Case Number: ITA 3745/DEL/2019
Appellant: Agson Global Pvt. Ltd, Delhi
Respondent: ACIT Central Circle-28, New Delhi
Assessment Year: 2016-17
Case Filed On: April 29, 2019
Order Type: Final Tribunal Order
Date of Order: October 31, 2019
Pronounced On: October 31, 2019
The case ITA 3745/DEL/2019 involves the appellant Agson Global Pvt. Ltd, a company based in Delhi, and the respondent, the Assistant Commissioner of Income Tax (ACIT) Central Circle-28, New Delhi. The case pertains to the assessment year 2016-17 and was filed on April 29, 2019. The final tribunal order was pronounced on October 31, 2019.
This case is part of a series of appeals involving the same appellant for multiple assessment years (2012-13 to 2017-18). Both the appellant and the respondent raised similar arguments across these appeals, and thus, the tribunal decided to dispose of all these appeals by a common order.
The central issues in this case revolved around the following:
A search and seizure operation was conducted on March 21, 2017, at the premises of Agson Global Pvt. Ltd. During this search, several documents, including blank signed share transfer forms, power of attorney, and other documents necessary for the transfer of shares, were found and seized. These documents were related to the companies from which the appellant had claimed to have received share capital and share premium.
Additionally, the managing director of the appellant company, Mr. Apresh Garg, in his statement recorded under Section 132(4) of the Act, admitted that the amounts received as share capital were actually the company’s own money routed back into the company.
The following are the key points from the tribunal’s order:
For the assessment years 2012-13, 2013-14, and 2014-15, the assessments were completed under Section 143(3) of the Income Tax Act. The assessing officer (AO) had made additions for unexplained share capital and share premium. However, these additions were deleted by the Commissioner of Income Tax (Appeals) [CIT(A)]. No further appeal was filed by the revenue against the CIT(A)’s order, and hence these assessments were considered concluded.
During the search, it was found that the share capital and premium received from various companies were essentially the appellant’s own unaccounted money. The AO made substantial additions to the appellant’s income on this ground for the assessment years 2012-13 to 2017-18.
However, the tribunal observed that for the assessment years 2012-13 to 2014-15, since these were concluded assessments, additions could only be made if incriminating material was found during the search. The tribunal found that the evidence provided by the AO, such as the photocopies of the blank signed share transfer forms, was not sufficient to constitute incriminating material. Therefore, the tribunal ruled in favor of the appellant for these years.
The AO made additions on account of bogus purchases, alleging that the appellant had inflated its expenses to suppress taxable income. The AO based these additions on the statement of the managing director and other documents found during the search. However, the tribunal noted that the AO did not find any discrepancies in the appellant’s stock records and that the purchases were duly recorded in the books of accounts.
For the assessment years 2012-13 to 2014-15, the tribunal held that there was no incriminating material to justify these additions. For the assessment years 2015-16 to 2017-18, the tribunal found that the AO did not adequately prove the allegations of bogus purchases and that the appellant had provided sufficient evidence to support the genuineness of the transactions.
The appellant also raised additional grounds challenging the jurisdiction of the CIT(A) to reject the books of accounts partially and make best judgment assessments without issuing prior show-cause notices. The tribunal admitted these additional grounds and found merit in the appellant’s arguments, further supporting the decision to delete the additions made by the AO.
The final tribunal order in ITA 3745/DEL/2019 concluded that the additions made by the AO for unexplained share capital and share premium under Section 68, and for alleged bogus purchases, were not justified. The tribunal ruled in favor of Agson Global Pvt. Ltd, deleting the substantial additions made to its income for the assessment year 2016-17.
This case highlights the importance of incriminating material in search and seizure operations and emphasizes the necessity for the revenue authorities to provide substantial evidence before making additions to an assessee’s income in concluded assessments.
ITA 3745/DEL/2019: Agson Global Pvt. Ltd vs. ACIT Central Circle-28 – Final Tribunal Order
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