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II. Useful Case Laws:
1. CIT Vs. M/s N.R. Portfolio Pvt. Ltd., ITA No. 134/2012, Date of order: 21-12-2012, High Court of Delhi
Addition u/s. 68 justified if applicants do not respond to summons, despite submission of PAN & bank details
This court is conscious of a view taken in some of the previous decisions that the assessee cannot be faulted if the share applicants do not respond to summons,
and that the state or revenue authorities have the wherewithal to
compel anyone to attend legal proceedings. However, that is merely one
aspect. An assessee’s duty
to establish that the amounts which the AO proposes to add back, under
Section 68 are properly sourced, does not cease by merely furnishing the
names, addresses and PAN particulars, or relying on entries in a
Registrar of Companies website.
One
must remember that in all such cases, more often than not, the company
is a private one, and share applicants are known to it, since they are
issued on private placement, or even request basis. If the assessee
has access to the share applicant’s PAN particulars, or bank account
statement, surely its relationship is closer than arm’s length. Its
request to such concerns to participate
in income tax proceedings, would, viewed from a pragmatic perspective,
be quite strong, because the next possible step for the tax
administrators could well be re-opening of such investor’s proceedings.
That apart, the concept of “shifting onus” oes not mean that once certain facts are provided, the assesse’s duties are over. If on verification, or during proceedings,
the AO cannot contact the share applicants, or that the information
becomes unverifiable, or there are further doubts in the pursuit of such
details, the onus shifts back to the assessee. At that stage, if it falters, the consequence may well be an addition under Section 68.
(Please click here for judgment)
2. CIT Vs. Sahara India Mutual Benefit Co. Ltd., ITA No. 876/2011, Date of Decision: 20-09-2012, High Court of Delhi
No penalty U/s. 271D levied for dealing in cash deposits with rural dwellers, being reasonable cause for failure.
In
the present case also the revenue has not been able to bring on record
any material to show that the finding of the Tribunal as to the
existence of reasonable cause is perverse. In the judgments of this
Court in Commissioner Of Income Tax vs Parma Nand
(2004) 266 ITR 255 and CIT Vs Itocha Corporation (2004) 268 ITR 172, it
has been held that whether or not there was reasonable cause for the
default is a question of fact which does not give rise to a substantial
question of law unless the finding is perverse or irrational. In the
light of these judgments and having regard to the finding of fact
entered by the Tribunal that there was reasonable cause for the
defaults, we do not find any substantial question of law arising for our consideration.
(Please click here for judgment)
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