1. ASSISTANT COMMISSIONER OF INCOME TAX & ANR VERSUS M/S. HOTEL BLUE MOON, CIVIL APPEAL NO.1198 OF 2010, DATE OF JUDGMENT: FEBRUARY 2, 2010, SUPREME COURT OF INDIA
If an assessment is to be completed under Section 143(3) read with Section 158-BC, notice under Section 143(2) should be issued within one year from the date of filing of block return. Omission on the part of the assessing authority to issue notice under Section 143(2) cannot be a procedural irregularity and the same is not curable and, therefore, the requirement of notice under Section 143(2) cannot be dispensed with.
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2. MOD CREATIONS PVT. LTD VS INCOME TAX OFFICER, ITA NO. 1158/2007, JUDGMENT DELIVERED ON: 29.08.2011, THE HIGH COURT OF DELHI AT NEW DELHI
Whether, on the facts and in the circumstances of the case, the Income Tax Appellate Tribunal was justified in sustaining `8,24,000.00 on account of unexplained cash credit under the provisions of Section 68 of the Income Tax Act, 1961?”
A bald assertion by the A.O. that the credits were a circular route adopted by the assessee to plough back its own undisclosed income into its accounts, can be of no avail. The revenue was required to prove this allegation. An allegation by itself which is based on assumption will not pass muster in law. The revenue would be required to bridge the gap between the suspicions and proof in order to bring home this allegation. The ITAT, in our view, without adverting to the aforementioned principle laid stress on the fact that despite opportunities, the assessee and/or the creditors had not proved the genuineness of the transaction. Based on this the ITAT construed the intentions of the assessee as being malafide. In our view the ITAT ought to have analyzed the material rather than be burdened by the fact that some of the creditors had chosen not to make a personal appearance before the A.O. If the A.O. had any doubt about the material placed on record, which was largely bank statements of the creditors and their income tax returns, it could gather the necessary information from the sources to which the said information was attributable to. No such exercise had been conducted by the A.O. In any event what both the A.O. and the ITAT lost track of was that it was dealing with the assessment of the company, i.e., the recipient of the loan and not that of its directors and shareholders or that of the sub-creditors. If it had any doubts with regard to their credit worthiness, the revenue could always bring it to tax in the hands of the creditors and/or sub-creditors.
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