Park View Automotive P. Ltd Vs ITO (ITAT Delhi)
AO’s Hypothetical Price Falls Flat: ITAT Favors Commercial Reality- No Evidence, No Addition: Tribunal Rejects ‘Uniform Price’ Fantasy
This case arose from a reopening of assessment u/s 147 based entirely on an Investigation Wing report alleging a large-scale accommodation entry scheme involving the shares of Purti Power & Sugar Ltd. (PPSL) & certain Mehta Group entities. The report mentioned layering of funds & circular trading of PPSL shares through multiple shell companies. Assessee, however, was not part of the Mehta Group, but AO presumed that Assessee was also a participant just because it had purchased PPSL shares.
Assessee had purchased 6,51,500 PPSL shares @ ₹14.40 per share in November 2009. Out of these, it sold:
- 15,000 shares @ ₹17.40 (small quantity, higher price); &
- 65,00,000 shares @ ₹8.85 (bulk quantity, lower price) to Amrupa Engineering & Mining Pvt. Ltd.
Based solely on suspicion, AO refused to accept the bulk sale price of ₹8.85, & arbitrarily substituted ₹17.40, the rate of the small sale. Without any evidence that the 65 lakh shares were actually sold at ₹17.40, AO added the difference of ₹5.59 crore as undisclosed income. CIT(A) upheld the addition.
Before Tribunal, Assessee demonstrated that AO completely ignored substantial documentary evidence, including:
- Sale bill raised by Assessee;
- Written confirmation from buyer Amrupa Engineering in response to notice u/s 133(6);
- Board resolution of buyer approving purchase of 65 lakh shares;
- Ledger account showing the transaction;
- Buyer’s ITR & bank statements confirming payment.
All these documents proved the genuineness & actual consideration of the sale. Moreover, Assessee highlighted that bulk sales naturally fetch a lower price, & comparing a tiny sale of 15,000 shares with a massive sale of 65,00,000 shares was commercially illogical.
