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

ITA/180/2017

AI Insights

The case involves Bright Metals India Private Limited, which appealed against the Assistant Commissioner of Income Tax, Circle 1, Jaipur. The core issue revolved around the burden of proof required from private limited companies in cases of share allotment through private placement. The Tribunal had previously set a higher burden of proof for private limited companies compared to public limited companies, due to the nature of share subscriptions and ongoing relationships with shareholders. The appellant's counsel argued that the Tribunal's decision included points not originally part of the appeal, suggesting a need for a review application to address these concerns. The High Court of Rajasthan, after hearing the arguments, allowed the appellant to withdraw the appeal and suggested filing a review application to the Tribunal.

• Counselvise Citation: [2018] 140 COUNSELVISE.COM (IT) 750904 (HC-RAJASTHAN)
• Appeal Type: Others
• Pronouncement Date: 03-04-2018
• Assessment Year: misc
• Result in Favour of: Others
• Court: HIGH COURT
• Department Lawyers: ANUROOP SINGHI; N S BHATI
• Assessee Lawyers: SIDDHARTH RANKA; M IQBAL
• Keywords: Assessment; Burden of Proof; Income Tax; Private Limited Companies; Share allotment
• Section: 14

Judgement Text

"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 of 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 "