ACIT, NEW DELHI vs. KOTIA ENTERPRISEAS LIMITED, NEW DELHI

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ITA 2205/DEL/2025Status: DisposedITAT Delhi05 August 2026AY 2018-196 pages

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

AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that the assumption of jurisdiction by the AO was illegal because the reassessment proceedings were initiated for one transaction (L&T) but the additions were made on entirely different grounds (cash credit and commission) without considering the original reason for reopening. Therefore, the assessment order was not sustainable.

What were the facts?

The Assessing Officer (AO) initiated reassessment proceedings based on a suspicious transaction with M/s Larsen & Toubro Limited. However, the AO later made additions on account of alleged unverified cash credit from M/s CEA Consultant Limited and bogus commission payments, without addressing the original L&T transaction.

What were the issues?

Whether the AO's assumption of jurisdiction for reassessment was illegal when the additions made were on grounds different from the initial reason for reopening. The validity of additions made under Section 68 for alleged unverified cash credits and bogus commission payments.

Which sections of the Income-tax Act were involved?

Section 148A,Section 148,Section 68

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, DELHI BENCH “A” NEW DELHI

Before: SHRI ANUBHAV SHARMA & SHRI SANJAY AWASTHI

For Appellant: Shri Mukesh Jain, CA & Shri Atul Dhama, CA
For Respondent: Shri Jitender Singh, CIT DR
Hearing: 16.07.2026

ITA No.2205/DEL/2025 KOTIA ENTERPRISEAS LIMITED IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH “A” NEW DELHI BEFORE SHRI ANUBHAV SHARMA, JUDICIAL MEMBER AND SHRI SANJAY AWASTHI, ACCOUNTANT MEMBER ITA No.2205/Del/2025 Assessment Year: 2018-19 ACIT, Vs. KOTIA ENTERPRISEAS LIMITED, Room No.332, 3rd Floor, ARA Centre, 905, New Delhi House, Jhandewalan Extension, New Delhi, 27, Barakhamba Road, Delhi 110005. New Delhi, Delhi 110001. INDIA. PAN No. AAACI0194C Appellant Respondent Assessee by Shri Mukesh Jain, CA & Shri Atul Dhama, CA Revenue by Shri Jitender Singh, CIT DR Date of hearing: 16.07.2026 Pronouncement on 05.08.2026 O R D E R PER SANJAY AWASTHI, ACCOUNTANT MEMBER: 1. This appeal arises from order dated 07.01.2025, passed u/s 250 of the Income Tax Act, 1961 (hereafter as “the Act”), by Ld. CIT(A)-23, Delhi.

1.1 The assessee is engaged in trading and construction activities of Civil Works. The assessee filed its return of income on 24.10.2018, declaring a total income of Rs.76,18,830/-. Thereafter, the AO initiated proceedings u/s 148A of the Act and proposed that an amount of Rs.589,64,152/- would be treated as unexplained expenditure with respect to M/s Larsen & Toubro Limited. After issuing a notice u/s 148 of the Act the Ld. AO made an addition of Rs.20,95,00,000/- u/s 68 of the 1

ITA No.2205/DEL/2025 KOTIA ENTERPRISEAS LIMITED Act on account of an alleged unverified cash credit from one M/s CEA Consultant Limited. A further addition of Rs.56,19,894/- was also made with respect to payment of interest on the loan assessed u/s 68 of the Act. The Ld.AO made a further addition of Rs.62,85,000/- on ad hoc basis for alleged bogus commission paid for arranging the said bogus entries. A final addition of Rs.3,79,363/- was made by estimating commission paid at 3% of Rs.1,26,45,457/-. This last addition was made on account of a payment made by the assessee to one M/s DNC Infrastructure Private Limited. The payment to M/s DNC Infrastructure was not found to be genuine by the Ld. AO and an estimated commission income was assessed in the hands of the assessee.

1.2 The aggrieved assessee approached the Ld. CIT(A) where he challenged the addition on merits as also on the alleged illegal assumption of jurisdiction by the Ld. AO. Before the Ld. CIT(A) the assessee filed considerable documents including copy of loan agreement, bank statement of the assessee, copy of ITR etc. of M/s CEA Consultants Pvt. Limited and other supporting documents. However, the Ld. CIT(A) affirmed the action of Ld. AO.

1.3 Further aggrieved the assessee has approached the ITAT with several grounds challenging the addition on merits as well as the assumption of jurisdiction by the Ld. AO mainly on the ground that the issue on which the proceedings for reassessment were initiated through

ITA No.2205/DEL/2025 KOTIA ENTERPRISEAS LIMITED the issue of notice u/s 148 of the Act, was not the issue on which the additions were eventually made by the Ld. AO.

2.

Before us the Ld. AR argued with the help of paper books and written submissions. It was stated that the assessee had filed considerable documents in support of the loan taken from M/s CEA Consultants Pvt. Limited and since the said transaction was duly accounted for in the books of account, in the bank statements, in the ITR of the loan giver and the fact that interest was being paid on the same, there could be no doubt about its genuineness, also because this transaction was a purely commercial one, with the assessee discharging the onus cast upon him under to Section 68 of the Act. Regarding the noting in the Ld. AO’s order that a notice u/s 133(6) was issued to M/s CEA Consultants Pvt. Limited and was not responded to, the Ld. AR stated that this very same AO was seized of proceedings for AY 2019-20 and M/s CEA Consultants Pvt. Limited had duly replied to the Ld. AO with respect to that year’s proceedings on 27.03.2024. It was flagged by the Ld. AR that this response was with the AO before he passed the order for AY 2018-19 (present year) on 29.03.2024. Regarding the disallowance of interest on this loan, it was stated that the assessee had deducted tax at source and deposited the same in the Government account. The Ld. AR relied on the documents submitted before the authorities below in order to prove the genuineness of the impugned loan from M/s CEA Consultants Pvt. Limited. The Ld. AR requested this Bench to consider the fact that 3

ITA No.2205/DEL/2025 KOTIA ENTERPRISEAS LIMITED the assessee’s case was reopened for a transaction of Rs.58,96,41,521/- with M/s L&T Limited but no addition was made with respect to this transaction either wholly or partially. It was the submission that this action was not sustainable in the eyes of law considering the cases of M/s Jaguar Buildcon Pvt. Limited reported in 165 taxmann.com 757 (Del.); and the case of ATS Infrastructure Limited reported in 473 ITR 595 (Del.). 2.1 The Ld. DR relied on the findings of Ld. AO and pointed out the relevant portions from the order of Ld.CIT(A). The Ld. DR supported the orders of authorities below.

3.

We have carefully considered the rival submissions and have gone through the records before us, including the case laws filed during the course of arguments. We deem it fit to consider the grounds of jurisdiction before proceeding any further in this matter. It is an admitted fact that the Ld. AO initiated reassessment proceedings on the allegation that an amount of Rs.589,64,152/- was suspicious and unjustified as a so-called transaction with M/s Larsen & Toubro Limited. What is clearly visible from the Ld. AO’s order is that this particular transaction has not been considered for any adverse treatment either in full or in part. Accordingly, the assumption of jurisdiction would be illegal considering the finding given in ATS Infrastructure Limited (supra), wherein it has been discussed in detail that the AO would be justified in making additions over and above the amounts proposed for reassessment only when the amounts mentioned in the proceedings u/s 148A of the Act 4

ITA No.2205/DEL/2025 KOTIA ENTERPRISEAS LIMITED have been added and thereafter some other amounts have also been treated adversely. Also in case the original amount or transaction as per the proceedings u/s 148A of the Act has not been considered for any kind of addition then the AO is not permitted to make any further addition on any other account. This view has also been echoed in the case of Jaguar Buildcon (supra) in para 7 of this order. Respectfully following these two case laws it deserves to be held that the assumption of jurisdiction was fraught with illegality and therefore the resultant assessment order cannot be sustainable in the eyes of law. The assessee gets relief accordingly.

3.1 Since the assessee has succeeded on the grounds of jurisdiction, hence, the grounds on merit are not adjudicated at present.

4.

In the result, appeal is allowed.

Order pronounced in the open court on 05.08.2026

Sd/- Sd/- (ANUBHAV SHARMA) (SANJAY AWASTHI) JUDICIAL MEMBER ACCOUNTANT MEMBER Dated: 05.08.2026 *Kavita Arora, Sr. P.S. Copy forwarded to: 1. Appellant 2. Respondent 3. CIT

ITA No.2205/DEL/2025 KOTIA ENTERPRISEAS LIMITED 4. CIT(Appeals) 5. DR: ITAT ASSISTANT REGISTRAR ITAT, NEW DELHI

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