Case Law Details
Vilson Roofing Products Pvt. Ltd. Vs ACIT (ITAT Pune)
The Income Tax Appellate Tribunal (ITAT) in Pune has rendered a pivotal decision in the case of Vilson Roofing Products Pvt. Ltd. Vs Assistant Commissioner of Income Tax (ACIT), concerning the reassessment proceedings under section 147 read with section 143(3) of the Income-tax Act, 1961 (the Act) for the assessment year 2009-10. This case examines the procedural and substantive aspects of the reassessment initiated on the grounds of undisclosed share subscription amounts, purportedly arising from accommodation entries as identified by the investigation wing.
Detailed Analysis: The crux of the matter revolved around the reassessment initiated by the Assessing Officer (AO) after receiving information indicating that Vilson Roofing Products Pvt. Ltd. was the ultimate beneficiary of certain cash transactions camouflaged as share subscription. The AO, after due process, concluded that the company failed to substantiate the creditworthiness of the share subscribers and the genuineness of the transactions, resulting in an addition of ₹3.00 Crores under section 68 of the Act as unexplained cash credits.
The company challenged the reassessment notice and subsequent addition on several grounds, including the validity of the reassessment initiation and the AO’s failure to prove the non-genuineness of the share subscription money. However, both the CIT(A) and ITAT dismissed the company’s arguments, upholding the reassessment and the addition made by the AO.
The ITAT’s decision was heavily influenced by the principles laid out in several landmark judgments, including the Supreme Court’s ruling in PCIT Vs NRA Iron & Steel, which emphasized the heightened onus on assessee to prove the creditworthiness of share subscribers and the genuineness of transactions in cases of private placement of shares. The Tribunal observed that the appellant company did not furnish sufficient evidence to establish the creditworthiness of the subscribers or the genuineness of the share subscription transactions, thereby failing to meet the required legal threshold.
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Author Bio
The adjudication from the Tribunal seems correct. Our assessee are to trained to make foolproof evidence for any such transaction before hand.