Two important cases of Income-tax

CASE-I

Case covered:

Pr. Commissioner of Income Tax -1 .. Appellant               

  Versus

M/s. Ami Industries (India) P Ltd .. Respondent 

Facts of the case:

This appeal under Section 260A of the Income Tax Act, 1961 (“the Act” for short) is preferred by the revenue against the order dated 26.8.2016 passed by the Income Tax Appellate Tribunal, Mumbai “A” Bench, Mumbai (“Tribunal” for short) in Income Tax Appeal No. 5181/Mum/2014 for the assessment year 2010-11.

The appeal has been preferred on the following three questions stated to be substantial questions of law:
(i) Whether on the facts and circumstances of the case and in law, the Tribunal was justified in directing the deletion of sum brought to tax by the Assessing Officer as unexplained income under Section 68 of the Act in respect of money credited in the books as share application money of Rs. 34,00,00,000/-?
(ii) Whether on the facts and circumstances of the case and in law, the Tribunal was justified in holding that the assessee proved identity, creditworthiness, and genuineness of money credited in the books as share application money of Rs. 34,00,00,000/- just by submitting PAN, acknowledgment of income tax returns filed and bank statements?

iii) Whether on the facts and circumstances of the case and in law, the Tribunal was justified in deleting the addition of Rs.34,00,00,000/- ignoring the facts brought out by the Assessing Officer that return of the investing company shows no creditworthiness and that investing company merely transferred share application money received from other parties to assessee-company?

Observation of the court:

From the above, it is seen that the identity of the creditors was not in doubt.  The assessee had furnished PAN, copies of the income tax returns of the creditors as well as a copy of bank accounts of the three creditors in which the share application money was deposited in order to prove the genuineness of the transactions.  In so far creditworthiness of the creditors were concerned, Tribunal recorded that bank accounts of the creditors showed that the creditors had funds to make payments for share application money and in this regard, resolutions were also passed by the Board of Directors of the three creditors.  Though assessee was not required to prove the source of the source, nonetheless, Tribunal took the view that Assessing Officer had made inquiries through the investigation wing of the department at Kolkata and collected all the materials which proved the source of the source.

CASE-II

Case covered:

NRA Iron & Steel (P) Ltd (supra)

Facts of the case:

the Assessing Officer had made independent and detailed inquiry including a survey of the investor companies. The field report revealed that the shareholders were either non-existent or lacked credit-worthiness. It is in these circumstances, the Supreme Court held that the onus to establish the identity of the investor companies was not discharged by the assessee. The aforesaid decision is, therefore, clearly distinguishable on facts of the present case.

Observation of the court:

Therefore, on a thorough consideration of the matter, we are of the view that the first appellate authority had returned a clear finding of fact that assessee had discharged its onus of proving the identity of the creditors, genuineness of the transactions and credit-worthiness of the creditors which finding of fact stood affirmed by the Tribunal. There is, thus, concurrent findings of fact by the two lower appellate authorities. The appellant has not been able to show any perversity in the aforesaid findings of fact by the authorities below.

The judgment of the court:

Under these circumstances, we find no error or infirmity in the view taken by the Tribunal. No question of law, much less any substantial question of law, arises from the order of the Tribunal. Consequently, the appeal is dismissed. However, there shall be no order as to cost.

Download the copy: