TaxTMI 
TaxTMI 
2018 (4) TMI 14
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....rting documents, etc filed by the appellant to establish genuineness of the transaction of Rs. 2.85 crores without appreciating the fact that the appellant cannot prove the creditworthiness of the source of source of funds when questioned by the authority. The appellant has provided all the documents to prove the source of funds received by him. 3. On the facts and under the circumstances of the case and in law, the Learned CIT(A) erred in confirming the addition u/s 69A of the Income Tax Act, 1961, even though the appellant had maintained proper records and recorded the receipt of Rs. 2.85 Crores and provided explanation to the AO for the same. Hence, application of sec 69A is bad in law." 2. The brief facts of the case are that the assessee is a non resident was staying in India since 2005. The assessee was maintaining NRO SB Account with Standard Chartered Bank, Lokhandwala Branch, Mumbai. The assessee has applied for VISA extension to the Ministry of Home Affairs which was rejected. The Ministry of Home Affairs further directed the office of the Deputy Commissioner of Police, Special Branch-2, CID & FR RO, Mumbai to grant him exit permit after procuring income-tax clearanc....
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.... in the state of New York in 2003, but it was inactive. The company has not reported any tax returns or other reports to the department of Treasury Internal Revenue Service. Even the second reply received from US tax authorities vide letter dated 19-11-2012 confirmed that Sohail Khan Productions, Inc. did not file any income-tax return or declared any income to the US government after 2001. The letter further stated that Sohail Khan did not have earned any declared income to support transfer of USD 7,50,000 to Shri Syed Servat Sevi Ali. The AO, after considering relevant submissions of the assessee and also by relying upon the letter furnished by US tax authorities observed that the assessee has not submitted relevant documents to support his contention nor proved the genuineness of the money found in his possession. The inflow of money into the company of Mr. Mahesh Bhat is only mentioned to have been sourced from the US company, Telegroup. Inc, but without any concrete evidence regarding the genuinity or creditworthiness of the said company. A mere affidavit, i.e. his declared document cannot constitute conclusive evidence without there being further material to support said affi....
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....racted above had stated that he maintained his books of account.. The appellant had advanced a sum of Rs. 2.85 crores in the year 2004, On enquiry by the AO about the sources thereof, the appellant tried to explain the same through its remittance from UK which was basically a receipt from U.S. concern namely, M/s.Sohail Production Inc- However,the fad remains that when the _^ AO made enquiry from U.S. tax authorities, the source of such remittance was not confirmed by the US tax authorities as it is explicitly enumerated by the A.O. in the order extracted as above. The US tax authorities has intimated the AO that the US concern, M/s.Sohail Production Inc. was a legal entity incorporated in the state of New York in the year, 2003 but the same was an inactive concern. The company has not reported any tax returns or other reports to the Department of the Treasury, Internal Revnue Service. I also find that the reply received from US tax authorities through their letter dated 19.11.2012 completely affirmed the base of the decision of the A.O. treating the said sum of Rs. 2.85 crores as unexplained investment. Taking note to the facts available on record, I am of the considered view that....
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....O made addition of Rs. 2.85 crores u/s 69A of the Income-tax Act, 1961 towards amount credited in assessee's bank account on the ground that the assessee has failed to satisfactorily explained the source of amount. The AO further observed that though the assessee tried to explain the source of money given to Shri Mahesh Bhat, film producer through transfer of funds from USA from Sohail Khan Productions, Inc., failed to file necessary evidence to prove the creditworthiness of Sohail Khan Productions, Inc. as enquiries conducted during the course of assessment proceedings revealed that Sohail Khan Productions, Inc. did not file tax returns in US as per the letters addressed by the US tax authorities. The AO further observed that the assessee, though filed an affidavit and also filed confirmations from Sohail Khan Productions, Inc explaining the source of source in respect of amount received from Sohail Khan Productions, Inc by stating that Sohail Khan Productions, Inc has received money from Telegroup Inc., a subsidiary of Sohail Khan Productions, Inc. Mere filing of an affidavit would not be sufficient compliance to discharge the onus of proving the genuineness of transaction and cr....