The Delhi High Court has dismissed the appeal against the deletion of income tax addition for share or bogus purchases or cash deposits and held that appeal under section 260A of Income Tax Act cannot be entertained by High Court except on the grounds of perversity or for the complete lack of evidence.
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. On further appeal, ITAT granted relief to the assessee.
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.
Counsel for the Department 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.
The division bench consisting of Justice Rajiv Shakdher and Justice Talwant Singh 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.
Dismissing the appeal, the High Court observed that “the Tribunal is the final fact-finding authority. We have not been able to conclude that the findings returned by the Tribunal are perverse. Importantly, neither in the grounds nor in the questions of law as suggested in the appeals, the revenue has averred that the findings of the Tribunal are ―perverse. This fact imposes a limitation on this court while entertaining an appeal under Section 260A of the Act. In a nutshell, this court cannot revaluate the findings of fact returned by the Tribunal, except on the limited ground of perversity/complete lack of evidence.”
PR. COMMISSIONER OF INCOME TAX (CENTRAL)- 3 vs M/S AGSON GLOBAL PVT. LTD
CITATION: 2022 TAXSCAN (HC) 102
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