Pestkill Pesticides Industries Vs Principal Commissioner (Gujarat High Court)
The Gujarat High Court considered whether the Income Tax Appellate Tribunal was justified in confirming an addition of Rs. 6,40,000/- under section 68 of the Income Tax Act, 1961, despite the evidence placed on record by the assessee-firm. The assessee had filed its return for Assessment Year 1997-98 declaring a loss of Rs. 15,783/-. During assessment proceedings, the Assessing Officer also examined a revaluation of land and building and made an addition of Rs. 59,16,492/- as suppressed business profits. The CIT(Appeals) deleted that addition but sustained the Rs. 6,40,000/- addition relating to the capital contribution attributed to Shri S. B. Jariwala HUF. The Tribunal upheld the deletion of the Rs. 59,16,492/- addition but confirmed the section 68 addition.
Before the High Court, the assessee submitted that the Tribunal had failed to consider documents showing that Shri S. B. Jariwala had been inducted as a partner and that the Rs. 6,40,000/- capital contribution had been received through banking instruments. The Revenue relied upon the concurrent findings of the lower authorities and contended that the assessee had failed to establish creditworthiness and genuineness. The Court examined the documentary evidence, including the assessee’s letter dated 12.02.2000, the balance sheet and the partner’s capital account. It found that the amount was reflected as partner’s capital and that the records showed receipts through demand drafts of Rs. 5,00,000/-, Rs. 1,00,000/- and Rs. 40,000/- on 11.12.1996, 21.12.1996 and 11.03.1997 respectively.
