Case Law Details
DCIT Vs Paswara Papers Ltd. (Allahabad High Court)
Introduction: In a significant ruling, the Allahabad High Court addressed a pivotal tax dispute involving Paswara Papers Ltd., a case that revolved around the contentious addition of income under Section 68 of the Income Tax Act, 1961. The case, identified as DCIT Vs Paswara Papers Ltd., captures the essence of the judiciary’s approach towards scrutinizing the authenticity of transactions and the responsibilities of the assessing officers in such matters.
Detailed Analysis
The appeal, lodged by the Department of Revenue against Paswara Papers Ltd., emanated from the decision of the Income Tax Appellate Tribunal, New Delhi, dated 13.4.2023. The crux of the matter lied in an addition of Rs. 3,48,00,852 under Section 68 of the Income Tax Act, which the Tribunal decided to delete, affirming the decision of the first appellate authority dated 22.3.2017. The Revenue’s appeal raised questions regarding the Tribunal’s judgment, particularly scrutinizing the alleged lack of diligent inquiry by the Assessing Officer (AO) into the transaction’s genuineness.
The Tribunal’s findings emphasized the substantiation of the transaction by Paswara Papers Ltd. through purchase invoices, cheques for sale consideration, and bank account details, demonstrating a clear trail of the transaction’s authenticity. Contrary to the Revenue’s contention, the Tribunal noted the AO’s failure to leverage his powers for conducting a thorough inquiry from the jeweler or other sources to validate any suspicions surrounding the transaction.
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