TaxTMI 
TaxTMI 
2019 (6) TMI 1290
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....ng on the business of builders and developers and had filed its return of income for the A.Y.2012-13 on 27/09/2012 declaring total income of Rs. 74,167/- under normal provisions of the Act and book profit u/s.115JB of the Act at Rs. 81,505/-. During the course of scrutiny assessment, the assessee submitted copy of profit and loss account, balance sheet, details of party-wise unsecured loans, loan confirmations, details of expenses etc., in support of its return of income, which had been duly acknowledged by the ld. AO in para 4 of his order. 3.1. The ld. AO observed that during the year under consideration, the assessee had issued 80,28,179 non-cumulative preference shares of face value of Rs. 1/- each at a premium of Rs. 9/- each to Aanya Properties (I) Ltd., a foreign body corporate based at Port Louis, Republic of Mauritius. The assessee was asked to submit documentary evidence to prove the identity and creditworthiness of the investor together with genuineness of the transactions. The entire documentation filed by the assessee with regard to the aforesaid three ingredients of Section 68 of the Act was filed by the assessee before the ld. AO in photocopy. The ld. AO insisted f....
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....) Limited." It may be seen that holding & subsidiary companies are one and same. f. Further, the assessee was also required to produce documentary evidence such as project report, presentation, correspondence, etc. relating to investment transaction made by M/s. Aananya Properties (1) Ltd. The assessee has not been able to produce a single document to prove that process of foreign Direct Investment (FDI) in a real estate project developed by the assessee. M/s. Aananya Properties (1) Ltd. has made investment of Rs. 8.02 Crores into the assessee's project however not a single piece of paper was submitted to prove that there was the FDI process continued for fairly long period. In normal circumstances, lot of correspondence, project reports, and presentations required to are to be made / given to the Foreign Entities to convince them to invest in Indian projects. In this case the assessee has received funds without any efforts. g. The assessee has stated that the funds are received through normal banking channels and with RBI's approval. But in this connection it is to be noted that the banks are not examining the source, legality, allowability of funds, nature of transact....
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....ii. Bank statements of Aanya Properties (I) Ltd. reflecting such investments made (Annexure 7(iv) to 7(vi) of paper book) iii. Copy of certificate of incorporation of Aanya Properties (I) Ltd. (Annexure- 7(viii) of paper book) iv. Copy of Memorandum of Association of Aanya Properties (I) Ltd. (Annexure 7(ix) of paper book) v. Bank statement of the Appellant company reflecting the payment received from Aanya Properties (I) Ltd. (Annexure 8(xxxvi) of paper book) vi. Bank statements of Aanya Holding Ltd reflecting payments made to Aanya Properties (I) Ltd. (Annexure 8(xlii) of paper book) vii. Foreign Inward remittance certificates in respect of remittance by Aanya Properties (I) Ltd. (Annexure 8(xlvi) of paper book) viii.Copy of FIPB approval for condonation of Delay in FDI and copy of compounding application to CEFA cell of Reserve Bank of India (Annexure 9(i) of paper book) ix. The proof of basis of share premium amount in the Form of Certificates by a Chartered Accountant. (Annexure 3(xxxiv) of paper book) x. Financial statement ofAanya Properties (I) Ltd. reflecting such investments and source of funds (Annexure 8(iii) to 8(xxxv) of paper book) xi. Shareholding ....
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....justice. 2.4.8 Further, Hon'ble Supreme Court in the case of Mahabir Prasad Santosh Kumarv. State of U.P. AIR 1970 SC 1302 has observed as under: "Recording of reasons in support of a decision on a disputed claim by a quasi-judicial authority ensures that the decision is reached according to law and is not the result of caprice, whim or fancy or reached on grounds of policy or expediency. A party to the dispute is ordinarily entitled to know the grounds on which the authority has rejected his claim, if the order is subject to appeal, the necessity to record reasons is greater, for without recorded reasons the appellate authority has no material on which it " may determine whether the facts were properly ascertained, the relevant law was correctly applied and the decision was just." 2.4.9 On weighing the pros and cons, I am of the considered view that Ld. AO has given a go by to the known canons of jurisprudence by completely ignoring the evidence produced by the appellant. He has not even adverted to the fact that RBI had taken cognisance of the Form-FCGPR. I find that, though not required, the appellant has, in fact, given the source of source and hence, the addition made ....
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....capital of Rs. 15 lacs received from him was through his NRE account. The remittances were through three separate cheques, of which details were available. The assessee had also filed bank certificates submitted to the RBI presumably for the purpose of remittance of dividend to said S. In the light of such evidence, the CIT(A) as also the Tribunal had come to a conclusion of fact that the assessee had discharged the burden which lay upon it for establishing the identity of the shareholders as well as the genuineness of the transactions. As such, the Tribunal confirmed the findings of the CIT(A) and deleted the addition which had been made by the AO. It is obvious that the findings returned by the CIT(A) as well as the Tribunal are pure findings of fact and no question of law arises on this issue." 2.4.12 In the case of CIT vs Peoples General Hospital ltd. [2013] 35 taxmann.com 444 (Madhya Pradesh), Hon'ble High Court confirmed the deletion of addition on the basis of the fact that the foreign company was not found to be a bogus company and that the money was transmitted through banking channels. In doing so, it was, inter alia, held as under: 'In the case of CIT v. Love....
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....t in favour of the appellant, Ground Nos. 2 and 3 are allowed. 4. Aggrieved, the revenue is in appeal before us. 5. We have heard rival submissions. We find that the ld. DR apart from reiterating findings given in the order of the ld. AO prayed for setting aside of the entire appeal to the file of the ld. AO for de novo adjudication. Per contra, the ld. AR vehemently objected for setting aside of this issue in as much as the entire details were duly furnished by the assessee before the ld. AO and before the ld. CIT(A) and the ld. AO had not bothered to even mention the list of documents submitted to explain the main three ingredients of Section 68 of the Act and the veracity of the transactions. He vehemently objected for giving second innings to the ld. AO for looking into the very same set of documents. He also argued that the ld. CIT(A) had duly appreciated the entire documents together with its supporting evidences that were before him on record. He placed reliance on the finding of the ld. CIT(A) in para 2.4.9 that the assessee in this case had also explained source of source. The ld. AR argued that the entire evidences submitted by the assessee explaining the credentials, i....
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....ors Pvt Ltd to Luxora Realtors Pvt. Ltd. was not effected by the assessee with its bankers. Hence the bank accounts were continued in the old name of the assessee company i.e. Opulent Realtors Pvt. Ltd. Accordingly, the receipt of preference share capital was also received and credited in the bank account of Opulent Realtors Pvt. Ltd. He stated that there could not be any infirmity in the said action thereby leading to drawing adverse inference in the hands of the assessee company. The ld. AR defended the arguments of the ld. DR that money was received only from Aanya Properties (I) Ltd., and not from Opulent Realtors Pvt. Ltd., as wrongly understood by the ld. AO and by the ld. DR. The ld. AR further argued that no deficiencies whatsoever were found on the documentary evidences as illustrated supra were found by the ld. AO. The ld. AR further placed reliance on the decision of the Hon'ble Jurisdictional High Court in the case of CIT vs. Gagandeep Infrastructure Pvt. Ltd. reported in 394 ITR 680; PCIT vs. Paradise Inland Shipping P. Ltd. reported in 400 ITR 439(Bom) and decision of Hon'ble Delhi High Court in the case of CIT vs. Russian Technology Centre (P) Ltd. 300 CTR 501 whic....