TaxTMI 
TaxTMI 
TaxTMI 
2022 (10) TMI 1284
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....deleting 'Addition u/ s 68 amounting to Rs. 4,07,88,170/ - without appreciating the fact that except for the identity, the assessee has not been able to establish the creditworthiness of the person advancing loan and also genuineness of the transaction. 2. On the facts and circumstances of the case, the Ld CIT(A) erred in holding 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 stand alone 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. 2. The assessees have raised Cross objections wherein following common grounds are raised which....
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....wherein it is held that. on mere suspicion no reopening is possible U/s. 147 of the act, since the satisfaction is based on "reason to believe" and not "reason to suspect" i) CIT V. Jeskaran Bhuvalka (1970) 76 ITR 128 (AP) ii) N. Sundareswaram V. CIT (1972) 84 ITR 173 (Ker) iii) Smt. Hemlata Agarwal V. CIT (1967) 64 ITR 428 (All) iv) ITO V. Lakshmani Mewal Das (1976) 103 ITR 437 (SC) v) India Finance & Construction Co., (P) Ltd V. B.N. Panda, DCIT (1993) 200 ITR 710 (Born) 9. The learned Commissioner of Income Tax (Appeals) erred in ignoring the ratio laid down by Hon'ble High Court of Delhi in the case of Principal Commissioner of Income Tax V. RMG Polyvinyl (I) Ltd (2017) 83 Taxmann.com 348 (Delhi), wherein it is held that, the information received from Investigation Wing could not be said to be tangible material perse 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. 10. The learned Commissioner of Income Tax (Appeals) erred in ignoring the position of....
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.... 57 Taxmann.com 141 (Delhi) wherein it is held that, simply reproducing details received from Director of Income Tax, Investigation without any verification would not be sufficient reason to believe for the purpose of invoking the provisions of section '147 of the act 16. The learned Commissioner of Income Tax (Appeals) erred in not following the ratio laid down by ITAT. Delhi Bench 'A' in the case of Bir Bahadur Singh Sijwali V. ITO Ward-1, Haldwani (2015) 53 Taxmann.com 366 (Delhi Trib). 17. The respondent craves permission to ad, delete or alter any of the grounds at the time of hearing. 2.1 The assessee has raised additional grounds of appeal in cross objections, which are reproduced as under:- "The Appellant has filed Cross Objection on 06.08.2018 before Hon'ble ITAT. While filing the same, we have 16 grounds of appeal. The last of the grounds is as under: - "16. The respondent craves permission to add, delete or alter any of the grounds at the time of hearing". The Appellant is taking the following Additional Grounds of Cross Objections on point of law. 1. The learned Commissioner of Income Tax (Appeals) erred in upholding the action of the Assess....
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....assessee's company and in certain years he has also incurred loss to the tune of 56,628,098 USD. As such, he is not in a position to make an investment of above amount in the assessee's company. According to Ld. D.R., the assessee has not proved the sources of Shri Samyak C. Veera to make such huge investment in assessee's company and he has made following investments for which Shri Samyak C. Veera have no source of income:- SI. No. Name of the company Asst. Year Share capital amount given in USD 1 M/s. Kansur Developers India (P) Ltd 2007-08 26,00,000 2 M/s. KJS Realtors (P) Ltd 2007-08 16,22,500 3 M/s. Jasuka Developers (P) Ltd 2008-09 5,99,970 4 M/s. KJS Realtors (P) Ltd 2008-09 10,02,475 5 M/s. Jaico Realtors (P) Ltd 2008-09 9,99,970 6 M/s. Snowshine Realtors (P) Ltd 2008109 4,99,975 7 M/s. Kansur Realtors (P) Ltd 2008-09 35,99,910 8 M/s. Kansur Developers India (P) Ltd 2008-09 41,99,915 9 M/s. Zircon Properties (P) Ltd 2009-10 5,00,0960 10 M/s. Kansur Developers India (P) Ltd 2009-10 9,39,952 11 M/s. Sukant Developers (P) Ltd 2008-09 10,00,440 12 M/s. Sukant Developers (P) Ltd 2010-11 1,84,62,500 13 M/s. Kansur Developers ....
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....ax returns filed by him in US as on date of completion of assessment orders. Subsequently the Internal Revenue Service (IRS) of US has disallowed the claim of losses stating that "based on the fact that the disallowance of $ 57600000 currency option losses would result in substantial under statement of income tax for the year 2003. In support of disallowance of loss claimed of $ 576.00.000 by Mr. Samyak Veera a notice of final partnership administrative adjustments issued by Department of Treasury Internal Revenue Service. USA which is furnished as an annexure to written submission. 5.5 The ld. A.R. submitted that since Ld. D.R. alleged that, the tax returns filed by Mr. Samyak Veera shows that he has no sufficient source to investment in share capital of the appellant company, mere tax returns does not disclose the income of the investor. It only shows the taxable income of the investor but not the actual funds available with the investor, the ld. AO alleging that investor does not have sufficient source of income, Ld. A.R. furnished final order of IRS for the calendar year 2003, wherein the investor has claimed a loss of US $ 57600000 has been disallowed and brought into tax by ....
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.... turn onto Mr. Samyak Veera personal tax return. In 2003, M/s. Gama Trading Co., has filed an Income Tax return reporting a loss of $ 57,600,000. 5.9 The ld. AR further submitted that investment in share capital made by Mr. Samyak Veera includes items which are not part of present pending appeals before the Tribunal. Hence deserves to be deleted from the Chart. The details are as under: (i) Sl. No. Name of the company Asst. Year Share capital amount given in USD 1 M/s. Kansur Develppers India (P) Ltd 2007-08 26,00,000 2 M/s. KJS Realtors (P) Ltd 2007-08 16,22, 500 3 M/s. Jasuka Developers (P) Ltd 2008-09 5,99,970 4 M/s. KJS Realtors (P) Ltd 2008-09 10,02,475 There was no additions made in respect of the above cases on account of investment in share capital by Mr. Samyak Veera and return filed has been accepted. (ii) SI. No. 8, in the chart of learned AO has stated that Mr. Samyak Veera has invested in share capital of M/s. Kansur Developers India (P) Ltd for the A.Y. 2008-09, $ 41.99,915. However, as per the assessment order for the A.Y. 2008-09 it is only $ 38.49,915 has been added U/s. 68 of the act. Hence the difference of $ 3,00,000 is deserves to be....
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....la PFI Corp. Each of these entities i.e., (1) Park Avenue Trust (2) Lexington Avenue Trust and (3) Pensacola PFI Corp, were in turn 100% owned by Mr. Samyak Veera. As such, any gains or losses from Gamma Trading Partners flowed through Park Avenue Trust, Lexington Avenue Trust and Pensacola PFI Corp and in turn onto Mr. Samyak Veera personal tax return. In 2003, M/s. Gama Trading Co., has filed an Income Tax return reporting a loss of $ 57,600,000. This claim of loss has been rejected by the IRS and disallowed stating as under: - -It is determined that the $ 57,600,000 of losses claimed on Form 1065, Schedule K. line 7, and reflected on Form 6761, Line 1 and statement 11 are disallowed because: 1. You have failed to substantiate that the transactions occurred, that they occurred in the manner claimed, or that the transactions and the claimed losses were bona fide or the result of a bona fide transaction. 2. You have failed to substantiate the existence of transactions entitling you to the loss deductions. 3. You have failed to establish that the claimed losses were deductible under I.R.C $ 165 of any other provision of the Internal Revenue Code. 4. It is determined that t....
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....n need not be proved by the investor. i) Tolaram Daga V. CIT (1966) 59 ITR 632 (Assam) ii) CIT V. Daulat Ram Rawatmull (1973) 87 ITR 349 (SC) iii) Sarogi Credit Corporation V. CIT (1976) 103 ITR 344 (Pat) 5.19 (i) In the present case the appellant has not only proved the source but also the source of the source. The investor Mr. Samyak C. Veera has accepted the investment. It is open for the department to initiate enquiries in his case. The revenue cannot insist upon the assessee to prove the source of the source. (ii) It is clarified by Mr. Samyak C. Veera that as per US Law, individuals are not required to create or submit personal balance sheet as part of their personal income tax reporting obligations. The IRS form are reporting individual income tax in Form 1040, US Individual income tax return. Form 1040 requires taxpayers to report the following general categories of items, as applicable to the particular taxpayer, filing status, exemptions, income deductions that reduce adjusted gross income (AGI), the AGI itself, other itemized deductions, a computation of the taxable income a computation of the tax and the alternative minimum tax (AMT). tax credits, and the amou....
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....to accept the source. This position is factually incorrect and the US authorities have also denied allowance of such loss. 5.15 In the light of the above position of law as confirmed in the various decisions listed out hereunder the Ld. A.R. submitted that the sources for investment are proved, the genuineness of the transaction established and the onus cast on the assessee is established. 5.16 In this regard, he relied on the ratios laid down in the following decisions, which are more fully explained in the earlier submissions:- (i) Commissioner of Income Tax and Another V. Arunananda Textiles (P) Ltd (2011) 333 ITR 116 (Kar) (ii) CIT V. Lovely Exports (P) Ltd (2009) 319 ITR (St.) 5 (SC) (iii) CIT V. Ask Brokers Ltd (2011) 333 ITR 111 (Kar) (iv) CIT V. Steller Investments Ltd (2001) 251 ITR 263 (SC) (v) ITO V. Ankush Finstock Ltd (2012) 21 Taxmann.com 119 (Ahmd) (vi) CIT V. Anurag Agarwal (2015) 54 Taxmann.com 75 (Allahabad) (vii) CIT V. Gangeshwari Metal (P) Ltd (2013) 30 Taxmann.com 328 (Delhi) (viii) CIT V. Jaydee Securities & Finance Ltd (2013) 32 Taxmann.com 91 (Allahabad) (ix) CIT V. Nav Bharat Duplex Ltd (2013) 35 Taxmann.com 289/217 Taxman 17 (All) (x....
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....n Ltd V. DCIT, Central Circle-6, New Delhi (2014) 41 Taxmann.com 251 (Delhi-Trib) (xlii) CIT V. (i) Oasis Hospitalities (P) Ltd, (ii) UP Bone Mills India Ltd, (iii) Vijay Powers Generators Ltd (xliii) CIT V. Dolphin Canpack Ltd (2006) 283 ITR 190 (Delhi) (xliv) CIT and Another V. ASK Brothers Ltd (2011) 333 ITR 111 (Kar) (xlv) CIT V. Value Capital Services (P) Ltd (2008) 307 ITR 334 (Delhi) 5.17 The Ld. A.R. finally submitted that in this case the assessee company has proved the identity of the investor with confirmation letters from the investor. Further the genuineness of the transaction is established as assessee company has furnished that all transactions are though banking channel, FIRC's and communication with Reserve Bank of India as per the RBI Guidelines under the FEMA. The department is harping on the investors source of investment in share capital who was a Non-Resident and Non-Citizen of India. The company has established the source of investment in share capital has come from Mr. Samyak Veera. This is not disputed by the Assessing Officer. The only issue on which the Assessing Officer is harping is that personal Balance Sheet and fund flow of Mr. Samyak Ve....
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....atements along with bank accounts of Shri Samyak C. Veera explain the capacity of the remitter, the person who remit the amount to the assessee. 6.2 On the other hand, Ld. D.R. submitted that merely producing the bank accounts does not discharge onus of the creditors if the capacity or creditworthiness of the creditor is not proved. He submitted that the assessee company has not filed any evidence regarding the sources of Shri Samyak C. Veera. The Ld. D.R. also submitted that when the department started enquiry specifically to satisfy the sources of income of Shri Samyak C. Veera, it has came to the knowledge of the department that he has incurred huge loss of 56 Million US Dollars whereas his net income over period of 6 preceding years was only 3.3 Million US dollars and he is not in a position to invest such a huge amount in these companies. According to him, the enquiry by AO shows that the entries shown by the assessee are not genuine and the same represent credit entry which is to be treated as income of assessee. But in our opinion, the satisfaction of AO must not be illusory or imaginary but must have been derived from the relevant facts and evidence and on the basis of pro....
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.... (Para 3)." 6.4 It is pertinent to mention that in ITAT Delhi Bench order dated 12th April 2013 in the case of Russian Technology Centre (P) Ltd. vs DCIT, Circle - 13, New Delhi (ITA No. 4932, 4933, 5390 & 5391/Del/2011) wherein the bench observed as under:- ''13......In our considered opinion the conflict between the provisions is only with reference to the onus and not to the issue of taxability of income. The onus is shifted under ss. 68 or 69 only with reference to the income which is otherwise taxable in the hands of non-resident under section 5(2). Therefore, the issue whether the income of non-resident is taxable or not is still to be decided with reference to the provisions of section 5(2) and the provisions of section 68 or 69 cannot enlarge the scope of section 5(2). What is not taxable under section 5(2) cannot be taxed under the provisions of section 68 or 69. Under sections 5(2), the income accruing or arising outside India is not taxable unless it is received in India. Similarly, if any income is already received outside India, the same cannot be taxed in India merely on the ground that it is brought in India by way of remittances. Reference can be made to the judg....
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....xxx 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 2007- 08, after giving the assessee reasonable opportunity of being heard. In view of above, this ground is allowed for statistical purposes." 10. The learned counsel for the assessee relied upon the judgment of this Court in Commissioner of Income Tax Vs. Divine Leasing & Finance Ltd. 2008 (299) ITR 268 (Del.) to contend that the assessee had furnished all relevant documents which should have been considered to prove the creditworthiness of the creditor/subscriber and the genuineness of the transactions. 11. In Divine Leasing & Filance Ltd.'s case (supra), this Court had held as under:- "13. Th....
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....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 AO. Instead he obdurately adhered to his first impression and/or initial understanding that the entire transaction was neither creditworthy nor genuine. The assessee relied upon the documents to prove that the monies had been received through banking channels from its principal and other related companies; it had submitted the FIPB Approval dated 10.12.2005 authorizing the assessee company to raise capital upto '600 crores, copy of certificates of incorporation of share holders, copy of bank statement, copy of Form 2 filed before ROC, copies of Certificates of (i) Incorporation of RTCHL, (ii) Incumbency of RTCHL, (iii) Good Standing of RTCHL, (iv) Director Certificate of RTCHL a....
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....and it was established that the transaction was genuine though as per contention of the respondent the creditworthiness of the creditor was also established. In the present case, in the light of the judgement of Lovely Exports (P) Ld., we have to see only in respect of the establishment of the identity of the investor. The Delhi High Court also in Divine Leasing & Finance Ltd. (supra) considering the similar question held that the assessee company having received subscription to the public/ rights through banking channels and furnished complete details of the shareholders, no addition could be made under section 68 in the absence of any positive material or evidence to indicate that the shareholders were benamidars or fictitious persons or that part of the share capital represented company's own income from undisclosed sources. The similar view has been taken by the High Courts. 17. As the Apex Court has considered the law in Lovely Exports (Supra) and in view of the law laid down by the Apex Court, we find that the substantial questions framed in these appeals do not arise for our consideration. Accordingly, all these appeals are dismissed with order as to costs. 6.7 Lastly the....
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....sessing Officer, unless there is any incriminating evidence. Except presumptions and allegations, virtually there is no evidence against assessee that these funds received into his bank account in Mauritius are his own incomes from India or 'round trip' funds of assessee as alleged. Therefore, all the grounds raised on this issue, particularly Ground No. 10 & 11 does not require any consideration on the facts of the case. 12. Coming to the issue of creditworthiness of the above said company, there is no dispute with reference to the funds. It has its own funds and Ld. CIT(A) took pains to examine and hold that it is creditworthy. Nothing was brought on record to counter the findings of Ld. CIT(A), except contending that the order of the CIT(A) is not correct. Therefore, the ground regarding creditworthiness of the company particularly from Ground No. 6 to 10 also does not require any consideration. 13. One of the issues to be considered is whether the admission of additional evidence by assessee at the directions of CIT(A) required to be sent to Assessing Officer under Rule 46A(1). It is not assessee who furnished the additional evidence. Therefore, it cannot be strictl....
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....be considered by the first appellate authority need not be confined to what was considered by the Assessing Officer while making the order appealed against. {Para 6] There are of course several judgments whcre it has clearly been laid down that the assessee on his own cannot produce any additional evidence not furnished before the Assessing Officer without meeting the various conditions provided under rule 46A for which satisfaction is to be recorded by the appellate authority in writing and with which the appellate authority is further required to confront the Assessing Officer and allow him a reasonable opportunity to have his say in the matter. [Para 9] From the various authorities of courts, the legal position is that the first appellate authority has wide powers over the order of assessment appealed against before him. In the course of exercise of such power the first appellate authority can direct the assessee to produce any evidence, information or material that was not produced before or was not considered by the Assessing Officer. The purpose of rule 46A is to place fetters on the rights of an appellant to produce additional evidence before the first appellate author....
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.... that requirement cannot be said to be a rule of universal application. If the additional evidence furnished by the assessee before the first appellate authority is in the nature of a clinching evidence leaving no further room for any doubt or controversy, in such a case no useful purpose would be served by performing the ritual of forwarding the evidence/material to the Assessing Officer to obtain his report. In such exceptional circumstances the requirement of sub-rule (3) may be dispensed with. [Para 14] Therefore, there was no infirmity in the impugned order of the Commissioner (Appeals) who had taken pains to comprehensively examine the issue before him and arrive at a correct finding of fact and he should be congratulated for having done so. Therefore, his order was to be upheld and the appeals were to be dismissed. [Para 15]. 14. In this case CIT(A) requisitioned the evidence to examine the contentions. Therefore, the grounds raised from Ground No. 3 to 6 on the issue of additional evidence are infructuous and does not require any consideration. 15. Therefore, on the facts of the case, it is to be admitted that assessee having his own funds abroad has remitted the amou....
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....s still to be decided with reference to the provisions of section 5(2) and, the provisions of Section 68 or 69 cannot enlarge the scope of section 5(2). What is not taxable under section 5(2) cannot be taxed under the provisions of section 68 or section 69. Under section 5(2) the income accruing or arising outside India is not taxable unless it is received in India. Similarly, if any income is already received outside India, the same cannot be taxed in India merely on the ground that it is brought in India by way of remittances. Reference can be made to the judgment of Supreme Court in the case of Keshav Mills Ltd. V. CIT (1953) 23 ITR 230 (Supreme Court of India) if such income is shown in the books of account then it cannot be taxed in India merely because the assessee is unable to prove the source of such entry. For example, there may be appearing an entry of cash credit in the name of a person of USA by way of loan received through cheque and deposited in the bank account maintained at any city in USA. Such money being received outside India cannot be taxed under section 5(2) unless it is proved that such money is relatable to the income accrued or arising in India. Therefore, ....
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.... If this circular motion of the money is conclusively proved with evidence then the non resident will surely do the, explaining under section 69, despite the money having been brought into India through banking channel. But merely on suspicions or doubts, conjectures or surmises, no inference can be drawn against the assessee. It is trite law that there can be no presumption in favor of any illegality of a transaction. In fact the presumption is the other way about. [Para 14.4]. In the cases of remittances through banking channel the nature and source of the funds get explained and the onus on the assessee under section 69 gets discharged, and consequently such remittances cannot be taxed under section 5(2) (b). Therefore, the argument of the revenue that, in the present case, the impugned money was taxable under section 5(2)(b) read with section 69, on the facts, as no merit and cannot be accepted. [para 14.6]. But, the position will be entirely different if the money has been brought into India otherwise than through banking channel, because in that case the onus on the assessee under section 69 will not stand discharged. In such a case the provisions of section 5(2)(b) read with....
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....this para, the AO has noted the loss and income declared by the remitter during Calendar year 2000 to 2006. This para reads as under. 6. During the course of assessment, the assessee was asked to prove the genuineness of the transaction along with the relevant documentary evidences. The assessee has informed that the assessee company has received investments towards share capital and share premium from Sri Samyak C Veera, who is a non-resident and the funds are received in foreign exchange through banking channels. The assesses has furnished 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 US Tax 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 ....
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....ount of losses incurred by the remitter in these three years i.e. 2003, 2004 and 2006, the remitters was having net income of $ 33,12,256 during the period from 01.01.2000 to 31.12.2006 and the assessee has received remittance of only $ 10 Lakhs approx. Under these facts, in our considered opinion, this judgment of Hon'ble Apex Court rendered in the case of Pr. CIT Vs. NRA Iron & Steel Pvt. Ltd. (supra) is not applicable in the present case. 7. Now we reproduce para 5.4 from the order of CIT(A) which is available on page Nos. 35 to 39 of the order 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 non-resident, non-citizen in the appellant company. The submi....
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..... These documents have been examined by me. The Assessing Officer also does not dispute the genuineness of the transaction. Under the circumstances, as far as the genuineness of the transaction is concerned there is no dispute. 3. Credit worthiness of the creditor The only issue to be examined in the appeal is the credit worthiness of the shareholder. The findings of the Assessing Officer in the assessment are only on this issue. The Assessing Officer states that, the sources of the creditor are not proved with supporting evidences. The 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 returns of the investor Sri. Samyak Chandrakanth Veera was filed....
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....orm of bank accounts are furnished the Assessing Officer should not have rejected the appellant's contention in a summary way without making enquiries on his own. The appellant had produced the bank accounts of the investor Mr. Samyak C Veera in support of the investment made. The entries were available in the said bank accounts. All the bank accounts are foreign bank accounts and the transactions are in the nature of interbank transfers. Instead the assessing Officer has directed the appellant to produce the cash flow of the investor, which is not in 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 FI....
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....y on this basis that since the investor has incurred losses and the assessee has not furnished cash flow statement, there is no creditworthiness of the investor. In our considered opinion, this objection of the AO is not valid for making addition of this huge amount particularly when the investor has remitted money from abroad through proper banking channel and even after adjusting or reducing the losses incurred by investor in three years i.e. 2003, 2004 and 2006 also, the remaining income of four years i.e. 2000, 2001, 2002 and 2005 is more than three times of the remittance received by the present assessee from the investor abroad. Considering these facts, we find no reason to interfere in the order of CIT(A) on this issue. 9. In the result, the appeal of the revenue is dismissed." 6.9 In the present case, as discussed in earlier paras, the issue is with regard to onus on the assessee to prove the sources of sources of credit. The onus is shifted under Sections 68 or 69 of the Act only with reference to the income, which is otherwise taxable in the hands of non-resident u/s 5(2) of the Act. Therefore, the taxability of the income is to be decided with reference to section 5(2....
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.... Confirmation from Samyak Chandrakanth Veera furnished. iv) FIRCs issued by the receiving bank and filed before the RBI. 6.11 In our opinion, identity of person, the genuineness of the transaction is established as assessee company has furnished that all transactions are though banking channel, FIRC's and communication with Reserve Bank of India as per the RBI Guidelines under the FEMA. The department is harping on the investors source of investment in share capital who was a Non-Resident and Non-Citizen of India. The company has established the source of investment in share capital has come from Mr. Samyak Veera. This is not disputed by the Assessing Officer. The only issue on which the Assessing Officer is harping is that personal Balance Sheet and fund flow of Mr. Samyak Veera is not provided. It is not the responsibility of the company to call for such details from the investor in share capital. The transaction of investment is in the form of Foreign Currency, which has been received through in banking channels. The receipt of foreign currency by the Indian Company is subjected to verification by the Reserve Bank of India as per the FEMA / FDI guidelines. As such expecti....