TMI Blog2019 (6) TMI 1290X X X X Extracts X X X X X X X X Extracts X X X X ..... e the AO, the photo copy of the said documents cannot be summarily brushed aside and ignored in order to draw the adverse inference against the assessee company. Key management personnel of Aanya Properties (I) Ltd. is stationed at Mauritius and merely because of his non-appearance before the AO, no adverse inference could be drawn against the receipt of preference share capital by doubting the veracity of the same, without rebutting various documentary evidences that are already available on record. Since this is more of a factual issue, we do not deem it fit to adjudicate the various decisions relied upon by the ld. AR before us. There is no need for setting aside of this appeal to the file of the AO as prayed by the ld. DR as it would only tantamount to giving second innings to the AO, which in our considered opinion, would not serve any purpose, as no second view is possible in the instant case and as these details were already before the AO. No infirmity in the order of the CIT(A) who had appreciated the entire facts and documentary evidences available on record, granting relief to the assessee. - Decided against revenue - ITA No.6202/Mum/2016 - - - Dated:- 19-6-2019 - ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the said documents which could not be produced by the assessee before the ld. AO. The ld. AO further directed the assessee to produce the key management personnel of the investor company from Mauritius to be personally present for his examination, which could not be complied with by the assessee. Based on this, the ld. AO proceeded to make the addition by treating in respect of paid up preference share capital of ₹ 8,02,81,790/- as unexplained cash credit u/s.68 of the Act by observing as under:- 5.4 The reply and documentary evidence submitted by the assessee are carefully perused. However, same are not acceptable on the following grounds; a. The assesee has submitted Xerox copies of alleged confirmation, bank account statement, certificate of incorporation, memorandum of association of M/s. Aananya Properties (1) Ltd. b. Since all the documents mentioned above were issued by foreign authorities therefore the assessee was asked to produce original documents to ascertain the genuineness of above stated documents. In response, the assessee has stated that since said documents are with the foreign entities / individuals t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s connection it is to be noted that the banks are not examining the source, legality, allowability of funds, nature of transaction and identity of the funds transferor. The bank is only medium of transfer of funds through which funds travel from one account to another. h. It is observed from the details filed by the assessee that though M/s. Aananya Properties (1) Ltd. has invested fairly large amount in Foreign Country i.e. India, it has given care of address. Which indicates that it do not have its own office. i. It is observed from the bank account statement of an account held by M/s. Aananya Properties (1) Ltd. with MSEC that the entries highlighted as alleged payment made to the assessee are in the name of M/s.Opulent Realtors Pvt. Ltd. as a payee. Thus the bank account statement, submitted by the assessee also do not support the assessee's contention. j. Further, section 68 of the I. T. Act, 1961 provides for additions to total income if..... a. Any sum found credited in the books of accounts maintained for any previous year, b. Assessee offers no explanation about the nature an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or condonation of Delay in FDI and copy of compounding application to CEFA cell of Reserve Bank of India (Annexure 9(i) of paper book) ix. The proof of basis of share premium amount in the Form of Certificates by a Chartered Accountant. (Annexure 3(xxxiv) of paper book) x. Financial statement ofAanya Properties (I) Ltd. reflecting such investments and source of funds (Annexure 8(iii) to 8(xxxv) of paper book) xi. Shareholding list of the Appellant company (Annexure 2(xviii) of paper book) xii. Shareholding list of Aanya Properties (I) Ltd. (Annexure 8(ii) of paper book) xiii. List of ultimate beneficiary owners of Aanya Holdings Ltd (Mauritius) (Annexure 8(iii) of paper book). This company holds 100% shares of Aanya Properties (I) Ltd. which in turn holds shares in the Appellant company which is subject of dispute before your honour. 3.3. The ld. CIT(A) placed reliance on the following decisions:- a. Hon ble Delhi High Court in the case of CIT vs. Shivdhooti Pearls and Investment Ltd. reported in 64 Taxman 329. b. Hon ble Delhi High c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the necessity to record reasons is greater, for without recorded reasons the appellate authority has no material on which it may determine whether the facts were properly ascertained, the relevant law was correctly applied and the decision was just. 2.4.9 On weighing the pros and cons, I am of the considered view that Ld. AO has given a go by to the known canons of jurisprudence by completely ignoring the evidence produced by the appellant. He has not even adverted to the fact that RBI had taken cognisance of the Form-FCGPR. I find that, though not required, the appellant has, in fact, given the source of source and hence, the addition made by the Ld. AO cannot stand the test of legal scrutiny. I am also fortified in my above view by the decision of the Hon'ble Bombay High Court in the case of Commissioner of Income-tax v, Tania Investments (P.) Ltd 322 ITR 394 (Bom) and the Hon'ble Mumbai Bench of ITAT in the case of Income-tax Officer 9(1)-1 v. Anant Shelters (P.) Ltd [2012J 20 taxmann.com 153 (Mum.) 2.4.10. It is also seen that the Hon'ble Mumbai Bench of ITAT was seized of the issue of cash credit from a foreign country in t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y upon it for establishing the identity of the shareholders as well as the genuineness of the transactions. As such, the Tribunal confirmed the findings of the CIT(A) and deleted the addition which had been made by the AO. It is obvious that the findings returned by the CIT(A) as well as the Tribunal are pure findings of fact and no question of law arises on this issue. 2.4.12 In the case of CIT vs Peoples General Hospital ltd. [2013] 35 taxmann.com 444 (Madhya Pradesh), Hon'ble High Court confirmed the deletion of addition on the basis of the fact that the foreign company was not found to be a bogus company and that the money was transmitted through banking channels. In doing so, it was, inter alia, held as under: 'In the case of CIT v. Lovely Exports (P.) Ltd. [Application No. 11993 of 2007, dated 11-1-2008], the Apex Court specifically held that if the identity of the person providing share application money is established, then the burden is not on the assessee to prove the creditworthiness of the said person. However, the department can proceed against the said, company in accordance with law. [Para 16] The posi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the ld. AO for de novo adjudication. Per contra, the ld. AR vehemently objected for setting aside of this issue in as much as the entire details were duly furnished by the assessee before the ld. AO and before the ld. CIT(A) and the ld. AO had not bothered to even mention the list of documents submitted to explain the main three ingredients of Section 68 of the Act and the veracity of the transactions. He vehemently objected for giving second innings to the ld. AO for looking into the very same set of documents. He also argued that the ld. CIT(A) had duly appreciated the entire documents together with its supporting evidences that were before him on record. He placed reliance on the finding of the ld. CIT(A) in para 2.4.9 that the assessee in this case had also explained source of source. The ld. AR argued that the entire evidences submitted by the assessee explaining the credentials, identity and genuineness of the transactions of the investor company were simply brushed aside by the ld. AO on the ground that the same were merely photo copies and not originals. Even the funds which had come under the Foreign Direct Investment (FDI) route after obtaining proper clearances and appr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rence share capital was also received and credited in the bank account of Opulent Realtors Pvt. Ltd. He stated that there could not be any infirmity in the said action thereby leading to drawing adverse inference in the hands of the assessee company. The ld. AR defended the arguments of the ld. DR that money was received only from Aanya Properties (I) Ltd., and not from Opulent Realtors Pvt. Ltd., as wrongly understood by the ld. AO and by the ld. DR. The ld. AR further argued that no deficiencies whatsoever were found on the documentary evidences as illustrated supra were found by the ld. AO. The ld. AR further placed reliance on the decision of the Hon ble Jurisdictional High Court in the case of CIT vs. Gagandeep Infrastructure Pvt. Ltd. reported in 394 ITR 680; PCIT vs. Paradise Inland Shipping P. Ltd. reported in 400 ITR 439(Bom) and decision of Hon ble Delhi High Court in the case of CIT vs. Russian Technology Centre (P) Ltd. 300 CTR 501 which in turn approved the two Tribunal decisions of Delhi Tribunal reported in 155 TTJ 316 and 193 TTJ 565 among other decisions. 5.2. We have heard rival submissions. The facts stated herei ..... X X X X Extracts X X X X X X X X Extracts X X X X
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