L7 CONSTRUCTION PRIVATE LIMITED,MUMBAI vs. DEPUTY COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE 6(4), MUMBAI

ITA 7801/MUM/2025Status: DisposedITAT Mumbai25 September 2026AY 2023-202430 pages
AI SummaryPartly Allowed

What did the Tribunal hold?

The Tribunal noted that the issue concerning the addition under Section 56(2)(x)(b) was covered by a coordinate bench decision in a similar case for AY 2023-24, which had restored the matter to the AO for reference to the District Valuation Officer (DVO). In the present case, the assessee disputed the stamp duty value, citing the property being under construction. Although the assessee initially sought a DVO reference but withdrew it, the Tribunal, following the precedent, restored the issue to the AO. The AO is directed to obtain valuation from the DVO and then adjudicate the applicability and quantum of addition under Section 56(2)(x)(b) afresh after affording the assessee an opportunity of hearing. Consequently, Grounds 2 and 3 of the Revenue's appeal are allowed for statistical purposes, and the impugned order on this issue is set aside. The appeal of L7 Media Pvt Ltd for AY 2023-24 is allowed, and for AY 2021-22 is partly allowed. The cross-appeals of the Revenue for AY 2023-24 are partly allowed for statistical purposes. The appeal of L7 Construction Pvt. Ltd. for AY 2023-24 is allowed, and the Revenue's appeal for AY 2023-24 is partly allowed for statistical purposes.

What were the facts?

The appeals involve L7 Media Private Limited and L7 Construction Private Limited against orders passed by the Commissioner of Income Tax (Appeals) [CIT(A)]. The assessment years in question are 2021-22 and 2023-24. The primary dispute revolves around additions made by the Assessing Officer (AO) concerning alleged interest income and unexplained money. The assessee contended that additions were based on assumptions, surmises, and conjecture, without supporting documents, and that statements recorded during search actions were under duress. The Revenue, on the other hand, argued that certain amounts represented unexplained money under Section 69A of the Income Tax Act, 1961, and that the CIT(A) erred in deleting these additions. The Tribunal decided to hear the appeal of L7 Media Private Limited for AY 2023-24 as the leading case.

What were the issues?

1. Whether, on the facts and in the circumstances of the case, the CIT(A) erred in confirming the addition of Rs. 77,34,969/- as alleged interest income earned by the Appellant in cash against finance provided to builders, when the Appellant claims no such income was earned or recorded, and the addition was based on assumption and conjecture without supporting material, or on statements recorded under threat, coercion, and duress, or on alleged WhatsApp chats and digital data without evidentiary value. (Assessee's contention: No interest income earned; addition based on surmises, coercion, and unproven digital data. Revenue's contention: Not recorded in books, hence unexplained money). 2. Whether, on the facts and in the circumstances of the case, the CIT(A) was justified in deleting the addition of Rs. 1,03,35,330/- made under Section 69A as the excess amount paid by the assessee to the builder (finance amount minus agreement amount) was returned in cash and was not recorded in the books, thus constituting unexplained money of the assessee. (Revenue's contention: Unexplained money under Section 69A. Assessee's contention: Not recorded in books, hence unexplained money). 3. Whether, on the facts and in the circumstances of the case, the CIT(A) was justified in deleting the addition of Rs. 35,32,252/- made by the AO under Section 56(2)(x)(b). (Revenue's contention: CIT(A) erred in deleting the addition. Assessee's contention: Property transactions were part of builder-financing arrangement, making Section 56(2)(x)(b) inapplicable).

Which sections of the Income-tax Act were involved?

Section 69A,Section 56(2)(x)(b)

AI-generated summary — verify with the full judgment below

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH “A” MUMBAI

BEFORE SHRI OM PRAKASH KANT (ACCOUNTANT MEMBER) AND SHRI SIDDHARTHA NAUTIYAL (JUDICIAL MEMBER)

ITA No. 7722 & 7723/MUM/2025 Assessment Year: 2021-22 & 2023-24

L7 Media Private Limited DCIT, Central Circle-6(4), P No.36, Gandhi Grain Room No. 453, 4th floor, Kautilya Market, CA Road, Near Vs. Bhavan, C-41 to C-43, G-Block, Telephone Exchange, Nagpur- Bandra Kurla Complex, Bandra 440008, Maharashtra. (East), Mumbai-400051, Maharashtra. PAN NO. AACCL5525E Appellant Respondent Assessment Year: 2023-24

Asstt. Commissioner of Income L7 Media Private Limited Tax, Central Circle-6(4) Exchange, Nagpur-440008, BKC, Bandra(E), Mumbai- Maharashtra. 400051, Maharashtra. PAN NO. AACCL5525E Appellant Respondent Assessment Year: 2023-24

L7 Construction Private DCIT, Central Circle-6(4), Bhavan, C-41 to C-43, G-Block, Times Square Building, Bandra Kurla Complex, Bandra Andheri Kurla Road, Marol, (East), Mumbai-400051, Andheri (East), Mumbai- Maharasht

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