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Income Tax Appellate Tribunal, DELHI BENCH “G”, DELHI
Before: SHRI VIKAS AWASTHY & SHRI M. BALAGANESH
सुनवाई क� ितिथ/ Date of hearing : 22/05/2025 घोषणा क� ितिथ/ Date of pronouncement : : 19/08/2025 आदेश/ORDER PER BENCH: These bunch of seven appeals emanate from search conducted at the premises of assessee on 20.10.2008. Since, the issues involved in these appeals are similar, these appeals are taken up together for adjudication and are decided by this common order. For the sake convenience, the appeals are taken up for adjudication in seriatim of assessment year. and 570/Del/2017 for AY 2006-07 3. The Revenue in this appeal has assailed the order of Commissioner of Income Tax (Appeals)-XXVI, New Delhi (in short ‘CIT(A)’) dated 05.12.2016 for AY 2006-07. The gist of grounds raised by the Revenue in appeal is as under:- Against deleting the addition of Rs.3,00,00,000/- on account of unexplained cash credit u/s. 68 of the Income Tax Act,1961(hereinafter referred to as ‘the Act’); Against deleting the addition of Rs.13,00,000/- made on account unaccounted expenses u/s. 69C of the Act; Against deleting the addition of Rs.6,35,000/- on account of income from unexplained sources; Against deleting the addition of Rs.2,15,00,000/- on account of unexplained cash credit u/s.68 of the Act;
3 Thapar Homes Ltd. Group (AYs 2006-07 to 2009-10)
Against deleting the addition of Rs. 15,639/- on account of unexplained expenses; & Against deleting the addition of Rs.7,26,250/- on account of unexplained credit u/s. 68 of the Act.
Shri Vikas Jain, appearing on behalf of the assessee at the outset submitted that the search action was carried out at the premises of the assessee on 20.10.2008, notice u/s. 153A of the Act was issued on 13.11.2009. On date of search there was no pending assessment for AY 2006-07. Thus, this is a year of unabated assessment. In response to the said notice, the assessee filed return of income on 30.11.2009 declaring income of Rs. 6,63,439/-. The Assessing Officer (AO) without there being any incriminating material made various additions and assessed the total income of the assessee at Rs.5,48,40,328/-. Aggrieved by the assessment order dated 31.12.2010 passed u/s. 153A/143(3) of the Act, the assessee filed appeal before the CIT(A), inter alia assailing additions on merits as well as raising legal ground. The CIT(A) vide impugned order deleted all the additions on merits but rejected assessee’s plea on legal issue. Thus, the appeal of the assessee was partly allowed by the First Appellate Authority. The ld. Counsel pointed that the CIT(A) while deleting additions has examined the facts and documents placed on record by the assessee, and thereafter on merits deleted the additions. The assessee not only has good case on merits but on legal issue as well, i.e. no addition can be made in the year of unabated assessment in absence of any incriminating material found and seized during search. To support his contention, he placed reliance on the decision in the case of PCIT vs. Abhisar Buildwell P. Ltd., 454 ITR 212 (SC).
4 Thapar Homes Ltd. Group (AYs 2006-07 to 2009-10)
Per contra, Shri Mahesh Kumar representing the department vehemently defended the assessment order and prayed for reversing findings of the CIT(A).
Both sides heard, orders of the authorities below examined. The Revenue in appeal has assailed the findings of the CIT(A) in deleting various additions. Each of the item assailed by the Revenue is dealt with here in under:-
(i) Addition on account of unexplained cash credit of Rs.3,00,00,000/- u/s. 68 of the Act:-
The AO had made addition of the aforesaid amount observing as under:-
“2. The assessee company has declared as taken a loan of Rs.3,00,00,000/- from M/s Mare Softwares Development Pvt. Ltd. on 17.02.2006. The assessee company is not paying any interest on the said loan. The assessee company has taken loan and advances from various parties against properties to be sold to them. However, in the case of M/s Mare Softwares Development Pvt. Ltd. The amount of loan is declared received on 17.02.2006 and has been declared paid finally on 25.06.2008. However, no agreement has been placed on record justifying the receipt and no interest etc. has been paid even after retaining the money for nearly two years. It is seen that the money was utilized to make payment of consideration for House No.19, Poorvi Marg, Vasant Vihar, New Delhi. Thus while the assessee requirement was clear the sum of this money has not been proved on the touchstone of section 68. The assessee company while replying to the questionnaire issued has submitted the confirmation of account without any seal of M/s Mare Softwares Development Pvt. Ltd. No details in this regard as to how the amount of Rs.3,00,00,000/- was received has not been explained by the assessee. No bank account of the said party from where the amount was paid and also the creditworthiness of the said party have not been proved. The AR Sh. H.L. Sekhri was asked on 20.12.2010 to furnish the details of bank statement and copy of I.T.R. of M/s Mare Softwares Development Pvt. Ltd. and justify the creditworthiness of the party M/s Mare Softwares Development Pvt. Ltd. on 24.12.2010 the assessee has submitted the ledger account of M/s Mare Softwares Development Put. Ltd. This does not confirm that the transaction was genuine.
5 Thapar Homes Ltd. Group (AYs 2006-07 to 2009-10)
Therefore, the same is an unexplained cash credit u/s 68. Therefore, the same is added to the assessee's income. As the assessee has concealed income penalty u/s 271(1)(c) is initiated separately.” A bare perusal of the reasons given by the AO for making addition show that there is no reference to any incriminating material while making the addition. It is no more res integra that in the year of completed assessments on the date of search, no addition can be made if no incriminating material is found during the course of search. The Hon'ble Supreme Court of India in the case of PCIT vs. Abhisar Buildwell P. Ltd. (supra) in an explicit and unambiguous manner has explained this principle. Therefore, the addition is unsustainable in light of settled legal position. In any case, the assessee has succeeded before the First Appellate Authority on merits of the additions. We find no infirmity in the order of CIT(A) in deleting the addition. Accordingly, ground no. 3 of appeal is dismissed.
(ii) Addition on account of unaccounted expenses of Rs.13,00,000/- u/s. 69C of the Act:-
The AO had made aforesaid additions for the following reasons:
“3. The assessee has declared income of Rs.19,35,000/-. This sum includes construction fee of Rs.13,00,000/- from Mr. B.K. Dhingra. However, no details have been provided about the nature of the construction fee and the manner in which goods/services have been provided. In the P&L account there are no purchases of raw materials & design fee expenses of Rs.17,333/- is only claimed. Sh. B.K. Dhingra a share holder & director of the company and his cases is also assessed to tax in this circle. In his individual return he has claimed to have paid Rs. 13,00,000/- for construction expenses carried on by M/s Thapar Homes Ltd. on farm house at Sultan Pur. Therefore, it is clear that the sum of Rs.13,00,000/- is not a fee but is a receipt for construction expenses. As the assessee has not declared any cost related expenses the sum of Rs. 13,00,000/- is treated as income from unexplained sources u/s 68 of 6 Thapar Homes Ltd. Group (AYs 2006-07 to 2009-10) the Act and a sum of Rs. 13,00,000/- is added u/s 69C of the Act as unaccounted expenses on construction materials on the assumption there the company would not be making a profit from dealing with its own promoters/directors/shareholders.” A plain reading of the reasons given by the AO for making addition shows that there is no reference to any incriminating material. As mentioned above, in the absence of any incriminating material, in the year of unabated assessment, no addition can be made. For the reason explained in para (i) above, we find no merit in ground no. 4 of appeal, accordingly the same is dismissed.
(iii) Addition on account of income from unexplained sources Rs.6,35,000/- :-
The AO made aforesaid addition by observing as under:-
“4. The assessee has also declared a sum of Rs.6,35,000/- as profit on cancellation of deal from M/s Mudhusudan Fibre Goods Pvt. Ltd. This company is also assessed with this circle and in its case the expense of Rs.6,35,000/- has been disallowed as not incurred for business purposes. In the case of M/s Thapar Homes Ltd. also the assessee is not been able to produce any agreement/document evidencing any business activities which led to receipt of sum of Rs.6,35,000/-. Also the calculation of this amount is not with the assessee. Therefore, this amount of Rs.6,35,000/- is treated as income from unexplained sources u/s 68.” The addition has been by the AO without reference to any incriminating material found and seized during search action u/s. 132 of the Act. It is a year of unabated assessment. The CIT(A) has deleted the said addition on merits. The said addition is unsustainable as there is no reference to any incriminating material while making addition by the AO. The issue is squarely covered by the decision rendered in the case of PCIT vs. Abhisar Buildwell P. Ltd. (supra). Hence, ground no. 5 of appeal is dismissed.
7 Thapar Homes Ltd. Group (AYs 2006-07 to 2009-10)
(iv) Addition on account of unexplained cash credit Rs.2,15,00,000/-u/s. 68 of the Act:-
The AO has made addition of aforesaid amount by observing as under:-
“5. As per annexure A-3 page 136 party 0-1 in the ledger account of J.P. Gupta the assessee has shown that cheque no. 311309 of Rs.2,15,00,000/- was issued on 11/10/2005. While checking the bank statement it was found that an amount of Rs.1,90,00,000/- was paid to M/s Bodhi Properties Pvt. Ltd. vide the said cheque number 311309. This is unexplained cash credit us 68 and an amount of Rs. 2,15,00,000/- is added to the assessee's income. As the assessee has concealed income penalty u/s 271(1)(c) is initiated separately.” The AO has made aforesaid addition after referring to alleged incriminating material Annexure A3 page 136 party O-1. A perusal of Annexure A3 page 136 (supra) shows that it is a ledger account of J.P Gupta in the books of assessee. During First Appellate proceedings, the assessee had explained that the company had paid Rs.2,40,00,000/- to Shri J.P Gupta for the purchase of property bearing no. 3/35 Shanti Niketan, New Delhi. The details of the payment made are as under:-
Date Particulars Amount (Rs.) 07.10.2005 Ch. No. 311303 from 25,00,000,.00 Corporation Bank 11.10.2005 Ch. No. 311309 from 1,90,00,000.00 Corporation Bank, paid to Bodhi Properties P Ltd to make payment To Sh. J.P Gupta on behalf of the company 11.10.2005 Being amount paid by Bodhi 25,00,000.00 Properties P. Ltd. for on behalf of Thapar Homes Ltd.
Total 2,40,00,00.00
8 Thapar Homes Ltd. Group (AYs 2006-07 to 2009-10)
It was further explained that since the deal could not be materialized, therefore, aforesaid amount was received back during subsequent assessment year. The assessee filed confirmations from Shri J P Gupta and also furnished copy of accounts, bank statement and audited Balance Sheet as on 31.03.2006 and Tax Audit Report for AY 2006-07 of Bodhi properties P. Ltd. The CIT(A) after examining the documents deleting the addition by observing as under:-
“Further, M/s. Bodhi Properties Pvt. Ltd. has also been assessed by the same AO u/s. 153A/143(3) and the transaction of Rs. 2.15 Cr. in respect of the payment made to Shri J. P. Gupta for and on behalf of the appellant company stood accepted as genuine and correct in its assessment order dated 31.12.2010. Keeping in view, the fact of the case as discussed hereinabove there is no logic for making addition of Rs. 2.15 Cr. in the hands of the appellant company. Therefore, the addition of Rs.2,15,00,000/- made by AO is directed to be deleted.” We concur with findings of the CIT(A) for deleting the addition. Hence, ground no. 6 of appeal is dismissed.
(v) Addition on account of unexplained expenses of Rs.15,639/:-
The AO has made aforesaid addition for the following reasons:
“6. In reply to question no.26 of the questionnaire the assessee stated that no employment was made during the year. However, in annexure L of the balance sheet under the head Administrative & Other Expenses. The assessee has claimed (a) staff welfare Rs.11,284/- (b) Security Expenses Rs.4,355/-Total Rs. 15,639/-. As the assessee has made no employment therefore, the amount of Rs. 15,639/- is disallowed as unexplained expenditure and added to the assessee's income. As the assessee has concealed income penalty u/s 271(1)(c) is initiated separately.” A bare reading of reasons given by the AO show that there is no reference to any incriminating material, hence, in the absence of any incriminating material no 9 Thapar Homes Ltd. Group (AYs 2006-07 to 2009-10) addition can be made in the year of unabated assessment. The CIT(A) has deleted the said addition after considering merits. We find no infirmity in the findings of CIT(A). Hence, ground no. 7 of appeal is dismissed being devoid of any merit.
(vi) Addition on account of unexplained credit Rs.7,26,250/- u/s. 68 of the Act:-
The AO has made addition of aforesaid addition by observing as under:-
“7. In Annexure A-21, Page No.78 and 79 seized from the premises of 604, Padama Tower-II, Rajinder Palace, Delhi. The advances received against property from M/s Prime IT Solution Pvt. Ltd. for property at Greater Nodia stands at Rs.55,00,000/- where as the assessee in the balance sheet has shown Rs. 47,73,750/-. Difference is Rs. 7,26,250/-. The assessee was unable to explain. Hence, the amount of Rs.7,26,250/- is treated as an un explained cash credit u/s 68 and it is added to the assessee's income. As the assessee has concealed income penalty u/s 271(1)(c) is initiated separately.” The AO has made addition after referring to alleged incriminating material Annexure A-21 page no. 78 and 79 seized from the premises of assessee company. The CIT(A) has deleted the addition for the following reasons:-
“I have considered the facts of the case, the basis of the additions made by the AO in the assessment order, the arguments of the AR and evidences filed by the appellant company during the assessment as well as appellate proceedings. It is seen from the assessment order that an addition of Rs.7,26,250/- had been made u/s 68 on account of difference in account balance of advance received from M/s Prime IT Solutions Pvt. Ltd. and as shown in books of accounts of the appellant company. Perusal of the records shows that the appellant company had given Rs. 80,00,000/- to 'Prime IT Solutions Pvt. Ltd., Regd. Office: B-33, Shivalik, New Delhi-110017, having PAN: AADCP5888P, details as under.- Date Particulars Amount (Rs.) 29.12.2005 Cheque No. 236416 drawn 50,00,000.00
10 Thapar Homes Ltd. Group (AYs 2006-07 to 2009-10) on Corporation Bank 29.12.2005 Cheque No. 236418 drawn 25,00,000.00 on Corporation Bank 01.01.2006 Cheque No. 236420 drawn 5,00,000.00 on Corporation Bank Total (Rs.) 80,00,000.00 In addition the appellant company received Rs.7,26,250/- vide Cheque No.163362 dated 24.01.06 drawn on Syndicate Bank, Malviya Nagar, New Delhi, from M/s Prime Infoways Pvt. Ltd., Rega. Office.B-33, Shivalik, New Delhi-17 PAN : AADCP5889N, which is a sister concern of 'M/s Prime IT Solutions Pvt. Ltd. having common directors and shareholders and same address. The amount of Rs.7,26,250/- so received was credited to the A/c of the 'Prime IT Solutions Pvt. Ltd.'" instead of 'Prime Infoways Pvt. Ltd. The appellant company filed (a). Confirmed copy of account of'Prime IT Solutions Pvt. Ltd., (b). Confirmed copy of account of Prime Infoways Pvt. Ltd. (C). copy of Bank Statement of Prime Infoways Pvt. Ltd. and (d). copy of Audited Balance Sheet as on 31.03.2006 of 'Prime Infoways Pvt. Ltd.' Perusal of bank statement of Prime Infoways Pvt. Ltd. with Syndicate Bank, Malviya Nagar, New Delhi reflects the debit of Rs. 7,26,250/- on 27.01.2006 vide cheque no. 163383 in favour of Thapar Homes Limited. It is also pertinent to note that M/s Prime IT Solutions Pvt. Ltd. and Prime Infoways Pvt. Ltd. have also been assessed u/s. 143(3) by the same AO vide assessment orders dated 31.12.2010. Therefore, in my considered view the assessee has fully discharged its onus as mandated on it u/S.
Accordingly, the addition of Rs.7,26,250/- made by AO is directed to be deleted.” No controverting material has been placed before us to show infirmity in findings of the CIT(A). Hence, the same is upheld and ground no. 8 of appeal is dismissed.
For the foregoing reasons, appeal of the Revenue is dismissed.
The ld. Counsel for the assessee made statement at Bar that the assessee is not pressing appeal for AY 2006-07. Accordingly, the appeal of the assessee for AY 2006-07 in is dismissed as not pressed.
11 Thapar Homes Ltd. Group (AYs 2006-07 to 2009-10)
The cross appeals by the Revenue and assessee are directed against the order of CIT(A)-XXVI, New Delhi dated 05.12.2016 for AY 2007-08. The Revenue in appeal has assailed the impugned order on following grounds:-
1. On the facts & Circumstances of the case the CIT(A) has erred in law in allowing the appeal of the assessee without independently verifying the facts of the case, being a fact finding authority as mandated by the Delhi High Court in the case of CIT Vs Jansampark Advertising.
2. On the facts & circumstances of the case the CIT(A) has erred in deleting the addition of Rs. 3,16,00,000/-made by AO on account of unexplained cash credit u/s 68 of the I.T. Act, 1961.
On the facts & circumstances of the case the CIT(A) has erred in deleting the addition of Rs. 24,67,149/-made by AO on account of Foreign travel expenses disallowed 4. On the facts & circumstances of the case the CIT(A) has erred in deleting the addition of Rs. 6,10,000/-made by AO on account of income from unexplained credit u/s 68.
5. On the facts & circumstances of the case the CIT(A) has erred in deleting the addition of Rs. 50,000/-made by AO on account of unexplained cash credit u/s 68.
6. On the facts & circumstances of the case the CIT(A) has erred in deleting the addition of Rs. 15,29,00,000/-made by AO on account of suppressed value of sale consideration.
7. On the facts & circumstances of the case the CIT(A) has erred in deleting the addition of Rs. 5,38,125/-made by AO on account of unexplained investment.
8. On the facts & circumstances of the case the CIT(A) has erred in deleting the addition of Rs. 1,29,056/-made by AO on account of disallowance of expenses u/s 35D.
12 Thapar Homes Ltd. Group (AYs 2006-07 to 2009-10)
9. The appellant craves leave to add, alter or amend any/all of the grounds of appeal
before or during the course of the hearing of the appeal.”
10. The ld. Counsel for the assessee at the outset submitted that AY 2007-08 is year of unabated assessment. Except for the additions mentioned in ground of appeal no. 4 to 7, the other additions are not based on any incriminating evidence found during the course of search. Hence, the said additions are liable to be deleted in light of decisions rendered in the case of PCIT vs. Abhisar Buildwell P. Ltd. (supra). In respect of the additions referred to in ground of appeal no. 4 to 7, he submitted that the addition of Rs.6,10,000/- is made on the basis of Annexure A/3 retrieved from pen drive. The CIT(A) deleted the addition holding that the addition is not based on any incriminating material. The ld. Counsel submitted that Annexure 13 extracted from pen drive is at page 1 of the paper book. The said document does not contain any date, time or year. It is a dumb document. Further, the seized material i.e. pen drive was not found at the premises of the assessee, the same was found from the premises which is not in control of the assessee.
10.1 In respect of issue raised in ground of appeal no. 5 i.e. Rs. 50,000/- treated as unexplained cash credit u/s. 68 of the Act. The ld. Counsel submitted that the assessee had made payment of Rs.50,000/- under Collaboration Agreement. The collaboration agreement is at page 6 to 19 of the paper book. The CIT(A) after examining the issue deleted the addition.
10.2. In respect of issue raised in ground of appeal no. 6 relating to alleged suppression of receipt on sale of property, he submitted that the CIT(A) has categorically held that there is no evidence on record to show that the assessee has received any cash amount over and above what has been stated in the books of 13. Thapar Homes Ltd. Group (AYs 2006-07 to 2009-10) assessee. Since, there is no incriminating material for making the addition, the addition is squarely covered by the decision in the case of PCIT vs. Abhisar Buildwell P. Ltd. (supra).
10.3. In respect of ground of appeal no. 7 relating to unexplained investment u/s. 69A of the Act based on Annexure A-8 page no 72. Party O-1, the ld. counsel for assessee submitted that the said addition by the AO was made based on Agreement to sell between the parties i.e. Om Prakash/Attar Singh/Ishwar Singh/Jai Bhagwan on the one side and M/s. Apex Buildwell P. Ltd. on the other. The assessee is not party to the said agreement. He placed on record a copy of said Agreement to sell at pages 2 to 5 of the paper book.
11. Per contra, the ld. DR strongly placing reliance on the assessment order prayed for reversing findings of the CIT(A) deleting the additions.
12. Both sides heard, orders of the authorities below examined. The primary contention of the assessee is that the additions have been made without any reference to any incriminating material/document found during the course of search. We find that the similar argument was raised by the assessee before the CIT(A) during First Appellate proceedings. The CIT(A) rejected the above contention of assessee and examined each addition on merits.
13. The Revenue in Ground no. 2 of appeal has assailed addition of Rs.3,16,00,000/- made on account of unexplained cash credit u/s. 68 of the Act. The addition was made by the AO as the assessee had allegedly failed to prove identity and creditworthiness of the following four parties from whom the assesee had taken loans:
14 Thapar Homes Ltd. Group (AYs 2006-07 to 2009-10)
(i) P P Rewari Rs. 12,00,000/- (ii) M/s. Gagan Education Society Rs.84,00,000/- (iii) Sachdeva Buildcon P Ltd. Rs.2,00,00,000/- (iv) M/s. Print Infomatics P Ltd. Rs.20,00,000/- Total Rs.3,16,00,000/- 14. The assessee had furnished complete details of the aforesaid parties including copies of accounts, complete address, PAN details and confirmations before the AO vide letter dated 24.12.2010. The AO never made any attempt to verify details from the respective parties. The CIT(A) after examining the details furnished by the assessee deleted the additions. It is pertinent to mention here that while making said addition, AO has not referred to any incriminating material. This being the year where no assessment was pending, the said addition is liable to be deleted in light of decision rendered in the case of PCIT vs. Abhisar Buildwell P. Ltd. (supra). The CIT(A) has examined the transaction on merits and has found that the assessee has discharged its onus in complying with the provisions of section 68 of the Act. Therefore, ground no. 2 of Revenue's appeal is dismissed sans merit.
In ground no. 3 of appeal, the Revenue has assailed deleting of addition of Rs.24,67,149/-. The said expenditure was purportedly incurred by the assessee towards foreign and domestic travels of the directors in connection with business. The AO disallowed the expenditure on the presumption that the travel is on account of pleasure or religious purpose, as on most of the trips husband, wife and children have travelled together. In the first instance, we find that the said addition is not based on any incriminating material. Secondly, the addition has been deleted by the CIT(A) on merits holding that the expenditure was on account of business exigencies
15 Thapar Homes Ltd. Group (AYs 2006-07 to 2009-10) and even if there was some element of personal travel, expenses incurred vis a vis the directors the same should have been taxed in the hands of the directors as perquisite u/s. 28(1)(iv) of the Act. We are of considered view that the said addition is unsustainable as the addition has been made without any reference to the incriminating material in the year of unabated assessment. Secondly, the CIT(A) has deleted the addition on merits. The Revenue has not been able to controvert findings of the CIT(A) in deleting the addition. Thus, in light of above facts, ground no. 3 of appeal is dismissed.
The next addition of Rs.6,10,000/- u/s. 68 of the Act is in respect of unexplained credits. The AO while making the addition has referred to the seized documents i.e. pen drive no. 1 annexure A-13. We have examined the said document at page no. 1 of the paper book filed by the assessee. A bare perusal of the document shows that it is undated and unsigned. On the face of it the document appears to be a dumb document. Hence, no addition can be made on the basis of dumb document. The ground no. 4 of appeal is dismissed, being without any merit.
In ground no. 5 of appeal, Revenue has assailed deleting of addition Rs.50,000/- made by AO on account of unexplained cash credit. The said addition has been made on the basis of incriminating material Annexure A-6 page no. 1 to 14 referring to one collaboration agreement dated 30.09.2006. The said agreement is placed on record at pages 6 to 19 of the paper book. A perusal of the agreement shows that the same has been entered into between Shri Aneesh Chander Diwan and the assessee for redevelopment/reconstruction of property i.e. residential plot bearing no. 36, Poorvi Marg, Vasant Vihar, New Delhi. From perusal of said agreement it emanates that the assessee has made payment of Rs.50,000/- on 16 Thapar Homes Ltd. Group (AYs 2006-07 to 2009-10)
26.09.2006 and the same amount has been reflected in the cash book of the assessee. Since, the amount stands explained the addition of Rs.50,000/- was rightly deleted by the CIT(A). Hence, ground no. 5 of appeal is dismissed.
The ground no 6 of appeal is in respect of addition of Rs.15,29,00,000/- made on account of suppressed value of sale consideration. The AO referring to seized document Annexure A-8 page no 73 to 76, holds that the assessee has sold two different properties i.e. 19, Poorvi Marg, Vasant Vihar, New Delhi for Rs.19,50,00,000/- and 3/35 Shanti Niketan, New Delhi sold for Rs.31,21,00,000/-. The AO held that the first floor of property at 19, Poorvi Marg, Vasant Vihar, New Delhi is sold for Rs.9.5 crores on 22.02.2007 and the entire basement and ground floor (with front and rear garden) is sold for Rs.10,00,00,000/- only on 24.01.2007. The sale prices are grossly undervalued. The AO holds that the sale of basement and ground floor should at least be double the price of the single first floor. He referred the property for valuation to valuation cell. In absence of any report received from valuation cell, he estimated the suppressed value of sale at Rs.13.5 crores and made addition of the same. Likewise, he made addition of Rs.1.79 crores in respect of property 3/35 Shanti Niketan, New Delhi and thus made total addition of Rs.15,29,00,000/- on account suppression of sale of two properties mentioned above. The CIT(A) examined the issue and deleted the addition holding as under: “In my considered view the AO made the addition of Rs.13,50,00,000/- merely on assumption and presumption. It is also a matter of fact that no enquries whatsoever had been carried out which could show that the actual sale consideration of basement and ground floor of the property No. 19, Poorvi Marg, Vasant Vihar, New Delhi was in excess of the registered sale price of Rs. 10.00 crores. The premises of the appellant was subjected to search proceedings us 132 and no evidence or document was found through which it could show that appellant company had received more than the amount what is declared in the sale deed. The AO had made
17 Thapar Homes Ltd. Group (AYs 2006-07 to 2009-10) the addition of Rs. 13.50 crore only on surmises without any information or material to support his guess. The transactions of sales of above said properties stood entered in books of accounts which were seized during the search operations. The appellant company relied on section 292C and 132(4A) of the act. The Onus was on the AO to bring on record some acceptable evidence to prove that what was stated in books of accounts did not depict actual state of affairs. If the AO was not satisfied about the correctness of the sale deed he should have made enquries from the buyers of the above said flats. In my considered view the basement of a residential building cannot fetch sale price equivalent to sale price of the normal floor because the same as per MCD bye laws is required to be used for domestic storage purposes only. It has been held in number of judicial pronouncements that the sale consideration as recorded in the registered document can be disturbed only on the basis of the evidence and not on the basis of presumptions. It is also important to note that the Sub-registrar-IX, New Delhi had registered the sale deed on 24.01.2007 in respect of basement & ground floor of the said property and accepted the consideration Rs.10.00 crore as true and correct for the purpose of stamp duty purposes. In the very next month, the same Sub-registrar had registered the sale deed on 22.02.2007 in respect of first floor of the same property and had accepted the consideration Rs.9.50 crore as true and correct for the purpose of stamp duty purposes.”
From perusal of assessment order it is gathered that the addition has been made by the AO merely on assumption and presumptions. Though, the AO had referred the property for valuation but without waiting for the valuation report has made the addition on surmises. No effort was made by the AO to make further enquiries regarding valuation of said properties. The Revenue has not been able to controvert findings of the CIT(A), hence, we see no reason to interfere with the same. Accordingly, ground no. 6 of appeal is dismissed.
In ground no. 7 of appeal, the Revenue has assailed deleting of addition of Rs.5,38,125/- on account of unexplained investment. The AO has made said addition based on annexure A-8 page no. 75 Party 0-1 found and seized during search operation. The assessee has placed on record Annexure A-8 at page no. 2 to 5 of the 18 Thapar Homes Ltd. Group (AYs 2006-07 to 2009-10) paper book. The short contention of the assessee is that the assessee is not party to said agreement. The CIT(A) has granted relief to the assessee after examining the said agreement and holding that there is no direct or indirect reference to the assessee’s name in the agreement. We have also examined the said agreement. The said agreement is between Om Prakash, etc. on the one side and M/s. Apex Buildwell P. Ltd. on the other. The name of the assessee does not find mention in the said agreement in any capacity. Hence, no addition on the basis of agreement where the name of assessee is not mentioned and there is no documentary evidence on record to link assessee with the said agreement, can be made in the hands of the assessee. Thus, ground no. 7 of appeal is dismissed.
The last addition assailed by the Revenue in appeal is in respect of disallowance of expenses u/s. 35D of the Act Rs.1,29,056/-. The assessee has incurred expenditure of Rs.6,45,081/- on increasing authorized share capital of the company from Rs.50,00,000/- to Rs.10,00,00,000/-. The assessee has claimed the benefit of Section 35D of the Act in respect of said expenditure, and accordingly claimed one-fifth of the total expenditure in the impugned assessment year. The CIT(A) has allowed assessee’s claim and permitted amortization of one-fifth of the total expenditure, i.e. Rs.1,29,056/-, under Section 35D of the Act. We find no infirmity in findings of the CIT(A) on this issue, hence, the same are upheld. Ground no. 8 of appeal is dismissed, accordingly.
In the result, appeal of the Revenue is dismissed.
The ld. Counsel for the assessee made statement at Bar that the assessee does not wish to press appeal in for AY 2007-08. Hence, appeal of the assessee is dismissed as not pressed.
19 Thapar Homes Ltd. Group (AYs 2006-07 to 2009-10) and for AY 2009-10 24. These cross appeals by the assessee and Revenue are directed against the order of CIT(A)-XXVI, New Delhi dated 10.11.2016, for AY 2009-10.
The ld. Counsel for the assessee submits that search was conducted at premises of the assessee on 20.10.2008, therefore, this appeal pertains to the year of search. As per assessment order notice u/s. 143(2) of the Act was issued on 13.11.2009, whereas, the only notice u/s. 143(2) of the Act issued by the AO and served on assessee is dated 22.10.2010. The limitation for issuance of notice u/s. 143(2) of the Act ended on 30.09.2010. Hence, the notice issued u/s. 143(2) of the Act was time barred. The notice u/s. 143(2) of the Act is mandatory, delay in issuance of mandatory notice is an irreparable defect. Any proceedings arising from invalid notice are liable to be quashed on account of invalid jurisdiction. The ld. Counsel pointed that the assessee vide letter dated 24.12.2010 had raised objection before the AO with respect to notice dated 22.10.2010 issued u/s. 143(2) of the Act being time barred. However, the AO brushed aside said objection of the assessee and proceeded with the assessment. He further submitted that in the assessment order the date of issuance of notice u/s. 143(2) of the Act has been wrongly mentioned as 13.11.2009. In fact, on the said date notice u/s. 153A of the Act was issued by the AO. The only notice u/s. 143(2) of the Act served on the assessee was dated 22.10.2010, that is after expiry of statutory period of six months from the end of Financial Year in which return was filed. The limitation for issuance of notice u/s. 143(2) of the Act expired on 30.09.2010, whereas notice u/s. 143(2) of the Act was issued on 22.10.2010. The ld. Counsel pointed that the assessee had filed an affidavit before the CIT(A) stating that the first notice u/s. 143(2) of the Act was dated
20 Thapar Homes Ltd. Group (AYs 2006-07 to 2009-10)
22.10.2010. He asserted that proceedings arising from invalid notice are unsustainable and are liable to be quashed. Even the provisions of Section 292BB of the Act would not rescue the Department where the assessee has raised such objection prior to completion of the assessment/reassessment. In support of his submissions, he placed reliance on the following decision:- ACIT vs. Hotel Blue Moon 188 taxmann.com 113 (SC); CIT v. Laxman Das Khandelwal 108 taxmann.com 183 (SC); & Alpine Electronics Asia Pte. Ltd. vs. Director General of Income Tax, 18 taxmann.com 246 (Delhi).
Per contra, the ld. DR submitted that in the assessment order the AO has mentioned that notice u/s. 143(2) of the Act was issued on 13.11.2009, hence, the said notice was within the period of limitation. The ld. DR placed reliance on the findings of the CIT(A) on the issue and prayed for dismissing objection raised by the assessee on validity of notice u/s. 143(2) of the Act.
Both sides heard, orders of the authorities below examined. The assessee has raised a limited ground before us at this stage. By way of ground no. 2 of appeal, the assessee has assailed validity of notice issued u/s. 143(2) of the Act. The contention of the assessee is that notice u/s. 143(2) of the Act was issued beyond limitation period. According to the assessee the solitary notice u/s. 143(2) of the Act served on the assessee is dated 22.10.2010, whereas, limitation for issuance of said notice was up to 30.09.2010. A perusal of the assessment order reveals that notice u/s. 143(2) of the Act was issued to the assessee on 13.11.2009. Since, there was dispute with regard to date of issuance of notice as per the assessment order and the contention raised by the assessee before us, the Revenue was directed to produce original assessment records. On the date of hearing of appeal, the ld. CIT(DR) placed on 21 Thapar Homes Ltd. Group (AYs 2006-07 to 2009-10) record assessment folder for examination. The examination of assessment record reveals that the solitary notice u/s. 143(2) of the Act available in the records of the Department is dated 22.10.2010, which was issued clearly beyond statutory time.
A perusal of the impugned order reveals that the assessee had raised objection before the AO that notice u/s. 143(2) of the Act is beyond statutory time. On perusal of assessment order, we find that there is no reference to the objections raised by the assessee in assessment order. The assessee again raised objection with regard to wrong assumption of jurisdiction by the AO as the notice u/s. 143(2) of the Act was time barred. The CIT(A) after recording facts concluded that if notice u/s. 153A of the Act is issued on 13.11.2009, it does not necessary mean that no notice u/s. 143(2) of the Act had been issued on the said date at all. These findings of the CIT(A) are absolutely contrary to the documents on record.
Notice u/s. 143(2) of the Act is a statutory requirement. To be valid, the same has to be issued within time limit prescribed under the Act. The provisions of section 143(2) of the Act, as there were applicable to assessment year under appeal provides that no notice u/s. 143(2) of the Act shall be served on the assessee after expiry of six months from the end of Financial Year in which the return is furnished. Undisputedly, the assessee filed return of income on 16.08.2009. Accordingly, the limitation for issuance of notice u/s. 143(2) of the Act was up to 30.09.2010. The AO issued notice u/s. 143(2) of the Act as per assessment records on 22.12.2010 and not on 13.11.2009 as mentioned in the assessment order. The notice was undoubtedly beyond time.
The Hon’ble Delhi High Court in the case of Alpine Electronics Asia Pte. Ltd. vs. Director General of Income Tax (supra) has held that it is mandatory to serve notice
22 Thapar Homes Ltd. Group (AYs 2006-07 to 2009-10) u/s. 143(2) of the Act within stipulated time limit. Where the assessee has raised objection to the validity of notice u/s. 143(2) of the Act before completion of assessment or reassessment, section 292BB of the Act would not apply. The Hon’ble Supreme Court of India in the case of CIT v. Laxman Das Khandelwal (supra) has observed that for section 292BB of the Act to apply, notice under section 143(2) of the Act must have emanated from the Department and it is only infirmities in the manner of service of notice that section seeks to cure and it is not intended to cure complete absence of notice itself. In the instant case there was complete absence of notice u/s. 143(2) of the Act within the period of limitation i.e. 30.09.2010.
In light of the fact that no invalid notice u/s. 143(2) of the Act was ever served on the assessee, the AO wrongly assumed jurisdiction to pass the assessment order. Therefore, the assessment order is liable to be quashed being without jurisdiction. We hold and direct accordingly.
In the result, impugned order is set aside and appeal of the assessee is allowed.
Since, we have quashed the assessment order for AY 2009-10, in appeal by the assessee, cross appeal by the Revenue is liable to be dismissed. We hold and direct accordingly. for AY 2009-10 34. This appeal by the assessee is directed against the order of CIT(A)-23, New Delhi dated 17.02.2020, for AY 2009-10 confirming levy of penalty u/s. 271AAA of the Act.
23 Thapar Homes Ltd. Group (AYs 2006-07 to 2009-10)
Since, we have quashed the assessment order for AY 2009-10, the substratum for levy of penalty u/s. 271AAA of the Act has eroded. Consequently, the penalty proceedings would not survive.
In the result, appeal of the assessee is allowed. 34. To sum up, appeals of the Revenue and assessee in 570/Del/2017, 1141/Del/2017, 571/Del/2017 & 548/Del/2017 are dismissed. Assessee’s appeal in & 1054/Del/2017 are allowed. Order pronounced in the open court on Tuesday the 19th day of August, 2025. Sd/- Sd/- (M. BALAGANESH) (VIKAS AWASTHY) लेखाकार सद�य/ACCOUNTANT MEMBER �याियक सद�य/JUDICIAL MEMBER िद�ी/Delhi, �दनांक/Dated 19/08/2025 NV/- �ितिलिप अ�ेिषतCopy of the Order forwarded to :
1. 1. अपीलाथ�/The Appellant , �ितवादी/ The Respondent. 2.