TMI Blog2019 (4) TMI 198X X X X Extracts X X X X X X X X Extracts X X X X ..... Tribunal in its own case as well as in the case of Mr. Suresh Nanda [2015 (5) TMI 938 - DELHI HIGH COURT]. Therefore, there is no justification to make the addition against the assessee-company. - decided in favour of assessee. - ITA.No.5629 & 5630/Del./2013 - - - Dated:- 27-3-2019 - Shri Bhavnesh Saini, J.M. And Shri O.P. Kant, A.M. For the Assessee : Shri Ajay Wadhwa, Advocate. For the Revenue : Shri Surender Pal, Sr. D.R. ORDER PER BHAVNESH SAINI, J.M. Both the appeals by Revenue are directed against the different orders of the Ld. CIT(A)-1, New Delhi dated 5th August 2013, for the assessment years 2008-2009 and 2009-2010, challenging the deletion of addition of ₹ 7,92,19,406/- and ₹ 2,34,96,795/- respectively, made by the assessing officer on account of unexplained share application money received from the Holding Company M/s. Palm Technologies (P) Ltd., Mauritius. 2. We have heard the Learned Representatives of both the parties and perused the material available on record. 3. Learned Representatives of both the parties mainly argued in assessment year 2008-2009 and have submitted that the issue is same in assessment year 2009- 20 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . vi. Valuation certificated dated 05.08.2008 issued by the Chartered Accountant along with Annexure-A. vii. Copies of the Annexure-II Ill forming part of Form No. FC-GPR. 4.1. The assessing officer on perusal of the balance sheet of M/s. Palm Technologies (P) Ltd., Mauritius noted that it had reflected investments of US $ 5745000 in subsidiary companies as on 31st March 2008. He has further noted that the said company has shown profit of US $ 7833 during the period. Assessing officer after analysing the balance sheet as on 31st March 2008 further noted as under : a. Non Current Assets Year ending on 31.03.2008 Year ending on 31.03.2007 Investment in subsidiary companies US $ 5,745,000 US $ 4,083,929/- b. Non Current Liabilities Year ending on 31.03.2008 Year ending on 31.03.2007 Borrowings US $ 54,56,197 USD 4,110,922 c. The share capital of the company has remained unchanged at US $ 1001. 4.2. The assessing officer in view ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ch shows its current liabilities from UBS Trading FZC and Y2KSIL. During the course of assessment proceedings, the balance sheet of M/s. Palm Technologies (P) Ltd., Mauritius for the year ending 31st March 2008 was submitted. The following tables depicts the balance sheet as under : Assets USD Non current assets Investment in subsidiaries 57,45,000/- 57,45,000/- Current assets Trade and other receivables 4,13,294/- Cash and Bank balance 8,657/- 4,21,951/- Total assets 61,66,951/- Equity and Liabilities Capital and Reserves Share Capital 1,001/- Revenue reserves (22,891/-) Shareholders interests ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 3; Page no. 35 Annexure No. A-8 seized from the residence of Mr. Suresh nanda-4, Prithvi Raj Road New Delhi. This is draft of a letter issued by Mr. Suresh Nanda from Dubai to M/s Infotech Services Ltd., Jersey, Channel Islands where it has been written that shareholders of UBS Trading FZC are 1% - M/s ISL and 99% - Suresh Nanda. In this letter it is written that M/s UBS FZC will declare an interim dividend of USD 4.5 millions which will go toward capital contribution in UBS Mauritius. This draft is indicative of ownership of Mr. Suresh Nanda of UBS Mauritius as well as UBS Trading FZC, UAE. Page no. 36 Annexure No. A-8 seized from the residence of Mr. Suresh Nanda-4, Prithvi Raj Road New Delhi., This is again draft of letter prepared by Mr. Suresh Nanda from Dubai requesting UBS Trading FZC dated 31st May, 2004 requesting them to declare an interim dividend of USD 50 lacs and direct such payments to the account of Mideast Consortium, S.A. which is a co-investor in UBS, Mauritius. Page no. 76 Annexure No. A-8, seized from the residence of Mr. Suresh Nanda-4, Prithvi Raj Road New Delhi. This is a draft letter written to M/s UBS Trading FZC for declaring f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion of Mr. Suresh Nanda with Y2KSIL which is evident from the document seized during the course of search operation under Income Tax Act conducted on the premises belonging to Mr. Suresh Nanda, details of the same are noted in the assessment order. Based on these facts, assessing officer held that assessee-company has been bringing unaccounted money after creating layers of intermediaries including M/s. Palm Technologies (P) Ltd., Mauritius due to less stringent exchange control norms there. The intermediaries have merely provided the names. The true source of funds has not been disclosed before the Income Tax Authorities. Since the assessee-company is an ultimate beneficiary of these unaccounted funds. Hence, the receipts were treated as unexplained in the hands of the assessee and addition of ₹ 7,92,19,406/- was made in assessment year under appeal. 5. The assessee challenged the addition before Ld. CIT(A) and it was submitted that similar addition has been deleted by the Ld. CIT(A) in assessment year 2004-2005 and also relied upon order of ITAT, Delhi Bench in the case of M/s. Russian Technologies Private Limited. Assessee, therefore, pleaded that the issue is ident ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has quashed the assessment order being barred by limitation vide order dated 28th September 2017. Learned Counsel for the Assessee submitted that if Mr.Suresh Nanda made the money available as per the contention of the Department, no addition could be made in the hands of the assessee. Learned Counsel for the Assessee referred to Para 2.5 of the assessment order, in which, the Government has made a reference to Government of Mauritius through Director General of Income Tax (Inv.) making inquiries against the Investor Company, on which, several details were asked for and the Government of Mauritius has filed a reply to the Government confirming the source of the funds and also confirmed the investment made by the Investor Company. He has, therefore, submitted that assessee has explained the source of the investment from M/s. Palm Technologies (P) Ltd., Mauritius which in turn taken it from loans/ shareholders loans. Learned Counsel for the Assessee, therefore, referred to Page-5 of the assessment order, in which, it is highlighted by the assessing officer that the Investor Company has the source of money to make the investments from M/s. UBS Trading FZC and Y2KSIL. How they go ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... w. Learned Counsel for the Assessee referred to PB-2-52 which is order of ITAT, Delhi G-Bench in the case of Mr Suresh Nanda in ITA.Nos.2237 3718, 3431 4641/Del./2013 dated 11th April 2014, in which, similar addition has been deleted in the hands of Shri Suresh Nanda. Para-70 of the order is reproduced as under : 70. Ground No. 4 relates to addition made on protective basis. We find that Ld CIT(A) has clearly held that share capital was subscribed Palm Technologies Ltd. which is a separate entity. Ld. CIT(A) held by a clear finding that the capital did not belong to assessee but to a distinct entity whose existence is not denied. After giving such dear finding, he should not have given finding about addition on protective basis. Palm technologies Ltd. and assessee are held to be two different persons. The CIT(A) has held that ownership of Palm Technologies Ltd is known and appellant was not a shareholder in Palm Technologies which was owned by One Mrs. EA Half land. It is undisputed that both UBBS and PTL are duly incorporated companies under the laws of Sharjah and Mauritius respectively. The Ld CIT(A) has himself observed that this amount cannot be held as un-e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ither creditworthy nor genuine. The assessee relied upon the documents to prove that the monies had been received through banking channels from its principal and other related companies: it had submitted the FIPB Approval dated 10.12.2005 authorizing the assessee company to raise capita! unto '600crores. copy of certificates of incorporation of share holders, copy of bank statement copy of Form 2 filed before ROC, copies of Certificates of (i) Incorporation of RTCHL, (ii) Incumbency of RTCHL, (iii) Good Standing of RTCHL. (iv) Director Certificate of RTCHL as well as the Balance Sheet of RTCHL for the years 2004-05 and the confirmation given by the remitters towards remittance of share capita! etc. This was all that the assessee could have furnished in the circumstances. It could not be expected to prove the negative that the monies received by it were suspicious or not genuine infusion of capital etc. The assessee had discharged its burden of proof in terms of the settled dicta in Divine Leasing (supra). It is only logical to expect that if the AO was not convinced about the genuineness of the said documents, he would have inquired into their veracity from the banks) to ascert ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bmitted that the issue is covered in favour of the assessee by the order of ITAT, Delhi Bench in the case of assessee as well as in the case of Mr Suresh Nanda and M/s. Russian Technologies Pvt. Ltd., (supra). Apart from the above, the Learned Counsel for the Assessee also relied upon the following decisions : 1. Commissioner vs. Orissa Corporation Ltd. reported in (1986) 159 ITR 78 (SC) 2. CIT vs. M/s Pondy Metal and Rolling Mill in ITA No. 788/2006 3. CIT vs. Diamond Products Ltd. [2009] 177 Taxman 331 (Delhi) 4. CIT vs. Flex Plastic Packaging (P.) Ltd. [2007] 211 CTR 607 (Delhi) 5. PCIT vs. Paradise Inland Shipping (P.) Ltd. [2017] 84 taxmann.com 58 (Bom). 6. CIT vs. Lalit Kumar Poddar (2015) 231 taxman 819 (Delhi). 7. CIT Vs. Gangeshwari Metal (P.) Ltd., reported in 361 ITR 10 (2014). 8. Dolphin Canpack Ltd., reported in 2004 CTR 50. 9. CIT vs ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... officer made similar addition against the assessee-company in assessment year 2004 2005 and the Ld. CIT(A) deleted the addition. The order of the Ld. CIT(A) have been confirmed by the ITAT, by dismissing the Departmental Appeal, though, on the ground that the assessment order is time barred. The finding of fact recorded by the Ld. CIT(A), have been confirmed by the Tribunal by dismissing the Departmental Appeal. No distinguishing fact or evidence have been pointed-out by Ld. D.R. as to how case of Revenue is different from earlier years. In assessment year under appeal, based on the same facts, the assessing officer made certain inquiries with regard to source of the money and sought information from the Government of Mauritius, who have supplied certified copies of the balance sheet and income statement for earlier years as well as for assessment year under appeal, in which, it is clarified that the Investor Company has made investment in assessee-company through its own sources. The assessee-company filed Tax Residence Certificate issued by the Tax Department of Government of Mauritius, Certificate issued by Registrar of Companies, Letter addressed to Reserve Bank of India and Fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y ITAT on substantive basis and the Order is confirmed by the Hon ble Delhi High Court, therefore, the issue is covered in favour of the assessee by the Order of the Tribunal in its own case as well as in the case of Mr. Suresh Nanda (supra). Therefore, there is no justification to make the addition against the assessee-company. No cash was found routed by any person related to this transaction. The assessing officer cannot ask the assessee-company to prove source of the source. We, rely upon the Judgment of the Hon ble Gujarat High Court in the case of Rohini Builders 256 ITR 360 (Guj.), and Judgment of Hon ble Delhi High Court in the case of Dwarakadheesh Investment Pvt. Ltd., 330 ITR 298 (Del.) and Judgment of Hon ble Allahabad High Court in the case of Zafar Ahmed Co., 30 taxmann.com 269 (Alld.). However, in the present case, the assessee-company has even explained the source of the source. The Hon ble Madhya Pradesh High Court in the case of CIT vs. Peoples General Hospital Ltd., [2013] 356 ITR 65 (MP) has admitted the following substantial question of Law in one of the appeal : (i) Whether the Income-tax Appellate Tribunal was correct in law in deleting the addit ..... 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