The Delhi Income Tax Appellate Tribunal has refused to admit the blank photocopy of shares transfer form as a piece of evidence u/s 16 of Indian Evidence Act.
Parties: Agson Global Ltd vs. Assistant Commissioner of Income Tax
Facts of the Case
The case is related to bogus shares capital and bogus purchase by Agson Global Pvt. Ltd. In order to suppress its taxable income. The order of search operation was carried out by the Income-tax Department on 21/03/17 for AY. 2012-13 which was notified u/s 153 A. According to the department, the assessee has issued different premium to different assesse on different dates. The Assesment Officer asked to provide their identities as well as the creditworthiness of these companies. According to the A.O, the companies to whom the premium was given were not much operative rather it was a road map to suppress the taxable income by the assessee. The A.O during its search found that heavy premium was issued to the assessee was a bogus way to hide out taxable income. The assessee has returned this premium in the form of share capital as an investment back to the company against which the A.O has seized certain copies of shares transfer as well as blank photocopies of share transfer. The A.O also added that the transaction that was done by the assessee were noted in books but during the search, no such books were found.
Arguments against the allegation of Blank Share Transfer Form
There were many grounds that were presented by the assessee on which he made the appeal to the court
- Firstly he said that there were no incriminating documents were found during the search to uphold the assessment made u/s 153 A of the Act.
- The A.O has invoked Article 153 A by assessing unabated assessment year.
- The Share premium and share capital has already been examined by the A.O u/s 143(3) of the Act dated on 24/3/15 where a sum of INR18.50 was added to the income of assessee which was later on stuck down by CIT on which no further appeal was made and hence it concludes the finality of the order.
- CIT(A) erred in confirming the order of A.O of adding the share capital (48,19,87000) which was assumed as unrevealed cash credit u/s 68 of the Act in the hands of the assessee against which the A.O didn’t found a single piece of incriminating document. During the search.
- The CIT(A) erred in involving section 145(3) of the Act without complying with the mandatory requirements of the law like issuing notice and giving an opportunity of being heard.
- With respect to the contention of learned A.O the assessee responded that mere photocopies of blank share transfer and share capital issued cannot be assumed incriminating documents as they were only photocopies and not the original documents.
Court says Blank Share Transfer Form cannot be admissible
The Court was of the opinion that after giving much of evidence the A.O failed to scrutinize the documents and had made an investigation regarding the flow of the funds. Mere suspects on the transaction between the investor and the company cannot amount to any bogus transaction among them. The Court also said that the documents that were seized by the A.O during the search were just photocopies which were not containing any important information like date of transfer of shares or any issued date hence they cannot be used piece of evidence under section 16 of Indian Evidence Act. The honourable court also added there were traces found of any cash transaction between the parties.
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