TaxTMI 
TaxTMI 
2019 (5) TMI 2002
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....lding that the assessee has proved the creditworthiness of the person advancing the loan merely relying on the fact that the said person has been held to a large tax defaulter by the US Revenue authorities ignoring the fact that the said fact does not conclusively prove that the said person has any large real income and cannot be a proof of his creditworthiness on standalone basis. 3. On the facts and circumstances of the case, the Ld CIT(A) erred in not appreciating that the said investor Shri Samyakant C Veera has invested of about 53.34 million US $ whereas his net income over a period of 6 proceedings years in US was only 3.3 million US$ as revealed from his tax returns filed with US Revenue authorities and hence his creditworthiness has not been proved." 3. Similarly, the grounds raised by the assessee in its C.O. are as under. "1. The order of the learned Commissioner of Income Tax (Appeals) is opposed to the facts of the case and law applicable to it. 2. The learned Commissioner of Income Tax (Appeals) erred in upholding the action of the Assessing Officer of invoking the provisions of section 147 of the act for the A.Y. 2008-09 dismissing the grounds of appeal of the....
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....d that, the information received from Investigation Wing could not be said to be tangible material per se without a further enquiry being undertaken by the Assessing Officer to establish link between "tangible material" and formation of reason to believe that, income chargeable to tax had escaped assessment for the purpose of the provisions of section 147 of the act. 9. The learned Commissioner of Income Tax (Appeals) erred in ignoring the position of law laid down by Gujarat High Court in the case of Gaurav Contracts Co., V. DCIT (2015) 64 Taxmann.com 333 (Guj), wherein it is held that, an opinion of an audit party cannot be basis for reason to believe for the purpose of the provisions of section 147 of the act. 10. The learned Commissioner of Income Tax (Appeals) erred in ignoring the position of law laid down by Hon'ble High Court of Delhi in the case of Pr. Commissioner of Income Tax - 6, Vs. Meenakshi Overseas Private Limited (2017) 82Taxmann.com 300 (Delhi), wherein it is held that, reassessment resorted to on the basis of information from investigation wing without independent application of mind to the tangible material is not justified and all the more so in the ab....
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....dition made by the AO of Rs. 4,06,98,770/- and this addition was made by the AO u/s. 68 of IT Act. It was submitted by him that it is noted by the AO on page no. 4 of the assessment order that the investor in question Shri Samyak C Veera had incurred huge losses in the year 2003, 2004 and 2006 and in the year 2005 also, the income reported was only $19,075/- whereas the loss reported in the year 2003 was $53,416,406, in the year 2004, loss reported was $1,643,264 and in the year 2006, loss reported was $1,568,428. It was also submitted by him that it is noted by the AO in Para 8 of the assessment order that the assessee was asked to furnish the details along with the cash flow statement for the earlier years linking the same for the subject remittances and the assessee has failed in submitting any of such details. It was submitted by ld. DR of revenue that in the absence of cash flow statement, this claim of assessee is not acceptable that the investor has made his investment out of income of earlier years. He submitted that under these facts, the order of CIT(A) should be reversed and that of AO should be restored. As against this, the ld. AR of assessee supported the order of CIT....
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....hed copies of the FIRC, foreign bank statement of the remitting share holder and copies of income tax returns for period ended 31.12.2000, 31.12.2001, 31.3.2002 and the Closing Agreement on Final Determination Covering Specific Matters for these years in Form 906, issued on 31.10.2011 by the Department of Treasury, Internal Revenue Service, USA. The assessee has furnished the income details of Sri Samyak C Veera as per US Tax returns, as here below: Year Income as per USTax returns in $ 2000 14,396,216 2001 16,410,419 2002 29,114,644 2003 Income as reported - (-)53,416,406 (Gross income 4,183,594 - Losses 57,600,000) 2004 Income as reported - (-) 1,643,264 (Gross income 41,471- Losses 1,684,735) 2005 Income as reported - 19,075 (Gross income 22,075 - Losses 3,000) 2006 Income as reported - (-) 1,568,428 (Gross income 77,836 - Losses 1,650,264) 6. From the figures noted by the AO in this para of assessment order, it is seen that the total income reported during this period i.e. in four calendar years i.e. 2000,2001,2002 and 2005 is to the extent of $ 5,99,40,354 and the loss reported by the remitter in the years 2003,2004 and 2006 was to the extent of $ 5,66,28,098 ....
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....rder of CIT(A). This para reads as under. "5.4 I have considered the grounds of appeal and also the submissions filed by the appellant. I have also considered the ratios laid down in the various decisions and relied upon by the appellant. The grounds of the appellant are disposed off as under: - GROUNDS 2, 3 & 4 The only issue involved in these grounds of appeal is the addition of Rs. 4,06,98,779/-brought to tax by invoking the provisions of section 68 of the act. As brought out in the facts the amount represents share capital introduced by Sri. Samyak Chandrakanth Veera a nonresident, non-citizen in the appellant company. The submissions of the appellant have been considered. All the documents furnished during the course of hearing by the AR of the appellant and also his oral arguments have been considered. The funds remitted by Mr. Samyak Chandrakant Veera towards the share capital is as under: Originating country Date of remittance Amount in US$ Relevant F. Y. Remitter details Source of bank account USA 06.06.2007 9,99,970 2007-08 Samaya Kant Veera JP Morgan, Chase Bank Total 9,99,970 It is a decided position of law that,....
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....he Assessing Officer also states that, the appellant has not produced the statement of affairs and also the cash flow statement of the investor. Itis on these grounds that, the Assessing Officer has concluded that, the creditworthiness of the creditor is not established and therefore the sources are not explained. It is vehemently argued by the appellant's representative that, it is not the appellant's responsibility to produce the statement of affairs and also the cash flow statement of the investor. It is argued on behalf of the appellant that, copies of income tax return of the investor Sri. Samyak Chandrakanth Veera was filed during the course of hearing. As per these returns the investor has huge income but claimed certain deductions which is eligible under the law of that country (USA). Such claim has been disallowed by the Inter Revenue Service of USA and assessed huge income which resulted in a huge tax demand. The fact that, substantial income is assessed is established. The fact of its taxability being under dispute also confirms that, the investor had enough of sources. This fact is evident from form no. 4549-A "Income Tax Discrepancy Adjustments" for the year en....
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....the realm and control of the investor, and thereafter giving a finding that, such cash flow was not furnished has concluded that the investor is not credit worthy. I, find force in the argument of the appellant's representative that, the appellant cannot be called upon to produce the cash flow statement of the investor. Since, the copy of the bank account has been produced it was for the Assessing Officer to make enquiries before arriving at conclusions. In the light of the above facts, considering the impeccable evidences such as US Tax Returns, copies of bank account of the investor, intimation to RBI and also copy of FIRC, which have been perused and examined by me, I hold that, the appellant has proved the identity of the investor, the genuineness of the transaction and also prima facie the credit worthiness of the investor. There is no basis for the Assessing Officer to conclude that, the credit worthiness of the investor is not established. The appellant has prima facie established the credit worthiness of the investor and therefore in the absence of any other evidence brought in by the Assessing Officer to prove the contrary, it has to be concluded that, the credit....