ACIT, New Delhi V. Sh. Suresh Nanda, New Delhi

ITA 5853/DEL/2014

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 0306 (ITAT-DELHI)
• Duration Of Justice: 4 year(s) 8 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-07-2019
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 13-06-2017
• Assessment Year: 2002-2003
• Appeal Filed On: 30-10-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: NIDHI SRIVASTAVA
• Keywords: Unexplained cash credit; Bogus Share capital; Unexplained investment; Income from undisclosed sources; Search and seizure; Double taxation relief; Document seized; Source of fund; Deemed to accrue or arise in india; Question of law; Wholly owned subsidiary; Capital receipt; Onus to prove; Documents seized; TDS; Set aside
• Section: 143(3); 5(2); 68; 69; 132

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL DELHI DELHI DELHI DELHI BENCH BENCH BENCH BENCH B BB B : NEW DELHI : NEW DELHI : NEW DELHI : NEW DELHI BEFORE SHRI G. BEFORE SHRI G. BEFORE SHRI G. BEFORE SHRI G.D.AGRAWAL, D.AGRAWAL, D.AGRAWAL, D.AGRAWAL, VICE PRESIDENT AND VICE PRESIDENT AND VICE PRESIDENT AND VICE PRESIDENT AND SHRI BHAVNESH SAINI SHRI BHAVNESH SAINI SHRI BHAVNESH SAINI SHRI BHAVNESH SAINI, JUDICIAL MEMBER , JUDICIAL MEMBER , JUDICIAL MEMBER , JUDICIAL MEMBER ITA NO ITA NO ITA NO ITA NO S SS S . .. . 5852/DEL/2014, 5853/DEL/2014 & 585 5852/DEL/2014, 5853/DEL/2014 & 585 5852/DEL/2014, 5853/DEL/2014 & 585 5852/DEL/2014, 5853/DEL/2014 & 585 4 44 4 /DEL/2014 /DEL/2014 /DEL/2014 /DEL/2014 ASSESSMENT YEAR ASSESSMENT YEAR ASSESSMENT YEAR ASSESSMENT YEAR S SS S : : : : 2001 2001 2001 2001 - -- - 02, 2002 02, 2002 02, 2002 02, 2002 - -- - 03 & 2003 03 & 2003 03 & 2003 03 & 2003 - -- - 04 0404 04 ASSI ASSI ASSI ASSI STANT COMMISSIONER OF STANT COMMISSIONER OF STANT COMMISSIONER OF STANT COMMISSIONER OF INCOME TAX, INCOME TAX, INCOME TAX, INCOME TAX, CENTRAL CIRCLE CENTRAL CIRCLE CENTRAL CIRCLE CENTRAL CIRCLE- -- -13, 13, 13, 13, NEW DELHI. NEW DELHI. NEW DELHI. NEW DELHI. VS. VS. VS. VS. SHRI SURESH NANDA, SHRI SURESH NANDA, SHRI SURESH NANDA, SHRI SURESH NANDA, 4, CASUARINA AVENUE, 4, CASUARINA AVENUE, 4, CASUARINA AVENUE, 4, CASUARINA AVENUE, WESTEND GREENS, WESTEND GREENS, WESTEND GREENS, WESTEND GREENS, 30 3030 30- -- -D, RAJOKRI, D, RAJOKRI, D, RAJOKRI, D, RAJOKRI, NEW DELHI NEW DELHI NEW DELHI NEW DELHI 110 038. 110 038. 110 038. 110 038. PAN : AAFPN9895H. PAN : AAFPN9895H. PAN : AAFPN9895H. PAN : AAFPN9895H. (APPELLANT) (RESPONDENT) ITA NO ITA NO ITA NO ITA NO S SS S . .. . 5857/DEL/2014, 5858/DEL/201 5857/DEL/2014, 5858/DEL/201 5857/DEL/2014, 5858/DEL/201 5857/DEL/2014, 5858/DEL/201 4 & 5859/DEL/2014 4 & 5859/DEL/2014 4 & 5859/DEL/2014 4 & 5859/DEL/2014 ASSESSMENT YEAR ASSESSMENT YEAR ASSESSMENT YEAR ASSESSMENT YEAR S SS S : : : : 2001 2001 2001 2001 - -- - 02, 2002 02, 2002 02, 2002 02, 2002 - -- - 03 & 2003 03 & 2003 03 & 2003 03 & 2003 - -- - 04 0404 04 ASSISTANT COMMISSIONER OF ASSISTANT COMMISSIONER OF ASSISTANT COMMISSIONER OF ASSISTANT COMMISSIONER OF INCOME TAX, INCOME TAX, INCOME TAX, INCOME TAX, CENTRAL CIRCLE CENTRAL CIRCLE CENTRAL CIRCLE CENTRAL CIRCLE- -- -13, 13, 13, 13, NEW DELHI. NEW DELHI. NEW DELHI. NEW DELHI. VS. VS. VS. VS. M/S C 1 INDIA PVT.LTD., M/S C 1 INDIA PVT.LTD., M/S C 1 INDIA PVT.LTD., M/S C 1 INDIA PVT.LTD., D DD D- -- -5, 3 5, 3 5, 3 5, 3 RD RDRD RD FLOOR, DEFENCE COLONY, FLOOR, DEFENCE COLONY, FLOOR, DEFENCE COLONY, FLOOR, DEFENCE COLONY, NEW DELHI NEW DELHI NEW DELHI NEW DELHI 110 024. 110 024. 110 024. 110 024. PAN : AABCC4078L. PAN : AABCC4078L. PAN : AABCC4078L. PAN : AABCC4078L. (APPELLANT) (RESPONDENT) APPELLANT BY : MS. NIDHI SRIVASTAVA, CIT - DR. RESPONDENT S BY : SHRI AJAY WADHWA, ADVOCATE. DATE OF HEARING : 07.05.2019 07.05.2019 07.05.2019 07.05.2019 DATE OF PRONOUNCEMENT : 01.07.2019 01.07.2019 01.07.2019 01.07.2019 ORDER ORDER ORDER ORDER PER PER PER PER BENCH BENCH BENCH BENCH : :: : THESE APPEALS BY DEPARTMENT AGAINST DIFFERENT ASSE SSEES ARE DIRECTED AGAINST THE ORDER OF LEARNED CIT(A)-I, NEW DELHI DATED 11 TH AUGUST, 2014. 2. SINCE COMMON ISSUES ARE INVOLVED IN ALL THESE AP PEALS, THEY WERE HEARD TOGETHER AND ARE BEING DISPOSED OF BY A CONSO LIDATED ORDER. ITA-5852/DEL/2014 & 5 OTHERS 2 3. IN THE THREE APPEALS OF THE DEPARTMENT IN THE CA SE OF M/S C 1 INDIA PRIVATE LIMITED, BOTH THE PARTIES STATED THAT THE ISSUES ARE COMMON AND MAINLY ARGUED FOR ASSESSMENT YEAR 2001-0 2 AND HAVE STATED THAT IN CASE THIS APPEAL IS DECIDED, THE ORD ER WOULD BE FOLLOWED IN THE REMAINING APPEALS. ITA NO.5857/DEL/2014 ITA NO.5857/DEL/2014 ITA NO.5857/DEL/2014 ITA NO.5857/DEL/2014 A.Y. 2001 A.Y. 2001 A.Y. 2001 A.Y. 2001- -- -02 : 02 : 02 : 02 :- -- - 4. IN THIS APPEAL BY THE REVENUE, FOLLOWING GROUNDS HAVE BEEN RAISED :- 1. THE ORDER OF LD.CIT(A) IS NOT CORRECT IN LAW AN D FACTS. 2. ON THE FACTS AND CIRCUMSTANCES OF THE CASE THE LD.CIT(A) HAS ERRED IN LAW IN DELETING THE ADDITION OF RS.9,34,15,000/- MADE BY AO ON ACCOUNT OF UNEXPLAIN ED SHARE CAPITAL. 3. ON THE FACTS AND CIRCUMSTANCES OF THE CASE THE LD.CIT(A) HAS ERRED IN LAW IN DELETING THE ADDITION OF RS.8,26,863/- MADE BY AO ON ACCOUNT OF PRE OPERATIV E EXPENSES. 4. ON THE FACTS AND CIRCUMSTANCES OF THE CASE THE LD.CIT(A) HAS ERRED IN LAW IN DELETING THE ADDITION OF RS.75,00,000/- MADE BY AO ON ACCOUNT OF UNACCOUNTED CREDIT U/S 68 OF THE INCOME TAX ACT, 1961. 5. BRIEFLY, THE BACKGROUND OF THE DEPARTMENTAL APPE AL IS THAT THE ASSESSING OFFICER PASSED THE ORDER UNDER SECTION 25 4/153C/143(3) DATED 26 TH MARCH, 2014. SEARCH AND SEIZURE UNDER SECTION 132 OF THE ACT WAS CARRIED OUT IN THE CASE OF SHRI SURESH NAND A AND HIS ASSOCIATES/CONCERNS ON 28 TH FEBRUARY, 2007. DOCUMENTS INDICATING VARIOUS TRANSACTIONS WERE SEIZED DURING THE SEARCH. THE CASE WAS ASSESSED AT AN INCOME OF `6.91 CRORES AGAINST RETUR NED LOSS OF `3.31 CRORES. IN APPEAL, LEARNED CIT(A), VIDE ORDER DATE D 8 TH FEBRUARY, 2012, UPHELD THE ADDITIONS. ON FURTHER APPEAL, ITAT, VID E ORDER DATED 24 TH JULY, 2012, SET ASIDE THE ISSUE OF TAXABILITY OF SH ARE CAPITAL OF `9,34,15,000/- RAISED IN ASSESSEES CASE AS WELL AS SHRI SURESH NANDA ITA-5852/DEL/2014 & 5 OTHERS 3 TO BE DECIDED AFRESH. OTHER ISSUES WERE ALSO SET A SIDE BY THE ITAT FOR FRESH CONSIDERATION. IN THE PRESENT ASSESSMENT ORD ER PASSED TO GIVE EFFECT TO THE DIRECTIONS OF THE TRIBUNAL, THE ASSES SING OFFICER HAS AGAIN MADE ADDITION OF `9,34,15,000/- REPRESENTING SHARE CAPITAL RECEIVED IN ASSESSEE COMPANY SUBSCRIBED BY ITS HOLDING COMPANY M/S Y2K SIL, MAURITIUS. OTHER ADDITIONS/DISALLOWANCES HAVE ALSO BEEN MADE WHICH WERE CHALLENGED BEFORE THE LEARNED CIT(A). 6. LEARNED CIT(A), BEFORE DECIDING THE ISSUES, NOTE D BRIEF FACTS OF THE CASE AS WELL. IT WAS NOTED THAT ON THE BASIS O F COMPLAINT BY THE PRIME MINISTERS OFFICE, A SEARCH WAS CONDUCTED BY THE DELHI POLICE ON 22 ND FEBRUARY, 2007 AT THE RESIDENCE OF ONE DR. M.V. RA O AT F-58, FIRST FLOOR, GREEN PARK, NEW DELHI, WHEREIN CERTAIN DOCUM ENTS INCLUDING CASH AMOUNTING TO `2 CRORES WERE FOUND AND SEIZED. THE DELHI POLICE INFORMED THE INCOME TAX DEPARTMENT, WHICH ALSO COND UCTED A SEARCH UNDER SECTION 132 OF THE INCOME-TAX ACT, 1961 ON TH E SAME DAY AND SEIZED THE SAID CASH ALONG WITH DOCUMENTS. BASED O N INFORMATION CONTAINED IN THE SEIZED DOCUMENTS AND STATEMENTS RE CORDED, SEARCH AND SEIZURE UNDER SECTION 132 WAS ALSO CARRIED OUT IN THE CASE OF SHRI SURESH NANDA AND HIS ASSOCIATE CONCERNS ON 28 TH FEBRUARY, 2007. DURING SEARCH, SEVERAL DOCUMENTS WERE SEIZED WHICH HAVE BEEN ANALYZED IN THE ASSESSMENTS FRAMED. BASED ON SEIZE D DOCUMENTS, THE REVENUE REACHED THE CONCLUSION THAT DR. RAO AND HIS ASSOCIATES SHRI SURESH NANDA AND OTHERS HAD RECEIVED COMMISSION ON CONTRACTS FOR THE SALE OF RADIO WIRELESS SETS TO INDIAN DEFENSE E STABLISHMENT AND ASSESSED IT AS HIS INCOME FOR DIFFERENT ASSESSMENT YEARS AS IS MENTIONED IN PARAGRAPH 3.2 OF THE APPELLATE ORDER. 7. SAME ADDITIONS WERE ALSO MADE IN THE CASE OF SHR I SURESH NANDA. OTHER ADDITIONS WERE ALSO MADE BASED ON ASS ETS AND DOCUMENTS HOLDING THE STATUS OF SHRI NANDA TO BE R ESIDENT. ASSESSMENTS IN THE CASE OF SHRI SURESH NANDA FOR AS SESSMENT YEARS ITA-5852/DEL/2014 & 5 OTHERS 4 2001-02, 2002-03 AND 2003-04 WHICH HAVE BEEN CONFIR MED BY THE LEARNED CIT(A) WERE REMANDED TO THE ASSESSING OFFIC ER FOR FRESH ASSESSMENTS BY THE COORDINATE BENCH OF THE ITAT VID E ORDER DATED 24 TH JULY, 2012 HOLDING THE STATUS OF SHRI SURESH NANDA TO BE NON-RESIDENT. ON FURTHER APPEAL BY THE REVENUE, THE STATUS OF SHR I NANDA WAS CONFIRMED BY HON'BLE DELHI HIGH COURT VIDE ORDER DA TED 25 TH FEBRUARY, 2013, DISMISSING THE APPEAL FILED BY THE REVENUE. 8. LEARNED CIT(A) FURTHER NOTED THAT HE HAS ADJUDIC ATED THE CASE OF SHRI SURESH NANDA FOR ASSESSMENT YEAR 2004-05 TO 20 06-07. IN THOSE APPEALS, FOLLOWING THE ORDER OF THE ITAT AS CONFIRM ED BY HON'BLE DELHI HIGH COURT, HE HAS HELD THE STATUS OF SHRI NANDA TO BE NON-RESIDENT. ALL THE ADDITIONS ON ACCOUNT OF DEPOSITS IN THE BAN K ACCOUNT IN THE CASE OF SHRI NANDA, INVESTMENTS MADE BY THE HOLDING COMP ANY UBL LTD., MAURITIUS, SHARE CAPITAL INVESTED BY THE HOLDING CO MPANY M/S PALM TECHNOLOGIES LTD., MAURITIUS IN M/S CLARIDGES SEZ ( P) LTD. AS UNACCOUNTED MONEY OF SHRI SURESH NANDA AND COMMISSI ON INCOME ON THE BASIS OF DOCUMENTS RECOVERED BY THE DELHI POLIC E ON 22 ND FEBRUARY, 2007 FROM THE POSSESSION OF DR. M.V. RAO ASSESSES A S INCOME OF DR. RAO AND SHRI SURESH NANDA WERE DELETED. ON FURTHER APPEAL IN THE CASE OF SHRI SURESH NANDA, HIS STATUS WAS HELD TO B E NON-RESIDENT. LEARNED CIT(A), THEREFORE, NOTED THAT IN THE CASE O F SHRI NANDA, THE ADDITIONS WERE DELETED. LEARNED CIT(A) IN THE BACK GROUND OF THESE FACTS DECIDED THE APPEAL OF THE ASSESSEE AND DELETE D CERTAIN ADDITIONS, AGAINST WHICH, THE REVENUE IS IN APPEAL. 9. GROUND NO.1 RAISED BY THE REVENUE IS GENERAL AND NEEDS NO ADJUDICATION. 10. IN GROUND NO.2, THE REVENUE HAS CHALLENGED THE DELETION OF ADDITION OF `9,34,15,000/- MADE BY THE ASSESSING OF FICER ON ACCOUNT OF UNEXPLAINED SHARE CAPITAL. THE ASSESSEE CHALLENGED THIS ADDITION ITA-5852/DEL/2014 & 5 OTHERS 5 BEING SHARE CAPITAL RECEIVED FROM Y2K SYSTEMS INTER NATIONAL LTD. (Y2K SIL), HOLDING COMPANY OF THE ASSESSEE COMPANY. BEF ORE THE LEARNED CIT(A), WRITTEN SUBMISSIONS WERE FILED BY THE ASSES SEE, WHICH READ AS UNDER :- 1. YOUR GOODSELF WILL APPRECIATE THAT OUR MATTER H AS BEEN SET ASIDE AND ALL FURTHER ACTION WILL HAVE TO BE TA KEN SUBJECT TO THE DIRECTIONS OF THE HON'BLE TRIBUNAL WHICH ARE REPRODUCED HERE UNDER:- SINCE WE HAVE SET ASIDE THE MAIN ISSUES BACK TO TH E FILE OF AO, INTEREST OF JUSTICE WILL BE SERVED IF THE REMAI NING ISSUES IN THESE APPEALS ARE SET ASIDE BACK TO THE FILE OF AO TO DECIDE ALL THESE ISSUES AFTER CONSIDERING THE EXPLA NATION GIVEN BY THE ASSESSEE AND THE ITAT ORDER. IN THE RE SULT, ALL THE APPEALS FILED THE ASSESSEE ARE ALLOWED FOR STAT ISTICAL PURPOSES. IN OUR CONSIDERED VIEW C1 INDIA PT. LTD. HAS BEEN HELD AS A SEPARATE ENTITY HELD BY DEPARTMENT BY WAY OF ASSESS MENTS. IT HAS NOT BEEN HELD TO BE A BENAMI CONCERN OF THE ASSESSEE. THE ADDITION HAVE BEEN MADE ON ACCOUNT OF SHARE APPLICATION MONEYS AND LOAN IN BOTH THE CASES I.E. ASSESSEE AND C1 INDIA WITHOUT EXAMINING THE RELEVAN T ASPECTS LIKE IDENTITY, CREDITWORTHINESS, ISSUES ABO UT GENUINENESS OF TRANSACTION AND THE ISSUE OF SEPARAT E STATUS OF THE ENTITIES IN VIEW OF HON'BLE SUPREME COURT JU DGMENT IN THE CASE OF VODAFONE (SUPRA). LOWER AUTHORITIES ALSO SEEM TO BE AMBIVALENT AS TO IN WHICH CASE THE ADDIT ION SHOULD BE MADE. 2. GROUND 3 - REGARDING ADDITION OF RS. 9,34,15,000 ON ACCOUNT OF SHARE CAPITAL RECEIVED FROM Y2K SIL: I) CONCLUSIVE DOCUMENTS FILED: THE ASSESSEE COMPANY IS 100% SUBSIDIARY OF Y2K SYSTEMS INTERNATIONAL LTD . AND HAS RECEIVED ALL THE SHARE CAPITAL AND LOANS FR OM IT THROUGH BANKING CHANNELS. THE NECESSARY ITA-5852/DEL/2014 & 5 OTHERS 6 INTIMATION AND APPROVALS HAVE BEEN RECEIVED FROM THE RBI REGARDING SHARE CAPITAL RECEIVED. WE ENCLOS E HEREWITH THE FOLLOWING DOCUMENTS RELATING TO Y2K SYSTEMS INTERNATIONAL LTD. WHICH CONCLUSIVELY PROVE THAT Y2K SYSTEMS INTERNATIONAL LTD. IS A SEPARATE COMPANY, IS REGISTERED IN MAURITIUS AND IS A TAX RESIDENT OF THE COMPANY AND THE MONEY HAS BEEN GIVEN FROM THEIR OWN BANK ACCOUNT:- (A) INVESTMENT CONFIRMATION DULY CERTIFIED BY CHARTERE D CERTIFIED ACCOUNTANT. (PG 75) (B) BALANCE SHEET AND INCOME STATEMENT OF Y2K SYSTEMS INTERNATIONAL LTD. DULY CERTIFIED BY CHARTERED CERT IFIED ACCOUNTANT. . (PG 76 - 77) (C) CERTIFIED TRUE COPY OF TAX RESIDENCE CERTIFICATE. . (PG 78- 79) (D) SHAREHOLDERS CONFIRMATION OF Y2K SYSTEMS INTERNATI ONAL LTD. DULY CERTIFIED BY CHARTERED CERTIFIED ACCOUNTA NT. . (PG 80- 81) (E) CONFIRMATION FOR ACCOUNT OPENING BY HSBC BANK OF Y 2K SYSTEMS INTERNATIONAL LTD. (PG 82 - 83) (F) COPY OF REGISTER OF SHAREHOLDERS. . (PG 84) (G) COPY OF REGISTER OF DIRECTORS WITH DATE OF APPOINT MENT AND DATE OF RESIGNATION. (PG 85) II) YOUR GOODSELF HAS STATED THAT Y2K SYSTEMS INTERNAT IONAL LTD. HAS RECEIVED A LOAN FROM ANOTHER COMPANY NAMEL Y M/S PALM TECHNOLOGY IN THE YEAR 2007. WE FAIL TO UNDERSTAND THE RELEVANCE OF THE LOAN TAKEN IN 2007 WHEREAS WE ARE DEALING WITH AYS 2001-02 TO AY 2003-04. III) RELIANCE PLACED ON DECISION GIVEN BY HON'BLE ITAT IN CASE OF RUSSIAN TECHNOLOGY CENTRE PVT. LTD. FOR AY 2007- 08 DT. 12.04.2013: A) WE ARE ALSO RELYING ON THE DECISION OF THE HON'BLE TRIBUNAL IN THE CASE OF RUSSIAN TECHNOLOGY CENTRE PVT. LTD. WHEREIN THE HONBLE TRIBUNAL HAS EXAMINED IDENTICAL ISSUE ON SI MILAR FACTS AND HELD THAT SEC. 68 WILL NOT APPLY WHERE MONEY HA S BEEN ITA-5852/DEL/2014 & 5 OTHERS 7 RECEIVED FROM A NON-RESIDENT WHO HAS REMITTED THE S AID MONEY FROM INCOME EARNED AND RECEIVED OUTSIDE INDIA. THEY ALSO HELD THAT THE CONFIRMATION OF REMITTER AND REMITTANCE CE RTIFICATE IS SUFFICIENT TO ESTABLISH THE VERACITY OF THE SHARE C APITAL RECEIVED. COPY OF THE JUDGMENT IS ENCLOSED HEREWITH AT PG 6 - 38/PB. B) SIMILAR DECISION VIEW FOLLOWING THE CASE OF RTC (S UPRA) HAS BEEN TAKEN BY THE ID. CIT (A) IN THE CASE OF CLARID GES HOTELS PVT. LTD FOR AYS 2004-05 TO 2009-10 WHEREIN IT WAS HELD IN THE PRESENT CASE, ADDITION HAS BEEN MADE BY THE ID. AO ALLEGING THE APPELLANT COMPANY TO BE A BENEFICIARY OF UNACCOUNTE D FUNDS DESPITE THE FACT THAT GENUINENESS, CREDITWORTHINESS AND IDENTITY OF THE SOURCE WAS ESTABLISHED. THE ID. CIT (A) DELE TED THE SAID ADDITION AFTER CONSIDERING THE SUPPORTING DOCUMENTS AND EVIDENCES AND FOLLOWING THE HONBLE ITAT IN THE CAS E OF RUSSIAN TECHNOLOGY CENTRE PVT. LTD. (ORDER OF THE CIT (A) FOR AY 2007-08 ATTACHED AT PG 39 - 70/PB). THE FOLLOWING IS THE RATIO DECIDENDI IN CASE OF RTC - (I) CBDT CIRCULAR NO 5 (F. NO 73A/2(69)-IT (A-L 1)) DT 20.02.1969- MONEY BROUGHT BY NON RESIDENTS FOR INV ESTMENTS FOR OTHER PURPOSES IS NOT LIABLE TO INDIAN INCOME T AX. IF MONEY HAS BEEN BROUGHT INTO INDIA THROUGH BANKI NG CHANNELS....NO QUESTIONS AT ALL ARE ASKED BY THE ITOS AS TO THE OR IGIN OF THE MONEY OR ASSETS BROUGHT IN (RELEVANT PARA AT PG 11 2/PB 1) (II) MONEY RECEIVED THROUGH BANKING CHANNELS:(PARA 11 O F PG 114/PB 1) THE MONEYS HAVE COME TO THE ASSESSEE COMP ANY THROUGH BANKING CHANNELS AS IS EVIDENT FROM FIRC. W HICH ALSO MENTIONS THE PURPOSE OF REMITTANCE AND ALSO THE PAR TICULARS OF THE REMITTING BANK. FIPB APPROVAL THAT TOO WITH A L IBERTY TO COLLECT SHARE CAPITAL UPTO RS. 600 CRORES AND ROC C OMPLIANCE ETC CLEARLY INDICATE THE STAND OF THE ASSESSEE. THE PLE THORA OF EVIDENCES FILED BY THE ASSESSEE AMOUNTS TO DISCHARG E OF PRIMARY BURDEN CAST ON THE ASSESSEE IN TERMS OF S. 68 OF TH E ACT FOR ESTABLISHING IDENTITY AND CREDITWORTHINESS OF CREDI TORS AND GENUINENESS OF TRANSACTION. ITA-5852/DEL/2014 & 5 OTHERS 8 (III) CAPITAL RECEIPT:(PARA 11.6 OF PG 116/PB 1) IT THEREFORE NATURALLY FOLLOWS THAT IF THE IDENTITY OF THE NON- RESIDENT REMITTER IS ESTABLISHED AND THE MONEY HAS COME IN THROUGH BANKING CHANNELS, IT WOULD CONSTITUTE A CAP ITAL RECEIPT AND ORDINARILY CANNOT BE TREATED AS DEEMED INCOME U NDER SECTIONS 68 OR 69 OF THE ACT. THIS IS CLARIFIED BY THE CBDT CIRCULAR ITSELF. (IV) SECTION 5(2) AND SECTION 68 OF THE ACT: (PARA 11.1 OF PG 114/PB 1) AS HELD BY THE HONBLE ITAT, DELHI IN THE CASE OF FINLAY CORPN LTD[2003] 86 ITD 626 (DELHI), THE TOTAL INCO ME OF THE NON-RESIDENT WHICH IS TAXABLE UNDER THE ACT IS DEFI NED IN S. 5(2) WHICH INCLUDES INCOME WHICH: (A) IS RECEIVED OR DUE TO BE RECEIVED IN INDIA IN THE PREVIOUS YEAR BY THE ASSESSEE OR ON BEHALF OF THE ASSESSEE; OR (B) ACCRUES OR ARISES OR IS DEEMED TO ACCRUE TO ARISE TO HIM IN INDIA DURING SUCH YEAR. THE DECISION IN THE CASE OF FINLAY CORPORATION LTD . (SUPRA) HAS BEEN FOLLOWED BY THE HONBLE ITAT, CHENNAI IN C ASE OF SMT. SUSILA RAMASWAMY [2010] 37 SOT 146 (CHENNAI) (PARA 11.2 AT PG NO. 115/PB 1) HOLDING AS UNDER: THE ASSESSEE, WHO IS A NON-RESIDENT, BROUGHT MONEY INTO INDIA THROUGH BANKING CHANNEL AND THE MANNER IN WHICH THI S MONEY WAS UTILISED IN INDIA IS DESCRIBED IN THE ANNEXURE. WE HAVE OBSERVED IN THE ABOVE PARAS THAT BECAUSE OF THE MOD E OF BANKING CHANNEL IS ADMITTEDLY USED FOR THE REMITTAN CE IN THIS CASE, THE ONUS ON THE ASSESSEE UNDER S. 69 STOOD DI SCHARGED, AND THEREFORE, IT WAS NOT TAXABLE IN INDIA UNDER S. 5(2)(B) OF THE ACT. THE CBDT CIRCULAR (SUPRA) SQUARELY SUPPORTS TH E CASE OF THE ASSESSEE. THE FACT THAT THE TRANSACTIONS AND EVENTS NARRATED IN THE ANNEXURE LOOK CURIOUS AND SUSPICIOUS MAKES NO D IFFERENCE TO THE CONCLUSIONS THAT WE HAVE DRAWN IN THIS CASE, AS PER LAW, IN THE ABOVE PARAS. APROPOS APPLICABILITY OF CBDT CIRCULAR NO/5, DT. 20TH FEB., 1969 THE HON'BLE ITAT, DELHI IN THE CASE OF SARASWATI HO LDING CORPN. INC. [2007] 16 SOT 535 (DELHI) (PARA 11.3 AT PG NO. 116/PB 1), WHILE EXAMINING ISSUE IN QUESTION IN LIGHT OF CBDT CIRCULAR NO. 5, DT. 20TH FEB., 1969 AND THE DECISION OF FINLAY CORP ORATION LTD. ITA-5852/DEL/2014 & 5 OTHERS 9 (SUPRA) HELD AS UNDER: IN THE LIGHT OF THE ABOVE DECISION OF THE TRIBUNAL , AND CIRCULAR NO. 5 OF CBDT, WE ARE OF THE VIEW THAT THE ACTION O F THE REVENUE AUTHORITIES IS BRINGING TO TAX THE SUM OF RS. 3, 83 , 1 1,550 CANNOT BE SUSTAINED. WE HAVE ALREADY HELD THAT THE ASSESSE E IS A TAX RESIDENT OF MAURITIUS. THERE IS NO BASIS FOR COMING TO A CONCLUSION THAT ANY INCOME OF THE ASSESSEE ACCRUED, AROSE OR WAS RECEIVED IN INDIA. IN THESE CIRCUMSTANCES, WE D IRECT THAT THE ADDITION MADE BE DELETED. GROUND NOS. 2 TO 2.3 RAIS ED BY ASSESSEE ARE ALLOWED. IV) FACTS ABOUT SOURCE OF SOURCE OF SHARE APPLICATION M ONEY IN THE CASE OF ASSESSEE ESTABLISHED IN THE CASE OF SH. SURESH NANDA BY HONBLE ITAT VIDE ORDER NO.2236/DEL//2013, 2601 /DEL/2013, 2605/DEL/2013 AND 2606/DEL/2013: A. SOURCES OF INCOME WERE ELABORATELY EXPLAINED IN THE CASE OF SURESH NANDA BY ITAT FOR AY. 2004-05, 2005-06 AND 2 006-07. B. ITAT IN ITS ORDER IN CASE OF SURESH NANDA HELD THA T UBS IS NOT A BENAMI CO. ON THE BASIS OF DOCUMENTS SUBMITTE D. C. FURTHER, IN THE AFORESAID ORDER AT THE HON'BLE ITAT HELD THAT WE DO NOT FIND ANY LOGIC IN THE ASSESSING OFFICER MAKING AN ADDITION OF THIS AMOUNT IN THE NAME OF THE COMPANY (I.E CLARIDGES HOTEL PVT LTD.). D. ALSO, IT WAS HELD THAT SHAREHOLDERS OF UBS, MAURIT IUS HAVE FILED LETTERS OF CONFIRMATION AS REGARDS THE OWNERS HIP. V) THE WORD 'MAY IN SECTION 68 IS EXPLAINED & IS SQUA RELY APPLICABLE TO ASSESSEE COMPANY: AS PER CIT V. SMT. P.K. NOORJAHAN [1999] 155 CTR 50 9 (SC), IT WAS HELD THAT ASSESSEES EXPLANATION THAT INVESTME NT MADE IN PURCHASE OF LAND CAME FROM HER STEP-FATHER WAS NOT FOUND SATISFACTORY BY ASSESSING OFFICER WHO MADE ADDITION AS INCOME FROM OTHER SOURCES - WHETHER, IF CONSIDERED IN TRUE PERSPECTIVE WORD MAY USED IN SECTION 69 CANNOT BE READ AS SH ALL' -HELD, YES - WHETHER SECTION 69 CONFERS A DISCRETIO N ON ASSESSING OFFICER IN MATTER OF TREATING SOURCES OF INVESTMENT WHICH HAS NOT BEEN SATISFACTORILY EXPLAINED BY ASSESSEE AS INCOME OF ASSESSEE AND HE IS NOT OBLIGED TO TREAT SUCH SOURCE OF INVES TMENT AS ASSESSEES INCOME IN EACH AND EVERY SUCH CASE - HEL D, YES - WHETHER TRIBUNAL HAVING HELD THAT DISCRETION HAD NO T BEEN PROPERLY EXERCISED BY ASSESSING OFFICER IN TAKING I NTO ACCOUNT ITA-5852/DEL/2014 & 5 OTHERS 10 CIRCUMSTANCES IN WHICH ASSESSEE, A YOUNG GIRL OF 20 YEARS, WAS PLACED, AND HAVING FOUND THAT SOURCES OF INVESTMENT COULD NOT BE TREATED AS HER INCOME, AND HIGH COURT HAVING AGR EED, THERE COULD BE NO ERROR IN THE ABOVE FINDINGS - HELD, YES VI) PROVISO TO SECTION 68 HAS BEEN INSERTED BY FINANCE ACT, 2012, W.E.F 01.04.2013. AS PER THE PROVISO, PROVID ED THAT WHERE THE ASSESSEE IS A COMPANY (NOT BEING A COMPANY IN W HICH THE PUBLIC ARE SUBSTANTIALLY INTERESTED), AND THE SUM S O CREDITED CONSISTS OF SHARE APPLICATION MONEY, SHARE CAPITAL, SHARE PREMIUM OR ANY SUCH AMOUNT BY WHATEVER NAME CALLED, ANY EXPLANATION OFFERED BY SUCH ASSESSEE-COMPANY SHALL BE DEEMED TO BE NOT SATISFACTORY, UNLESS (A) THE PERSON, BEING A RESIDENT IN WHOSE NAME SUCH CREDIT IS RECORDED IN THE BOOKS OF SUCH COMPAN Y ALSO OFFERS AN EXPLANATION ABOUT THE NATURE AND SOURCE O F SUCH SUM SO CREDITED; AND (B) SUCH EXPLANATION IN THE OPINION OF THE ASSESSING OFFICER AFORESAID HAS BEEN FOUND TO BE SATISFACTORY: THE SECTION NOW PROVIDES THAT IN CASE OF A CLOSELY HELD COMPANY IF THE AMOUNT CREDITED IS BY WAY OF SHARE APPLICATION MONEY, SHARE CAPITAL, SHARE PREMIUM OR ANY SUCH AMOUNT BY WHATEVER NAME CALLED, THE EXPLANATIO N OFFERED FOR THE CREDIT WILL NOT BE CONSIDERED TO BE SATISFACTORY UNLESS THE COMPANY WHICH RECEIVED THE SUM OFFERS EXPLANATION ABOUT THE SOURCE OF MONEY IN THE HANDS OF SUCH SHAREHOLDER (BEING A RESIDENT) OR PERSONS M AKING PAYMENT TOWARDS ISSUE OF SHARES. 11. LEARNED CIT(A), AFTER CONSIDERING THE EVIDENCES AND MATERIAL ON RECORD AND FOLLOWING THE ORDER OF THE TRIBUNAL IN T HE CASE OF SHRI SURESH NANDA DELETED THE ENTIRE ADDITION. HIS FINDINGS IN PARAGRAPH 4.2 AND 4.3 ARE REPRODUCED AS UNDER :- 4.2 I HAVE CONSIDERED THE DIRECTIONS OF HONBLE ITAT IN APPELLANTS CASE AND THE CONSEQUENTIAL ASSESSMENT O RDERS PASSED BY THE REVENUE IN THE APPELLANTS CASE AS WE LL AS IN THE CASE OF SH. SURESH NANDA FOR AYS 2001-02 TO 200 3-04 AND THE SUBMISSIONS FILED DURING APPEAL IN THESE CA SES. THE ITA-5852/DEL/2014 & 5 OTHERS 11 APPELLANT HAS DISCHARGED ITS PRIMARY ONUS OF ESTABL ISHING THE SOURCE OF CAPITAL BROUGHT IN THROUGH OVERWHELMI NG EVIDENCE BROUGHT ON RECORD. UNDISPUTEDLY, THE CAPIT AL HAS BEEN INFUSED BY THE HOLDING COMPANY OF THE APPELLAN T. THUS, IT CANNOT BE CONCLUDED THAT THE SOURCE IS UNEXPLAINED OR THAT THE TRANSACTION IS NOT GENUINE. NO NEW FACTS OR EVIDENCE HAS BEEN BROUGHT ON RECORD BY THE REVENUE TO ESTABLISH THAT THE SHARE CAPITAL IS FROM UNDISCLOSED SOURCES OR OUT OF COMMISSION INCOME EAR NED IN DEFENCE CONTRACTS. EVEN IF IT IS ESTABLISHED THAT T HE AMOUNT WAS INVESTED FROM COMMISSION OUT OF DEFENCE CONTRAC TS IN INDIA, AND THEREFORE INCOME ACCRUING OR ARISING IN INDIA, THE ADDITION CAN ONLY BE SUSTAINED IN THE HANDS OF THE PERSONS EARNING SUCH COMMISSION INCOME AND TO THE EXTENT OF SUCH INCOME ONLY, IF ESTABLISHED. THE CAPITAL BROUGHT IN CAN AT BEST BE TREATED AS APPLICATION OF INCOME AND CANNOT BE TAXED AGAIN. IN THE ABSENCE OF ANY EVIDENCE TO ESTA BLISH THE LINK, AND IN ANY CASE, THE ADDITION IN THE HAND S OF THE APPELLANT COMPANY CANNOT BE SUSTAINED AND IS LIABLE TO BE DELETED. 4.3 IN THE ABOVE MATRIX OF FACTS AND CIRCUMSTANCES OF THE CASE, THE ADDITION OF RS.9.34,15,000/- BROUGHT IN A S SHARE CAPITAL OF THE APPELLANT COMPANY FROM Y2K SYSTEMS INTERNATIONAL LTD. (Y2K SIL), HOLDING COMPANY OF TH E APPELLANT, CANNOT BE TREATED AS UNEXPLAINED CREDIT IN THE BOOKS / ACCOUNTS OF THE APPELLANT COMPANY AND MUST BE DELETED. I HOLD ACCORDINGLY. THIS GROUND OF APPEAL IS ALLOWED. IN REACHING THIS CONCLUSION I AM RELYING O N REVENUE'S OWN BASIC POSITION IN THE MATTER THAT INC OME HAS BEEN EARNED IN DEFENCE CONTRACTS / SUPPLIES IN INDIA, AND I HAVE FOLLOWED RULINGS OF HON'BLE ITAT. DELHI AND HON'BLE DELHI HIGH COURT IN THE VARIOUS DECISIONS I N SURESH NANDA GROUP OF CASES HOLDING THAT SHARE-CAPITAL BRO UGHT IN THROUGH THE FDI ROUTE CANNOT BE TAXED AND THAT THER E IS NO EVIDENCE TO ESTABLISH THAT THESE AMOUNTS WERE INVES TED OUT OF INCOME ACCRUING OR ARISING IN INDIA. 12. LEARNED DR RELIED UPON THE ORDER OF THE ASSESSI NG OFFICER AND HE SUBMITTED THAT PAPER WORK IS PERFECT IN THIS CASE B UT NO GENUINE TRANSACTION WAS CARRIED OUT BY THE ASSESSEE. HE RE LIED UPON THE DECISION OF HON'BLE DELHI HIGH COURT IN THE CASE OF PCIT VS. NDR PROMOTERS PVT.LTD. [2019] 410 ITR 379 (DELHI), CI T VS. NOVA PROMOTERS AND FINLEASE (P) LTD. [2012] 342 ITR 16 9 (DELHI), CIT VS. ITA-5852/DEL/2014 & 5 OTHERS 12 MAF ACADEMY P.LTD. [2014] 361 ITR 258 (DELHI) AND CIT VS. N.R. PORTFOLIO (P) LTD. [2014] 42 TAXMANN.COM 339 (DEL HI). 13. ON THE OTHER HAND, LEARNED COUNSEL FOR THE ASSE SSEE REITERATED THE SUBMISSIONS MADE BEFORE THE AUTHORITIES BELOW. HE HAS SUBMITTED THAT THE ASSESSEE SUBMITTED ALL THE DOCUMENTS ON RE CORD WHICH PROVE THAT THE INGREDIENTS OF SECTION 68 OF THE ACT WHICH HAVE NOT BEEN DOUBTED BY THE REVENUE AUTHORITIES. HE HAS SUBMITT ED THAT IDENTICAL ISSUES HAVE BEEN DECIDED IN THE CASE OF RUSSIAN TEC HNOLOGY CENTRE PVT.LTD., CLARIDGES HOTEL PVT.LTD. AND SHRI SURESH NANDA. HE HAS SUBMITTED THAT RECENTLY, THE ITAT DECIDED GROUP CAS ES OF RIVER VALLEY MEADOWS & TOWNSHIP PVT.LTD. FOR ASSESSMENT YEAR 200 8-09 AND 2009- 10, DATED 27 TH MARCH, 2019 AND THAT THE ISSUE IS COVERED BY THE AFORESAID ORDER, IN WHICH ALL THE DECISIONS OF THE COORDINATE BENCHES AND HON'BLE DELHI HIGH COURT RELATED TO THIS GROUP HAVE BEEN REFERRED TO. HE HAS RELIED UPON SEVERAL DECISIONS IN SUPPOR T OF THE ORDER OF THE LEARNED CIT(A) FOR DELETING THE ADDITION IN HIS WRI TTEN SUBMISSION. HE HAS SUBMITTED THAT THE REVENUE CANNOT ASK FOR THE S OURCE OF THE SOURCE WHICH IS ALSO EXPLAINED IN THE PRESENT CASE. THE LEARNED COUNSEL FOR THE ASSESSEE RELIED UPON THE FOLLOWING DECISIONS :- (I) JUDGEMENT OF HON'BLE DELHI HIGH COURT DATED 15 TH DECEMBER, 2016 IN THE CASE OF CIT-I VS. M/S RUSSIAN TECHNOLOG Y CENTRE (P) LTD. AND CLARIDGES HOTELS (P) LTD. (II) ORDER OF THE ITAT IN THE CASE OF RUSSIAN TECHN OLOGY CENTRE (P) LTD. DATED 12 TH APRIL, 2013. (III) ORDER OF THE ITAT IN THE CASE OF CLARIDGES HO TELS (P) LTD. DATED 30 TH SEPTEMBER, 2014. ITA-5852/DEL/2014 & 5 OTHERS 13 (IV) ORDER OF THE ITAT IN THE CASE OF RIVER VALLEY MEADOWS & TOWNSHIP PVT.LTD. DATED 27 TH MARCH, 2019. (V) ORDER OF THE ITAT IN THE CASE OF SHRI SURESH NA NDA DATED 11 TH APRIL, 2014. (VI) JUDGMENT OF HON'BLE DELHI HIGH COURT IN THE CA SE OF SHRI SURESH NANDA DATED 27 TH MAY, 2015. 14. LEARNED COUNSEL FOR THE ASSESSEE WITHOUT PREJUD ICE TO THE ABOVE SUBMISSIONS ALSO SUBMITTED THAT IN THIS CASE, THE A SSESSING OFFICER PASSED THE ASSESSMENT ORDER UNDER SECTION 153C/143( 3) BUT ADDITIONS ARE NOT BASED ON ANY SEIZED MATERIAL FOUND OR RECOV ERED DURING THE COURSE OF SEARCH. THE ASSESSING OFFICER FAILED TO POINT OUT AS TO HOW THE DOCUMENTS RELATE TO THE ASSESSEE. HE HAS RELIE D UPON THE JUDGMENT OF HON'BLE SUPREME COURT IN THE CASE OF SI NHGAD TECHNICAL EDUCATION SOCIETY [2017] 397 ITR 344 (SC) AND THE JUDGMENT OF HONBLE GUJARAT HIGH COURT IN THE CASE OF KAMLESHBH AI DHARAMSHIBHAI PATEL VS. CIT [2013] 263 CTR (GUJ) 362, IN WHICH IT WAS HELD THAT DOCUMENTS MUST BE SHOWN TO BE BELONGING TO A PERSON AND NOT PERTAINING TO. HE FURTHER SUBMITTED THAT THE ISSUE IS COVERED BY THE AFORESAID DECISIONS IN THE CASE OF GROUP COMPANIES AND PERSONS. 15. WE HAVE HEARD THE ARGUMENTS OF BOTH THE SIDES A ND PERUSED THE MATERIAL PLACED BEFORE US. IN THE GROUP CASES OF R IVER VALLEY MEADOWS & TOWNSHIP PVT.LTD. IN ITA NO.5629 & 5630/DEL/2013 FOR ASSESSMENT YEAR 2008-09 AND 2009-10 VIDE ORDER DATED 27 TH MARCH, 2019, THE TRIBUNAL HAD DISMISSED THE DEPARTMENTAL APPEALS. T HE ENTIRE ORDER IS REPRODUCED BELOW :- BOTH THE APPEALS BY REVENUE ARE DIRECTED AGAINST T HE DIFFERENT ORDERS OF THE LD. CIT(A)-1, NEW DELHI DATED 5TH AUGUST 201 3, FOR THE ASSESSMENT YEARS 2008-2009 AND 2009-2010, CHALLENGI NG THE DELETION ITA-5852/DEL/2014 & 5 OTHERS 14 OF ADDITION OF RS.7,92,19,406/- AND RS.2,34,96,795/ - RESPECTIVELY, MADE BY THE ASSESSING OFFICER ON ACCOUNT OF UNEXPLAINED SHARE APPLICATION MONEY RECEIVED FROM THE HOLDING COMPANY M/S. PALM T ECHNOLOGIES (P) LTD., MAURITIUS. 2. WE HAVE HEARD THE LEARNED REPRESENTATIVES OF B OTH THE PARTIES AND PERUSED THE MATERIAL AVAILABLE ON RECOR D. 3. LEARNED REPRESENTATIVES OF BOTH THE PARTIES MA INLY ARGUED IN ASSESSMENT YEAR 2008-2009 AND HAVE SUBMITTED THA T THE ISSUE IS SAME IN ASSESSMENT YEAR 2009-2010. THEREFORE, ORDER IN ASSESSMENT YEAR 2008-2009 MAY BE FOLLOWED IN ANOTHER APPEAL. F OR THE SAKE OF DISPOSAL OF BOTH THE APPEALS, WE PROCEED TO DECIDE ITA.NO.5629/ DEL./2013 FOR THE ASSESSMENT YEAR 2008-2009 AS UNDE R. ITA.NO.5629/DEL./2013 A.Y. 2008-2009 : 4. THE FACTS OF THE CASE ARE THAT THE ASSESSEE IS A COMPANY FILED RETURN OF INCOME DECLARING LOSS OF RS.13,72,9 42/-. THE ASSESSING OFFICER ON PERUSAL OF THE RETURN AND DETAILS SUBMIT TED FOUND THAT DURING THE YEAR UNDER CONSIDERATION THE ASSESSEE-COMPANY H AS RECEIVED SHARE APPLICATION MONEY OF RS.7,92,19,406/- ON 15TH FEBRUARY 2008 FROM THE HOLDING COMPANY M/S. PALM TECHNOLOGIES (P) LTD., MAURITIUS. THUS, ASSESSEE WAS ASKED TO FURNISH COMPLETE DETAIL S REGARDING SHARE APPLICATION MONEY RECEIVED AND PROVE THE CREDITWORT HINESS OF THE INVESTOR. IN RESPONSE THERETO, THE ASSESSEE SUBMITT ED AS UNDER : EVIDENCE OF CREDIT WORTHINESS OF PALM TECHNOLOGY L TD., EVIDENCE OF CREDIT WORTHINESS OF PALM TECHNOLOGY L TD., EVIDENCE OF CREDIT WORTHINESS OF PALM TECHNOLOGY L TD., EVIDENCE OF CREDIT WORTHINESS OF PALM TECHNOLOGY L TD., THE SAID COMPANY WAS INCORPORATED IN MAURITIUS ON 3 1.10.2000 UNDER THE NAME OF Y2K LTD. (A) CERTIFIED COPY OF CERTIFICATE OF INCORPORATION DATE D 16.11.2010 IS ENCLOSED. (B) THEREAFTER, THE NAME OF THE COMPANY WAS CHANGED IN TO PALM TECHNOLOGIES LTD., IN TERMS OF CERTIFICATE ISS UED BY THE REGISTRAR OF COMPANIES EFFECTIVE 15TH MARCH. 20 02. (ATTESTED COPIES OF THE CERTIFICATE ARE ENCLOSED). (C) THE SAID COMPANY WAS ISSUED A TAX RESIDENT CERTIFI CATE BY THE INCOME TAX DEPARTMENT REPUBLIC OF MAURITIUS (ATTESTED COPIES OF THE CERTIFICATE ARE ENCLOSED). (D) THE COMPANY WAS MAINTAINING A BANK ACCOUNT WITH HS BC AND CERTIFICATE OF HSBC DATED 20TH JUNE. 2008 IS EN CLOSED. (E) COPY OF THE BALANCE SHEET OF M/S PALM TECHNOLOGY L TD. FOR THE YEAR ENDING 23RD MARCH 2008 IS ENCLOSED. 2. 2.2. 2. DOCUMENTS IN SUPPORT OF REMITTANCES FROM PALM TECH NOLOGY DOCUMENTS IN SUPPORT OF REMITTANCES FROM PALM TECHN OLOGY DOCUMENTS IN SUPPORT OF REMITTANCES FROM PALM TECHN OLOGY DOCUMENTS IN SUPPORT OF REMITTANCES FROM PALM TECHN OLOGY LTD. LTD. LTD. LTD. ITA-5852/DEL/2014 & 5 OTHERS 15 A. DETAIL OF AMOUNT RECEIVED ANY EQUITY SHARES ALLO TTED TO PALM TECHNOLOGY LTD. DURING THE YEAR ENDED 31.03.20 08. B. LETTER DATED 26.08.2008 ADDRESSED TO THE MANAGE R IDBI BANK REGARDING SUBMISSION OF FORM FCGBR - FOREIGN D IRECT INVESTMENT ALONG WITH THE FOLLOWING ANNEXURE:- I. TWO LETTERS DT. 26.08.2008 ADDRESSED TO RESERVE BANK OF INDIA. II. FORM FC-GPR III. CERTIFICATE OF COMPLIANCE DATED 26.08.2008 ISS UED BY THE COMPANY SECRETARY. IV F1RC NO. 098902 DATED 15.02.2008 ISSUED BY IDBI BANK. V. CERTIFICATE OF COMPLIANCE DATED 25.08.2008 ISSUE D BY CHARTERED ACCOUNTANT. VI. VALUATION CERTIFICATED DATED 05.08.2008 ISSUED BY THE CHARTERED ACCOUNTANT ALONG WITH ANNEXURE-A. VII. COPIES OF THE ANNEXURE-II ILL FORMING PART OF FORM NO. FC- GPR. 4.1. THE ASSESSING OFFICER ON PERUSAL OF THE BALAN CE SHEET OF M/S. PALM TECHNOLOGIES (P) LTD., MAURITIUS NOTED TH AT IT HAD REFLECTED INVESTMENTS OF US $ 5745000 IN SUBSIDIARY COMPANIES AS ON 31ST MARCH 2008. HE HAS FURTHER NOTED THAT THE SAID COMP ANY HAS SHOWN PROFIT OF US $ 7833 DURING THE PERIOD. ASSESSING OF FICER AFTER ANALYSING THE BALANCE SHEET AS ON 31ST MARCH 2008 FURTHER NOT ED AS UNDER : A. NON CURRENT ASSETS YEAR ENDING ON 31.03.2008 YEAR ENDING ON 31.03.2007 INVESTMENT IN SUBSIDIARY COMPANIES US $ 5,745,000 US $ 4,083,929/- B. NON CURRENT LIABILITIES YEAR ENDING ON 31.03.2008 YEAR ENDING ON 31.03.2007 BORRO WINGS US $ 54,56,197 USD 4,110,922 C. THE SHARE CAPITAL OF THE COMPANY HAS REMAINED UN CHANGED AT US $ 1001. 4.2. THE ASSESSING OFFICER IN VIEW OF THE ABOVE AL SO NOTED THAT THE MEAGER PROFIT EARNED BY THE SAID COMPANY SHOWS THAT INVESTMENT IN THE SUBSIDIARY COMPANY HAS BEEN FINANCED THROUGH BORROWINGS. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, A REFE RENCE TO GOVERNMENT OF MAURITIUS THROUGH DIRECTOR GENERAL OF INCOME TAX (INV.), DELHI WAS MADE THROUGH F.T.&T.R. DIVISION OF CBDT UNDER DTAA. ITA-5852/DEL/2014 & 5 OTHERS 16 IN THIS REFERENCE, GOVERNMENT OF MAURITIUS WAS REQU ESTED TO PROVIDE THE FOLLOWING DETAILS : ENQUIRIES TO BE CONDUCTED WITH REGARDS TO M/S PALM TECHNOLOGIES LTD. MAURITIUS WITH FOLLOWING SPECIFIC QUERIES: - A) SOURCE OF FUNDS IN THE REMITTER BANKS. B) COPY OF ACCOUNT OF M/S PALM TECHNOLOGIES LTD. IN TH E REMITTER BANKS FROM 1.4.2000 TO 27.02.2007. C) EQUITY STRUCTURE IN M/S PALM TECHNOLOGIES LTD. MAUR ITIUS. D) BENEFICIAL OWNER OF M/S PALM TECHNOLOGIES LTD. MAUR ITIUS. E) SOURCES OF FUNDS IN M/S PALM TECHNOLOGIES LTD. MAUR ITIUS. F) COPY OF ALL BANK ACCOUNTS OF M/S PALM TECHNOLOGIES LTD. MAURITIUS IN FOR THE PERIOD 1.4.2000 TO 27.02.2007. G) COPY OF ANNUAL ACCOUNTS OF M/S PALM TECHNOLOGIES LT D. MAURITIUS FILED BEFORE THE MAURITIAN TAX AUTHORITIE S, IF ANY, STARTING FROM FINANCIAL YEAR 2000-01 TILL 2006-07. H) PHOTO COPIES OF DOCUMENTATION FILED BEFORE THE COMP ETENT AUTHORITIES IN MAURITIUS FOR BRINGING FUNDS IN MAUR ITIUS IN THE ACCOUNTS OF M/S PALM TECHNOLOGIES LTD. MAURITIUS. I) ANY OTHER QUERY WHICH THE MAURITIAN TAX AUTHORITY M AY DEEM FIT IN THIS REGARD 4.3. THE GOVERNMENT OF MAURITIUS VIDE ITS LETTER D ATED 4TH APRIL 2008 PROVIDED THE INCOME STATEMENT AND BALANCE SHEE T OF M/S. PALM TECHNOLOGIES (P) LTD., AND CLARIFIED THE FOLLOWING POINTS : A) THE EQUITY STRUCTURE IS AS PER THE BALANCE SHEET S. B) AS SHOWN IN THE BALANCE SHEETS, THE SOURCES OF F UNDS ENABLING INVESTMENTS MADE IN THE INDIAN COMPANIES A RE FROM LOANS/SHAREHOLDERS LOANS. C) PLEASE NOTE THAT THERE IS NO EXCHANGE CONTROL IN MAURITIUS. THERE IS NO REQUIREMENT TO SUBMIT DOCUMENTATION FOR BRINGING FUNDS IN MAURITIUS. D) A REQUEST HAS BEEN MADE TO THE ABOVE COMPANIES T O SUBMIT BANK STATEMENTS AND OTHER PARTICULARS REQUES TED IN YOUR AFORESAID LETTER. THE INFORMATION WILL BE FORW ARDED TO VON AS SOON AS THEY ARE RECEIVED. ' 4.4. THE ASSESSING OFFICER, THEREAFTER, NOTED THE TABLE IN PARA 2.7 OF THE ASSESSMENT ORDER, WHICH GIVES SNAPSHOT O F THE FINANCIAL POSITION OF THE INVESTOR, WHICH SHOWS ITS CURRENT L IABILITIES FROM UBS TRADING FZC AND Y2KSIL. DURING THE COURSE OF ASSESS MENT PROCEEDINGS, THE BALANCE SHEET OF M/S. PALM TECHNOLOGIES (P) LTD ., MAURITIUS FOR THE YEAR ENDING 31ST MARCH 2008 WAS SUBMITTED. THE FOLL OWING TABLES DEPICTS THE BALANCE SHEET AS UNDER : ASSETS ASSETS ASSETS ASSETS USD NON CURRENT ASSETS NON CURRENT ASSETS NON CURRENT ASSETS NON CURRENT ASSETS INVESTMENT IN SUBSIDIARIES ITA-5852/DEL/2014 & 5 OTHERS 17 57,45,000/ - CURRENT ASSETS CURRENT ASSETS CURRENT ASSETS CURRENT ASSETS TRADE AND OTHER RECEIVABLES 4,13,294/ - CASH AND BANK BALANCE 8,657/ - 4,21,951/ - TOTAL ASSETS 61,66,951/ - EQUITY AND LIABILITIES EQUITY AND LIABILITIES EQUITY AND LIABILITIES EQUITY AND LIABILITIES CAPITAL AND RESERVES CAPITAL AND RESERVES CAPITAL AND RESERVES CAPITAL AND RESERVES SHARE CAPITAL 1,001/ - REVENUE RESERVES (22,891/ - ) SHAREHOLDERS INTER ESTS 21,890/ - NON CURRENT LIABILITIES NON CURRENT LIABILITIES NON CURRENT LIABILITIES NON CURRENT LIABILITIES SHAREHOLDER'S LOAN 4,56,197/ - OTHER LOANS 50,00,000/ - CURRENT LIABILITIES CURRENT LIABILITIES CURRENT LIABILITIES CURRENT LIABILITIES TRADE & OTHER PAYABLES 62,644 / - OTHER LOANS 6,70,000/ - 62,644/- 7,32,644/ - TOTAL EQUITY AND LI ABILITY TOTAL EQUITY AND LI ABILITY TOTAL EQUITY AND LI ABILITY TOTAL EQUITY AND LI ABILITY 61,66,951/ - 4.5. THE ASSESSING OFFICER ON THE BASIS OF THE DET AILS AND ACCOUNTS AND BALANCE SHEET, NOTED THE FINANCIAL POS ITION OF THE SAID COMPANY WITH RESPECT TO ITS INVESTMENTS AND ITS LIA BILITY IN ASSESSMENT YEAR UNDER APPEAL AND THE PRECEDING ASSESSMENT YEAR S. THE DETAILS OF INVESTMENT MADE BY M/S. PALM TECHNOLOGIES (P) LTD., IN CLARIDGES SEZ PRIVATE LIMITED [NOW M/S. RIVER VALLEY MEADOWS & TO WNSHIP PVT., LTD.,]. THE TABLE BELOW GIVES THE DETAILS OF SHARE CAPITAL IN ASSESSEE COMPANY AS UNDER : A.Y. SHARE CAPITAL SHARE APPLICATION MONEY 2004 - 05 RS. 34,60,000/ - 2 005 - 06 RS. 34,60,000/ - 2006 - 07 RS. 34,60,000/ - RS. 3,25,00,000/ - 2007 - 08 RS. 17,32,98,000/ - RS. 1,90,00,000/ - 2008 - 09 RS. 17,32,98,000/ - RS. 9,57,19,406/ - 4.6. THE ASSESSING OFFICER ALSO NOTED THAT INVESTM ENT IN THE SHARE CAPITAL OF THE ASSESSEE-COMPANY HAS BEEN MADE THROUGH THE BORROWINGS FROM TWO ENTITIES CONTROLLED BY SHRI SUR ESH NANDA THAT ARE AS UNDER : ITA-5852/DEL/2014 & 5 OTHERS 18 UBS TRADING FZC US $ 3,000,000 Y2K SIL US $ 431, 197 4.7. THEREAFTER, THE ASSESSING OFFICER TRIED TO MA KE A POINT THAT AS TO HOW THERE WAS A CLOSE LINK OF SHRI SURESH NAN DA WITH UBS TRADING FZC AND Y2KSIL WHICH WERE NOTICED FROM THE DOCUMENT S RECOVERED DURING THE COURSE OF SEARCH UNDER SECTION 132 OF TH E INCOME TAX ACT ON 28TH FEBRUARY 2007. THE DOCUMENTS ARE DESCRIBED BELOW : PAGE NO. 35 ANNEXURE NO. A-8 SEIZED FROM THE RESIDE NCE OF MR. SURESH NANDA-4, PRITHVI RAJ ROAD NEW DELHI. THIS IS DRAFT OF A LETTER ISSUED BY MR. SURESH NANDA FROM DUBAI TO M/S INFOTECH SERVICES LTD., JERSEY, CHANNEL ISLANDS WHERE IT HAS BEEN WRITTEN THAT SHAREHOLDERS OF UBS TRADING FZC ARE 1% - M/S I SL AND 99% - SURESH NANDA. IN THIS LETTER IT IS WRITTEN THAT M/S UBS FZC WILL DECLARE AN INTERIM DIVIDEND OF USD 4.5 MILLIONS WHI CH WILL GO TOWARD CAPITAL CONTRIBUTION IN UBS MAURITIUS. THIS DRAFT IS INDICATIVE OF OWNERSHIP OF MR. SURESH NANDA OF UBS MAURITIUS AS WELL AS UBS TRADING FZC, UAE. PAGE NO. 36 ANNEXURE NO. A-8 SEIZED FROM THE RESIDE NCE OF MR. SURESH NANDA-4, PRITHVI RAJ ROAD NEW DELHI., TH IS IS AGAIN DRAFT OF LETTER PREPARED BY MR. SURESH NANDA FROM D UBAI REQUESTING UBS TRADING FZC DATED 31 ST MAY, 2004 REQUESTING THEM TO DECLARE AN INTERIM DIVIDEND OF USD 50 LACS AND DIRECT SUCH PAYMENTS TO THE ACCOUNT OF MIDEAST CONSORTIUM, S.A. WHICH IS A CO-INVESTOR IN UBS, MAURITIUS. PAGE NO. 76 ANNEXURE NO. A-8, SEIZED FROM THE RESID ENCE OF MR. SURESH NANDA-4, PRITHVI RAJ ROAD NEW DELHI. THI S IS A DRAFT LETTER WRITTEN TO M/S UBS TRADING FZC FOR DECLARING FURTHER INTERIM DIVIDEND OF USD 45 LACS TO MR. SURESH NANDA AND TRANSFER THE SUM TO M/S UBS MAURITIUS BANK BARCLAYS BANK, PORT LOUIS, MAURITIUS. PAGE 77-79 ANNEXURE NO. A-8, SEIZED FROM THE RESIDE NCE OF MR. SURESH NANDA-4, PRITHVI RAJ ROAD NEW DELHI. THESE ARE COVERING LETTERS AND E-MAIL OF ALL THE DRAFTS SEIZE D AND DISCUSSED ABOVE AND THESE WERE FORWARDED BY THE CONSULTANCY F IRM TO M/S MAURITIUS CONSULTING AND MANAGEMENT LIMITED FOR SIG NATURE OF ONE MR. ENDREEN VENCHARD. PAGE 8-49 ANNEXURE NO. A-15, SEIZED FROM THE RESIDE NCE OF MR. SURESH NANDA-4, PRITHVI RAJ ROAD NEW DELHI. THI S IS THE AUDITED FINANCIAL STATEMENTS OF MR. NANDAS COMPANY M/S UBS TRADING FZC FOR THE YEAR ENDED 31 ST DECEMBER, 2005. IT IS SEEN THAT MR. SURESH NANDA IS CHAIRMAN OF THE COMPANY AN D IS HOLDING 99 SHARES OUT OF TOTAL 100 AND THE REMAINING 1 SHAR E IS HELD BY ITA-5852/DEL/2014 & 5 OTHERS 19 INFOTECH SERVICES LIMITED, JERSEY WHICH IS ALSO HEL D ON HIS BEHALF. THE PROFIT FOR 2004 IS SHOWN AS AED 34,115,538 AND PROFIT FOR 2005 HAS BEEN DECLARED AS AED 24,924,085. THE COMPA NY HAS ALSO PAID A DIVIDEND OF AED 15,000,000 CALENDAR YEA R, 2005 AND AED 19,000,000 IN THE YEAR ENDING DECEMBER, 2004. PAGE 55-69 ANNEXURE NO. A-15, SEIZED FROM THE RESID ENCE OF MR. SURESH NANDA-4, PRITHVI RAJ ROAD NEW DELHI. THESE CONTAIN MAJOR OPERATIONAL HIGHLIGHTS OF UBS TRADING FZC SIN CE ITS INCEPTION AND IT HAS BEEN SHOWN TO HAVE EARNED A PR OFIT OF USD 1.411 MILLION - MARCH 2002-30TH JUNE, 2003 USD 8.311 MILLION -1 JULY 2003-31ST DECEMBER, 2004 USD 4.4311 MILLION - 1.1.2005 -31.12.2005 USD. 2.884 MILLION - 1.1.2006 NOV 2006 THESE PAGES ALSO INCLUDE PERSONAL PROFILE OF MR. SU RESH NANDA. 4.8. THE ASSESSING OFFICER FURTHER NOTED FROM THE ABOVE MENTIONED DOCUMENTS THAT IT IS EVIDENT THAT MR.SURE SH NANDA IS THE OWNER OF M/S. UBS TRADING FZC, DUBAI. HE HAS BEEN M AKING INVESTMENTS IN MAURITIUS BASED COMPANY TO HIDE THE TRUE SOURCE OF MONEY, TILL IT IS FINALLY INVESTED IN INDIA. THE FA CT THAT INVESTMENT IN ASSESSEE-COMPANY IS FINANCED THROUGH THE BORROWINGS FROM M/S. UBS TRADING FZC, DUBAI AND MR.SURESH NANDA CLOSE ASSOCI ATION WITH THE AFFAIRS OF CLARIDGES SEZ PVT. LTD., IN INDIA GOES T O SHOW THAT IT IS MR.SURESH NANDAS MONEY THAT HAS BEEN ROUTED THROUG H M/S. PALM TECHNOLOGIES (P) LTD., MAURITIUS INTO INDIAN COMPAN Y. THE ASSESSING OFFICER ALSO NOTED THAT THERE IS A CLOSE CONNECTION OF MR. SURESH NANDA WITH Y2KSIL WHICH IS EVIDENT FROM THE DOCUMENT SEIZ ED DURING THE COURSE OF SEARCH OPERATION UNDER INCOME TAX ACT CON DUCTED ON THE PREMISES BELONGING TO MR. SURESH NANDA, DETAILS OF THE SAME ARE NOTED IN THE ASSESSMENT ORDER. BASED ON THESE FACTS, ASSE SSING OFFICER HELD THAT ASSESSEE-COMPANY HAS BEEN BRINGING UNACCOUNTED MONEY AFTER CREATING LAYERS OF INTERMEDIARIES INCLUDING M/S. PA LM TECHNOLOGIES (P) LTD., MAURITIUS DUE TO LESS STRINGENT EXCHANGE CONT ROL NORMS THERE. THE INTERMEDIARIES HAVE MERELY PROVIDED THE NAMES. THE TRUE SOURCE OF FUNDS HAS NOT BEEN DISCLOSED BEFORE THE INCOME TAX AUTHORITIES. SINCE THE ASSESSEE-COMPANY IS AN ULTIMATE BENEFICIARY OF THESE UNACCOUNTED FUNDS. HENCE, THE RECEIPTS WERE TREATED AS UNEXPLAI NED IN THE HANDS OF THE ASSESSEE AND ADDITION OF RS.7,92,19,406/- WAS M ADE IN ASSESSMENT YEAR UNDER APPEAL. 5. THE ASSESSEE CHALLENGED THE ADDITION BEFORE LD. CIT(A) AND IT WAS SUBMITTED THAT SIMILAR ADDITION HAS BEEN DEL ETED BY THE LD. ITA-5852/DEL/2014 & 5 OTHERS 20 CIT(A) IN ASSESSMENT YEAR 2004-2005 AND ALSO RELIED UPON ORDER OF ITAT, DELHI BENCH IN THE CASE OF M/S. RUSSIAN TECHN OLOGIES PRIVATE LIMITED. ASSESSEE, THEREFORE, PLEADED THAT THE ISSU E IS IDENTICAL AND COVERED IN FAVOUR OF THE ASSESSEE. THE LD. CIT(A) F OUND THE CONTENTION OF ASSESSEE TO BE CORRECT BECAUSE FOR ASSESSMENT YE AR 2004-2005, IN ASSESSEES OWN CASE, SIMILAR ADDITION HAVE BEEN DEL ETED. THE LD. CIT(A) NOTED THAT THE ARGUMENTS, FACTS AND SUBMISSI ONS OF THE REVENUE ARE SAME. THEREFORE, FOLLOWING THE REASONS FOR DECI SION FOR THE ASSESSMENT YEAR 2004-2005, THE LD. CIT(A), DELETED THE ADDITION. 6. THE LD. D.R. RELIED UPON THE ORDER OF THE ASSES SING OFFICER AND REFERRED TO PARA-2.7 OF THE ASSESSMENT ORDER AN D SUBMITTED THAT RESOURCES OF THE INVESTOR WAS VERY SMALL. THE LD. C IT(A) FOLLOWED HIS ORDER FOR ASSESSMENT YEAR 2004-2005 IN THE CASE OF THE ASSESSEE, WHICH IS CONFIRMED BY ITAT, BY DISMISSING THE APPEA L OF THE DEPARTMENT, HOLDING THE ASSESSMENT TO BE TIME BARRE D. THE LD. D.R. SUBMITTED THAT SEIZED DOCUMENTS FOUND FROM THE PREM ISES OF MR.SURESH NANDA MAY BE CONSIDERED. IT WAS MONEY OF MR SURESH NANDA WHO IS CONTROLLER OF THE COMPANIES OF THE GRO UP. THE LD. D.R. IN SUPPORT OF HER CONTENTION HAS RELIED UPON THE FOLLO WING DECISIONS : 1. PR. CIT, NEW DELHI VS. NDR PROMOTERS (P.) LTD., [20 19] 410 ITR 379 (DEL.) 2. CIT VS. NOVA PROMOTERS & FINLEASE (P) LTD., [20 12] 342 ITR 169 (DEL.) 3. CIT - II VS. MAF ACADEMY (P.) LTD., [2014] 361 ITR 258 (D EL.) 4. CIT VS. N.R. PORTFOLIO (P.) LTD., [2014] 42 TAXMANN .COM 339 (DEL.) 5. CIT, WEST VS. DURGA PRASAD MORE [1971] 82 ITR 540 ( SC) 6. SUMATI DAYAL VS. CIT 1995 AIR (SC) 2109 7. ON THE OTHER HAND, LEARNED COUNSEL FOR THE ASSE SSEE REITERATED THE SUBMISSIONS MADE BEFORE THE AUTHORIT IES BELOW. HE HAS REFERRED TO PB-2, PAGE-17 WHICH IS ORDER OF LD. CIT (A) FOR THE ASSESSMENT YEAR 2004-2005 IN THE CASE OF THE SAME A SSESSEE, IN WHICH, SIMILARLY, SHARE APPLICATION MONEY WAS RECEI VED FROM M/S. PALM TECHNOLOGIES (P) LTD., MAURITIUS AND LD. CIT(A) DEL ETED THE ADDITION FOLLOWING THE DECISION IN THE CASE OF M/S. RUSSIAN TECHNOLOGY CENTRE PVT. LTD., THE LEARNED COUNSEL FOR THE ASSESSEE FUR THER SUBMITTED THAT THE DEPARTMENT HAS FILED APPEAL BEFORE ITAT, DELHI BENCH AGAINST THE ORDER OF LD. CIT(A) FOR THE ASSESSMENT YEAR 2004-20 05 AND ASSESSEE ALSO FILED CROSS-OBJECTION. THE TRIBUNAL HAS QUASHE D THE ASSESSMENT ORDER BEING BARRED BY LIMITATION VIDE ORDER DATED 2 8TH SEPTEMBER 2017. LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED TH AT IF MR. SURESH NANDA MADE THE MONEY AVAILABLE AS PER THE CONTENTIO N OF THE DEPARTMENT, NO ADDITION COULD BE MADE IN THE HANDS OF THE ASSESSEE. LEARNED COUNSEL FOR THE ASSESSEE REFERRED TO PARA 2 .5 OF THE ASSESSMENT ORDER, IN WHICH, THE GOVERNMENT HAS MADE A REFERENCE TO ITA-5852/DEL/2014 & 5 OTHERS 21 GOVERNMENT OF MAURITIUS THROUGH DIRECTOR GENERAL OF INCOME TAX (INV.) MAKING INQUIRIES AGAINST THE INVESTOR COMPANY, ON W HICH, SEVERAL DETAILS WERE ASKED FOR AND THE GOVERNMENT OF MAURIT IUS HAS FILED A REPLY TO THE GOVERNMENT CONFIRMING THE SOURCE OF TH E FUNDS AND ALSO CONFIRMED THE INVESTMENT MADE BY THE INVESTOR COMPA NY. HE HAS, THEREFORE, SUBMITTED THAT ASSESSEE HAS EXPLAINED TH E SOURCE OF THE INVESTMENT FROM M/S. PALM TECHNOLOGIES (P) LTD., MA URITIUS WHICH IN TURN TAKEN IT FROM LOANS/ SHAREHOLDERS LOANS. LEARN ED COUNSEL FOR THE ASSESSEE, THEREFORE, REFERRED TO PAGE-5 OF THE ASSE SSMENT ORDER, IN WHICH, IT IS HIGHLIGHTED BY THE ASSESSING OFFICER T HAT THE INVESTOR COMPANY HAS THE SOURCE OF MONEY TO MAKE THE INVESTM ENTS FROM M/S. UBS TRADING FZC AND Y2KSIL. HOW THEY GOT SOURCE IS ALSO EXPLAINED. HE HAS SUBMITTED THAT ASSESSEE-COMPANY HAS FILED TH E FOLLOWING DOCUMENTS TO PROVE IDENTITY OF THE INVESTOR, IT'S C REDITWORTHINESS AND THE GENUINENESS OF THE TRANSACTION, WHICH HAVE NOT BEEN DOUBTED OR DISPUTED BY THE AUTHORITIES BELOW : I) CERTIFIED COPY OF CERTIFICATE OF INCORPORATION OF T HE COMPANY DT. 16 TH NOVEMBER, 2000 UNDER THE NAME Y2K LTD., BY THE REGISTRAR OF COMPANY, MAURITIUS. II) CERTIFIED ISSUED BY REGISTRAR OF COMPANIES EFFECTIV E 15 TH MARCH, 2002 WITH RESPECT TO CHANGE OF NAME OF PALM TECHNOLOGIES LTD., III) TAX RESIDENCY CERTIFICATE ISSUED BY INCOME TAX DEPA RTMENT REPUBLIC OF MAURITIUS. IV) T HE COMPANY WAS MAINTAINING A BANK ACCOUNT WITH BARC LAYS BANK CERTIFICATE DATED 24 TH JUNE 2008. V) CERTIFIED TRUE COPY OF BALANCE SHEET OF M/S. PALM T ECHNOLOGIES LTD., FOR THE YEAR ENDING 31 ST MARCH, 2008. 3. DOCUMENTS FILED EVIDENCING RECEIPT OF RS.7,92 ,19,406/ - IN DUE COMPLIANCE WITH THE RULES AND REGULATION LAID DOWN BY THE RESERVE BANK OF INDIA. I) DETAILS OF AMOUNT RECEIVED AND EQUITY SHARES ALLOTT ED TO PALM TECHNOLOGIES LTD., DURING THE YEAR ENDED 31.03.2008 . II) LETTER DATED 26.08.2008 ADDRESSE D TO THE MANAGER, IDBI BANK REGARDING SUBMISSION FROM FCGBR-FOREIGN DIRECT INVE STMENT ALONG WITH THE FOLLOWING ANNEXURE. (A) TWO LETTERS DT. 26.08.2008 ADDRESSED TO RBI (B) FORM NO. FC - GPR (C) COMPLIANCE CERTIFICATE DATED 26.08.2008 ISSUED BY T HE COMPANY SECRETARY. (D) FIRC NO.098902 DT. 26.02.2008 ISSUED BY THE IDBI BA NK. (E) COMPLIANCE CERTIFICATE DATED 25.08.2008 ISSUED BY CHARTERED ACCOUNTANT. (F) VALUATION CERTIFICATE DT. 05.08.2008 ISSUED BY THE CHARTERED ACCOUNTANT ALONG WITH ANNEXURE-A (G) COPY OF ANNEXURE - II, III FORMING PART OF FORM NO.FC - GPR. ITA-5852/DEL/2014 & 5 OTHERS 22 7.1. THE ASSESSEE, THEREFORE, PROVED SOURCE OF THE SOURCE AS WELL WHICH IS NOT REQUIRED BY LAW. LEARNED COUNSEL FOR THE ASSESSEE REFERRED TO PB-2-52 WHICH IS ORDER OF ITAT, DELHI G -BENCH IN THE CASE OF MR SURESH NANDA IN ITA.NOS.2237 & 3718, 3431 & 4641 /DEL./2013 DATED 11TH APRIL 2014, IN WHICH, SIMILAR ADDITION H AS BEEN DELETED IN THE HANDS OF SHRI SURESH NANDA. PARA-70 OF THE ORDE R IS REPRODUCED AS UNDER : 70. GROUND NO. 4 RELATES TO ADDITION MADE ON PRO TECTIVE BASIS. WE FIND THAT LD CIT(A) HAS CLEARLY HELD THAT SHARE CAPITAL WAS SUBSCRIBED PALM TECHNOLOGIES LTD. WHICH IS A SE PARATE ENTITY. LD. CIT(A) HELD BY A CLEAR FINDING THAT THE CAPITAL DID NOT BELONG TO ASSESSEE BUT TO A DISTINCT ENTITY WHOSE E XISTENCE IS NOT DENIED. AFTER GIVING SUCH DEAR FINDING, HE SHOULD N OT HAVE GIVEN FINDING ABOUT ADDITION ON PROTECTIVE BASIS. PALM TE CHNOLOGIES LTD. AND ASSESSEE ARE HELD TO BE TWO DIFFERENT PERSONS. THE CIT(A) HAS HELD THAT OWNERSHIP OF PALM TECHNOLOGIES LTD IS KNOWN AND APPELLANT WAS NOT A SHAREHOLDER IN PALM TECHNOLOGIE S WHICH WAS OWNED BY ONE MRS. EA HALF LAND. IT IS UNDISPUTED TH AT BOTH UBBS AND PTL ARE DULY INCORPORATED COMPANIES UNDER THE L AWS OF SHARJAH AND MAURITIUS RESPECTIVELY. THE LD CIT(A) H AS HIMSELF OBSERVED THAT THIS AMOUNT CANNOT BE HELD AS UN-EXPL AINED MONEY/INVESTMENT OF APPELLANT THEREAFTER THERE IS N O JUSTIFICATION IN KEEPING A PROTECTIVE ADDITION IN THIS BEHALF. WE ALSO FIND THAT SIMILAR ADDITION ON SUBSTANTIVE BASIS WAS MADE IN A SSESSMENT YEAR 2004-05 AND TRIBUNAL ON REVENUE APPEAL IN I.T.A.NO.2605/DEL/2013 HAS DEALT WITH THIS ISSUE AT PAGE 60 ONWARDS VIDE ORDER DATED 21.2.2014 AND VIDE PARA 7. 5. AT PAGE 68 HAS DISMISSED THE APPEAL OF REVENUE ON THIS ISSU E. DURING THESE YEARS THE LD CIT(A) HAS HOWEVER MADE THE ADDI TION ON PROTECTIVE BASIS WITHOUT JUSTIFICATION. IN VIEW OF THE ABOVE AND FOLLOWING THE IT AT ORDER FOR 2004-05 IN ASSESSES O WN CASE WE DELETE THE ALTERNATE RETENTION OF ADDITION ON PROTE CTIVE BASIS. THEREFORE, GROUND NO. 4 IN BOTH THE YEARS IS ALLOWE D.' 7.2. HE HAS REFERRED TO PB-2, PAGES-56-67 WHICH IS JUDGMENT OF THE HONBLE DELHI HIGH COURT IN THE CASE OF CIT VS. , MR.SURESH NANDA DATED 27TH MAY, 2015, IN WHICH THE ABOVE JUDGMENT O F THE TRIBUNAL HAVE BEEN CONFIRMED, BY DISMISSING THE DEPARTMENTAL APPEALS. LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE HONBLE DELHI HIGH COURT CONSIDERED THE INVESTMENT MADE BY M/S. P ALM TECHNOLOGIES LIMITED, MAURITIUS IN SEVERAL YEARS AND IT WAS NOTE D THAT INVOLUNTARY STAY OF MR.SURESH NANDA DURING THE PERIOD SHOULD BE EXCLUDED FOR CALCULATING THE PERIOD UNDER SECTION 6(1)(A) OF THE INCOME TAX ACT, 1961 AND DEPARTMENTAL APPEAL HAS BEEN DISMISSED. HE HAS SUBMITTED THAT MR.SURESH NANDA IS NRI AND SIMILAR MONEY HAVE BEEN EXPLAINED IN HIS CASE AS WELL. THUS, THE ASSESSEE IS ABLE TO PRO VE SOURCE OF THE SOURCE AS WELL. THE ADDITION IS MADE IN THE HANDS O F THE ASSESSEE- COMPANY MERELY BECAUSE ASSESSEE-COMPANY IS BENEFICI ARY OF THE ITA-5852/DEL/2014 & 5 OTHERS 23 MONEY. HE HAS REFERRED TO PB-2, PAGE-35-47, WHICH I S JUDGMENT OF THE DELHI HIGH COURT IN THE CASE OF CIT, CENTRAL-1 VS., M/S. RUSSIAN TECHNOLOGY CENTRE (P) LTD., IN ITA.NOS.547, 549 & 5 55 OF 2013, DATED 15TH DECEMBER 2016, IN WHICH, SIMILAR DOCUMENTS HAV E BEEN CONSIDERED AND DEPARTMENTAL APPEAL HAS BEEN DISMISS ED. THE FINDINGS OF THE HONBLE DELHI HIGH COURT IN PARAS 12 TO 14 A RE REPRODUCED AS UNDER : 12. THE PRECEDING ENUMERATION OF THE CIRCUMSTANC ES OF THE CASE SHOW THAT THE ASSESSEE HAD FURNISHED ALL R ELEVANT DATA BEFORE THE AO AND THE CIT(A), WHICH, HOWEVER, WERE NOT INQUIRED INTO BY THE AO. INSTEAD HE OBDURATELY ADHERED TO HI S FIRST IMPRESSION AND/OR INITIAL UNDERSTANDING THAT THE EN TIRE TRANSACTION WAS NEITHER CREDITWORTHY NOR GENUINE. T HE ASSESSEE RELIED UPON THE DOCUMENTS TO PROVE THAT THE MONIES HAD BEEN RECEIVED THROUGH BANKING CHANNELS FROM ITS PRINCIPA L AND OTHER RELATED COMPANIES: IT HAD SUBMITTED THE FIPB APPROV AL DATED 10.12.2005 AUTHORIZING THE ASSESSEE COMPANY TO RAIS E CAPITAL UNTO '600CRORES. COPY OF CERTIFICATES OF INCORPORAT ION OF SHARE HOLDERS, COPY OF BANK STATEMENT COPY OF FORM 2 FILE D BEFORE ROC, COPIES OF CERTIFICATES OF (I) INCORPORATION OF RTCH L, (II) INCUMBENCY OF RTCHL, (III) GOOD STANDING OF RTCHL. (IV) DIRECTOR CERTIFICATE OF RTCHL AS WELL AS THE BALANCE SHEET O F RTCHL FOR THE YEARS 2004-05 AND THE CONFIRMATION GIVEN BY THE REMITTERS TOWARDS REMITTANCE OF SHARE CAPITAL ETC. THIS WAS A LL THAT THE ASSESSEE COULD HAVE FURNISHED IN THE CIRCUMSTANCES. IT COULD NOT BE EXPECTED TO PROVE THE NEGATIVE THAT THE MONIES R ECEIVED BY IT WERE SUSPICIOUS OR NOT GENUINE INFUSION OF CAPITAL ETC. THE ASSESSEE HAD DISCHARGED ITS BURDEN OF PROOF IN TERM S OF THE SETTLED DICTA IN DIVINE LEASING (SUPRA). IT IS ONLY LOGICAL TO EXPECT THAT IF THE AO WAS NOT CONVINCED ABOUT THE GENUINEN ESS OF THE SAID DOCUMENTS, HE WOULD HAVE INQUIRED INTO THEIR V ERACITY FROM THE BANKS) TO ASCERTAIN THE TRUTH OF THE ASSESSEE'S CLAIMS. HAVING NOT DONE SO. HE WAS NOT JUSTIFIED IN DISREGARDING T HE ASSESSEES CONTENTIONS THAT THE INFUSION OF MONIES INTO ITS AC COUNTS WAS LEGITIMATE. CONSEOUENTIV, THE AO WAS NOT JUSTIFIED IN MAKING ADDITIONS OF THE VARIOUS SUMS UNDER SECTION 68 OF T HE ACT. 13. IN VIEW OF THE ABOVE, THIS COURT IS OF THE VI EW THAT THE CONCLUSION OF THE TRIBUNAL IN DELETING THE ADDITION S MADE CANNOT BE FAULTED. ACCORDINGLY, THE QUESTIONS OF LAW ARE A NSWERED AGAINST THE REVENUE AND IN FAVOUR OF THE ASSESSEE. THE ORDER OF THE TRIBUNAL IS, THEREFORE, AFFIRMED. 14. RESULTANTLY, THE APPEALS ARE DISMISSED. 7.3. THE LEARNED COUNSEL FOR THE ASSESSEE ALSO REF ERRED TO PB- 2, PAGE-71 WHICH IS ORDER OF ITAT, DELHI B-BENCH IN THE CASE OF ACIT, ITA-5852/DEL/2014 & 5 OTHERS 24 CENTRAL CIRCLE-13, NEW DELHI VS. CLARIDGES HOTELS P VT., LTD., NEW DELHI IN ITA.NO.2737/ DEL./2012, ITA.NO.4607/DEL./2013 AN D C.O.NO.10/DEL./ 2014 IN ITA.NO.4707/DEL./2013 DATED 30.09.2014, IN WHICH ON IDENTICAL FACTS, THE DEPARTMENTAL APPEAL HAS BEEN DISMISSED. PARA-30 OF THE ORDER IS REPRODUCED AS UNDER : '30. WE THUS FIND THAT THE ASSESSEE HAS BEEN ABLE TO ESTABLISH THE IDENTITY, CREDITWORTHINESS OF THE SHA RE APPLICANTS AND THE GENUINENESS OF THE TRANSACTION BY FURNISHIN G SEVERAL DOCUMENTS IN EVIDENCE IN SUPPORT ON THE BASIS OF WH ICH THE LEARNED CIT(APPEALS), IN OUR VIEW, HAS RIGHTY DELET ED THE ADDITION IN QUESTION MADE UNDER SEC,. 68 OF THE INC OME-TAX ACT, 1961 BY THE ASSESSING OFFICER AS THE FACTS NOTED BY THE LEARNED CIT(APPEALS) IN THE ABOVE CONCLUDING PARA NO. 4.5 O F THE FIRST APPELLATE ORDER HAVE ALSO NOT BEEN REBUTTED BY THE REVENUE WITH SATISFACTORY EXPLANATION TO THAT. THE FIRST APPELLA TE ORDER ON THE ISSUE IS COMPREHENSIVE AND REASONED ONE TO WHICH WE DO NOT FIND REASONS TO INTERFERE WITH. THE SAME IS UPHELD. THE GROUND NO. 2 IS ACCORDINGLY REJECTED.' 7.4. LEARNED COUNSEL FOR THE ASSESSEE FURTHER SUB MITTED THAT THE CBDT CIRCULAR SAYS WHEN THE MONEY COME FROM FO REIGN COUNTRY THROUGH BANKING CHANNEL, IT SHOULD BE CONSIDERED. HE HAS SUBMITTED THAT AMENDMENT UNDER SECTION 68 IS APPLICABLE FROM THE YEAR 2013 AND SOURCE OF THE SOURCE IS TO BE PROVED IN THE CAS E OF RESIDENT COMPANY ONLY. HOWEVER, THE INVESTOR M/S. PALM TECHN OLOGIES PVT. LTD., MAURITIUS IS NRI, THEREFORE, THE AMENDED PROVISION WOULD NOT APPLY TO THE CASE OF ASSESSEE. LEARNED COUNSEL FOR THE ASSES SEE, THEREFORE, SUBMITTED THAT THE ISSUE IS COVERED IN FAVOUR OF TH E ASSESSEE BY THE ORDER OF ITAT, DELHI BENCH IN THE CASE OF ASSESSEE AS WELL AS IN THE CASE OF MR SURESH NANDA AND M/S. RUSSIAN TECHNOLOGI ES PVT. LTD., (SUPRA). APART FROM THE ABOVE, THE LEARNED COUNSEL FOR THE ASSESSEE ALSO RELIED UPON THE FOLLOWING DECISIONS : 1. COMMISSIONER VS. ORISSA CORPORATION LTD. RE PORTED IN (1986) 159 ITR 78 (SC) 2. CIT VS. M/S PONDY METAL AND ROLLING MILL IN ITA NO. 788/2006 3. CIT VS. DIAMOND PRODUCTS LTD. [2009] 177 TAXMAN 331 (DELHI) 4. CIT VS. FLEX PLASTIC & PACKAGING (P.) LTD. [2007] 2 11 CTR 607 (DELHI) 5. PCIT VS. PARADIS E INLAND SHIPPING (P.) LTD. [2017] 84 TAXMANN.COM 58 (BOM). 6. CIT VS. LALIT KUMAR PODDAR (2015) 231 TAXMAN 819 (D ELHI). 7. CIT VS. GANGESHWARI METAL (P.) LTD., REPORTED IN 36 1 ITR 10 (2014). 8. DOLPHIN CANPACK LTD., REPORTED IN 2004 CTR 50. 9. CIT VS. SAMIR BIOTECH P. LTD., [2010] 325 ITR 294 (DELHI), ITA NO. 415/2008 (DELHI). ITA-5852/DEL/2014 & 5 OTHERS 25 7.5. LEARNED COUNSEL FOR THE ASSESSEE ALSO CONTEN DED THAT SINCE ADDITION HAS BEEN DELETED IN THE HANDS OF MR. SURESH NANDA ON SUBSTANTIVE BASIS, WHICH IS CONFIRMED BY THE HONBL E DELHI HIGH COURT, THEN THE FINDINGS OF THE ASSESSING OFFICER WHICH AR E SOLELY BASED ON THE PRESUMPTION THAT IT WAS THE UNACCOUNTED MONEY OF MR . SURESH NANDA ROUTED THROUGH THE INTERMEDIARY COMPANIES TO THE AS SESSEE COMPANY, HAS NO BASIS TO JUSTIFY THE ADDITION. HE HAS FURTHE R POINTED-OUT THAT SIMILAR ADDITION WAS MADE IN EARLIER YEARS, WHICH H AVE BEEN DELETED AND THE ASSESSING OFFICER HAS ADMITTED THAT EVEN IN EARLIER YEARS SIMILAR INVESTMENTS HAVE BEEN MADE IN ASSESSEE-COMP ANY, WHICH HAVE ALREADY BEEN DELETED. THEREFORE, LD. CIT(A), ON PRO PER APPRECIATION OF FACTS AND MATERIAL ON RECORD, CORRECTLY DELETED THE ADDITION. 8. WE HAVE CONSIDERED THE RIVAL SUBMISSION AND PER USED THE MATERIAL ON RECORD. THE ASSESSING OFFICER CONSIDERE D THE ISSUE OF UNEXPLAINED SHARE APPLICATION MONEY RECEIVED BY ASS ESSEE-COMPANY FROM THE INVESTOR M/S. PALM TECHNOLOGIES (P) LTD., MAURITIUS IN ASSESSMENT YEAR UNDER APPEAL AS WELL AS IN EARLIER YEARS. THE ASSESSING OFFICER HAD MADE OUT A CASE THAT THE IMPU GNED MONEY BELONGS TO MR. SURESH NANDA, WHO HAS ROUTED THE AMO UNT TO THE ASSESSEE-COMPANY THROUGH M/S. PALM TECHNOLOGIES (P) LTD., MAURITIUS AND THAT THE SOURCE OF LOAN TO M/S. PALM TECHNOLOGI ES (P) LTD., MAURITIUS IS FROM M/S. UBS TRADING FZC AND Y2KSIL. THE ASSESSING OFFICER HELD THAT THE INVESTOR COMPANY IS MERELY A CONDUIT OF MR. SURESH NANDA TO BRING HIS UNACCOUNTED MONEY AND ASS ESSEE IS THE ULTIMATE BENEFICIARY OF THE UNACCOUNTED FUNDS. THE ASSESSEE-COMPANY, ON THE OTHER HAND, HAS PRODUCED THE DOCUMENTARY EVI DENCES ABOVE, WHICH CLEARLY PROVES THAT ASSESSEE RECEIVED THE GEN UINE MONEY FROM IDENTIFIED AND EXISTING INVESTOR WHICH WAS ACCEPTED IN EARLIER YEAR AS WELL. THE DOCUMENTARY EVIDENCES FILED BY THE ASSESS EE-COMPANY HAVE NOT BEEN DISPUTED AND DOUBTED BY THE REVENUE AUTHOR ITIES. THUS, THE ASSESSEE HAS BEEN ABLE TO PROVE THE IDENTITY OF THE INVESTOR, ITS CREDITWORTHINESS AND GENUINENESS OF THE TRANSACTION IN THE MATTER. THE ASSESSING OFFICER ALSO NOTED IN THE ASSESSMENT ORDE R THAT EVEN IN EARLIER YEARS THE ASSESSEE-COMPANY HAS RECEIVED THE SHARE APPLICATION MONEY FROM THE SAME INVESTOR. THE ASSESSING OFFICER MADE SIMILAR ADDITION AGAINST THE ASSESSEE-COMPANY IN ASSESSMENT YEAR 2004 2005 AND THE LD. CIT(A) DELETED THE ADDITION. THE ORDER OF THE LD. CIT(A) HAVE BEEN CONFIRMED BY THE ITAT, BY DISMISSING THE DEPARTMENTAL APPEAL, THOUGH, ON THE GROUND THAT THE ASSESSMENT O RDER IS TIME BARRED. THE FINDING OF FACT RECORDED BY THE LD. CIT (A), HAVE BEEN CONFIRMED BY THE TRIBUNAL BY DISMISSING THE DEPARTM ENTAL APPEAL. NO DISTINGUISHING FACT OR EVIDENCE HAVE BEEN POINTED-O UT BY LD. D.R. AS TO HOW CASE OF REVENUE IS DIFFERENT FROM EARLIER YEARS . IN ASSESSMENT YEAR UNDER APPEAL, BASED ON THE SAME FACTS, THE ASS ESSING OFFICER MADE CERTAIN INQUIRIES WITH REGARD TO SOURCE OF THE MONEY AND SOUGHT INFORMATION FROM THE GOVERNMENT OF MAURITIUS, WHO H AVE SUPPLIED ITA-5852/DEL/2014 & 5 OTHERS 26 CERTIFIED COPIES OF THE BALANCE SHEET AND INCOME ST ATEMENT FOR EARLIER YEARS AS WELL AS FOR ASSESSMENT YEAR UNDER APPEAL, IN WHICH, IT IS CLARIFIED THAT THE INVESTOR COMPANY HAS MADE INVEST MENT IN ASSESSEE- COMPANY THROUGH ITS OWN SOURCES. THE ASSESSEE-COMPA NY FILED TAX RESIDENCE CERTIFICATE ISSUED BY THE TAX DEPARTMENT OF GOVERNMENT OF MAURITIUS, CERTIFICATE ISSUED BY REGISTRAR OF COMPA NIES, LETTER ADDRESSED TO RESERVE BANK OF INDIA AND FORM FC-GPR, COMPLIANCE CERTIFICATE ISSUED BY THE COMPANY SECRETARY AND DET AILS ISSUED BY IDBI BANK. THESE DOCUMENTS SUPPORTS THE EXPLANATION OF A SSESSEE-COMPANY THAT ASSESSEE-COMPANY RECEIVED GENUINE SHARE APPLIC ATION MONEY. THE ASSESSING OFFICER INSTEAD OF EXAMINING THE DOCU MENTARY EVIDENCES AND RECORD IN DEPTH, HAS MADE AN ATTEMPT TO LINK MR . SURESH NANDA, WHO WAS HAVING INTEREST IN THE COMPANIES NAMELY M/S . UBS TRADING FCZ AND Y2KSIL, WHO WERE THE DIFFERENT ENTITIES, WH O HAVE PROVIDED LOANS AND FUNDS TO INVESTOR COMPANIES. EVEN IF CERT AIN DOCUMENTS WERE FOUND DURING THE COURSE OF SEARCH IN THE CASE OF MR. SURESH NANDA, BUT, NOTHING HAS BEEN BROUGHT ON RECORD, IF ANY, MATERIAL WAS FOUND THAT HE HAS RECEIVED ANY UNACCOUNTED MONEY. N O MATERIAL WAS FOUND DURING THE COURSE OF SEARCH TO PROVE MR. SURE SH NANDA WAS DEALING WITH UNACCOUNTED MONEY RATHER THE DEPARTMEN T HAD MADE SIMILAR ADDITION IN THE HANDS OF MR. SURESH NANDA, WHICH HAVE BEEN DELETED BY THE ITAT AND THE ORDER OF THE ITAT HAVE BEEN CONFIRMED BY THE HONBLE DELHI HIGH COURT. THE ISSUE IS ALSO COV ERED BY JUDGMENT OF THE DELHI HIGH COURT IN THE CASE OF M/S. RUSSIAN TE CHNOLOGY CENTRE (P) LTD., (SUPRA), IN WHICH, SIMILAR ADDITION HAVE BEEN DELETED ON THE SAME SET OF FACTS, IN WHICH THE SUBSIDIARY OF M/S. RUSSI AN TECHNOLOGY CENTRE (P) LTD., WHICH HAD RECEIVED VARIOUS AMOUNTS TOWARD S SHARE CAPITAL FROM ITS RELATED COMPANIES AND PROMOTERS. THE ASSES SEE FILED ALL THE DOCUMENTS AS ARE FILED IN THE PRESENT CASE AND ON T HAT BASIS, THE TRIBUNAL DELETED THE ADDITION AND JUDGMENT IS CONFI RMED BY THE HONBLE DELHI HIGH COURT. IN THE PRESENT CASE ASSES SEE HAS RECEIVED SHARE APPLICATION MONEY FROM ITS HOLDING COMPANY. 8.1. THE ABOVE FACTS AND CIRCUMSTANCES, WOULD CLEA RLY REVEAL THAT BURDEN UPON ASSESSEE-COMPANY UNDER SECTION 68 OF THE INCOME TAX ACT, 1961, TO PROVE THE IDENTITY OF THE INVESTO R, ITS CREDITWORTHINESS AND THE GENUINENESS OF THE TRANSACTION, HAVE BEEN P ROVED BY THE ASSESSEE-COMPANY, WHICH HAVE BEEN CORRECTLY APPRECI ATED AND ACCEPTED BY THE LD. CIT(A) FOR THE PURPOSE OF DELET ING THE ADDITION. NO ADDITION COULD BE MADE MERELY ON PRESUMPTION AS HAS BEEN DONE IN THE PRESENT CASE. SINCE THE SIMILAR ADDITION HAVE B EEN DELETED BY THE LD. CIT(A) IN ASSESSMENT YEAR 2004-2005 AND THE DEP ARTMENTAL APPEAL HAVE BEEN DISMISSED BY THE TRIBUNAL AND SIMILAR ADD ITION HAVE BEEN DELETED IN THE CASE OF MR. SURESH NANDA BY ITAT ON SUBSTANTIVE BASIS AND THE ORDER IS CONFIRMED BY THE HONBLE DELHI HIG H COURT, THEREFORE, THE ISSUE IS COVERED IN FAVOUR OF THE ASSESSEE BY T HE ORDER OF THE TRIBUNAL IN ITS OWN CASE AS WELL AS IN THE CASE OF MR. SURESH NANDA (SUPRA). THEREFORE, THERE IS NO JUSTIFICATION TO MA KE THE ADDITION AGAINST ITA-5852/DEL/2014 & 5 OTHERS 27 THE ASSESSEE-COMPANY. NO CASH WAS FOUND ROUTED BY A NY PERSON RELATED TO THIS TRANSACTION. THE ASSESSING OFFICER CANNOT ASK THE ASSESSEE-COMPANY TO PROVE SOURCE OF THE SOURCE. WE, RELY UPON THE JUDGMENT OF THE HONBLE GUJARAT HIGH COURT IN THE C ASE OF ROHINI BUILDERS 256 ITR 360 (GUJ.), AND JUDGMENT OF HONBL E DELHI HIGH COURT IN THE CASE OF DWARAKADHEESH INVESTMENT PVT. LTD., 330 ITR 298 (DEL.) AND JUDGMENT OF HONBLE ALLAHABAD HIGH COURT IN THE CASE OF ZAFAR AHMED & CO., 30 TAXMANN.COM 269 (ALLD.). HOWEVER, I N THE PRESENT CASE, THE ASSESSEE-COMPANY HAS EVEN EXPLAINED THE S OURCE OF THE SOURCE. THE HONBLE MADHYA PRADESH HIGH COURT IN TH E CASE OF CIT VS. PEOPLES GENERAL HOSPITAL LTD., [2013] 356 ITR 65 (M P) HAS ADMITTED THE FOLLOWING SUBSTANTIAL QUESTION OF LAW IN ONE OF THE APPEAL : (I) WHETHER THE INCOME-TAX APPELLATE TRIBUNAL WAS CORRECT IN LAW IN DELETING THE ADDITION MADE BY THE ASSESSING OFFICER IN RESPECT OF THE NON-RESIDENT INDIAN COMPANY, WHIC H ADMITTEDLY HAS CONTRIBUTED SHARE CAPITAL, EVEN ON T HE ASSUMPTION THAT THE ASSESSEE HAS FAILED TO DISCHARG E THE FINANCIAL CAPACITY OF THE NON-RESIDENT INDIAN COMPA NY ? 8.2. THE HONBLE MADHYA PRADESH HIGH COURT HELD AS UNDER : HELD DISMISSING THE APPEALS, THAT IF THE ASSESSEE HAD RECEIVED SUBSCRIPTIONS TO THE PUBLIC OR RIGHTS ISSU E THROUGH BANKING CHANNELS AND FURNISHED COMPLETE DETAILS OF THE SHAREHOLDERS, NO ADDITION COULD BE MADE UNDER SECTI ON 68 OF THE INCOME-TAX ACT, 1961, IN THE ABSENCE OF ANY POSITIVE MATERIAL OR EVIDENCE TO INDICATE THAT THE SHAREHOLD ERS WERE BENAMIDARS OR FICTITIOUS PERSONS OR THAT ANY PART O F THE SHARE CAPITAL REPRESENTED THE COMPANY'S OWN INCOME FROM UNDISCLOSED SOURCES. IT WAS NOBODY'S CASE THAT THE NON- RESIDENT INDIAN COMPANY WAS A BOGUS OR NON-EXISTENT COMPANY OR THAT THE AMOUNT SUBSCRIBED BY THE COMPAN Y BY WAY OF SHARE SUBSCRIPTION WAS IN FACT THE MONEY OF THE ASSESSEE. THE ASSESSEE HAD ESTABLISHED THE IDENTITY OF THE INVESTOR WHO HAD PROVIDED THE SHARE SUBSCRIPTION AN D THAT THE TRANSACTION WAS GENUINE. THOUGH THE ASSESSEE'S CONTENTION WAS THAT THE CREDITWORTHINESS OF THE CRE DITOR WAS ALSO ESTABLISHED, IN THIS CASE, THE ESTABLISHME NT OF THE IDENTITY OF THE INVESTOR ALONE WAS TO BE SEEN. THUS , THE ADDITION WAS RIGHTLY DELETED. 8.3. IN VIEW OF THE ABOVE DISCUSSION, WE DO NOT FI ND ANY INFIRMITY IN THE ORDER OF THE LD. CIT(A) IN DELETIN G THE ADDITION. THE DECISIONS RELIED UPON BY THE LD. D.R. WOULD NOT SUP PORT THE CASE OF THE REVENUE. ACCORDINGLY, THE DEPARTMENTAL APPEAL IS DI SMISSED. ITA.NO.5630/DEL./2013 A.Y. 2009-2010 : ITA-5852/DEL/2014 & 5 OTHERS 28 9. THE ISSUE IS SAME AS HAVE BEEN CONSIDERED IN A. Y. 2008- 2009. FOLLOWING THE REASONS FOR DECISION, WE DISMIS S THIS APPEAL OF THE DEPARTMENT. 10. IN THE RESULT, ITA.NO.5630/DEL./2013 OF THE DE PARTMENT IS DISMISSED. 12. TO SUM-UP, BOTH THE APPEALS OF THE DEPARTMENT ARE DISMISSED. 16. IN THE AFORESAID CASES, ALL THE IDENTICAL FACTS HAVE BEEN CONSIDERED BY THE TRIBUNAL. EVEN DURING THE COURSE OF ARGUMENTS, LEARNED DR DID NOT DISPUTE THAT THE ISSUES HAVE ALR EADY BEEN CONSIDERED IN DETAIL IN THE AFORESAID DECISION CONS IDERING THE OTHER RELATED DECISIONS IN THE CASE OF SHRI SURESH NANDA AND RUSSIAN TECHNOLOGY CENTRE PVT.LTD. IT IS ALSO A FACT THAT DURING THE COURSE OF SEARCH, NO MATERIAL PERTAINING TO THE ASSESSEE WAS FOUND AND SEIZED. IT IS A ROUTINE ADDITION ON WHICH ASSESSEE HAS ALRE ADY DECLARED SHARE CAPITAL WHILE FILING THE RETURN OF INCOME. THE ASS ESSEE HAS PRODUCED SUFFICIENT DOCUMENTARY EVIDENCE AS ARE REFERRED TO ABOVE WHICH COMPLETELY PROVE THE CASE OF THE ASSESSEE THAT ASSE SSEE PROVED THE IDENTITY OF THE INVESTORS, THEIR CREDITWORTHINESS A ND GENUINENESS OF THE TRANSACTION. DURING THE COURSE OF HEARING, LEARNED DR WAS NOT ABLE TO POINT OUT ANY INFIRMITY IN THE ORDER OF THE LEARNED CIT(A) IN DELETING THE ADDITION. CONSIDERING THE ISSUE IN ITS ENTIRETY IN THE LIGHT OF THE ORDER OF THE TRIBUNAL IN THE CASE OF RIVER VALLEY MEADOWS & TOWNSHIP PVT.LTD. (SUPRA), WE FIND THAT THE ISSUE IS COVERED BY THE O RDER OF THE TRIBUNAL IN THIS CASE. IN THE ABSENCE OF ANY INFIRMITY POINTED OUT IN THE ORDER OF THE LEARNED CIT(A), WE DISMISS THE DEPARTMENTS APP EAL ON THIS GROUND. ACCORDINGLY, GROUND NO.2 OF THE APPEAL IS DISMISSED . 17. IN GROUND NO.3, THE REVENUE HAS CHALLENGED THE ADDITION OF `8,26,863/- ON ACCOUNT OF PRE-OPERATIVE EXPENSES. THE ASSESSEE HAS CHALLENGED THE DISALLOWANCE OF CERTAIN EXPENSES CLA IMED AS DEDUCTION UNDER SECTION 35D AS PRE-OPERATIVE EXPENSES AMORTIZ ED. THE ASSESSEE ITA-5852/DEL/2014 & 5 OTHERS 29 EXPLAINED BEFORE THE LEARNED CIT(A) THAT IT WAS EXP LAINED BEFORE THE ASSESSING OFFICER THAT PRE-OPERATIVE EXPENSES WERE INCURRED BY THE ASSESSEE BEFORE COMMENCEMENT OF THE BUSINESS. THES E EXPENSES WERE IN THE NATURE OF FEASIBILITY REPORTS, PROJECT REPORTS, TRAVELLING TRANSPORTATION, LEGAL CHARGES, PRINTING OF MEMORAND UM AND ARTICLES OF ASSOCIATION AND SUCH OTHER EXPENSES RELATING TO THE ISSUE OF SHARE CAPITAL AS WELL. HENCE, THESE EXPENSES HAVE BEEN I NCURRED PRIOR TO THE COMMENCEMENT OF BUSINESS FALL UNDER SECTION 35D OF THE ACT WHICH PERMITS AMORTIZATION OF SUCH PRELIMINARY EXPENSES F OR A PERIOD OF FIVE YEARS. HENCE, THE CLAIM OF 20% IN THE ASSESSMENT Y EAR IN QUESTION IS ALLOWABLE UNDER SECTION 35D OF THE ACT. IT WAS SUB MITTED THAT IN THE ASSESSMENT ORDER UNDER SECTION 143(3) DATED 28 TH JUNE, 2006, SIMILAR ADDITIONS HAVE BEEN MADE. THEREFORE, DOUBT ADDITIO N CANNOT BE MADE. 18. LEARNED CIT(A) FOUND THAT THE AMOUNT OF `4,26,8 63/- REPRESENTING 20% OF VARIOUS EXPENSES SUCH AS TRAVEL LING, TELEPHONE, PRINTING ETC. AND `4,00,000/- REPRESENTING LEGAL AN D PROFESSIONAL CHARGES WERE INCURRED BEFORE COMMENCEMENT OF BUSINE SS. THESE WERE IN THE NATURE OF REVENUE EXPENSES AND WERE AMORTIZE D UNDER SECTION 35D OF THE ACT. BOTH THESE ADDITIONS WERE ACCORDIN GLY DELETED. 19. LEARNED DR RELIED UPON THE ORDER OF THE ASSESSI NG OFFICER. ON THE OTHER HAND, LEARNED COUNSEL REITERATED THE SUBM ISSIONS MADE BEFORE THE AUTHORITIES BELOW AND SUBMITTED THAT ASS ESSMENT IN THIS CASE WAS ALREADY COMPLETED AND THAT NO DOCUMENT WAS SEIZED DURING THE COURSE OF SEARCH SO AS TO MAKE THIS ADDITION. THIS ISSUE IS, THEREFORE, COVERED BY THE JUDGMENT OF HON'BLE DELHI HIGH COURT IN THE CASE OF KABUL CHAWLA [2016] 380 ITR 573 (DELHI). 20. ON CONSIDERATION OF RIVAL SUBMISSIONS, WE DO NO T FIND ANY MERIT IN THIS GROUND OF APPEAL OF THE REVENUE. THE ASSESSEE HAS INCURRED THIS EXPENDITURE BEFORE COMMENCEMENT OF BUSINESS WHICH W AS IN THE ITA-5852/DEL/2014 & 5 OTHERS 30 NATURE OF TRAVELLING, TELEPHONE AND PRINTING EXPENS ES ETC. THESE WERE REVENUE IN NATURE. THEREFORE, LEARNED CIT(A) RIGHT LY AMORTIZED THESE EXPENSES UNDER SECTION 35D OF THE ACT. FURTHER, NO DOCUMENT WAS SEIZED DURING THE COURSE OF SEARCH WITH REFERENCE T O THIS ADDITION. SINCE ASSESSMENT IN THIS YEAR WAS ORIGINALLY COMPLE TED UNDER SECTION 143(3), THEREFORE, NO ADDITION CAN BE MADE AS PER L AW LAID DOWN BY HON'BLE DELHI HIGH COURT IN THE CASE OF KABUL CHAWL A (SUPRA). THIS GROUND IS ACCORDINGLY DISMISSED. 21. IN GROUND NO.4, THE REVENUE HAS CHALLENGED THE ADDITION OF `75 LAKHS ON ACCOUNT OF UNACCOUNTED CREDIT UNDER SECTIO N 68 OF THE ACT. 22. THE ASSESSEE MADE THE FOLLOWING SUBMISSIONS BEF ORE THE LEARNED CIT(A):- 3. GROUND 4 - REGARDING ADDITION OF RS.75,00,000/ - RECEIVED FROM SH. SURESH NANDA TREATING THE SAME AS UNSECURED LOAN: THE ID. AO HAS MADE AN ADDITION OF RS.75,00,000/- O N ACCOUNT OF LOAN RECEIVED FROM SH. SURESH NANDA, TRE ATING THE SAME AS UNEXPLAINED. IN THIS RESPECT IT IS SUBM ITTED AS FOLLOWS: A) THE ID. AO HAS NOT MADE A SINGLE WHISPER OF THE LO AN RECEIVED FROM SH. SURESH NANDA AND HAS SUO MOTO PROCEEDED TO HOLD THAT MR. SURESH NANDA HAS ALSO G IVEN 75LACS AS LOAN TO THE ASSESSEE COMPANY IN AY 2001 - 02. IN VIEW OF THE DISCUSSION MADE ABOVE, SAME IS ALSO CONSIDERED AS UNEXPLAINED CREDIT U/S 68 OF I.T ACT IN THE HAND OF THE ASSESSEE COMPANY. NO DETAILS WERE ASKE D TO BE FILED IN RESPECT OF THE LOAN RECEIVED AND THE AD DITION U/S 68 HAS BEEN MADE WITHOUT ANY OPPORTUNITY BEING AFFO RDED TO THE ASSESSEE COMPANY. B) HOWEVER, THE ASSESSEE HAS PLACED THE FOLLOWING DOCUMENTS AND EVIDENCES ON RECORD IN RESPECT OF THE SAID LOAN: CONFIRMATION OF ACCOUNT FROM 01.04.2000 TO 31.03.2012 FORM 16A FOR TDS OF RS. 46,972/- DEDUCTED FROM ITA-5852/DEL/2014 & 5 OTHERS 31 INTEREST OF RS. 1,42,338/- FORM 16A FOR TDS OF RS. 229,907/- DEDUCTED FROM INTEREST OF RS.684,247/- BANK STATEMENT OF THE ASSESSEE COMPANY SHOWING REPAYMENT OF RS.75,00,000/- TO SH. SURESH NANDA. THE ASSESSEE HAS DISCHARGED ITS ONUS OF PROVING THE GENUINENESS OF THE TRANSACTION BY SUBMITTING THE FO LLOWING DOCUMENTS. C) IT IS ALSO SUBMITTED THAT SH. SURESH NANDA WAS A NON-RESIDENT FOR THE AY 2001-02 AS HELD BY THE HON' BLE HIGH COURT VIDE ORDER DATED 25.02.2013 (PG 86 - 94) AND THE AMOUNT OF LOAN RECEIVED CANNOT BE ADDED IN HIS HANDS BY VIRTUE OF HIM BEING A NON RESIDENT. 23. LEARNED CIT(A), CONSIDERING THE EXPLANATION OF THE ASSESSEE IN THE LIGHT OF THE DECISION IN THE CASE OF SHRI SURES H NANDA, DELETED THE ENTIRE ADDITION. HIS FINDINGS IN PARAGRAPH 5.2 ARE REPRODUCED BELOW :- I HAVE CONSIDERED THE ORDERS OF HONBLE ITAT, THE CONSEQUENTIAL ORDER PASSED BY THE REVENUE AND THE SUBMISSIONS OF THE APPELLANT. IT IS UNDISPUTED THAT THE AMOUNT WAS RECEIVED BY THE APPELLANT FROM SH. SURES H NANDA. SH. NANDA HAS BEEN HELD BY HON'BLE ITAT TO B E A NON-RESIDENT DURING THE PREVIOUS YEAR AND THIS STAT US HAS BEEN CONFIRMED BY HON'BLE DELHI HIGH COURT VIDE ITS ORDER DATED 25.02.2013. THE AMOUNT CAN ONLY BE TAXED IN T HE HANDS OF SH. NANDA IF IT CAN BE ESTABLISHED TO HAVE BEEN OUT OF HIS INCOME ACCRUED ARISEN OR RECEIVED IN IND IA. THEREFORE, THE SOURCE OF THE CREDIT STANDS EXPLAIN ED IN THE HANDS OF THE APPELLANT. THERE IS NO CASE FOR TAXATI ON OF THIS AMOUNT IN THE HANDS OF THE APPELLANT. THE ADDITION IS DELETED AND THIS GROUND OF APPEAL IS ALLOWED. 24. LEARNED DR MERELY RELIED UPON THE ORDER OF THE ASSESSING OFFICER. ON THE OTHER HAND, LEARNED COUNSEL REITER ATED THE SAME SUBMISSIONS AS WERE MADE BEFORE THE LEARNED CIT(A) AND ALSO SUBMITTED THAT ASSESSMENT IN THIS YEAR WAS ORIGINAL LY COMPLETED UNDER SECTION 143(3) AND NO INCRIMINATING DOCUMENT WAS FO UND. THEREFORE, ITA-5852/DEL/2014 & 5 OTHERS 32 THE ISSUE IS ALSO COVERED BY THE DECISION OF HON'BL E DELHI HIGH COURT IN THE CASE OF KABUL CHAWLA (SUPRA). 25. ON CONSIDERATION OF RIVAL SUBMISSIONS, WE ARE O F THE VIEW THAT NO INTERFERENCE IS CALLED FOR IN THE ORDER OF THE LEAR NED CIT(A). THE ASSESSEE PLACED SEVERAL DOCUMENTS BEFORE THE AUTHOR ITIES BELOW TO PROVE THAT GENUINE TRANSACTION WAS CONDUCTED IN THE CASE OF THE ASSESSEE. THE ITAT IN THE CASE OF SHRI SURESH NAND A ALSO HELD THAT SHRI SURESH NANDA IS NON-RESIDENT AND IS NOT TAXA BLE IN INDIA. THE ORDER OF THE ITAT HAS BEEN CONFIRMED BY HON'BLE DEL HI HIGH COURT. LEARNED CIT(A) RIGHTLY HELD THAT THE AMOUNT CAN ONL Y BE TAXED IN THE HANDS OF SHRI SURESH NANDA IF IT IS ESTABLISHED TO HAVE BEEN OUT OF HIS INCOME ACCRUED, ARISEN OR RECEIVED IN INDIA. THE S OURCE OF CREDIT HAS BEEN EXPLAINED BY THE ASSESSEE THROUGH EVIDENCE ON RECORD. THEREFORE, SAME ADDITION COULD NOT BE MADE IN THE H ANDS OF THE ASSESSEE. IT IS ALSO CLEAR THAT DURING THE COURSE OF SEARCH, NO INCRIMINATING MATERIAL WAS FOUND SO AS TO MAKE THIS ADDITION. IN THIS CASE, ORIGINALLY, ASSESSMENT WAS COMPLETED UNDER SE CTION 143(3) AND NO SEIZED MATERIAL HAS BEEN REFERRED TO SO AS TO MA KE THIS ADDITION AGAINST THE ASSESSEE. IN THIS CASE, PROTECTIVE ADD ITION WAS MADE IN THE HANDS OF SHRI SURESH NANDA OF THE SAME AMOUNT. SIN CE IN THE CASE OF SHRI SURESH NANDA, HE WAS HELD TO BE NON-RESIDENT , THEREFORE, NO ADDITION CAN BE MADE IN HIS HANDS. ON THE BASIS OF DOCUMENTARY EVIDENCES ON RECORD AND CONSIDERING VARIOUS LITIGAT ION IN THE CASE OF GROUP IN WHICH SIMILAR ADDITIONS HAVE BEEN DELETED, THEREFORE, LEARNED CIT(A), ON PROPER APPRECIATING OF FACTS AND MATERIA L ON RECORD, CORRECTLY DELETED THE ADDITION. THIS GROUND IS ACC ORDINGLY DISMISSED. 26. NO OTHER POINT IS ARGUED. 27. IN THE RESULT, THE APPEAL OF THE REVENUE IS DIS MISSED. ITA-5852/DEL/2014 & 5 OTHERS 33 ITA NO.585 ITA NO.585 ITA NO.585 ITA NO.5858 88 8/DEL/2014 /DEL/2014 /DEL/2014 /DEL/2014 A.Y. 200 A.Y. 200 A.Y. 200 A.Y. 2002 22 2- -- -0 00 03 33 3 : :: :- -- - 28. IN THIS APPEAL BY THE REVENUE, FOLLOWING EFFECT IVE GROUNDS HAVE BEEN RAISED :- 2. ON THE FACTS AND CIRCUMSTANCES OF THE CASE THE LD.CIT(A) HAS ERRED IN LAW IN DELETING THE ADDITION OF RS.65,85,000/- MADE BY AO ON ACCOUNT OF UNEXPLAINED SHARE CAPITAL. 3. ON THE FACTS AND CIRCUMSTANCES OF THE CASE THE LD.CIT(A) HAS ERRED IN LAW IN DELETING THE ADDITION OF RS.8,39,383/- MADE BY AO ON ACCOUNT OF PRE OPERATIV E EXPENSES. ITA NO.585 ITA NO.585 ITA NO.585 ITA NO.5859 99 9/DEL/2014 /DEL/2014 /DEL/2014 /DEL/2014 A.Y. 200 A.Y. 200 A.Y. 200 A.Y. 2003 33 3- -- -0 00 04 44 4 : :: :- -- - 29. IN THIS APPEAL BY THE REVENUE, FOLLOWING EFFECT IVE GROUNDS HAVE BEEN RAISED :- 2. ON THE FACTS AND CIRCUMSTANCES OF THE CASE THE LD.CIT(A) HAS ERRED IN LAW IN DELETING THE ADDITION OF RS.9,53,00,000/- MADE BY AO ON ACCOUNT OF UNEXPLAIN ED SHARE CAPITAL. 3. ON THE FACTS AND CIRCUMSTANCES OF THE CASE THE LD.CIT(A) HAS ERRED IN LAW IN DELETING THE ADDITION OF RS.8,39,383/- MADE BY AO ON ACCOUNT OF PRE OPERATIV E EXPENSES. 30. BOTH PARTIES HAVE SUBMITTED THAT THE ISSUES INV OLVED IN THE ABOVE APPEALS ARE SAME AS HAVE BEEN CONSIDERED IN A SSESSMENT YEAR 2001-02. FOLLOWING THE ORDER FOR ASSESSMENT YEAR 2 001-02 ABOVE, WE DISMISS BOTH THE APPEALS OF THE REVENUE. ITA NO.585 ITA NO.585 ITA NO.585 ITA NO.5852 22 2/DEL/2014 /DEL/2014 /DEL/2014 /DEL/2014 A.Y. 200 A.Y. 200 A.Y. 200 A.Y. 2001 11 1- -- -0 00 02 22 2 : :: :- -- - 31. IN THIS APPEAL BY THE REVENUE, FOLLOWING GROUND S HAVE BEEN RAISED :- 1. THE ORDER OF LD.CIT(A) IS NOT CORRECT IN LAW AN D FACTS. ITA-5852/DEL/2014 & 5 OTHERS 34 2. ON THE FACTS AND CIRCUMSTANCES OF THE CASE THE LD.CIT(A) HAS ERRED IN LAW IN DELETING THE DISALLOW ANCE OF RS.9,34,15,000/- MADE BY AO ON ACCOUNT OF UNEXPLAIN ED INVESTMENT IN C-1 INDIA PVT.LTD. 3. THE APPELLANT CRAVES LEAVE TO ADD, AMEND ANY/ALL THE GROUNDS OF APPEAL BEFORE OR DURING THE COURSE OF HE ARING OF THE APPEAL. GROUND NO.1 IS GENERAL AND NEEDS NO ADJUDICATION. 32. IN GROUND NO.2, REVENUE HAS CHALLENGED THE ORDE R OF LEARNED CIT(A) IN DELETING THE DISALLOWANCE OF `9,34,15,000 /- MADE BY THE ASSESSING OFFICER ON ACCOUNT OF UNEXPLAINED INVESTM ENT IN C-1 INDIA PVT.LTD. THE ASSESSEE CHALLENGED THE AFORESAID ADD ITION BEFORE THE LEARNED CIT(A) BEING SHARE CAPITAL RECEIVED FROM Y2 K SYSTEMS INTERNATIONAL LTD. (Y2K SIL), HOLDING COMPANY OF TH E ASSESSEE COMPANY. THE ASSESSING OFFICER MADE SUBSTANTIVE AD DITION IN THE CASE OF M/S C-1 INDIA PVT.LTD. AND MADE PROTECTIVE ADDIT ION IN THE HANDS OF THE PRESENT ASSESSEE. THE ASSESSEE EXPLAINED BEFOR E THE LEARNED CIT(A) THAT PROTECTIVE ADDITION IS MADE IN THE HAND S OF THE ASSESSEE WITHOUT ANY REASONS. THE ISSUE IS COVERED BY THE O RDER OF THE ITAT IN ASSESSEES OWN CASE FOR ASSESSMENT YEAR 2004-05 TO 2006-07 DATED 21 ST FEBRUARY, 2014. SIMILAR ADDITION HAS BEEN MADE BY THE ASSESSING OFFICER IN OTHER HOLDING COMPANY IN WHICH ALSO ADDI TIONS HAVE BEEN DELETED. LEARNED CIT(A) ALSO DELETED SIMILAR ADDIT ION IN ASSESSMENT YEAR 2005-06 AND 2006-07. NO EVIDENCE HAS BEEN BRO UGHT ON RECORD THAT SHARE CAPITAL BROUGHT INTO C-1 INDIA PVT.LTD. BELONGS TO THE ASSESSEE. THE SHARE CAPITAL HAS BEEN INVESTED BY T HREE COMPANIES NAMELY, INFOTECH SERVICES LTD., Y2K LTD. (PALM TECH NOLOGIES) AND MIDEAST CONSORTIUM SA. THE ASSESSEE IS MERELY A SH AREHOLDER IN INFOTECH SERVICES LTD. WHICH WOULD NOT ESTABLISH TH E FACT THAT INVESTMENT IN C-1 INDIA WAS MADE BY THE ASSESSEE. BANK STATEMENT OF Y2K SIL RECEIVED BY THE DEPARTMENT DIRECTLY FROM TH E GOVERNMENT OF MAURITIUS ALSO SUPPORTS THE EXPLANATION OF THE ASSE SSEE. THE ITA-5852/DEL/2014 & 5 OTHERS 35 CONFIRMATION FROM THE CREDITOR, TAX RESIDENCE CERTI FICATE OF THE CREDITOR ISSUED BY THE MAURITIUS REVENUE AUTHORITY, COPY OF BALANCE SHEET AND COPY OF BANK STATEMENTS WERE FILED TO ESTABLISH THA T ASSESSEE HAS NO CONNECTION WITH THE AFORESAID ADDITION. THERE IS N O REQUIREMENT IN LAW TO GO INTO THE BENEFICIAL OWNERSHIP. ASSESSEE RELI ED UPON SEVERAL DECISIONS IN SUPPORT OF THE CONTENTION THAT ADDITIO N IS UNJUSTIFIED. 33. LEARNED CIT(A) ACCEPTED THE EXPLANATION OF THE ASSESSEE AND FOUND THAT IN THE CASE OF C 1 INDIA PVT.LTD. FOR AS SESSMENT YEAR 2001- 02 TO 2003-04, SIMILAR SUBMISSIONS HAVE BEEN MADE I N WHICH ADDITIONS HAVE BEEN DELETED. LEARNED CIT(A) FOUND THAT UNDIS PUTEDLY, THE AMOUNT HAS BEEN INFUSED AS CAPITAL BY THE HOLDING C OMPANY OF M/S C 1 INDIA PVT.LTD. THE ASSESSEE IS UNDISPUTEDLY A NON -RESIDENT. NO NEW FACTS OR EVIDENCE HAS BEEN BROUGHT ON RECORD BY THE REVENUE THAT SHARE CAPITAL IS FROM UNDISCLOSED SOURCE OR OUT OF COMMISSION INCOME EARNED IN DEFENSE CONTRACTS BY THE ASSESSEE. REPLY TO THE REFERENCE MADE TO THE GOVERNMENT OF ISRAEL IS STILL AWAITED. ACCORDINGLY, EVEN IF ANY AMOUNT INVESTED IN INDIA IS FOUND TO BE BELONGI NG TO THE ASSESSEE, IT CANNOT BE BROUGHT TO TAX AS INCOME IN HIS HANDS UNLESS IT IS PROVED THAT THE INCOME ACCRUED TO HIM IN INDIA, AS IS HELD BY THE TRIBUNAL IN THE ORDER DATED 24 TH JULY, 2012 AND CONFIRMED BY HON'BLE DELHI HIGH COURT IN THE ORDER DATED 25 TH FEBRUARY, 2013. LEARNED CIT(A), THEREFORE, HELD THAT NO ADDITION CAN BE MADE IN THE HANDS OF THE ASSESSEE. THE ADDITION WAS ACCORDINGLY DELETED. 34. AFTER CONSIDERING RIVAL SUBMISSIONS, WE ARE OF THE VIEW THAT NO INTERFERENCE IS CALLED FOR IN THE MATTER. LEARNED COUNSEL SUBMITTED THAT THE ISSUE IS COVERED BY THE JUDGMENT OF HON'BL E DELHI HIGH COURT IN THE CASE OF THE ASSESSEE DATED 25 TH FEBRUARY, 2013 (SUPRA) IN WHICH IT WAS HELD THAT THE ASSESSEE IS A NON-RESIDENT. THE ORDER OF THE TRIBUNAL IS THUS AFFIRMED AND HENCE, NO ADDITION CA N BE MADE. LEARNED DR ALSO DID NOT DISPUTE THE ABOVE FACT. IN THIS VI EW OF THE MATTER, IT IS ITA-5852/DEL/2014 & 5 OTHERS 36 CLEAR THAT SINCE SIMILAR ADDITIONS HAVE BEEN DELETE D IN THE CASE OF M/S C 1 INDIA PVT.LTD. IN ASSESSMENT YEAR 2001-02 TO 20 03-04 (SUPRA), IN WHICH SUBSTANTIVE ADDITION IS MADE, THEREFORE, NO P ROTECTIVE ADDITION CAN BE MADE IN THE HANDS OF THE ASSESSEE. FURTHER, ASSESSEE IS HELD TO BE NON-RESIDENT, THEREFORE, NO INCOME HAD ACCRUED O R RECEIVED BY THE ASSESSEE IN INDIA AND, AS SUCH, NO ADDITION CAN BE MADE IN HANDS OF THE ASSESSEE. THE ISSUE IS COVERED BY THE AFORESAI D DECISION IN THE CASE OF THE ASSESSEE. WE, THEREFORE, DO NOT FIND A NY MERIT IN THIS GROUND OF THE REVENUES APPEAL. THE SAME IS DISMIS SED. 35. IN THE RESULT, THE APPEAL OF THE REVENUE IS DIS MISSED. ITA NO.585 ITA NO.585 ITA NO.585 ITA NO.5853 33 3/DEL/2014 /DEL/2014 /DEL/2014 /DEL/2014 A.Y. 200 A.Y. 200 A.Y. 200 A.Y. 2002 22 2- -- -0 00 03 33 3 : :: :- -- - 36. GROUND NO.1 IN THIS APPEAL BY THE REVENUE IS GE NERAL AND NEEDS NO ADJUDICATION. 37. IN GROUND NO.2, REVENUE HAS CHALLENGED THE ORDE R OF LEARNED CIT(A) IN DELETING THE ADDITION OF `65,85,000/- MAD E BY THE ASSESSING OFFICER ON ACCOUNT OF UNEXPLAINED INVESTMENT IN C 1 INDIA PVT.LTD. 38. BOTH THE PARTIES STATED THAT THIS ISSUE IS SIMI LAR AS HAS BEEN CONSIDERED IN THE REVENUES APPEAL IN ASSESSMENT YE AR 2001-02 (SUPRA). FOLLOWING OUR DECISION IN ASSESSMENT YEAR 2001-02, THIS GROUND IS DISMISSED. 39. IN GROUND NO.3, REVENUE HAS CHALLENGED THE ORDE R OF LEARNED CIT(A) IN DELETING THE DISALLOWANCE OF `2,17,57,724 /- MADE BY THE ASSESSING OFFICER ON ACCOUNT OF COMMISSION EARNED O N THE DEFENSE DEAL RELATED TO DOCUMENTS FOUND FROM M.V. RAO. 40. THE ASSESSEE SUBMITTED BEFORE THE LEARNED CIT(A ) THAT THIS ISSUE IS COVERED BY THE ORDER OF THE ITAT IN THE CASE OF THE ASSESSEE FOR ITA-5852/DEL/2014 & 5 OTHERS 37 ASSESSMENT YEAR 2004-05 TO 2006-07 VIDE ORDER DATED 21 ST FEBRUARY, 2014 IN WHICH IT WAS HELD THAT THE ADDITION OF COMM ISSION MADE ON THE BASIS OF DOCUMENTS SEIZED FROM THE PREMISES OF DR. M.V. RAO AND SHRI MOHAN JAGTHAP IS COMPLETELY BASELESS. THE ORDER I S REPRODUCED IN THE IMPUGNED ORDER. LEARNED CIT(A) NOTED THAT SINCE TH E ASSESSEE HAS BEEN HELD TO BE NON-RESIDENT, THEREFORE, EVEN IF TH E SAME REPRESENTS UNACCOUNTED INCOME OF THE ASSESSEE FROM UNDISCLOSED SOURCES, IT CANNOT BE BROUGHT TO TAX AS INCOME IN HIS HANDS UNL ESS IT IS PROVED THAT THE INCOME ACCRUED TO HIM IN INDIA. THE ORDER OF THE TRIBUNAL HAS BEEN CONFIRMED BY HON'BLE DELHI HIGH COURT. LEARNE D CIT(A) ACCORDINGLY DELETED THE ADDITION. 41. LEARNED DR STATED THAT THIS ISSUE IS COVERED BY THE ORDER OF THE ITAT IN THE CASE OF THE ASSESSEE FOR ASSESSMENT YEA R 2004-05 TO 2006- 07 DATED 21 ST FEBRUARY, 2014. 42. IN VIEW OF THE ABOVE, THERE IS NO MERIT IN THE REVENUES APPEAL. THE SAME IS ACCORDINGLY DISMISSED BECAUSE ONCE THE ASSESSEE IS A NON-RESIDENT, NO ADDITION CAN BE MADE IN THE HANDS OF THE ASSESSEE. FURTHER, THE ITAT HAS DECIDED THIS ISSUE IN FAVOUR OF THE ASSESSEE HOLDING THAT NO ADDITION ON ACCOUNT OF COMMISSION C AN BE MADE IN THE HANDS OF THE ASSESSEE ON THE BASIS OF DOCUMENTS SEI ZED FROM THE PREMISES OF DR. M.V. RAO. THIS GROUND OF REVENUES APPEAL IS ACCORDINGLY DISMISSED. 43. IN GROUND NO.4, THE REVENUE HAS CHALLENGED THE ORDER OF LEARNED CIT(A) IN DELETING THE ADDITION OF `18,76,165/- MAD E BY THE ASSESSING OFFICER ON ACCOUNT OF COMMISSION EARNED RELATED TO GLOBTECH INTERNATIONAL CORPORATION DOCUMENTS FOUND FROM MOHA N S. JAGTHAP. 44. LEARNED CIT(A) DECIDED THIS GROUND ALONG WITH G ROUND NO.3 ABOVE. THIS ISSUE IS, THEREFORE, COVERED BY THE RE ASONING GIVEN IN ITA-5852/DEL/2014 & 5 OTHERS 38 GROUND NO.3. FOLLOWING THE SAME, THIS GROUND OF RE VENUES APPEAL IS DISMISSED. 45. IN THE RESULT, THE APPEAL OF THE REVENUE IS DIS MISSED. ITA NO.585 ITA NO.585 ITA NO.585 ITA NO.5854 44 4/DEL/2 /DEL/2 /DEL/2 /DEL/2014 014 014 014 A.Y. 200 A.Y. 200 A.Y. 200 A.Y. 2003 33 3- -- -04 0404 04 : :: :- -- - 46. GROUND NO.1 OF THE REVENUES APPEAL IS GENERAL IN NATURE AND NEEDS NO ADJUDICATION. 47. IN GROUND NO.2, THE REVENUE HAS CHALLENGED THE ORDER OF LEARNED CIT(A) IN DELETING THE DISALLOWANCE OF `9,53,00,000 /- MADE BY THE ASSESSING OFFICER ON ACCOUNT OF UNEXPLAINED INVESTM ENT IN C 1 INDIA PVT.LTD. IN GROUND NO.3, THE REVENUE HAS CHALLENGE D THE ORDER OF LEARNED CIT(A) IN DELETING THE DISALLOWANCE OF `27, 94,40,988/- MADE BY THE ASSESSING OFFICER ON ACCOUNT OF COMMISSION EARN ED ON DEFENSE DEAL RELATED TO DOCUMENTS FOUND FROM M.V. RAO. 48. LEARNED REPRESENTATIVES OF BOTH THE SIDES STATE D THAT BOTH THE ABOVE GROUNDS ARE SIMILAR AS HAVE BEEN CONSIDERED I N ASSESSMENT YEAR 2002-03. FOLLOWING OUR ORDER IN ASSESSMENT YEAR 20 02-03 ABOVE, WE DISMISS BOTH THESE GROUNDS OF THE REVENUES APPEAL. 49. IN THE RESULT, THE APPEAL OF THE REVENUE IS DIS MISSED. 50. IN THE RESULT, ALL THE SIX APPEALS OF THE REVEN UE ARE DISMISSED. DECISION PRONOUNCED IN THE OPEN COURT ON 1 ST JULY, 2019. SD/- SD/- ( (( ( G.D. AGRAWAL G.D. AGRAWAL G.D. AGRAWAL G.D. AGRAWAL ) )) ) ( (( ( BHAVNESH SAINI BHAVNESH SAINI BHAVNESH SAINI BHAVNESH SAINI ) )) ) VICE PRESIDENT VICE PRESIDENT VICE PRESIDENT VICE PRESIDENT JUDICIAL MEMBER JUDICIAL MEMBER JUDICIAL MEMBER JUDICIAL MEMBER VK. ITA-5852/DEL/2014 & 5 OTHERS 39 COPY FORWARDED TO: - 1. APPELLANT : ASSISTANT COMMISSIONER OF INCOME T AX, ASSISTANT COMMISSIONER OF INCOME TAX, ASSISTANT COMMISSIONER OF INCOME TAX, ASSISTANT COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE CENTRAL CIRCLE CENTRAL CIRCLE CENTRAL CIRCLE- -- -13, NEW DELHI. 13, NEW DELHI. 13, NEW DELHI. 13, NEW DELHI. 2. RESPONDENT : SHRI SURESH NANDA, 4, CASUARINA AVE NUE, SHRI SURESH NANDA, 4, CASUARINA AVENUE, SHRI SURESH NANDA, 4, CASUARINA AVENUE, SHRI SURESH NANDA, 4, CASUARINA AVENUE, WESTEND GREEN WESTEND GREEN WESTEND GREEN WESTEND GREENS, 30 S, 30 S, 30 S, 30- -- -D, RAJOKRI, D, RAJOKRI, D, RAJOKRI, D, RAJOKRI, NEW DELHI NEW DELHI NEW DELHI NEW DELHI 110 038 AND 110 038 AND 110 038 AND 110 038 AND M/S C 1 INDIA PVT.LTD., M/S C 1 INDIA PVT.LTD., M/S C 1 INDIA PVT.LTD., M/S C 1 INDIA PVT.LTD., D DD D- -- -5, 3 5, 3 5, 3 5, 3 RD RDRD RD FLOOR, DEFENCE COLONY, FLOOR, DEFENCE COLONY, FLOOR, DEFENCE COLONY, FLOOR, DEFENCE COLONY, NEW DELHI NEW DELHI NEW DELHI NEW DELHI 110 024. 110 024. 110 024. 110 024. 3. CIT 4. CIT(A) 5. DR, ITAT ASSISTANT REGISTRAR