TaxTMI 
TaxTMI 
2015 (8) TMI 129
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.... u/s 68 of the Act. 4. Because of CIT(A) has erred on facts and in law in holding that the addition of Rs. 32,51,697/- offered for taxation on conditional basis, with no charge of interest and levy of penalty, was not a conditional offer and was a case of agreed assessment, thus the assessee was liable to pay interest. 5. Because in any case and in all circumstances of the case, the CIT(A) has erred in dismissing the appeal without appreciating the facts and circumstances of the case and holding that the sum of 32,51,697/- is a taxable receipt. 6. Because the CIT(A) has relied on an incomplete record of the paper file of the assessee in passing the impugned order, as important documents filed by the assessee have been deliberately removed/concealed and manipulated by the revenue authorities, as is clearly evidenced by reference to the findings contained in the impugned order. The order passed by CIT (A) is based on facts that have been deliberately falsified and manipulated by the removal of crucial documents to support the findings therein and is thus liable to be seen aside on this ground alone. 2. Though various grounds are raised, but they all relate to the nature o....
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.... CA 94103, USA, representative office of Golden ADA Moscow, Russia and Golden ADA Belgium NV/ Shako Real Estate, Belgium NV (hereinafter referred in short as "GADA") initially for the period of Five (5) Years. Subsequently, vide an addendum to the agreement, the term of agreement was extended to Ten (10) years. According to the agreement, the assessee was granted exclusive business rights to export the goods to USSR in the name of GADA along with facilities provided by GADA, namely, Letter of Credit, Bank Guarantee, Counter guarantee etc. Since GADA had already established its reputation as to quality and the goods, companies / buyers in the USSR were willing to buy through GADA and in its name. Further, GADA also agreed to underwrite any damages, losses including expected profit suffered by the appellant through securitization of all transactions through GADA. The assessee put all its sources in the business, but however, unfortunately, GADA failed to issue letter of credit to the assessee and, therefore, no export performance could take place. Also, due to financial crisis in the US, GADA suffered several financial setback and was ultimately declared bankrupt. Assessee filed a su....
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....bbar, Director of the company. It was also found that the person who signed the agreement on behalf of the USA Company is Shri. Rajiv Gosain who is son of Shri. K.K. Gosain, the promoter of the assesseecompany. It was also noticed that both the agreements have been found to be signed in India and the same were available on assessment record. The ld. CIT(A) has also taken note of the report of the Inspector, who conducted spot enquiry with regard to the registered office of the assesseecompany and has reported that on the given address, no such office of the company was available. 9. The ld. CIT(A) has also taken cognizance of the statement of Shri. Deepak Babbar recorded by the Assessing Officer during the course of assessment proceedings in which Shri. Deepak Babbar, who was signatory in both the agreements on behalf of the assessee-company, has deposed that he was an Accountant with M/s Tech. Trusion System & Services (P) Ltd. and this company was under liquidation since financial year 1993-2000 and Shri. K.K. Gosain and Shri. C. Kumar were Directors of the said company. In response to the nature of agreement and receipts, Shri. Deepak Babbar has deposed that he was an Account....
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....Banana Street San Francisco CA094103 USA (hereinafter referred as GADA) for export of Indian Goods to Russian federation for a period of 10 years. The essence of this agreement was that the GADA and is affiliates were bound to exclusively purchase all their requirements from India solely from assesses company and the assessescompany was bound to do business only, with GADA for its exports to Russian Federation. As per the further submission made by the assesses company, the agreement did not materialize at the outset itself because the USA Company went into bankruptcy but the assesses company also did riot do any export business for the USA Company, However, as claimed by the assesses company, initially it tried to pursue a suit filed for damage against the USA Company because of not being able to do any export business, on its behalf but thereafter, realizing that such action taken by him against the USA Company would be a fruitless exercise, it claimed to have entered into another agreement on 10.12.1988 with .the Swiss company named M/s Tanagia Real Estate Corporation, a company registered under the aims of British Virgin island. As mentioned in this agreement, assesses company ....
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....as been found. In the statement, of its director Sri Deepak Babbar, it has been clearly stated in answer to question no. 2 that the company has no business activities since 1997, much before the year 1990 in which, it has been claimed by the assesses company that it has entered into an agreement with Swiss Company for not doing any export business to Russian (Federation on account of which, it is being claimed that the assesses company received a compensation of Rs. 32,51,697/- as non-compete fees. Here too question is, when no export business of the assesses company existed and the assessee company was not doing any business since 1997, how it can be believed that a foreign company would enter into an agreement with it for not doing such business that did not exist at all and pay a hefty sum of Rs. 32,51,697/-. Therefore, facts of the case of the case of the assesses, is totally different than the facts of the case of M/s Oberoi Hotlb (P) Ltd. (supra) cited by it. Unlike, the Oberoi Hotels (P) Ltd., which was operating and managing hotels and getting a fee, the assesses company has neither done any export business, whatsoever, prior to the agreement in question nor was in receipt ....
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....rized representative of the USA Company, in what capacity, he is representing the assesses-company because he is neither an advocate nor a chartered accountant engaged by the assesses company and also not holding any post in the assessee-company. Therefore, his involvement in the affairs of the assessee-company and also having been found him to have signed the agreement on behalf of the USA Company, his deep involvement in the whole affairs in getting the amount of Rs. 32,61,697/- in the account of USA is very evident. During the course of the assessment proceedings, the assessee-company could also not file any evidence to show that this amount was paid by the Swiss Company M/s Tanaiga. On enquiry by the A.O, it has only been stated that this amount was remitted by UBOCI to World Trade Centre, New York on 28.07.1999. Therefore, the origin of the source of fund has been found to be from USA where Sri Rajiv Gosain used to live but its payment by the Swiss Company M/s Tanaiga could not be established. Even the director of the assessee-company Sri Deepak Babbar whose statement was recorded at the time of assessment is nothing but a dummy director because on going through his statement ....
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.... circumstances of the case, the receipt of Rs. 32,51,697/- shown by the assessee in the return of income cannot be considered as capital receipt and the Assessing Officer has rightly treated it as revenue receipt and more so, this amount being in the nature of unexplained receipt is liable to be added under section 68. Therefore, I dismiss the Ground No. (b)." 10. Aggrieved, the assessee has preferred an appeal before the Tribunal and has reiterated its contentions as raised before the ld. CIT(A). The ld. counsel for the assessee has further contended that having executed the non-compete fees agreement with M/s Tanaiga Real Estate Corporation, the assessee has surrendered its right to supply or export any product to another entity whether in USA or elsewhere and the consideration of a lump sum amount of US $ 75000 as overall and final consideration to be paid on or before 31.7.1999 as compensation towards non-compete fees and loss of source of income. He has also invited our attention to the noncompete fee agreement at page 89 of the compilation of the assessee that Tanaiga has purchased the rights and claims of TTS on an "as is where is" basis and there shall be no liability of....
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.... bound to do business only with GADA for its exports to Russian Federation, but unfortunately this agreement did not materialize at the outset itself because the USA company went into bankruptcy and the assessee-company did not do any export business for the USA company and ultimately the assesseecompany filed a suit for damages against the USA company because of not being able to do any export business on its behalf. Later on, the assesseecompany entered into an agreement with Swiss company namely M/s Tanaiga Real Estate Corporation and received US $ 74900 as compensation towards non-compete fees and US $ 100 as balance token amount towards damages, totaling to an amount of US $ 75000 or Rs. 32,51,697/-, having agreed not to do business of export of any commodities from India to Russian Federation for a period of 7 years from the date of agreement. 14. The issue arose before the Assessing Officer is whether the receipt of the said amount of Rs. 32,51,697/- as revenue receipt or capital receipt. The Assessing Officer has made detailed investigation during the course of assessment proceedings and the glaring fact noticed by the Assessing Officer was that the initial agreement for....
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....fficer has raised certain queries and asked the assessee to furnish the details of USA company along with name and address, balance sheet, etc. But nothing was submitted before the Assessing Officer and he accordingly doubted the genuineness of the USA Company. The ld. CIT(A) has also observed that during the course of assessment proceedings, the assessee company could not file any evidence to show that the amount was paid by the Swiss company, M/s Tanaiga Real Estate Corporation. On enquiry, it has been surfaced that this amount was debited by UBOCI to World Trade Centre, New York on 28.07.1999. Therefore, the origin of source of fund has been found to be from USA where Shri. Rajiv Gosain used to live, but this payment by Swiss company, M/s Tanaiga Real Estate Corporation could not be established. 15. During the course of assessment proceedings, the assessee was asked to produce Shri. K. K. Gosain, promoter of the assessee company, but he was not produced. Shri. Deepak Babbar was produced and in his statement he has categorically stated that he did not know much about the activities of the assessee company and he was the Accountant prior to becoming as Director. It was also dep....
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