DCIT Vs Tarun International Ltd. (ITAT Delhi)
In a significant ruling for corporate assessees, the Income Tax Appellate Tribunal (ITAT), Delhi Bench, has dismissed an appeal filed by the Department of Revenue against Tarun International Ltd., upholding the deletion of an income tax addition of ₹3,07,09,348 made under Section 68 of the Income Tax Act, 1961. The dispute centered on the genuineness and source of share capital received by the assessee company.
The case, pertaining to the Assessment Year 2011-12, saw the Department challenging the order of the Commissioner of Income Tax Appeals-15 (CIT(A)), which had previously quashed the Assessing Officer’s (AO) addition. The Department’s primary contention was that the transactions leading to the investment in Tarun International Ltd. were not genuine and that the assessee had failed to discharge its onus under Section 68 of the Act, particularly regarding the “source of source” of the investments.
Background of the Case
Tarun International Ltd. had filed its return of income declaring an income of ₹83,43,730. During scrutiny proceedings, the AO made a substantial addition of ₹3,53,40,000 under Section 68, specifically questioning investments from four parties: M. R. Tradex (P) Ltd. (₹1,87,00,000), Tarun Buildwell (P) Ltd. (₹1,10,95,000), Tarun Realcon (P) Ltd. (₹29,00,000), and Pawan Kumar Jain (₹18,35,000). The total addition related to these share capital receipts amounted to ₹3,45,30,000, though the appeal specifically addressed ₹3,07,09,348.
