TMI Blog2019 (5) TMI 2002X X X X Extracts X X X X X X X X Extracts X X X X ..... estor has remitted money from abroad through proper banking channel and even after adjusting or reducing the losses incurred by investor in three years i.e. 2003, 2004 and 2006 also, the remaining income of four years i.e. 2000, 2001, 2002 and 2005 is more than three times of the remittance received by the present assessee from the investor abroad. Considering these facts, we find no reason to interfere in the order of CIT(A) on this issue. Appeal of the revenue is dismissed. - SHRI ARUN KUMAR GARODIA, ACCOUNTANT MEMBER AND SHRI PAVAN KUMAR GADALE, JUDICIAL MEMBER For the Assessee : Shri C. Ramesh, CA For the Revenue : Shri T.N. Prakash, Addl. CIT (DR) ORDER PER SHRI A.K. GARODIA, ACCOUNTANT MEMBER This appeal is filed by the revenue and the C.O. is filed by the assessee and these are directed against the order of ld. CIT(A)-11, Bangalore dated 28.02.2018 for Assessment Year 2008-09. 2. The grounds raised by the revenue in its appeal are as under. 1. On the facts and circumstances of the case, the Ld CIT(A) erred in deleting addition u/s 68 amounting to Rs. 4,06,98,770/- without appreciating the fact that except for the identity, the assessee ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... just an opinion which is not supported by evidences the provisions of section 147 of the act could not have been invoked. 6. The learned Commissioner of Income Tax (Appeals) erred in ignoring the position of law laid down by Hon'ble Supreme Court in the case of Indian Eastern News Paper Society V. CIT (1979) 119 ITR 996 (SC), wherein it is held that, opinion of an audit party cannot be basis for reopening and on the same lines opinion of investigation wing can also be not a basis for reopening U/s.147 of the act. 7. The learned Commissioner of Income Tax (Appeals) erred in ignoring the position of law laid down in the following decisions, wherein it is held that, on mere suspicion no reopening is possible U/s.147 of the act, since the satisfaction is based on reason to believe and not 'reason to suspect i) CIT V. Jeskaran huvalka (1970) 76 ITR 128 (AP) ii) N. Sundareswaram V. CIT (1972) 84 ITR 173 (Ker) iii) Smt. Hemlata Agarwal V. CIT (1967) 64 ITR 428 (All) iv) ITO V. Lakshmani Mewal Das (1976) 103 ITR 437 (SC) v) India Finance Construction Co., (P) Ltd V. B.N. Panda, DCIT (1993) 200 ITR 710 (Bom) 8. The learned Commissioner of Income Tax ( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e learned Commissioner of Income Tax (Appeals) erred in not following the ratio laid down by ITAT, Delhi Bench in the case of RMG Polyvinyl (I) Ltd V. DCIT, Circle 15(1), New Delhi (2017) 88 taxmann.com 351 (Delhi-Trib), wherein it is held that, where the Assessing Officer had not applied his mind and mechanically issued notice U/s. 148 of the act on the basis of information received from the DIT Investigation, the reassessment is bad in law and deserves to be quashed. 14. The learned Commissioner of Income Tax (Appeals) erred in ignoring the ratio laid down by the Hon'ble Delhi Tribunal in the case of Monarch Educational Society V. ITO (Exemption) (2015) 57 Taxmann.com 141 (Delhi) wherein it is held that, simply reproducing details received from Director of Income Tax, Investigation without any verification would not be sufficient reason to believe for the purpose of invoking provisions of section 147 of the act. 15. The learned Commissioner of Income Tax (Appeals) erred in not following the ratio laid down by ITAT, Delhi Bench 'A' in the case of Bir Bahadur Singh Sijwali V. ITO Ward-1, Haldwani (2015) 53 Taxmann.com 366 (Delhi Trib). 16. The respondent craves ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gment of Hon ble Apex Court rendered in the case of Pr. CIT Vs. NRA Iron Steel Pvt. Ltd. in SLP(Civil) No. 29855 of 2018 as per judgment dated 05.03.2019, the issue regarding receipt of capital was decided against the assessee. The bench wanted to know from the ld. AR of assessee as to what is the submissions in this regard. In reply, he submitted that this judgment is not applicable in the present case because the facts are different. He pointed out that in that case, the shares were issued at a very high premium of Rs. 190/- per share, even though the face value of the share was Rs. 10/- per share whereas in the present case, the premium received is only Rs. 50/- per share as against the face value of shares at Rs. 100/- each. 5. We have considered the rival submissions. First of all, we reproduce para no. 6 from the assessment order because we find that in this para, the AO has noted the loss and income declared by the remitter during Calendar year 2000 to 2006. This para reads as under. 6. During the course of assessment, the assessee was asked to prove the genuineness of the transaction along with the relevant documentary evidences. The assessee has informed that the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... premium at Rs. 190/- per share, even though the face value of the share was Rs. 10/- per share whereas in the present case, the premium received is only Rs. 50/- per share as against the face value of shares at Rs. 100/- per share. Hence the amount of such premium is 50% of the face value in question in the present case whereas the amount of premium in that case was 19 times of the face value of shares. It is also seen that in that case, it is noted by Hon ble Apex Court in para 9 of the judgment that the AO made an independent and detailed enquiry, including survey of the so called investor companies from Mumbai, Kolkata and Guwahati to verify the credit-worthiness of the parties, the source of funds invested, and the genuineness of the transactions and the field reports revealed that the share-holders were either non-existent or lacked credit-worthiness. In the present case, this is not the case of the AO that the remitter is non-existent and the only objection of the AO is this that in view of losses incurred by that remitter in the years 2003, 2004 and 2006, the credit-worthiness of the remitter is in doubt. But we have seen that even after reducing the amount of losses incurr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... submissions of the appellant's representative, the findings on the above three issues are as under: - 1. Identity of the creditor In support of the identity of the creditor, the Income Tax returns of the creditor which was filed in United States of America has been produced, wherein USA Social Security no. and the citizen ship of the person has been disclosed. Further, the investigation wing of the department also verified the fact. The Assessing Officer has not given any findings against the identity of the creditor and has accepted the identity of the creditor. As far as the identity of the creditor is concerned there is no dispute. 2. Genuineness of the transaction The transactions are through banking channels. Copy of the foreign bank account through which the amounts have been remitted to the bank account of the appellant company has been furnished. The appellant has also furnished the Foreign Inward Remittance Certificates issued by recipient bank in support of the transaction. The FIRCs certificates clearly indicates, name of the remitter, the fund transferred from which country, from which bank and recipient bank as detailed below. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Rate of conversion to INR Income in Indian Rupees 31.12.2000 141,86,897 46.75 66,32,37,435 31.03.2001 164,10,419 48.18 79,06,53,987 31.03.2002 291,14,644 48.03 139,83,76,351 Total 59,11,960 285,22,67,773 The Closing agreement of final determination covering specific matters in form 906 of department of treasury - internal revenue service, dated 31.10.2011 duly signed by Commissioner of Internal Revenue Service Annexure to such closing agreement also discloses various entities in which Mr. Samyak Chandrakant Veera has invested and income earned has been placed on records. As Mr. Samyaka Chandrakant Veera has not paid tax demanded as per investigation wing of the department and same has been informed to the Assessing Officer that, he is a tax defaulter in USA It was argued by the AR that, the huge income earned by Mr. Samyak C Veera during those years wa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ished the credit worthiness of the investor and therefore in the absence of any other evidence brought in by the Assessing Officer to prove the contrary, it has to be concluded that, the credit worthiness of the investor is also established. In view of the above facts and submissions, I hold that prima facie the identity of the investor is established, the genuineness of the transaction proved and also the credit worthiness of the creditor established. Under the circumstances, above, since the basic requirements for the provisions of section 68 of the act, were satisfied, there was no case for the Assessing Officer to invoke the provisions of section 68 of the act and consider the share capital of Rs. 4,06,98,779/- as income of the appellant. GROUNDS - 5 6 The grounds relate to the extent of proof that the appellant can be called upon to produce and the extent of onus cast on the appellant. The appellant's representative argues that, the following documents have been produced in support of the transactions. v) Copies of FIRCs issued by the receiving bank. vi) Copies of the foreign bank accounts in support of the moneys transferred. vii) Copy of the let ..... X X X X Extracts X X X X X X X X Extracts X X X X
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