ITO 15(2)(2), MUMBAI V. LUXTRA REALTORS P.LTD, MUMBAI

ITA 6202/MUM/2016

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 2109 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 7 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-06-2019
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: H
• Assessment Year: 2012-2013
• Appeal Filed On: 21-10-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: DHAS AN GANDHI
• Assessee Lawyers: ADAGIRI
• Keywords: Unexplained cash credit; Income from undisclosed sources; Source of fund; Corroborative evidences; Onus to prove
• Section: 195; 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL H , BENCH MUMBAI BEFORE SHRI M. BALAGANESH , AM & SHRI AMARJIT SINGH , JM ITA NO. 6202 / MUM/20 1 6 ( ASSESSMENT YEAR : 2012 - 13 ) ITO - 15(2)(2), MUMBAI ROOM NO.802, 8 TH FLOOR OLD CGO BUILDING M.K.ROAD, MUMBAI 400 020 VS. M/S. LUXORA REALTORS PVT.LTD., SOHAM HOUSE, HARI OM NAGAR OFF. EASTERN EXPRESS HIGHWAY NEAR CHECKNAKA MULUND (E), MUMBAI - 400081 PAN/GIR NO. AABCO3197J ( APPELLANT ) .. ( RESPONDENT ) REVENUE BY SHRI HIR O RAI AND SHRI DHAS AN GANDHI ASSESSEE BY SHRI B. YADAGIRI DATE OF HEARING 17 / 06 /201 9 DATE OF PRONOUNCEMENT 19 / 06 /201 9 / O R D E R PER M. BALAGANESH (A.M) : THIS APPEAL IN ITA NO. 6202/MUM/2016 FOR A.Y. 2012 - 13 ARISES OUT OF THE ORDER BY THE LD. COMMISSIONER OF INCOME TAX (APPEAL S) - 24, MUMBAI IN APPEAL NO. CIT(A) - 24/ITO - 15(2)(2)/IT - 189/2015 - 16 A.Y.2012 - 13 DATED 29/07/2016 (LD. CIT(A) IN SHORT) AGAINST THE ORDER OF ASSESSMENT PASSED U/S.143(3)OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS ACT) DATED 27/03/2015 BY THE LD. IN COME TAX OFFICER 15(2)(2), MUMBAI (HEREINAFTER REFERRED TO AS LD. AO). ITA NO.6202/MUM/2016 M/S. LUXBRA REALTORS P. LTD. 2 2. THE ONLY ISSUE TO BE DECIDED IN THIS APPEAL IS AS TO WHETHER THE LD. CIT(A) WAS JUSTIFIED IN DELETING THE ADDITION OF RS.8,02,81,790/ - IN RESPECT OF PAID UP PREFERENCE SHARE CAPITAL WHICH WAS ADDED BY THE LD. AO AS UNEXPLAINED CASH CREDIT U/S.68 OF THE IT ACT IN THE FACTS AND CIRCUMSTANCES OF THE CASE. 3. THE BRIEF FACTS OF THIS ISSUE ARE THAT THE ASSESSEE IS CARRYING ON THE BUSINESS OF BUILDERS AND DEVELOPERS AND HAD FILED ITS RETU RN OF INCOME FOR THE A.Y.2012 - 13 ON 27/09/2012 DECLARING TOTAL INCOME OF RS. 74,167/ - UNDER NORMAL PROVISIONS OF THE ACT AND BOOK PROFIT U/S.115JB OF THE ACT AT RS.81,505/ - . DURING THE COURSE OF SCRUTINY ASSESSMENT, THE ASSESSEE SUBMITTED COPY OF PROFIT AND LOSS ACCOUNT, BALANCE SHEET, DETAILS OF PARTY - WISE UNSECURED LOANS, LOAN CONFIRMATIONS, DETAILS OF EXPENSES ETC., IN SUPPORT OF ITS RETURN OF INCOME, WHICH HAD BEEN DULY ACKNOWLEDGED BY THE LD. AO IN PARA 4 OF HIS ORDER. 3.1. THE LD. AO OBSERVED THAT DUR ING THE YEAR UNDER CONSIDERATION, THE ASSESSEE HAD ISSUED 80,28,179 NON - CUMULATIVE PREFERENCE SHARES OF FACE VALUE OF RS.1/ - EACH AT A PREMIUM OF RS.9/ - EACH TO AANYA PROPERTIES (I) LTD., A FOREIGN BODY CORPORATE BASED AT PORT LOUIS, REPUBLIC OF MAURITIUS. THE ASSESSEE WAS ASKED TO SUBMIT DOCUMENTARY EVIDENCE TO PROVE THE IDENTITY AND CREDITWORTHINESS OF THE INVESTOR TOGETHER WITH GENUINENESS OF THE TRANSACTIONS. THE ENTIRE DOCUMENTATION FILED BY THE ASSESSEE WITH REGARD TO THE AFORESAID THREE INGREDIENTS O F SECTION 68 OF THE ACT WAS FILED BY THE ASSESSEE BEFORE THE LD. AO IN PHOTOCOPY. THE LD. AO INSISTED FOR ORIGINALS OF THE SAID DOCUMENTS WHICH COULD NOT BE PRODUCED BY THE ASSESSEE BEFORE THE LD. AO. THE LD. AO FURTHER DIRECTED THE ASSESSEE TO PRODUCE THE KEY MANAGEMENT PERSONNEL OF THE INVESTOR COMPANY FROM MAURITIUS TO BE PERSONALLY PRESENT FOR HIS EXAMINATION, WHICH COULD NOT BE ITA NO.6202/MUM/2016 M/S. LUXBRA REALTORS P. LTD. 3 COMPLIED WITH BY THE ASSESSEE. BASED ON THIS, THE LD. AO PROCEEDED TO MAKE THE ADDITION BY TREATING IN RESPECT OF PAID UP PREF ERENCE SHARE CAPITAL OF RS.8,02,81,790/ - AS UNEXPLAINED CASH CREDIT U/S.68 OF THE ACT BY OBSERVING AS UNDER: - 5.4 THE REPLY AND DOCUMENTARY EVIDENCE SUBMITTED BY THE ASSESSEE ARE CAREFULLY PERUSED. HOWEVER, SAME ARE NOT ACCEPTABLE ON THE FOLLOWING GROUND S; A. THE ASSESEE HAS SUBMITTED XEROX COPIES OF ALLEGED CONFIRMATION, BANK ACCOUNT STATEMENT, CERTIFICATE OF INCORPORATION, MEMORANDUM OF ASSOCIATION OF M/S. AANANYA PROPERTIES (1) LTD. B. SINCE ALL THE DOCUMENTS MENTIONED ABOVE WERE ISSUED BY FOREIGN AU THORITIES THEREFORE THE ASSESSEE WAS ASKED TO PRODUCE ORIGINAL DOCUMENTS TO ASCERTAIN THE GENUINENESS OF ABOVE STATED DOCUMENTS. IN RESPONSE, THE ASSESSEE HAS STATED THAT SINCE SAID DOCUMENTS ARE WITH THE FOREIGN ENTITIES / INDIVIDUALS THEREFORE HE IS NOT IN POSITION TO PRODUCE SAID ORIGINAL DOCUMENTS FOR EXAMINATION. C. DURING THE COURSE OF ASSESSMENT PROCEEDINGS THE ASSESSEE WAS ASKED TO KEY MANAGERIAL PERSON OF THE M/S. ANANYA PROPERTIES (1) LTD. FOR EXAMINATION ALONG WITH THEIR BOOKS OF ACCOUNTS AND RELATED DOCUMENTS IN RESPECT OF INVESTMENT MADE IN THE ASSESSEE'S SHARES. HOWEVER THE ASSESSEE HAS EXPRESSED ITS INABILITY. D. IT IS OBSERVED FROM THE BALANCE SHEET OF THE ASSESSEE THAT M/S. AANANYA PROPERTIES (1) LTD. IS HOLDING 99% OF SHARE CAPITAL OF THE ASSESSEE. HOWEVER IT IS NOT IN POSITION TO PRODUCE REQUIRED DOCUMENTS IN ORIGINAL FOR VERIFICATION OR PRESENT KEY MANAGERIAL PERSON BEFORE THE UNDERSIGNED FOR EXAMINATION TO PROTECT THE INTEREST OF THE ASSESSEE. IN NORMAL CIRCUMSTANCES A PRUDENT PERSON WOULD HAVE COMPLIED WITH ABOVE REQUIREMENT TO PROTECT ITS INTEREST. E. THE ASSESSEE HAS MADE CRYPTIC STATEMENT IN RESPECT OF SOURCE OF FUNDS I.E. 'WITH A VIEW TO SATISFYING YOUR REQUIREMENT WE HEREBY STATE THAT M/S. AANANYA PROPERTIES (1) LIMITED (A MAUR ITIUS BASED COMPANY) IS HOLDING 100% SHARES OF M/S. AANANYA PROPERTIES (I) LIMITED, WE HAVE PROVED THE GENUINENESS OF SOURCE OF THE FUNDS INVESTED IN OUR COMPANY BY M/S. AANANYA PROPERTIES (1) LIMITED.' IT MAY BE SEEN THAT HOLDING & SUBSIDIARY COMPANIES AR E ONE AND SAME. ITA NO.6202/MUM/2016 M/S. LUXBRA REALTORS P. LTD. 4 F. FURTHER, THE ASSESSEE WAS ALSO REQUIRED TO PRODUCE DOCUMENTARY EVIDENCE SUCH AS PROJECT REPORT, PRESENTATION, CORRESPONDENCE, ETC. RELATING TO INVESTMENT TRANSACTION MADE BY M/S. AANANYA PROPERTIES (1) LTD. THE ASSESSEE HAS NOT BEEN ABL E TO PRODUCE A SINGLE DOCUMENT TO PROVE THAT PROCESS OF FOREIGN DIRECT INVESTMENT (FDI) IN A REAL ESTATE PROJECT DEVELOPED BY THE ASSESSEE. M/S. AANANYA PROPERTIES (1) LTD. HAS MADE INVESTMENT OF RS.8.02 CRORES INTO THE ASSESSEE'S PROJECT HOWEVER NOT A SIN GLE PIECE OF PAPER WAS SUBMITTED TO PROVE THAT THERE WAS THE FDI PROCESS CONTINUED FOR FAIRLY LONG PERIOD. IN NORMAL CIRCUMSTANCES, LOT OF CORRESPONDENCE, PROJECT REPORTS, AND PRESENTATIONS REQUIRED TO ARE TO BE MADE / GIVEN TO THE FOREIGN ENTITIES TO CONV INCE THEM TO INVEST IN INDIAN PROJECTS. IN THIS CASE THE ASSESSEE HAS RECEIVED FUNDS WITHOUT ANY EFFORTS. G. THE ASSESSEE HAS STATED THAT THE FUNDS ARE RECEIVED THROUGH NORMAL BANKING CHANNELS AND WITH RBI'S APPROVAL. BUT IN THIS CONNECTION IT IS TO BE N OTED THAT THE BANKS ARE NOT EXAMINING THE SOURCE, LEGALITY, ALLOWABILITY OF FUNDS, NATURE OF TRANSACTION AND IDENTITY OF THE FUNDS TRANSFEROR. THE BANK IS ONLY MEDIUM OF TRANSFER OF FUNDS THROUGH WHICH FUNDS TRAVEL FROM ONE ACCOUNT TO ANOTHER. H. IT IS OB SERVED FROM THE DETAILS FILED BY THE ASSESSEE THAT THOUGH M/S. AANANYA PROPERTIES (1) LTD. HAS INVESTED FAIRLY LARGE AMOUNT IN FOREIGN COUNTRY I.E. INDIA, IT HAS GIVEN CARE OF ADDRESS. WHICH INDICATES THAT IT DO NOT HAVE ITS OWN OFFICE. I. IT IS OBSERVED FROM THE BANK ACCOUNT STATEMENT OF AN ACCOUNT HELD BY M/S. AANANYA PROPERTIES (1) LTD. WITH MSEC THAT THE ENTRIES HIGHLIGHTED AS ALLEGED PAYMENT MADE TO THE ASSESSEE ARE IN THE NAME OF M/S.OPULENT REALTORS PVT. LTD. AS A PAYEE. THUS THE BANK ACCOUNT STATEM ENT, SUBMITTED BY THE ASSESSEE ALSO DO NOT SUPPORT THE ASSESSEE'S CONTENTION. J. FURTHER, SECTION 68 OF THE I. T. ACT, 1961 PROVIDES FOR ADDITIONS TO TOTAL INCOME IF..... A. ANY SUM FOUND CREDITED IN THE BOOKS OF ACCOUNTS MAINTAINED FOR ANY PREVIOUS YEAR, B. ASSESSEE OFFERS NO EXPLANATION ABOUT THE NATURE AND SOURCE OF THE SUCH A CREDIT, OR C. EXPLANATION OFFERED BY ASSESSEE IS NOT SATISFACTORY IN THE OPINION OF THE ASSESSING OFFICER. IN THIS CASE THE ASSESSE E HAS SUBMITTED XEROX COPIES OF DOCUMENTS IS EXECUTED IN FOREIGN COUNTRY THEREFORE, THE GENUINENESS OF THE DOCUMENTS REMAINS TO BE ASCERTAINED. FURTHER IT HAS EXPRESSED ITS INABILITY TO PRODUCE ORIGINAL DOCUMENTS OR RESPONSIBLE KEY MANAGERIAL PERSON FOR EX AMINATION. HENCE, THE EXPLANATION OFFERED BY THE ASSESSEE IN RESPECT OF IDENTITY & ITA NO.6202/MUM/2016 M/S. LUXBRA REALTORS P. LTD. 5 CREDITWORTHINESS OF THE INVESTOR, GENUINENESS OF THE TRANSACTION AND SOURCE OF FUNDS INVESTED BY M/S, AANANYA PROPERTIES (1) LTD. IS NOT SATISFACTORY. 5.5 IN VIEW OF THE DI SCUSSION MADE AS ABOVE, THE INVESTMENT MADE BY M/S. ANANYA PROPERTIES (1) LTD. AMOUNTING TO RS.8,02,81,790/ - IS HELD AS CASH CREDIT WITHIN THE MEANING OF SECTION 68 OF THE I. T. ACT AND SAME IS ADDED TO THE ASSESSEE'S TOTAL INCOME. PENALTY PROCEEDINGS U/S. 271(L)(C) OF THE I. T. ACT ARE INITIATED SEPARATELY FOR FURNISHING INACCURATE PARTICULARS OF INCOME AND CONCEALMENT OF INCOME. 3.2. THE ASSESSEE AGITATED THE ADDITION BEFORE THE LD. CIT(A) AND STATED THAT THE FOLLOWING DOCUMENTS WERE SUBMITTED BEFORE TH E LD. AO, WHICH WAS ALSO SUBMITTED IN THE FORM OF PAPER BOOK BEFORE THE LD. CIT(A) : - I. CONFIRMATION OF AANYA PROPERTIES (I) LTD. CONFIRMING THE INVESTMENTS MADE IN THE APPELLANT COMPANY (ANNEXURE 7( II I) OF PAPER BOOK) II. BANK STATEMENTS OF AANYA P ROPERTIES (I) LTD. REFLECTING SUCH INVESTMENTS MADE (ANNEXURE 7(IV) TO 7(VI) OF PAPER BOOK) III. COPY OF CERTIFICATE OF INCORPORATION OF AANYA PROPERTIES (I) LTD. (ANNEXURE - 7(VIII) OF PAPER BOOK) IV. COPY OF MEMORANDUM OF ASSOCIATION OF AAN YA PROPERTIES (I) LTD. (ANNEXURE 7(IX) OF PAPER BOOK) V. BANK STATEMENT OF THE APPELLANT COMPANY REFLECTING THE PAYMENT RECEIVED FROM AANYA PROPERTIES (I) LTD. (ANNEXURE 8(XXXVI) OF PAPER BOOK) VI. BANK STATEMENTS OF AANYA HOLDING LTD REFLECTI NG PAYMENTS MADE TO AANYA PROPERTIES (I) LTD. (ANNEXURE 8(XLII) OF PAPER BOOK) VII. FOREIGN INWARD REMITTANCE CERTIFICATES IN RESPECT OF REMITTANCE BY AANYA PROPERTIES (I) LTD. (ANNEXURE 8(XLVI) OF PAPER BOOK) VIII.COPY OF FIPB APPROVAL FOR CONDONATIO N OF DELAY IN FDI AND COPY OF COMPOUNDING APPLICATION TO CEFA CELL OF RESERVE BANK OF INDIA (ANNEXURE 9(I) OF PAPER BOOK) IX. THE PROOF OF BASIS OF SHARE PREMIUM AMOUNT IN THE FORM OF CERTIFICATES BY A CHARTERED ACCOUNTANT. (ANNEXURE 3(XXXIV) OF PAPER B OOK) ITA NO.6202/MUM/2016 M/S. LUXBRA REALTORS P. LTD. 6 X. FINANCIAL STATEMENT OFAANYA PROPERTIES (I) LTD. REFLECTING SUCH INVESTMENTS AND SOURCE OF FUNDS (ANNEXURE 8(III) TO 8(XXXV) OF PAPER BOOK) XI. SHAREHOLDING LIST OF THE APPELLANT COMPANY (ANNEXURE 2(XVIII) OF PAPER BOOK) XII. SHAREHOLDING LIST OF AANYA PROPERTIES (I) LTD. (ANNEXURE 8(II) OF PAPER BOOK) XIII. LIST OF ULTIMATE BENEFICIARY OWNERS OF AANYA HOLDINGS LTD (MAURITIUS) (ANNEXURE 8( II I) OF PAPER BOOK). THIS COMPANY HOLDS 100% SHARES OF AANYA PROPERTIES (I) LTD. WHICH IN TURN HOLDS SHARES IN THE APPELLANT COMPANY WHICH IS SUBJECT OF DISPUTE BEFORE YOUR HONOUR. 3.3. THE LD. CIT(A) PLACED RELIANCE ON THE FOLLOWING DECISIONS: - A. HONBLE DELHI HIGH COURT IN THE CASE OF CIT VS. SHIVDHOOTI PEARLS AND INVESTMENT LTD. REPORTED IN 64 TAXMAN 329. B. HONBLE DELH I HIGH COURT IN THE CASE OF MOD CREATIONS (P) LTD., VS. ITO REPORTED IN 354 ITR 282. C. HONBLE DELHI HIGH COURT IN THE CASE OF CIT VS. DIVINE LEASING AND FINANCE LTD., REPORTED IN 299 ITR 268. D. HONBLE SUPREME COURT IN THE CA SE OF CIT VS. LOVELY EXPORTS (P) LTD., REPORTED IN 216 CTR 195 (SC) 3.4. THE LD. CIT(A) FURTHER OBSERVED AS UNDER: - 2.4.7 IF ABOVE REFERRED PRINCIPLES ARE APPLIED TO THE FACTS AND CIRCUMSTANCES OF THE CASE UNDER CONSIDERATION, IT BECOMES ABSOLUTELY CLEAR THAT THE APPELLANT HAD DISCHARGED ITS ONUS AND BURDEN OF PROOF. NOT ONLY HAD IT FURNISHED THE TRAIL OF BANKING TRANSACTIONS, IT HAD ALSO PRODUCED COPIES OF FORM - FCGPR SUBMITTED TO THE RBI EVIDENCING RECEIPT OF FUNDS FROM THE FOREIGN ENTITY. FURTHER, CONFIR MATION OF THE SAID ENTITY WAS ALSO FURNISHED BEFORE THE LD AO WHICH HAS NOT BEEN NEGATED BY HIM. THUS, THE IDENTITY OF THE CREDITOR, ITS CREDITWORTHINESS AND GENUINENESS OF THE TRANSACTION STANDS EXPLAINED AND IF THE ID. AO STILL HARBOURED ANY DOUBTS ABOUT THE CREDITWORTHINESS OR IDENTITY OF THE CREDITOR, HE HAD ALL THE RIGHT UNDER THE ACT TO HOLD FURTHER INQUIRY AND CONFRONT THE APPELLANT WITH SUCH INQUIRY. TO THE CONTRARY, ID AO DID NOT MAKE ANY ATTEMPT TO DISCHARGE HIS BURDEN TO REBUT THE EVIDENCES PRODU CED BY THE APPELLANT AND MADE THE ADDITION MERELY ON THE BASIS OF A SUSPICION. IT IS TRITE LAW THAT THE AO CANNOT BRUSH ASIDE THE EVIDENCES SUBMITTED DURING ASSESSMENT PROCEEDINGS ITA NO.6202/MUM/2016 M/S. LUXBRA REALTORS P. LTD. 7 AND MAKE ADDITIONS ON MERE WHIMS AND FANCIES. EVEN THE HON'BLE SUPREME COURT IN THE CASE OF STATE OF KERALA V. C. VELUKUTTY CO. [1966] 60 ITR 239 HAS HELD THAT THE JUDGMENT IS A FACULTY TO DECIDE THE MATTERS WITH WISDOM TRULY AND LEGALLY AND NOT TO DEPEND ON THE ARBITRARY CAPRICE OF A JUDGE, BUT ON SETTLED AND INVARIABLE - PRINCIPLE S OF JUSTICE. 2.4.8 FURTHER, HON'BLE SUPREME COURT IN THE CASE OF MAHABIR PRASAD SANTOSH KUMARV. STATE OF U.P. AIR 1970 SC 1302 HAS OBSERVED AS UNDER: 'RECORDING OF REASONS IN SUPPORT OF A DECISION ON A DISPUTED CLAIM BY A QUASI - JUDICIAL AUTHORITY ENSURE S THAT THE DECISION IS REACHED ACCORDING TO LAW AND IS NOT THE RESULT OF CAPRICE, WHIM OR FANCY OR REACHED ON GROUNDS OF POLICY OR EXP EDIENCY. A PARTY TO THE DISPUTE IS ORDINARILY ENTITLED TO KNOW THE GROUNDS ON WHICH THE AUTHORITY HAS REJECTED HIS CLAIM, IF THE ORDER IS SUBJECT TO APPEAL, THE NECESSITY TO RECORD REASONS IS GREATER, FOR WITHOUT RECORDED REASONS THE APPELLATE AUTHORITY HAS NO MATERIAL ON WHICH IT ' MAY DETERMINE WHETHER THE FACTS WERE PROPERLY ASCERTAINED, THE RELEVANT LAW WAS CORRECTLY APPL IED AND THE DECISION WAS JUST.' 2.4.9 ON WEIGHING THE PROS AND CONS, I AM OF THE CONSIDERED VIEW THAT LD. AO HAS GIVEN A GO BY TO THE KNOWN CANONS OF JURISPRUDENCE BY COMPLETELY IGNORING THE EVIDENCE PRODUCED BY THE APPELLANT. HE HAS NOT EVEN ADVERTED TO THE FACT THAT RBI HAD TAKEN COGNISANCE OF THE FORM - FCGPR. I FIND THAT, THOUGH NOT REQUIRED, THE APPELLANT HAS, IN FACT, GIVEN THE SOURCE OF SOURCE AND HENCE, THE ADDITION MADE BY THE LD. AO CANNOT STAND THE TEST OF LEGAL SCRUTINY. I AM ALSO FORTIFIED IN MY ABOVE VIEW BY THE DECISION OF THE HON'BLE BOMBAY HIGH COURT IN THE CASE OF COMMISSIONER OF INCOME - TAX V, TANIA INVESTMENTS (P.) LTD 322 ITR 394 (BOM) AND THE HON'BLE MUMBAI BENCH OF ITAT IN THE CASE OF INCOME - TAX OFFICER 9(1) - 1 V. ANANT SHELTERS (P.) LTD [2012J 20 TAXMANN.COM 153 (MUM.) 2.4.10 . IT IS ALSO SEEN THAT THE HON'BLE MUMBAI BENCH OF ITAT WAS SEIZED OF THE ISSUE OF CASH CREDIT FROM A FOREIGN COUNTRY IN THE CASE OF ACIT VS M/S LINFOX LOGISTICS (I) PVT. LTD. IN ITA NO.864/M/2012 WHERE VIDE ORDER D ATED 30.09.2015, THE HON'BLE TRIBUNAL DELETED THE ADDITION MADE ON THE BASIS OF THE FIRC ISSUED BY THE BANK IN THE FOLLOWING TERMS: '7. WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSIONS. DURING THE YEAR UNDER CONSIDERATION THE ASSESSEE COMPANY RECEIVED A SUM OF RS. 1,02,78, 000 / - , WHICH WAS CLAIMED TO BE RECEIVED FROM ITS PARENT COMPANY I.E. M/S,LINFOX INTERNATIONAL GROUP PTY. LTD., AUSTRALIA. IN SUPPORT OF SUCH CREDIT, ASSESSEE FURNISHED BEFORE THE LOWER AUTHORITIES A COPY OF THE FIRC ISSUED BY THE BANK. THE CIT(A) HAS NOTICED THAT THE COPY OF FIRC FURNISHED BY THE ASSESSEE REFLECTS THE NAME OF THE ASSESSEE AS THE BENEFICIARY AND THE NAME OF THE SENDER/REMITTED. M/S. LINFOX INTERNATIONAL GROUP PTY. LTD., AUSTRALIA WAS ALSO MENTIONED. IT IS ALSO NOTICED BY THE CIT(A) THAT ITA NO.6202/MUM/2016 M/S. LUXBRA REALTORS P. LTD. 8 FIRC SHOWS PURPOSE OF THE REMITTANCE AS 'TOWARDS SHARE APPLICATION'. QUITE CLEARLY, THE IMPUGNED SUM HAS BEEN RECEIVED BY THE ASSESSEE THROUGH BANKING CHANNELS, AND THE MATERIAL ON RECORD CLEARLY BRINGS OUT SOURCE AS WELL AS THE NATURE OF T HE AMOUNT RECEIVED. UNDER THESE CIRCUMSTANCES, IN OUR VIEW, THE CIT(A) MADE NO MISTAKE IN HOLDING THAT THE IDENTITY AND CREDITWORTHINESS OF THE CREDITOR AND GENUINENESS OF THE TRANSACTION STOOD SATISFACTORILY EXPLAINED. IN THE ABSENCE OF ANY CREDIBLE MATER IAL WITH THE REVENUE TO DISPROVE THE FINDINGS OF THE CIT(A), WE HEREBY AFFIRM THE SAME. THUS, ON THIS ASPECT THE REVENUE FAILS.' 2 . 4.11 . SIMILARLY IN THE CASE OF CIT VS TULIP FINANCE LTD. [2009] 178 TAXMAN 182 (DELHI), THE HON'BLE DELHI HIGH COURT CONFIRM ED THE FINDING OF THE ITAT ON THE OASIS OF REMITTANCE CERTIFICATES SUBMITTED TO THE RBI AND IN DOING SO IT WAS, INTER ALIA, HELD AS UNDER: - '3....... AS REGARDS THE REMAINING SHAREHOLDER, THAT IS S, IT WAS NOTED THAT HE WAS AN NRI AND THE SHARE CAPIT AL OF RS. 15 LACS RECEIVED FROM HIM WAS THROUGH HIS NRE ACCOUNT. THE REMITTANCES WERE THROUGH THREE SEPARATE CHEQUES, OF WHICH DETAILS WERE AVAILABLE. THE ASSESSEE HAD ALSO FILED BANK CERTIFICATES SUBMITTED TO THE RBI PRESUMABLY FOR THE PURPOSE OF REMITTAN CE OF DIVIDEND TO SAID S. IN THE LIGHT OF SUCH EVIDENCE, THE CIT(A) AS ALSO THE TRIBUNAL HAD COME TO A CONCLUSION OF FACT THAT THE ASSESSEE HAD DISCHARGED THE BURDEN WHICH LAY UPON IT FOR ESTABLISHING THE IDENTITY OF THE SHAREHOLDERS AS WELL AS THE GENUINE NESS OF THE TRANSACTIONS. AS SUCH, THE TRIBUNAL CONFIRMED THE FINDINGS OF THE CIT(A) AND DELETED THE ADDITION WHICH HAD BEEN MADE BY THE AO. IT IS OBVIOUS THAT THE FINDINGS RETURNED BY THE CIT(A) AS WELL AS THE TRIBUNAL ARE PURE FINDINGS OF FACT AND NO QUE STION OF LAW ARISES ON THIS ISSUE.' 2.4.12 IN THE CASE OF CIT VS PEOPLES GENERAL HOSPITAL LTD. [2013] 35 TAXMANN.COM 444 (MADHYA PRADESH), HON'BLE HIGH COURT CONFIRMED THE DELETION OF ADDITION ON THE BASIS OF THE FACT THAT THE FOREIGN COMPANY WAS NOT FOU ND TO BE A BOGUS COMPANY AND THAT THE MONEY WAS TRANSMITTED THROUGH BANKING CHANNELS. IN DOING SO, IT WAS, INTER ALIA, HELD AS UNDER: 'IN THE CASE OF CIT V. LOVELY EXPORTS (P.) LTD. [APPLICATION NO. 11993 OF 2007, DATED 11 - 1 - 2008], THE APEX COURT SPECIFICA LLY HELD THAT IF THE IDENTITY OF THE PERSON PROVIDING SHARE APPLICATION MONEY IS ESTABLISHED, THEN THE BURDEN IS NOT ON THE ASSESSEE TO PROVE THE CREDITWORTHINESS OF THE SAID PERSON. HOWEVER, THE DEPARTMENT CAN PROCEED AGAINST THE SAID, COMPANY IN ACCORDAN CE WITH LAW. [PARA 16] THE POSITION OF THE PRESENT CASE IS IDENTICAL. IT IS NOT THE CASE OF ANY OF THE PARTIES THAT THE COMPANY IN SHARJAH IS A BOGUS COMPANY OR A NON - EXISTENT COMPANY AND THE AMOUNT WHICH WAS SUBSCRIBED BY THE ITA NO.6202/MUM/2016 M/S. LUXBRA REALTORS P. LTD. 9 SAID COMPANY BY WAY OF SHARE SUBSCRIPTION WAS IN FACT THE MONEY OF THE ASSESSEE. IN THE PRESENT CASE, THE ASSESSEE HAD ESTABLISHED THE IDENTITY OF INVESTOR WHO HAD PROVIDED THE SHARE SUBSCRIPTION AND IT WAS ESTABLISHED THAT THE TRANSACTION WAS GENUINE, THOUGH AS PER CONTENTION OF THE ASSESSEE THE CREDITWORTHINESS OF THE CREDITOR WAS ALSO ESTABLISHED. IN THE PRESENT CASE, IN THE LIGHT OF THE JUDGMENT OF LOVELY EXPORTS (P.) LTD. (SUPRA), ONLY ESTABLISHMENT OF THE IDENTITY OF THE INVESTOR IS TO BE SEEN. THE DELHI HIGH COURT ALSO, IN THE CASE OF CIT V. DIVINE LEASING & FINANCE LTD. [2008] 299 ITR 268/12007] 158 TAXMAN 440, CONSIDERING A SIMILAR QUESTION HELD THAT THE ASSESSEE - COMPANY, HAVING RECEIVED SUBSCRIPTIONS FROM THE PUBLIC/RIGHTS ISSUE THROUGH BANKING CHANNELS AND FURNISHED COMPLETE DETAILS OF THE SHAREHOLDERS, NO ADDITION COULD BE MADE UNDER SECTION 68 IN THE ABSENCE OF ANY POSITIVE MATERIAL OR EVIDENCE TO INDICATE THAT THE SHAREHOLDERS WERE BENAMIDARS OR FICTITIOUS PERSONS OR THAT ANY PART OF THE SHARE CAPITAL REPRESENTED COMPANY'S OWN INCOME FROM UNDISCLOSED SOURCES. [PARA 16] IN VIEW OF LAW LAID DOWN BY THE APEX COURT, THE SUBSTANTIAL QUESTIONS FRAMED IN THESE APPEALS DO NOT ARISE FOR CONSIDERATION. ACCORDINGLY, ALL THESE APPEALS ARE DISMISSED WITH NO ORDER AS TO COSTS.' 2.4.13 IT IS THUS APPARENT THAT THE SOURCE OF THE FUNDS WHICH WAS ROUTED THROUGH BANKING CHANNELS AND REPORTED TO THE RBI STANDS EXPLAINED. IF LD. AO WANTED TO BRING CERTAIN OTHER INFORMATION OR EVIDENCE ON RECORD TO NEGATE THE APPELLANT'S CLAIM,' HE WAS NOT PREC LUDED FROM DOING SO. HOWEVER, AS BROUGHT OUT EARLIER, IT IS SEEN THAT HE HAS NOT EVEN CARED TO DISCUSS THE FACTS AVAILABLE ON RECORD AND HAS MERELY GONE BY HIS WHIMS AND FANCIES. ACCORDINGLY, IN VIEW OF THE OVERWHELMING FACTUAL AND LEGAL SUPPORT IN FAVOUR OF THE APPELLANT, GROUND NOS. 2 AND 3 ARE ALLOWED. 4. AGGRIEVED, THE REVENUE IS IN APPEAL BEFORE US. 5. WE HAVE HEARD RIVAL SUBMISSIONS. WE FIND THAT THE LD. DR APART FROM REITERATING FINDINGS GIVEN IN THE ORDER OF THE LD. AO PRAYED FOR SETTING ASIDE OF THE ENTIRE APPEAL TO THE FILE OF THE LD. AO FOR DE NOVO ADJUDICATION. PER CONTRA, THE LD. AR VEHEMENTLY OBJECTED FOR SETTING ASIDE OF THIS ISSUE IN AS MUCH AS THE ENTIRE DETAILS WERE DULY FURNISHED BY THE ITA NO.6202/MUM/2016 M/S. LUXBRA REALTORS P. LTD. 10 ASSESSEE BEFORE THE LD. AO AND BEFORE THE LD. CIT( A) AND THE LD. AO HAD NOT BOTHERED TO EVEN MENTION THE LIST OF DOCUMENTS SUBMITTED TO EXPLAIN THE MAIN THREE INGREDIENTS OF SECTION 68 OF THE ACT AND THE VERACITY OF THE TRANSACTIONS. HE VEHEMENTLY OBJECTED FOR GIVING SECOND INNINGS TO THE LD. AO FOR LOOKI NG INTO THE VERY SAME SET OF DOCUMENTS. HE ALSO ARGUED THAT THE LD. CIT(A) HAD DULY APPRECIATED THE ENTIRE DOCUMENTS TOGETHER WITH ITS SUPPORTING EVIDENCES THAT WERE BEFORE HIM ON RECORD. HE PLACED RELIANCE ON THE FINDING OF THE LD. CIT(A) IN PARA 2.4.9 TH AT THE ASSESSEE IN THIS CASE HAD ALSO EXPLAINED SOURCE OF SOURCE. THE LD. AR ARGUED THAT THE ENTIRE EVIDENCES SUBMITTED BY THE ASSESSEE EXPLAINING THE CREDENTIALS, IDENTITY AND GENUINENESS OF THE TRANSACTIONS OF THE INVESTOR COMPANY WERE SIMPLY BRUSHED ASI DE BY THE LD. AO ON THE GROUND THAT THE SAME WERE MERELY PHOTO COPIES AND NOT ORIGINALS. EVEN THE FUND S WHICH HAD COME UNDER THE FOREIG N DIRECT INVESTMENT (FDI) ROUTE AFTER OBTAINING PROPER CLEARANCES AND APPROVAL FROM FOREIGN INVESTMENT P ROMOTION BOARD (F IPB) AND STATUTORY FORM FILED WITH RESERVE BANK OF INDIA (RBI) IN FORM FCGPR WERE COMPLETELY IGNORED BY THE LD. AO. HE VEHEMENTLY ARGUED THAT HOW CAN A FOREIGN INVESTOR WHO HAD ONLY 31% ST AKE IN THE ASSESSEE COMPANY DURING THE RELEVANT TIME PRODUCE THE ORI GINAL DOCUMENTS OF ITS MEMORANDUM OF ASSOCIATION, BANK STATEMENT AND ALL OTHER PARTICULARS AS ABOVE. HE SPECIFICALLY DREW OUR ATTENTION TO THE FOLLOWING FACTUAL INCORRECT STATEMENTS MADE BY THE LD. AO IN HIS ORDER: - ITA NO.6202/MUM/2016 M/S. LUXBRA REALTORS P. LTD. 11 A . AANYA PROPERTIES ( I ) PVT. LTD. WAS N OT HOLDING 99% SHARES OF THE ASSESSEE COMPANY DURING THE RELEVANT TIME. IT WAS HOLDING ONLY 3 1 % AS IS EVIDENT FROM FIPB APPROVAL ENCLOSED IN PAGES 97 TO 101 OF THE PAPER BOOK. B. AANYA PROPERTIES (I) LTD., SHARES WERE HELD BY AANYA HOLDING LTD, WHICH AG AIN A MAURITIUS BASED COMPANY. THE LD. AO HAD RECORDED IN HIS ORDER BY WRONGLY MENTIONING THE FACT THAT ASSESSEE HAD GIVEN VIDE ITS LETTER DATED 24/03/2015 THAT AANYA PROPERTIES (I) LTD., WAS HOLDING 100% SHARES OF AANYA HOLDING LTD., AND THAT THE HOLDING AND SUBSIDIARY COMPANIES ARE ONE AND THE SAME. THIS IS COMPLETELY FACTUALLY INCORRECT STATEMENT MADE BY THE LD. AO . IN SUPPORT OF THIS , THE LD. AR DREW OUR ATTENTION TO PAGE 59 OF THE PAPER BOOK WHEREIN THE SUBJECT MENTIONED LETTER DATED 24/03/2015 WAS PLA CED ON RECORD . IN THE SAID LETTER , IT HAS BEEN SPECIFICALLY MENTIONED BY THE ASSESSEE THAT AANYA HOLDING LTD . WAS HOLDING 100% SHARES OF AANYA PROPERTIES (I) LTD. THE LD. AR ARGUED THAT THE LD.AO HAD DELIBERATELY RECORDED FALSE FACTS IN HIS ORDER IN ORDER TO REACH A PRE - CONCEIVED DESTINATION TO MAKE AN ADDITION TOWARDS THE RECEIPT OF PREFER ENCE SHARE CAPITAL SOMEHOW. ITA NO.6202/MUM/2016 M/S. LUXBRA REALTORS P. LTD. 12 C. THE LD. AR ALSO STATED THAT PREVIOUS NAME OF THE ASSESSEE M/S. OPULENT REALTORS PVT. LTD. THE SAID NAME WAS CHANGED TO LUX O RA REALTORS PVT . LTD. W.E.F. 21/02/2011 AND ALSO DREW OUR ATTENTION TO FRESH CERTIFICATE OF INCORPORATION CONSEQUENT UPON CHANGE OF NAME WAS OBTAINED FROM REGISTRAR OF COMPANIES, MAHARASHTRA, MUMBAI. D. THE LD. AR STATED THAT CORRESPONDINGLY THE NAME CHANGED FROM OPULEN T REALTORS PVT LTD TO LUX O RA REALTORS PVT. LTD. WAS NOT E FFECTED BY THE ASSESSEE WITH ITS BANKERS. HENCE THE BANK ACCOUNTS WERE CONTINUED IN THE OLD NAME OF THE ASSESSEE COMPANY I.E. OPULENT REALTORS PVT. LTD. ACCORDINGLY, THE RECEIPT OF PREFERENCE SHARE C APITAL WAS ALSO RECEIVED AND CREDITED IN THE BANK ACCOUNT OF OPULENT REALTORS PVT. LTD. HE STATED THAT THERE COULD NOT BE ANY INFIRMITY IN THE SAID ACTION THEREBY LEADING TO DRAWING ADVERSE INFERENCE IN THE HANDS OF THE ASSESSEE COMPANY. THE LD. AR DEFENDE D THE ARGUMENTS OF THE LD. DR THAT MONEY WAS RECEIVED ONLY FROM AANYA PROPERTIES (I) LTD., AND NOT FROM OPULENT REALTORS PVT. LTD., AS WRONGLY UNDERSTOOD BY THE LD. AO AND BY THE LD. DR. THE LD. AR FURTHER ARGUED THAT NO DEFICIENCIES WHATSOEVER WERE FOU ND ON THE DOCUMENTARY EVIDENCES AS ILLUSTRATED SUPRA WERE FOUND BY THE LD. AO. THE LD. AR FURTHER PLACED RELIANCE ON THE DECISION OF THE HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT VS. GAGAN D EEP INFRASTRUCTURE ITA NO.6202/MUM/2016 M/S. LUXBRA REALTORS P. LTD. 13 PVT. LTD. REPORTED IN 394 ITR 680; PC IT VS. PARADISE INLAND SHIPPING P. LTD. REPORTED IN 400 ITR 439(BOM) AND DECISION OF HONBLE DELHI HIGH COURT IN THE CASE OF CIT VS. RUSSIAN TECHNOLOGY CENTRE (P) LTD. 300 CTR 501 WHICH IN TURN APPROVED THE TWO TRIBUNAL DECISIONS OF DELHI TRIBUNAL REPORTED IN 155 TTJ 316 AND 193 TTJ 565 AMONG OTHER DECISIONS. 5.2. WE HAVE HEARD RIVAL SUBMISSIONS. THE FACTS STATED HEREINABOVE AND THE ARGUMENTS OF THE LD. AR REMAIN UNDISPUTED AND HENCE, THE SAME ARE NOT REITERATED FOR THE SAKE OF BREVITY. WE ARE SATISFIED TH AT THE LD. AO HAD MADE SEVERAL FACTUAL ERRORS IN HIS ASSESSMENT ORDER WHERE INCORRECT ASSUMPTIONS OF FACTS HAVE BEEN RIGHTLY POINTED OUT BY THE LD. AR HEREINABOVE. NONE OF THESE ARGUMENTS WERE CONTROVERTED BY THE LD. DR BEFORE US. WE FIND THAT MONEY RECEIV ED IN THE FORM OF PREFERENCE SHARE CAPITAL HAS COME THROUGH FDI ROUTE WITH THE PROPER APPROVAL OF FIPB AND RBI BY FILING REQUISITE STATUTORY FORMS AND COMPLYING WITH THE REQUISITE CONDITIONS PRESCRIBED THEREON. HENCE, THERE IS NO QUESTION OF DOUBTING THE GENUINENESS OF THE SAID TRANSACTIONS. WE FIND THAT THE ASSESSEE HAS RECEIVED PREFERENCE SHARE CAPITAL FROM AANYA PROPERTIES (I) LTD. WHICH IS HOLDING 31% EQUITY IN THE ASSESSEE COMPANY WHICH MEANS THE PREFERENCE SHARE CAPITAL IS RECEIVED FROM THE EXISTING SHARE HOLDER OF THE ASSESSEE COMPANY. THE ASSESSEE HAS GIVEN VARIOUS DOCUMENTARY EVIDENCES PERTAINING TO THE INVESTOR COMPANY I.E. AANYA PROPERTIES (I) LTD. PROVING THE IDENTITY AND CREDITWORTHINESS THEREON . HENCE THE THREE NECESSARY INGREDIENTS OF ITA NO.6202/MUM/2016 M/S. LUXBRA REALTORS P. LTD. 14 SECTION 68 OF THE ACT HAVE BEEN DULY COMPLIED WITH BY THE ASSESSEE IN THE INSTANT CASE. WE ARE INCLINED TO APPRECIATE THE CONTENTIONS OF THE LD. AR THAT MERELY BECAUSE THE ORIGINAL DOCUMENTS WERE NOT SUBMITTED BEFORE THE LD. AO, THE PHOTO COPY OF THE SAID DOCUMEN TS CANNOT BE SUMMARILY BRUSHED ASIDE AND IGNORED IN ORDER TO DRAW THE ADVERSE INFERENCE AGAINST THE ASSESSEE COMPANY. 5.3. WE ALSO APPRECIATE THE FACT THAT THE KEY MANAGEMENT PERSONNEL OF AANYA PROPERTIES (I) LTD. IS STATIONED AT MAURITIUS AND MERELY BECA USE OF HIS NON - APPEARANCE BEFORE THE LD. AO, NO ADVERSE INFERENCE COULD BE DRAWN AGAINST THE RECEIPT OF PREFERENCE SHARE CAPITAL BY DOUBTING THE VERACITY OF THE SAME, WITHOUT REBUTTING VARIOUS DOCUMENTARY EVIDENCES THAT ARE ALREADY AVAILABLE ON RECORD. SIN CE THIS IS MORE OF A FACTUAL ISSUE, WE DO NOT DEEM IT FIT TO ADJUDICATE THE VARIOUS DECISIONS RELIED UPON BY THE LD. AR BEFORE US. 5.4. IN VIEW OF THESE FACTS, THERE IS NO NEED FOR SETTING ASIDE OF THIS APPEAL TO THE FILE OF THE LD. AO AS PRAYED BY THE LD . DR AS IT WOULD ONLY TANTAMOUNT TO GIVING SECOND INNINGS TO THE LD. AO, WHICH IN OUR CONSIDERED OPINION , WOULD NOT SERVE ANY PURPOSE , AS NO SECOND VIEW IS POSSIBLE IN THE INSTANT CASE AND AS THESE DETAILS WERE ALREADY BEFORE THE LD. AO. IN VIEW OF THE AF ORESAID OBSERVATIONS, IN THE FACTS AND ITA NO.6202/MUM/2016 M/S. LUXBRA REALTORS P. LTD. 15 CIRCUMSTANCES OF THE CASE, WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE LD. CIT(A) WHO HAD APPRECIATED THE ENTIRE FACTS AND DOCUMENTARY EVIDENCES AVAILABLE ON RECORD, GRANTING RELIEF TO THE ASSESSEE. ACCORDINGLY, THE GROUNDS RAISED BY THE REVENUE ARE DISMISSED. 6. IN THE RESULT, APPEAL OF THE REVENUE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 19 / 06 /201 9 SD/ - ( AMARJIT SINGH ) SD/ - (M.BALAGANESH) JUDICIAL M EMBER ACCOUNTANT MEMBER MUMBAI; DATED 19 / 06 /201 9 KARUNA SR. PS COPY OF THE ORDER FORWARDED TO : BY ORDER, ( ASSTT. REGISTRAR) ITAT, MUMBAI 1. THE APPELLANT 2. THE RESPONDENT. 3. THE CIT(A), MUMBAI. 4. CIT 5. DR, ITAT, MUMBAI 6. GUARD FILE. //T RUE COPY//