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TMI Blog2014 (2) TMI 1383X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee to furnish details to prove the said credit in terms of the provisions of sec. 68 of the Act, i.e. to prove the identity, genuineness and credit worthiness of the creditor. The AO also asked the assessee to furnish copies of necessary approval obtained from Reserve Bank of India and Registrar of Companies. The assessee furnished copies of incorporation certificate of M/s Great Valley P Ltd, certificate of Foreign Inward remittance issued by HDFC bank. On examination of the details filed by the assessee, the AO took the view that the assessee has only proved the identity of the company and the details of flow of money through the banking channels and it has failed to prove the credit worthiness of M/s Great Valley P Ltd in terms of sec.68 of the Act. Hence, the AO added the amount of Rs. 21.76 crores to the total income of the assessee treating the same as unexplained cash credit u/s 68 of the Act. 3.1 Before the ld CIT(A) the assessee filed certain additional evidences including a certificate obtained from the bank named Barclays Bank PLC. It is pertinent to note that the Ld CIT(A) did not consider the said certificate and he also did not seek comments from the AO on the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ncy certificate was obtained only in 2011 and not for the year under consideration. The Ld Counsel also submitted that the genuineness of transaction have also been proved, since the funds were transferred through banking channels. In this regard, the Ld Counsel took support from the certificate issued by the HDFC Bank. Besides the above, the Ld Counsel also furnished copies of letter written by the assessee as well as the HDFC bank to RBI for reporting the impugned financial transaction. He further submitted that the foreign company referred above has made investments not only in the assessee company, but also in other companies. Since the assessee is receiving funds from it, the assessee was not in a position to enforce the foreign company to furnish the details of their Balance sheet and other financial information. The Ld Counsel further submitted it is the prerogative of the foreign company either to give or not to give copies of its account, since the assessee is in the receiving end. The Ld Counsel submitted that the Ld CIT(A) was not justified in sustaining the addition made u/s 68 of the Act for the following six reasons:- (a) The provisions of sec. 68 of the Act are not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n it u/s 68 of the Act. 5. On the contrary, the ld DR placed strong reliance on the order of the AO and the decision of the ld CIT(A). The ld DR further submitted that the primary responsibility to prove the cash credits is placed upon the assessee i.e. the assessee is required to prove the identity of the creditors, creditworthiness of the creditors and the genuineness of the transaction. The ld DR submitted that the assessee herein has obtained loans in the form of debentures and hence he is required to prove all the three main ingredients stated above. However, the assessee, in the instant case, has failed to prove the creditworthiness of the company M/s Great Valley Co P Ltd., even though an opportunity to prove the same was afforded by the ld CIT(A) also during the course of appellate proceedings. The ld DR further submitted that the assessee has only furnished copies of forwarding letters addressed to Reserve Bank of India and it did not furnish any document to show that the RBI has given its approval to the funds received by it from the Mauritius company. The ld DR further submitted that approval granted by the RBI was also one of the essential documents to prove the genuin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssee company was funded out of loans from share holders." However in the instant case, there was no prior approval of Indian Government authorities (if required) and further the assessee has miserably failed to prove the source available with M/s Great Valley Co. Pvt Ltd, i.e., the credit worthiness of the said company with supporting evidences. In fact, the submission of the Ld A.R was that the assessee could not enforce the above said company to furnish the financial details, which appears to be very strange to us. Hence, in our view, the assessee cannot take support of this decision also. The issue considered in the case of Smt. Susila Ramasamy (supra) was about the applicability of provisions of sec. 69 of the Act on an assessee, who was a Non- Resident Indian. In the instant case, we are concerned with the applicability of the provisions of sec. 68 to an Indian assessee on the loan received by it. Hence, in our view, the assessee cannot take support of the case of Smt. Susila Ramasamy (supra) also. 8. The Delhi bench of Tribunal, in the case of Russian Technology Centre, has considered the decision rendered by the co-ordinate bench of Delhi Tribunal in the case of Finlay Co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , the assessee is required to prove all the three main ingredients in respect of debenture proceeds received from M/s Great Valley Pvt. Ltd., Mauritius. 10. In the instant case, it is a fact that the assessee did not furnish any material to prove the credit worthiness before the AO. However, before the Ld CIT(A), the assessee has furnished a certificate obtained from M/s Barclays Bank to the effect that the funds were transferred to the assessee company from out of the balance available in a Bank account. It is pertinent to note that the said certificate is very bald in nature, i.e., it did not give any detail about the Bank account, i.e., the Bank account number, the account holder name, when the account was opened, details of dates and amounts of deposit in the said bank account etc. Be that as it may, the fact remains that the said certificate has not been examined by the Ld CIT(A) or by the AO (in the remand proceedings). Whatever may be the worth, the assessee has furnished a certificate obtained from M/s Barclays bank in order to prove the credit worthiness of the foreign company, referred above and hence, in our view, the tax authorities should have examined the same and th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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