Case Law Details
Agson Global Pvt. Ltd Vs ACIT (ITAT Delhi)
Conclusion: Since assessee had sufficient documentary evidences before AO to prove that money routed from assessee itself which came back to assessee in the form of share capital/premium and AO neither made any further enquiry on the documentary evidences filed by assessee nor verify the trail of the source of funds received by assessee through various entities thus, assessee had been able to prove that it had received genuine amounts which was routed through various companies. Thus, there was no justification to make any addition under section 68. Also, there was no justification to make the addition under section 69C regarding bogus purchases as AO could not disallow purchases from a party as bogus while treating sales to same party as genuine.
Held: In the instant case, Ao held that amount received by assessee-company in form of share capital/premium represented the amounts given to various parties/entities in the form of loans/bogus sales/purchases and it had nothing but assessee company’s own money which was routed back to assessee’s own money routed back to assessee company in the form of share capital/premium. AO therefore, noted that the amount that assessee had resorted to circuitous and sham transaction with these entities, therefore, addition of the above amount was made as unexplained credit under section 68. It was held assessee had sufficient documentary evidences before AO to prove that money routed from assessee itself which came back to assessee in the form of share capital/premium, therefore, assessee proved identity of the Investors, their creditworthiness and genuineness of the transaction in the matter. Photocopies of blank share transfer forms, blank signed receipts etc necessary for transfer of shares found with assessee were not admissible as evidence u/s 61 of Evidence Act and not incriminating in nature. AO however neither make any further enquiry on the documentary evidences filed by assessee nor verify the trail of the source of funds received by assessee through various entities. AO thus, failed to conduct scrutiny of the documents at assessment stage and merely suspected the transaction between the Investor Companies and assessee company despite the fact that in the deviation report AO expressed doubts in making addition into the matter. It might also be noted here that no cash had been reported to have been deposited in the accounts of assessee, the Investor Companies and other related parties. Considering the totality of the facts and circumstances of the case and material on record, assessee had been able to prove that it had received genuine amounts which was routed through various companies. Therefore, there was no justification to make any addition under section 68. Further, there was no evidence on record that assessee paid any amount on account of commission for arranging any transaction because it was a genuine transaction between the parties. Therefore, there was no justification to make the addition under section 69C. Also, AO had incorrectly disallowed 25% of the purchases from the alleged bogus parties without finding any evidence and ignoring the sales paid by them to assessee. Further, CIT (A) applied the provisions of section 145 (3) by rejecting the books of accounts of assessee partially, without even looking at the books of accounts was also incorrect. Therefore, addition made by AO on account of bogus purchases deserved to be deleted for concluded assessment as well as pending assessments.
FULL TEXT OF THE ITAT JUDGEMENT
1. These are the 12 cross appeals filed by the assessee and the learned Assessing Officer involving similar issue in case of one assessee for all 6-assessment years. Both the parties argued them together raising similar arguments on these issues for concluded assessment and abated assessment. Therefore, these all appeals are disposed of by this common order.
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