Addition cannot be made under Section 68, merely for non-response from directors to notices: Calcutta HC

 

PCIT Vs Atlantic Dealers Pvt. Ltd. (Calcutta High Court)

Appeal Number : ITAT/41/2024

Facts:

1. During the assessment proceedings, the tax authorities identified undisclosed cash credits in the books of Atlantic Dealers Pvt. Ltd.

2. The Assessing Officer initiated proceedings to investigate the nature and source of the undisclosed cash credits. Notices were issued to Atlantic Dealers Pvt. Ltd. to provide explanations and supporting documentation regarding these credits.

3. Atlantic Dealers Pvt. Ltd. responded that the credits were genuine and provided details regarding the transactions involved. Even so, the Assessing Officer deemed the explanations unsatisfactory and concluded that the undisclosed cash credits should be added to the income.

Hon Calcutta HC held as below:

1. The Assessing Officer erroneously drew an adverse inference solely based on the failure of the directors to respond to notices.

2. Adverse inferences must be based on valid grounds and cannot be drawn arbitrarily.

3. The CIT(A) failed to consider any of the grounds raised by the assessee, rendering the order a non-speaking one devoid of proper application of mind.

4. Revenue’s appeal is dismissed

 

The copy of the the order is as under:

PCIT-Vs-Atlantic-Dealers-Pvt.-Ltd.-Calcutta-High-Court