Loading judgment…
Facts
During a search action, the assessee, a Non-Banking Financial Company, had no material seized pertaining to them. However, the AO made additions based on information from a search at the Chartered Accountant's office regarding unexplained investments, loans, and liabilities. The CIT(A) partly allowed the assessee's appeal.
Held
The Tribunal allowed the assessee's ground of appeal concerning the non-adjudication of an additional ground about protective addition. The Tribunal also directed the CIT(A) to take a report from the AO on factual aspects regarding unexplained items and decide afresh, sustaining the revenue's grounds for statistical purposes.
Key Issues
Whether the CIT(A) was justified in deleting additions for unexplained liabilities and investments without considering incriminating material from a search, and whether an additional ground regarding protective addition should be adjudicated.
Sections Cited
150, 69, 68, 69A, 132, 132(4)
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, DELHI BENCHES: G : NEW DELHI
Before: SHRI ANUBHAV SHARMA & SHRI MANISH AGARWAL
Assessment Year: 2017-18 ACIT, Vs. Strategic Credit Capital Pvt. Ltd., Central Circle-25, A-49, Engine House, Delhi Mathura Road, Mohan Cooperative Indus. Estate, Delhi – 110 055. PAN: AAACK4532C (Assessees) (Respondents) Assessee by : None Revenue by : Shri Mahesh Kumar, CIT-DR Date of Hearing : 02.07.2025 Date of Pronouncement : 30.07.2025 ORDER PER ANUBHAV SHARMA, JM:
ITAs No.289 &438/Del/2022 These are cross appeals filed by the assessee as well as the Revenue against the order dated 15.12.2021 of the Ld. Commissioner of Income-tax (Appeals)-31, New Delhi for AY 2017-18. 2. None appeared for the assessee at the time of hearing and it appears that the assessee has been repeatedly served and informed the date of hearing. Ld. DR was heard. The grounds of appeal read as under:- Grounds of appeal of the assessee “
1. The Ld CIT(A) erred in facts and circumstances of the case and in law in not adjudicating additional ground about addition made on protective basis preceding addition made on substantive basis
2. The Ld CIT(A) erred in facts and circumstances of the case and in law in directing AO to take into account findings in the appellate order and considering these for earlier assessment years in light of provisions of section 150 of The Income Tax Act.
3. The Ld CIT(A) erred in facts and circumstances of the case and in law in directing AO to take into account the findings in the appellate order for considering amounts as unexplained investments for earlier assessment years overlooking that addition as unexplained investments under section 69 cannot be made of amount recorded in books of accounts
4. The Ld CIT(A) erred in facts and circumstances of the case and in law in directing AO to take into account the findings in the appellate order for considering amounts as unexplained liabilities for earlier assessment years overlooking that addition as unexplained liabilities under section 68 cannot be made of amount actually not received.
Grounds of appeal of the Revenue; “i) Whether on the fads and circumstances of the case, the Ld.CIT(A) is legally justified in deleting the addition of Rs. 60,07,599/- made on account of unexplained liability without considering the fact emerged in the search proceeding and found in incriminating material. ii) Whether on the facts and circumstances of the case, the Ld. CIT(A)is legally justified in deleting the addition of Rs. 123,48,53,648/-
2. ITAs No.289 &438/Del/2022 made on account of unexplained investments without considering the fact emerged in the search proceeding and found in incriminating material. iii) Whether on the facts and circumstances of the case, the Ld. CIT(A) is legally justified in deleting the addition of Rs. 92,78,45,000/- made on account of unexplained loans and advances without considering the fact emerged in the search proceeding and found in incriminating material. iv) “The assessee craves leave to add, alter or amend any of the ground(s) of appeal before or during the course of hearing of the appeal.”
3. The assessee is a Non Banking Financial company carrying on business of acquiring distressed debts along with accompanying collateral securities and connected business activities. There was an action U/s 132 on 11.01.2017, at the residential premises of Mr Mohnish Mohan Mukkar who is claimed to be one of the experts the kind of business that the assessee has been carrying on and who deals with business associates on behalf of the assessee. During the action U/s 132, there was allegedly no seizure of any material pertaining to the assessee nor there was any disclosure made in the statement recorded u/s 132(4) of The Income Tax Act 1961. Ld. AO made addition of Rs. 21,58,911 as unexplained u/s 69A of the Act on protective basis and held substantive addition shall be made in the hands of Sh. Mohnish Mohan Mukkar. On account of unexplained entries in books of account on the basis of search conducted at the Chartered Accountant of Mr. Mukkar on the basis of seized material addition of Rs. 123,48,53,648 on account of unexplained investments, Rs. 92,78,45,000/- on account of unexplained investment and Rs. 60,07,599/- on account of unexplained liabilities were made. Aggrieved by the action of AO, the assessee ITAs No.289 &438/Del/2022 went in appeal before ld. CIT(A) where appeal was partly allowed. Thus both the sides are in appeal.
4. We find that as with regard to the ld. CIT(A) has found that material pertained to other years and had given ld. AO opportunity of proceed as per provisions of Section 150 of the Act. There is nothing from revenue to show if any subsequent actions was taken. However, the additional ground of assessee about protective addition made preceding addition made on substantive basis is not adjudicated and with that grievance assessee has raised ground no.
1. Though ld. CIT(A) mentions that assessee has not pressed this ground but even then as the ground is legal and goes to the very root of impugned additions same needed to be decided after taking due report from the ld. AO.
5. Then as far as the setting aside of the additions on merits is concerned we find that in remand report ld. AO has mentioned that due to non-availability of break-up of items same cannot be verified however, ld. CIT(A) without giving further opportunity to the ld. AO accepted the assessee’s explanations and held that additions be made in initial years as per law. Thus the revenue’s grounds are also sustained for statistical purposes and ld. CIT(A) is directed to take report of ld. AO, on these factual aspect and decide afresh.
6. Thus we allow the ground no. 1 in appeal of assessee and allow the appeal of assessee for statistical purposes. The revenue’s appeal is also allowed for statistical purposes with aforesaid consequences to follow. Order pronounced in the open court on 30.07.2025. 4 ITAs No.289 &438/Del/2022