ACIT Vs Hallmark Suppliers Pvt Ltd (ITAT Ranchi)
In ACIT vs. Hallmark Suppliers Pvt. Ltd., the ITAT Ranchi upheld the deletion of a Rs. 6 crore income addition, ruling that the director’s statement alone, without corroborative evidence, could not be the basis for assessment.
The Income Tax Appellate Tribunal (ITAT), Ranchi, has dismissed an appeal by the Assistant Commissioner of Income Tax (ACIT), upholding a lower court’s decision to delete an addition of ₹6 crore to the income of Hallmark Suppliers Pvt. Ltd. The ruling reaffirms that an income declaration made by a director during a search operation, without supporting evidence, is not a sufficient basis for assessment.
The case, ACIT vs. Hallmark Suppliers Pvt. Ltd., originated from a search conducted on the “Bhalotia group” of companies on August 22, 2013. During the assessment proceedings for the financial year 2014-15, the Assessing Officer (AO) added ₹6 crore to the company’s income. This addition was based solely on a statement made by the company’s director, who had offered to declare the amount as additional income. The director’s statement, as noted in the assessment order, mentioned that the disclosure was “voluntary” to “have peace of mind” and “avoid any litigation.” The director also stated that the tax would be paid once funds were realized from debtors.
