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Facts
The Revenue appealed against the CIT(A)'s order which deleted additions made by the Assessing Officer (AO) concerning unsecured loans, unexplained advances, penalty expenses, interest on VAT/TDs, and sundry creditors. The AO had made these additions after the assessee provided limited information during the assessment.
Held
The Tribunal found merit in the Revenue's contention that the CIT(A) did not pass a well-reasoned order. The Tribunal noted that the AO had submitted a remand report stating additional evidences were not acceptable without proper verification, which was essential for a well-reasoned order.
Key Issues
Whether the CIT(A) erred in deleting additions made by the AO without proper appreciation of facts and evidence, and whether the CIT(A) passed a well-reasoned order when the AO's remand report indicated issues with the assessee's evidences.
Sections Cited
68, 143(3), 142(1), 143(2)
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, DELHI BENCH “C”, DELHI
Before: SH. M BALAGANESH & SH. SUDHIR KUMAR
Date of hearing: 02/09/2025 Date of Pronouncement: 28/10/2025 ORDER PER SUDHIR KUMAR, JUDICIAL MEMBER:
This appeal by the Revenue is directed against the order of the Ld. CIT(A)-3, Noida vide order dated 05-03-2024 pertaining to A.Y. 2018-19 arising out the assessment order dated 26-02-2021 passed u/s.144(3) of the Income-tax Act, 1961, (in short ‘the Act’). 2. The Revenue has raised the following grounds in its appeal :-
Whether on facts and circumstances of the case and in law, the Ld. CIT(A)-3, Noida has erred in deleting the addition of Rs. 6,00,000/- made u/s 68 of the Act on account of unsecured loan taken by the assessee company, without considering the facts that the said unaccounted cash was routed to the account of assessee company in the form of loan as it was evident, from the record that lenders had deposited 2.00 Lakh each in their respective bank's account and on the very same day the same amount was transferred to the account of assessee company as loan.
Whether on facts and circumstances of the case and in law, the Ld. CIT(A)-3, Noida has erred in deleting the addition of Rs 71,00,000/- made u/s 68 of the Act on account of unexplained money credited into assesses books of accounts in the form of advances, without appreciating the fact ta money actually belonged to the assessee company and it has also failed to discharge its onus regarding source of this money.
3. Whether on facts and circumstances of the case and in law, the Ld. CIT(A)-3, Noida has erred in deleting the addition of Rs 80,00,000/- on account of disallowance of penalty expenses in absence of cogent documentary evidence in support of claim, without considering the facts that the assessee company has furnished a cancelled agreement dated 19.11.2017 wherein there was no mention about any cancellation fee or penalty.
4. Whether on facts and circumstances of the case and in law, the Ld. CIT(A) has erred in deleting the addition of Rs. 14,95,155/- made on account of disallowance of penalty expenses against late payment for settlement of loan, without considering the facts that the assessee company has failed to furnish any cogent evidence in support of its claim.
5. Whether on facts and circumstances of the case and in law, the Ld. CIT(A) has erred in / deleting the addition of Rs. 23,774/- made on account of disallowance pertaining to interest on VAT payment and TDs, without appreciating the farts brought on record by the AO.
6. Whether on facts and circumstances of the case and in law, the Ld. CIT(A) has erred in deleting the additions of Rs. 1,27,10,002/- made u/s 68 of the Act on account of unexplained sundry creditors without appreciating the facts that AO has genuinely made addition as the assessee company has failed to discharge its primary onus and also failed to explain the outstanding sundry creditors standing in its Balance Sheet.
Whether on facts and circumstances of the case and in law, the Ld. CIT(A), Noida has erred in deleting the addition of Rs. 10,26,067/- made on account of unverifiable 1/4th of total expenses of Rs. 41,04,269/- claimed under head of legal & professional charges, ignoring the fact that the assessee failed to furnish complete supporting evidences to substantiate the expenditure claim.
Brief facts of the case are that the assessee company has e-filed its return of income on 30/03/2019 declaring total loss of Rs.6,92,36,830/-. The case of the assessee company was selected for scrutiny through CASS and notice u/s 143(2) of the Income Tax Act, 1961 was issued to the assessee company on 22/09/2019 and served. Subsequently, notice u/s 142(1) of the Income Tax Act, 1961 along with questionnaire was issued to the assessee company on 06/03/2020 & 23/10/2020. Further show cause notices were also issued to the assessee company on 04/12/2020, 15/12/2020, 21/12/2020, 01/01/2021, 21/01/2021 & 30/01/2021. In response to these notices, the assessee company has filed written submissions and supporting documents during the course of assessment proceedings. The assessee company is engaged in business of Real Estate & related activities. During the course of assessment proceedings, the assessee company has filed various details/documents/information including statements of bank accounts that were looked into. The accounts of the assessee company were audited and copy of audit report along with Profit & Loss A/c and Balance Sheet was furnished. During the course of assessment proceedings, it came to notice of the AO that the assessee has taken unsecured loans in the year under consideration from various entities. In this regard, the assessee was required to furnish complete name, addresses, PAN No., confirmations & relevant statement of bank accounts of the entities from whom the assessee has taken unsecured loans and was also required to justify the genuineness of the transactions with creditworthiness of these lenders. In response to this, the assessee has furnished the required details/documents. After considering all the documentary evidences, the AO made the various additions by assessing the total income of the assessee at Rs. 2,04,10,602/-. Aggrieved the order of the AO the assessee preferred the appeal before the Ld. CIT(A) who vide his order dated 05-03-2024 allowed the appeal of the assessee. Being aggrieved the order of the Ld. CIT(A), the Revenue is in appeal before the Tribunal.
Learned authorized representative for Department submitted that Ld. CIT(A) has not passed a well reasoned order, as assessee did not file any submissions before the AO. However, in the appellate proceedings, the Ld. CIT(A) sought the Remand Report from the AO, but AO in his Remand Report has submitted that the additional evidences filed by the assessee are not acceptable and even did not opine anything thereupon. Moreover, the verification of the additional evidences and comments thereon of the AO are very much essential, to enable the Ld. CIT(A) to pass a well reasoned order, which has not been done in the instant case. Per contra, Ld. AR for the assessee relied upon the order of the Ld. CIT(A).
We have heard both the parties and perused the records. We find considerable cogency in the contention of the Ld. Learned authorized representative for Department that assessee did not file any submission before the AO. However, in the appellate proceedings, the Ld. CIT(A) sought the Remand Report from the AO, but AO in his Remand Report has submitted that the additional evidences filed by the assessee are not acceptable and did not give his comments on the additional evidences and also not done any verification of the same on his part, which are very much essential, to enable the Ld. CIT(A) to pass a well reasoned order, which has been left in the present case. Therefore, considering the totality of the facts and circumstances of the case and in the interest of justice, we deem it fit and proper to restore the issues to the file of the Assessing Officer with the directions to verify each and every additional evidence and consider the same in a proper manner and thereafter decide the issues in dispute afresh, after giving adequate opportunity of being heard to the assessee, to enable him to canvass its case properly before the AO. The assessee through its Ld. AR is also directed to appear before the Assessing Officer and fully cooperate with him during the proceedings and provide him all the requisite documentary evidences, if any, to enable him to pass a fresh assessment order, in accordance with law.
In the result, the appeal of the Revenue is allowed for statistical purposes. Order pronounced in the open court 28.10.2025.