DCIT, NEW DELHI vs. S K INTEGRATED CONSULTANTS, DELHI

At the time of hearing, it came up that the appeal of the Revenue was filed late by 70 days. No objection was taken by the ld. AR to the same and, accordingly, the delay stands condoned.

The assessee had filed cross objections and primarily the contention of the ld. AR was focused on the cross objections which were defended by the ld. DR by relying the orders of the ld. tax authorities. It comes up that the assessee filed the return declaring an income of Rs.1,82,82,530/- and the assessment was completed u/s 143(3) of the Act on 28.12.2017 at an income of Rs.1,83,68,785/- Thereafter, an order u/s 263 of the Act was passed on 24.12.2018 by the ld. PCIT, directing the AO to make the assessment denovo and, consequently, the impugned assessment order u/s 263 r.w.s. 143(3) of the Act was passed determining the income at Rs.6,79,03,018/- making a disallowance on account of contract charges of Rs.4,96,20,488/-. Aggrieved by the disallowance made, the assessee filed an appeal before the CIT(A) who deleted the addition made by the AO. Now, by way of the cross objections, the assessee has raised the following grounds:- “

The ld. AR has relied the decision of the Hon’ble Delhi High Court in the case CIT vs. M/s Radhika Creation, 2010 (4) TMI 100 –Delhi High Court, wherein in paras 4 to 6, the Hon’ble High Court has observed as follows:- “4. The case before us has two dimensions. The first being as to whether the Assessing Officer was right in treating the said sum of Rs 44,38,997/- as unexplained expenditure under Section 69C of the said Act. The second aspect is whether the said addition could legitimately have been made in the course of a block assessment.

Insofar as the first aspect of the matter is concerned, we find that Section 69C clearly stipulates that where, in any financial year, the assessee has incurred an expenditure and he offers no explanation about “the source of such expenditure or part thereof”, or the explanation, if it is offered by him, is not, in the opinion of the Assessing Officer, satisfactory, the amount covered by such expenditure or part thereof, as the case may be, may be deemed to be the income of the assessee for such financial year. Thus, the focus of Section 69C is on the "source" of such expenditure and not on the authenticity of the expenditure itself. It is an admitted position that the expenditure was shown by the assessee in its regular books of accounts and it is because of this reason that the Income-tax Appellate Tribunal had observed:- "As the expenditure was accounted in the regular books, the source is obviously explained. The provisions of Section 69C are not applicable as there was no unaccounted expenditure." (underlining added) 6. What the Assessing officer attempted to do was to go into the authenticity of the expenditure and he returned a finding that the expenditure was not authenticated by vouchers and consequently, he added the said expenditure as unexplained expenditure under Section 69C. We are in agreement with the observations and findings of the Commissioner of Income-tax (Appeals) as well as that of the Income-tax Appellate Tribunal that this is not a case which falls under Section 69C. Clearly, Section 69C refers to the „source of the expenditure‟ and not to the expenditure itself. Consequently, the Assessing Officer was clearly wrong in treating the said expenditure as unexplained expenditure under Section 69C of the said Act and the lower appellate authorities were right in their conclusions in deleting the said addition.”