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Commissioner of Income Tax Versus Jain Export Private Ltd.

2015 (3) TMI 713 - DELHI HIGH COURT

Penalty u/s 271(1)(c) - no explanation as to how the shares were purchased for over ₹ 23 lakhs in AY 2004-05 - ITAT deleted penalty levy based on reasoning that the AO did not make any effort to discharge the burden placed upon him to investigate and to bring on record some material to dispute the assessee’s contentions with regard to the actual sale being at ₹ 6000/- Held that:- It is now well established that Section 271(1)(c) of the Act does not compel the Revenue to initiate proc .....

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ion. The disallowance was ultimately directed and upheld by the ITAT, however, the reasoning of the ITAT in holding that the penalty proceedings required satisfaction of a higher threshold of proof, which confirmed the basis for it, ultimately cannot be faulted. - Decided against revenue. - ITA 194/2015 - Dated:- 13-3-2015 - S. Ravindra Bhat And R. K. Gauba,JJ. For the Appellant : Mr. Rohit Madan and Mr. Ruchir Bhatia, Advs. For the Respondent : None ORDER Mr. Justice S. Ravindra Bhat (Open Cour .....

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s Ltd. (PHWL). These shares were purchased during different years at a cost of ₹ 44,26,250/- lakhs. The record evidences that the acquisition of such shares in the relevant year was duly reported and accepted by the AO s concerned. PHWL was eventually directed to be wound up; it was referred to the Board of Industrial and Financial Reconstruction (BIFR), for the purposes of rehabilitation. Ultimately, those efforts failed. During the intervening period the assessee had acquired shares at d .....

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en placed upon him to investigate and to bring on record some material to dispute the assessee s contentions with regard to the actual sale being at ₹ 6000/-. 3. The Revenue urges that the assessee accepted the additions made in the circumstances since there was no explanation as to how the shares were purchased for over ₹ 23 lakhs in AY 2004-05, the disallowance was justified, as was the penalty. 4. The ITAT pertinently observed as follows: It is further relevant to note that what t .....

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den to prove that apparent is not real is not the one who claims so. When we examine the facts, it is found that the AO has not discharged onus on him to prove that apparent was not real. Except for the ipse dixit, there is not substantiation of his stand that the sale price was manipulated. What to talk of proving such a thing, the AO has not even taken pains in explaining that the market price of the shares was more than that realized by the assessee. The ld. CIT(A) has proceeded to confirm th .....

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the figure of Investment in share is only a brought forward balance. When the purchase price of the shares has not been disputed by the AO in any of the earlier assessments, how the authorities can canvass a view in the instant year that such purchase price was inflated in earlier years. It is trite that the transactions which have not been disputed in the earlier years cannot be reviewed in the assessment of the subsequent years. This type of stand would have been admissible if the AO had not .....

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