Case Law: Rupa Shyamsundar Dhumatkar vs. ACIT (Bombay High Court)

148 Reopening: As per settled law, notice for reopening of assessment against a dead person is invalid. The fact that the AO was not informed of the death before issue of notice is irrelevant. Consequently, the s. 148 notice is set aside and order of assessment stands annulled (Alamelu Veerappan 257 TM 72 (Mad) followed)

There are several judgments of different High Courts holding that the notice or reopening of assessment is invalid in law. It is not necessary to refer to all the judgments on the point. Suffice it to say, as per the settled law, notice for reopening of assessment against a dead person is invalid Read the rest of this entry »

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Case Law: Rajbhushan Omprakash Dixit vs. DCIT (Bombay High Court)

147/ 148: The fact that the assessee did not disclose the material is not relevant if the AO was otherwise aware of it. If the AO had the information during the assessment proceeding, irrespective of the source, but chooses not to utilize it, he cannot allege that the assessee failed to disclose truly and fully all material facts & reopen the assessment (Scope of Explanation 1 to S. 147 explained)

As per this Explanation thus, production before the Assessing Officer of account books or other evidence from which material evidence could with due diligence have been discovered by the Assessing Officer will not necessarily amount to disclosure within the meaning of the first proviso to Section 147. Here is not a case where the Assessee is seeking to rely on a disclosure which the Revenue can seek to bring within the fold of the said Explanation. Here is a case where the Department already had collected certain documents and materials which were before the Assessing Officer at the time of framing assessment. If the Assessing Officer did not, for some reason, advert to such material or did not utilize the same, he surely cannot allege that the Assessee failed to disclose truly and fully all material facts

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Case Law: PCIT vs. A. A. Estate Pvt. Ltd (Supreme Court)

260A: There is a distinction between questions proposed by the appellant for admission of the appeal (u/s 260­A(2)(c)) and the questions framed by the Court (u/s 260­A(3)). The High Court has to formulate substantial question of law and only thereafter hear the appeal on merits. If the High Court is of the view that the appeal does not involve any substantial question of law, it should record a categorical finding to that effect & dismiss the appeal in limine. However, it cannot, without admitting the appeal and framing any question of law, issue notice to the respondent, hear both parties on the questions urged by the appellant and dismiss it. This is not in conformity with the mandatory procedure prescribed in s. 260­A

It was, however, not done and instead the High Court without admitting the appeal and framing any question of law issued notice of appeal to the respondent­ assessee, heard both the parties on the questions urged by the appellant and dismissed it. In our view, the respondent had a right to argue “at the time of hearing” of the appeal that the questions framed were not involved in the appeal and this the respondent could urge by taking recourse to sub­ section (5) of Section 260­A of the Act. But this stage in this case did not arise because as mentioned above, the High Court neither admitted the appeal nor framed any question as required under sub­section (3) of Section 260­A of the Act. The expression “such question” referred to in sub­ section (5) of Section 260­A of the Act means the questions which are framed by the High Court under sub­section (3) of Section 260­A at the time of admission of the appeal and not the one proposed in Section 260­A (2) (c) of the Act by the appellant Read the rest of this entry »

Case Law: Jagdish C. Dhabalia vs. ITO (Bombay High Court)

50C Capital Gains: The assessee cannot avoid the impact of s. 50C by claiming that his s. 54EC investment is 5large enough to cover the deemed consideration based on stamp duty valuation. Such interpretation renders s. 50C redundant

The deeming fiction under section 50C of the Act, must be given its full effect and the Court should not allow to boggle the mind while giving full effect to such fiction. We are not opposing the proposition canvassed by the Counsel of the Assessee that deeming fiction must be applied in relation to the situation for which it is created. However, while giving full effect to the deeming fiction contained under section 50C of the Act for the purpose of computation of the capital gain under section 48, for which section 50C is specifically enacted, the automatic fallout thereof would be that the computation of the assessee’s capital gain and consequently the computation of exemption under section 54EC, shall have to be worked out on the basis of substituted deemed sale consideration of transfer of capital asset in terms of section 50C of the Act Read the rest of this entry »

Case Law: P. Leelavathi vs. V. Shankarnarayana Rao (Supreme Court)

Benami Transactions: In considering whether a particular transaction is benami, six circumstances can be taken as a guide: (1) source from which purchase money came; (2) nature and possession of property, after purchase; (3) motive, if any, for giving transaction a benami colour; (4) position of parties and relationship, if any, between claimant and alleged benamidar; (5) custody of title deeds after sale & (6) conduct of parties in dealing with the property after sale. Mere fact that financial assistance was given is not a determinative factor (All imp judgements referred)

It is well­ settled that the burden of proving that a particular sale is benami and the apparent purchaser is not the real owner, always rests on the person asserting it to be so. This burden has to be strictly discharged by adducing legal evidence of a definite character which would either directly prove the fact of benami or establish circumstances unerringly and reasonably raising an inference of that fact. The essence of a benami is the intention of the party or parties concerned; and not unoften, such intention is shrouded in a thick veil which cannot be easily pierced through. But such difficulties do not relieve the person asserting the transaction to be benami of any part of the serious onus that rests on him; nor justify the acceptance of mere conjectures or surmises, as a substitute for proof

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Case Law: PCIT vs. NRA Iron & Steel Pvt. Ltd (Supreme Court)

68 Bogus share capital/ premium: The practice of conversion of un-accounted money through cloak of Share Capital/Premium must be subjected to careful scrutiny especially in private placement of shares. Filing primary evidence is not sufficient. The onus to establish credit worthiness of the investor companies is on the assessee. The Assessee is under legal obligation to prove the receipt of share capital/premium to the satisfaction of the AO, failure of which, would justify addition of the said amount to the income of the Assessee

The practice of conversion of un-accounted money through the cloak of Share Capital/Premium must be subjected to careful scrutiny. This would be particularly so in the case of private placement of shares, where a higher onus is required to be placed on the Assessee since the information is within the personal knowledge of the Assessee. The Assessee is under a legal obligation to prove the receipt of share capital/premium to the satisfaction of the AO, failure of which, would justify addition of the said amount to the income of the Assessee Read the rest of this entry »

ITO vs. Yadu Steels & Power Pvt. Ltd (ITAT Delhi)

Under Section 68 onus is upon assessee to prove three ingredients, i.e., identity and creditworthiness of credit entries. As to how onus can be discharged would depend on facts and circumstances of each case. It is expected of both sides – assessee and Ld.AO, to adopt reasonable approach. Assessee before us is a private limited company. It cannot issue shares in manner in which a public limited company does. It generally depend on persons known to its directors or shareholders directly or indirectly to buy its shares. Once monies are received and shares are issued, it is not as if share-subscribers and assessee lose touch with each other and become incommunicado. Onus thus is upon assessee to prove identity, creditworthiness of subscribers and most importantly genuineness of transactions under section 68 Read the rest of this entry »