Padma Vibhushan N.A. Palkhivala Memorial National Moot Court Competition, 2021

Team Code: TC34
Padma Vibhushan N.A. Palkhivala Memorial National Moot Court
Competition, 2021
BEFORE THE HON’BLE HIGH COURT OF ______________
Writ Tax No. /2021
IN THE MATTER OF
M/s XYZ Pvt. Ltd …………………………………………………………. COMPLAINANT
V.
Commissioner of Income Tax ………………………………………………. RESPONDENT
UNDER ARTICLE 226 OF THE INDIAN CONSTITUTION
WRITTEN SUBMISSIONS ON BEHALF OF THE APPLICANT-

- M/s XYZ Pvt. Ltd -
1
Padma Vibhushan N.A. Palkhivala Memorial National Moot Court Competition, 2021
TABLE OF CONTENTS
LIST OF ABRRIVATION……………………………………………………………………… 3
TABLE OF AUTHORITIES…………………………………………………………………… 4
STATEMENT OF JURISDICTION……………………………………………………………. 6
SUMMARY OF FACTS………………………………………………………………………... 7
ISSUES RAISED ………………………………………………………………………………..8
SUMMARY OF ARGUMENTS ………………………………………………………………..9
ARGUMENTS ADVANCED………………............................................................................ 10
Issue 1: Whether the Writ Petition challenging the Notice under section 148 of the Act is
maintainable or not?
A) Maintainabilty Of Writ Petition Even If Alternate Remdy Is Avaiable…………………….10
B) The Writ Petition Is Admissible Since The Notice Is Without Jurisdiction………….……...11
Issue 2: Whether the Notice under section 148 of the Act is void of jurisdiction?
A) Time Limit Mentioned Under Section 149 To Issue Notice Under Section 148…………...14
B) Finance Act 2021 Cannot Be Over Subsided By The Taxation And Other Laws
(Relaxation And Amendment Of Certain Provisions) Act, 2020……………………………...16
C) Notice Under Section 148 Cannot Be Issued To The Assesse……………………………..18
Issue 3: Whether the proposed additions under section 68 of the Act deserve to be deleted on
merits?
A) The Identity, Creditworthiness And Genuineness Of The Transaction…………………….19
B) Source Of Source……………………………………………………………………………20
PRAYER
…………………………………………………………………………………………………23
2
[WRITTEN SUBMISSIONS ON BEHALF OF THE APPLICANT]
LIST OF ABRRIVATION
MEANING…………………………………………………...…………………….ABBRIVATION
INCOME TAC ACT ………………………………………………. ………….…………....I. T ACT
ASSESSING OFFICER…………………………………………….............................................A.O
HONORABLE……………………………………………………………………………. HON’BLE
UNDER SECTION……………………………………………………………………………….u/s
READ WITH…………………………………………………………………….……..…………r/w
INCOME TAX APPELLATE TRIBUNAL…………...……………………………………….ITAT
INCOME TAX OFFICER……………………………………………………………………….ITO
COMMISSIONER OF INCOME TAX………………………………………………………….CIT
PERMANENT ACCOUNT NUMBER……………………………………………..…………..PAN
INCOME TAX RETURN…………………………………………………………...…………...ITR
TAX RESIDENCY CERTIFICATE………………………………………….…………………TRC
MEMORANDUM OF ASSOCIATION……………………………………………………..…MOA
ARITICLE OF ASSOCIATION…………………………………………………..…………….AOA
CENTRAL BOARD OF DIRECT TAX………………………….……………………………CBDT
3
INDEX OF AUTHORITIES
BOOKS
BRYAN A. GARNER, BLACK’S LAW DICTIONARY (9th ed. 2009).
JUSTICE C.K THAKKER, ENCYCLOPAEDIC LAW LEXICON (1st ed. 2010).
KANGA & PALKHIVALA’S, THE LAW AND PRACTICE OF INCOME TAX (10 ed. 2014).
CASES
Calcutta Discount Limited Company vs. District I, Calcutta & Anr 1961 AIR 372; 1961 SCR
(2) 241
Whirlpool Corporation v Registrar of Trademarks, Mumbai, (1998) 8 SCC 1
City Life Projects Pvt Ltd. Vs ITO (ITAT Delhi): ITA 2668/DEL/2019
GKN Driveshaft v. ITO (2003) 259 ITR 19 (SC)
Jeans Knit Private Ltd. Bangalore v. The Deputy Commissioner of Income Tax Bangalore &
Other (2018) 12 SCC36
M/S Ardent Steel Limited vs Assistant Commissioner Of Income Writ Petition (T) No.168 of
2016
T T Pvt Ltd Vs Income Tax Officer (1980) 121 ITR 551

N Govindaraju Vs Income Tax Officer ITA 504/2013
Ashok Kumar Agarwal V. Union of India WRIT TAX No. - 524 of 2021
Avinder Singh Etc vs State Of Punjab & Anr. 1979 AIR 321, 1979 SCR (1) 845
Armada D1 Pvt. Ltd. v. DCIT WP(L) No. 11766 of 2021
Tata Communications Transformation Services Limited v. ACIT WP No. 1334 of 2021
Principal CIT v. NRA Iron & Steel Pvt. Ltd, M.A. No. 814 of 2019 in Civil Appeal No. 2463
of 2019. D/d. 25.10.2019.
ITO Vs M/s Megasun Merchants Pvt. Ltd. (ITAT Kolkata), ITA No.1038/Kol/2015, D/d
29.01.2019.
4
Gaurav Triyugi Singh v. CIT, 2017 SCC OnLine ITAT 3817

Harish Sharma Vs ITO (ITAT Chandigarh) , ITA No. 327/Chd/2020
A-One Housing Complex Ltd. Vs ITO (2008) 110 ITD 361 (Del)
CIT Vs Lovely Exports (P) Ltd. 216 CTR 195
JOURNAL
Amar Gahlot, Applicability of Res Judicata in Tax Matters
T.P Ostwal and Vikram Vijayaraghavan, Anti Avoidance Measures, 22(2) NLSIU L.R. 59 (2010).
STATUTES REFFERED
Income Tax Act, 1961.
Finance Act, 2021

Double Taxation Avoidance Agreement Between India And Mauritius, 2016
The Taxation and Other Laws (Relaxation and Amendment Of Certain Provisions) Act,
2020
5
STATEMENT OF JURISDICTION
M/s XYZ Pvt. Ltd, the COMPLAINANT in the present case, have approached this Hon’ble
High Court Of Bombay u/s 226(1) of the Indian Constitution.
“Notwithstanding anything in Article 32 every High Court shall have powers, throughout the
territories in relation to which it exercise jurisdiction, to issue to any person or authority,
including in appropriate cases, any Government, within those territories directions, orders
or writs, including writs in the nature of habeas corpus, mandamus, prohibitions, quo
warranto and certiorari, or any of them, for the enforcement of any of the rights conferred by
Part III and for any other purpose”
The COMPLAINANT humbly set-forth the facts and laws on which these claims are based.
6
STATEMENT OF FACTS
1. M/s XYZ Pvt. Ltd. Assessee is a private limited company incorporated in India engaged in
real estate development. During the Financial year 2012-13 i.e., Assessment Year (AY)
2013-14, the Assessee received investment from AB Ltd, an Indian company. AB Ltd
purchased the 50,000 shares of Face Value of Rs. 10/- at a premium of Rs. 13,990/.
2. Subsequently, the Assessee raised another round of funding from CD (Mauritius) Ltd, a
company incorporated in Mauritius. CD (Mauritius) Ltd purchased 30,000 shares of Face
Value of Rs. 10/- at a premium of Rs. 19,990/-
3. For AY 2013-14, the Assessee filed its return of Income October 15, 2013. A Notice under
section 142(1) of the Act dated October 02,2014 was issued wherein a question pertaining
to the share capital investment, inter alia, was raised. Assessee furnished all the relevant
documents required which proved that AB Ltd & CD Ltd, are genuine companies such as
PAN, ITR and a copy of bank transaction with AB Ltd. For CD(Mauritius) Ltd, the Assessee
furnished TRC, Audited Financial Statements and a copy of bank transaction.
4. On November 2020, a search and seizure action were carried on a ZT group which has no
connections with workings of M/s. XYZ Pvt. Ltd. , wherein a diary was found which read
“AB 700 To XYZ 700 …. CD 600 To XYZ 600”. On the mere basis of this diary entry AO
issued a Notice under section 148 of the Act on April 02, 2021, to the Assessee requiring
the Assessee to file its return.
5. The Ld. AO vide letter dated April 15, 2021, provided a copy of the recorded reasons and
sanction obtained from the appropriate authority. The recorded reasons contained extracts
from the diary seized from the ZT group and a statement recorded from one of the employees
of the ZT group that they were involved in providing accommodation entry. The investment
of Rs. 130,00,00,000 is considered as bogus and an addition under section 68 of the Act is
proposed.
6. The Assessee has preferred a Writ Petition before the Hon’ble High Court against the Re-
assessment proceedings.
7
STATEMENT OF ISSUES
1.Whether the Writ Petition challenging the Notice under section 148 of the Act is maintainable
or not?
2.Whether the Notice under section 148 of the Act is void of jurisdiction?
3.Whether the proposed additions under section 68 of the Act deserve to be deleted on merits?
8
SUMMARY OF ARGUMENTS
A. WRIT PETITION CHALLENGING THE NOTICE UNDER SECTION 148

OF THE ACT IS MAINTAINABLE
(A)The counsel humbly submits that the writ petition challenging the notice under section 148 of
the act is maintainable as, the principles relating to Powers of the court in entertaining writ petition
under article 226 of the Constitution, Even where alternate remedy. (B)The notice issued under
section 148 had exhausted the time limit. (B.2)Proceedings had been issued under wrong
provision i.e section 148 whereas the notice should have been issued u/s 153C of the Act.
B. NOTICE UNDER SECTION 148 OF THE ACT IS VOID OF JURISDICTION
(A)Time Limit Mentioned Under Section 149 To Issue Notice Under Section 148:Counsel
petitioner would like this honourable court to take note that the time limit for issuance of notice
under section 148 expired on 31st of March 2020 as the time limit prescribed under section
149(1)(b) of the I.T ACT 1961. (B) Finance Act 2021 Cannot Be Over Subsided By The Taxation
And Other Laws (Relaxation And Amendment Of Certain Provisions) Act, 2020:delegated
legislation can never overreach any Act of principal legislature, and the CBDT was issuing the
Notifications under the delegated powers which were given to them by The Taxation And Other
Laws (Relaxation And Amendment Of Certain Provisions) Act, 2020. (C) Notice Under Section
148 Cannot Be Issued To The Assesse: The notice under section 148 was given to the petitioner
when search and seizure action were carried on a ZT group, and the notice should be issued under
section 153A of ITA.
C. PROPOSED ADDITIONS UNDER SECTION 68 OF THE ACT DESERVE TO BE

DELETED ON MERITS.
This Section deal with 2 parts, (A) which, establishes the genuineness of the transaction by using
various case laws that show that PAN, ITR and Bank statements are enough to satisfy the doubts
and concerns of the AO and further pushes the onus back at AO, to show how the channels are
not genuine. (B) this part deal with source of source and with the help various case laws show
that proving source of source is not necessary by the Assessee.
9
ARGUMENTS ADVANCED
ISSUE 1
WRIT PETITION CHALLENGING THE NOTICE UNDER SECTION 148

OF THE ACT IS MAINTAINABLE
(A) MAINTAINABILTY OF WRIT PETITION EVEN IF ALTERNATE REMDY IS

AVAIABLE
The counsel humbly submits that the writ petition challenging the notice under section 148 of the
act is maintainable as, the principles relating to Powers of the court in entertaining writ petition
under article 226 of the Constitution, Even where alternate remedy is available are as under:
1. Exceptions to the rule of alternate remedy arise where
(a) The writ petition has been filed for the enforcement of a fundamental right protected by Part
III of the Constitution;
(b) There has been a violation of the principles of natural justice;
(c) The order or proceedings are wholly without jurisdiction1
The counsel further submits that the aforesaid proposition has recently been upheld by Supreme
Court in the case of jeans knit private LTD vs the ITO Bangalore where in the context of
challenging notice under section 148, It was specifically held that writ petition is admissible
against 148 notices under article 226 if the same is found to be wholly without jurisdiction even
when there is an alternate remedy available:
“ We find that the High Courts in all these cases have dismissed the writ petitions preferred By
the appellant/assessee herein challenging the issuance of notice under Section 148 the I.T ACT,
1961 and the reasons which were recorded by the Assessing Officer for reopening the assessment.
dimsissed by the High Courts view taken is contrary as These writ petitions are not maintainable.
to the law laid down by Calcutta Discount Limited Company vs. District I, Calcutta & Anr.2 set
1
Whirlpool Corporation v Registrar of Trademarks, Mumbai, (1998) 8 SCC 1
2
Calcutta Discount Limited Company vs. District I, Calcutta & Anr 1961 AIR 372; 1961 SCR (2) 241
10
aside the impugned judgments, and remit the respective High Courts to decide the writ petitions
on merits”.
The counsel further submits that as rightly mentioned by the apex court in the abovementioned
cases even if alternate remedy is available the notice issued is wholly without jurisdiction and
hence it is bad in law.
Now applying the aforesaid principles Supreme Court in the case of GKN drive shafts held that
the proper procedure to to file writ petitions would be after assessee filed its objections Before
being relevant authority and such authority disposes those objections through a speaking order ,
The assessee can at that stage approach the court in article 226.
(B) THE WRIT PETITION IS ADMISSIBLE SINCE THE NOTICE IS WITHOUT

JURISDICTION
I. The notice issued under section 148 had exhausted the time limit which was as supposed on
31st of March 2020 as mentioned under section 149(1)(b) of the I.T ACT 1961.
II. Furthermore the proceedings had been issued under wrong provision i.e section 148 whereas
the notice should have been issued u/s 153C of the act-
The counsel further submits that as held in City Life Projects Pvt Ltd. Vs ITO (ITAT Delhi)3
“once reassessment proceedings are initiated on the basis of incriminating material found in the
search of 3rd party then the provisions of section 153C of the I.T. Act were applicable which
exclude the application of section 147 and 148 of the I.T. Act and notice u/s. 148 of the Act and
proceeding u/s. 147 are illegal and void ab initio”
3
City Life Projects Pvt Ltd. Vs ITO (ITAT Delhi): ITA 2668/DEL/2019
11
III. The issuance of notice is wholly without jurisdiction
The counsel further submits that as held in GKN Driveshaft vs ITO4 “a notice can be challenged
if the authority issued such notice has no competence of jurisdiction or if the notice is issued
beyond the period of limitation”.
Hence as observed from the above stated reasons prima facie the notice is without jurisdiction
and therefore the decision laid down in Jeans Knit Private LTD Vs The ITO Bangalore5 R/W
Whirlpool Corporation V Registrar Of Trademarks6 the writ is maintainable not withstanding
alternate remedy available before CIT appeal.
Questioning the initiation of proceeding of reassessment under Section 148 of the IT Act, this
writ petition has been preferred principally on the ground that no notice was issued within the
period of limitation as prescribed under Section 149(1)(b) read with Section 148(1) of the IT Act
and, therefore, the initiation of proceeding for reassessment is barred by limitation and even
otherwise, alternatively, The assessee was served the notice under wrong section i.e Section
148(1)of the IT Act, as such, initiation of proceeding for reassessment and the notice deserve to
be quashed7.
The counsel further submits that as held by the Division Bench in the case of T T Pvt Ltd Vs
Income Tax Officer8, “Held that availability of alternate remedy under the Act would not be a
bar for this Court to examine the notice issued under section 148 of the I.T ACT, 1961, if it is
challenged on the ground of jurisdictional error”.
The Division Bench in the case of N Govindaraju Vs Income Tax Officer9, has held that the notice
under section 148 is justiciable, meaning thereby that the same can be challenged independently.
4
GKN Driveshaft v. ITO (2003) 259 ITR 19 (SC).
5
Jeans Knit Private Ltd. Bangalore v. The Deputy Commissioner of Income Tax Bangalore & Other (2018) 12
SCC36
6
Supra 1
7
M/S Ardent Steel Limited vs Assistant Commissioner Of Income
8
T T Pvt Ltd Vs Income Tax Officer (1980) 121 ITR 551
9
N Govindaraju Vs Income Tax Officer ITA 504/2013
12
In the facts of the present case, where the jurisdiction of issuance of notice under section 148 of
the I.T ACT was itself under challenge, we are of the opinion that the learned Single Judge has
rightly held that the writ petition, in the said circumstances, would be maintainable.
Section 147 & 148 of the I.T ACT, 1961 Reassessment Where the jurisdiction of issuance of
notice under section 148 was itself under challenge, it was rightly held that the writ petition
would be maintainable Joint Commissioner of Income Tax vs. Dell India P Ltd.
Thus keeping the above stated facts and precedents set by apex court and hon’ble high courts the
writ petition challenging the notice u/s 148 of the IT act should be maintainable.
13
ISSUE 2
WHETHER THE NOTICE UNDER SECTION 148 OF THE ACT IS VOID OF

JURISDICTION?
The writ petition is filed by petitioner to challenge initiation of re-assessment proceedings under
Section 148 of the I.T ACT, 1961 for assessment year 2013-14 reassessment proceedings have
been initiated upon notices issued after the date 01.04.2021.
Name of Portioner …………………………………………………….……………………..XYZ

Assessment Year …………………………………………………………………………2013-14
Date of Notice U/s 148………………………………………………………………... 02.04.2021
Date of filing of original Return……………………………………..………………..15.10.2013
Time limit of issue of Notice U/s 148 expires…………………………...…………… 31.3.2020
(A) TIME LIMIT MENTIONED UNDER SECTION 149 TO ISSUE NOTICE UNDER
SECTION 148.
The Counsel petitioner would like this honourable court to take note that the time limit for
issuance of notice under section 148 expired on 31st of March 2020 as the time limit prescribed
under section 149(1)(b) of the I.T ACT 1961.
(b) if four years, but not more than six years, have elapsed from the end of the relevant assessment year unless the
income chargeable to tax which has escaped assessment amounts to or is likely to amount to one lakh rupees or
more91 for that year.]10
Therefore the issuance of notice on 2 April 202111 is void of Jurisdiction as the time limit has
already expired which was prescribed in section 149(1)(b) of the act.
10
Section 149(1)(b) of I.T ACT 1961, substituted by Finance Act, 2001, w.e.f. 1-6-2001
11
Moot Preposition Point 13 page 2
14
I. SEQUENCE OF EVENTS THAT EXTENDED THE DATES TO ISSUE NOTICE

UNDER SECTION 148
Event 1:
THE TAXATION AND OTHER LAWS (RELAXATION AND AMENDMENT OF CERTAIN
PROVISIONS) ACT, 2020 dated 29th September 2020 was passed and gave certain powers to
Central Government to extend various dates of the I.T ACT 1961 (Specified Act) as per Section
3.
The above stated act said under Section 3(1) that:
(1) Where, any time-limit has been specified in, or prescribed or notified under, the specified Act
which falls during the period from the 20th day of March, 2020 to the 31st day of December,
2020, or such other date after the 31st day of December, 2020, as the Central Government may,
by notification, specify in this behalf, for the completion or compliance of such action:-
(a) completion of any proceeding or passing of any order or issuance of any notice, intimation,
notification, sanction or approval, or such other action, by whatever name called, by any
authority, commission or tribunal, by whatever name called, under the provisions of the specified
Act; or
(b) filing of any appeal, reply or application or furnishing of any report, document, return or
statement or such other record, by whatever name called, under the provisions of the specified
Act.
Event 2:
On 27thFebruary, 2021, the CBDT issued notification S.O. 966(E) . As per which the time limit
for completion the action which inter alia included the reassessment proceedings was due to
expire on 31st March, 2021 was extended to 30th April, 2021. This was done by the Govt. as per
the power conferred to it u/s 3(1) of the Relaxation Act.
Event No. 3:
On 31st March, 2021, the CBDT issued notification S.O. 1432(E) the notification clarified that
the reassessment orders, which were earlier to be passed on 31st March, 2021 can now be passed
to 30th April, 2021. Further that the notice U/s 148 of the Act which were to be issued on or before
31st March, 2021, can now be issued on or before 30th April, 2021. This was done by the
15
Government as per the power conferred to it U/s 3(1) of the Relaxation Act. CBDT issued another
Notification S.O. 1432(E) on 31st March, 2021, which Further Extended the dates to issue notice
under 148 on or before 30th April 2021. It was explicitly clarified that the reassessment
mechanism as per the old system, i.e., which was prevalent before 31st March, 2021, shall be
applicable.
(B) FINANCE ACT 2021 CANNOT BE OVER SUBSIDED BY THE TAXATION AND
OTHER LAWS (RELAXATION AND AMENDMENT OF CERTAIN PROVISIONS)
ACT, 2020
The Taxation And Other Laws (Relaxation And Amendment Of Certain Provisions) Act, 2020
gave Statutory powers to the Central government to extend dates were only for the purpose of
overcoming the immediate difficulty arising from the spread of the pandemic COVID-19.
However, the only intervention offered by Taxation and Other Laws (Relaxation of Certain
Provisions) Act, 2020, was to extend the timelines under then pre-existing provisions of the Act,
with reference to pending proceedings. Therefore, Taxation and Other Laws (Relaxation of
Certain Provisions) Act, 2020 is not visualized to impact or have any power to over subside the
provisions of the Finance Act, 2021. The Notifications that may have been issued under the
Ordinance and the Taxation and Other Laws (Relaxation of Certain Provisions) Act, 2020 cannot
be read to remedy the situation upon the enforcement of the Finance Act, 2021 which has
substituted and thus repealed the pre-existing provisions of the ITA 1961 and has re-enacted a
new scheme for reassessment under the Act, with effect from 01.04.2021.
The counsel from the side of the petitioner would like this honourable High Court to take note
that the delegated legislation can never overreach any Act of principal legislature, and the CBDT
was issuing the Notifications under the delegated powers which were given to them by The
Taxation And Other Laws (Relaxation And Amendment Of Certain Provisions) Act, 2020. the
CBDT is a statutory authority functioning under the Central Board of Revenue Act, 1963. The
issuance of Notification extending the due date for issuance of Notice under the Act beyond the
existence of relevant provisions of such act would amount to excessive delegation.
16
In Ashok Kumar Agarwal V. Union of India through its Revenue Secretary North Block and 2
Others12 Hon'ble Naheed Ara Moonis, J. and Saumitra Dayal Singh, J. said in para 79 page 53
that “A delegated legislation can never overreach any Act of the principal legislature. Practicality
of life de hors statutory provisions, may never be a good guiding principle to interpret any
taxation law. In absence of any specific clause in Finance Act, 2021, either to save the provisions
of the Enabling Act or the Notifications issued thereunder, by no interpretative process can those
Notifications be given an extended run of life, beyond 31 March 2020.”
In Avinder Singh Etc vs State Of Punjab & Anr.13 Krishna Iyer J. appropriately expressed in para
16 of the judgement that parliamentary authority over designated enactment should be a living
continuity as a protected need. The authoritative command over the organization in parliamentary
nations like India is more hypothetical than practical. In truth, the control of the Parliament is not
that much effective as it needs to be.
The Department did not adhere to the new procedures laid down by the Finance Act under section
148A and thus this notice issued to XYZ Ltd. should be squashed and it is void of jurisdiction.
The AO has issued Notice under Sec 148 without the proper Application of mind and the
procedure which in mentioned in section 148A of the Finance Act 2021 in this particular case
The Hon. Bombay High Court in Armada D1 Pvt. Ltd. v. DCIT14 dated 03.06.2021 has stayed
the proceedings of reassessment on account of non-adherence to the new procedure laid down
under section 148A of the Act. Similarly, The Hon. Bombay High Court in Tata Communications
Transformation Services Limited v. ACIT15 WP No. 1334 wherein the Petitioner has contended
that section 3 of The Taxation And Other Laws (Relaxation And Amendment Of Certain
Provisions) Ordinance, 2020 and Explanation in Notification No. 20 of 2021 and Explanation in
Notification No. 30 of 2021 dated April 27, 2021 (2021) 434 ITR (St) 11 are ultra-vires the I.T
ACT, 1961 and the Finance Act, 2020 and are unconstitutional, posing challenge to them urges
for striking them down. The Court has stayed the proceedings in this case as well.
12
Ashok Kumar Agarwal V. Union of India WRIT TAX No. - 524 of 2021
13
Avinder Singh Etc vs State Of Punjab & Anr. 1979 AIR 321, 1979 SCR (1) 845
14
Armada D1 Pvt. Ltd. v. DCIT WP(L) No. 11766 of 2021
15
Tata Communications Transformation Services Limited v. ACIT WP No. 1334 of 2021
17
(C) NOTICE UNDER SECTION 148 CANNOT BE ISSUED TO THE ASSESSE
The notice under section 148 was given to the petitioner when search and seizure action were
carried on a ZT group, which is an another person or an entity wherein a diary was found16 and
some journal entries were found.
Section 153C(1) states that “Notwithstanding anything contained in section 139, section 147,
section 148, section 149, section 151 and section 153, where the Assessing Officer is satisfied
that any money, bullion, jewellery or other valuable article or thing or books of account or
documents seized or requisitioned belongs or belong to a person other than the person referred
to in section 153A, then the books of account or documents or assets seized or requisitioned shall
be handed over to the Assessing Officer having jurisdiction over such other person and that
Assessing Officer shall proceed against each such other person and issue such other person
notice and assess or reassess income of such other person in
accordance with the provisions of section 153A.” And all the proceedings under this section
should be initiated according to section 153A as mentioned in the section which was not done.
As per the facts present in the Moot preposition the A.O should have sent a notice under section
153A instead of 148 of the I.T ACT 1961. This proves that the A.O issues a notice with the proper
application of mind and did not have any right to issue a notice under section 148 and the said
notice is void of Jurisdiction.
16
Moot preposition point 12 page 2
18
ISSUE 3
WHETHER THE PROPOSED ADDITIONS UNDER SECTION 68 OF THE ACT

DESERVE TO BE DELETED ON MERITS?
The Counsel humbly submits that proposed additions under section 68 of the Act deserve to be
deleted on merits because of the following reasons : -
A) THE IDENTITY, CREDITWORTHINESS AND GENUINENESS OF THE

TRANSACTION
The Supreme Court in Principal CIT v. NRA Iron & Steel Pvt. Ltd17. recently reiterated the settled
position of law regarding Section 68 wherein the initial onus is on the assessee to establish by
cogent evidence the identity of the creditors, genuineness of the transaction, and creditworthiness
of the investors under Section 68 of the Act.
The assesses discharges this onus by providing PAN identity, share registered form, balance
sheet, incorporation form, bank accounts, acknowledgment copy of the return of income,
MOA/AOA and board resolution of the investing companies.
In the present case, assessee does so by producing the PAN, ITR and a copy of bank transaction
with AB ltd (Indian company)18 and for CD ltd (Mauritian Company), it produced TRC, Audited
Financial Statements and a copy of bank transaction19.
In the case of ITO Vs M/s Megasun Merchants Pvt. Ltd. (ITAT Kolkata)20, where AO added back
the entire share application money raised from the share applicants by assessee during the year
under consideration primarily on the premise that directors of the shareholder companies failed
to appear before him, and assessee company failed to prove identity, creditworthiness, and
17
Principal CIT v. NRA Iron & Steel Pvt. Ltd, M.A. No. 814 of 2019 in Civil Appeal No. 2463 of 2019. D/d.
25.10.2019.
18
Moot Preposition, para 7
19
Moot Preposition, para 8
20
ITO Vs M/s Megasun Merchants Pvt. Ltd. (ITAT Kolkata), ITA No.1038/Kol/2015, D/d 29.01.2019.
19
genuineness of the transaction. In the facts of the present case, both the nature & source of the
share application received was fully explained by assessee. Assessee had discharged its onus to
prove the identity, creditworthiness, and genuineness of the share applicants through the PAN
details, bank account statements, audited financial statements and Income Tax acknowledgments
which were placed on AO’s record. Accordingly, all the three conditions as required u/s. 68 i.e.,
the identity, creditworthiness and genuineness of the transaction was placed before the AO and
the onus shifted to AO to disprove the materials placed before him. Without doing so, the addition
made by AO under section 68 was based on conjectures and surmises could not be justified.
B) SOURCE OF SOURCE.
An Addition of Rs. 70,00,00,000/- was made under section 68 of I.T ACT by the Assessing
Officer against the assessee for not producing the source of source of the investment. But in the
case of Gaurav Triyugi Singh v. ITO21, it was held that that assessee is only required to explain
the source of the credit. There is no requirement under the law to explain the source of the source.
Furthermore, in the case of Commissioner Of Income Tax vs Nr Portfolio Pvt Ltd it was held the
burden of proof can seldom be discharged to the hilt by the assessee; if the AO harbours doubts
of the legitimacy of any subscription he is empowered, nay duty-bound, to carry out thorough
investigations. But if the Assessing Officer fails to unearth any wrong or illegal dealings, he
cannot obdurately adhere to his suspicions and treat the subscribed capital as the undisclosed
income of the Company.
In the case of Harish Sharma Vs ITO (ITAT Chandigarh)22 the assessee has explained the nature
and source of the amount in question and to substantiate his contention submitted cash flow
statement. We further note that the AO has not given his findings on this point. We, therefore,
find merit in the contention of the assessee that in the absence of any adverse findings by the AO
on the source of earning of the assessee, the authorities below have wrongly treated the amount
in question as undisclosed income u/s 68 of the Act and computed the Tax liability under the
provisions of section 115BBE of the Act.
21
Gaurav Triyugi Singh v. CIT, 2017 SCC OnLine ITAT 3817
22
Harish Sharma Vs ITO (ITAT Chandigarh) , ITA No. 327/Chd/2020
20
The share application money or the share capital received by an assessee (company) was
considered to be adequate disclosure as the assessee cannot generally collect the source of such
source from the prospective shareholder of the assessee. Also, the court were of the view that
once the company has given the details of the person from whom the share application money
was received, the department is at liberty to proceed against those person. Thus, it was found to
be unjustified on the part of the department to add the application money received by the assessee
as unexplained cash credit under section 68 of the Act.
The Hon’ble Delhi ITAT in the case of A-One Housing Complex Ltd. Vs ITO23 observed as
under, “In the case of deposits received by a money lender or a bank, the onus would be lighter
as such banker is not supposed to know all the particulars of general public. Any person whether
a millionaire or beggar can come to a bank and open the account with such banker. The banker is
not supposed to know the source of money deposited by his customers. Hence, the onus would
be light.”
This issue discussed and decided in various judicial forums was finally settled with the verdict of
the Hon’ble Supreme Court in the case of CIT Vs Lovely Exports24 which held as under, “Can
the amount of share money be regarded as undisclosed income under section 68 of the I.T ACT,
1961. We find no merit in this Special Leave Petition for the simple reason that if the share
application money is received by the assessee company from alleged bogus shareholders, whose
names are given to the Assessing Officer, then the Department is free to proceed to reopen their
individual assessments in accordance with law. Hence, we find no infirmity with the impugned
judgement.”
As far as the creditworthiness or financial strength of the creditor/subscriber is concerned, that

can be proved by producing the bank statement of the creditors/subscribers showing that it had
sufficient balance in its accounts to enable it to subscribe to the share capital. Once these
documents are produced, the assessee would have satisfactorily discharged the onus cast upon
23
A-One Housing Complex Ltd. Vs ITO (2008) 110 ITD 361 (Del)
24
CIT Vs Lovely Exports (P) Ltd. 216 CTR 195
21
him. Thereafter, it is for the Assessing Officer to scrutinize the same and in case he nurtures any
doubt about the veracity of these documents, to probe the matter further. However, to discredit
the documents produced by the assessee on the aforesaid aspects, there has to be some cogent
reasons and materials for the Assessing Officer, and he cannot go into the realm of suspicion.
Thus, element of credit worthiness and satisfaction of AO thereafter is subjective and requires
more efforts/inquiry on the part of the AO to give a finding in the order that lender is not credit
worthy.
In all of these above-mentioned cases it is established that the primary onus to prove the
genuineness of the source of income lies with the assessee and after the assessee has done so the
burden is lifted from him. The department of Income Tax cannot burden the assessee to prove the
source of source of income and it can neither use it as a weapon to harass the assessee. In the
present case assessee has carried out his duty by providing evidence proving the genuineness of
his source and thus additions under section 68 for not proving source of source should be deleted
on merits.
22
PRAYER
Therefore, in light of the facts stated, issues raised, authorities cited and arguments advanced,
the Applicant, most humbly and respectfully pray before this Hon’ble High Court that it may
be pleased to Allow the writ petition and adjudge that:
1. This Hon 'ble Court may allow the writ petition challenging the notice u/s 148 to be
admissible .
2. That the notice u/s 148 of the act is void of jurisdiction and is requested to be quashed.
3. The additions u/s 68 of the act unsubstantiated and hence deserved to be deleted on
merits.
and for such further or other order or orders as this this Hon’ble High Court may deem fit in
the light of circumstances of the case and thus render justice. For which the complainant do and
shall always pray.
Date: The Applicants
Place: Sd/-
Counsel for the Applicants

TC34
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Padma Vibhushan N.A. Palkhivala Memorial National Moot Court Competition, 2021

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Padma Vibhushan N.A. Palkhivala Memorial National Moot Court

BEFORE THE HON’BLE HIGH COURT OF ______________

Writ Tax No. /2021

M/s XYZ Pvt. Ltd …………………………………………………………. COMPLAINANT

Commissioner of Income Tax ………………………………………………. RESPONDENT

UNDER ARTICLE 226 OF THE INDIAN CONSTITUTION

WRITTEN SUBMISSIONS ON BEHALF OF THE APPLICANT-

ISSUES RAISED ………………………………………………………………………………..8

SUMMARY OF ARGUMENTS ………………………………………………………………..9

INCOME TAC ACT ………………………………………………. ………….…………....I. T ACT

INCOME TAX APPELLATE TRIBUNAL…………...……………………………………….ITAT

INCOME TAX OFFICER……………………………………………………………………….ITO

COMMISSIONER OF INCOME TAX………………………………………………………….CIT

PERMANENT ACCOUNT NUMBER……………………………………………..…………..PAN

INCOME TAX RETURN…………………………………………………………...…………...ITR

TAX RESIDENCY CERTIFICATE………………………………………….…………………TRC

CENTRAL BOARD OF DIRECT TAX………………………….……………………………CBDT

BRYAN A. GARNER, BLACK’S LAW DICTIONARY (9th ed. 2009).

JUSTICE C.K THAKKER, ENCYCLOPAEDIC LAW LEXICON (1st ed. 2010).

T T Pvt Ltd Vs Income Tax Officer (1980) 121 ITR 551

Gaurav Triyugi Singh v. CIT, 2017 SCC OnLine ITAT 3817

Amar Gahlot, Applicability of Res Judicata in Tax Matters

Income Tax Act, 1961.

Finance Act, 2021

A. WRIT PETITION CHALLENGING THE NOTICE UNDER SECTION 148

B. NOTICE UNDER SECTION 148 OF THE ACT IS VOID OF JURISDICTION

C. PROPOSED ADDITIONS UNDER SECTION 68 OF THE ACT DESERVE TO BE

WRIT PETITION CHALLENGING THE NOTICE UNDER SECTION 148

(A) MAINTAINABILTY OF WRIT PETITION EVEN IF ALTERNATE REMDY IS

(B) THE WRIT PETITION IS ADMISSIBLE SINCE THE NOTICE IS WITHOUT

III. The issuance of notice is wholly without jurisdiction

WHETHER THE NOTICE UNDER SECTION 148 OF THE ACT IS VOID OF

Name of Portioner …………………………………………………….……………………..XYZ

I. SEQUENCE OF EVENTS THAT EXTENDED THE DATES TO ISSUE NOTICE

(C) NOTICE UNDER SECTION 148 CANNOT BE ISSUED TO THE ASSESSE

WHETHER THE PROPOSED ADDITIONS UNDER SECTION 68 OF THE ACT

A) THE IDENTITY, CREDITWORTHINESS AND GENUINENESS OF THE

As far as the creditworthiness or financial strength of the creditor/subscriber is concerned, that

Date: The Applicants

Counsel for the Applicants

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