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From The Court : CIT Vs Gangour Investments LTd (Delhi High Court) —
The Revenue can make addition u/s 68 of the Act only if the assessee is unable to explain credit appearing in its books of accounts :
Assessee had filed his loss return and there is increase in his share capital of Rs. 1 crore. Assessing officer has initiated enquiry regarding shareholder.
Out of the Rs 1 crore shares Rs. 71 Lakhs are invested by sister concern and both companies have common shareholders & directors. The assessing officer made addition of this amount on the basis that assessee’s own funds has come back in form of share capital and all these entries are book entries and merely routed through T.T. finance Ltd.
Assessee filed copies of the applications made by T.T. Finance Ltd , details of bank A/c, PAN held by them.
CIT(A) & Tribunal allowed the assesses appeal on the ground that assessee though there are same shareholders, directors & premises the company investing is separate entity & widely held company and it made application for shares. High Court affirmed the above decision and revenues appeal failed.
Penalty under section 271(1)(c)-Concealment-Addition to income based on estimate basis-: CIT v. Iqbal Singh & Co. (2009) 28 (I) ITCL 468 (P&H-HC)
A penalty of Rs. 1,38,454 was levied upon the assessee which was confirmed by the Commissioner. In appeal, the Tribunal found that the Commissioner (Appeals), while confirming the penalty, no where stated that the assessee had not disclosed all the facts to compute the income. It also found that the addition to income had been made on the basis of an estimate but without bringing any material on record which could substantiate that there was a failure on the part of the assessee to return correct income due to fraud or willful neglect or furnishing of inaccurate particulars of income.
This court in CIT v. M.M. Rice Mills (2002) 253 ITR 17 (P&H) held as follows:
Merely because the addition had been made to income under the proviso to section 145(1) of Income Tax Act, 1961 by adopting the view that the gross profit shown in the books of account was too low as there
