When Assessee-Company Can Prove Genuineness Of Transaction, Delhi HC's 'NR Portfolio' Judgment Not Applicable: Calcutta HC

The Calcutta High Court has placed a limitation on the applicability of the Delhi High Court's precedent in the "NR Portfolio" case, specifically holding that it should not be applied mechanically in tax cases where the assessees (taxpayers) are able to provide credible documentation and evidence to prove the genuineness of their transactions. The NR Portfolio case often deals with situations where adverse inferences are drawn against taxpayers who fail to provide satisfactory explanations or documentation for certain transactions. However, the Calcutta High Court's ruling emphasizes that if a taxpayer can substantiate the legitimacy of their transactions by presenting reliable documentary evidence, then the adverse inferences that might otherwise be drawn based on the NR Portfolio precedent should not be automatically applied. This judgment underscores the importance of assessing each tax case on its own merits and based on the specific evidence presented by the taxpayer. It prevents a situation where adverse inferences become a default approach, even when taxpayers have taken steps to provide transparency and proof of their financial dealings.