ACIT, MUMBAI vs. FLIPSPACES TECHNOLOGY LABS PVT. LTD., MUMBAI

The assessee has its registered office at Mumbai and other places such as in the state of Haryana, Uttar Pradesh, Gujarat, Karnataka, and Telangana. It is said to be in the business of design and building commercial places segment. It is stated that, the assessee has a healthy Array of MNC’s and large organization and focuses on SME/MSME SEBI. It is submitted that, the assessee focuses on building up work spaces with diverse spectrum of customer persons, including, but not limited to companies/managed working spaces, start-ups. 2.1 The assessee filed its return of income for year under consideration on 28/11/2022 declaring loss of Rs.1,49,67,946/-. The case was selected for scrutiny to verify the following issues. “i. Sales of product/goods shown in the ITR in less than the FOB value of exports shown in the Export Import Data. ii. Large share premium received during the year (verify applicability of Sec 56(2) (viib) or any other relevant section) iii. Introduction/Addition of high value intangible asset during the year and claim of depreciation at full rate. iv. High liabilities as compared to low income/receipts. v. Claim of Large Value Refund.” 2.2 Accordingly, notice was issued to the assessee u/s.143(2) and 142(1) on various dates as to show cause notices were issued to the assessee. In response to statutory notices, the assessee furnished details as called for. 2.3 The Ld.AO noted that, the assessee received share premium from about 17 persons and assessee had submitted valuation report on the equity share from a merchant banker registered with SEBI wherein the face value per share of assessee was shown at 21,22.519 per share. The Ld.AO thus issued notice A.Y. 2022-23 Flipspaces Technology Labs Pvt. Ltd. u/s.133(6) to all the parties from whom the share premium was received. In response to the notice issued u/s.133(6), except for following 3 parties all other parties responded.

Gursimranbir Singh 2,55,12,699/- 2. Thomas Lawrence Azavedo 1,04,88,188/- 3. Amit Kumar 42,29,783/- TOTAL 4,02,30,670/- 2.4 The Ld.AO thus called upon assessee to show cause as to why, sum of Rs. 4,02,30,670/- should not be treated as income from other sources, and should why should not it added back to the total income of assessee. The assessee was also called upon to explain the difference in the turnover as shown in the ITR at Rs.66,31,92,380/- as against the FOB value of export import data received by the Ld.AO wherein turnover was shown as Rs. 110,99,86,071/-. The Ld.AO thus proposed to add the difference of Rs.44,67,93,691/- in respect of the sale of products/goods being not disclosed in the ITR. 2.5 The assessee did not submit any reply to the show caused notices and the Ld.AO thus drew conclusion that sum of Rs.4,02,30,670/- being the share premium received form 3 parties to be non genuine. As Rs.44,67,93,691/- was not substantiate, the Ld.AO treated the same as unexplained cash credit u/s.68 of the Act. The Ld.AO also treated the said amount as unexplained expenditure u/s.69C of the Act.

Before the Ld.CIT(A), the assessee furnished additional evidences which was sent to the Ld.AO and remand report was called by the Ld.CIT(A). The Ld.AO in the remand report accepted the documents of 3 parties from whom the share premium amount to Rs.4,02,30,670/- was received. The Ld.CIT(A) thus deleted the said addition in the hands of the assessee. 3.1 In respect of the difference in the turn over, the Ld.CIT(A) observed and held as under : “7.3 I have gone through the assessment order and the submissions of the appellant. AO’s comments submitted in the remand report on in regard to addition of Rs. 44,67,93,691/- is also been perused. During the course of assessment proceedings, the AO observed that there is a difference of rs. 44,67,93,691/- in respect of sales of product / goods shown in ITR and FOB value of export Import data. Therefore, a show cause letter was issued to the appellant. The appellant ought to have reconciled the figures and requires to be submitted before the AO. However, the appellant had failed to submit the same and hence, the AO made the addition under sec. 69C of the I T Act. During the present proceedings, it is submitted there is clearly errors in the data provided by the ICE GATE to the I T portal. As per the ICE GATE the total FOB value as Rs. 2,39,35,169/- and not Rs. 110,99,86,071. One of the reason for selection of the case into scrutiny is to verify the ‘sales of product /goods shown in the ITR in less than the FOB value of exports shown in the export import data’. In the remand report, it is submitted by the AO that “ AO’s comments on in regard to addition of Rs. 44,67,93,691/- 8. With regard to addition of Rs. 44,67,93,691/- the assessee filed its reply which contains Snap Shot of purchase invoices taken from ICEGATE (Indian customs EDI Gateway) website :- https://enquiry. icegate.gov.in and it was found that the assesee’s claim for FOB value is of Rs. 5,83,30,055/- out of which Rs. 2,52,02,893/- is physical export value and Rs. 3,31,27,162/- is man power export value. Both were considered and verified with the snap shot of purchase invoices taken from ICEGATE (Indian Customs EDI Gatewary) website :- https://enquiry. icegate.gov.in.”

The only issue contested by the revenue is in respect of the difference in the turn over added by the Ld.AO based on some data received from 3rd parties.

We have considered the submissions of both sides, based on the remand report 23/11/2024 furnished by the Ld.AO placed at page 201 to 204 of the paper book. 5.1 It is noted that, the assessee furnished following documents as additional evidences which was remand to the Ld.AO for necessary verification “- Details of exports turnover from the portal of Icegate. - Reconciliations between export turnover per books and ICEGATE. - Reconciliation of turnover with GST Returns filed. - Screenshots of shipping bills from ICEGATE portal. - GST returns including GSTR-9 and GSTR-9C. - FIRC certificates for all foreign inward remittances. - Audited financials and affidavit from the Director confirming correct turnover as Rs. 5,82,90,166 (i.e. Goods: Rs. 2,51,63,004/- and Services Rs. 3,31,27,162/-). - List of sales parties. - Copy of export invoices. - Copy of shipping bills. - Relevant extracts of bank statements.”

Ground no. 2 raised by the revenue is against the addition u/s.68 being deleted in respect of cash credits. In our view the assessee has substantiated its receipt before the Ld.AO and the assessing officer in the remand report categorically observed that identity of the credit worthiness of all 3 parties was found to be genuine, based on the additional evidences filed by the assessee. We therefore do not find any reason to interfere with the view taken by the Ld.CIT(A) aspect and the same is upheld.