JCIT (IT) (OSD)-4(1)(2), Mumbai V. ARUN RANGACHARI, Mumbai

ITA 2393/MUM/2019

• Counselvise Citation: [2022] 105 COUNSELVISE.COM (IT) 4033 (ITAT-MUMBAI)
• Duration Of Justice: 3 year(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-04-2022
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: I
• Assessment Year: 2009-2010
• Appeal Filed On: 14-04-2019
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Keywords: Unexplained investment; Business income; Rectification of order; Double taxation relief; Source of fund; Permanent establishment; Corroborative evidences; Reason to believe; Reassessment proceedings; Set aside
• Section: 147; 131; 68; 69; 148; 6; 132; 271(1)(c); 5(2); 9(1); 9(1); 9(1); 13; 22

Judgement Text

THE INCOME TAX APPELLATE TRIBUNAL “I” Bench, Mumbai Shri Shamim Yahya (AM) & Ms. Kavitha Rajgopal (JM) I.T.A. No. 2393/Mum/2019 (A.Y. 2009-10) JCIT(IT)(OSD)-4(1)(2) Room No. 1609, 16 th Floor, Air India Building Nariman Point Mumbai-400 021. Vs. Arun Rangachari 201, Centre Point J.B. Nagar, A.K. Road, Andheri-E Mumbai-400 059. PAN : AMDPR8746F (Appellant) (Respondent) Assessee by None Department by Shri Milind S. Chavan Date of Hearing 17.02.2022 Date of Pronouncement 22.04.2022 O R D E R Per Shamim Yahya (AM) : This appeal by the Revenue is directed against the order of learned CIT(A) dated 28.1.2019 pertains to A.Y. 2009-10. 2. The grounds of appeal read as under : 1. Whether the Ld. CIT(A) has erred in facts and law in not holding that the assessee is taxable u/s 9(1)(i) of the IT Act, 1961 in relation to the assessment of his business income as done by the Assessing Officer? 2. Whether the Ld. CIT(A) has erred in facts and law in not holding that there exists a business connection of the assessee in India and his business income as computed by the Assessing Officer is taxable u/s 9(1)(i) of the IT Act, 1961? 3. Whether the Ld. CIT(A) has erred in facts and law in applying the provisions of India-UAE DTAA without even examining whether the assessee is a resident under Article 4 of that DTAA for the purposes of it being applicable? 4. Whether the Ld. CIT(A) has erred in facts and law in holding that the assessee is entitled to treaty benefit under the India-UAE DTAA without appreciating the fact that the assessee had not provided Tax Residency Certificate from UAE Tax Authority? Arun Rangachari 2 5. Whether the Ld. CIT(A) has erred in facts and law in holding that there is no conclusive evidence and sufficient nexus of the assessee rendering consultancy services in India, without appreciating the fact that the assessee had accepted in his statement u/s 132(4) of the Act that he had provided such services to Gulf Finance House of UAE in relation to the Valuable Group of India? 6. Whether the Ld. CIT(A) has erred in facts and law in not appreciating that the statement of the assessee was recorded u/s 132(4) of the Act in the business premises of a company M/s Dar Media Pvt. Ltd, in which he was a share holder and director, and for purposes of business connection in India his utilization of such premises was sufficient in relation to consultancy services provided by him as he was in India for 110 days during F.Y.2008-09 (A.Y.2009-10) and the above premises was at his disposal? 7. Whether the Ld. CIT(A) has erred in facts and law in providing relief to the assessee w.r.t. addition of Rs 3,25,50,00,000/- being income corresponding to the receipts by Thurles International Ltd and DAR Capital Ltd, from Gulf Finance House of UAE without appreciating that these amounts pertained to services rendered by the assessee in relation to Valuable Group of India and that the onus was on assessee to prove that it was not as such? 8. Whether Ld. CIT(A) has erred in facts and in law in not considering the companies of DAR group as conduit companies without appreciating that the assessee was the sole/principal shareholder and director in DAR group of companies, and through them had cross-holding in Indian companies of the Valuable Group? 9. Whether Ld. CIT(A) has erred in facts and in law in not considering the companies of DAR group as conduit companies without appreciating that the copy of bank account submitted before the Ld CIT(A) clearly shows that money was transferred to him by M/s. DAR Investment Ltd, a DAR Group company, to buy a residential property in India in his own name and not in the name of the company? 10.Whether on the facts and in the circumstances of the case and in law, Ld. CIT (A) erred in not taking into account that the assessee has not discharged his onus by failing to provide copy of bank accounts regarding receipt of USD 51.m million and USD 41.5 million even while accepting that he had provided services to Gulf Finance House of UAE in relation to the Valuable Group of India, and not considering the decision of Hon'ble Bombay High Court in the case of Soignee R Kothari v/s DCIT IN WP(L) No. 3172 of 2015 where it was held that in the normal course of human conduct, if a person has nothing to hide and serious question are being raised about the funds, a person would put to rest all questions which seem to arise in the minds of the authority? 11.Whether on the facts and in the circumstances of the case and in law, Ld. CIT(A) erred in not taking into account the decision of a Constitution Bench of Hon'ble Supreme Court in case of GVK Industries Ltd. & Anr Vs. The Arun Rangachari 3 Income Tax Officer & Anr in Civil Appeal No. 7796 of 1997 where extra- territorial nexus of Indian laws has been held to be valid? 12.Without prejudice to the above, even if it is found that the India-UAE DTAA is applicable, whether on the facts and in the circumstances of the case and in law, Ld. CIT(A) erred in holding that there was no fixed place PE of the assessee in India without taking into account that the assessee was present in India for 110 days in AY 2009-10 and he had business premises at his disposal which are sufficient for creating such a PE in light of decision of the Hon'ble Supreme Court in the case of Formula One World Championship Limited [2017] TS-161-SC-2017? 13. Whether on the facts and in the circumstances of the case and in law, Ld. CIT(A) erred in holding that the investment of Rs 94,44,74,054/- by DAR Group of companies in Indian companies of the Valuable Group, cannot be taxed in the hands of the assessee on the ground that the investments were made by the foreign companies in their own capacities, without appreciating that the companies of DAR group were conduit companies in which the assessee was the sole/principal shareholder and through them had cross- holding in Indian companies of the Valuable Group? 14. Whether on the facts and in the circumstances of the case and in law, Ld. CIT(A) erred in holding that the investment of Rs 94,44,74,054/- by DAR Group of companies in Indian companies of the Valuable Group, cannot be taxed in the hands of the assessee without appreciating that a Constitution Bench of Hon'ble Supreme Court in case of GVK Industries Ltd & Anr v The Income Tax Officer & Anr in Civil Appeal No. 7796 of 1997 has held the validity of extra-territorial nexus of Indian laws and this nexus is established by way of premises of M/s Dar Media Pvt. Ltd. being available at assessee's disposal and utilized by him w.r.t. rendering services and the presence of the assessee in India for 110 days during F.Y.2008-09(A.Y.2009-10)? 15. Whether on the facts and in the circumstances of the case and in law, Ld. CIT(A) erred in holding that the investment of Rs 94,44,74,054/- by DAR Group of companies in Indian companies of the Valuable Group, cannot be taxed in the hands of the assessee without considering the decision of Hon'ble Bombay High Court in the case of Soignee R Kothari vs DCIT IN WP(L) No. 3172 of 2015 where it was held that in the normal course of human conduct, if a person has nothing to hide and serious question are being raised about the funds, a person would put to rest all questions which seem to arise in the minds of the authority, and the assessee had failed to provide even basic documentary proof such as bank statements of DAR Group of companies w.r.t. investments in Indian companies of the Valuable Group? 16. The Appellant craves leave to amend or alter any ground or add a new ground which may be necessary." 3. Brief facts are as under : Arun Rangachari 4 The assessee in this case is an Indian citizen and an NRI based in Dubai. The assessment in this case was reopened upon letter received from DDIT(Inv.) regarding involvement of Mr. Arun Madhavachari Rangachari with relation to search carried out at Valuable group at Mumbai and Dar Media Pvt. Ltd. Statement of Arun Madhavachari Rangachari was recorded as director of the entities. The initial part of the reassessment notice encapsulates the statement of assessee in this regard which led to the reopening. The same is reproduced as under :- “A letter was received from DDIT(Inv.) Thane regarding Mr. Arun Rangachari, Search action u/s 132 was carried out in the case of Valuable Group at Mumbai on 10.04.2013 by DDIT(Inv.), Thane. In a related action M/s DAR Media Pvt. Ltd. was also covered u/s. 132 of the Act on 10.04.2013 and the statement of Shri Arun Rangachari was recorded in the capacity of Director of this entity. Mr Rangachari claims to be resident of UAE u/s 6 of I T Act though he has an Indian passport. In the statement Shri Rangachari claimed to have rendered consultancy services to two non-resident entities i. e. Gulf Finance House (GFH) & Khaleej Bank of Commerce (KBHC) which were executing certain projects in India in association with the Valuable Group. During the search proceedings u/s 132 an email from GFH addressed to Arun Ranganchari was found which stated "Please note that GFH over the years, has for certain of its projects made payments amounting to USD 51.5m to DAR Capital Limited and USD 41.5 m to Thurles International Limited". Shri Arun Rangachari is the Director of these two entities which are based in Mauritius. The two Mauritius entities are owned 100 percent by Shri Rangachari, by his own admission in his statement recorded on 13.04.2013, in response to question no 4 of the same. Based on the advice provided by Mr. Rangachari, the GFH and KBHC have made investments in India in collaboration with the Valuable Group.’’ 4. The Assessing Officer in the assessment order proceeded to add these amounts in the hands of the assessee by following order. The same read as under :- “7. The amount received by M/s. Dar Capital Ltd. and M/s. Thurles International Ltd. on behalf of the assessee (Mr. Arun Rangachari) are taxable in India due to the well established fact that Shri Arun Rangachari has provided consultancy services to Gulf Finance House (GFH) and Khaleej Bank of Commerce (KBHC) from India at a fixed place of business premises in Mumbai. 7.1 It has been established by the Investigation Unit of Mumbai that the consultancy work has been rendered by the assessee for the business operations carried out in India. The consultancy work included identification Arun Rangachari 5 of land, local partners in India and allied activities at Energy City, Panvel and Logistics Park, Pen. 7.2 Sh. Arun Rangachari has liasoned actively between Valuable Group and Gulf Finance House (GFH) & Khaleej Bank of Commerce (KBHC). For the consultancy work carried out by Sh. Arun Rangachari, Gulf Finance House (GFH) and Khaleej Bank of Commerce (KBHC) have paid Consultancy fees to the companies owned 100% by Sh. Arun Rangachari amounting to USS 51.5 million to M/s Dar Capital Ltd and USS 41.5 million to Thurles International Ltd. It is notable that Dar Capital Ltd is based at Mauritius and Thurles International Ltd is based at British Virgin Islands. In view of the above said facts, it is clear [hat, Sh. Arun Rangachari's 100% owned companies have received a total of USS 93.00 million (INR 465.00 crores approximately by adopting the value of 1 US$ at Rs. 50/-). 7.3 The contention of the assessee is that since he is an NRI based al UAE and his two companies are foreign companies, their income cannot be taxed in India. 7.4 The above contention of the assessee cannot be accepted due to the well established fact that Sh. Arun Rangachari has been giving various consultancy services for projects undertaken in India as mentioned above to GFH and KBHC. Since, the above stated companies are owned by the assessee by having 100% stake; the assessee has deliberately received the amount in the hands of M/s. Dar Capital Ltd, based at Mauritius and Thurles International Ltd, based at British Virgin Islands in order to avoid taxation of income in India. 7.5 It is well established fact that the assessee has not submitted any details of the said companies, even though it was submitted by the assessee under Oath during the course of the proceedings u/s. 131 of the Income tax Act before the DDIT, Investigation Unit, Mumbai. Further, it is notable that the assessee is the sole person having the required knowledge of rendering these technical services on behalf of those business concerns. 7.6 It is contented by the assessee that, the above amount has been received by his foreign companies for consultancy work given outside India. Hence, the assessee was asked to submit the proof of this fact in the form of copies of agreement for this work, the invoices raised, payment received etc. At the time of search on 10/04/2013, Sh. Arun Rangachari stated that he would furnish all this information by 19/04/2013. But he did not submit any information before the Investigation Wing or before the undersigned during the assessment proceedings even after notices calling for this information has been issued on 16/11/2016, 06/12/2016, 06/11/2017 and 06/12/2017. Thus the assessee's submission is found Ipse Dixit. 7.7 Hence, it is clear fact that the assessee has earned money for projects undertaken in India by using the business premises in India and the business consideration was received by the companies of the assessee as per the arrangement made by the assessee. Further, the assessee has not proved Arun Rangachari 6 that the money was actually received by him for work carried out outside India. 7.8 But even after being asked for about ten times, such information has not been furnished by the assessee nor any reason for not furnishing this information has been submitted. Thus it is clear that the amount of Rs.465 crores received by the foreign companies is for the consultancy work given by Sh. Arun Rangachari to GFH and KBHC for the project work undertaken with the Valuable Group in India, more precisely at Panvel and Pen. Accordingly the receipt becomes taxable in India. Further, it is unbelievable that such huge payment of nearly Rs 465 crores will be paid just for exercising limited role as claimed by Arun Kangachari which is not business expedient and too narrow a view to be accepted. Accordingly, it is considered that the above amount received by the said companies is nothing but the income of the assessee and hence it is treated as business income of the assessee from the consultancy work carried out to GFH and KBHC. 7.9 It will be proper to examine the taxability of Sh, Arun Rangachari in India. It is found that Sh. Arun Rangachari has an Indian Passport, even though he claims to be a resident of UAE u/s 6 of the IT Act. At the outset it is mentioned that Sh. Arun Rangachari has not furnished (he copy of Tax Residency Certificate from UAE Tax Authority. In absence of the TRC no treaty benefit will be available to him and he is liable to be charged to tax as per the IT Act. Notwithstanding to the above, the income earned by the assessee is taxable in India as business income in India as per the India-UAE DTAA based on the following facts and legal position. 8. Permanent Establishment in India:- 8.1 At the time of search action u/s. 132 of the Income tax Act on 10/04/2013 at the premises of M/s Dar Media Pvt Ltd at 201, Centre Point, Andheri Kurla Road, J.B. Nagar, Andheri, Mumbai, which is owned.100% by the assessee (Shri Arun.Rangachari), he was present at the said business premised and his statement was recorded U/s 132(4) of the Act in the capacity of Director of M/s Dar Media Pvt Ltd. 8.2 Hence, it is clear that the assessee has been rendering his consultancy and other business activities from the said business premises. Hence, the income earned by him by making use of the said business premises is liable to be taxed under Article 7(1) as he has a permanent establishment. In other words, the assessee is making use of the business premises of Dar Media Pvt. Ltd in India as a fixed base and is available at the disposal of assessee for management of his activities in India. 8.3 The assessee has contended that, the concept of the PE is not applicable to the individuals and hence, the business income arrived in India cannot be taxed as per the India-UAE DTAA. Arun Rangachari 7 8.4 The above contention of the assessee cannot be accepted due to the fact that as per the Article 5 of the India UAE treaty, any income earned by an enterprise by way of permanent establishment is taxable in the source state. It is notable that the word "enterprise" is defined neither in the DTAA nor in the Income tax Act. It is observed from the Article 3 (1) (g) of the DTAA, it is mentioned as under :- "the terms "enterprise of a Contracting State" and "enterprise of the other Contracting State" mean respectively, an enterprise carried on by a resident of a Contracting State and an enterprise carried on by a resident of the other Contracting State; The Article 5: Permanent Establishment of the DTAA is as under: Article 5: Permanent Establishment: 1) For the purposes of this Agreement, the term "permanent establishment" means a fixed place of business through which the business of an enterprise is wholly or partly carried on. 2) The term "permanent establishment" includes especially: (a) a place of management ; (b) a branch ; (c) an office ; (d) a factory ; (e) a workshop ; (f) a mine, an oil or gas well, a quarry or any other place of extraction of natural resources ; (9) a farm or plantation ; (h) a building site or construction or assembly project or supervisory activities in connection therewith, but only where such site, project or activity continues for a period of more than 9 months ; (i) the furnishing of services including consultancy services by an enterprise of a Contracting State through employees or other personnel in the other Contracting State, provided that such activities continue for the same project or connected project for a period or periods aggregating more than 9 months within any twelve-month period. 20 th Nov 2008 25 th Nov 2008 6 Arun Rangachari 8 13 th Jan 2009 14 th Jan 2009 2 Total 110 8.8 From the above it is amply clear that Sh. Arun Rangachari spends substantial period in India due to his business interest. This fact once again proves that he has been using the business premises at Mumbai as a Permanent Establishment to carry out his business and also carrying out the business for his wholly owned business concern. 8.9 In the instant case, the assessee is engaged in the business activity by way of providing consultancy services and the assessee also uses the business premises located at Mumbai as a place of management. It is evident from the fact that at the time of search on 10/04/2013, Mr Arun Rangachari was present in this office premises. He has himself admitted to the fact that he has been giving consultancy services to GFH and KBHC. Hence, the assessee is having PE as per the Article 5(1) and 5(2)(a) of the India UAE DTAA. Thus it has been established that the assessee has business income in India, has a Permanent Establishment (business connection) here and it is taxable here u/s 9(1) of the IT Act. 9. Without prejudice, the assessee's case is also covered by Article 14 of the India UAE DTAA which is reproduced below:- Article 14 - independent personal services 1. Income derived by a resident of a Contracting State in respect of professional services or other independent activities of a similar character shall be taxable only in that State, except in the following circumstances when such income may also be taxed in the other Contracting State : (a) if he has a fixed base regularly available to him in the other Contracting State for the purpose of performing his activities; in that case, only so much of the income as is attributable to that fixed base may be taxed in that other Contracting State; or (b) if his stay in the other Contracting State is for a period or periods amounting to or exceeding in the aggregate 183 days in the relevant "previous year" or "year of income", as the case may be; in that case only so much of the income as is derived from his activities performed in that other State may be taxed in that other State, 2. The term "professional services" includes independent scientific, literary, artistic, educational or teaching activities as well as the independent activities of physicians, surgeons, lawyers, engineers, architects, dentists and accountants. Arun Rangachari 9 9.1 From the table in para 8.7, it is seen that Sh. Arun Rangachari has been India for 110 days during the year under consideration. From this it is amply clear that Sh. Arun Rangachari spends substantial period in India due to his business interest. This fact once again proves thai he has been using the business premises at Mumbai as a fixed base which is regularly available to him for the purpose of his business. He is using this base as a Permanent. It is noticed from the Webster dictionary, the term enterprise is defined as under :- Definition of Enterprises 1: a project or undertaking that is especially difficult, complicated, or risky 2a : a unit of economic organization or activity; especially : a business organization b : a systematic purposeful activity eg. agriculture is the main economic enterprise among these people 3: readiness to engage in daring or difficult action- Initiative: INITIATIVE showed great enterprise in dealing with the crisis. https://www.merriam-webster.com/dictionary/enterprise 8.5 Hence, it is clear from the above meaning that the agriculture activity can be considered as an enterprise, which can be carried out by the individuals and also by the company, firm and other type of business organisations. Hence, enterprise is nothing but an initiative or readiness to engage in a business activity. It can be either individual or by other persons like company or firm. 8.6 It is further notable that the professionals like doctor, advocates, consultants etc are individuals and they have enterprises being run by them. The business run by them are proprietary businesses in the form of enterprises and it is very much possible for them to have PE. Thus proprietary businesses are also enterprises and they can have a PE. 8.7 From the passport of Sh. Arun Rangachari, it is seen that he has been in India for 110 days during F.Y.2009-10 as per details given below:- Arrival in India Departure from India Slay in days 31 st march 2008 13 th April 2008 13 03 rd May 2008 11 th May 2008 9 14 th May 2008 19 th May 2008 6 22"" May 2008 25 th May 2008 4 4 th June 2008 12 th June 2008 9 17 th June 2008 29 th June 2008 13 Arun Rangachari 10 04 th July 2008 06 th July 2008 3 9 th July 2008 21 st July 2008 13 3 rd July 2008 01 st Aug 2008 2 19 lh Aug200S 21 st Aug2008 3 04 lh Sept 2008 07 th Sept 2008 4 13 th Sept 2008 18 th Sept 2008 6 2 nd Oct 2008 04 th Oct 2008 3 15 th Oct 2008 17 th Oct 2008 3 22 nd Oct 2008 25 th Oct 2008 4 2 nd Nov 2008 08 th Nov 2008 7 Establishment to carry out his business and also carrying out the business for his wholly owned business concern. 9.2 In the instant case, the assessee is engaged in providing consultancy services and the assessee also uses the fixed base located at Mumbai, which is regularly available to him. It is evident from the fact that at the time of search on 10/04/2013, Mr Arun Rangachari was present in that premises. He has himself admitted to the fact that he has been giving consultancy services to GFH and KBHC. Hence, the assessee income is squarely taxable as fee for independent personal services as per the Article 14 (1)(a) of the India UAE DTAA. 10. Company Income are nothing but the income of the assessee:- 10.1 Shri Arun Rangachari has claimed that the services have been provided by M/s Dar Capital Ltd and Thurles International Ltd. which are foreign based. However, it is seen that Mr. Arun Rangachari is a 100% share holder of these two companies. During the course of post search proceedings, summons was issued to Shri Arun Rangachari asking to appear on 03/09/2013, 19/09/2013, 04/10/2013 and 17/10/2013 in the Investigation Wing, Thane and provide the names of employees, date of visits by the employees who have actually provided the services for acquisition of land. Further, he was asked to submit copies of invoices raised by him on GFH and KHCB. This information was called for by the notices issued from this office also. However, Arun Rangachari has neither appeared nor submitted any details called for. Thus the assessee's submissions are nothing but Ipse Dixit. The only conclusion which can be drawn from this is that all the activities have been carried out by Arun Rangachari himself. Thus, these facts go to prove that all the consultancy services were actually rendered by Arun Rangachari and the companies M/s Dar Capital Ltd and Arun Rangachari 11 Thurles International Ltd are only front/shell companies which are based at Mauritius and British Virgin Island to avoid taxation in India. 10.2 The above two companies are mere shell companies. SIi. Arun Rangachari and M/s Thurles International Ltd and M/s Dar Capital Ltd were asked sever times to produce copies of agreement for consultancy work, the invoices raised, payment received, projects undertaken. Had these documents been provided, the nature of consultancy work and nature of payment in lieu thereof would have become clear. But these were not provided either in the case of any of the companies or in the case of Sh. Arun Rangachari. Thus it is clear that Sh. Arun Rangachari and M/s Thurles International Ltd and M/s Dar Capital Ltd did not want the issue to become clear. 10.3 Here it is pointed out that Sh. Arun Rangachari is 100% shareholder of Thurles International Ltd and Dar Capital Ltd and as such he is in a position to control them totally. They were asked to give details of the names and addresses of the persons who work for Thurles International Ltd and Dar Capital and other information about the assessee company but no such information has been provided. Thus it is clear that M/s Thurles International and Dar Capital Ltd are a shell company owned and controlled fully by Sh. Arun Rangachari. Thus, the money amounting to USD 51.5 million received by M/s Dar Capital Ltd and USD 41.5 million received by M/s Thurles International Ltd is money actually received for the consultancy work given by Sh. Arun Rangachari to GFH in India. 10.4 Sh. Arun Rangachari has received payments amounting to USD 51.5 million in the name of M/s Dar Capital based at Mauritius and USD 41.5 million in the name M/s Thurles International based at British Virgin Islands. These two companies are mere shell companies existing only on paper. These were formed for the sole purpose of receiving abroad the income earned by Sh. Arun Rangachari in India. 10.5 Sh. Arun Rangachari and M/s Thurles International Ltd and M/s Dar Capital Ltd were asked several times to produce copies of agreement for consultancy work, the invoices raised, payment received. Had these documents been provided, the nature of consultancy work and nature of payment in lieu thereof would have become clear. But these were not provided either in the case of any of the companies or in the case of Sh. Arun Rangachari. No project wise break up of money received or the exact purpose for which the money was received from GFH and KBHC was also not given. Thus the assessee has made an assertion but he has not proved it. 10.6 It was asked to give details of the names and addresses of the persons who work for Thurles International Ltd and Dar Capital and other information about the assessee company but no such information has been provided. No employee detail was provided who had the capability to earn such high consultancy fees for these companies. Even the details of the foreign projects, invoices raised, the payments received were not given by Sh. Arun Rangachari or these two companies. Thus the assessee has made unsubstantiated assertions. Thus it is clear that M/s Thurles International Arun Rangachari 12 and Dar Capital Ltd are shell company owned and controlled fully by Sh. Arun Rangachari floated only for the purpose of diverting income earned in India to foreign country. Moreover, there is nobody else working for these two companies who can get them such high consultancy income. Thus the money amounting to USD 51.5 million received by M/s Dar Capital Ltd and USD 41.5 million received by M/s Thurles International Ltd is money actually received for the consultancy work given by Sh. Arun Rangachari to GFH in India but he made whole arrangement to look in such a way that it should appear that the money was received outside India. Thus the money received by these two companies is in substance for the consultancy work given by Sh. Arun Rangachari. 10.7 If we put the facts of the case together, we come to only one conclusion. GFH and KBHC wanted to invest in some real estate project India. For this Sh. Arun Rangachari gave them consultancy services and arranged for their meetings with some prospective parties for this purpose in India. GFH and KBHC selected Valuable Group for this work. They started the two projects namely, Energy City al Panvel and Logistics Park at Pen, both in Maharashtra, Near Mumbai. These projects materialised because of active liasoning and consultancy service given by Sh. Arun Rangachari to GFH and KBHC. He brought GFH and KBHC and Valuable Group together. As a result, above two projects were started. Due to his services, Sh. Arun Rangachari was to receive payment. For tax management purpose, Arun Rangachari decided to route these payments through his foreign based company. For this purpose he received USD 51.5 million in the name of M/s Dar Capital Ltd, Mauritius and USD 41.5 million in the name of M/s Thurles International Ltd, British Virgin Islands from GKH. Thus the consultancy service was given to GFH and 1CBHC for operations in India but payment was received by M/s Dar Capital Ltd and Thurles International Ltd, two foreign based companies based outside India, in tax haven. This was done purely to save tax in India. 11. In view of the above facts and circumstances of the case, the income of the assessee is taxable as business income under the provisions of the 1 T Act of India u/s 9(1) of the Income tax Act read with Article 5 of the India UAE DTAA treaty. 12. Without prejudice, it is observed that if Sh. Aruii Rangachari is working for M/s Thurles International Ltd and M/s Dar Capital Ltd and giving consultancy services to GFH and KBHC for the project work in India, the money received by these two companies would become taxable as Fees for Technical Services and would be liable to tax as such as it is discussed in the para 9. 13. In view of the above, the total amount received on this ground is Rs.465,00,00,000/-. Taking a genuine stand 30% of it is allowed as business expenditure, an amount of Rs. 3,25,50,00,000/- is taken as net income from business activity. Accordingly, the above amount of Rs.325,50,00,000/- is being added in the hands of the assessee, Sh. Arun Rangachari on substantive basis. (Penalty proceedings u/s 271(1)(c) of the I T Act, 1961 has been initiated for furnishing inaccurate particulars of income.) Arun Rangachari 13 14. It is notable that even though the receipt is shown in the name of M/s Thurles International Ltd and M/s Dar Capital Ltd, the real owner of this money is Sh. Arun Rangachari. Currently, in a separate case assessment proceedings u/s 147 is going on in the case of M/s Thurles International Ltd also. The income related to M/s Thurles International Ltd is added in the hands of Thurles International Ltd on protective basis. 15. Unexplained Investment in Shares:- 15.1 Shri Rangachari also admitted to being a shareholder in certain entities in India, which were listed in response to question no. 7 of the statement recorded on 13.04.2013. The details of these investments are available on record, as part of the seized material and submissions made by the assessee in the post search proceedings. It is seen that during the financial year 2008-09, A.Y 2009-10, investment were made in Valuable Ag- Bio Pvt. Ltd., Valuable Technologies. Valuable Destination Pvt. Ltd., Nisarg the details of which are as under: Shareholder Company Date of Payment Amount paid (Rs.) Dar Ventures Ltd. Valuable Ag-Bio Pvt Ltd 26/09/2008 7,70,10,000/- Dar Ventures Ltd. Valuable Ag-Bio Pvt Ltd 18/02/2009 7,57,74,000/- Dar Investment Valuable Technologies 03/10/2008 10,00,00,000/- Thurles India Investment Ltd. Valuable Destination Pvt. Ltd. 06/l 0/2008 42,48,74,985/- Dar Ventures Ltd. Nisarg 06/10/2008 26,68,15,069/- Total 94,44,74,054/- 15.2 The assessee was asked to give the source of investment made by his foreign companies in India. The assessee has submitted that these money was invested by the companies and not by the assessee. Further, the money has been remitted from outside and are not taxable in India. Here it is observed that it has been held above that the companies owned by the assessee are mere shell companies and the money routed through these are the income earned by the assessee by his own personal consultancy work. Moreover, the assessee has not furnished evidence of receiving the money through remittance. About the source of his investment in different shares, the assessee has referred to the Board Circular No. 5 dated 20-02-1969. Board Circular is extracted as under: "1. It has been represented to the Board that persons of Indian origin residing abroad but intending to return to India and settle here permanently, apprehend that the money brought in or remitted from abroad by such persons might be subjected to income-tax in India. The apprehension Arun Rangachari 14 appears to be due to lack of information regarding the correct legal position about the taxability of the remittances of money from abroad. The general position, in this regard, is clarified below. Xxxx 15.3 From the above it is seen that it is for the persons of Indian origin residing abroad but intending to return to India and settle here permanently. Moreover in the circular itself it has been mentioned:- "The question of assessment to tax arises only when (here is no evidence to show that the amount, in question, in fact represents such remittance, in other words, in the absence of proper supporting evidence, the taxpayers' story that the money has been brought into India from outside may be disbelieved by the Income- tax Officer who may then proceed to hold that the money had in fact been earned in India." 15.4 In this whole episode, the issue is that the money should be earned outside India and should be brought in India as remittance. But in the case of the assessee the money is earned tor consultancy work rendered in India, has been received outside India in the name of his two shell companies and is again bringing in India. This is pure tax evasion and nothing else. The assessee cannot be allowed to take shelter behind this Circular. As per this Circular, the person should have sufficient resources in the foreign country. As we have seen the assessee is just receiving his income earned in India in foreign country and bringing it here. As such he does not have sufficient resources in the foreign country. 15.5 Thus it is held that the above money amounting to Rs.94,44,74,054/- is assessee's own money earned from undisclosed source for which the assessee has no explanation. Accordingly, this amount is being added to the total income of the assessee as unexplained investment. (Penalty proceedings u/s 271(1)(c) of the IT Act, 1961 has been initiated for furnishing inaccurate particulars of income.) 16. It is notable that even though the investment is shown in the name of the above companies, the real owner of this money is Sh. Arun Rangachari. Currently, in a separate case assessment proceedings u/s 147 is going on in the case of M/s Thurles India Investment Ltd also. The unexplained investment related to M/s Thurles India Investment Ltd is added in the hands of Thurles India Investment Ltd on protective basis. 17. The notice u/s 148 of the IT Act was issued on 31/03/2016. But the case was referred to foreign authority through FT & TR for obtaining information in the case of Sh. Arun Rangachari, M/s Dar Capital Ltd and M/s Thurles International Ltd. The requested information has not been received till now. Accordingly, the time barring dale is 31/12/2017. The quantum of the additions will be altered based on the information, if it is received from the FT &TR, CBDT. 18. In the light of the above, computation of income is made as under:- Arun Rangachari 15 SI. No. Particulars Amount (in Rs.) 1 Income as shown in the return 75,000/- 2 Add – Business income as discussed in Para 6 to 13 325,50,00,000/- 3 Add – Unexplained investment as discussed in Para 15 94,44,74,054/- 4 Total Taxable Income 419,95,49,054/- 4. Upon assessee’s appeal learned CIT(A) confirmed the reopening by a short order as under :- “The appellant gave a detailed submission which includes wrong reliance on the above documentary evidencefe-mail). I find that if the reassessment was initiated solely on basis of the above document, then initiation is wrong. I however, find other aspects, including statement of Shri Arun Madhavachari Rangachari is considered in initiation of reassessment proceedings. This is sufficient material to form reason to believe within meaning of section 148. There is proper application of mind and existence to sufficient material and after recording proper reasons the notice was issued. Objection of appellant in regard is overruled. The ground is dismissed.” But he deleted the addition as under :- “Ground 2 reads as under. "The Learned Assessing Officer has erred in making an addition of Rs.325,50,00,000/- in the hands of the assessee, without considering the facts and "circumstances of the case." A stated, after rectification order, the addition is reduced to Rs. 1,80,26,00,000/- and this confines to sum paid by GHF to Thurles International Ltd.. Thus issue is now reduced to payment to Thurles International Ltd. by the two companies. 12. The factual contention of appellant include (a) The payment is not is India and (b) That no consultancy services was does in India. The legal contention include (A) That as per India-UAE Double Taxation Avoidance Agreement, Fees for Technical Services is non-taxable in India, the source country, (B) concept of Permanent Establishment apply only to company or entity , (C) as an individual in accordance with Article 3(1)(e) of the Double Taxation Avoidance Agreement he can avail benefits of treaty, (D) company and individual are distinct on analysis of section 2(17) of Income Tax Act 1961 and (E) Circular 5 dated 20.02.1969 regarding money brought into India by non-residents for investment or other purpose stands to his benefit. 13. Against question 32 of statement recorded during search the appellant stated as under: Ans: I was not actively involved in land acquisition for the GFH and KHCB projects. The land acquisition process requires a complete understanding of the local laws and regulation; a vast network in the target area; and significant on-ground presence in the area to facilitate Arun Rangachari 16 the process. I enjoy none of these attributes and am based in Dubai as I have been for the past 14 years. The land acquisition for both these projects were done solely be Valuable Group. Yes, I do not deny that there were instances in which I was called upon to step in and resolve certain Hasoning issue by both GFH/ KHCB and Valuable Group, and I was only too happy to assist. Upon request, I also assisted my clients in identifying a legal firm and working with them to establish the legal standing of the land acquired for the project. Paragraph 8.9 of assessment order reads as under: In the instant case, the assesses is engaged in the business activity by way of providing consultancy services and the assessee a/so uses the business premises located in Mumbai as a place of management. It is evident from the fact that at the time of search on 10/04/2013, Mr Arun Rangachari was present in this office premises. He has himself admitted to the fact that he has been giving consultancy services to GFH and KBHC. Hence, the assessee is having PE as per the Article 5(1) and 5(2)(a) of India UAE DTAA. Thus it has been established that the assesses has business income in India, has a Permanent Establishment (business connection) her and it is taxable here u/s 9(1) of IT Act. Further, upon going through Assessment order, I do not find a single piece of evidence to hold that there is a Permanent Establishment for appellant in India. The evidence relied upon by itself is an e-mail (sort of confirmation letter) filed by appellant before DDIT to prove their case does not establish anything in this regard. Other claim is frequent travel to India to allege as fixed place Permanent Establishment which is correct. Also regarding Dar Media Pvt. Ltd. (100% owned by appellant) to hold fixed place business, still there is no evidence to hold it as a fixed place of business by establishing actual conduct of business in that place so as to hold it as a Permanent Establishment. The finding in paragraph 8.9 is presumption based as even if consultancy services was given to GFH and KBHC, it is not established that it is rendered in India and not UAE. Further presence of a shareholder in a business premise of a company cannot be held as an evidence to establish permanent establishment. Overall there is no reasonably good evidence that there was actual conduct of business/rendering of services in India to hold existence of Permanent Establishment so as to assess business income. 14. Also, I find that there is no evidence of any financial transaction to establish that rendered in India. In page 6 of counter comments, the Assessing Officer mentions about Tax Residency Certificate [applicable section 90(4))]. This applies only if it is established that there is income accruing or arising in India and that is a separate matter in this assessment/appeal. This also holds negatively against Assessing Officer. 15. In respect of detailed show cause issued by Assessing Officer, the appellant rebutted the contention of Assessing Officer. The Assessing Officer made his findings in paragraph 7 onwards of Assessment order. There is no Arun Rangachari 17 direct evidence. One indirect evidence is frequency of India visit and duration or stay. In paragraph 10 Assessing Officer held that the company income is actually income of appellant since he is 100% owner of company. 16. Para 10.5 to 10.7 and 11 of Assessment order reads as under: 70.5 Sh. Arun Rangachari and M/s Thurles International Ltd and M/s Dar Capital Ltd. were asked several times to produce copies of agreement for consultancy work, the invoices raised, payment received. Had these documents been provided, the nature of consultancy work and nature of payment in lieu thereof would have become clear. But these were not provided either in the case of any of the companies or in the case of Sh. Arun Rangachari. No project wise break up of money received or the except purpose for which the money was received from GFH and KBHC was also not given. Thus the assessee has made an assertion but he has not proved it. 10.6 It was asked to give details of the names and addresses of the persons who work for Thurles International Ltd. and Dar Capital and other information about the assessee company but no such information has been provided. No employee detail was provided who had the capability to earn such high consultancy fees for these companies. Even the details of the foreign projects, invoices raised, the payment received were not given by Sh. Arun Rangachari or these two companies. Thus the assessee has made unsubstantiated assertions. Thus it is clear that M/s Thurles International and Dar Capital Ltd. are shell company owned and controlled fully by Sh. Arun Rangachari floated only for the purpose of diverting income earned in India foreign country. Moreover, there is nobody else working for these two companies who can get them such high consultancy income. Thus the money amounting to USD 1.5 million received by M/s Dar Capital Ltd. and USD 41.5 million received by M/s. Thurles International Ltd. is money actually received for the consultancy work given by Sh. Arun Rangachari to GFH in India but he made whole arrangement to work in such a way that it should appear that the money was received outside India. Thus the money received by these two companies is in substance for the' consultancy work given by Sh. Arun Rangachari. 10.7 If we put the facts of the case together, we come to only one conclusion. GFH and KBHC wanted to invest in some real estate project India. For this Sh. Arun Rangachari gave them consultancy services and arranged for their meetings with some prospective parties for this purpose in India. GFH and KBHC selected Valuable Group for this work. They started the two projects namely, Energy City at Panvel and Logistics Park at Pen, both in Maharashtra, Near Mumbai. These projects materialised because of active liasoning and consultancy service given by Sh. Arun Rangachari to GFH and KBHC. He brought GFH and KBHC and Valuable Group together. As a result, above two projects were started. Due to his services, Sh. Arun Rangachari was to receive payment. For tax management purpose, Arun Rangachari decided to route these payments through his foreign based company. Arun Rangachari 18 For this purpose he received USD 51.5 million in the name of M/s Dar Capital Ltd, Mauritius and USD 41.5 million in the name of M/s Thurles International Ltd. British Virgin Islands from GFH. Thus the consultancy service was given to GFH and KBHC for operations in India but payment was received by M/s Dar Capital Ltd. and Thurles International Ltd, two foreign based comp9aneis based outside India, in tax haven. This was done purely to save tax in India. 11. In view of the above fads and circumstances of the case, the income of the assessee is taxable as business income under the provisions of the I. T. Act of India u/s. 9(1) of the Income tax Act read with Article 5 of the India UAE DTAA treaty. 17. It can be seen that the figure of USD 51.5 million and 41.5 million are not figures found by Assessing Officer or DDIT but originating from confirmation letter filed by assessee. The said confirmation letter was filed with a view to explaining source of payment by GFH to Dar Capital Ltd. and Thurles International Taxation Limited. 18. I find that existence of Permanent Establishment in India not established factually within meaning of article 5(2) of India-UAE Double Taxation Avoidance Agreement. Further the documentary evidence relied upon does not prove any receipt in FY 08-09(AY 09-10). It is a vague document sent by an employee to Appellant. There is no receipt or confirmation letter from GFH or KBHC (a document from GHF or KBHC which proves that the payment was for services in India would have the best to have) and the circumstantial evidence built by Assessing Officer is weak and not conclusive. There is no seized material directly establishing the same. Thus income from consultancy services cannot be assessed as business profits under article 7 of the DTAA. 19. Coming to assessment as Fees for Technical Services, it is noted that India-UAE Double Taxation Avoidance Agreement does not deal with Fees for Technical Services, the original head under which Assessing Officer has assessed. Article 22 deals with "Other Income" and if income is Fees for Technical Services, it is taxable in UAE in accordance with Article 22(1) and appellant is not found to fit into exception clause in Article 22(2). 20. In regard to alternate view of Assessing Officer, that Article 14 viz. independent personal services paragraph 9 of assessment order) applies, I find the view to be incorrect once the justification made in paragraph 9.1 and 9.2 is purely presumption based to prove fixed base. 21. Lastly company has different existence and cannot be held to be of individual even if 100% shares are held by one individual as a company is formed as a legal entity following procedure prescribed by law. The inferences drawn by Assessing Officer from statement recorded, presence in India, fixed place of business etc., are not substantiated as has been discussed in different parts of this order. Arun Rangachari 19 22. As a result of discussion followed by decisions in paragraphs 16,17,18 and 19, I hold no case for addition of Rs 3,25,50,00,000/-. The Assessing Officer is directed to delete the addition. The ground is allowed. 23. On the subject matter in ground 2, it is noted that in paragraph 14 Assessing Officer states that action under 147 in case of Thurles International Ltd. has been initiated to assessee the same income. Dar Capital Ltd is rules out as a result of rectification order. Hence, no alternate direction is issued by me. 24. Ground 3 reads as under; 3. "The Learned Assessing Officer has erred in making an addition of Rs. 94,44,74,054/- by treating the investment made in shares by various companies as alleged Unexplained Investment of appellant, without considering the facts and circumstances of the case." The above pertains to addition of UAE investment of Rs. 94,44,74,054/-. 25. The Assessing Officer noted the following investment in shares of Private Limited Companies: Shareholder Company Date of Payment Amount paid (Rs.) Dar Ventures Ltd. Valuable Ag-Bio Pvt Ltd. 26.09.2008 7,70,10,000/- Dar Ventures Ltd. Valuable Ag-Bio Pvt. Ltd. 18.02.2009 7,57,74,000/- Dar Investment Valuable Technologies 03.10.2008 10,00,00,000/- Thurles India Investment Ltd. Valuable Destination Pvt. Ltd. 06. 10.2008 42,48,74,985/- Dar Ventures Ltd. Nisarg 06.10.2008 26,68,15,069/- Total 94,44,74,054/- Explanation regarding source was sought for and before Assessing Officer is was submitted that appellant has not invested but investment was by the companies concerned. Holding the companies to be shell companies and objecting the cited circular 5 date 20.02.969 as not applicable, the Assessing Officer made the addition. 26. Before me appellant rebutted the finding of Assessing Officer point by points. Gist of the same are : A. Investment of company cannot be taxed in hands of stakeholder. B. As per circular 5 dated 20.02.1969 in case Non-Resident, remittance brought to India through normal banking channels is not taxable. Arun Rangachari 20 C. Case of appellant is different as source is explained. 27. All matters are duly considered. Here investment is made by a foreign company in companies based in India. The effort of Assessing Officer is to assess same in hands of an individual, who is Non-Resident. Unexplained investment can be under section 69/69B. In this case no books of account exists and the same is to be considered under section 69 of Income Tax Act, 1961. 28. Viewing form angle of section 69, this is case where there is a factual explanation i.e. investment not made by assessee but by a company where he is a 100% share. Moreover, the foreign companies have made investment from Mauritius/British Virgin Islands. To make an addition under section 69, factual information is needed that the explanation offered is not satisfactory and has to be established that assessee indeed made the investment, of which source is not proved. 29. Upon going though Assessment order (paragraph 15) as well as counter comments by Assessing Officer dated 24.10.2018 (pages 8 and 9), the thrust of the argument of Assessing Officer is that the investing companies are shell companies. He also discussed application of circular 5 dated 20.02.1969. 30. I find that merely because investment is made by a 100% owned foreign company, the same cannot be held to be owned by appellant. Company has a different legal existence created under legal provisions (being foreign company, under statute relevant in that foreign jurisdiction) applicable. None disputes investment in this case by the foreign companies in Indian companies. The dispute is why the investment is that of Appellant and, if it is so, why it is his unaccounted investment. The former is decided upon on basis of guesswork based on loosely worded statement and latter without documentary evidence. Moreover, there is no hard evidence that same is sourced from income that has accrued or arisen in India. 31. The issue before me is investment by Dar Ventures Ltd, Dar Investment Ltd and Thurles International Ltd. in companies in India. It has nothing to do with personal accounts of Appellant. The case of Assessing Officer is that the Appellant(distinct from company) has invested the money. I find that even basic particulars from the India companies where the investment is made is not in records. 32. Here it is mentioned that investment have come directly from Dar Ventures Ltd, Dar estment Ltd and Thurles International Ltd. directly to the India companies. With the limited ion before me decision is to be taken. As such there is no documentary evidence to prove that investing company and appellant are one and the allegation of Assessing Officer as shell company is unsubstantiated. In records investment is made in India companies by other companies. A different view with help of documentary evidence is not before me or seen established by Assessing Officer to fix it on the appellant. Arun Rangachari 21 33. In view of above, I direct Assessing officer to delete the addition of Rs 94,44,74,054. Ground 3 is allowed. 34. It is recorded that with a view to find new facts on grounds 2 and 3, further notice was issued by me to appellant asking for expense and investment details in India in the A.Y. concerned. This includes bank account examination and expenses analysis. Eiank account in HSBC, Chennaif Account No. 041- 073016- 006) exhibited payment for purchase of flats in Chennai and Pune ( including stamp duty) and credit has specific mention the sum has come from Dubai. There are cash withdrawals in multiples of Rs. 20,000/- and Rs. 10.000/-but not huge amount and also payment for Air Tickets and restaurant bills. An entry of Rs. 3 crores is seem in account with description "DAR investment Limited Purchase of Residential property in India" on 25.07.2008 with subsequent transfer for purchase of property and payment to Rangachari M & 1. Similar entry is seen on 17.06.2018 of Rs. 2.7 crores 08.09.2008 of Rs. 1.25 crores, 01.10.2008 of 0.25 crores and on 10.02.2009 or Rs. 0.1455 crores. These are sums received from Dar Investments Ltd by proving that such entity exist as a foreign company. They enquiry by me has not resulted in any additional adverse information against the appellant to be considered while dealing with grounds 2 and 3.” 5. Against the above order Revenue is in appeal before us. 6. We have heard learned Departmental Representative and perused the records. None appeared on behalf of the assessee despite several notices duly served on many occasion. We find that identical issue was decided by the ITAT in assessee’s own case for A.Y. 2008-09 in ITA No. 677/Mum/2018 vide order dated 19.2.2020 as under:- 11. We have heard both the counsel and perused the records. Learned Counsel of the assessee relied upon the order of learned CIT(A). The submitted that from the FIRC, it is evident that the amounts have been credited in assessee’s NRE account was transferred to overseas account in Dubai. He submitted that the assessee being a NRI cannot be asked to prove source of credit in its overseas account. In this regard learned counsel placed reliance upon the following case laws :- • DCIT Vs. Hemant Mansukhlal Pandya (100 taxmann.com 280) (Mumbai-Tribunal) • Smt. Susila Ramasamy Vs. ACIT (37 SOT 146)(Chennai) • DCIT Vs. Finlay Corporation Ltd. (86 ITD 626)(Delhi) 12. Per contra, learned Departmental Representative submitted that the additions are based upon findings in search action carried out in the case of Valuable Group on 10.4.2013. That in a related action M/s. DAR Media Pvt. Ltd. was also covered u/s. 132 of the Act on 10.4.2013 and the statement of Shri Arun Rangachari was recorded. That during the search proceedings, Shri Arun Rangachari 22 Arun Rangachari has claimed to have rendered consultancy services to Gulf Finance House (GFH) & Khaleej Bank of Commerce (KBHC) which were executing certain projects in association with the Valuable Group. Further, Shri Arun Rangachari in his statement recorded during the course of search proceedings also confirmed that M/s. DAR Capital Limited and M/s. Thurles International Limited are owned 100 percent by him. That the email from Gulf Finance House addressed to Shri Arun Rangachari was found which stated that “please note that GFH over the years, has for certain of its projects made payments amounting to USD 51.5m to DAR Capital Limited and USD 41.5m to Thurles International Limited". That during the course of search, it was also observed that assessee has made investment in shares in Indian entities, the source of which is not only from his personal account but also from DAR Capital. That from the email found during the course of search action, it was also confirmed that the Shri Arun Rangachari’s 100% owned entities in Mauritius i.e. Dar Capital Ltd. and Thurles International Ltd. had received Rs. 465 crores equal to USD 93 on account of service rendered in India and the proceeds from the same have been used to make investments in India. 13. That during the year Rs. 1.568 crores credited in assessee’s NRE account Chennai Branch from HSBC Bank Middle East Ltd. Dubai. Narration in the said bank account read as under :- Foreign remittance credited in Assessee's NRE A/c. Immediate source for the remittance from HSBC Bank Middle East Ltd, Dubai UAE Amount (In Rs.) Date Particulars Amount (In AED) Paper Book Page No. 23,41,170.21 13.11.2007 Inv. No. GFH/01/2007 1,284,150.00 10 1,59,331.50 1,31,83,962.33 16.01.2008 DAR INVESTMENTS LTD 1,284,150.00 12 1,56,84,464.04 14. Referring to the above, learned Departmental Representative pleaded that the amount has been received from GFH and Dar Investment Ltd., which is a hundred percent owned entity of Shri Arun Rangachari. In these circumstances, referring to the investment made by the assessee learned AR pleaded section 68 has rightly invoked regarding deposits in assessee’s own NRE account. She pleaded that receipt in absence of any further detail submitted by the assessee can be reasonably attributed to the services rendered by the assessee in India. She submitted that learned CIT(A) has totally ignored the findings of services and the statement of the assessee and he has relied upon the case laws from the ITAT which were not rendered in the background as operating in the present case. She submitted that it is clearly established the source of assessee’s income is originated in India as the substantial amount is received by the assessee from Gulf Finance House and Khaleej Bank of Commerce for the services rendered by the assessee in India. That there is no curtain left to state that the Revenue has no incriminating Arun Rangachari 23 documents to ask the assessee for the source of money. Further she submitted that learned CIT(A)’s reliance on Board circular No. 5 dated 20.2.1969 is not correct in as much as in the said circular it was mentioned that it was applicable when there is no evidence for transfer of money. It is submitted that by no stretch of imagination it can be submitted that section 68 is not applicable in the case where the persons of India origin residing abroad but intending to return to India and settle here permanently, the money brought in or remitted from abroad by such persons through banking channels, no question at all to be asked by the Department as to the origin of the money. Furthermore, she submitted that in the instant case, the assessee is not a person who intending to return to India and settle here permanently. Hence, she submitted that Circular relied upon by learned CIT(A) is not correct. 15. Upon Careful consideration we find in a search and seizure action assessee has accepted he has rendered services in India to Gulf finance house (GFH) Bahrain which was executing certain projects in association with the Valuable group. During the search itself email from Gulf Finance House addressed to the assessee was found wherein it was mentioned that GFH over the years has made payments to US 51.5 million to DAR Capital ltd and US dollar 41.5 million to Thurles International Ltd Mauritios. These two companies were hundred percent owned by the assessee. In these circumstances the money found credited in assessee’s NRE account was enquired by the assessing officer. The narration in the NRE account in particulars referred to GFH and DAR Investment Ltd. In these circumstances upon enquiry the assessee informed the assessing officer that his concern Thurles was not incorporated in that assessment year and assessee was required to submit the necessary certificate from GFH that the amount did not relate to any services rendered by assessee in India. The assessee did not give any such certificate. The assessee only relied upon the F IRC (foreign inward remittance certificate). In absence of the assessee cogently showing the source of fund in his bank account to be not originating from the entities who had received sums from GFH Bahrain for rendering services in India the assessing officer proceeded to add the said sum as assessee’s undisclosed income. 16. Upon assessee’s appeal learned CIT(appeals) totally ignored the facts of search and the incriminating material found. He only referred to the FIRC and concluded that assessee need not show the source of its income in its NRE account if it has been received from abroad if he is a NRI. The learned CIT appeals also referred to certain case laws in this regard. In our considered opinion learned CIT(appeals) has totally erred in ignoring the background as referred by the assessing officer. The facts of the case and the search predominantly pointed that assessee has received sums through its entities abroad as consultation fee received from GFH Bahrain for rendering services in India. The entries in the bank account did mention the name of GFH and Dar Capital. In these circumstances it was incumbent upon the assessee to give a confirmation from GFH that no fee was paid to the assessee through its entities during the concerned assessment year for services rendered to GFH in connection with projects in India. Since the assessee has failed to do so in our considered opinion the learned CIT appeals has totally erred in ignoring the detailed finding of the assessing officer .It is settled law from Hon’ble Apex Arun Rangachari 24 Court in the case of Sumati Dayal Vs. CIT (1995 AIR 2109) and CIT Vs. Durga Prasad More (82 ITR 540) that revenue authority are not to put on blinkers and ignore the overwhelming surrounding circumstances. The learned CIT(A)’s reliance upon the case laws and the circular is totally not applicable on the facts of the present case. The facts of the case prima facie indicate that assessee has received sums abroad from foreign concern on account of services rendered in India. In these circumstances it was incumbent upon the assessee to cogently rebut that assessee has not received any sums abroad for services rendered in India which could have been transferred from abroad in his Indian account through these concerns. The sole reliance upon the FIRC which is only a certificate of remittance from abroad in absence of the overwhelming surrounding circumstances by the learned CIT appeals not at all sustainable. 17. Accordingly in the background of aforesaid discussion in our considered opinion the order of learned CIT(A) is to set aside the order of the assessing officer is to be restored. Accordingly we set aside order of learned CIT(appeals) and restore that on the assessing officer on the issue of credits in the bank account. 18. As regards the investment in shares out of the said bank account the same cannot be added again as unexplained investment. It is settled law that assessee cannot be subject to double jeopardy. Hence qua the unexplained investment in shares the order of CIT(A) is upheld. 19. In the result revenues appeal stands partly allowed.” 6. We find that the issue is primarily covered in favour of the Revenue by the above order of the ITAT. It is not the case that the above order has been reversed by Hon'ble Jurisdictional High Court. Hence, we set aside the order of learned CIT(A) to the extent and in accordance with the aforesaid order of the ITAT. The Assessing Officer should give effect accordingly. Order pronounced in the open court on 22.04.2022. Sd/- Sd/- (KAVITHA RAJGOPAL) (SHAMIM YAHYA) JUDICIAL MEMBER ACCOUNTANT MEMBER Mumbai; Dated : 22/04/2022 Copy of the Order forwarded to : 1. The Appellant 2. The Respondent 3. The CIT(A) 4. CIT 5. DR, ITAT, Mumbai Arun Rangachari 25 6. Guard File. BY ORDER, //True Copy// (Assistant Registrar) PS ITAT, Mumbai