ACIT Vs Indure Private Limited (ITAT Delhi)
Unsigned Mauritius Financials Sink Section 68 Defence – ITAT Restores ₹6.30 Crore Share Premium Addition
The Delhi ITAT restored an addition of ₹6.30 crore made u/s 68 in respect of share capital and premium received by The Indure Private Limited from Mauritius-based investor Energen Infra (Mauritius) Ltd., holding that the assessee failed to discharge the primary onus of proving identity, creditworthiness and genuineness of the transaction. The AO had observed that the financial statements of the Mauritius entity were merely plain unsigned papers without notes, annexures, auditor seal, company seal or even the name of the signatory director. Despite being specifically asked to furnish proper authenticated financials, the assessee failed to provide complete documents during assessment proceedings.
Rejecting the assessee’s defence that the inward remittance had already been approved by RBI, the Tribunal held that FEMA/RBI compliance and section 68 requirements operate in completely different fields. The ITAT observed that RBI approval by itself does not establish compliance with section 68 of the Income-tax Act. Stressing that financial statements without signatures, seals or authentication cannot inspire confidence as valid evidence, the Tribunal remarked that affixing names, stamps and signatures on financial statements is a universally accepted accounting practice. Since the assessee failed to furnish credible supporting material to establish the investor’s financial capacity and genuineness of the transaction, the ITAT reversed the CIT(A)’s relief and upheld the AO’s addition u/s 68.
FULL TEXT OF THE ORDER OF ITAT DELHI
