Case Summary of ACIT, Circle-7(2), New Delhi vs. Direct News Pvt. Ltd, ITA No. 6146/DEL/2019

Introduction

This case summary addresses the Income Tax Appellate Tribunal’s decision for ITA No. 6146/DEL/2019, where the ACIT, Circle-7(2), New Delhi appealed against Direct News Pvt. Ltd regarding the assessment year 2013-14.

Case Background

The case revolves around the deletion of disallowance made by the AO under section 68 of the Income-tax Act, 1961 concerning share application money received, which was initially found unexplained but later deleted by the CIT(A).

Details of Proceedings

The hearing took place on September 19, 2023, with the decision pronounced on September 21, 2023. The main issue in the appeal was the legitimacy of the share application money and the penalty imposed under section 271(1)(c) for the assessment year 2012-13, along with related proceedings for other years linked through common factual and legal questions.

Judicial Findings and Conclusion

The Tribunal, after reviewing the precedents and findings from similar cases, upheld the decision of the CIT(A) to delete the additions made by the AO. It was determined that the assessee had satisfactorily demonstrated the authenticity of the transactions through appropriate banking channels and confirmations from the investing company. The lack of a remand report from the AO further weakened the Revenue’s position.

The Tribunal’s decision also referenced several higher judicial authorities supporting the non-investigation of the source of the source, thereby affirming the decision in favor of the assessee. The Revenue’s appeals in both the quantum and penalty aspects were dismissed, underscoring the necessity of substantial evidence before dismissing an assessee’s claims.

Implications

This case highlights the critical aspects of handling share application controversies and the requirements for the AO to substantiate claims with concrete evidence. It reinforces the judicial trend of protecting taxpayer rights against baseless claims by the authorities.

Case Summary of ACIT, Circle-7(2), New Delhi vs. Direct News Pvt. Ltd, ITA No. 6146/DEL/2019