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Facts
A search and seizure action under Section 132 was conducted on the assessee (Orris Infrastructure Pvt. Ltd.) and other groups on 16th January, 2013. Notices under Section 153A were issued for AYs 2008-09 to 2013-14, leading to additions primarily for unaccounted interest expenditure on loans. The Assessing Officer relied on emails with Excel sheets seized from the assessee's hard disk and third-party diaries from a group company, which the assessee contended did not constitute incriminating material found at its own premises for unabated assessments.
Held
For assessment years 2008-09 to 2011-12, the Tribunal quashed the assessments under Section 153A, holding that additions based on third-party material or material not found at the assessee's premises, lacking a direct and corroborated nexus with the assessee's own search, were invalid, following the Supreme Court's decision in *Abhisar Buildwell Pvt.Ltd*. The assessee's appeals for AYs 2012-13 and 2013-14 were dismissed by concession. The Revenue's appeals for all assessment years were dismissed, upholding the CIT(A)'s deletion of certain additions for later years based on precedents in group cases.
Key Issues
Whether assessments under Section 153A for unabated assessment years are valid without incriminating material found during the assessee's own search; and whether additions for unaccounted interest expenditure based on third-party documents constitute incriminating material.
Sections Cited
132, 153A, 143(3), 139(1), 153C, 153, 271(1)(c)
AI-generated summary — verify with the full judgment below
IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH 'F': NEW DELHI
BEFORE SHRI MAHAVIR SINGH, VICE PRESIDENT AND SHRI KRINWANT SAHAY, ACCOUNTANT MEMBER
ITA Nos.2250/Del/2017, 2251/Del/2017, 2252/Del/2017, 2253/Del/2017, 2254/Del/2017 & 2255/Del/2017
Assessment Years: 2008-09, 2009-10, 2010-11, 2011-12, 2012-13 & 2013-14
M/s Orris Infrastructure
Pvt.Ltd.,
RZ-D5, Mahavir Enclave,
Delhi – 110 045. PAN : AAACO8494P.
(Appellant)
Vs. Assistant Commissioner of
Income Tax,
Central Circle-8, ARA Centre,
Jhandewalan Extension,
New Delhi.
(Respondent)
ITA Nos.2698/Del/2017, 2699/Del/2017, 2700/Del/2017, 2701/Del/2017, 2702/Del/2017 & 2703/Del/2017
Assessment Years: 2008-09, 2009-10, 2010-11, 2011-12, 2012-13 & 2013-14
Assistant Commissioner of
Income Tax, Central Circle-8,
New Delhi.
Vs. M/s Orris Infrastructure Pvt.Ltd.,
RZ-D5, Mahavir Enclave,
Delhi – 110 045. PAN : AAACO8494P.
(Appellant) (Respondent)
Assessee by : Shri S.K. Tulsiyan and
Ms. Bhoomija Verma, Advocates.
Revenue by : Ms. Monika Singh, CIT-DR.
Date of hearing : 18.09.2025 Date of pronouncement : 18.12.2025
ORDER
PER MAHAVIR SINGH, VP
These cross-appeals, by the assessee and the Revenue, are arising out of the order of learned Commissioner of Income-tax
A.Y. 2008-09 | A.Y. 2009-10 | A.Y. 2010-11 | A.Y. 2011-12 Completed u/s | Completed u/s | Completed u/s | Notice u/s 143(2) 153A pursuant to | 143(3) | 143(3) | not issued earlier search on | - period expired 13.3.2008 | Unabated | Unabated unabated Unabated
Assessment | Original Return | Return pursu | ant to Notice Year | U/s 153A Date of Filing | Income | Date of Filing | Income Declared | Declared 2008-09 | 30.09.2008 | 3,25,28,400 | 05.11.2014 | 3,33,40,200 2009-10 | 31.03.2010 | 18,88,09,930 | 05.11.2014 | 18,88,09,930 2010-11 | 15.10.2010 | (6,04,21,379) | 05.11.2014 | (6,04,21,379) 2011-12 | 30.09.2011 | 57,92,200 | 05.11.2014 | 57,92,200
Particulars of | AY 2008-09 | AY 2009-10 | AY 2010-11 | AY 2011-12 Addition made by AO Unaccounted | 6,48,83,421 | 11,67,26,593 | 11,67,26,593 | 2,46,81,704 interest Business | 25,00,00,000 receipt Unaccounted | 29,59,82,000 cash Grand Total | 6,48,83,421 | 11,67,26,593 | 66,27,08,593 | 2,46,81,704
Particulars | Period Involved | A.O. Addition | CIT(A) Deletion | CIT(A) (AY) | (₹) | (₹) | Sustained (₹) Unaccounted | 2008-09 to | 43,28,88,657 | 37,37,80,797 | 5,91,07,860 interest | 2013-14 Unaccounted | 2008-09 to | 29,59,82,000 | 22,09,82,000 | 7,50,00,000 cash | 2013-14 Forfeited | 2010-11 | 25,00,00,000 | 25,00,00,000 advance (business receipt) 97,88,70,657 | 84,47,62,797 | 13,41,07,860
Para/Page Ref. | Material/Annexure | CIT(A)'s Finding (CIT(A) Order) Pages 8-9 | Emails with Excel | CIT(A) notes that these were retrieved sheets (A-29, A-30) | from Orris's own hard disk during the 16.01.2013 search. They contain computations of interest at 24% (accounted) and an addition 12% (unaccounted). CIT(A) treats these as primary incriminating material against Orris. Pages 11-13 | Same emails (A-29, | Observes that the Excel files specifically A-30) | record actual unaccounted payments.
I | On this basis, sustains additions of unaccounted interest for certain lenders. At the same time, deletes additions for other parties (Merlin, Crane, SA Developers, etc.) as no material was found qua them. Pages 32-33, | DLF correspondence | Records that Orris's letter declared (A-15, 10.08.2009 & | forfeiture of ₹25 crore and DLF's reply 12.08.2009) | accepted it. But accepts assessee's evidence (ledger and registered sale deeds of 25.05.2010) showing that the same ₹25 crore was later adjusted against sale of Hayatpur land. Holds that AO's treatment would result in double taxation; deletes the addition in full. Pages 37-39 | Excel "DLF" | Notes that AO treated "ca" entries as worksheet (A-30) | cash. Assessee explained "ca" current account, and demonstrated reconciliation with ICICI current a/cs (nos. ending 5303 & 2926). CIT(A) finds this explanation plausible; accepts reconciliation for most entries (₹14.60 cr). However, entries aggregating ₹6.90 Cr remained unmatched, which he sustains as unexplained expenditure. Pages 43-44 | Excel "Deepak Gupta- | CIT(A) records that the worksheet 1 ayes 43-44 | 2" worksheet (A-30) | emanated from Orris's hard disk but was Z WUIKSHEEL (A-3U) authored by a broker/ex-employee. Most entries are marked "cheque" and tally with ledgers. Only one entry of ₹60 lakh marked 'cash' could not be reconciled. CIT(A) nevertheless notes it pertains to AY 2009-10 (buy-back of 15,000 sq.ft.). THIRD PARTY MATERIAL Pages 7-8 | Diaries AA-1 and AA-2 | Acknowledges that these diaries were (U.K. Paints search | seized from U.K. Paints, not Orris. 16.09.2011) | Nonetheless, holds that they contain 10.09.2011) systematic notings of loans, bifurcation
of cheque vs. "material" (cash) interest. Page 22 | Diary page AA-2/40 Statements of | Interprets the page to show U.K. Paints charging 33% interest vs. Orris booking only 12%. Concludes the 21% difference was unaccounted. Notes assessee's objection of no cross- Page 6,9,55 | Naveen Choudhary | examination. Treats statements as provided and consistent with records but not sole basis. Page 47-54 | Jurisdictional ground (no incriminating material) | Assessee argued that no incriminating material was found at Orris's premises; additions impermissible. The CIT(A) records that emails with Excel attachments (Annexures A-29 & A-30) were indeed seized from Orris's premises, which clearly evidenced dualrate interest computations and actual unaccounted payments. The CIT(A) further notes that the assessee's reliance on Anil Khandelwal is misplaced. In that case, the incriminating material belonged to a third party; here, material (emails and Excel) was seized from Orris's own computer hard disk. He further refers to Dayawanti v. CIT (Del HC), where it was held that seized documents are to be read in entirety, and if they show a pattern of undisclosed transactions, additions can be made under s. 153A. The CIT(A) next holds that while the diaries were seized from U.K. Paints, the primary incriminating evidence is the emails from Orris's premises; the diaries merely corroborate. The CIT(A) further reasons that statements of U.K. Paints CFO Naveen Choudhary and promoter
Name of | Unaccounted | Unaccounted | Unaccounted | Unaccounted | Unaccounted | Unaccounted borrower | interest for | interest for | interest for | interest for | interest for | interest for the AY 2008- | the AY 2009- | the AY 2010- | the AY 2011- | the AY 2012- | the AY 2013- 09 | 10 | 11 | 12 | 13 | 14 Span India | 17978630 | 11120594 UK Paints | 21581038 | 22268788 | 24723627 | 2089036 UK Paints | 11536438 | 15963156 SA | 1079119 | 3119295 Developers Span | 3996922 | 23936084 | 25562904 | 6800776 | 12585161 | 5785498 Holding Span | 5569315 | 6443836 Holding SS Dhingra | 491462 | 1702216 Uttam | 278661 | 1998831 Wang | 5601349 | 16673864 Sarla | 20835369 | 23964820 | 25868495 | 9494083 Fabric Sarla | 11536438 | 13347945 Fabric Citiland | 777684 | 6131625 Delhi Brass | 16212493 | 18106714 | 3175775 Garmex | 696460 | 11715904 Flair | 1762780 SHE | 15558839
Realors Total | 64883421 | 116726593 | 111909963 | 24681704 | 61217107 | 48653239
Accordingly, unaccounted interest expenditure of the assessee for the AY 2012-13 amounting to Rs.6,12,17,107/-is added to the income of the assessee. In view of the above it is established that the assessee company has attracted the provisions of section 271(1)(c) of the I.T. Act, 1961 by furnishing inaccurate particulars of its income, for which penalty proceedings u/s 271(1)(c) are being initiated separately.
(Addition: Rs.6,12,17,107/-)"
- 16. Aggrieved, assessee preferred appeal before the learned CIT(A). Learned CIT(A), after considering the entire submissions, deleted the addition of interest computed at 36% or 24% to 12% and 18% respectively vide paragraph 4.2.12 of his order, as under:- - "4.2.12 Upon an appreciation of all the evidence discussed above, I therefore direct the A.O. that:- - (1) In respect of the transactions with UK Paints P. Ltd. only, in view of the evidence showing a payment of unaccounted interest over a sustained period of time:- - (i) the A.O. should compute undisclosed interest @24% on Rs.12.50 crores from 1.12.2008 to 19.8.2009 as paid by the appellant. [AA-1/10 and AA-1/81] - (ii) From 20.08.2009 till 30.11.2009 the A.O. shall compute unaccounted interest paid @12% on the loan of Rs.20.33 crores as reduced by periodic repayments, for which evidence of regular receipt of payment by U.K. Paints P. Ltd. is available [A-1/101 (back) and AA-1/53 (back)] - (iii) the notings of Sh. N Choudhary at seized diary AA-2/40 show that the appellant has paid interest @33% on the loan transaction Rs.10 crores. However, the appellant has shown interest @12% only in its books. The remaining 21% on this loan is not accounted for. Of course, the seized documents evidencing computation of undisclosed interest on the loan are pertinent only to October 2007, whereas the loan tenure was from 2.04.2007 to 22.11.2007. As discussed earlier in this Order (at para 4.3.11), following the ratio of the judgement of jurisdictional Delhi High Court in Smt. Dayawanti v CIT in ITA 357/2015 dated 27.10.2016,
and the ratio laid down by the Hon'ble Supreme Court on preponderance of probability in CIT. v. Durga Prasad More (supra) and Sumati Dayal v. CIT, I hold that the entries pertaining to undisclosed interest as seen in the seized documents can be extrapolated to hold that the appellant has been paying unaccounted interest @21% for the entire tenure of the loan of Rs.10 crores. I therefore direct the A.O. to consider unaccounted interest on the loan of Rs.10 crores @21% p.a. for the period 2.4.2007 to 2.11.2007.
- (iv) The accounted-for loan of Rs.4 crores to Orris from 31.5.2010 to 5.8.2010 is contemporaneous with the loan amount discussed at para (ii) above. The interest for the latter has been held to be 36%, whereas the recorded rate is @18%. Applying ratio laid down by the Hon'ble Supreme Court on preponderance of probability and the ratio of Delhi High Court in Smt. Dayawanti v CIT in ITA 357/2015 dated 27.10.2016, I direct that the A.O. should add unaccounted interest @18% on the principal amount of this loan (as reduced/increased from time to time). - (v) AA-1/53(back) clearly shows a separate unaccounted loan of Rs.12.83 crores (depicted as "material"), extended by U K. Paints Pvt. Ltd. to Orris @24% pa for the month of July 2009. The A.O. also directed to include the undisclosed interest payment thereon of Rs.26,15,210/- in the total income of the appellant for AY 2010-11 (interest for July 2009, as seen in the document). - (2) In addition, the A.O. is also directed to include the undisclosed interest of Rs.1,24,31,394/- paid to UK Paints, Sarla Fabrics and Span Holdings on 07.01.2010 (for the months of December, 2009 and January 2010), as seen in the seized emails. - (3) There is no evidence whatsoever that the appellant even had any understanding with other parties like SA Developers, SS Dhingra, Uttam Enterprises, Flair and SEH Realtors for payment of undisclosed interest on loans taken from them. The loan transaction with these parties are independently handled. These addition made on transaction with these parties is therefore deleted." - 17. Aggrieved, Revenue is in appeal before the Tribunal. - 18. We have heard the rival submissions and perused the material placed before us. We noted that the similar issue is covered by the
decision of ITAT in group cases in the case of Span Holdings Pvt.Ltd. Vs. ACIT, ITA Nos.1270-1275/Del/2017, order dated 27.12.2024 (ITAT Delhi) and U.K. Paints India Ltd. Vs. ACIT, M.A. No.84/Del/2020, order dated 05.09.2023 (ITAT Delhi), wherein the alleged cash interest income in the hands of those lenders U.K. Paints India and Span Holdings was deleted and hence, this issue stands covered in favour of the assessee and against the Revenue. As no argument was made by the learned CIT-DR in regard to the deletion of addition in the group cases i.e., U.K. Paints India and Span Holdings (supra), we confirm the order of learned CIT(A) in deleting the addition.
In the result, all the appeals of the Revenue and the appeals of the assessee in ITA Nos.2254/Del/2017 and 2255/Del/2017 are dismissed, and the appeals of the assessee in ITA Nos.2250/Del/2017, 2251/Del/2017, 2252/Del/2017 and 2253/Del/2017 are allowed.
Decision pronounced in the open Court on 18th December, 2025.
Sd/-
(KRINWANT SAHAY) ACCOUNTANT MEMBER Sd/-
(MAHAVIR SINGH) VICE PRESIDENT
Date: 18.12.2025
VK.
Copy forwarded to: -
- 1. Appellant - 2. Respondent - 3. CIT - 4. CIT(A) - 5. DR, ITAT
Assistant Registrar ITAT, New Delhi