invoking the provisions of section 115BBE of the I.T. Act, 1961. 4. That under the facts and circumstances of the case the ld. CIT(A) has err ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o. Ltd. Vs. CIT (1998) 229 ITR 383 (SC) - Tribunal has jurisdiction to examine a question of law which arises from the facts as found by the authorities below and having a bearing on the tax liability of the assessee, notwithstanding the fact that same was not raised before the lower authorities. (ii) CIT Vs. Raoraia Hanut Singh 117 Taxman 613 / 252 ITR 0528 : (Raj) - The position is that the Tribunal can admit the additional evidence if it requires it to enable it to pass orders. (iii) Electra (Jaipur) Pvt. Ltd. Vs. IAC 26 ITD 236 - If evidence produced by assessee is genuine, reliable and proves assessee's case than assessee should not be denied opportunity of it being produced even if he first time produces same before appellate authority. (iv) Smt. Prabhavati S. Shah Vs. CIT 231 ITR 1 (Bom.) - Production of additional evidence - assessee taking loans from two creditors - ITO treating loans as income from undisclosed sources as summons could not be served on creditors - Assessee wanting to prove genuineness of loan by relying on fact that amount borrowed and repaid by cheques. Assessee producing Photostat copies of cheques and certificate from Bank before AAC ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is engaged in the liquor business. The assessee company filed its return of income on 19-09-2013 for the Assessment Year 2013-14 declaring total income of Rs. Nil and has also declared current year loss of ₹ 50,19,763/-. The AO completed the assessment on 16-03-2016 u/s 143(3) of the Act determining total income of ₹ 85,23,000/- inter alia making the addition of ₹ 85,23,000/- u/s 68 of the Act. The relevant observations of the AO are as under:- 4.2 The reply filed by the assessee has been gone through and is placed on record. In this regard, it is hereby stated that Shri Jagjit Singh Urf Shri Jeetji who is one of the investor for share capital and security premium amounting to ₹ 85,23,000/- in the year under consideration, the assessee company has filed that Shri Jagjit Singh owns a single Director company in the name of Quick Forex Transfer Limited wherein he is the only share holder. On perusal of the notes to the financial statement for the year ended 31-08-2013 31-08-2014 in the case of Quick Forex Transfer Limited, it is seen that under the head reconciliation of movements in shareholder s fund, the earned profit of the company is 12065 GBP and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o offer any explanation for submission in support of the grounds raised in this appeal nor any supporting evidences were produced by him despite adequate opportunity having been provided. In this connection, reliance may be placed upon the decision of the Hon'ble Supreme Court in the case of H.M. Esufali Abdulali (1973) 90 ITR 271 wherein the Hon'ble Court has held that the appellate authority cannot substitute its own judgement in place of the judgement of the AO unless it is shown that the judgement of the AO was biased, irrational, vindictive or capricious. In the instant case, the appellant is not able to show that the decision of the AO was arbitrary, biased, irrational, vindictive or capricious without any basis, I find no reason to interfere with the decision of the AO. 5. In the result, the appeal is dismissed. 5.2 During the course of hearing, the ld.AR of the assessee prayed for deletion of addition sustained by the ld. CIT(A) amounting to ₹ 85.23 lacs u/s 68 of the Act for which the ld.AR of the assessee filed the following written submission. The assessee is a private limited company and is engaged in the liquor business. Return ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the confirmation is available on paper book page number 8. Thus to summarize the assessee furnished the following in support of the genuineness of share application money before the Learned Assessing Officer: - (i) Copy of passport of Shri Jagjit Singh Gabha evidencing that he is a NRI R/o 55, Woodlands Road, Southall, UBI 1EJ, London Pasport No. 508223849. This establishes the existence and identity of the share applicant. (ii) Copy of driving license of Shri Jagjit Singh Gabha available on paper book page number 1. Thus further supports the existence and identity of the share applicant. (iii) Confirmation in support of share application money of ₹ 85,23,000/- which discloses that the entire amount were through banking channels. This establishes the genuineness of the transaction. (iv) Copy of HDFC Bank Account no. 156210660000188, Mansarover Garden, New Delhi which further establishes that the entire amount of share application of ₹ 85,23,000/- flowed/transacted through this bank account. (v) Copies of financial statement of the company owned by Shri Jagjit Singh Gabha as one person company namely Quick Forex Transfer Ltd for the period en ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by him i.e. Quick Forex Transfer Ltd. Thus the assessee has also made compliance of proviso to section 68. In view of this it is submitted that the addition made by the Learned Assessing Officer has erroneously confirmed by the Learned CIT(A) deserves to be deleted. 4. Favbourable case laws: - The assessee further places reliance on the following decisions of the wherein in similar circumstances share application money has been accepted as genuine and additions made by the revenue were deleted: - (i) CIT vs. Bhaval Synthetics (2013) 84 DTR 449 (Raj) The learned counsel for the respondent-assessee submits that the question as formulated does not even arise in this case because it remains settled with the consistent decisions of the Courts that even in case of doubt about subscribers to the increased share capital, the amount of share capital cannot be regarded as undisclosed income of the company. The learned counsel has referred to the decision in the case of Shree Barkha Synthetics Pvt. Ltd (supra) wherein this Court has noticed that in Steller's case [(2001) 251 ITR 263],the Hon'ble Supreme Court has affirmed the view of Delhi High Court in the c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y and the existence of the investor has not been disputed, no addition on account of share application money in the name of such investor can be made in the assessee's hands. In respect of the share application money received from investors, the assessee company has only to provethat the existence of the persons in whose name share application is receive. No further burden is cast upon the assessee to prove that person himself has invested the said money or some other person made investment in his name. (iv) CIT vs Divine Leasing and Finance Ltd .299 ITR 268 SC :- The assessee has to prima facie prove the (1) identify of the creditor / subscriber; (2) the genuineness of the transaction, namely whether it has been transmitted through banking or other indisputable channels; (3) the creditworthiness or financial strength of the creditor / subscriber; (4) if relevant details of the address or PAN identity of the creditor/ subscriber are furnished to the Department alongwith copies of the shareholders register, share application forms, share transfer register etc. it would constitute acceptable proof or acceptable explanation by the assessee (5) the Department would not be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ding that the assessee has neither offered any explanation in support of the grounds raised before him nor filed any supporting evidence to support his contention during the course of hearing. During the course of hearing, the ld.AR of the assessee submitted that at the time of assessment proceeding, the share applicant was not in India and was residing in abroad. Therefore, the assessee could not produce the bank statement. Now the assessee has obtained all the bank statement vide paper book pages 10 and 11 and further submitted that the additional evidence being furnished are only of supporting and supplementary nature but these go to the root of the matter in support of the share application money. The ld.AR of the assessee further submitted that the additional evidences are crucial for the discharge of justice. During the course of hearing the ld.AR of the assessee relied on the CBDT Circular No. 05 dated 20th Feb. 1969 (Direct Tax Online) wherein it is mentioned that money brought into India by non-resident for investment or other purposes is not liable to Indian Income-tax. Therefore, there is no question of a remittance into the country being subjected to Income-tax in I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t only with reference to those amounts whose origin of source can be located in India. Therefore, the provisions of section 68 or or 69, in our opinion, have limited application in the case of nonresident. The ld.AR of the assessee further relied on the Hon'ble Delhi High Court judgement dated 15-12-2016 on the similar issue in the case of CIT vs Russian Technology Centre (P) Ltd. (ITA No.547, 549, 555/2013) wherein the Hon'ble High Court affirmed the judgement of the Trubunal by holding as under:- 13. In view of the above, this Court is of the view that the conclusion of the Tribunal in deleting the additions made cannot be faulted. Accordingly, the questions of law are answered against the Revenue and in favour of the assessee. The order of the Tribunal is, therefore, affirmed. The ld.AR of the assessee further relied on the decision of Madhya Pradesh High Court in the case of CIT vs M/s. Peoples General Hospital (MAIT No. 27/2008 dated 27 June 2013) wherein the Hon'ble Court dismissed the appeals of the Revenue as to the matter of proving the identity and creditworthiness of the person providing share application money. The relevant observation ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not applicable as the amount received is from assessee's own account outside India and no income has accrued or arisen in India. These funds were also received through banking channel with necessary statutory approvals. Therefore, assessee has proved the source of receipts and discharged the onus. It is the Revenue which failed in proving that this amount is unexplained income of assessee. In view of these facts of the case, we are of the opinion that various case laws relied on by the Revenue does not apply and they are clearly distinguishable. In view of this, we have no hesitation in upholding the order of the CIT(A) and rejecting the Revenue s grounds. 20. In the result, appeal of the Revenue is dismissed. It is also pertinent to mention that the assessee has filed the following documents in support of his contentions. (i) Copy of Driving License of Shri Jagjit Singh (PBP 1- 2) (ii) Copy of Passportof Shri Jagjit Singh (PBP 3-7) (iii) Confirmation of amount of ₹ 85.23 lacs with respect to share application money (PBP 8) (iv) Bank Statement of Shri Jagjit Singh Ghaba for the period31-03-2012 to 31-03-2014 showing relevant transactions with HDFC B ..... X X X X Extracts X X X X X X X X Extracts X X X X
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