BRIGHT METALS INDIA PVT LTD vs. ASSISTANT COMMISSIONER OF INCOME TAX

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ITA/180/2017HC RajasthanRJHC02013223201703 April 20182 pages
AI SummaryWithdrawn

What did the High Court hold?

The High Court held that the Income Tax Appellate Tribunal had dealt with certain points (specifically paragraphs 4.5 and 4.6 of its order) which were not part of the appeal grounds before it. The Court found it appropriate for the assessee to move a review application before the Tribunal to address these specific paragraphs. Consequently, the High Court permitted the assessee to withdraw the present appeal with the liberty to file an appropriate application before the Tribunal. The period from June 27, 2017, to the date of the order was to be considered under Section 14 of the Limitation Act. The appeal was disposed of as withdrawn with the aforesaid liberty.

What were the facts?

The appeal was filed by Bright Metals India Private Limited (the assessee) against an order of the Income Tax Appellate Tribunal (ITAT). The assessee's representative argued before the High Court. The High Court noted specific paragraphs (4.5 and 4.6) from the ITAT's order dated February 24, 2017, which discussed the burden of proof for private limited companies regarding share allotment and the genuineness of transactions when shareholders become incommunicado. The High Court observed that these points were not part of the appeal grounds before the Tribunal. The assessee was granted permission to withdraw the appeal with liberty to file a review application before the Tribunal.

What were the issues?

1. Whether the Income Tax Appellate Tribunal erred in dealing with contentions that were not part of the appeal grounds, specifically concerning the burden of proof for private limited companies in share allotment cases and the genuineness of transactions when shareholders are incommunicado. Assessee's contention: The assessee argued that the Tribunal had dealt with points (paras 4.5 and 4.6 of the ITAT order) which were never the subject matter of the appeal by way of ground or foundation. Therefore, the Tribunal should not have addressed these contentions. Revenue's contention: The judgment does not record any specific contention from the revenue on this matter. However, the High Court's observation implies that the revenue might have implicitly accepted or not contested the assessee's submission regarding the scope of the appeal.

Which sections of the Income-tax Act were involved?

Section 14

AI-generated summary — verify with the full judgment below

HIGH COURT OF JUDICATURE FOR RAJASTHAN BENCH AT JAIPUR D.B. Income Tax Appeal No. 180 / 2017 Bright Metals India Private Limited, Having Its Registered Address At F-671, Road No. 9, F-2, VKI Area, Jaipur Through Its Director Shri Sanjay Porwal S/o Shri Vimal Chandra Porwal ----Appellant Versus Assistant Commissioner of Income Tax, Circle 1, Jaipur, Having Its Address At New Central Revenue Building, Bhagwan Das Road, C- Scheme, Jaipur ----Respondent ___________________________________________________ For Appellant(s) : Mr. Siddharth Ranka with Mr. M.Iqbal For Respondent(s) : Mr. Anuroop Singhi with Mr. N.S. Bhati _____________________________________________________ HON'BLE MR. JUSTICE K.S.JHAVERI HON'BLE MR. JUSTICE VIJAY KUMAR VYAS Order 03/04/2018 1. We have heard Mr. Siddharth Ranka. 2. Some of the points mentioned in paras Nos.4.5 and 4.6 of the Tribunal order dated 24.02.2017 are reproduced as under: 4.5 The degree of burden of proof on the assessee will vary from assessee to assessee. In case of private limited companies where shares are allotted through private placement to persons generally known to directors or shareholders, directly or indirectly, burden of proof is on higher pedestal as compared to public limited companies where the large scale subscription are offered through public issue and shares are subscribed by general public. In case of private limited companies, the Courts have laid down a strict approach in terms of satisfying such burden of proof. 4.6 In case of private limited companies, generally persons known to directors or shareholders, directly or indirectly buy or subscribe to shares. Upon receipt of money, the share subscribers do not lose touch and become incommunicado.

Call

money,

dividends, warrants, etc. have to be sent and the relationship remains a continuing one.

Therefore, an assessee cannot simply furnish some details and remain quiet when summons issued to shareholders remain un-served and uncomplied. As a general proposition, it would be improper to universally hold that the assessee cannot plead that they had received money, but could do nothing more and it was for the Assessing Officer to enforce shareholders' attendance in spite of the fact that the shareholders were missing and not available. Their reluctance and hiding may reflect on the genuineness

the

transaction

and creditworthiness of the shareholder. It would be also incorrect to universally state that an inspector must be sent to verify the shareholders/subscribers at the available addresses, though this might be required in some cases. Similarly, it would be incorrect to state that the Assessing Officer should ascertain and get addresses from the Registrar of Companies' website or search for the addresses of shareholders themselves.” are never subject matter of the appeal by way of ground or foundation and in spite of that, the Tribunal has dealt with those contentions. Therefore, it will be appropriate for him to move an application by way of review before the Tribunal if such contentions are there in appeal. We grant opportunity to the Tribunal to meet out the paras No.4.5 & 4.6 of the order as reproduced above. 3. We permit him to withdraw this appeal with liberty to move the Tribunal by way of appropriate application. Period taken from 27.06.2017 till today will be taken into consideration under Section 14 of the Limitation Act. 4. The appeal stands disposed of as withdrawn with the aforesaid liberty.

(VIJAY KUMAR VYAS),J (K.S.JHAVERI),J Chauhan/85

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