TaxTMI 
TaxTMI 
2017 (5) TMI 1107
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....cts of the case pertaining to the appeals filed in 2013 are that pursuant to the search proceedings under Section 132 of the Act conducted at the office and residential premises of the assessee, a reassessment order was passed by the AO under Section 153A of the Act, whereby inter alia additions of various amounts were made under Section 68 of the Act for Assessment Years (AYs) 2002-03, 2003-04, 2005-06 and 2007-08. These amounts, being primarily towards monies received from various companies as well as disallowances of expenditure, were debited to the profit & loss account for AYs 2002-03, 2003-04 and 2005-06. For AY 2007-08 disallowance of interest of Rs. 75,47,897/- on unsecured loans was added under Section 68 of the Act and an amount of Rs. 1,51,200/- which was expended on the foreign guests was added. 3. Apropos the appeals filed in 2015, a similar reassessment order was passed pursuant to the search proceedings under Section 132, whereby inter alia additions of various amounts were made under Section 68 of the Act for Assessment Years (AYs) 2004-05, 2005-06, 2006-07, 2007-08, 2008-09 and 2009-10. These amounts were primarily towards share application money received from v....
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....it accepted a loan of Rs. 5,00,000/- from M/s Tsunami Technologies India P. Ltd by a Demand Draft drawn on Union Bank of India, Vasant Vihar. The relevant documents in this regard were furnished. However, the AO, for reasons best known to him, was not satisfied by the aforesaid details and proceeded to add Rs. 5,00,000/- towards the unsecured loans and Rs. 55,44,000/- towards capital loss as being unexplained. Thereafter, in his appeals against the aforesaid additions, as well as in respect of AY 2007-08, the assessee produced the following additional documents under Section 46 of the IT Rules:- "(i) Attested copy of Certificate of Incorporation of M/s Russian Technology Centre Holding Ltd. (ii) Attested copy of Certificate of Incumbency of M/s Russian Technology Centre Holding Ltd. (iii) Attested copy of Certificate of Good Standing of M/s Russian Technology Centre Holding Ltd. (iv) Director Certificate of M/s Russian Technology Centre Holding Ltd. (v) Balance Sheet of M/s Russian Technology Centre Holding Ltd. for the calendar year 2004 and 2005" 6. The Commissioner of Income Tax (Appeals), [CIT(A)] had disallowed the additional documents and the appeal. In d....
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....view the additional evidence has been technically admitted by CIT(A) by commenting on the merits of the additional evidence, however, we accept the plea of the ld. Counsel for the assessee that as a matter of abundant caution, the additional evidence be admitted, more so when the comments of both the lower authorities i.e. assessing officer and CIT(A) are on record. Thus, these grounds of the assessee in respect of admission of additional evidence are allowed." 7. The Tribunal further noted that:- "8.1. The FIPB further authorized the assessee company to raise capital upto Rs. 600 crores without approaching it for further approvals. This approval was given vide letter dated 20.12.2005. The assessee also, filed the Certificate of Incorporation of RTCHL and a detailed confirmation by RTCHL and M/s Protex Trading Company Ltd confirming the remittance of Rs. 54,44,000/- towards share capital of the assessee company. The assessee contended that the money came in through banking channels and a copy of the Foreign Inward Remittance Certificate was also filed wherein it was specifically stated that the money's have come in towards share capital in the assessee company and the sam....
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....on that basis a reasonable view is to be taken as to whether the assessee has discharged the primary onus of establishing the identity of share applicant, its creditworthiness and genuineness of the transaction. From the documents filed during the course of assessment and before CIT(A), the independent existence of the share applicants in Russia is clearly established. The assessee's application to FIPB for raising the capital contains all the relevant details which is favourably accepted by the Board, particularly by allowing the assessee to raise further the capital without approaching the FIPB. The transactions are through banking channels. Thus the gamut of evidence does not leave any doubt in the discharge of primary burden of the assessee. On the issue CBDT Circular and Finlay Corporation judgment (supra) also we are in agreement with the ld. Counsel for the assessee that in these circumstances of the case moneys remitted by non-residents through banking channel outside India has to be held as capital receipts, not exigible to tax and cannot be treated as deemed income on the fictions created by sections 68 and 69 of the Act. In consideration of all these observations, we....
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....e department, department could have verified the same from its record. The interest of justice will be served if the issue is remitted back to the file of assessing officer to verify from the seized record about the bank statement of CSEZ and decide the issue after giving the assessee fair and reasonable opportunity of being heard. The assessee may be allowed to submit necessary evidence in this behalf. This ground of the assessee is allowed for statistical purposes. xxxx xxxx xxxx xxxx 22. We have heard rival contentions. From the orders of both the lower authorities, the names of the persons whose interest payment has been disallowed, has not been given. Besides, we have deleted additions made u/s 68 in respect of above parties. In the absence of the details about disallowance of interest, it will not be possible for us to adjudicate this ground. Therefore, we set aside the issue of interest of Rs. 7,54,797/- back to the file of assessing officer to decide the same afresh, considering our conclusion on applicability of sec. 68, commencement of business in 200708, after gi....
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....tted through banking or other indisputable channels: (3) the creditworthiness or financial strength of the creditor/subscriber: (4) If relevant details of the address or PAN identity of the creditor/subscriber are furnished to the Department along with copies of the Shareholders Register, Share Application Forms, Share Transfer Register etc. it would constitute acceptable proof or acceptable explanation by the assessee. (5) The Department would not be justified in drawing an adverse inference only because the creditor/subscriber fails or neglects to respond to its notices: (6) the onus would not stand discharged if the creditor/subscriber denies or repudiates the transaction set up by the assessee nor should the Assessing Officer take such repudiation at face value and construe it, without more, against the assessee. (7) The Assessing Officer is duty-bound to investigate the creditworthiness of the creditor/subscriber the genuineness of the transaction and the veracity of the repudiation" 12. The preceding enumeration of the circumstances of the case show that the assessee had furnished all relevant data before the AO and the CIT(A), which, however, were not inquired into by the....