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 Income Tax Addition Made Towards Unsubstantiated Share Capital Is Eligible For Section 80-IC Deduction: Delhi High Court

Income Tax OfficerWard 33(4), New Delhi Vs. Gurinder Kaur R 831, New Rajinder Nagar New Delhi 110 060
November, 21st 2014
                                                                I.T.A. No.: 1312/Del/13
                                                            Assessment years: 1993-94

                                                                               Page 1 of 3

                           DELHI C BENCH, NEW DELHI
               [Coram: Pramod Kumar AM, and C. M. Garg JM]

                             I.T.A. No.: 1312/Del/13
                           Assessment years: 1993-94

Income Tax Officer
Ward 33(4), New Delhi                                      .....................Appellant


Gurinder Kaur                                             ...................Respondent
R 831, New Rajinder Nagar
New Delhi 110 060 [PAN: AALP9195K]

Appearances by:

Satpal Singh, for the appellant
Salil Agarwal, Shailesh Gupta and Sanjeev Jain, for the respondent

                                 O R D E R

Per Pramod Kumar:

1.    This is an appeal filed by the Assessing Officer and is directed against the
order dated 27 th November 2012 passed by the CIT(A) in the matter of
assessment under section 143(3) of the Income Tax Act, 1961, for the
assessment year 1993-94.

2.    Grievances raised by the Assessing Officer are as follows:

      1.    The CIT(A) has erred in deleting addition of Rs 21,00,000
      under section 68 of the Act, on account of unexplained gift received
      by the assessee.

      2.     The CIT(A) has erred in holding that the provisions of Section
      68 of the Income Tax Act is not applicable in this case as the assessee
      is not maintaining the books of accounts.
                                                                  I.T.A. No.: 1312/Del/13
                                                              Assessment years: 1993-94

                                                                               Page 2 of 3

3.    To adjudicate on this appeal, only a few material facts need to be taken
note of. This is second round of proceedings and the issue in appeal cen tres
around a gift of Rs 21,00,000 received by the assessee. The allegation of the
Assessing Officer is that it is a bogus gift and the assessee has siphoned his own
unaccounted funds by giving them garb of a gift received from a non resident
Indian, but, according to the Assessing Officer, creditworthiness of the donor is
not established. This is second round of proceedings. In the first round of
proceedings, when the matter travelled before a coordinate bench of this
Tribunal, the matter was remitted to the file of the Assessing Officer. While
doing so, the coordinate bench had, inter alia, observed that " the present
case, these documents were very much available before the authorities below
and in the light of these bank documents, the creditworthin ess of the donor
cannot be rejected outright without making further enquiry from the bank of the
donor or from the donor. No such enquiries was made by the authorities below
in this case....". The matter was thus restored to the file of the Assessing Offic er
for "a fresh decision, after making further enquiry in the matter". However,
when the matter travelled back to the Assessing Officer, he reiterated the
addition even as no further enquiry on the above lines was made. Aggrieved,
assessee carried the matter in appeal before the CIT(A) and the deleted the
impugned addition. The Assessing Officer is aggrieved and is in appeal before

4.    We have heard the rival contentions, perused the material on record and
duly considered factual matrix of the case in the light of the applicable legal

5.    When learned Departmental Representative was asked whether the
Assessing Officer did in fact make further inquiries on the lines directed by the
Tribunal, he was not in a position to confirm the same. A plain look at the
assessment order does not indicate any such inquiry either. The Assessing
Officer had simply reiterated his earlier findings and did not take trouble to
                                                                    I.T.A. No.: 1312/Del/13
                                                                Assessment years: 1993-94

                                                                                  Page 3 of 3

make any inquiries. As learned counsel for the assessee rightly contends, relying
upon Hon 'ble Punjab & Haryana High Court decision in the case of CIT Vs FCS
International Marketing Ltd (283 ITR 32), the assessee cannot face endless
litigation just because the Assessing Officer refuses to shed his inertia and
inaction. In any case, it is admitted position that no books of accounts were
maintained by the assessee and, following Hon'ble jurisdictional High Court's
judgment in the case of CIT Vs Mayawati (338 ITR 563), an addition under
section 68 cannot be made for this reason either. That aspect of the matter,
however, in the given facts is somewhat academic and we need not deal with the
same in much detail.

6.      In view of these discussions, as also bearing in mind entirety of the case,
we approve the conclusions arrived at by the CIT(A) and decli ne to interfere in
the matter.

7.      In the result, the appeal is dismissed. Pronounced in the open court today
on 18 th day of November, 2014.

Sd/xx                                                                               Sd/xx
C M Garg                                                           Pramod Kumar
(Judicial Member)                                             (Accountant Member)

New Delhi, 18 th day of November, 2014

Copies to :   (1)    The appellant                   (2)      The respondent
              (3)    CIT                             (4)      CIT (A)
              (5)    Departmental Representative
              (6)    Guard File
                                                                               By order etc

                                                                      Assistant Registrar
                                                           Income Tax Appellate Tribunal
                                                                Delhi benches, New Delhi
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