Resolving a ₹1.8 Crore Tax Litigation through Expert Representation and Strategic Planning

Turning Litigation into Resolution :

How we helped a Manufacturing Client Close a ₹1.8 Cr Tax Dispute in Record Time

Quick Highlights

Significant Tax Reduction Achieved

Successfully reduced proposed tax addition from ₹1.8 crores to ₹42 lakhs

Penalty Avoidance & Interest Savings

Avoided penalty under Section 271(1)(c) and saved over ₹6 lakhs in interest

Swift Case Resolution

Achieved full case resolution within 10 weeks without going into appeal

Enhanced Tax Documentation & Compliance

Strengthened client’s tax documentation and compliance framework

Client Overview & Requirement

Our client, a long-established manufacturer of agricultural machinery based in Western India, had been served with a scrutiny notice from the Income Tax Department for alleged discrepancies in TDS deductions, depreciation claims, and turnover reporting.

The proposed additions amounted to ₹1.8 crores, with potential penalties and reputational risks for non-compliance.

The management engaged PGAS & Associates to provide specialized tax litigation representation — aiming to resolve the matter efficiently, maintain compliance integrity, and prevent prolonged appeals.

Challenges Identified

During the initial review, PGAS & Associates uncovered multiple issues that required immediate attention. The challenge was to reconstruct evidence and establish factual accuracy within a limited timeframe while maintaining transparency with tax authorities.

TDS Disallowance under Section 40(a)(ia)

Alleged short deduction of TDS requiring detailed justification.

Depreciation Disallowance on Leased Assets

Questioned due to gaps in supporting documentation.

Turnover Mismatch Between GSTR-9 and ITR

Differences interpreted as undisclosed income.

Limited Response Window

Only 15 days provided to reply to the show-cause notice.

Weak Documentation

Incomplete audit working papers and missing reconciliations.

PGAS & Associates’ Approach (Concise Version)

PGAS & Associates adopted a strategic, evidence-driven approach to resolve the case swiftly and effectively.

01

Data Reconstruction

Reconciled GSTR-9, Form 26AS, and books to eliminate income mismatch; rebuilt TDS and depreciation working papers.

02

Legal Submissions

Presented section-wise rebuttals with judicial precedents; justified depreciation and TDS positions with documented proof.

03

Representation

Senior tax partner appeared before AO, explained turnover timing differences, and defended the client’s case with full transparency.

04

Resolution

Achieved major reduction through fact-based defense and filed rectification under Section 154 to correct computational errors.

05

Outcome Optimization

AO accepted most submissions, reducing proposed additions from ₹1.8 crores to ₹42 lakhs.
Filed a rectification under Section 154, further reducing the assessed amount by ₹9 lakhs.
Achieved full case closure at the assessment level, avoiding appellate proceedings.

Outcome & Impact

The case was concluded without escalation to CIT(A), preserving both time and goodwill with tax authorities.

The client’s financial credibility and compliance rating improved, paving the way for future audits with minimal scrutiny risk.

Parameter	Before PGAS	After PGAS Implementation	Impact
Proposed Tax Addition	₹1.8 Cr	₹42 Lakh	✅ ₹1.38 Cr Reduction
Penalty Exposure (Sec 271(1)(c))	Applicable	Nil	⚖️ Avoided Litigation
Interest Liability (Sec 234B/C)	₹9.2 Lakh	₹3.1 Lakh	💰 ₹6.1 Lakh Saved
Turnover Mismatch	₹1.3 Cr Difference	Fully Reconciled	🧾 Complete Acceptance
Resolution Timeline	6+ Months Expected	10 Weeks	⏱️ Fast-Track Closure

Client Feedback

PGAS & Associates handled our case with unmatched professionalism and precision. Their team understood our operations, clarified every issue with data-backed reasoning, and represented us with integrity. We closed the case quickly, avoided penalties, and gained lasting peace of mind.

— Managing Director

The Value of Expert Tax Representation

Tax litigation is not just about defense — it’s about clarity, documentation, and trust.
Through meticulous review, legal insight, and transparent advocacy, PGAS & Associates transformed a potential tax crisis into a confident resolution. By combining strategic representation, factual accuracy, and ethical handling, PGAS delivered.

PGAS & Associates — Defending with Diligence, Representing with Integrity.

Substantial Tax Savings

Major reduction in tax liability.

Penalty & Interest Relief

Penalty and interest savings.

Efficient Dispute Resolution

Avoidance of prolonged appeals.

Enhanced Compliance Framework

Strengthened client’s compliance framework.