PRAKASH HOUSING PRIVATE LIMITED,MUMBAI vs. A/DCIT-13(1)(2), MUMBAI

This appeal has been preferred by the assessee against the order dated 28th August, 2024 passed by the National Faceless Appeal Centre, Delhi, arising from the assessment framed under

The assessee is aggrieved by two principal additions sustained by the learned Commissioner (Appeals): firstly, an addition of ₹30,00,000/– on account of cash deposits in the bank account, treated as unexplained cash credit under section 68; and secondly, an addition of ₹11,58,90,825/– on account of unsecured loans reflected in the balance sheet as having been taken from Shri SahilGidwani, which too was brought to tax under section 68.

The brief facts are that the assessee–company filed its return of income for the impugned assessment year on 29th October, 2017, declaring a current year loss of ₹6,19,10,144/–. The case was subsequently selected for scrutiny, and statutory notices under sections 143(2) and 142(1) were issued.

Since there was no compliance from the assessee, the Assessing Officer proceeded to complete the assessment ex parte under section 144. In doing so, he made two substantive additions. Cash deposits of ₹30,00,000/– in the bank account with Bharat Co– operative Bank Ltd. were treated as unexplained cash credits under section 68. Further, an amount of ₹11,58,90,825/– representing unsecured loans from Shri SahilGidwani, as reflected in the balance sheet, was added under section 68 for want of confirmation, explanation, or supporting evidence. 2 AY. 2017-18 Prakash Housing Pvt. Ltd.

In appeal, the learned CIT(A) confirmed both the additions. He observed that the assessee had not filed any evidence at the assessment stage, and even during appellate proceedings, the assessee failed to establish the genuineness of the loan transaction or the creditworthiness of the creditor. With respect to the cash deposits, the learned CIT(A) noted that the assessee did not produce receipts, vouchers, or books of account to explain the nature and source of the deposits. Accordingly, the appeal was dismissed.

At the threshold, it is noted that the appeal before us has been filed belatedly by 229 days. The learned counsel for the assessee submitted that the delay was neither wilful nor deliberate, but attributable to circumstances beyond the control of the assessee. It was explained that the assessee–company had ceased business operations and had no dedicated staff to look after statutory compliances. As such, statutory notices and even the appellate order could not be attended to or received in time.

Having regard to the explanation offered, we are satisfied that the cause shown is reasonable and bona fide. The delay, in our considered view, does not stem from negligence but from genuine practical difficulties. In the larger interest of justice, and following the well–settled principle that technicalities should not defeat substantial justice, the delay of 229 days in filing the appeal is condoned. The appeal is thus admitted for adjudication on merits.

In the appellate proceedings before the CIT(A), the assessee did file certain replies, including copies of financial statements, cash book, and the tax audit report in relation to the cash deposits. However, the learned CIT(A) was not satisfied and confirmed the additions. The assessee had proceeded under a bona fide belief that since the loan was taken from its director, duly recorded in the books, the same could not be treated as undisclosed.

Before us, the assessee has placed reliance upon additional evidences. These comprise the Income Tax Returns and Computations of Income of Shri SahilGidwani for Assessment Years 2015–16, 2016–17 and 2017–18, his Statement of Affairs for Assessment Year 2015–16, as well as the relevant ledger accounts of the loan transactions between the assessee–company and the said director. According to the assessee, these evidences go to the root of the matter and conclusively establish the identity and creditworthiness of the creditor and the genuineness of the transactions. It was therefore urged that the same be admitted under Rule 29 of the Income–tax (Appellate Tribunal) Rules, 1963.

At this stage, however, the assessee has tendered additional evidences which are of material significance. These evidences prima facie establish the source of the impugned loan and are directly relevant for determining whether the addition under section 68 is sustainable. We are satisfied that admission of such evidence is necessary for a fair adjudication of the issues in dispute. Accordingly, in the exercise of our powers under Rule 29 of the Income–tax (Appellate Tribunal) Rules, 1963, we admit the additional evidences.

In the circumstances, we deem it appropriate to set aside the impugned order of the learned CIT(A) and restore the matter to the file of the Assessing Officer. The Assessing Officer shall examine and verify the additional evidences now placed on record and thereafter decide the matter afresh in accordance with law, after affording due and effective opportunity of hearing to the assessee.

In the result, the appeal of the assessee is allowed for statistical purposes.