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II. Direct Taxes Case Law:
1. Shree Krishana Kripa Feeds Vs. CIT, I.T.A. No. 126-2018 (O&M), Date of Order: 01.11.2018, High Court of Punjab & Haryana
Issue:
Whether addition on account of undisclosed income is sustainable
where creditworthiness of parties and genuineness of transaction was not
established by assessee.
Held: Yes
Brief facts:
The assessee filed its return of income on 20.9.2012 for the
assessment year 2012-13 declaring income at Rs. 7,98,820/-. During the
assessing proceedings, the assessee was asked to explain certain
unsecured loans of Rs. 6,20,000/- (wrongly written as Rs. 7,20,000/-)
received from three persons. The Assessing Officer treated the said loan
as undisclosed income of the assessee and made the addition of Rs.
6,20,000/-.The assessee filed an appeal before the Commissioner of
Income Tax (Appeals). The CIT(A) upheld the assessment framed by the
Assessing Officer and dismissed the appeal.The onus of proving the
creditworthiness of the parties and the genuineness of the transaction
was on the assessee. The AO observed that cash deposit was made in
accounts of the providers of unsecured loan to the assessee, just before
the loan was received by the assessee through the mode of cheque. Such
an action appears to be suspicious and non-genuine.
Held:
The genuineness and credit worthiness of these unsecured loans have
not been established by the assessee and the initial onus had therefore
not been discharged by the assessee. On the other hand the assessee has
only emphasized that Income Tax Return, PAN and other details have been
filed by the assessee before the AO and therefore the credit worthiness
of the parties has been established. However, the AR has not provided
the details of returned income of the parties and the explanation for
deposit of cash by one person immediately before cheques were issued to
the appellant. Establishing the credit worthiness and genuine would
imply that the parties would be having sufficient surplus savings and
funds backed by capital assets to provide loan to the assessee. Merely
by providing the Income Tax Return and PAN number is not enough to
establish the creditworthiness and genuineness of the unsecured loans.
Hence, the appeal was dismissed.
(Please click here for judgment)
2. ACIT Vs. Varun Beverages Ltd., I.T.A. No. 832/Del/2015, Date of Pronouncement: 20.11.2018. ITAT - Delhi
Issue:
Whether addition in respect of completed assessments u/s 153A be
made solely on the basis of post search enquiry when no incriminating
material was unearthed during search?
Held: No
Brief facts:
The brief facts of the case are that a search and seizure operation
u/s 132 was carried out on M/s Jaipuria group and the case of assessee
was covered in said search. The Ld. AO, during post search
investigation, concluded that advertisement expenses booked by Company
aren’t genuine and consequently made addition of Rs.2,03,82,486/- u/s
69C of the Act. On appeal, the Ld.CIT(A) deleted the addition but upheld
the validity of assessment.
Being
aggrieved, the revenue has filed an appeal before the Hon’ble ITAT while
the assessee, at the time of hearing, challenged the validity of
assessment by invoking Rule 27 of the IT(AT) Rules, 1963.
Held
The Hon’ble ITAT while relying on decision of Hon'ble Delhi High
Court in the case of CIT vs. Kabul Chawla held that completed
assessments can be interfered while making assessments u/s 153A only on
the basis of some incriminating material unearthed during course of
search and not on basis of post search enquiry.
Therefore, the legal ground raised by assessee was allowed and appeal filed by revenue was dismissed.
Cases cited:
1. CIT Vs. Kabul Chawla 61 taxmann.com 412(Delhi HC).
(Please click here for judgment)
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