ACIT, Circle- 26(2), New Delhi V. Virtuous Services Pvt. Ltd., New Delhi

ITA 8080/DEL/2018

• Counselvise Citation: [2022] 106 COUNSELVISE.COM (IT) 9432 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 8 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-09-2022
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: F
• Assessment Year: 2011-2012
• Appeal Filed On: 18-12-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: HARPREET SINGH AZMANI
• Section: 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH ‘F’, NEW DELHI Before Sh. Saktijit Dey, Judicial Member Dr. B. R. R. Kumar, Accountant Member ITA No. 8080/Del/2018 : Asstt. Year : 2011-12 ACIT, Circle-26(2), New Delhi-110002 Vs Virtuous Services Pvt. Ltd., 106, Durga Chambers, 1335, Desh Bandhu Gupta Road, Karol Bagh, New Delhi-110005 (APPELLANT) (RESPONDENT) PAN No. AADCV2438H Assessee by : Sh. Harpreet Singh Azmani, Adv. & Ms. Pratishtha Singh, Adv. Revenue by : Sh. Shankar Gupta, Sr. DR Date of Hearing: 06.07.2022 Date of Pronouncement: 07.09.2022 ORDER Per Dr. B. R. R. Kumar, Accountant Member: The present appeal has been filed by the Revenue against the order of ld. CIT(A)-9, New Delhi, dated 16.10.2018. 2. Following grounds have been raised by the Revenue: “1. On the facts and circumstances of the case the Ld. CIT(A) erred in allowing relief to the assessee on the issue of addition of Rs. 2,13,85,9807- u/s 68 without appreciating the detailed justification given by the AO. 2. On the facts and circumstances of the case the Ld. CIT(A) erred in holding that the identity has been established by the submission of Tax Residency Certificate of M/s Voldemort Investment Holding Company, Mauritius, without appreciating that the above TRC pertains to the period 08.01.2014 to 07.01.2015 (and not for the A.Y. 2010-11). ITA No.8080/Del/2018 Virtuous Services Pvt. Ltd. 2 3. On the facts and circumstances of the case the Ld. CIT(A) erred in holding that creditworthiness is established by the audited financial statements disclosing the investment without appreciating that the assessee never submitted the audited financial statements of M/s Voldemort Investment Holding Company, Mauritius, before the AO and the Ld. CIT(A) failed to confront the AO, the above additional evidence which has apparently been submitted before the Ld. CIT(A) after submission of the Remand Report, in violation of Rule 46A. 4. On the facts and circumstances of the case the Ld.CIT(A) erred in holding that genuineness is established by receipt of money directly into the bank account without appreciating that receipt of money through banking channel is not sacrosanct as held by the Hon'ble Courts in plethora of judgments. 5. On the facts and circumstances of the case the Ld.CIT(A) erred in admitting additional evidences in the form of confirmation and financials of M/s Voldemort Investment Holding Company, Mauritius, without providing the AO opportunity to rebut u/r 46A.” 3. The assessee company is engaged in the business of providing market research, leasing management consultancy and design advisory services in the real estate sector. The assessee has filed return of income on 28.09.2011 declaring an income of Rs.44,76,752/-. 4. In this case, the addition has been made u/s 68 of the Income Tax Act, 1961, of the amount the assessee company received security premium of Rs.2.13 Cr. from M/s Voldemort Investment Holding Company Ltd., Mauritius alleging that the identity, genuineness and creditworthiness has not been proved satisfactorily to the Assessing Officer. The AO held that the assessee has not even filed confirmation from the investor and also proof of creditworthiness of the investor. ITA No.8080/Del/2018 Virtuous Services Pvt. Ltd. 3 5. The ld. CIT(A) deleted the addition after due verification of; a) Copy of Foreign Inward Remittance Certificate (FIRC) issued by Citi Bank b) Intimation by the assessee to RBI as per Foreign Exchange Management Act and Foreign Direct Investment Regulations. Also the intimation by RBI to the assessee allotting Unique Identification Number to the transaction etc. c) Confirmation for receipt of FDI for issuance of shares of VRSPL d) Necessary intimations to Foreign Exchange Department of RBI under the scheme of Foreign Direct Investment in India (FDI). e) Confirmation of the investor f) Audited Financial statements of the investor g) ...And the fact that the assessee is a subsidiary of the investor company. 6. The ld. CIT(A) held that the identity of investor, creditworthiness of investor and the genuineness of the transaction has been established. It was held that the identity of the investor is established by Tax Residency Certificate issued to the investor by Mauritius Revenue Authority. Creditworthiness of the investor is established by the audited financial statements of the investor disclosing the investment in the assessee. Genuineness of the transaction is established by receipt of money directly into the bank account of the assessee evidenced by Foreign Inward Remittance Certificate issued by Citi Bank. Accordingly, he held that the AO was not ITA No.8080/Del/2018 Virtuous Services Pvt. Ltd. 4 justified in making the addition of share premium amounting to Rs.2,13,85,980/- u/s 68 of the Act. 7. We find that the ld. CIT(A) has forwarded the submission of the ld. AR to the Assessing Officer who replied on 22.05.2018 and submitted that the assessee has not put forward the confirmations and proof of creditworthiness. The rebuttal to the remand report has been examined by the ld. CIT(A) vide the submissions dated 17.08.20018, 07.09.2018, 17.09.2018 and 12.10.2018. The deficiency of the documents as alleged by the Assessing Officer have been made good before the ld. CIT(A) and the ld. CIT(A) having been satisfied with the documents has given relief to the assessee. 8. The grounds taken up by the Revenue with regard to Rule 46A, confirmation, financial statements and the impact of TRC have been duly examined by the ld. CIT(A). In the absence of any contrary material, we hereby affirm the decision of the ld. CIT(A). 9. In the result, the appeal of the Revenue is dismissed. Order Pronounced in the Open Court on 07/09/2022. Sd/- Sd/- (Saktijit Dey) (Dr. B. R. R. Kumar) Judicial Member Accountant Member Dated: 07/09/2022 *Subodh Kumar, Sr. PS* Copy forwarded to: 1. Appellant 2. Respondent 3. CIT 4. CIT(Appeals) 5. DR: ITAT ASSISTANT REGISTRAR