ACIT, CHENNAI V. M/s. Vox Spectrum Pvt Ltd., CHENNAI

ITA 198/CHNY/2013

• Counselvise Citation: [2015] 120 COUNSELVISE.COM (IT) 8764 (ITAT-CHENNAI)
• Duration Of Justice: 2 year(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-02-2015
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: D
• Next Hearing Date: 29-01-2015
• Assessment Year: 2008-2009
• Appeal Filed On: 04-02-2013
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: N MADHAVAN
• Assessee Lawyers: S SRIDHAR
• Section: 143(3); 68

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH : CHENNAI . . , . . , ! '# [BEFORE SHRI B.R. BASKARAN, ACCOUNTANT MEMBER AND SHRI S. S. GODARA, JUDICIAL MEMBER] ./ I.T.A.NO.198/MDS/2013 / ASSESSMENT YEAR : 2008-09 THE ASSTT. COMMISSIONER OF INCOME-TAX COMPANY CIRCLE III(4) CHENNAI VS. M/S VOX SPECTRUM PVT. LTD NO.35, 2 ND FLOOR 36 TH STREET, TG NAGAR NANGANALLUR CHENNAI 600 061 [PAN AABCV 5785 D ] ( $% / APPELLANT) ( &'$% /RESPONDENT) / APPELLANT BY : SHRI N. MADHAVAN, JCIT /RESPONDENT BY : SHRI S. SRIDHAR, ADVOCATE / DATE OF HEARING : 29-01-2015 / DATE OF PRONOUNCEMENT : 4-02-2015 ( / O R D E R PER S.S.GODARA, JUDICIAL MEMBER THIS REVENUES APPEAL FOR ASSESSMENT YEAR 2008 -09, IS DIRECTED AGAINST ORDER OF THE COMMISSIONER OF INC OME-TAX (APPEALS)- II CHENNAI DATED 1.11.2012, PASSED IN APPEAL NO.8 18/10-11, IN I.T.A.NO.198/13 :- 2 -: PROCEEDINGS UNDER SECTION 143(3) OF THE INCOME-TAX ACT, 1961 (IN SHORT THE ACT). 2. THE REVENUES SOLE SUBSTANTIVE GROUND CHALLENGES TH E CIT(A)S ORDER DELETING SECTION 68 ADDITION TOWARDS INTRODUCTION OF SHARE APPLICATION MONEY AMOUNTING TO ` 2.90 CRORES; ADDED IN THE COURSE OF A REGULAR ASSESSMENT DATED 31.12.2010. 3. A PERUSAL OF THE CASE FILE REVEALS THAT THIS APPEAL IS TIME BARRED BY 31 DAYS IN FILING. THE ASST. COMMISSIONE R OF INCOME-TAX, COMPANY CIRCLE III(3), CHENNAI, HAS FILED AN AFFIDA VIT STATING REASONS THEREOF. THE ASSESSEE DOES NOT CONTEST THE SOLEMN AFFIRMATIONS AVERRED THEREIN. THEREFORE, WE CONDONE THIS DELAY OF 31 DAYS IN FILING THE APPEAL. 4. THE ASSESSEE-COMPANY ASSEMBLES, MARKETS AND DISTRIB UTES VOICE LOGGERS. IT HAD FILED ITS RETURN ON 17.8.200 9 ADMITTING LOSS OF ` 2,33,65,961/-. THE SAME WAS SUMMARILY PROCESSED. THE ASSESSING OFFICER TOOK UP SCRUTINY. HE INTER ALIA NOTICED THE ASSESSEE TO HAVE INTRODUCED A SUM OF ` 2.90 CRORES AS SHARE APPLICATION MONEY RECEIVED FROM FOREIGN REMITTANCE CHANNEL. THE RELEVANT FIRC DOCUMENTS REVEALED THAT THERE WERE TOTAL 13 TRANSACTIONS FROM 23.4.2007 TO 18.3.2008. SIX OF THEM STATED PARTICULARS OF THE R EMITTER ENTITY AS VOX I.T.A.NO.198/13 :- 3 -: SPECTRUM LTD. SHARJAH WITH ITS PURPOSE AS ADVANCE TOWARDS EQUITY. OTHERS MENTIONED THE SAME AS OTHER INWARD REMITT ANCE. THE ASSESSING OFFICER QUOTED ASSESSMENT ORDER OF THE PR ECEDING ASSESSMENT YEAR ADDING SIMILAR CREDITS FOR WANT OF GENUINENESS. HE FOLLOWED EARLIER REASONING FOR TREATING THE IMPUGNE D SHARE APPLICATION MONEY OF ` 2.90 CRORES AS BOGUS CREDITS U/S 68 RESULTING IN THE ADDITION IN QUESTION. 5. THE CIT(A) HAS ACCEPTED THE ASSESSEES GROUNDS CHA LLENGING THE IMPUGNED SHARE APPLICATION MONEY ADDITION AS UN DER: 6. I HAVE GONE THROUGH THE ELABORATE SUBMISSIONS O F THE ASSESSEE, THE ASSESSMENT ORDER AND OTHER MATERIALS AVAILABLE ON R ECORD. APART FROM THE ABOVE SUBMISSION, THE ASSESSEE ALSO FILED LETTE R DATED 1ST OCTOBER 2012, GIVING COPIES OF REASSESSMENT ORDER DATED 11. 05.2012 AND ALSO FCGRP DOCUMENTS SUBMITTED TO THE RBI THROU GH THE ICICI BANK, BANGALORE ALONG WITH CERTAIN OTHER ENCLOSURES . 6.1 THE ASSESSEE WAS IN APPEAL BEFORE THE CIT(A)III , CHENNAI FOR THE ASSESSMENT YEAR 2007-08. THE ADDITION WAS PARTLY DE LETED AND PARTLY SUSTAINED. THE DEPARTMENT WAS IN APPEAL BEFORE THE ITA T FOR THE SAME ASSESSMENT YEAR AND THE IT AT REMITTED THE ENTIRE M ATTER BACK TO THE ASSESSING OFFICER FOR RECONSIDERATION. THE ASSE SSING OFFICER AFTER CONSIDERING ALL THE ASPECTS OF THE CASE PASSED ORDE R ON 11.05.2012 FOR THE ASSESSMENT YEAR 2007-08. 6.2 A PERUSAL OF THE ASSESSMENT ORDER FOR THE AS SESSMENT YEAR 2008- 09 WOULD INDICATE THE ADDITION OF RS.2,90,00,000/- HAS BEEN ADDED WITH THE FOLLOWING REMARKS ..... ON THE PRINCIPLES WHICH WAS DISCUSSED IN DE TAILS THE ASSESSMENT PROCEEDINGS FOR THE ASSESSMENT YEAR 2007 -08. SINCE THE FACTS AND CIRCUMSTANCES ARE SIMILAR, ACCO RDINGLY, THE ABOVE CREDITS. OF RS.2,90,00,000/- IS TREATED A S BOGUS CREDIT FOR THE REASON BEING NO GENUINENESS IN SUCH CREDITS AND THE SAME IS ADDED BACK TO THE INCOME OF THE ASS ESSEE U/S .68 OF THE I.T. ACT.' I.T.A.NO.198/13 :- 4 -: 6.3 HOWEVER DURING THE .COURSE OF APPEAL, THE ASSE SSEE HAS PRODUCED COPY OF THE REVISED ASSESSMENT ORDER PASSED BY THE ACIT, COMPANY CIRCLE III(4), CHENNAI DATED 11.05.2012 ALLOWING TH E ENTIRE ADDITION OF RS.23,97,32,760/-, THE RELEVANT PORTION OF WHICH IS AS UNDER: 'ON VERIFICATION OF THE ABOVE INFORMATION, THE INVE STMENT FALLS UNDER THE AUTOMATIC ROUTE OF RESERVE BANK OF INDIA, AS THIS COMPANY IS IN THE LINE OF MANUFACTURING I.E., ASSEM BLING, MARKETING AND DISTRIBUTION OF VOICE LOGGERS CAN ACCEPT 100% INVESTMENTS FROM RESIDENT OUTSIDE INDIA I.E. FOREIGN INSTITUTIONAL INVESTORS CAN INVEST 100% IN THE MANUFACTURING CONCERN. FURTHER THE ASSESSEE HAD FILED COPIES OF FORM NO.2 IN ACCORDANCE WITH SECTION 75(1) OF THE COMPANIES ACT 1956 AND COPIES OF FCGPR WITH THE RESERVE BANK OF INDIA FILED BY THE ICICI BANK BEFORE THE RESERVE BANK OF INDIA AS AUTHORIZED DEALER OF THE' ASSESSEE COMPANY. THE FORM FCGPR INTENDS TO INTIMATE ALLOTMENT OF SHARES BY TH E INVESTORS BY THE ASSESSEE COMPANY AND FILED THE EVIDENCES OF ISSUING SHARES TO THE RESPECTIVE I NVESTORS. ON EXAMINATION OF THE DOCUMENTS FURNISHED BY THE. A SSESSEE COMPANY, THE ASSESSMENT IS COMPLETED IN CONCURRENCE WITH THE JOINT COMMISSIONER OF INCOMETAX, COMPANY RANGE III AS UNDER ... ' FROM THE ABOVE ASSESSMENT ORDER, IT IS EVIDENT THAT THE INVESTMENT BROUGHT IN BY THE ASSESSEE DOES NOT REQUIRE ANY FIP B CLEARANCE AS THE SAME IS UNDER AUTOMATIC ROUTE. FURTHER TILE ASSESSE E HAS ALSO FILED COPIES OF FCGPR FILED BY IGICI BANK, BANGALORE TO R BI. 6.4 SIMILARLY FOR THE ASSESSMENT YEAR 2008-09, THE ASSESSEE BROUGHT IN A SUM OF RS.2,90,00,000/- BY 13 REMITTAN CES FROM 23.04.2007 TO 17.03.2008. THE REMITTANCES WERE FROM VOX SPECTRUM, SHARJAH, REMITTING BANK WAS EMIRATES INTERNATIONAL BANK, DUBAI AND WAS RECEIVED BY THE ICICI BANK, CHENNAI. THE ASSES SEE HAD OBTAINED APPROVAL FOR ISSUE OF EQUITY/PREFERENCE SHARES TO V ARIOUS INVESTORS FROM RESERVE BANK OF INDIA FOR RS. 2,90,00,000/- ON OCTOBER, 19,2011, THE RELEVANT PORTION OF WHICH IS AS UNDER: 'WE ADVISE THAT YOU HAVE OUR. APPROVAL FOR ISSUE OF SHARES AGAINST THE INWARD REMITTANCE AGGREGATING TO RS.2,9 0,00,000/- RECEIVED DURING THE PERIOD 27.08.2007 TO 31.12.2008 TO THE NON RESIDENT INVESTOR WITHIN ONE MONTH FROM THE DAT E OF THIS LETTER.' 6.5 AFTER OBTAINING THE PERMISSION OF THE RBI ON 19 .10.2011, THE APPELLANT COMPANY HAS ISSUED EQUITY SHARES FOR RS.2 ,90,00,000/- ON 25.10.2011. THE REASONS FOR DELAY IN OBTAINING RBI PERMISSION HAS BEEN EXPLAINED BY THE ASSESSEE AS BEING THE TRANSFE R OF THEIR REGISTERED OFFICE FROM CHENNAI TO BANGALORE. I.T.A.NO.198/13 :- 5 -: 6.6 CONSIDERING THE FACT THAT THE REASONS CITED FOR ADDITION IN THE ASSESSMENT ORDER FOR THE ASSESSMENT YEAR 2007-08 HA S BEEN ANNULLED IN THE SUBSEQUENT ASSESSMENT ORDER DATED 11.05.2012 AND THE IDENTITY OF THE REMITTER HAS BEEN PROVED AND NECESSARY PERMI SSION HAS BEEN OBTAINED BY THE ASSESSEE FROM THE RBI FOR ISSUANCE OF SHARES TO FOREIGN INVESTORS AND ALSO THE FACT THAT THE FIPB CLEARANCE IS NOT REQUIRED FOR INVESTMENT IN THIS SECTOR AS THE SAME IS UNDER AUTO MATIC ROUTE, THERE IS NO REASON FOR TREATING THE AMOUNT OF CAPITAL BROUGH T IN TO THE EXTENT OF R.2,90,00,000/- AS UNEXPLAINED INCOME OF THE ASSESS EE. THEREFORE, THIS GROUND OF APPEAL IS ALLOWED. THIS LEAVES THE REVENUE AGGRIEVED. 6. WE HAVE HEARD BOTH PARTIES AND GONE THROUGH THE CAS E FILE. RECORDS STAND PERUSED. THE ONLY DISPUTE BETWEEN TH E PARTIES PERTAINS TO THE IMPUGNED ADDITION OF SHARE APPLICAT ION MONEY U/S 68 AMOUNTING TO ` 2.90 CRORES. THE PARTIES UNANIMOUSLY ADMIT BEFORE US THAT FACTS OF THIS ISSUE ARE IDENTICAL TO THOSE INV OLVED IN THE PRECEDING ASSESSMENT YEAR. IT HAS COME ON RECORD THAT THE CI T(A) HAD DELETED SIMILAR ADDITION THEREIN AS WELL. THE REVENUES AP PEAL IN THIS 'TRIBUNAL' WAS ALLOWED FOR STATISTICAL PURPOSES. THE ASSESSIN G OFFICER IN HIS CONSEQUENTIAL ORDER HAS DELETED THE ENTIRE ADDITION OF ` 23,97,32,716/- AFTER BEING SATISFIED ABOUT GENUINENESS OF THE FORE IGN REMITTANCES IN QUESTION WITH ALL NECESSARY DETAILS. THE CIT(A) OB SERVES IN THE LOWER APPELLATE ORDER THAT THE RBI HAS ALREADY ACCORDED A PPROVAL TO THE ASSESSEES REMITTANCES IN THE IMPUGNED ASSESSMENT Y EAR. IT HAS ALSO BEEN HELD THAT ALL THESE REMITTANCES ARE AS PER THE NECESSARY REGULATIONS. HOWEVER, NO DISCUSSION IN DETAIL IS F ORTHCOMING IN THE I.T.A.NO.198/13 :- 6 -: YEAR UNDER CHALLENGE ABOUT THE DISCREPANCIES SPECIF ICALLY PINPOINTED BY THE ASSESSING AUTHORITY. THESE CIRCUMSTANCES LE AD US TO FOLLOW THE EARLIER REMAND ORDER OF THE CO-ORDINATE BENCH AND S END BACK THIS ISSUE TO THE ASSESSING AUTHORITY FOR FRESH DECISION AS PE R LAW. WE ORDER ACCORDINGLY. NEEDLESS TO SAY, THE ASSESSING OFFICE R MAY BE GUIDED BY HIS CONSEQUENTIAL ORDER DATED 11.5.2012 FOR ASSESSM ENT YEAR 2007-08 SUBJECT TO SIMILARITY OF THE CIRCUMSTANCES INVOLVED . THE REVENUES GROUNDS ARE RESTORED TO THE FILE OF THE ASSESSING O FFICER. 7. THE REVENUES APPEAL IS ALLOWED FOR STATISTICAL PUR POSES. ORDER PRONOUNCED ON WEDNESDAY, 4 TH OF FEBRUARY, 2015, AT CHENNAI. SD/- SD/- ( . . ) (B.R. BASKARAN) / ACCOUNTANT MEMBER ( . . ) (S. S. GODARA) ! '# / JUDICIAL MEMBER $! / CHENNAI %' / DATED: 4 TH FEBRUARY, 2015 RD '&'' ()'*) / COPY TO: ' 1 . / APPELLANT ' 2. / RESPONDENT 3. ' +',- / CIT(A) 4. ' + / CIT 5. )./' 0 / DR 6. /1'2 / GF