TMI Blog2021 (11) TMI 78X X X X Extracts X X X X X X X X Extracts X X X X ..... of having debited in amount of ₹ 140 lakhs in favour of assessee. As rightly observed by authorities below assessee has not discharge the primary onus of establishing the creditworthiness of all the directors. The right measure is to file the bank statements of the creditors/subscribers, copy of returns filed by them to establish that the promoters/share subscribers had sufficient funds to make such huge payments to assessee towards share capital/share premium. In the interest of justice we deem it proper to remand this issue to the Ld.AO. Assessee is directed to file all documents/statutory forms to establish the creditworthiness of the all the promoters/share subscribers. Merely by showing that the funds have received in the hands of assessee through banking channels, would not establish the creditworthiness of such creditors. Ld.AO is directed to verify all the details filed by the assessee and consider the claim in accordance with law - ITA No. 3444/Bang/2018 - - - Dated:- 11-10-2021 - Shri Chandra Poojari, Accountant Member And Smt. Beena Pillai, Judicial Member For the Assessee : Shri Suresh Muthukrishnan, CA For the Revenue : Shri Kannan Narayanan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d 22/11/2017 was passed after considering the additional evidences filed by assessee. Ld.AO was of the opinion that 5% of the total expenditure is reasonable to be disallowed as most of the cash vouchers were self-made and the bills were self certified without any backing, corresponding documents. Insofar as the share application money and share premium money received by assessee, the Ld.AO was of the opinion that assessee failed to discharge the creditworthiness, of the persons who invested and the addition was to be conformed. On receipt of the remand report by assessee, it was submitted that a sumo moto disallowance of ₹ 34, 86, 684/- was made in the computation of income. Assessee thus submitted that, any disallowance from the total expenditure is therefore uncalled for. 4. In respect of the share premium and share application money received by assessee, the Ld.AR submitted that, assessee filed the shareholders and subscription agreement, bank statement showing the receipt of the funds and the communication received from RBI approving the payments. It was submitted that assessee was holding the NRE account, in which one of the director who invested money was an NRI ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... opies of bank statement, income tax return, balance sheet or statement of affairs of these persons. The report of the AO is reproduced as follows: ii. Regarding the share application money and share premium, the assessee company has produced foreign inward remittance certificates and bank statements where the amounts were received. Brief profiles of the persons who made the payments are also submitted. However, from the details submitted by the assessee company, it is not possible to ascertain the creditworthiness of the persons who invested the money as NO bank statements, income tax returns, balance sheet or statement of affairs of these persons were produced. Hence, it is submitted that the addition made by the AO in this regard maybe sustained. 6.2 During appellate proceedings also the appellant has expressed its inability to produce these details, although in relation to Mr. E.V. Shunmugam the appellant produced copy of acknowledgement of Income Tax Return for AY 2013-14. A perusal of the same shows that the gross total income of the person was ₹ 76,515/- only as against amount of ₹ 2 crores stated to be invested by him as share application money' ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e direct the Ld.AO to restrict the disallowance only to the extent of 5% of the travel expenses. Accordingly this ground raised by assessee stands partly allowed. 7. Ground No.3-4 pertains to the share application money and said share premium money invested with the assessee during the year under consideration. 7.1. The Ld.AR argued that source of the source of funds is proved by the documents on record and the mere fact that the creditor is a non resident itself cannot be held against the taxpayer. It was submitted that amended provisions of section 68 of the Act, in respect of examining the source of the source for subscription of share capital and share premium, are not applicable to non-residents. The Ld.AR thus prayed that addition made under section 68 of the Act was thus unwarranted and legally untenable, considering that the genuineness of the transaction, credit worthiness and identity of the creditor is established. Ld.AR relied on decisions of Hon ble Karnataka High Court in case of CIT vs. Arunananda Textile Pvt Ltd reported in (2011) 15 taxman.com 226 and decision of Hon ble Bombay High Court in case Pr.CIT vs. Ami Industries (India) Ltd ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... om abroad by such persons might be subjected to income-tax in India. The apprehension appears to be due to lack of information regarding the correct legal position about the taxability of the remittances of money from abroad. The general position, in this regard, is clarified below. 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 orig ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the personal jewellery in the case of West Pakistan claimed to have been brought exceeds ₹ 50,000; or b. where the assessee had some sources of income either in India or in any foreign country, other than the one from which he had migrated, prior to migration; or c. where the assessee was assessed as resident in India either for the assessment year preceding the year of his/her migration or in the earlier years, will not be entitled to any special concession. Thus, any claim by such migrants that the funds or the jewellery have been brought from the abovementioned countries, will be accepted only if the persons concerned produce adequate evidence to show that they had sufficient funds/wealth in those countries and that the transfer of the cash/jewellery to India can directly be linked with the said funds or wealth. In other words, these migrants will have to lead proper evidence like any other assessees, about the source of the cash/jewellery alleged to have been brought by them from these countries. In support of the claim that they had sufficient funds in those countries, they might produce before the income-tax authorities in India their bank accounts in tho ..... X X X X Extracts X X X X X X X X Extracts X X X X
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