| Case ID |
2e41d6e4-d5e9-487a-81dc-8880db955012 |
| Body |
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| Case Number |
IT REFERENCE NO. 462 OF 1979 |
| Decision Date |
Jan 01, 1985 |
| Hearing Date |
Jan 01, 1985 |
| Decision |
The Calcutta High Court upheld the Tribunal's decision, ruling that the sum of Rs. 40,000 added to the assessee's income from undisclosed sources could not be treated as part of the commercial profits for the purpose of determining dividend payments under Section 104 of the Income-Tax Act, 1961. The court noted that the onus was on the department to prove that the disputed amount was indeed commercial income. The failure of the assessee to prove the genuineness of a loan transaction gave the revenue the right to add back the amount but did not justify a finding that the amounts were available for distribution as dividend. Thus, the court confirmed that the proceedings under Section 104 were of a penal nature and the Tribunal was justified in canceling the order made by the Income-Tax Officer. |
| Summary |
In the case of Commissioner of Income Tax v. Industry Side (P.) Ltd., the Calcutta High Court dealt with the implications of Section 104 of the Income-Tax Act, 1961 concerning additional income tax on undistributed profits. The case revolved around the assessment year 1963-64, where the Income-Tax Officer (ITO) had added Rs. 40,000 to the income of the assessee, a private limited company, as income from undisclosed sources. The ITO computed the distributable surplus and served a notice for additional tax due to the failure to declare dividends. The key issue was whether this added amount could be classified as commercial income for dividend distribution. The Tribunal ruled that the onus of proving that the amount was commercial income rested with the department, and since they failed to do so, the order under Section 104 was canceled. The High Court upheld this decision, emphasizing the need for clear proof before classifying undisclosed income as commercial profit. This case highlights the importance of due diligence in tax assessments and the protections afforded to taxpayers under law. |
| Court |
Calcutta High Court
|
| Entities Involved |
Not available
|
| Judges |
Dipak Kumar Sen,
Suhas Chandra Sen
|
| Lawyers |
B.K. Bagchi,
S.K. Mukherjee,
A.K. Roy Chowdhury
|
| Petitioners |
Not available
|
| Respondents |
Industry Side (P.) Ltd.
|
| Citations |
1985 SLD 1211,
(1985) 154 ITR 686
|
| Other Citations |
CIT v. Universal Fertiliser Co. (P.) Ltd. [1978] 114 ITR 47 (Cal.),
Banga Luxmi Hosiery Mills (P.) Ltd. v. CIT [1977] 106 ITR 644 (Cal.)
|
| Laws Involved |
Income-Tax Act, 1961
|
| Sections |
104
|