2014 (2) TMI 995

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....ook up the business of consultancy in real estate development. During the concerned assessment year, the Assessing Officer (AO) noted that the assessee had received two amounts from two Non-Resident Indians (NRIs). The first was from Vinay Kumar Kedia (an amount of Rs.14,97,400/-), and the second was from Sh. Narottam Singh (an amount of Rs.14,73,410/-). During the course of enquiry, the assessee said that these amounts were received for purchase of land on behalf of these NRIs. The AO observed that the foreign exchange remittances and certificates disclosed that the amounts had not been sent by two persons but by two companies, namely M/s. Thailand and General Co. Ltd. and M/s. Preet Trading Co. Ltd. of Thailand. He, therefore, queried that since the remittance were received from two companies, how the credit entries could be made in the books of accounts of the assessee in the name of NRIs remained unexplained. Since nothing was forthcoming, the AO treated it as unexplained and assessed/brought them to tax under Section 68 of the Act. The CIT, upon appeal, considered the issue in the light of the evidence pertaining to the sale deed through which these lands were purchased in the....

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....appellant in the subsequent years. The CIT (Appeals) also noted that the assessee had received commission and development charges which were credited to the P&L account in the subsequent years and taxed accordingly. 6. The Tribunal accepted the Revenue's appeal. Its reasoning is premised upon the previous remand order where according to it the directions were clear that the AO had to afford an opportunity to the assessee to prove whether the two companies were owned by Sh. Vinay Kumar Kedia and Sh. Narottam Singh and the link between the two. The inability expressed by the assessee to do so, and its exclusive relevance on affidavits filed before the AO, according to the Tribunal, were not sufficient or adequate explanation as to avoid the income being added under Section 68. It accordingly directed the addition of those amounts, restoring the order of the AO. 7. In the present appeal, it is contended that the assessee did all that was expected of it and indeed lawfully required of it in the remand proceedings. Learned counsel, Sh. Ajay Vohra, argued that by producing the affidavits of the three individuals, i.e. the lady - Ms. Rosna Singjirakul, who facilitated the transactio....

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....of the persons concerned were shown, the Revenue had to proceed further with concrete materials to conclude that the amounts were benami. Learned counsel also relied upon the decision reported as CIT v. Divine Leasing and Finance Limited, [2008] 299 ITR 268 (Delhi). Learned counsel for the respondent relied upon the findings of the Tribunal in the impugned judgment and urged the Court not to interfere with them. It was argued that the remand order by the Tribunal on the previous occasion was on the pointed issue regarding the identity of the two companies, i.e. M/s. Thailand and General Co. Ltd. and M/s. Preet Trading Co. Ltd. of Thailand. Further, learned counsel argued that the assessee's reliance upon the affidavits of Sh. Vinay Kumar Kedia and Sh. Narottam Singh on the one hand and the affidavit of Ms. Rosna Singhjirakul was insufficient, and there needed to be a clear confirmation from the two foreign remitters, i.e. M/s. Thailand and General Co. Ltd. and M/s. Preet Trading Co. Ltd. of Thailand. In the absence of these, it could equally be held by the AO that the entries shown in the books of accounts in respect of the transaction could well cover some other commercial activit....

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.... to some extent, advance its case. At the same time, the immediate foreign remitters' explanation is absent. The assessee contends with some vehemence that being foreign nationals or concerns, it was not possible to secure their confirmations or affidavit and further, they are beyond the pale of jurisdiction of the Indian authorities. Whilst that may be so, this Court cannot help notice that when asked to produce materials in support of its contention after the remand, the assessee was able to secure affidavits of Ms. Rosna Singhjirakul as well as the alleged purchasers, i.e. Sh. Vinay Kumar Kedia and Sh. Narottam Singh. When the scope of remand itself is narrow and limited, in proving of entire chain of transactions leading to the remittance to the assessee, the missing link was also an aspect which had to be established. This becomes critical because the monies were immediately remitted to the assessee by the two Thai companies - M/s. Thailand and General Co. Ltd. and M/s. Preet Trading Co. Ltd. of Thailand. The scope of the remand was defined in the previous order of the Tribunal dated 20.08.2004, the relevant part of which is extracted below: "We have carefully examined the ....