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2015 (3) TMI 755 - AT - Income TaxAddition made u/s.68 / 69 / 69A / 69C - CIT(A) deleted the addition accepting additional evidence under Rule 46A(1) - assessee is a non-resident Indian, generally resident of Dubai - Held that - We are unable to understand how Assessing Officer can consider inward remittance of moneys into NRI A/c of a non-resident Indian as income of assessee as unexplained. Assessee in the course of assessment proceedings furnished enough evidences in support of inward remittance of funds including a certificate from M/s.Vitrual International Ltd., about the source of funds being loan. If Assessing Officer has any doubt about the said company in Mauritius, he cannot reject the genuineness of the said company without making necessary enquiries either through the internal mechanism of foreign tax division of CBDT or by any other means. Just because the certificate furnished does not have any seal, the same cannot be rejected outright. However, the matter did not end there. Assessing Officer took pains to verify from the internet and also from the website of the SEBI and came to the conclusion that the said company is one of the group companies of assessee listed as persons constituting group under Monopolies and Restrictive Trade Practices Act, 1969 and further noticed from the red herring prospectus of M/s.Lanco Infratech Limited, wherein this company was shown as single shareholder company of assessee as on 29-07-2006. This means the existence of the company is accepted by the authorities, not only by SEBI and other statutory authorities but even by the Assessing Officer, as can be seen from the enquiries conducted. We are unable to understand how the Revenue could raise ground on existence of the above company in Ground No.7 about the identity of the company when Assessing Officer himself acknowledged the same in the assessment order. Coming to the creditworthiness of the amount, assessee's explanation is that the amounts were transferred from his own bank account in Mauritius to the NRI account in India. Therefore, the immediate source of funds is his own account from Mauritius which is not disputed. If funds are received into Mauritius account, then that becomes source of the source which cannot be examined by Assessing Officer, unless there is any incriminating evidence. Except presumptions and allegations, virtually there is no evidence against assessee that these funds received into his bank account in Mauritius are his own incomes from India or 'round trip' funds of assessee as alleged. Therefore, all the grounds raised on this issue, particularly Ground No.10 & 11 does not require any consideration on the facts of the case. Coming to the issue of creditworthiness of the above said company, there is no dispute with reference to the funds. It has its own funds and Ld.CIT(A) took pains to examine and hold that it is creditworthy. Nothing was brought on record to counter the findings of Ld.CIT(A), except contending that the order of the CIT(A) is not correct. Therefore, the ground regarding creditworthiness of the company particularly from Ground No.6 to 10 also does not require any consideration. It is not assessee who furnished the additional evidence. Therefore, it cannot be strictly considered as additional evidence under Rule 46A. CIT has co-terminus powers as that of Assessing Officer as far as appeals before him are concerned. In fact, he even had enhancement powers, if Assessing Officer has missed out bringing into tax any amounts. He also has powers of enquiry and investigation. Therefore, the CIT(A) if exercises his powers as an Assessing Officer, there is no need to give an opportunity to the Assessing Officer who passed the assessment order under Rule 46A. The action of the CIT(A) is completely justified Thus merely on suspicions or doubts, conjectures or surmises, no inference can be drawn against the assessee. The assessee, who is a non resident brought money into India through banking channel and the manner in which this money was utilized in India is described in the Annexure. It has been observed that because of the mode of banking channel, admittedly, used for the remittance in this case, the onus on the assessee under section 69 stood discharged, and therefore it was not taxable in India under section 5(2)(b). In view of these facts of the case, we are of the opinion that various case laws relied by the Revenue does not apply and they are clearly distinguishable. In view of this, we have no hesitation in upholding the order of the CIT(A) and rejecting the Revenue's grounds. - Decided in favour of assessee.
Issues Involved:
1. Addition of Rs. 78,04,58,374/- under Sections 68, 69, 69A, and 69C of the Income Tax Act. 2. Admissibility and consideration of additional evidence under Rule 46A. 3. Identity, creditworthiness, and genuineness of the creditor company, M/s. Vitrual International Ltd., Mauritius. 4. Application of Section 5(2) of the Income Tax Act and related Board Circular. 5. Jurisdiction and applicability of Sections 68, 69, 69A, and 69C to a non-resident Indian. Detailed Analysis: 1. Addition of Rs. 78,04,58,374/- under Sections 68, 69, 69A, and 69C of the Income Tax Act: The Assessing Officer (AO) added Rs. 78,04,58,374/- to the assessee's income under Sections 68, 69, 69A, and 69C, citing insufficient evidence regarding the source of the funds credited in the NRI Ledger Account. The AO questioned the authenticity of the loan certificate from M/s. Vitrual International Ltd., Mauritius, and doubted the existence of the company. However, the Commissioner of Income Tax (Appeals) [CIT(A)] deleted the addition, concluding that the identity, creditworthiness, and genuineness of the transaction were satisfactorily explained by the assessee through various documents, including the certificate of incorporation, financial statements, and loan confirmation from M/s. Vitrual International Ltd., Mauritius. 2. Admissibility and Consideration of Additional Evidence under Rule 46A: The Revenue argued that the CIT(A) erred in admitting additional evidence without satisfying the conditions prescribed in Rule 46A(1) and without providing the AO an opportunity to examine such evidence. The CIT(A) justified the admission of additional evidence, stating that it was necessary to verify the creditworthiness and nature of business activities of M/s. Vitrual International Ltd., Mauritius. The Tribunal upheld the CIT(A)'s decision, noting that the CIT(A) has co-terminus powers with the AO and can requisition evidence for proper disposal of the appeal. 3. Identity, Creditworthiness, and Genuineness of the Creditor Company, M/s. Vitrual International Ltd., Mauritius: The CIT(A) examined the identity and creditworthiness of M/s. Vitrual International Ltd., Mauritius, through various documents, including the certificate of incorporation, annual report, loan confirmation, and audited financial statements. The CIT(A) concluded that the identity and creditworthiness of the creditor company were proved, and the transaction was genuine. The Tribunal agreed with the CIT(A), noting that the AO had acknowledged the existence of the company and that the funds were transferred from the assessee's own bank account in Mauritius. 4. Application of Section 5(2) of the Income Tax Act and Related Board Circular: The CIT(A) referred to Section 5(2) and Board Circular No.5 dated 20-2-1969, which clarify that remittances from abroad into India through normal banking channels are not liable to Indian income tax unless it is proved that they have accrued or arisen in India. The CIT(A) concluded that the amount of Rs. 78,04,58,374/- was remitted from the assessee's own bank account in Mauritius and was not taxable under Section 5(2). The Tribunal upheld this view, noting that the remittance was through banking channels with necessary statutory approvals and that the provisions of Sections 68, 69, 69A, and 69C were not applicable. 5. Jurisdiction and Applicability of Sections 68, 69, 69A, and 69C to a Non-Resident Indian: The Tribunal emphasized that the AO's jurisdiction is limited to taxing incomes arising in India for a non-resident. Since the funds were transferred from the assessee's own bank account in Mauritius, they could not be considered unexplained income in India. The Tribunal also noted that the provisions of Sections 68, 69, 69A, and 69C were not applicable as the funds were the assessee's own money transferred from abroad. Conclusion: The Tribunal dismissed the Revenue's appeal, upholding the CIT(A)'s decision to delete the addition of Rs. 78,04,58,374/-. The Tribunal concluded that the assessee had satisfactorily explained the source of the funds, and the remittance from the assessee's own bank account in Mauritius could not be taxed in India under Sections 68, 69, 69A, and 69C. The Tribunal also found no merit in the Revenue's grounds regarding the admissibility of additional evidence and the application of Board Circular No.5.
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