ACIT, CHENNAI vs. M/S. VOX SPECTRUM PVT LTD., CHENNAI

आदेश / O R D E R

PER S.S.GODARA, JUDICIAL MEMBER

proceedings under section 143(3) of the Income-tax Act, 1961 (in short the ‘Act’).

The Revenue’s sole substantive ground challenges the 2.

CIT(A)’s order deleting section 68 addition towards introduction of share application money amounting to ` 2.90 crores; added in the course of a regular assessment dated 31.12.2010.

A perusal of the case file reveals that this appeal is time 3. barred by 31 days in filing. The Asst. Commissioner of Income-tax, Company Circle III(3), Chennai, has filed an affidavit stating reasons thereof. The assessee does not contest the solemn affirmations averred therein. Therefore, we condone this delay of 31 days in filing the appeal.

The assessee-company assembles, markets and distributes 4. voice loggers. It had filed its return on 17.8.2009 admitting loss of ` 2,33,65,961/-. The same was ‘summarily’ processed. The Assessing Officer took up ‘scrutiny’. He inter alia noticed the assessee to have introduced a sum of ` 2.90 crores as share application money received from foreign remittance channel. The relevant FIRC documents revealed that there were total 13 transactions from 23.4.2007 to 18.3.2008. Six of them stated particulars of the remitter entity as Vox

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Spectrum Ltd. Sharjah with its purpose as ‘advance towards equity’.

Others mentioned the same as ‘other inward remittance’. The Assessing Officer quoted assessment order of the preceding assessment year adding similar credits for want of genuineness. He followed earlier reasoning for treating the impugned share application money of ` 2.90 crores as bogus credits u/s 68 resulting in the addition in question.

The CIT(A) has accepted the assessee’s grounds challenging 5. the impugned share application money addition as under:

“6. I have gone through the elaborate submissions of the assessee, the assessment order and other materials available on record. Apart from the above submission, the assessee also filed letter dated 1st October 2012, giving copies of Reassessment order dated 11.05.2012 and also FCGRP documents submitted to the RBI through the ICICI Bank, Bangalore along with certain other enclosures. 6.1 The assessee was in appeal before the CIT(A)III, Chennai for the assessment year 2007-08. The addition was partly deleted and partly sustained. The Department was in appeal before the ITA T for the same assessment year and the IT AT remitted the entire matter back to the Assessing Officer for reconsideration. The assessing officer after considering all the aspects of the case passed order on 11.05.2012 for the assessment year 2007-08.

6.2 A perusal of the assessment order for the assessment year 2008- 09 would indicate the addition of Rs.2,90,00,000/- has been added with the following remarks “…..... on the principles which was discussed in details the assessment proceedings for the assessment year 2007-08. Since the facts and circumstances are similar, accordingly, the above credits. of Rs.2,90,00,000/- is treated as bogus credit for the reason being no genuineness in such credits and the same is added back to the income of the assessee u/s.68 of the I.T. Act."

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6.3 However during the .course of appeal, the assessee has produced copy of the revised assessment order passed by the ACIT, company Circle III(4), Chennai dated 11.05.2012 allowing the entire addition of Rs.23,97,32,760/-, the relevant portion of which is as under: "On verification of the above information, the investment falls under the automatic route of Reserve Bank of India, As this company is in the line of manufacturing i.e., assembling, marketing and distribution of voice loggers can accept 100% investments from resident outside India i.e. Foreign Institutional Investors can invest 100% in the manufacturing concern.

Further the assessee had filed copies of Form No.2 in accordance with Section 75(1) of the Companies Act 1956 and copies of FCGPR with the Reserve Bank of India filed by the ICICI Bank before the Reserve Bank of India as authorized dealer of the' assessee company. The form FCGPR intends to intimate allotment of shares by the investors by the assessee company and filed the evidences of issuing shares to the respective investors. On examination of the documents furnished by the. assessee company, the assessment is completed in concurrence with the Joint Commissioner of Incometax, Company Range III as under ... " From the above assessment order, it is evident that the investment brought in by the assessee does not require any FIPB clearance as the same is under automatic route. Further tile assessee has also filed copies of FCGPR filed by IGICI bank, Bangalore to RBI.

6.4 Similarly for the assessment year 2008-09, the assessee brought in a sum of RS.2,90,00,000/- by 13 remittances from 23.04.2007 to 17.03.2008. The remittances were from Vox Spectrum, Sharjah, remitting bank was Emirates International Bank, Dubai and was received by the ICICI Bank, Chennai. The assessee had obtained approval for issue of equity/preference shares to various investors from Reserve Bank of India for Rs. 2,90,00,000/- on October, 19,2011, the relevant portion of which is as under: "We advise that you have our. approval for issue of shares against the inward remittance aggregating to Rs.2,90,00,000/- received during the period 27.08.2007 to 31.12.2008 to the non resident investor within one month from the date of this letter."

6.5 After obtaining the permission of the RBI on 19.10.2011, the appellant company has issued equity shares for Rs.2,90,00,000/- on 25.10.2011. The reasons for delay in obtaining RBI permission has been explained by the assessee as being the transfer of their Registered office from Chennai to Bangalore.

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6.6 Considering the fact that the reasons cited for addition in the assessment order for the assessment year 2007-08 has been annulled in the subsequent assessment order dated 11.05.2012 and the identity of the remitter has been proved and necessary permission has been obtained by the assessee from the RBI for issuance of shares to foreign investors and also the fact that the FIPB clearance is not required for investment in this sector as the same is under automatic route, there is no reason for treating the amount of capital brought in to the extent of R.2,90,00,000/- as unexplained income of the assessee. Therefore, this ground of appeal is allowed.”

This leaves the Revenue aggrieved.

We have heard both parties and gone through the case file. 6.

Records stand perused. The only dispute between the parties pertains to the impugned addition of share application money u/s 68 amounting to ` 2.90 crores. The parties unanimously admit before us that facts of this issue are identical to those involved in the preceding assessment year. It has come on record that the CIT(A) had deleted similar addition therein as well. The Revenue’s appeal in this 'tribunal' was allowed for statistical purposes. The Assessing Officer in his consequential order has deleted the entire addition of ` 23,97,32,716/- after being satisfied about genuineness of the foreign remittances in question with all necessary details. The CIT(A) observes in the lower appellate order that the RBI has already accorded approval to the assessee’s remittances in the impugned assessment year. It has also been held that all these remittances are as per the necessary regulations. However, no discussion in detail is forthcoming in the I.T.A.No.198/13 :- 6 -: year under challenge about the discrepancies specifically pinpointed by the assessing authority. These circumstances lead us to follow the earlier remand order of the co-ordinate bench and send back this issue to the assessing authority for fresh decision as per law. We order accordingly. Needless to say, the Assessing Officer may be guided by his consequential order dated 11.5.2012 for assessment year 2007-08 subject to similarity of the circumstances involved. The Revenue’s grounds are restored to the file of the Assessing Officer.

The Revenue’s appeal is allowed for statistical purposes. 7.