M/s. Futuron Systems Private Limited C/o Sri. Vinod Sunder Raman, Liquidator, Bangaluru V. The Income Tax Officer, Ward-3(1)(1), Bangalore

ITA 2526/BANG/2019

• Counselvise Citation: [2022] 105 COUNSELVISE.COM (IT) 4498 (ITAT-BANGALORE)
• Duration Of Justice: 2 year(s) 4 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-04-2022
• Appeal Filed By: Assessee
• Order Result: PartlyAllowed
• Bench Allotted: A
• Assessment Year: 2016-2017
• Appeal Filed On: 12-12-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Opportunity of being heard; Set aside
• Section: 68; 133(6)

Judgement Text

ITA No.2526/Bang/2019 Futuron systems Pvt. Ltd., Bangalore IN THE INCOME TAX APPELLATE TRIBUNAL “A’’BENCH: BANGALORE BEFORE SHRI B. R. BASKARAN, ACCOUNTANT MEMBER AND SMT. BEENA PILLAI, JUDICIAL MEMBER ITA No.2526/Bang/2019 AssessmentYear:2016-17 Futuron Systems Pvt. Ltd. C/o Sri Vinod Sunder Raman Liquidator 3 rd Floor, 717, 17 th Main Road 4 th T Block, Jayanagar Bengaluru 560 041. PAN NO : AACCF7460N Vs. ITO Ward-3(1)(1) Bengaluru APPELLANT RESPONDENT Appellant by : Sri Chavali Narayan, A.R. Respondent by : Sri Sankar Ganesh D., D.R. Date of Hearing : 18.04.2022 Date of Pronouncement : 18.04.2022 O R D E R PER B.R. BASKARAN, ACCOUNTANT MEMBER: The assessee has filed this appeal challenging the order dated 14.10.2019 passed by ld. CIT(A)-3, Bengaluru and it relates to the assessment year 2016-17. 2. Ground No.1 urged by the assessee is general in nature. The Ld. A.R. did not press ground No.3 relating to disallowance of pre- operative expenses. Accordingly the said ground is dismissed as not pressed. Ground No.4 relating to charging of interest is consequential in nature. Hence, only surviving ground is Ground ITA No.2526/Bang/2019 Futuron systems Pvt. Ltd., Bangalore Page 2 of 5 No.2, which relates to the addition of Rs.4.99 crores made u/s 68 of the Income-tax Act,1961 ['the Act' for short]. 3. The facts relating to the addition are stated in brief. The assessee company is engaged in the business of building software and mobile applications and also providing solution/services to web technologies, internet, etc. It filed its return of income for the year under consideration declaring a loss of Rs.8,23,861/-. The A.O. noticed that the assessee has issued 30,769 CCP shares to M/s. Accel India IV (Mauritius) Ltd. (hereinafter referred to as “Investor”), having face value of Rs.10/- at a premium of Rs.1,615.01 per share. Accordingly, the assessee had collected a sum of Rs.4,99,99,932/-. According to the A.O., the assessee did not furnish information relating to the above said subscriber in order to prove the genuineness of the transaction and creditworthiness of the investor. The A.O. also issued notice to the above said investor u/s 133(6) of the Act and he did not receive any reply from it. Accordingly, the A.O. assessed the above said sum of Rs.4,99,99,932/- as unexplained cash credit u/s 68 of the Act in the hands of the assessee. The Ld. CIT(A) also confirmed the same and hence the assessee has filed this appeal before us. 4. The Ld. A.R. submitted that the assessee has furnished host of details before the A.O. as well as before Ld. CIT(A) to prove the cash credit received in the form of share capital, but both the tax authorities have not examined them at all. The Ld. A.R. submitted that the assessee has discharged the primary onus placed upon it u/s 68 of the Act by furnishing the above said information and hence the A.O. was not justified in making addition u/s 68 of the Act. The Ld. A.R. submitted that M/s. Accel India IV (Mauritius) ITA No.2526/Bang/2019 Futuron systems Pvt. Ltd., Bangalore Page 3 of 5 Ltd. is one of the well-known global investor and it is making investments in various companies. The Ld. A.R. submitted that the assessee was developing an application called “Milofi”, a social networking App that connects couples with other like-minded couples for US market. Considering the potential success of the company, the investor has made the investment into the assessee company. Accordingly, he submitted that the impugned addition should be deleted. In this regard he took the support of the decision rendered by Mumbai bench of Tribunal in the case of M/s. Vodafone India Ltd. Vs. Deputy Commissioner of Income-tax (ITA No.1835/Mum/2018 dated 28.8.2020). 5. The Ld. D.R. on the contrary, submitted that the A.O. has not made any reference to the documents claimed to have been filed by the assessee. 6. In the rejoinder, the Ld. A.R. submitted that the assessee has furnished various documents and they are all placed in the paper book. 7. We heard the parties and perused the record. The Ld A.R has furnished a list giving details of documents that were furnished before the A.O. and also Ld. CIT(A). The said document is extracted ITA No.2526/Bang/2019 Futuron systems Pvt. Ltd., Bangalore Page 4 of 5 below:- Besides the above, the Ld. A.R. submitted that the assessee has also obtained a confirmation letter and also copy of global business license issued to the investor by Financial Services Commission of Mauritius. 8. We notice that the tax authorities do not refer to any of the above said documents in their respective orders. According to the Ld. A.R., the above said documents would prove the genuineness of the transaction and identity and creditworthiness of the investor, which are required to be shown in order to discharge the initial onus placed upon the assessee. Since the above said documents have not been examined by the tax authorities which are vital to the issue under consideration, we are of the view that, in the interest of natural justice, this issue requires fresh examination at the end of the A.O. by duly considering the above said documents and also taking into account the decision rendered by Mumbai Bench of Tribunal in the case of Vodafone India Ltd. (supra). 9. Accordingly, we set aside the order passed by Ld. CIT(A) on this issue and restore the same to the file of the A.O. for examining it afresh. After affording adequate opportunity of being heard to the ITA No.2526/Bang/2019 Futuron systems Pvt. Ltd., Bangalore Page 5 of 5 assessee, the A.O. may take appropriate decision in accordance with law. 10. In the result, the appeal filed by the assessee is partly allowed. Order pronounced in the open court on 18 th Apr, 2022 Sd/- (Beena Pillai) Judicial Member Sd/- (B.R. Baskaran) Accountant Member Bangalore, Dated 18 th Apr, 2022. VG/SPS Copy to: 1. The Applicant 2. The Respondent 3. The CIT 4. The CIT(A) 5. The DR, ITAT, Bangalore. 6. Guard file By order Asst. Registrar, ITAT, Bangalore.