CAPITAL AUTOWORLD PRIVATE LIMITED,NEW DELHI vs. ASSISTANT COMMISSIONER OF INCOME TAX CIRCLE - 5(2), NEW DELHI

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ITA 3724/DEL/2023Status: DisposedITAT Delhi13 June 2025AY 2017-18Bench: MS. MADHUMITA ROY (Judicial Member)5 pages
AI SummaryPartly Allowed

What did the Tribunal hold?

The Tribunal confirmed the addition of Rs.26,360/- for software expenses due to lack of documentary evidence. However, the addition of Rs.12,87,449/- was found to be erroneous as the CIT(A) failed to provide a definite finding or cogent documents to establish it as unexplained.

What were the facts?

The assessee's appeal arose from an order that upheld additions made by the AO for software expenses and unexplained credit. The assessee failed to provide documentation for software expenses. Regarding cash deposits during demonetization, the AO found manipulated sales records.

What were the issues?

Whether the addition for software expenses can be confirmed without documentary evidence? Whether the addition for unexplained credit is sustainable in the absence of definite findings by the CIT(A)?

Which sections of the Income-tax Act were involved?

Section 143(3)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, “SMC” BENCH, DELHI

Before: MS. MADHUMITA ROY

Hearing: 17.03.2025Pronounced: 13.06.2025

The Instant appeal filed at the behest of the assessee is arising out of the order dated 03.10.2023 passed by the National Faceless Appeal Centre (NFAC) New Delhi, arising out of the order dated 29.12.2019 passed by the ACIT, Circle 5(2) , Delhi under Section 143(3) of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’) for Assessment Year 2017-18 whereby and whereunder the addition made by the Ld. AO with regard to software expenses of Rs.26,360/- and unexplained credit of Rs.12,87,449/- has been upheld.

2.

Heard the parties and perused the records. It appears that before the Ld. AO the assessee did not file any documents in regard to the expenditure on acquisition of software, whether the same is revenue or capital expenditure and hence, the same was added and further confirmed by the First Appellate Authority in the absence of any documents available on record.

3.

So far as the cash deposit of Rs.1,14,78,500/- during the demonetization is concerned the assessee’s claim of Rs.78,54,000/- was out of the advanced received from the customers; rest attributes to sales details whereof were duly submitted before the Ld. AO considering which the Ld. AO came to a finding that the assessee manipulated the sales records and reduced the post demonetization months sales by half. Further that there was high sales qua cash in hand during the demonetization period. However, while confirming the addition by the First Appellate Authority to the tune of Rs.12,87,449/- the Ld. CIT(A) has failed to come to a definite finding as to how the same could at all remained unexplained without referring any cogent documents establishing the same. In that view of the matter the order of Ld. CIT(A) in computing the addition of Rs.12,87,449/- is found to be erroneous and not sustainable in the eyes of law. So far as the software expenses of Rs.26,360/- is concerned in the absence of any documentary evidence in support of the claim the same is hereby confirmed.

4.

The appeal of the assessee is partly allowed.

Order pronounced in the open court on 13.06.2025

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