| Case ID |
43f6b800-efad-4fcc-9521-161ccde0accd |
| Body |
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| Case Number |
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| Decision Date |
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| Hearing Date |
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| Decision |
The Tribunal upheld the Commissioner (Appeals)'s decision to delete the addition of Rs. 25 lakhs made by the Assessing Officer under section 68 of the Income-tax Act, 1961. It was determined that it was not the responsibility of the assessee-company to prove the source of funds for M/s. Diamond Protein Ltd. to subscribe to its share capital. The Assessing Officer failed to establish any connection or relationship between the two companies, and thus, the order of the Tribunal was affirmed. |
| Summary |
This case revolves around the interpretation of section 68 of the Income-tax Act, 1961, which concerns cash credits. The primary issue was whether the assessing authority could treat a portion of the share application money as unexplained income. The case involved M/s. Diamond Protein Ltd., which had subscribed to share capital of K.C. Fibres Ltd., and the Assessing Officer had questioned the legitimacy of the funds used for this purpose. The Tribunal ultimately ruled that the assessee was not responsible for proving the source of funds of the subscribing company, affirming the earlier decision of the Commissioner (Appeals) to delete the addition. This case highlights the importance of establishing direct connections between parties in tax assessments and clarifies the burden of proof regarding unexplained cash credits in share capital transactions. Keywords: Income-tax, cash credits, share capital, assessment, unexplained income, Delhi High Court, Tribunal decision. |
| Court |
Delhi High Court
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| Entities Involved |
M/s. Diamond Protein Ltd.,
K.C. Fibres Ltd.
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| Judges |
A.K. Sikri,
Valmiki J. Mehta
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| Lawyers |
Sanjeev Sabharwal,
Mohan Prasad Gupta
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| Petitioners |
Commissioner of Income Tax
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| Respondents |
K.C. Fibres Ltd.
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| Citations |
2011 SLD 2478 = (2011) 332 ITR 481
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| Other Citations |
CIT v. Lovely Exports (P.) Ltd. [2008] 216 CTR 195
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| Laws Involved |
Income-tax Act, 1961
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| Sections |
68
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