ACIT, MUMBAI vs. FLIPSPACES TECHNOLOGY LABS PVT. LTD., MUMBAI
Income Tax Appellate Tribunal, “F” BENCH, MUMBAI
Before: SMT. BEENA PILLAI () & SMT. RENU JAUHRI ()
Per: Smt. Beena Pillai, J.M.:
The present appeal filed by the revenue is against order dated 28/01/2025 passed by NFAC, Delhi for assessment year
2022-23 on following grounds of appeal :
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ITA No.2055/Mum/2025; A.Y. 2022-23
Flipspaces Technology Labs Pvt. Ltd.
“1. Whether the Ld.CIT(A) was justified in disregarding the AO's findings and remand report, which highlighted discrepancies in the FOB value of export import data vis-à-vis the sales reported in the Income Tax Return (ITR), thereby deleting the addition of Rs.
44,67,93,691/ made under Section 69C of the Act?
2. Whether the Ld.CIT(A) erred in shifting the burden of proof from the assessee to the department regarding unexplained cash credits under Section 68 and unexplained expenditure under Section 690
when the onus to prove the genuineness of transactions lay on the assessee?
3. Whether the Ld.CIT(A) was justified in accepting additional evidence from the assessee without adequate verification and cross-examination, particularly when the AO's remand report suggested unresolved discrepancies?
4. Whether the Ld.CIT(A) erred in law by deleting the entire addition of Rs. 44,67,93.691/ under Section 69C without directing the AO to conduct further verification, despite clear contradictions between the sales figures reported in the ITR and the ICEGATE portal data?
5. Whether the Ld. CIT(A) overlooked the fact that the assessee failed to provide a valid reconciliation of sales figures and export-import data during the assessment proceedings, thereby violating the principles of natural justice?
7. Whether the Ld.CIT(A) failed to appreciate that unexplained discrepancies in turnover and export figures warranted an adverse inference under the provisions of Section 69C of the Income Tax
Act, 1961?
8. Whether the Ld.CIT(A) erred in ignoring judicial precedents that place the burden of proof on the assessee to justify the source and nature of unexplained income and expenditure?
9. Whether the Ld.CIT(A)'s order is perverse in law, as it failed to consider material contradictions pointed out by the AO in the remand report and granted relief solely on the assessee's submissions without independent verification?
10. The appellant craves leave to add, alter, amend or delete all or any of the aforesaid grounds of appeal."”
Brief facts of the case are as under:
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Flipspaces Technology Labs Pvt. Ltd.
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
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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.
Sl.
No.
Name
Total Amount
1. 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.
Aggrieved by the order of the Ld.AO assessee preferred appeal before the Ld.CIT(A).
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Flipspaces Technology Labs Pvt. Ltd.
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.”
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Flipspaces Technology Labs Pvt. Ltd.
In view of the above and relied on the remand report submitted by the AO, the addition of Rs. 44,67,93,691/- is hereby directed to be deleted.
Ground No. 5 of this appeal is allowed.”
Aggrieved by the order of the Ld.CIT(A) the revenue is in appeal before this Tribunal.
4. 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.
5. 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.”
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Flipspaces Technology Labs Pvt. Ltd.
2 It is further categorically noted that, the Ld.AO in the remand report accepts that the total turnover of the assessee is Rs.66,31,92,380/- which include turn over from exports as shown in the ITR for the year under consideration. The said figure is reconciled with that the shipping bills and ICE Gate portal. The Ld.AR before this Tribunal furnished snapshot of the ICE Gate portal that reveals the export turn over at Rs. 5.83crores. 5.3 It is noted that, the Ld.AO placed reliance on FOB value of export import data received from 3rd parties being 110.59 crores which has not been placed on record. There is nothing on record with the revenue to substantiate the said amount in the hands of the assessee. Be that as it may the documents furnished by the assessee supports its contention. We therefore do not find any infirmity in the view taken by the Ld.CIT(A) and the same is upheld. Accordingly the Ground no. 1, 4, 7 raised by the revenue stands dismissed. 6. 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.
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Flipspaces Technology Labs Pvt. Ltd.
Accordingly grounds no.2 raised by the revenue stands dismissed and Ground no. 8 - 10 are general in nature and do not require any adjudication.
Accordingly grounds raised by the revenue stands dismissed.
In the result the appeal filed by the revenue stands dismissed.
Order pronounced in the open court on 23/05/2025 (RENU JAUHRI)
Judicial Member
Mumbai:
Dated: 23/05/2025
Poonam Mirashi,
Stenographer
Copy of the order forwarded to:
(1)The Appellant
(2) The Respondent
(3) The CIT
(4) The CIT (Appeals)
(5) The DR, I.T.A.T.By order
(Asstt.