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14.12.2018 - Voice of CA presents - Latest Updates
Friday, December 14, 2018

  I. Headlines Today:   

  1. MCA: Time limit for filing e-form NFRA-1 will be 30 days from date of deployment of form  (Click for detail)
  2. ITAT: No tax benefit on house sale if new flat is in wife's name  (Click for detail)
  3. NPS withdrawal made 100% tax free   (Click for detail)
  4. Plots attached, top builder challenges Benami Act rules  (Click for detail)
  5. New RBI Guv Brings Rate Cut Expectations  (Click for detail)
  6. SEBI proposes to create segregated portfolios by Mutual Funds  (Click for detail)

  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

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.

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

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.

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  61 412(Delhi HC).

(Please click here for judgment)


Golden Rules:

  "When GOD solves your problems,
you have faith in HIS abilities;
when GOD doesn't solve your problems,
He has faith in your abilities


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