1.  COMMISSIONER OF INCOME TAX Vs.   GOURDIN HERBALS INDIA LTD. –High Court Delhi- Section 69- Unexplained Cash Credit

The Assessing Officer had some doubts about the source of the investment made by those three companies and therefore, made certain inquiries. In response, the assessee produced the copy of the bank accounts of all the three companies, their certificates of incorporation and also the income tax returns filed by them. From the above documents, the identity and genuineness of these companies is clearly established. The only ground for making addition by the AO was that the bank accounts of the three companies revealed that the amounts in cash were deposited in those accounts and thus cheques were issued in favour of the assessee company along with share application money. In these circumstances, we are of the opinion that following the judgment of the Supreme Court in the case of Commissioner of Income Tax Vs. Lovely Exports Pvt. Ltd., 216 CTR 195, the ITAT has rightly held that the assessee had discharged its burden. In case those three companies had received certain cash, which were deposited in the bank accounts, it was for the Income Tax Department to take action against the said companies.

(Click here for judgment)

   

2.  In the case of CIT Vs Quadra Securities &Financial Services P Ltd: Delhi High Court-Section-68

Perusal of the order passed by the Income Tax Appellate Tribunal (ITAT)
would reveal that while confirming the findings of Commissioner of Income Tax (Appeal), the ITAT came to the conclusion that identity of the shareholders, who had subscribed to the share capital, had been established. The assessee company had provided PAN numbers, copy of the returns filed, copies of the bank accounts and even the source of deposit in the bank accounts in respect of those shareholders. These are pure finding of facts.

(Click here for judgment)

  

3.  In CIT Vs Goetze(India) Ltd:-Delhi High Court- on Bad and Doubt full debts- section 37(2)(i)

Further, Income Tax Appellate Tribunal found that in the Memorandum of Association, money lending is mentioned as one of the objects of the company. It is also found, as a matter of record, that the assessee company has been giving ICDs since 1995-96 and interest in income earned by the assessee in all these years was shown as ?income from business? and not income from other sources and also tax paid thereon as business income. Thus, when the interest income from these ICDs/inter corporate deposits shown as income from business, bad debts were rightly claimed as deduction under Section 37(2)(i).

(Click here for judgment)

   

4.  In CIT v Surya Vinayak Ind. Ltd- Delhi High Court- On Genuineness of Purchases- Section 40A(3)

“The AO doubted the said purchase and was of the opinion that the said M/s. Sonali Enterprises used to provide accommodation entries. However, the Income Tax Appellate Tribunal reversed the aforesaid addition observing that the assessee had filed evidence by way of purchase bills, transport bill, form ST-38 issued by Excise and Trade Officer, copy of stock ledger of the company showing receipts of material, production records showing production of goods and charge of excise and sales tax thereon along with copy of bank accounts. The bills raised by M/s. Sonali Enterprises were also filed. It was also found, as a matter of fact, that all payments had been made through banking channels. On the aforesaid facts, the ITAT has rightly held that the provisions of Section 40A(3) were not even attracted…”

(Click here for judgment)

  

5.  CIT v LG Chemicals India Pvt. Ltd : Delhi high Court : On Concealment Penalty Section 271(1)(c)-Revised return pursuant to appeal order obtained after filing of return

It is not in dispute that when the assessee had filed the return on 2.12.2003 in respect of the assessment year 2003-04 claiming set off of Brought Forward Losses, an identical issue for previous year, i.e. assessment year 2001- 02 was pending before the CIT(A). This appeal was decided only after the filing of the return, i.e. on 29.9.2004. The assessee had preferred appeal thereagainst, which was dismissed by the ITAT on 26.8.2005. Thereafter, when the assessee was sent a questionnaire seeking basis of Brought Forward Losses, he withdrew the claim on 20.10.2005. In these circumstances, we are of the opinion that the claim preferred by the assessee in the original return, though withdrawn subsequently, was a bona fide move. Therefore, the ITAT rightly held that the assessee, in these circumstances, could not be subjected to penalty.

(Click here for judgment)

  

 

If you have any query please e-mail at voiceofca@gmail.com.

   

"A single conversation with a wise man is better than ten years of study"

 

Thanks for your valuable time

"Voice of CA"

CA. Kapil Goel, Moderator-Direct Taxes, Mob:9910272806, cakapilgoel@gmail.com

CA. Sidharth Jain, Co-Moderator, Mob: 9810418700, sidhjasso@yahoo.com

CA. Mukesh K Bansal, Co-Moderator-FEMA, mkak@rediffmail.com