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 Income Tax Addition Made Towards Unsubstantiated Share Capital Is Eligible For Section 80-IC Deduction: Delhi High Court

AGS Retail P Ltd. Plot No.1 Local Shopping Centre Sharda Niketan Pitampura vs. ACIT Central Circle-9 New Delhi
May, 31st 2019

Subject: Assessee belongs to Aerens Group. A search and seizure and survey operation under section 132/133A of the Income Tax Act, 1961

Referred Sections:
Section 43 B
Section 234B of the Income Tax Act
Section 132/133A of the Income Tax Act, 1961

Referred Cases / Judgments
AGS Retail P Ltd. Vs. ACIT, C.C.9,N.Del.

 

          IN THE INCOME TAX APPELLATE TRIBUNAL
              DELHI BENCHES: `A' NEW DELHI

       BEFORE SMT. BEENA A PILLAI, JUDICIAL MEMBER
    AND SHRI MAHARISHI PRASHANT, ACCOUNTANT MEMBER

                       ITA No. 4682/Del/2016
                            AY: 2012-13

AGS Retail P Ltd.                  vs.   ACIT
Plot No.1                                Central Circle-9
Local Shopping Centre                    New Delhi
Sharda Niketan
Pitampura
New Delhi 110 034

PAN: AAHCA3643H

(Appellant)                                    (Respondent)


     Assessee by : Sh. Rajeshwar Prashad Painuly, C.A.
     Department by : Sh. S.N.Pandey, Sr. D.R.
                     Date of Hearing :       13/05/2019
                     Date of Pronouncement: 30/05/2019


                               ORDER
PER BEENA A PILLAI, JUDICIAL MEMBER

     Present appeal has been filed by assessee against      order of

Ld.CIT(A)-25, Delhi dated 24.06.2016 for A.Y. 2012-13 on following

grounds of appeal.
                                                        ITA No. 4682/Del/16 AY 2012-13
                                                  AGS Retail P Ltd. Vs. ACIT, C.C.9,N.Del.




"1. The learned CIT (A) erred in law and on facts in dismissing the
appeal against the order of assessing officer without giving the
adequate opportunity to the appellant. Thus, order of the learned CIT
(A), passed merely on surmises and conjecture should be reversed.

2. The learned CIT (A) erred in law and on facts in dismissing the
appeal against the order of assessing officer and confirming the
addition of Rs. 9,84,527/- u/s section 43 B arbitrarily despite the
fact that these liabilities were not claimed as expense in the profit &
loss Account. Moreover, no incriminating documents were found
during the course of search. The addition was made purely on
presumptive basis. Thus, order of the learned CIT (A), passed merely
on surmises and conjecture should be reversed.

3. The learned CIT (A) erred in law and on facts in dismissing the
appeal against the order of assessing officer and confirming the
addition of Rs. 11,03,000/- by treating genuine sales of appellant as
bogus expenditure arbitrarily despite the fact that complete details of
transactions were provided to the assessing officer. Moreover, no
incriminating documents were found during the course of search and
in respect of which no proceedings were abated. The addition was
made purely on presumptive basis. Thus, order of the learned CIT (A),
passed merely on surmises and conjecture should be reversed.






4. The learned CIT (A) erred in law and on facts in rejecting the
ground of the appellant on non-applicability of provisions of Section
234B of the Income Tax Act despite the fact that said provisions are
not applicable. Thus, order of the learned CIT(A), passed merely on
surmises and conjecture should be reversed.

5. The appellant craves the leave to add, substitute, modify, delete or
amend all or any ground of appeal either before or at the time of
hearing."



                                                                                        2
                                                      ITA No. 4682/Del/16 AY 2012-13
                                                AGS Retail P Ltd. Vs. ACIT, C.C.9,N.Del.


2. Brief facts of the case are as under:
Assessee belongs to Aerens Group. A search and seizure and survey
operation under section 132/133A of the Income Tax Act, 1961
was conducted in case of group at various residential and business
premises. Case of assessee was accordingly centralised and
jurisdiction was transferred to Central Circle. Subsequently notice
u/s    143(2) was issued, in response to which assessee filed its
return of income declaring sum of Rs.1,19,040/-. Thereafter notice
u/s 142(1) along with questionnaire was issued to assessee in
response to which representative of assessee appeared before Ld.AO
and filed requisite details/information.
2.1. Ld.AO observed that assessee has shown following liabilities:
Service tax payable-Rs.7,84,353/-
TDS payable Rs.2,00,174/-
2.2. Ld.AO observed that, though these payments were filed before
filing of return, there was no evidence on record to show that these
were paid and therefore he added said sum u/s 43B of the Act in
the hands of assessee.
2.3.   During further course of assessment proceeding, Ld.AO called
upon assessee to substantiate        invoices raised amounting to
Rs.11,03,000/-, for payment to M/s. PCIL Ltd.
2.4. Assessee filed various details, however, Ld.AO was of opinion
that assessee had booked bogus expenditure and disallowed said
sum in hands of assessee.
3.     Aggrieved by order of Ld.AO, assessee preferred appeal before
Ld.CIT (A) who upheld view of Ld.AO.

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                                                        ITA No. 4682/Del/16 AY 2012-13
                                                  AGS Retail P Ltd. Vs. ACIT, C.C.9,N.Del.


3.1.     Aggrieved by order passed by Ld.CIT(A), assessee is in appeal

before us now.

4.     Ground No. 1 raised by assessee is general in nature and

therefore do not require any adjudication.

5.     Ground No. 2 is in respect of addition of Rs.9,84,527/- u/s

43B of the Act.

5.1.      Ld.AR submitted that assessee has complete details in

respect of payments made to Service Tax Department and TDS

deducted which can be subject to verification.

5.2.    Ld.DR did not object for issue being set aside for verification

of payments made by assessee towards Service tax.

6.     We have perused submissions advanced by both sides in light

of records placed before us.

7.     It is observed that Ld.AO has recorded finding that payments

has been made before date of filing of returns, however, for want

of evidence,    same was added in       hands of assessee. Now that

assessee has submitted to have complete details in respect of

service tax paid and TDS deducted, we are inclined to set aside this

issue back to Ld.AO for verification. Ld.AO shall verify payments

made by assessee and allow assessee's claim as per law.






                                                                                        4
                                                       ITA No. 4682/Del/16 AY 2012-13
                                                 AGS Retail P Ltd. Vs. ACIT, C.C.9,N.Del.


Accordingly these grounds raised by assessee stands allowed for

statistical purposes.

8.     Ground No. 3 is in respect of addition of Rs.11,03,000/- while

treating it as bogus expenditure.

8.1.    Ld.AR submitted that assessee raised invoice dated 01/06/11

for Rs.11,03,000/-, as advertisement charges for display on

malls/shops in      name of PCI Ltd.    He submitted that assessee

earned income and paid taxes thereon. Ld.AR submitted that before

authorities below assessee       filed form 26 A-S reflecting TDS

deducted by PCI Ltd., on such amount. It has thus been submitted

by Ld.AR that      amount has been treated as actual receipts in

hands of assessee.

8.2.       On the contrary Ld.DR placed reliance upon                 orders of
authorities below and submitted that assessee failed to explain by
way of any documents in support of claim.
9.     We have perused submissions advanced by both sides in light
of records placed before us.
9.1.     It is pertinent to note that alleged sum of Rs.11,03,000/-,
has been treated as income by assessee on which due taxes has
been paid. However,      authorities below have made an addition in
hands of assessee by treating it as bogus expenditure. We fail to
appreciate this contradiction as from admitted facts,            invoice has

                                                                                       5
                                                     ITA No. 4682/Del/16 AY 2012-13
                                               AGS Retail P Ltd. Vs. ACIT, C.C.9,N.Del.


been raised by assessee on PCI Ltd against services rendered by
assessee and therefore allegation of authorities below of said sum
being bogus expenditure cannot be sustained.
9.2.    We are therefore of considered opinion that, this addition
deserves to be deleted at the outset, as Ld.AO has not applied his
mind while considering this issue.
Accordingly this ground raised by assessee stands allowed.
10.    In the result appeal filed by assessee stands allowed as
indicated above.
Order pronounced in the open court on 30/05/2019.
                   Sd/-                     Sd/-

    (MAHARISHI PRASHANT)                      (BEENA A PILLAI)
     ACCOUNTANT MEMBER                       JUDICIAL MEMBER
Dt. 30/05/2019.

*GMV
Copy forwarded to: -
1.  Appellant
2.  Respondent
3.  CIT
4.  CIT(A)
5.  DR, ITAT
                  -    TRUE COPY     -

                                                      By Order,




                                         ASSISTANT REGISTRAR
                                          ITAT Delhi Benches
                                                                                     6
                                                 ITA No. 4682/Del/16 AY 2012-13
                                           AGS Retail P Ltd. Vs. ACIT, C.C.9,N.Del.




                                 Date
Draft dictated on                29/5/19
Draft placed before author       29/5/19
Draft proposed & placed before
the second member
Draft discussed/approved by
Second Member.
Approved Draft comes to the
Sr.PS/PS
Kept for pronouncement on
            &
Order uploaded on :
File sent to the Bench Clerk
Date on which file goes to the
AR
Date on which file goes to the
Head Clerk.
Date of dispatch of Order.




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