Judicial Analysis Court Copy Headnote Facts Arguments Court observation

2022 Supreme(Del) 253

IN THE HIGH COURT OF DELHI AT NEW DELHI
Rajiv Shakdher, Talwant Singh, JJ.
Pr. Commissioner Of Income Tax (Central)- 3 - Appellant
Versus
M/s Agson Global Private Limited - Respondent
ITA 68 of 2021 & CM No. 9319 of 2021, ITA 69 of 2021 & CM No. 9322 of 2021, ITA 70 of 2021 & CM No. 9346 of 2021, ITA 72 of 2021 & CM No. 9355 of 2021 & ITA 73 of 2021 and CM No. 9356 of 2021
Decided On : 19-01-2022

Advocates Appeared:
Mr Ajit Sharma, Sr. Standing Counsel, for the Appellant; Mr Mukul Rohatgi and Mr Sandeep Sethi, Senior Advocates. with Mr Mahesh Agarwal, Mr Rishi Agrawala, Mr Karan Luthra, Mr Sameer Rohatgi & Mr Ankit Banati, Advocates, for the Respondent.

The Tribunal's findings on income and evidence were upheld, affirming that no incriminating material justified additions under Sections 68 or 143(3) of the Income Tax Act.

Headnote:(A) Income Tax Act, 1961 - Sections 68 and 143(3) - Appeals by the revenue against the decision of the Tribunal concerning six assessment years - Issues examined included additions to income regarding unexplained share capital, bogus purchases, and cash deposits during demonetization. (Paras 1, 2, 3, 10.1, 19.1)

(B) Legal Principles - The Tribunal is the final fact-finding authority, and assessments can only be disturbed if incriminating material is found during searches. (Paras 10.1, 11.3)

(C) Findings of Court - Assessments could not be disturbed for AYs 2012-2013 to 2014-2015, as no incriminating material was discovered. The share capital received was ultimately derived from the assessee’s own funds. The evidence regarding cash deposits during demonetization aligned with accounted cash sales. (Paras 10.1, 11.3, 19.1)

(D)

Issues: Whether the revenue provided sufficient grounds to disturb the orders of the Tribunal. (Paras 19, 19.1) (E)

Ratio Decidendi: The Tribunal correctly concluded that income from share capital and cash deposits was accounted for, and that allegations of bogus transactions lacked basis. The revenue failed to establish that the findings of the Tribunal were perverse. (Paras 19.1) (F)

Result: Appeals by revenue dismissed.

Table of Content
1. introduction of the appeals. (Para 1)
2. identification of key issues in appeals. (Para 2)
3. factual background of assessment years. (Para 3)
4. details on search and seizure operations. (Para 4)
5. procedural observations by the tribunal. (Para 5)
6. submissions heard from both parties. (Para 6 , 7)
7. summarized parties’ arguments. (Para 8 , 9)
8. court's analysis on assessed material. (Para 10)
9. assessment of incriminating material. (Para 11)
10. discussion on position of evidence. (Para 12 , 13 , 14)
11. court's view on disallowed amounts. (Para 15)
12. analysis of cash deposits post-demonetization. (Para 16)
13. conclusive observations by the tribunal. (Para 17)
14. final conclusions drawn by the court. (Para 18 , 19)
15. final orders and implications. (Para 20 , 21)

ORDER

1. These appeals, which are six in number, are preferred under Section 260A of the INCOME TAX ACT , 1961 [hereafter referred to as "the Act"] and are directed against a common order dated 31.10.2019, passed by the Income Tax Appellate Tribunal [in short "the Tribunal"].

1.1 The Tribunal, via the impugned order, rendered a decision in twelve appeals out of which six were preferred by the respondent i.e., Agson Global Pvt. Ltd. [hereafter referred to as "assessee"], while the remaining six appeals were preferred by the appellant [hereafter referred to as "revenue"].

1.2. The impugned order concerned six assessment years [in short "AYs"] i.e., 2012-2013, 2013-2014, 2014-2015, 2015-2016, 2016-2017 and 2017- 2018.

2. The record shows that the Tribunal was, principally, grappling with three broad issues. These issues concerned additions/deletions made to the declared/returned income of the assessee under the following broad heads:

(i) Additions qua amounts received by the assessee in the form of share capital/share premium under Sections 68 of the Act.

(ii) Deletions made on account of alleged bogus purchase transactions.

Under this head, the Assessing Officer ruled that 25% of the bogus purchases in value should be added to the assessee's declared/returned income.

(iii) Addition made, under Section 68 of the Act, in respect of monies deposited by the assessee with its banker during the demonetization period.

2.1. Insofar as issue nos. (i) and (ii) are concerned, they were common to all six AYs, referred to hereinabove. However, insofar as issue no. (iii) is concerned, it arises only in AY 2017-2018. In this regard, it requires to be noticed that demonetization was brought about on 08.11.2016 and the period of demonetization spanned between 09.11.2016 and 30.12.2016.

2.2. Therefore, we would be dealing with submissions and counter-submissions of parties bearing in mind the aforesaid issues and the fact as to whether or not substantial questions of law have arisen which require consideration and/or adjudication.

Background:-

3. Before we proceed further, certain facts and circumstances, in the backdrop of which the above-captioned appeals have been lodged, are required to be noticed.

3.1. The assessee had filed its return of income qua AY 2012-2013 under Section 139 (1) of the Act on 31.10.2013. In this return, the assessee had declared its income as Rs.6,02,85,750/-. The Assessing Officer [in short "A.O."] passed an assessment order under Section 143(3) of the Act, on 24.03.2015. Via the said assessment order, the A.O. made an addition of Rs. 18,50,00,000/- to the declared/returned income of the assessee on account of "unexplained share capital and share premium". Resultantly, the assessed income shot up to Rs.24,52,85,750/-. Being aggrieved, the assessee preferred an appeal. The CIT(A), vide order dated 31.03.2016, deleted the aforesaid addition. Pertinently, the revenue did not carry the matter further. Consequently, the assessment proceedings vis-à-vis AY 2012-2013, stood concluded.

3.2. Likewise, for AYs 2013-2014 and 2014-2015, the A.O. passed assessme

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2022 Supreme(Del) 253

The Tribunal's findings on income and evidence were upheld, affirming that no incriminating material justified additions under Sections 68 or 143(3) of the Income Tax Act.

Cases Referred (6)