Appeal U/S 260A Of Income Tax Act Can't Be Entertained Except On The Ground Of Perversity/Lack Of Evidence: Delhi High Court

The appellant/department challenged the order of ITAT on the grounds that ITAT has failed to take into account the true import and effect of the statement made by an accommodation entry provider who had denied having made any investment in the assessee. The statement pointed in the direction that the money which had ostensibly been invested in the assessee in the form of share capital or share premium were unaccounted funds of the assessee routed through accommodation entry providers.

The assessee filed its return of income under Section 139 (1) of the Income Tax Act. In the return, the assessee had declared its income. The Assessing Officer (AO) passed an assessment order making an addition of Rs. 18,50,00,000 to the declared income of the assessee on account of unexplained share capital and share premium. The assessed income shot up to Rs. 24,52,85,750.

The assessee preferred an appeal before the CIT(A). The CIT (A) deleted the addition. The revenue did not carry the matter further. The assessment proceedings were concluded.

A deviation report was prepared by the AO, which was markedly different from the assessment orders passed by AO. In the deviation report, the AO concluded that since the source of the cash movement concerning the receipt of money by the assessee in the form of share capital or share premium amounting to Rs.365.28 crores was traceable directly to the assessee's bank accounts, the addition of the sum was not justified.

The deviation report is prepared by the Assessing Officer departing from assessment orders, which tells a story that can be easily understood by all parties well after the investigation.

The ITAT has deleted the scaled-down addition made by the CIT (A) in respect of cash deposits made with the bank during the demonetization period.

Counsel for the Department/appellant contended that the Tribunal lost sight of the fact that most of the entities which had invested amounts in the form of share capital/share premium in the assessee had no resources of their own. All told, about 50 entities had invested a huge amount in the form of a share premium at the rate of Rs. 9,990/-, while they were sold at an appreciably lower premium ranging between Rs. 70 and Rs. 80 per share.

On the other hand, the counsel for the assessee/respondent submitted that the addition made by the AO on account of share capital or share premium was rightly deleted by the Tribunal as it concluded that the monies invested in the assessee were their own money, which had been advanced to the investor entities, who, in turn, had invested the same in the assessee in the form of share capital/share premium. A finding of fact has been returned by the Tribunal that these transactions were carried out via banking channels and involved money which was accounted for in the assessee's books of accounts and, therefore, it need not be disturbed.

The court noted that the revenue has neither averred in the grounds nor in the questions of law that the findings of the Tribunal were "perverse", which imposes a limitation on the court while entertaining an appeal under Section 260A of the Income Tax Act.

Case Title: Pr. Commissioner Of Income Tax (Central)- 3 Versus M/s Agson Global Pvt. Ltd.

Citation: ITA 68/2021 & CM No. 9319/2021

Counsel For Appellant: Sr. Standing Counsel Ajit Sharma

Counsel For Respondent: Senior Advocates Mukul Rohatgi and Sandeep Sethi

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