CIT v. N.R. Portfolio (P) Ltd.

SUBSCRIBE FOR FULL CONTENT


The Tax Publishers2013 TaxPub(DT) 1173 (Del-HC) : (2013) 051 (I) ITCL 0142 : (2013) 263 CTR 0456 : (2013) 214 TAXMAN 0408 : (2013) 087 DTR 0162 INCOME TAX ACT, 1961 --Income from undisclosed sources--Addition under section 68 Identity of share applicants not proved by assessee-- assessing officer made assessment under section 147/144 and made addition under section 68 of the amount received on allotment of shares. In appellate proceedings, Commissioner sought for remand report and concluded that assessing officer could not prove with certainty that the investors were entry providers and the transactions entered by assessee with them were bogus and also summon issued to deponents had come back unserved, and therefore directed to set aside the order of assessing officer. Revenue appealed ITAT and assessee filed cross-objection that reopening of assessment was unwarranted. However, Tribunal held that assessing officer did not prove that amount received was unexplained income or unaccounted money of assessee, thereby set aside the addition made. *Held:* Was not justified, as in regard to totality of facts. An assessee's duty to establish that the amounts which assessing officer proposed to add back under section 68 were properly sourced, does not cease by merely furnishing the names, addresses and PAN particulars, or relying on entries in a Registrar of Companies website. Here the company was a private company, and share applicants were known to it, since they were issued on private placement, or even on request basis. If the assessee had access to the share applicant's PAN particulars, or bank account statement, surely its relationship was closer than arm's length. In income-tax proceedings, the next step for the tax administrators could well be reopening of such investor's proceedings. If during proceedings, assessing officer 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 assessee and if it falters, the consequence may well be an addition under section 68. Income Tax Act, 1961, Section 68 In the Delhi High Court S. Ravindra Bhat & R.V. Easwar, JJ. CIT v. N.R. Portfolio (P) Ltd. ITA Nos. 134/2012 A.Y. 2004-05 21 December, 2012 Income Tax Act, 1961, S. 68 *Decision:* Against the assessee. JUDGMENT The revenue claims to be aggrieved by the order of the Income Tax Appellate Tribunal (ITAT) dated 22-7-2011 in ITA No. 2177/Del/2010 by which its appeal was dismissed. The following question of law arises for consideration : SUBSCRIBE FOR FULL CONTENT

The Tax Publishers2013 TaxPub(DT) 1173 (Del-HC) : (2013) 051 (I) ITCL 0142 : (2013) 263 CTR 0456 : (2013) 214 TAXMAN 0408 : (2013) 087 DTR 0162

INCOME TAX ACT, 1961

--Income from undisclosed sources--Addition under section 68 Identity of share applicants not proved by assessee-- assessing officer made assessment under section 147/144 and made addition under section 68 of the amount received on allotment of shares. In appellate proceedings, Commissioner sought for remand report and concluded that assessing officer could not prove with certainty that the investors were entry providers and the transactions entered by assessee with them were bogus and also summon issued to deponents had come back unserved, and therefore directed to set aside the order of assessing officer. Revenue appealed ITAT and assessee filed cross-objection that reopening of assessment was unwarranted. However, Tribunal held that assessing officer did not prove that amount received was unexplained income or unaccounted money of assessee, thereby set aside the addition made. Held: Was not justified, as in regard to totality of facts. An assessee's duty to establish that the amounts which assessing officer proposed to add back under section 68 were properly sourced, does not cease by merely furnishing the names, addresses and PAN particulars, or relying on entries in a Registrar of Companies website. Here the company was a private company, and share applicants were known to it, since they were issued on private placement, or even on request basis. If the assessee had access to the share applicant's PAN particulars, or bank account statement, surely its relationship was closer than arm's length. In income-tax proceedings, the next step for the tax administrators could well be reopening of such investor's proceedings. If during proceedings, assessing officer 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 assessee and if it falters, the consequence may well be an addition under section 68.

Income Tax Act, 1961, Section 68

In the Delhi High Court

S. Ravindra Bhat & R.V. Easwar, JJ.

CIT v. N.R. Portfolio (P) Ltd.

ITA Nos. 134/2012

A.Y. 2004-05

21 December, 2012

Income Tax Act, 1961, S. 68

Decision: Against the assessee.

JUDGMENT

The revenue claims to be aggrieved by the order of the Income Tax Appellate Tribunal (ITAT) dated 22-7-2011 in ITA No. 2177/Del/2010 by which its appeal was dismissed. The following question of law arises for consideration :