· Assessee company is a subsidiary of Russian Technology Centre Holding Ltd. During the year under consideration, assessee received various amounts towards share capital and unsecured loan from M/s Russian Technology Centre Holding Ltd. The said company was based in the Republic of Seychelles.
· All the details called for by the AO in this regard were furnished during the course of assessment. The documents submitted included the following:
- Names and addresses of the parties
- Approval of FIPB authorizing the company to raise share capital upto USD 3 lakhs
- Copy of certificate of incorporation of share applicants
- Copy of bank statements and financial statements
- Copy of Form No. 2 filed before ROC
· The AO, however, made the addition u/s 68, treating the transactions as unexplained.
· The CIT(A) also upheld the addition made by the AO by disregarding the evidences filed by the assessee.
· The Tribunal, however, allowed the appeal of the assessee after considering the facts that assessee had furnished all relevant documents.
· The Court, in view of the facts of the case, observed that the assessee had furnished all relevant data before the AO and the CIT(A), which was not enquired into by the AO. The Court further observed that assessee had submitted all the documents to prove that the monies had been received through banking channels from its principal and other related companies.
· The Court was of the view that the assessee could not be expected to prove the negative that the monies received by it were suspicious or not genuine infusion of capital. Thus, the Court by relying upon the settled dicta in CIT v. Divine Leasing & Finance Ltd. concluded that the assessee had discharged its burden of proof, and if the AO was not convinced about the genuineness of the said documents, he should have enquired into their veracity from the banks. Having not done so, the AO was not justified in disregarding assessee’s contentions, and thus, the order of the Tribunal was affirmed.
For further reading, refer the attachment.
Further Reading