AGM Properties Private Limited vs. ITO, Ward 1 (1), New Delhi

Parties Involved

Facts Summary

The case pertains to AGM Properties Pvt. Ltd. (assessee), formerly known as Automobile Components (India) Ltd., which was subjected to proceedings under section 153A of the Income-tax Act, 1961 following a search conducted on 16.09.2015. The assessee denied any search at its own premises and challenged the jurisdiction of the proceedings, asserting that the notices were invalid. The Assessing Officer, however, maintained that the search was valid and linked to the assessee through its director. During the assessment, it was revealed that the company had issued 7,26,975 equity shares at Rs.10 each, with a premium of Rs.390 per share, aggregating to Rs.26.40 crore. Despite this large capital inflow, the company reported gross receipts of only Rs.13.27 lakh, indicating negligible business activity. Further scrutiny showed that Rs.26.04 crore was invested across 48 entities without any substantive documentation or explanation regarding the purpose or commercial rationale. The AO alleged that the assessee was a shell entity used to route accommodation entries, operated by Shri Deepak Aggarwal through a network of over 200 companies. Based on these findings, the Assessing Officer made substantive additions u/s 68 for unexplained credits and protective additions for estimated commission income.…

Legal Issues

• 1. Validity of the assessment u/s 153A and the addition made thereby without bringing on record any incriminating material found in the course of the search.
• 2. Mechanical approval u/s 153D of the Act
• 3. Applicability of section 68 of the Act on addition of Rs.27,07,90,000/-
• 4. Applicability of section 68 of the Act on addition of Rs.1,02,23,800/-

Judgment Outcome

Decided in favour of Assessee.

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