Case Law Details
Covenant Stones Private Limited Vs CIT (Kerala High Court)
Introduction: The Kerala High Court recently delivered a judgment in the case of Covenant Stones Private Limited versus the Commissioner of Income Tax (CIT). The writ petition, challenging the conditional stay order issued by the 2nd respondent, was dismissed. This article provides an in-depth analysis of the case, focusing on the examination of undisclosed income in relation to the returned income in the assessment order.
Detailed Analysis: The crux of the matter revolves around Ext.P5, the order passed by the 2nd respondent. This order granted a conditional stay, directing the petitioner to pay 20% of the total tax demand raised for the assessment years 2014-2015 to 2019-2020. The petitioner was also allowed to pay this amount in seven equal installments, with the first installment due on or before 25.09.2023.
The petitioner, instead of complying with the conditional stay order, approached the court, questioning its validity. The primary argument raised by the petitioner was that the 2nd respondent did not consider the merit of the case and merely followed a circular in passing the order.
Upon examination, the court found that the assessment orders, based on a survey under Section 133A of the Income Tax Act, were not solely reliant on the statements of the Director and Managing Director, who had later retracted their statements. The court noted that incriminating materials, including excel sheets and digital data from computers and laptops, were considered before adding undisclosed income to the returned income.
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