Case Law Details
Prestigious Enterprises Pvt. Ltd Vs ACIT (ITAT Delhi)
Introduction: In a recent case, “Prestigious Enterprises Pvt. Ltd vs. ACIT,” the Income Tax Appellate Tribunal (ITAT) in Delhi ruled on an appeal against the order of the Commissioner of Income Tax (Appeals) for the assessment year 2007-08. The central issue revolved around the failure to establish the creditworthiness of the creditor and the genuineness of a transaction, resulting in an addition under section 68 of the Income Tax Act.
Detailed Analysis
1. Background: The appellant, Prestigious Enterprises Pvt. Ltd, initially declared a loss of Rs. 53,05,870 in its income tax return. However, during the assessment under section 143(3), the assessing officer made two significant additions: Rs. 1,00,00,000 on account of compensation received due to a contract breach and Rs. 50,00,000 as unexplained cash credits. Subsequently, the matter was brought before the ITAT, which set it aside for reconsideration.
2. The Assessment and Appeal: The ITAT’s decision led to a fresh assessment where the appellant was granted relief of Rs. 1,00,00,000 but faced the same addition of Rs. 50,00,000 under section 68 of the Income Tax Act. Dissatisfied with this outcome, the appellant filed an appeal before the Commissioner of Income Tax (Appeals), who, in an order dated 30/09/2019, upheld the addition of Rs. 50,00,000 under section 68 of the Act.
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