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II. Direct Taxes Case Law:
1. ITO Vs. BSNL Commercial Pvt. Ltd., I.T.A. No. 686-2017, Date of Order: 22.11.2018, ITAT - Kolkata
Issue:
Whether Additions u/s 68 merely on the ground that the assessee
could not produce the directors of the share subscribing companies is
sustainable.
Held: No
Brieffacts:
The assessee in the present case is a Company, which filed its return
of income for the year under consideration on 21.09.2012 declaring
total income of Rs.13,429/-. The assessee-company during the year under
consideration had raised share capital at a huge share premium of
Rs.1,00,80,000/-. Keeping in view that there was no substantial business
activity carried on by the assessee-company during the year under
consideration except making some investment in land and Bank, the
Assessing Officer proceeded to examine the claim of the assessee for
huge share premium. In this regard, he issued notices directly to the
concerned shareholder companies and in reply to the said notices, the
concerned shareholder companies furnished the details and documents
required by the Assessing Officer. The Assessing Officer, however, found
that the replies received from the shareholder companies were almost
identical in style and some of their Directors and addresses of the
Registered Office were common. He, therefore, issued summons u/s 131 to
the assessee-company requiring it to produce the Directors of the
shareholder companies for examination.
The
assessee-company, however, failed to produce the Directors of the
shareholder companies for verification before the Assessing Officer.The
assessee filed documentary evidences in form of Annual Reports, Bank
statements, copies of PAN Card, of shareholder companies were produced
before AO in order to establish identity as well as creditworthiness of
said shareholder companies, due to the failure of the assessee-company,
the Assessing Officer held that the creditworthiness of the concerned
creditors could not be corroborated by the assessee-company and even the
high value of share premium could not be justified by it. He
accordingly treated the share premium amount of Rs.1,00,80,000/-
received by the assessee- company as unexplained cash credit and made an
addition to that extent to the total income of the assessee in the
assessment completed under section 143(3).
Held:
The relevant documentary evidence in the form of Annual Reports, Bank
statements, copies of PAN Card, of the shareholder companies was
produced before the AO in order to establish the identity as well as
creditworthiness of the said shareholder companies. The notices issued
by the AO were also duly responded by the said shareholder companies by
filing their replies. It is observed that the AO, however, doubted their
creditworthiness as well as the genuineness of the share premium amount
mainly on the ground that the assessee failed to produce the Directors
of the shareholder companies for examination. He, however, accepted the
share capital amount received from the concerned shareholder companies
and treated mainly the share premium amount paid by them as unexplained.
Hence, the appeal was dismissed.
(Please click here for judgment)
2. ITO Vs. Prashant Sharma, I.T.A. No. 960/JP/2016, Date of Pronouncement: 15.11.2017, ITAT - Jaipur
Issue:
Whether the penalty order u/s 271D and 271E would reckon from the
date whenthe show cause notice was issued by the AO and not from the
datewhen the show cause notice was issued by the Joint Commissioner
whois competent to pass the penalty orders?
Held: Yes
Brief facts:
During the course of scrutiny assessment u/s 143(3) of the Income Tax
Act,1961, the Ld. AO noticed that the assessee has received cash on
various dates in personas well as in bank account and subsequently paid
the amount in cash toM/s MPPL which is in contravention of the
provisions of section 269SSand 269T of the Act. The AO called certain
information from M/s MPPL,in response to which, the company had
submitted that the assessee ishaving imprest account in the books of the
company.Since theassesse has received substantial amount in cash and
also paid asubstantial amount in cash, the Ld. AO issued a notice dated
30.12.2011 u/s 274 for levy of penaltyu/s 271D and 271E. Thereafter,
when the matter was transferred tothe J.CIT,an another show cause notice
was issued by the ACIT on10.09.2012.
Finally
the impugned orders u/s 271D and 271E werepassed on 25.03.2013 which are
beyond the limitation provided u/s275(1)(c) of the act.The assessee
contended that the the limitation for passingthe penalty order u/s 271D
and 271E would reckon from the date whenthe show cause notice was issued
by the AO and not from the datewhen the show cause notice was issued by
the Joint Commissioner whois competent to pass the penalty orders. The
Ld. AO rejected the contention of theassessee and passed the orders of
levy of penalty u/s 271D as well as271E of the Act. The assessee filed
an appeal before the Ld. CIT (A).The Hon’ble CIT (A) set aside the
penalty orders. Being aggrieved, the revenue filed an appeal before
Hon’ble ITAT.
Held:
The Hon’ble ITAT held thatwhen the authority competent to impose
penalty under Section 271D was the JointCommissioner, the period of
limitation for the purpose of such penalty proceedingswas to be reckoned
from the date of issue of first showcause for initiation of such
penalty proceedingsby the AO and not to be reckoned from the issue of
first show cause by the Joint Commissioner.Therefore, the decision is in
favour of the assesseeand against therevenue.
Hence, the appeal was held in favour of assessee and against therevenue.
Cases cited:
CIT Vs.Jitendra Singh Rathore(2013)352ITR 327(HC- Rajasthan)
Grihalakshmi Vision Vs. Addl. CIT (2015)379 ITR 100 (HC- Kerala)
(Please click here for judgment)
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