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TMI Blog2021 (8) TMI 926X X X X Extracts X X X X X X X X Extracts X X X X ..... ,56,50,000/-- made by the Assessing Officer u/s.68 of the I.T. Act by treating the genuine share capital as unexplained. 2. On the facts and in the circumstance of the case, the learned CIT(A) has failed to appreciate that the appellant company has fully discharged its onus cast upon it u/s.68 of the I.T. Act. Hence the addition as affirmed by CIT(A) to the extent of Rs. 80,00,000/- is uncalled and unwarranted and hence may be deleted. 3. On the facts and in the circumstance of the case, the learned CIT(A) has failed to appreciate that the appellant was a newly incorporated company in the first year and had no business and once the confirmation with identity and genuineness of transactions were established, addition could not have been made in the hands of the appellant. 4. On the facts and in the circumstances of the case, the Commissioner of Income Tax (Appeals) has erred in not treating the order passed by AO as illegal and bad in law as it was against the legal position settled by the Apex Court and jurisdictional high court decisions. 5. On the facts and in the circumstances of the case, the Commissioner of Income Tax (Appeals) has erred in not upholding the claim that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he NRE bank accounts. 4.3 As per the assessee the documents furnished above are sufficient enough to prove the identity, genuineness of the transaction and credit worthiness of the parties. 4.4 The assessee also contended that it is the first year of the registration and no business activity has been carried in this year. Therefore in such facts and circumstances the amount of share capital received by it cannot be treated as unexplained cash credit of the assessee. 4.5 However, the AO being dissatisfied observed that the copies of the passport and FRC can only prove the identity and genuineness of the transaction as it was routed through banking channel. But the creditworthiness of the parties cannot be proved based on these documents. As such assessee was under the obligation to provide the bank statements as well as copies of the ITRs filed by these person in their country to justify the creditworthiness. 4.6 Accordingly, the AO held that the amount of share capital of Rs. 2,56,50,000/- represents unexplained cash credit u/s 68 of the Act. 5. Aggrieved assessee preferred an appeal before the Ld.CIT(A), who called for the remand report from the AO. 6. The Ld. CIT(A) after c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Ld. CIT(A) both the assessee and Revenue are in appeal before us. 8. The assessee is in appeal before us against the confirmation of the addition for Rs. 80,00,000/- whereas the Revenue is in appeal in ITA No.2769/Ahd/2016 for A.Y. 2012-13 against the direction of deleting of the addition of Rs. 1,76,50,000/-. The Revenue has raised the following ground of appeal: That the ld.CIT(A) has erred in law and on facts in deleting the addition of Rs. 1,76,50,000/- made u/s.68 of the I.T Act on account of bogus share capital. 9. The Ld.A.R before us filed a paper book running from pages 1 to 322 and contended that the money was received towards share application through the banking channel. For this purpose, the Ld. AR drew our attention on the bank statements running from pages 17 to 51 of the paper book. 9.1 The Ld. AR also drew our attention on the confirmation filed by the investors which are placed on pages 6 to 11 of the paper book. The Ld. AR also contended that the money was received through the RBI channel and drew our attention on the receipts of share application money which is placed on pages 145 to 157 of the paper book. 9.2 The Ld. AR also filed the copy of the Income-t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the identity of the creditors had not been established, consequently, the question of establishment of the genuineness of the transactions or the creditworthiness of the creditors did not and could not arise. The Tribunal did not apply its mind to the facts of this particular case and proceeded on the footing that since the transactions were through the bank account, it was to be presumed that the transactions were genuine. It was not for the ITO to find out by making investigation from the bank accounts unless the assessee proved the identity of the creditors and their creditworthiness. Mere payment by account payee cheque was not sacrosanct nor could it make a non-genuine transaction genuine." 12.2 Admittedly, there is no issue with regard to the identity of the parties who have subscribed the shares of the assessee company. Likewise, the genuineness of the transaction was also not doubted by the Revenue as all the transactions were carried out through the banking channel. As all the subscribers of the shares of the assessee company are the NRIs i.e. residing in USA, the payment was made by them for acquiring the shares through the NRE account. The necessary details of the NRE ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... his regard, we find that there is a circular issued by the CBDT bearing number 05 of 1969 dated 20-02-1969 wherein it was instructed that there cannot be any tax liability on the amount remitted by the NRI in India for investment in India. The extract of the relevant circular is reproduced as under: 2. Money brought into India by non-residents 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 India. The question of assessment to tax arises only when there is no evidence to show that the amount, in question, in fact represents such remittance. In other words, in the absence of proper supporting evidence, the taxpayers' story that the money has been brought into India from outside may be disbelieved by the Income-tax Officer who may then proceed to hold that the money had in fact been earned in India. 3. If the money has been brought into India through banking channels or in the form of assets like plant and machinery or stock-in-trade, for which the necessary import permits had been obtained, no questions at all are asked by the Income-tax Officers as to the origi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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