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Facts
The assessee did not file an income tax return, but transactions such as purchase of immovable property, interest earned, and payments to contractors were noted. The AO reopened the case and added unexplained expenditure under Section 69C and estimated profit on turnover. The CIT(A) deleted these additions.
Held
The CIT(A) correctly observed that the purchase of immovable property was made through banking channels with proper documentation. Regarding the GP addition, the CIT(A) found that the turnover was already disclosed and the profit on the sale of agricultural land was wrongly included by the AO as part of business turnover.
Key Issues
Whether the CIT(A) was correct in deleting the additions made by the AO on account of unexplained expenditure and estimated profit on turnover.
Sections Cited
69C, 148, 142(1)
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Income Tax Appellate Tribunal, DELHI BENCH “F”: NEW DELHI
O R D E R PER NAVEEN CHANDRA, A. M.:
1. 1. This appeal by the revenue is preferred against the order of the National Faceless Appeal Centre (NFAC), Delhi dated 07.04.2025 pertaining to A.Y. 2014-15.
2. None appeared on behalf of the assessee. We decided to hear ex-parte with able assistance of the ld DR. We heard the ld DR at length and perused the materials on record. The revenue has filed an appeal contesting deletion of addition made u/s 69C of the Act and deletion of GP addition made on estimate basis.
Page 1 of M/s. Pandit Munshi Ram & Associates Pvt. Ltd 3. Brief fact of the case is that the assessee has not filed the return of income. From the information available with the department, the AO noticed that the assessee has done many transactions such as purchase of an immovable property of Rs. 2,00,00,000/-, interest earned of Rs. 41,72,967/- and payments made to contractors of Rs. 14,97,264/- etc but still did not file the return of income, therefore this case was reopened and notice was issued u/s. 148 of the IT Act on 27.03.2021. In response to the notice u/s. 148 of the IT Act, the assessee filed the return of income on 06.08.2021 by declaring total income of Rs. 15,05,260/.
Subsequently, notice was issued u/s. 142(1) of the IT Act calling for various details. From the verification of details, the AO noticed that the assessee had purchased an immovable property from Shilpa Agarwal and Shila Devi Agarwal of Rs. 2,00,00,000/- on which TDS was deducted by the seller at the rate of 1% and the same was reflected in the Form 26AS. However, the assessee did not file any relevant sources of purchase, therefore, the same was added as unexplained expenditure u/s. 69C of the IT Act. Further, the assessee had done a turnover of Rs. 3,58,73,927/- on which the AO estimated profit at the rate of 8% and arrived at income of Rs. 28,69,921/- and the same was added.
Page 2 of M/s. Pandit Munshi Ram & Associates Pvt. Ltd 5. Aggrieved, the assessee preferred an appeal before the ld CIT(A). The ld CIT(A), with regard to unexplained expenditure, observed that the assessee entered into an agreement of purchase of an immovable property i.e., Two and half stories, bearing no. 265, UP Samaj Cooperative House Building Society Ltd, Pritampura, Delhi admeasuring 230 Sq. Mtrs. This agreement was entered with Shila Devi Agarwal and Shilpa Agarwal for purchase of the above property for Rs. 20 Crores, out of which the assessee paid Rs. 2 Crore of advance during the year under consideration and this amount was paid through ICICI bank account no. 182505000019 and the assessee filed necessary confirmations, details of agreements. Thus, this is clearly transactions done through banking channels and transaction was explained by the assessee. Therefore, there is no reason to treat this payment as unexplained expenditure. Accordingly, the CIT(A) deleted the addition made by the AO.
With regard to ground raised of deletion of GP addition made on estimated basis, the ld CIT(A) observed that the assessee has already disclosed the turnover in his return of income filed in response to the notice u/s. 148 of the IT Act as per which the assessee has shown a turnover of Rs. 3,32,93,347/- as business Page 3 of M/s. Pandit Munshi Ram & Associates Pvt. Ltd turnover and filed return of income showing income of Rs. 15,05,260/-. The AO also included the profit on sale of agricultural land as part of turnover which is not correct as the assessee sold an agricultural land situated at village Mudka, Delhi for Rs. 41,00,000/- and filed necessary submissions. Thus, this profit on sale of agricultural land is not to be included as part of the turnover. Moreover, turnover was already disclosed in the ROI filed, therefore, there is no need for further estimation of profit on this turnover. Therefore, the ld CIT(A) allowed the ground of appeal
of the assessee on this count also.
7. We have perused the material available on record. We find that the CIT(A) has given a finding of fact that the transaction done for purchase of an immovable property was done through banking channel and the AO has not placed any evidence to show the same as unexplained expenditure. Similarly, with regard to GP addition made on estimated basis, we find that the ld CIT(A) excluded the sale proceeds from agricultural land from business turnover and accepted turnover which was already disclosed in the ROI filed and the resultant income shown in the return. We find no reason to interfere with the reasonable order of the ld CIT(A). Accordingly, the appeal of the revenue is dismissed.