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TMI Blog2020 (4) TMI 95X X X X Extracts X X X X X X X X Extracts X X X X ..... ed in India which could have been transferred from abroad in his Indian account through these concerns. The sole reliance upon the FIRC which is only a certificate of remittance from abroad in absence of the overwhelming surrounding circumstances by the learned CIT appeals not at all sustainable. Order of learned CIT(A) is to set aside the order of the assessing officer is to be restored. Accordingly we set aside order of learned CIT(appeals) and restore that on the assessing officer on the issue of credits in the bank account. As regards the investment in shares out of the said bank account the same cannot be added again as unexplained investment. It is settled law that assessee cannot be subject to double jeopardy. Hence qua the unexplained investment in shares the order of CIT(A) is upheld. - Revenues appeal stands partly allowed. X X X X Extracts X X X X X X X X Extracts X X X X ..... icer opined that the money received by Mr. Rangachari through his fully owned companies, is taxable in India. Further during the course of search action it was also found that during F.Y. 2007-08, assessee made investment worth of ₹ 2, 57,970/ - in the following concerns. Company Name Date of payment Amt. Paid Total (Rs.) Valuable Technologies Ltd. 29.02.2008 1,21,560 (2,770) 1,64,870 Arun Rangachari 20.03.2008 1,18,790 V2 Media Pvt. Ltd. (Merged with VTL) 29.02.2008 46,080 Impect Media 29.02.2008 56,240 56,240 Spadeworx 27.03.2008 25,200 25,200 Dusane 08.03.2008 11,660 11,660 Total 2,57,970 4. Thus Assessing Officer observed that on the basis of large amount of payment made to the entities, which is owned by assessee on account of services rendered in India and the proceed from the same have been used to make the investments, which suggested that the assessee is the beneficiary owner of money. The assessee has not filed the return of income for A. Y. 2008-09 in India showing the proceeds from these operations nor the source of his investment. Hence in view of the same there was reason to believe that income to the tune of ₹ 2,57,970/- has e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al Ltd. had received ₹ 465 crores, equal to USD 93". These two entities are owned 100 percent by Shn Rangachari, by his own admission in his statement recorded on 13.04.2013 Services have been rendered by Mr. Rangachari in India and invoices have been raised to both these entities, as mentioned by him in his statement, in lieu of which payments have been made by GFH, as mentioned in email. Therefore, the money received by Mr. Rangachari through his fully owned companies, is taxable in India in his hands. During the course of assessment proceedings, it is submitted that Thurles International Limited was not incorporated in F Y. 2007-08 relevant to A Y 2008--09 for which the assessee has furnished copy of certificate of incorporation It is further submitted that during the year under consideration Gulf Finance House had not given any sum to DAR Capital Limited wherein assessee has 100% shareholding. The assessee's representative has not furnished any confirmation from GFH as stated in its letter received in this office on 1 1/2/2016 for its defense. During the course of assessment proceedings, assessee's representative has been requested to give the source of fund cre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion that FIRC certificate is sufficient and section 68 in such circumstances will not be applicable. He referred to section 68 and concluded as under :- "From the plain reading of section it is clear that the appellant's case nowhere comes under the provisions of section 68. The amount so transferred is through banking channel and the above money is very much explained. The appellant has submitted that Board circular No. 5 dated 20.02.1969 which is relevant. The Board has very categorically said that "it is only in case where money is claimed to have been brought from outside otherwise than through banking channels and there is no evidence regarding the transfer of the money that the department has to make enquiries about the source thereof. The appellant has cited case laws wherein the tribunal has very categorically stated that AO cannot ask the source of the money unless the officer has with him incriminating documents (DCIT Vs Shri Madhusudan Rao Lagadapati (Hyderabad Tribunal ITA No. 1482/2014). In DC1T vs Finlay Corporation Ltd., (86 ITD 626) Delhi. In this case it was very strongly decided that sec. 68 & sec. 69 have limited application in the case of non-resident. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t in shares in Indian entities, the source of which is not only from his personal account but also from DAR Capital. That from the email found during the course of search action, it was also confirmed that the Shri Arun Rangachari's 100% owned entities in Mauritius i.e. Dar Capital Ltd. and Thurles International Ltd. had received ₹ 465 crores equal to USD 93 on account of service rendered in India and the proceeds from the same have been used to make investments in India. 13. That during the year ₹ 1.568 crores credited in assessee's NRE account Chennai Branch from HSBC Bank Middle East Ltd. Dubai. Narration in the said bank account read as under :- Foreign remittance credited in Assessee's NRE A/c. Immediate source for the remittance from HSBC Bank Middle East Ltd, Dubai UAE Amount (In Rs.) Date Particulars Amount (In AED) Paper Book Page No. 23,41,170.21 13.11.2007 Inv. No. GFH/01/2007 1,284,150.00 10 1,59,331.50 1,31,83,962.33 16.01.2008 DAR INVESTMENTS LTD 1,284,150.00 12 1,56,84,464.04 14. Referring to the above, learned Departmental Representative pleaded that the amount has been received from GFH and Dar Investment Ltd., which is a hundre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... red percent owned by the assessee. In these circumstances the money found credited in assessee's NRE account was enquired by the assessing officer. The narration in the NRE account in particulars referred to GFH and DAR Investment Ltd. In these circumstances upon enquiry the assessee informed the assessing officer that his concern Thurles was not incorporated in that assessment year and assessee was required to submit the necessary certificate from GFH that the amount did not relate to any services rendered by assessee in India. The assessee did not give any such certificate. The assessee only relied upon the F IRC (foreign inward remittance certificate). In absence of the assessee cogently showing the source of fund in his bank account to be not originating from the entities who had received sums from GFH Bahrain for rendering services in India the assessing officer proceeded to add the said sum as assessee's undisclosed income. 16. Upon assessee's appeal learned CIT(appeals) totally ignored the facts of search and the incriminating material found. He only referred to the FIRC and concluded that assessee need not show the source of its income in its NRE account if it has been rec ..... X X X X Extracts X X X X X X X X Extracts X X X X
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