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2009 (8) TMI 59 - HC - Income TaxBogus Payment Assumption / Presumption AO initiated proceedings on the following two assumptions - (1) The assessee herein had diverted her income amounting to Rs.6.30 crores by way of showing the bogus payment of that amount to M/s Rathi Ispat Ltd. which was a loss making company. (2) The presumption was drawn that M/s Rathi Ispat Ltd would have returned back that amount to the assessee in cash. Held that - M/s Rathi Ispat Ltd. was not a loss making undertaking and it had paid the taxes on the amount received from the assessee herein, it could not be disputed by the learned counsel. Thus, we find from this that the very basis for initiating proceedings under Section 147 is on wrong premise as it is neither factually correct that M/s Rathi Ispat Ltd. was a loss making company and on the other hand it also stands established that the payment was received by M/s Rathi Ispat Ltd. for the services rendered by it to the assessee which had been shown as income in its return and duly taxed by the Income Tax Department. Department appeal dismissed.
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