Set Back to Young Indian: ITAT uphelds case against Gandhi’s

The Income Tax Appellate Tribunal(ITAT Delhi) in the matter of Young Indian, vs. ACIT uphelds case against Gandhi’s.

ITAT upheld the case against the Gandhi family in connection with commercial immovable assets worth more than Rs.800 crore acquired through the incorporation of Young Indian with a share capital of Rs.5 lakh and the receipt of a hawala entrance of Rs.1 crore from a shell company in Kolkata.

The Appellant prays that the said payment of Rs.50,00,000/- be treated as an expense incurred on the objects of the Appellant.

The appellant has challenged the disallowance of Rs.50,00,000/- paid for assigning of loan from AJL. It has been submitted before us that, if addition u/s 28(iv) is upheld, then the sum of Rs.50,00,000/- paid by the appellant for earning the alleged business assets ought to be allowed as deduction while computing the alleged benefit.

The Coram Found out that, “We have already noted above that the appellant had shown loan in its books of account of Rs.1 crore stated to have been received from Kolkata based company, Dotex. The Assessing Officer has doubted the entire transaction of the loan on various grounds which have been incorporated above. One of the key reasons for casting a doubt on the transaction of loan was that, earlier this company was owned, controlled and managed by established entry providers, namely, Mr. Sunil Bhandari and Mr. Sunil Sanganeria, who were not only the Directors of Dotex, but also various other 50 paper companies operating from Kolkata which were directly and indirectly managed by them. Assessing Officer has also discussed the modus operandi which was unearthed by the enquiry of Investigation Wing in the case of these two entry providers and Dotex. When the AO had required the assessee to establish the nature and source of loan and also to prove the identity, creditworthiness and genuineness of the transaction, the assessee had filed name, address, PAN etc. and also the confirmation letter. However, the AO has dealt with these documents and did not find them satisfactory in light of these inquiries so as to establish the genuineness and creditworthiness of the said company. Before the ld. CIT (A), the appellant had filed various documents to establish the genuineness of the transaction, the list of which has been incorporated above in the foregoing paragraphs which has been filed as additional evidences before us also and same were taken into record by us, because these documents were filed before the ld. CIT (A) who has refused to admit the same despite calling for the remand report.”

The Appellate Authority rule out that, “Accordingly, in the interest of justice, we deem it proper that this matter should be restored back to the file of the Assessing Officer, with the following direction to Assessing Officer:-

• Firstly, to examine all the evidences filed by the assessee in the form of additional evidences before us;
• Secondly, to carry out necessary inquiries from Dotex and also summon himself or through a commission to the Directors or the Principal Officer of Dotex to explain the source and genuineness of the transaction;
• Thirdly, Assessing Officer should confront all the information and material gathered and communicated by the Investigation wing including STR report to the appellant; and;
• Lastly, the appellant is also directed to cooperate in such enquiry and lead all such evidence as they consider necessary to establish the credentials and the genuineness of the transaction in support of their explanation given before us.”

“Since we have already upheld the action of the AO insofar as addition made u/s 28(iv), therefore, the claim for deduction of Rs.50,00,000/- for acquiring the aforesaid business assets and to be allowed as deduction is accepted. Accordingly, we direct AO to allow the deduction of Rs.50,00,000/- from the amount held to be taxable u/s 28(iv)”, Tribunal added.

The Judgment was made by Anil Chaturvedi And Amit Shukla.

The Petitioner was represented by Shri Saurabh Soparkar and Respondent was represented by Shri G.C. Srivastava.

To Read Judgment Download PDF Given Below: