ITO Ward 2(1)(1), Surat V. M/s.Raj Gar Fab Pvt. Ltd., Surat

ITA 389/SRT/2017

• Counselvise Citation: [2021] 108 COUNSELVISE.COM (IT) 2925 (ITAT-SURAT)
• Duration Of Justice: 3 year(s) 5 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-06-2021
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: 2011-2012
• Appeal Filed On: 29-12-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ANUPMA SINGLA
• Assessee Lawyers: S K KABRA
• Keywords: Gift; Double taxation relief; Onus to prove
• Section: 68

Judgement Text

INCOME TAX APPELLATE TRIBUNAL, SURAT BENCH, SURAT BEFORE SHRI PAWAN SINGH, JUDICIAL MEMBER AND DR. ARJUN LAL SAINI, ACCOUNTANT MEMBER ITA NO. 389 /SRT/2017 (AY 2011-12) (H EARING IN VIRTUAL COURT) ITO- WARD-2(1)(1), ROOM NO.222, AAYAKAR BHAWAN, MAJURA GATE, SURAT. VS RAJ GAR FAB PVT LTD, 701, RIVER RESIDENCY, PANDAV BUNGLOW LANE, ATHWALINES, SURAT PAN : AAECR 4858 C APPELLANT / REVENUE RESPONDENT /ASSESSEE ASSESSEE BY SH.S.K.KABRA CA REVENUE BY MISS ANUPMA SINGLA SR. DR DATE OF HEARING 10.06.2021 DATE OF PRONOUNCEMENT 14.06.2021 ORDER UNDER SECTION 254(1) OF INCOME TAX ACT PER PAWAN SINGH, JUDICIAL MEMBER : 1. THIS APPEAL BY REVENUE UNDER SECTION 253 OF INCOME TAX ACT (ACT) IS DIRECTED AGAINST THE ORDERS OF LEARNED COMMISSIONER OF INCOME TAX (APPEALS)-2, SURAT, DATED 13.10.2017, HEREINAFTER REFERRED AS LEARNED COMMISSIONER (APPEALS), WHICH IN TURN ARISE FROM THE ASSESSMENT ORDER DATED 30.03.2015 PASSED UNDER143(3) FOR ASSESSMENT YEAR (AY) 2011-12. IN THE ASSESSMENT ORDER THE ASSESSING OFFICER MADE ADDITION UNDER SECTION 68, ON ACCOUNT OF SHARE APPLICATION AND SHARE PREMIUM OF RS. 90.85 LAKHS AND GIFT OF RS. 1.99 CRORE. THOUGH, THE REVENUE HAS RAISED MULTIPLE GROUNDS OF APPEALS. HOWEVER, AS PER OUR CONSIDERED VIEW, THE SUBSTANTIAL GROUNDS OF APPEAL RELATES TO DELETING THE ITA NO. 389/SRT/2017 (AY 2011-12) RAJ GAR FAB PRIVATE LIMITED 2 ADDITIONS ON ACCOUNT OF ACCOUNT OF SHARE APPLICATION AND SHARE PREMIUM OF RS. 90.85 LAKHS AND GIFT OF RS. 1.99 CRORE. 2. BRIEF FACTS AS STATED AND GATHERED FROM THE ORDER OF THE LOWER AUTHORITIES ARE THAT ASSESSEE IS A COMPANY, ENGAGED IN THE BUSINESS OF TRADING OF TEXTILE FABRICS. THE ASSESSEE FILED ITS RETURN OF INCOME FOR RELEVANT ASSESSMENT YEAR ON 30 TH SEPTEMBER 2011 DECLARING TAXABLE INCOME OF 8,31,050/-. THE CASE WAS SELECTED FOR A SCRUTINY. DURING THE SCRUTINY ASSESSMENT, THE ASSESSING OFFICER NOTED THAT ASSESSEE HAS RECEIVED A SHARE PREMIUM OF 90.85 LAKHS AND GIFT OF 1.99 CRORE TOTALLING 2 2.90 CRORE FROM GIRISH KUMAR BODRA, WHO IS RESIDING IN DUBAI, UNITED ARAB EMIRATE (UAE). THE ASSESSING OFFICER, IN ORDER TO VERIFY THE IDENTITY, GENUINENESS OF TRANSACTION AND CREDITWORTHINESS OF THE INVESTOR ASKED THE ASSESSEE TO FURNISH DETAILS OF INVESTOR INCLUDING IDENTITY, CAPACITY AND GENUINENESS OF TRANSACTION. THE ASSESSEE FILE ITS REPLY VIDE REPLY DATED 26 TH MARCH 2015. IN THE REPLY THE ASSESSEE FURNISH THE DETAILS WITH REGARD TO THE IDENTITY, GENUINENESS AND CREDITWORTHY OF THE INVESTOR. THE ASSESSEE ALSO FURNISHED THE DETAILS PARTICULAR OF THE INVESTOR INCLUDING BANK STATEMENT TO PROVE THE CREDITWORTHINESS OF THE SHAREHOLDER /INVESTOR. THE ASSESSING OFFICER NOTED THAT ASSESSEE FAILED TO FURNISH THE COMPLETE DETAILS REGARDING THE GENUINENESS OF THE TRANSACTION. THE ASSESSING OFFICER REFERRED THE MATTER TO THE FOREIGN TAX AND TAX RESEARCH (FT&TR) DIVISION UNDER THE CENTRAL BOARD OF ITA NO. 389/SRT/2017 (AY 2011-12) RAJ GAR FAB PRIVATE LIMITED 3 DIRECT TAXES (CBDT ) NEW DELHI. THE JOINT SECRETARY FT & TR DIVISION FORWARDED THE INFORMATION TO UAE FOR SEEKING CONFIRMATION OF TRANSACTION UNDER EXCHANGE OF INFORMATION UNDER ARTICLES OF INDO UAE DOUBLE TAX AVOIDANCE AGREEMENT (INDO-UAE DTAA). THE ASSESSING OFFICER FURTHER NOTED THAT UAE AUTHORITY HAS NOT SEND ANY INFORMATION. THE ASSESSMENT WAS GETTING TIME-BARRED, THE ASSESSING OFFICER MADE ADDITION OF SHARE APPLICATION AND SHARE PREMIUM AND AMOUNT OF GIFT UNDER SECTION 68 AT THE TIME OF PASSING THE ASSESSMENT ORDER ON 30 TH MARCH 2015. 3. AGGRIEVED BY THE ADDITIONS IN THE ASSESSMENT ORDER THE ASSESSEE FILED APPEAL BEFORE LEARNED COMMISSIONER (APPEALS). BEFORE LEARNED COMMISSIONER (APPEALS) THE ASSESSEE FILE DETAILED WRITTEN SUBMISSION AS RECORDED IN PARA 5 OF HIS ORDER. THE ASSESSEE EXPLAINED THAT ASSESSEE COMPANY SUBMITTED COMPLETE DETAILS OF SHARE APPLICATION MONEY AND SHARES PREMIUM RECEIVED BY THE ASSESSEE COMPANY AND CLEARLY SUBMITTED THAT ASSESSEE COMPANY HAS NOT RECEIVED A SINGLE PENNY AS A GIFT FROM ANYONE, BUT THE REASONS BEST KNOWN TO THE ASSESSING OFFICER, HE HAD CONSIDERED THE AMOUNT OF 2.90 CRORE AND ADDED IN THE INCOME OF ASSESSEE UNDER SECTION 68. IT WAS EXPLAINED THAT IN FACT A GIFT OF 1.99 CRORE WAS RECEIVED BY SRI JAGDISH BODRA, ONE OF THE SHAREHOLDER OF THE ASSESSEE COMPANY, IN HIS INDIVIDUAL CAPACITY. THE SAID SHAREHOLDER IS A REGULAR ASSESSEE AND FILING HIS REGULAR RETURN OF INCOME WITH THE DEPARTMENT. ITA NO. 389/SRT/2017 (AY 2011-12) RAJ GAR FAB PRIVATE LIMITED 4 THE GIFT RECEIVED BY SAID SHAREHOLDER HAS BEEN SHOWN IN HIS RETURN OF INCOME. THE ASSESSEE COMPANY ALSO FILED THE COPY OF HIS RETURN OF INCOME. THE SAID SHAREHOLDER NAMELY JAGDISH BODRA AND THE DONOR GIRISH BODRA ARE REAL BROTHER. THE ASSESSEE ALSO EXPLAINED THAT DURING THE ASSESSMENT PROCEEDING, THE ASSESSING OFFICER MADE A REFERENCE TO THE OFFICE OF FT&TR CBDT NEW DELHI, FOR OBTAINING INFORMATION OF GIRISH BODRA FROM UAE AUTHORITIES. SINCE ASSESSMENT PROCEEDING WAS DELAYED FOR A YEAR, THE ASSESSING OFFICER OBTAINED EXTENSION OF TIME FOR PASSING ASSESSMENT ORDER. EVEN AFTER EXTENSION OF TIME THE INFORMATION WAS NOT RECEIVED FROM UAE AUTHORITY. THE ASSESSING OFFICER MADE ADDITION OF SHARE CAPITAL AND SHARE PREMIUM AS WELL AS GIFT IN THE HAND OF ASSESSEE. THE ASSESSEE FURTHER SUBMITTED THAT GIRISH BODRA IS NON-RESIDENT INDIAN (NRI), ALL FUNDS HAVE BEEN RECEIVED THROUGH NON-RESIDENTS EXTERNAL ACCOUNT (NRE ACCOUNT) WITH AXIS BANK. THE ASSESSEE ALSO FURNISHED THE COPY OF ALLOTMENT OF SHARES. THE COPY OF BANK ACCOUNT OF ASSESSEES COMPANY WITH AXIS BANK OF WAS ALSO FILED. TO PROVE THE IDENTITY OF INVESTOR THE ASSESSEE FURNISHED A COPY OF PASSPORT OF SHAREHOLDER AND TRADE LICENSE ISSUED BY UAE GOVERNMENT TO DO BUSINESS AT DUBAI. FOR GENUINENESS OF TRANSACTION THE ASSESSEE EXPLAINED THAT MONEY WAS RECEIVED THROUGH BANKING CHANNEL NRE ACCOUNT. FOR CREDITWORTHINESS THE ASSESSEE FURNISH THE COPY OF NET WORTH CERTIFICATE ISSUED BY A CHARTERED ACCOUNTANT (CA) FROM DUBAI ALONG WITH COPY ITA NO. 389/SRT/2017 (AY 2011-12) RAJ GAR FAB PRIVATE LIMITED 5 OF BANK STATEMENT. AGAINST THE ADDITION OF GIFT AT THE HAND OF ASSESSEE, THE ASSESSEE EXPLAINED THAT NO SUCH GIFT WAS RECEIVED BY ASSESSEE COMPANY. THE GIFT OF 1.99 CRORE WAS RECEIVED BY ONE OF THE DIRECTORS OF THE ASSESSEE COMPANY. ALL DOCUMENTS RELATING WITH THE RECEIPT OF GIFT BY DIRECTOR OF THE COMPANY, CONSISTING GIFT DEED, COPY OF BANK STATEMENT OF AXIS BANK OF RECIPIENT JAGDISH BODRA, COPY OF BANK STATEMENT OF AXIS BANK GIRISH BODRA WERE FILED. THE LEARNED COMMISSIONER (APPEALS) AFTER CONSIDERING THE DETAILED WRITTEN SUBMISSIONS AND THE DOCUMENTARY EVIDENCES DELETED BOTH THE ADDITION. THE LEARNED COMMISSIONER (APPEAL) HELD THAT THE TRANSACTIONS WERE MADE THROUGH THE NRE ACCOUNT. THE ASSESSING OFFICER HAS NOT POINTED OUT ANY DISCREPANCY IN THE DOCUMENTS FURNISHED BY THE ASSESSEE ON ACCOUNT OF AMOUNT OF SHARE APPLICATION AND SHARE PREMIUM. FURTHER, THE GIFT DEED WAS FILED BEFORE THE ASSESSING OFFICER AND HE HAS NOT POINTED OUT ANY DISCREPANCY. THE DONOR IS REAL BROTHER OF THE GIFT RECIPIENT. THE INVESTOR HAS SUFFICIENT WORTH FOR MAKING THE INVESTMENT WITH THE ASSESSEE COMPANY. THUS, AGGRIEVED BY THE ORDER OF COMMISSIONER (APPEALS) THE REVENUE HAS FILED PRESENT APPEAL BEFORE THE TRIBUNAL. 4. WE HAVE HEARD THE SUBMISSION OF LEARNED SENIOR DEPARTMENTAL REPRESENTATIVE (DR) FOR THE REVENUE AND THE LEARNED AUTHORISED REPRESENTATIVE (AR) FOR ASSESSEE. THE LD. SR DR FOR THE REVENUE SUPPORTED THE ORDER OF THE ASSESSING ITA NO. 389/SRT/2017 (AY 2011-12) RAJ GAR FAB PRIVATE LIMITED 6 OFFICER. IT WAS SUBMITTED THAT DURING THE ASSESSMENT THE ASSESSING OFFICER DOUBTED THE VERACITY OF THE TRANSACTION AND DOUBTED THAT GIRISH BODRAS SOURCE OF INCOME FROM WHICH HE EARNED 150 CRORE. AS PER HIS ANNUAL STATEMENT IN BODRA TRADING COMPANY (LLC) PERTAINING TO 1 ST JANUARY 2008 TO 31 ST DECEMBER 2009, THE TOTAL PROFIT OF HIS COMPANIES AROUND 6.4 CRORE AT CURRENT EXCHANGE RATE IN WHICH SHARE OF THE ASSESSEE @ 25% IS CALCULATED AT 1.6 CRORE. THE ASSESSING OFFICER ALSO RELIED ON VARIOUS CASE LAWS THAT ONUS TO PROVE THE IDENTITY OF THE CREDITOR, CAPACITY OF CREDITOR TO ADVANCE SHARE APPLICATION MONEY AND GENUINENESS OF TRANSACTION HAS NOT BEEN PROVED BY THE ASSESSEE. THE LEARNED DR FOR THE REVENUE PRAYED FOR UPHOLDING THE ADDITION MADE BY ASSESSING OFFICER BY REVERSING THE DECISION OF LEARNED COMMISSIONER (APPEALS). 5. ON THE OTHER HAND THE LEARNED AR FOR THE ASSESSEE SUPPORTED THE ORDER OF LEARNED COMMISSIONER (APPEALS). THE LEARNED AR OF THE ASSESSEE FURTHER SUBMITTED THAT THE ASSESSING OFFICER MADE ADDITION WITHOUT CONSIDERING THE DOCUMENTARY EVIDENCE FURNISHED BY ASSESSEE. THE ASSESSING OFFICER HAS NOT GIVEN ANY FINDING ON DOCUMENTARY EVIDENCE FURNISHED BY ASSESSEE. THE ASSESSEE HAS DISCHARGED ITS ONUS. BEFORE THE ASSESSING OFFICER THE ASSESSEE CLEARLY STATED THAT THE ASSESSEE COMPANY HAS NOTHING TO DO WITH THE GIFT RECEIVED BY ONE OF ITS DIRECTOR IN HIS INDIVIDUAL CAPACITY. THE GIFT WAS RECEIVED BY DIRECTOR IN HIS INDIVIDUAL CAPACITY. THE TRANSACTION OF THE GIFT WAS SHOWN IN ITA NO. 389/SRT/2017 (AY 2011-12) RAJ GAR FAB PRIVATE LIMITED 7 THE RETURN OF INCOME BY THAT DIRECTOR IN HIS INDIVIDUAL TAX RETURN. THE ASSESSEE ALSO FILED THE COPY OF GIFT DEED. THE ASSESSING OFFICER BRUSHED ASIDE THE ENTIRE EVIDENCE FURNISHED BY THE ASSESSEE. THE ASSESSEE DISCHARGED ITS HONOURS BY PROVING THE IDENTITY OF CREDITOR, BY FILING HIS PASSPORT, GENUINENESS OF TRANSACTION AS THE ENTIRE SHARE APPLICATION AND SHARE PREMIUM MONEY WAS RECEIVED THROUGH NRE ACCOUNT. THE ASSESSEE ALSO PROVED THE CREDITWORTHINESS OF THE INVESTOR BY FILING HIS STATEMENT OF ACCOUNT AND CERTIFICATE OF CA. THE ASSESSING OFFICER HAS NOT POINTED OUT ANY DISCREPANCIES IN ALL THE DOCUMENTARY EVIDENCE FURNISHED BY ASSESSEE. THE ASSESSING OFFICER FORWARDED THE MATTER FOR SEEKING INFORMATION THROUGH FT &TR CBDT, NEW DELHI, UNDER THE ARTICLES OF INDO US DTAA. HOWEVER, AS RECORDED BY ASSESSING OFFICER NO INFORMATION WAS RECEIVED TO HIM TILL THE PASSING OF THE ASSESSMENT ORDER. THE LEARNED AR FOR THE ASSESSEE SUBMITS THAT AS PER BELIEF OF ASSESSEE NO ADVERSE INFORMATION WAS RECEIVED FROM UAE AUTHORITIES AGAINST THE INVESTOR. THE LEARNED AR OF THE ASSESSEE PRAYED FOR DISMISSAL OF APPEAL FILED BY THE REVENUE. 6. WE HAVE CONSIDERED THE CONTENTS OF BOTH THE REPRESENTATIVE AND THE ORDERS OF THE LOWER AUTHORITIES. WE HAVE ALSO CONSIDERED THE DOCUMENTARY EVIDENCES FILED BEFORE US, WHICH WERE FILED BEFORE LOWER AUTHORITIES AS WELL. WE FIND THAT THE ASSESSING OFFICER IN PARA 5.2 OF HIS ORDER RECORDED THAT ON 31.03.2014, A LETTER WAS RECEIVED FROM JOINT SECRETARY FT & TR DIVISION NEW DELHI, THAT HIS ITA NO. 389/SRT/2017 (AY 2011-12) RAJ GAR FAB PRIVATE LIMITED 8 REQUEST HAS BEEN FORWARDED TO THE UAE AUTHORITIES FOR SEEKING INFORMATION UNDER THE EXCHANGE OF INFORMATION UNDER ARTICLES OF INDO UAE TO FURNISH IN INFORMATION ABOUT THE UAE BASED ENTITIES, GIRISH KUMAR BODRA, BODRA TRADING COMPANY (LLC) AND SHYAM TRADING COMPANY (LLC). SO THE ASSESSMENT DID NOT GET TIME BARRED ON 31.03.2014 AND TIME BARRING DATE IS EXTENDED BY 12 MONTH, I.E TB ON 31.03.2015. FURTHER, THE ASSESSING OFFICER IN PARA 5.3 RECORDED THAT NO INFORMATION WAS RECEIVED FROM FT & TR NEW DELHI AND THE EXTENDED TIME PERIOD FOR PASSING THE ASSESSMENT ORDER WAS EXPIRING ON 31.03.2015. THE ASSESSING OFFICER RECORDED THAT HE HAS GONE THROUGH THE REPLY OF ASSESSEE BUT THE SAME IS NOT CONVINCING. THE ASSESSEE HAS GIVEN A GENERAL REPLY TO THE NOTICE AND FAILED TO FURNISH THE NATURE AND BUSINESS ACTIVITY OF INVESTOR BUSINESS CONCERNED I.E. SHYAM GENERAL TRADING CO. LLP AND BODRA TRADING COMPANY. THE ASSESSEE FAILED TO DISCHARGE ITS ONUS. THE ASSESSING OFFICER TREATED THE SHARE APPLICATION AND SHARE PREMIUM OF RS. 90.85 LAKHS UNDER SECTION 68 OF ACT. THE ASSESSING ALSO ADDED THE GIFT OF RS. 1.99 CRORE AT THE HAND OF THE ASSESSEE. AS NOTED ABOVE THE ASSESSEE FILE WRITTEN SUBMISSION BEFORE LEARNED COMMISSIONER (APPEALS). 7. THE LEARNED COMMISSIONER (APPEALS) AFTER CONSIDERING THE WRITTEN SUBMISSION AND THE DOCUMENTARY EVIDENCES FURNISHED BEFORE HIM HELD THAT DURING THE ASSESSMENT THE ASSESSEE ALL THE DETAILS WERE FURNISHED TO THE ASSESSING OFFICER ITA NO. 389/SRT/2017 (AY 2011-12) RAJ GAR FAB PRIVATE LIMITED 9 WITH REGARDS TO IDENTITY, CREDITWORTHY AND GENUINENESS OF TRANSACTION. THE ASSESSEE FILED PASSPORT, TRADE LICENCE ISSUED BY UAE GOVERNMENT, BANK STATEMENT, NET WORTH CERTIFICATE ISSUED BY CA FROM DUBAI AND GIFT DEED. THE ASSESSING OFFICER HAS NOT POINTED OUT ANY DISCREPANCY IN THE DOCUMENTS RATHER MADE GENERAL COMMENTS. WE FIND THAT DURING THE APPELLATE STAGE, THE LEARNED COMMISSIONER (APPEALS) VIDE HIS DIRECTION DATED 05.10.2016 DIRECTED THE ASSESSING OFFICER TO VERIFY FROM RECORD WHETHER ANY REPORT IS RECEIVED FROM UAE AUTHORITIES. THE ASSESSING OFFICER VIDE HIS REPORT DATED 03.10.2017 HAS INFORMED THAT NO REPLY HAS BEEN RECEIVED FROM UAE AUTHORITIES IN REFERENCE TO THE REQUEST MADE UNDER EXCHANGE OF INFORMATION UNDER THE ARTICLES OF INDO-UAE DTAA. WE FURTHER FIND THAT THE LD. COMMISSIONER (APPEALS) INDEPENDENTLY EXAMINED THE EVIDENCES FILED BEFORE HIM AND CONCLUDED THAT THE ASSESSEE PROVED THE IDENTITY AND STATUS OF GIRISH BODRA BEING NRI AT DUBAI WHO IS HAVING INCOME FROM DIRECTORS REMUNERATION AND PROFIT SHARE IN BODRA TRADING COMPANY LLC AND SHYAM TRADING CO. (LLC). AFTER EXAMINING THE WORTH OF INVESTOR HELD THAT THE INVESTOR HAS SUFFICIENT CAPACITY TO INVEST IN THE ASSESSEE COMPANY. THE TRANSACTION WAS ROUTED THROUGH NRE ACCOUNT. THE LD COMMISSIONER (APPEALS) ALSO HELD THAT THE ASSESSEE FILED DETAILS OF GIFT IN THE NAME OF ONE DIRECTOR OF THE COMPANY. FURTHER NO DISCREPANCY WAS POINTED OUT BY THE ASSESSING OFFICER. ON THE ABOVE OBSERVATION THE LD. COMMISSIONER (APPEALS) DELETED BOTH THE ITA NO. 389/SRT/2017 (AY 2011-12) RAJ GAR FAB PRIVATE LIMITED 10 ADDITIONS. IN OUR VIEW THE ASSESSEE HAS FULLY DISCHARGED ITS ONUS AND PROVED THE TRANSACTION OF SHARE APPLICATION AND SHARE PREMIUM MONEY AS GENUINE. WE FURTHER CONCUR WITH THE FINDINGS OF THE LEARNED COMMISSIONER (APPEALS) THAT THERE IS NO DISCREPANCY IN THE GIFT TO THE DIRECTOR OF THE ASSESSEE COMPANY. THE DONOR IS THE REAL BROTHER OF RECIPIENT OF THE GIFT. IN OUR VIEW THE LEARNED COMMISSIONER (APPEALS) HAS PASSED THE ORDER AFTER DUE DELIBERATION ON THE FACTS OF THE CASE AND THE DOCUMENTARY EVIDENCES FURNISHED BY THE ASSESSEE WHICH WE AFFIRM. NO CONTRARY FACT TO TAKE OTHER VIEW IS BROUGHT OVER NOTICE. IN THE RESULT THE GROUNDS OF APPEAL RAISED BY REVENUE ARE DISMISSED. 8. IN THE RESULT THE REVENUE IS DISMISSED NO ORDER AS TO COST. ORDER ANNOUNCED ON 14 TH JUNE 2021 BY PLACING RESULT ON THE NOTICE BOARD. SD/- SD/- ( DR ARJUN LAL SAINI) (PAWAN SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER SURAT, DATED: 14/06/2021 (SELF/DRAGON) COPY TO: 1. APPELLANT 2. RESPONDENT 3. CIT(A) 4. CIT 5. DR 6. GUARD FILE TRUE COPY/ BY ORDER ASSISTANT REGISTRAR, ITAT,SURAT RUE COPY/