The appeal by Turbinado Trading Ltd challenges the orders of the CIT(A) and the Income Tax Department concerning alleged tax deficiencies for the fiscal year 2011-12. Central to the dispute is the addition of Rs. 60,00,000 as unexplained income under Section 68 of the Income Tax Act.
The assessee argues that the reassessment process initiated under Section 147/148 was flawed due to procedural irregularities including the alleged non-receipt of notice under Section 148. Furthermore, the assessee contests the mechanical nature of the reasons recorded for reopening the case, emphasizing reliance on dubious third-party information without substantive verification.
Central to the controversy is the addition of Rs. 60,00,000 to the assessee’s income, claimed to be received as share capital from dubious sources. The tribunal reviewed the case amidst claims of non-compliance by the assessee in responding to notices and lack of substantial evidence to disprove the income tax department’s findings.
The tribunal, referring to precedent from various High Courts and the Supreme Court, underscored the importance of demonstrating the genuineness of such transactions. It noted the assessee’s failure to substantiate the creditworthiness of the transactions or to produce any credible evidence during the assessment proceedings.
The decision highlights the crucial need for taxpayers to maintain and present robust documentation to verify the legitimacy of their financial transactions, especially when substantial sums are claimed as share capital or similar investments. The tribunal’s decision upholds the addition of Rs. 60,00,000 as taxable income under Section 68 due to insufficient evidence provided by the assessee to counter the claims.
ITA 893/DEL/2020: Turbinado Trading Ltd vs ITO – Analysis of Section 68 Income Tax Dispute
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