ALSORG INTERIORS INDIA PRIVATE LIMITED,DELHI vs. DCIT, CENTRAL CIRCLE-20, DELHI

ITA 4632/DEL/2025Status: DisposedITAT Delhi29 September 2026AY 2017-1823 pages
AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that the additions made by the AO were not justified. The Tribunal found that the AO relied heavily on digital and physical evidence like WhatsApp chats and retracted statements, rather than conducting independent inquiries. The 'Cash Books' relied upon contained both cash and bank transactions, and the AO failed to reconcile bank entries with regular books or bank statements. The Tribunal noted that for AY 2016-17, payments exceeded receipts, making the net profit addition uncalled for. Furthermore, the Tribunal observed inconsistencies in the AO's figures and the actual cash book totals. The Tribunal also emphasized that projections of later-year practices (from WhatsApp chats) backwards to earlier assessment years were not permissible without year-specific material. The Tribunal noted that the AO's estimation of 15% profit lacked a factual basis, and the CIT(A) correctly identified this lack of basis. Consequently, the Tribunal found that the Revenue failed to establish actual unaccounted sales or receipts attributable to the assessment years. The grounds raised by the assessee were sustained on merits, and the grounds raised by the revenue were dismissed.

What were the facts?

The assessee, Alsorg Interiors India Pvt. Ltd., is in appeal against the order of the Commissioner of Income Tax (Appeals)-27, New Delhi, which upheld additions made by the Assessing Officer (AO) under Section 143(3) read with Section 147 of the Income Tax Act, 1961. These appeals cover assessment years 2016-17 to 2022-23. The proceedings stem from a search and seizure operation on the assessee, which allegedly revealed suppression of sales and unaccounted cash transactions. The AO quantified unaccounted receipts and expenses, estimating a 15% net profit on gross receipts, leading to additions. The CIT(A) restricted this profit rate to 8.5%. The assessee's grounds challenge the additions based on 'dumb documents' and the validity of the assessment proceedings. The revenue's grounds question the reduction of the profit rate and the methodology applied.

What were the issues?

1. Whether, on the facts and in law, the addition to returned income by applying an ad-hoc profit rate of 8.5% on alleged unaccounted sales, based on 'dumb documents' or rough notings not confronted to the assessee or not related to unaccounted transactions, is arbitrary and liable for deletion? (Assessee's contention: Yes, the documents are unreliable and not properly confronted. Revenue's contention: The CIT(A) erred in reducing the profit rate from 15% to 8.5% and should not have applied the NP rate when cash expenses were reduced and other expenses were already claimed). 2. Whether, on the facts and in law, the assessment order passed under Section 147/143(3) is barred by limitation and passed without proper prior approval under Section 153D, making the additions unsustainable? (Assessee's contention: Yes, the assessment is time-barred and lacked proper approval. Revenue's contention: The CIT(A) erred in not appreciating that amounts given after reducing cash expenses reflected net profit in cash and that NP rate is applied when unaccounted receipts are ascertainable but expenses are not). 3. Whether, on the facts and in law, the CIT(A) erred in applying the NP rate when the benefit of indirect expenses was already claimed, cash expenses were reduced, and the assessee provided no evidence of further cash expenses? (Revenue's contention: The CIT(A) erred in applying the NP rate under these circumstances.)

Which sections of the Income-tax Act were involved?

Section 143(3),Section 147,Section 148,Section 153D

AI-generated summary — verify with the full judgment below

P a g e | 1 10 Appeals Alsorg Interiors India P. Ltd. 2016-17 to 2022-23 INCOME TAX APPELLATE TRIBUNAL, DELHI BENCHES, NEW DELHI BENCH: H

BEFORE SHRI ANUBHAV SHARMA, JUDICIAL MEMBER AND SHRI KRINWANT SAHAY, ACCOUNTANT MEMBER

ITA 4631 to 4637/DEL/2025 निर्धारणवर्ा/Assessment Years: 2016-17 to 2022-23) Alsorg Interiors India Pvt. Ltd. DCIT, CC-20 182-GG1, VikasPuri, Jhandewal Extension Vs. Delhi – 110018 New Delhi - 110055 अपीलधर्थी Appellant प्रत्यर्थी Respondent Permanent Account Number of AAICA5824D Assessee:

ITA 5321, 5399 &5400/DEL/2025 निर्धारणवर्ा/Assessment Years: 2020-21 to 2022-23) DCIT, CC-20 Alsorg Interiors India Pvt. Room No. 269A, Second Floor, Ltd., 182, GG1, Vikaspuri, E-2, ARA Centre, Income Tax New Delhi - 110018 Vs. Office, JhandewalanExtn. Delhi – 110055 अपीलधर्थी Appellant प्रत्यर्थी Respondent Permanent Account Number of AAICA5824D Assessee:

Sh. Salil Aggarwal, Sr. Adv. Sh.Shailesh Gupta, CA अपीलधर्थीद्वारा/Appellant represented by: Sh. Madhur Aggarwal, Adv. (Virtual) प्रत्यर्थीद्वारा/Respondent represented by: Sh.Bhopal Singh, CIT, DR सुनवाईकीतारीख/ Date of conclusion of 24.08.2026 hearing: घोषणाकीतारीख/ Date of pronouncement: 29.09.2026

P a g e | 2 10 Ap

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