Addition in the hand of company cannot be made for items belonging to directors which was duly proved with Supporting Evidences

Bagaria Properties & Investment Pvt. Ltd. Vs. ITO (ITAT Kolkata)

Mr. Shiv Kishan Mohta has in his sworn statement u/s 134 on 10.11.2008, has in response to question no. 3 admitted that the silver items in question belong to him and not to the assessee company. Further on 23.12.2010 he also filed a letter with the Assessing Officer confirming that this silver utensils belong to his family. In support of this contention he also filed a copy of wealth tax returns for the assessment year 2009-10 wherein these silver articles have been declared by his family members in their returns of wealth. In our view, on the face of these evidences filed by Mr. Shiv Kishan Mohta and the confessional statement, no addition can be made in the hands of the assessee company. The Assessing Officer in this case has merely rejected the contention of the assessee without any evidence to the contrary. The assessee has discharged the onus that lay on it, against the presumption in law. The AO should have examined the source of funds for acquisition of assets in the hands of Mr. Shiv Kishan Mohta and family members in case he doubted the evidences. In view of the above, we delete the addition and allow the appeal of the assessee.

FULL TEXT OF THE ITAT ORDER IS AS FOLLOWS:-

This appeal by the Assessee arises out of the order of the Learned Commissioner of Income Tax (Appeals)-22, Kolkata [in short the ld CITA] dated 15.03.2017 against the order passed by the I.T.O, Ward-3(1), Kolkata [ in short the ld AO] under section 143(3)/153A of the Income Tax Act, 1961 (in short “the Act”) dated 29.12.2010 for the Assessment Year 2009-10.

2. The assessee is a company and filed its return of income on 26.09.2009 declaring NIL income. A search and seizure operation was conducted u/s 132 of the Act on the locker of the assessee, in connection with the search on Merlin Group of cases. Subsequent a notice was issued u/s 153A of the Act to the assessee.

Please become a Premium member. If you are already a Premium member, login here to access the full content.