M/S. FUTURON SYSTEMS PRIVATE LIMITED C/O SRI. VINOD SUNDER RAMAN, LIQUIDATOR,BANGALURU vs. THE INCOME TAX OFFICER, WARD-3(1)(1), BANGALORE

The assessee has filed this appeal challenging the order dated 14.10.2019 passed by ld. CIT(A)-3, Bengaluru and it relates to the assessment year 2016-17.

Ground No.1 urged by the assessee is general in nature. The Ld. A.R. did not press ground No.3 relating to disallowance of pre- operative expenses. Accordingly the said ground is dismissed as not pressed. Ground No.4 relating to charging of interest is consequential in nature. Hence, only surviving ground is Ground Futuron systems Pvt. Ltd., Bangalore No.2, which relates to the addition of Rs.4.99 crores made u/s 68 of the Income-tax Act,1961 ['the Act' for short].

The facts relating to the addition are stated in brief. The assessee company is engaged in the business of building software and mobile applications and also providing solution/services to web technologies, internet, etc. It filed its return of income for the year under consideration declaring a loss of Rs.8,23,861/-. The A.O. noticed that the assessee has issued 30,769 CCP shares to M/s. Accel India IV (Mauritius) Ltd. (hereinafter referred to as “Investor”), having face value of Rs.10/- at a premium of Rs.1,615.01 per share. Accordingly, the assessee had collected a sum of Rs.4,99,99,932/-. According to the A.O., the assessee did not furnish information relating to the above said subscriber in order to prove the genuineness of the transaction and creditworthiness of the investor. The A.O. also issued notice to the above said investor u/s 133(6) of the Act and he did not receive any reply from it. Accordingly, the A.O. assessed the above said sum of Rs.4,99,99,932/- as unexplained cash credit u/s 68 of the Act in the hands of the assessee. The Ld. CIT(A) also confirmed the same and hence the assessee has filed this appeal before us.

The Ld. A.R. submitted that the assessee has furnished host of details before the A.O. as well as before Ld. CIT(A) to prove the cash credit received in the form of share capital, but both the tax authorities have not examined them at all. The Ld. A.R. submitted that the assessee has discharged the primary onus placed upon it u/s 68 of the Act by furnishing the above said information and hence the A.O. was not justified in making addition u/s 68 of the Act. The Ld. A.R. submitted that M/s. Accel India IV (Mauritius)

The Ld. D.R. on the contrary, submitted that the A.O. has not made any reference to the documents claimed to have been filed by the assessee.

In the rejoinder, the Ld. A.R. submitted that the assessee has furnished various documents and they are all placed in the paper book.

We heard the parties and perused the record. The Ld A.R has furnished a list giving details of documents that were furnished before the A.O. and also Ld. CIT(A). The said document is extracted

We notice that the tax authorities do not refer to any of the above said documents in their respective orders. According to the Ld. A.R., the above said documents would prove the genuineness of the transaction and identity and creditworthiness of the investor, which are required to be shown in order to discharge the initial onus placed upon the assessee. Since the above said documents have not been examined by the tax authorities which are vital to the issue under consideration, we are of the view that, in the interest of natural justice, this issue requires fresh examination at the end of the A.O. by duly considering the above said documents and also taking into account the decision rendered by Mumbai Bench of Tribunal in the case of Vodafone India Ltd. (supra).

Accordingly, we set aside the order passed by Ld. CIT(A) on this issue and restore the same to the file of the A.O. for examining it afresh. After affording adequate opportunity of being heard to the Futuron systems Pvt. Ltd., Bangalore assessee, the A.O. may take appropriate decision in accordance with law.

In the result, the appeal filed by the assessee is partly allowed.