M/S. ARADHYAA INFRA & HOLDINGS PVT. LTD.,CHENNAI vs. ITO, CORP. WARD-1(1), CHENNAI

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ITA 1793/CHNY/2026Status: DisposedITAT Chennai03 September 2026AY 2020-2113 pages

In favour of the assessee: the assessee's appeal was allowed. From the AI summary of this appeal.

AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that the Revenue failed to establish that the income had accrued to the assessee during FY 2019-20. The date of incorporation, the timing of invoicing in FY 2020-21, and the opening of the bank account in April 2020 supported the assessee's claim that the income pertained to AY 2021-22.

What were the facts?

The assessee company was incorporated on March 24, 2020. The tax authorities reopened the assessment for AY 2020-21 based on Form 26AS showing receipts of Rs. 91,28,613/- from another company. The assessee contended that these receipts pertained to FY 2020-21 as business operations and invoicing occurred in April 2020.

What were the issues?

Whether the income reflected in Form 26AS for AY 2020-21 had actually accrued to the assessee in that year, considering its incorporation date and the timing of business operations and invoicing.

Which sections of the Income-tax Act were involved?

Section 147,Section 148,Section 10A,Section 199

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, ‘B’ BENCH: CHENNAI

Before: SHRI MANU KUMAR GIRI & SHRIS.R.RAGHUNATHA

Hearing: 06.08.2026

आयकरअपील�यअ�धकरण ’बी’ �यायपीठ,चे�नई। IN THE INCOME TAX APPELLATE TRIBUNAL ‘B’ BENCH: CHENNAI �ी मनुकुमारिग�र, �ाियक सद� एवं �ी एस. आर. रघुनाथा लेखासद� BEFORE SHRI MANU KUMAR GIRI, JUDICIAL MEMBER AND SHRIS.R.RAGHUNATHA, ACCOUNTANT MEMBER

आयकर अपील सं./ITA No. 1793/Chny/2026 �नधा�रण वष�/Assessment Year: 2020-21 M/s Aradhyaa Infra & Holdings v. The ITO, Private Limited, Corporate Ward 1(1), No. 18-21/95 F9B, Heritage, Chennai-600034 Apartment, Ormes Road, 4th Cross Street, Kilpauk, Chennai-600010 [PAN: AATCA 4131 G] (अपीलाथ�\Appellant) (��यथ�\Respondent)

अपीलाथ� क ओर से/ Appellant by : Mr. D. Anand, Advocate ��यथ� क ओर से /Respondent by : Mr. A.T. Krishnamoorthy, Addl. CIT सुनवाई क तार�ख/Date of Hearing : 06.08.2026 घोषणा क तार�ख /Date of : 03.09.2026 Pronouncement आदेश / O R D E R PER MANU KUMAR GIRI, JM: This appeal by the assessee is directed against the order of the Learned Commissioner of Income Tax (Appeals), National Faceless Appeal Centre, Delhi ["Ld. CIT(A)"], dated 19.02.2026, whereby the Ld. CIT(A) confirmed the assessment framed under section 147 of the Income Tax Act, 1961 ["the Act"] for Assessment Year 2020-21.

ITA No. 1793/Chny/2026 (AY 2020-21) M/s Aradhyaa Infra & Holdings Pvt Ltd. Vs ITO, Corp. Ward-1(1) :: 2 :: 2. The assessee has raised the following grounds of appeal:

1.

The order of the learned Commissioner of Income Tax (Appeals), National Faceless Appeal Centre [NFAC], Delhi is bad in law, contrary to facts, opposed to statutory provisions and liable to be set aside.

2.

The National Faceless Appeal Centre [NFAC] erred in upholding the reopening under section 147 without valid jurisdiction and without proper application of mind.

3.

The learned CIT(A) erred in law and on facts in upholding the reopening of assessment under section 147, which was initiated solely on the basis of entries reflected in Form 26AS indicating receipt of 291,28,613/- from M/s. Visionary RCM Infotech India Pvt. Ltd., without any independent application of mind or tangible material, rendering the reassessment proceedings invalid in law.

4.

The learned Commissioner of Income Tax (Appeals) (NFAC) while making the impugned addition erred in law and on facts in placing sole reliance on the entries reflected in Form 26AS without appreciating that such entries are merely indicative of tax deduction and do not determine the accrual or year of taxability of income and therefore is unsustainable in law.

5 The Commissioner of Income Tax (Appeals), National Faceless Appeal Centre [NFAC] erred in law and on facts in confirming the addition of 291,28,613/- in AY 2020-21 without appreciating that the said income does not pertain to the relevant year and is not taxable in the year under consideration.

6.

The learned CIT(A) erred in law and on facts in failing to appreciate that, in terms of Section 10A of the Companies Act, 2013, the appellant company. incorporated on 24.03.2020, was legally not permitted to commence business operations without complying with the statutory requirement of filing a declaration of commencement of business, and therefore no income could have accrued during FY 2019-20 and therefore the alleged accrual of income during FY 2019-20 is in direct conflict with the mandate of Section 10A of the Companies Act, 2013 and hence the addition deserves to be deleted.

7.

The learned CIT(A) failed to appreciate that the appellant company, having been incorporated only on 24.03.2020 had not commenced business operations during FY 2019-20 and, therefore, no income could have accrued or arisen in the said year. The learned CIT(A) erred in ignoring that no services were rendered during FY 2019-20 and that invoices were raised only in April 2020, thereby establishing that the income pertains to FY 2020-21 relevant to AY 2021-22.

ITA No. 1793/Chny/2026 (AY 2020-21) M/s Aradhyaa Infra & Holdings Pvt Ltd. Vs ITO, Corp. Ward-1(1) :: 3 :: 8. The learned CIT(A) failed to appreciate that the appellant company, incorporated on 24.03.2020, was within the statutory 180-day window prescribed under Section 10A of the Companies Act, 2013 and, therefore, could not have commenced or carried on any business activity during the relevant year, the bank account itself being opened only in April 2020, no income could have accrued during the impugned year, and the addition is consequently unsustainable in law.

9.

The learned CIT(A) failed to appreciate that, in terms of Section 199 read with Rule 37BA, TDS credit is allowable only in the year in which the corresponding income is assessable, and the appellant has correctly offered the income and claimed TDS in AY 2021-22.

10.

The learned CIT(A) failed to appreciate that the impugned income has already been duly offered to tax in AY 2021-22 and, therefore, the addition in AY 2020-21 results in impermissible double taxation.

For these and other grounds that may be rendered at the time of hearing it is most humbly prayed that the Hon'ble Tribunal may be pleased to allow the appellants appeal and thus render justice.

3.

Briefly stated, the assessee is a company which was incorporated on 24.03.2020. The case of the assessee was subsequently reopened under section 147 of the Act on the basis of information reflected in Form 26AS showing receipts of Rs.91,28,613/- from M/s. Visionary RCM Infotech India Pvt. Ltd. towards fees for professional/technical assistance. Since the assessee had not filed its return of income for Assessment Year 2020-21, the Assessing Officer ("AO") formed the view that income chargeable to tax had escaped assessment and issued notice under section 148 of the Act on 27.03.2024.

3.1 During the reassessment proceedings, the assessee did not file a return of income in response to the notice under section 148. Notices under section 142(1) were thereafter issued. In response thereto, the assessee submitted that it had been incorporated only on 24.03.2020 and that the impugned receipts from M/s. Visionary

ITA No. 1793/Chny/2026 (AY 2020-21) M/s Aradhyaa Infra & Holdings Pvt Ltd. Vs ITO, Corp. Ward-1(1) :: 4 :: RCM Infotech India Pvt. Ltd. pertained to work completed during FY 2020-21 relevant to AY 2021-22 and not to FY 2019-20 relevant to the year under consideration. It was further submitted that although the amount was reflected in Form 26AS for AY 2020-21, the actual invoices were raised only in April 2020. The assessee also submitted before the AO that the consultancy agreement was entered into on 30.03.2020 and that the assessee had commenced its relevant operations only subsequently. It was further stated that the bank account of the assessee was opened only in April 2020.

3.2 During the course of reassessment proceedings, the AO made independent enquiry by issuing notice under section 133(6) of the Act to M/s. Visionary RCM Infotech India Pvt. Ltd. The AO was informed that the said company had subsequently merged with M/s. Corrohealth Infotech Pvt. Ltd. Consequently, information was obtained from M/s. Corrohealth Infotech Pvt. Ltd. In response, the said company stated, inter alia, that the assessee had rendered services during FY 2019-20, that it had created a provision and withheld tax thereon, but that the invoice was raised by the assessee only during FY 2020-21. It was further stated that since, according to the payer, the services pertained to FY 2019-20, the corresponding expenditure had been accounted for in FY 2019-20. Relying principally upon the information reflected in Form 26AS and the response received from the payer, the AO concluded that the services had been rendered during FY 2019-20 and that the receipts were accordingly taxable in AY 2020-21. The AO consequently determined the total income of the assessee at Rs.91,28,613/-.

ITA No. 1793/Chny/2026 (AY 2020-21) M/s Aradhyaa Infra & Holdings Pvt Ltd. Vs ITO, Corp. Ward-1(1) :: 5 :: 4. Aggrieved, the assessee carried the matter before the Ld. CIT(A). Before the first appellate authority [CIT(A)], the assessee reiterated that it had been incorporated only on 24.03.2020 and that the relevant business transactions took place only in FY 2020-21. It was submitted that the consultancy agreement was entered into on 30.03.2020 and invoices were raised only in April 2020. The assessee further submitted that the payer had deducted tax at source on 31.03.2020 merely with a view to accounting for the amount as a provision in its books and claiming the corresponding expenditure.

4.1 The Ld. CIT(A), however, did not accept the explanation of the assessee. The Ld. CIT(A) observed that the assessee had not produced documentary evidence of the invoices raised in April 2020. The Ld. CIT(A) further relied upon the response furnished by M/s. Corrohealth Infotech Pvt. Ltd., wherein it was stated that the assessee had rendered services during FY 2019-20, that the payer had created a provision and withheld tax thereon, although the invoice was raised during FY 2020-21. On the aforesaid basis, the Ld. CIT(A) held that the expenditure had been booked by the payer in AY 2020-21 and that the corresponding income was therefore taxable in the hands of the assessee in AY 2020-21. The addition of Rs.91,28,613/- was accordingly confirmed.

Now assessee is in appeal before the Tribunal.

ITA No. 1793/Chny/2026 (AY 2020-21) M/s Aradhyaa Infra & Holdings Pvt Ltd. Vs ITO, Corp. Ward-1(1) :: 6 :: 5. Before us, the Learned Authorised Representative ("Ld. AR") reiterated the submissions made before the lower authorities. He also filed paper book and referred to pages 1, 2, 3, 5, 8, 12, 14-15, 45 etc. The paper book index is as under:

Sr. Date Particulars Pg. No. Nos. 1 24.03.2020 Certificate of Incorporation of Assessee 1 2 04.04.2020 Certificate issued by Bank for opening of 2-3 Current A/c No: 027805004476 3 Bank State for the month of April, 2020 3-4 4 26.04.2020 GST Registration Certificate for the Assessee 5-7 5 30.04.2020 Invoices issued towards VCRM for services 8-11 rendered by the Assessee 6 14.07.2020 GSTR-3B Return of the Assessee for April, 12-13 2020 7 Screenshot from GST Portal evidencing 14 transactions entered into with VCRM 8 03.12.2021 ITR Acknowledgment for A Y 2021-22 15 9 Form 26AS for A Y 2021-22 16-28 10 29.07.2021 Auditor’s Report along with Financials 29-44 11 31.03.2021 Ledger Extract for Visionary RCM Infotech 45 India Private Limited Acknowledgement of responses filed during e-proceedings 12 08.04.2025 Acknowledgement of response and 46-47 evidences filed before FAA 13 23.12.2024 Acknowledgement of response and 48-49 evidences filed before AO 14 13.06.2024 Acknowledgement of response and 50 evidences filed before AO

6.

He submitted that the fundamental fact which had not been properly appreciated by the AO or the Ld. CIT(A) was that the assessee itself came into existence only on 24.03.2020. It was

ITA No. 1793/Chny/2026 (AY 2020-21) M/s Aradhyaa Infra & Holdings Pvt Ltd. Vs ITO, Corp. Ward-1(1) :: 7 :: submitted that the assessee had not commenced its business operations during FY 2019-20 and its bank account was opened only in April 2020. The Ld. AR further submitted that the consultancy agreement was entered into only on 30.03.2020 and the invoices were raised only in April 2020. Therefore, the actual accrual of income, if any, could not have taken place in FY 2019-20 merely because the payer chose to create a provision and deduct tax at source on 31.03.2020. He contended that Form 26AS merely records the factum of tax deduction and deposit and does not, by itself, determine the year in which the corresponding income has accrued or is chargeable to tax. The year of taxability has to be determined with reference to the actual accrual of income and the surrounding facts. The Ld. AR also placed reliance upon the response of the payer itself, particularly the categorical admission therein that the invoice was raised only during FY 2020-21. According to the Ld. AR, this fact materially supported the assessee's case that the amount became income of the assessee only in FY 2020-21 relevant to AY 2021-22.

7.

The ld.AR further submitted that the assessee had in fact offered the said income to tax in AY 2021-22 and had claimed credit for the corresponding TDS in that year in accordance with section 199 read with Rule 37BA of the Income Tax Rules, 1962. Therefore, taxing the same amount again in AY 2020-21 would result in double taxation of the same income.

8.

With regard to section 10A of the Companies Act, 2013, the Ld. AR submitted that the assessee, having been incorporated only on 24.03.2020, was subject to the statutory requirement relating to

ITA No. 1793/Chny/2026 (AY 2020-21) M/s Aradhyaa Infra & Holdings Pvt Ltd. Vs ITO, Corp. Ward-1(1) :: 8 :: commencement of business and that the relevant declaration was required within the prescribed period. It was therefore contended that the alleged business activity attributed to the assessee during FY 2019-20 was legally and factually untenable. The Ld. AR accordingly submitted that the addition had been made merely by shifting the year of taxability on the basis of the payer's accounting treatment and the TDS reflected in Form 26AS, without establishing that the income had actually accrued to the assessee during FY 2019-20. He therefore prayed that the addition be deleted and the appeal be allowed.

9.

The Learned Departmental Representative ("Ld. DR"), on the other hand, supported the orders of the lower authorities. He submitted that the payer had categorically confirmed that the assessee had rendered services during FY 2019-20 and that the corresponding expenditure had been accounted for in that year. The payer had also deducted tax at source on 31.03.2020, which was duly reflected in Form 26AS for AY 2020-21. The Ld. DR submitted that the assessee had failed to furnish sufficient documentary evidence before the lower authorities to establish that the services were actually rendered only during FY 2020-21. According to him, the mere fact that the invoice was raised in April 2020 could not, by itself, alter the year in which the services were rendered. The Ld. DR therefore supported the conclusion of the AO and Ld. CIT(A) that the income of Rs.91,28,613/- pertained to FY 2019-20 and was taxable in AY 2020-21. He accordingly prayed for dismissal of the appeal.

ITA No. 1793/Chny/2026 (AY 2020-21) M/s Aradhyaa Infra & Holdings Pvt Ltd. Vs ITO, Corp. Ward-1(1) :: 9 :: 10. We have heard the rival submissions and perused the material available on record. We have also carefully considered the orders of the AO and the Ld. CIT(A) and paper book filed by the assessee. The controversy before us, insofar as the merits of the addition are concerned, is essentially whether the sum of Rs.91,28,613/- had accrued as income to the assessee during FY 2019-20 relevant to AY 2020-21 or during FY 2020-21 relevant to AY 2021-22.

11.

At the outset, we find it undisputed that the assessee-company was incorporated on 24.03.2020. Thus, the period between the incorporation of the assessee and the end of FY 2019-20 comprised only a few days. The assessee has specifically contended that its bank account was opened only in April 2020 and that the invoices in respect of the impugned receipts were raised only in April 2020. More importantly, the material gathered by the AO from the payer itself does not conclusively establish that the impugned amount had accrued as income to the assessee during FY 2019-20. Rather, the response of M/s. Corrohealth Infotech Pvt. Ltd., as reproduced by the Ld. CIT(A), specifically records that "the invoice was raised by Aradhyaa only during the FY 2020-21."

12.

The distinction between the payer's accounting of an expenditure and the accrual of income in the hands of the recipient is material. The fact that the payer created a provision in its books and deducted tax at source on 31.03.2020 may explain the payer's accounting treatment, but it cannot, by itself, conclusively determine the year in which income accrued to the recipient assessee. Likewise, the reflection of TDS in Form 26AS for AY 2020- 21 is not determinative of the year of accrual of the underlying

ITA No. 1793/Chny/2026 (AY 2020-21) M/s Aradhyaa Infra & Holdings Pvt Ltd. Vs ITO, Corp. Ward-1(1) :: 10 :: income. Form 26AS records tax deducted at source by the deductor; the substantive question as to the year in which the corresponding income is assessable has to be determined independently on the basis of the accrual and taxability of such income.

13.

In the present case, the lower authorities have proceeded substantially on the premise that since the payer had accounted for the expenditure in FY 2019-20 and deducted TDS on 31.03.2020, the corresponding income must necessarily have accrued to the assessee in the same financial year. In our considered view, such an inference is not sustainable in the facts of the present case.

14.

The payer's response itself contains two material facts: first, that it had created a provision and withheld tax during FY 2019-20; and second, that the invoice was actually raised by the assessee only during FY 2020-21. The second fact assumes considerable significance while determining the year of accrual of the income in the hands of the assessee.

Further, the assessee was incorporated only on 24.03.2020. The assessee has consistently maintained that it had not commenced business operations during the relevant period and that the relevant business activity and invoicing took place in April 2020. The opening of the bank account only in April 2020 also lends support to the assessee's contention regarding the commencement of its actual business operations.

15.

We are conscious of the fact that the payer has stated that the services pertained to FY 2019-20. However, this statement has to be appreciated in its proper context. The payer's accounting of a

ITA No. 1793/Chny/2026 (AY 2020-21) M/s Aradhyaa Infra & Holdings Pvt Ltd. Vs ITO, Corp. Ward-1(1) :: 11 :: provision for expenditure is not, by itself, conclusive proof that corresponding income had legally accrued to the assessee in that year. What is required to be determined is whether the assessee had acquired a legally enforceable right to receive the amount as income during FY 2019-20. On the facts available on record, no cogent material has been brought before us to establish that the assessee had completed the relevant services and that the income had accrued to it before 31.03.2020. On the contrary, the assessee's incorporation on 24.03.2020, the stated opening of its bank account in April 2020, and, significantly, the payer's acknowledgement that the invoice was raised only in FY 2020-21, collectively support the assessee's contention that the income pertains to FY 2020-21. We also find force in the assessee's contention that the amount in question has already been offered to tax in AY 2021-22. Once the assessee has offered the same income to tax in the subsequent assessment year, bringing the identical receipt to tax again in AY 2020-21, without first establishing that it had accrued in that year, would result in taxation of the same income twice. The provisions relating to TDS credit also reinforce the principle that credit for tax deducted at source is to be given with reference to the assessment year in which the corresponding income is assessable, subject to the statutory provisions. Therefore, the mere fact that the payer deducted TDS in March 2020 cannot be treated as conclusive evidence that the corresponding income is taxable in AY 2020-21. We further find that the assessee's reliance on section 10A of the Companies Act, 2013 cannot be brushed aside altogether. The assessee was incorporated on 24.03.2020 and the statutory framework relating to commencement of business is

ITA No. 1793/Chny/2026 (AY 2020-21) M/s Aradhyaa Infra & Holdings Pvt Ltd. Vs ITO, Corp. Ward-1(1) :: 12 :: relevant while examining the assessee's contention that it could not have commenced its business operations during the relevant period without satisfying the statutory requirements. Although the applicability and effect of the said provision have to be considered in the context of the actual facts, the same constitutes a relevant surrounding circumstance supporting the assessee's contention regarding the timing of commencement of its business.

16.

In our considered opinion, the Ld. CIT(A) has placed excessive reliance upon the payer's accounting treatment and the TDS entry in Form 26AS without adequately examining whether the income had actually accrued to the assessee during FY 2019-20. The year of taxability of income in the hands of the assessee cannot be determined merely by the unilateral accounting treatment adopted by the payer.

17.

On an overall consideration of the facts, we hold that the Revenue has failed to establish, on the material available on record, that the sum of Rs.91,28,613/- had accrued to the assessee during FY 2019-20 relevant to AY 2020-21. The contemporaneous evidence, particularly the date of incorporation of the assessee and the fact that the invoice was admittedly raised only during FY 2020- 21, supports the assessee's case that the income pertains to AY 2021-22. We therefore hold that the impugned amount of Rs.91,28,613/- could not have been brought to tax in AY 2020-21. Accordingly, the addition made by the AO and confirmed by the Ld. CIT(A) is directed to be deleted.

ITA No. 1793/Chny/2026 (AY 2020-21) M/s Aradhyaa Infra & Holdings Pvt Ltd. Vs ITO, Corp. Ward-1(1) :: 13 :: 18. In view of our finding on the merits of the addition, the grounds challenging the validity of reopening under section 147/148 of the Act become academic in nature. Accordingly, we refrain from adjudicating the said grounds on merits.

19.

In the result, the grounds relating to the addition are allowed and the grounds challenging the reopening are treated as academic. Accordingly, the appeal of the assessee is allowed. Order pronounced in the open court on the 03rd day of September, 2026 in Chennai.

Sd/- Sd/- (एस. आर. रघुनाथा) (मनु कुमार िग�र) (S.R.RAGHUNATHA) (MANU KUMAR GIRI) लेखा सद*य/ACCOUNTANT MEMBER �या�यक सद*य/JUDICIAL MEMBER चे�नई/Chennai, +दनांक/Dated: 03rd September 2026 SNDP, Sr. PS आदेश क ��त,ल-प अ.े-षत/Copy to: 1. अपीलाथ�/Appellant 2. ��थ�/Respondent 3. आयकरआयु�/CIT, Chennai / Madurai / Salem / Coimbatore. 4. िवभागीय�ितिनिध/DR 5. गाड�फाईल/GF Digitally signed SANDE by SANDEEP KUMAR EP Date: 2026.09.08 KUMAR 09:49:29 +05'30'

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