DEPUTY COMMISSIONER OF INCOME TAX, JHANDEWALAN, NEW DELHI vs. ISRANI BUILDWELL PRIVATE LIMITED, DELHI

PER AVDHESH KUMAR MISHRA, AM

This appeal for the Assessment Year (‘AY’) 2014-15 preferred by the Revenue is directed against the order dated 12.04.2024 passed by the Commissioner of Income Tax (Appeals)-24, New Delhi [‘CIT(A)’].
3. The revenue has raised following grounds of appeal: -
“1) The Ld. CIT(A) has erred in deleting the addition of Rs.9,31,00,000/- on account of unexplained cash credit under section 68 of the Act even when the assessee failed to discharge its onus during assessment proceedings?
2) The Ld. CIT(A) has erred in deleting the addition of Rs.17,92,814/-on account of unexplained expenditure under section 69C of the Act even
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when the assessee failed to discharge its onus during assessment proceedings?
3) The Ld. CTT(A) has erred in deleting the addition of Rs.50,00,000/-on account of unexplained investment under section 69 of the Act even when the assessee failed to discharge its onus during assessment proceedings?
4) The Ld. CIT(A) has erred in admitting the additional evidence from assessee as per rule 46A notified by CBDT, even though the assessee failed to produce the same when asked upon by the AO during the course of assessment proceedings?
5) The appellant craves leave for reserving the right to amend, modify, alter, add or forego any ground(s) of appeal at any time before or during the hearing of this appeal.”
3. The relevant facts giving rise to this appeal are that the respondent assessee has not filed its Income Tax Return (‘ITR’) of the relevant year though the respondent assessee, as per the information available with the Assessing Officer (‘AO’), was legally required to do so. Therefore, the AO reopened the case after recording the following reasoning: -
“……On perusal of records available with this office or ITBA portal, it is noticed that assessee has failed to file ITR during the year under consideration. Since, the assessee has transferred the immovable property and received amount of Rs.9,31,00,000/-, on this transaction
TDS u/s 194IA is required to be deducted, but the same neither was deducted nor has been disclosed by way of filing ITR. During the year under consideration, the assessee also deposited Rs.50,00,000/- in banks as time deposit and the source of the same was remained unverified. Further, it is also observed that assessee has paid interest other than securities amounting to Rs.13,07,814/- during the year under consideration and on the same assessee has required to deduct TDS, but assessee has failed to do so, hence, the same was also remain unverified. During the year under consideration the assessee is also Israni Buildwell Pvt. Ltd.

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paid an amount of Rs.4,85,000/- to contractor, but fails to deduct TDS u/s 194C of Act. In absence of ITR, the identity/genuineness/
creditworthiness/source of the transactions are not found. Therefore, the assessee is required to file ITR as the entire transactions either received or paid is above the threshold limit of not filing of ITR and due to the non-discloser of transaction by way of not filing of ITR, the entire transaction found suspicious and required to be verify. Hence, I have reason to believe that entire transaction either paid/received total of Rs.9,98,92,814/- has escaped assessment....."
3.1
In response to the notice under section 148 of the Income Tax Act,
1961 (‘Act’), the respondent assessee filed its ITR on 24.01.2022 declaring income of Rs.13,83,860/-. The case was scrutinized. The respondent assessee challenged the reopening of assessment before the Hon’ble Delhi
High Court; however, the same, vide order dated 11.02.2022, was dismissed as withdrawn.
3.2
During the course of assessment proceedings, the Ld. AO show- caused the assessee to explain the source and genuineness of receipt of sale consideration of Rs.9,31,00,000/- of the immovable property.
However, the assessee failed to do so. Therefore, the Ld. AO taxed the same under section 68 of the Act observing as under:
“9.3 Under these circumstances, the amount credited of Rs.9,31,00,000
remains unexplained and is considered as un-explained cash credit as per provisions of section 68 of the Income Tax Act, 1961. The relevant part of section 68 of the Income Tax Act, 1961 is as under:
"68……
9.4 In the pertinent case, two show cause notices issued to the assessee of which no compliance has been made by the assessee. In this regard
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attention is being drawn to the provision of Section 144 of the Income
Tax Act, 1961. Section 144 (1) (b) states that "....….
9.5 Thus, assessee has failed to discharge the onus cast upon her related to the transaction as discussed above satisfactorily as per provisions of section 68 of the Income Tax Act, 1961. Therefore, a sum of Rs. 9,31,00,000/- is added to the total income of the assessee company on account of un-explained cash credit u/s 68 of the Income Tax Act,
1961 to the best of my judgment.”
3.3
Further, the Ld. AO also taxed the interest payment of Rs.13,07,814/- and contract payment of Rs.4,85,000/- as unexplained under section 69C of the Act on the reasoning that the assessee has failed not only to deduct tax at source (‘TDS’) thereon but also failed to explain the source of such expenditure. the relevant part of the assessment order reads as under:
“10.1 On the basis of information received, the assessee has entered into financial transaction i.e the assessee has paid interest other than securities amounting to Rs.13,07,814/- during the year under consideration and on the same assessee has required to deduct TDS, but assessee has failed to do so, hence, the same was also remained unverified. During the year under consideration, the assessee has also paid an amount of Rs.4,85,000/- to contractor, but fails to deduct TDS u/s 194C of Act. The assessee has also not filed its return of income for the AY under consideration therefore the expenditures incurred by the assessee remained unexplained.
10.2 Under these circumstances, amount paid to contractor amounting to Rs.4,85,000/- and the amount paid as interest other than securities amounting to Rs.13,07,814/- remained as un-explained expenditure as per provisions of section 69C of the Income Tax Act, 1961. The relevant part of section 69C of the Income Tax Act, 1961 is as under:
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"69C….
10.3 In the pertinent case, a show cause notice was issued to the assessee which no compliance has been made by the assessee. In this regard attention being drawn to the provision of Section 144 of the Income Tax Act, 1961. Section 144 (1) (b) states that "......
10.4 Thus, the assessee has failed to discharge the onus cast upon it related to the transaction as discussed above satisfactorily as per provisions of section 69C of the Income Tax Act, 1961. Therefore, a sum of Rs.17,92,814/- (4,85,000 + 13,07,814) is added to the total income of the assessee company on account of unexplained expenditure u/s 69C of the Income Tax Act, 1961 to the best of my judgment.”
3.4
Further, the Ld. AO also taxed the assessee’s Time Deposit of Rs.50,00,000/- made during the year under section 69 of the Act on the reasoning that the assessee has failed to explain the source thereof.
“11.1 On the basis of information received, the assessee has entered into a financial transaction i.e. time deposit of Rs.50,00,000/-. The source of the fund could not be verified and remained unexplained during the year under consideration.
11.2 Under these circumstances, time deposit made of Rs.50,00,000/- remained as un-explained expenditure as per provisions of section 69 of the Income Tax Act, 1961. The relevant part of section 69 of the Income
Tax Act, 1961 is as under:
"69…….
11.3 In the pertinent case, a show cause notice was issued to the assessee which no compliance has been made by the assessee. In this regard attention being drawn to the provision of Section 144 of the Income Tax Act, 1961. Section 144 (1) (b) states that “……
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11.4 Thus, the assessee has failed to discharge the onus cast upon it related to the transaction as discussed above satisfactorily as per provisions of section 69 of the Income Tax Act, 1961. Therefore, a sum of Rs.50,00,000 is added to the total income of the assessee company on account of un-explained investment u/s 69 of the Income Tax Act, 1961
to the best of my judgment.”
3.5
Consequentially, the assessment was completed at income of Rs.10,12,76,674/- (returned income of Rs.13,83,860 + unexplained cash credit Rs.9,31,00,000 + unexplained expenditure of Rs.13,83,860 +
contractual payment without TDS of Rs.4,50,000/- + unexplained investment of Rs.50,00,000/-). Aggrieved, the respondent assessee filed appeal before the Ld. CIT(A) and succeeded there. Thereafter, the Revenue has filed this appeal before us challenging the above-mentioned additions.
4. Before us, the Ld. CIT-DR, placing emphasis on the finding of the Ld. AO prayed for dismissal of the appeal. With the help of facts mentioned in the assessment order, the Ld. CIT-DR submitted that sufficient opportunities of being heard were provided to the assessee by the Ld. AO but in vain. He submitted that the assessee tactfully ensured noncompliance to avoid proper investigations. The Ld. CIT-DR also challenged the admission of the additional evidence by the Ld. CIT(A) without providing an opportunity of being heard to the Ld. AY in accordance with the provisions of Rule 46A of the Income Tax Rules.
Thus, it was submitted that there was no justification of admission of the additional evidence by the Ld. CIT(A).
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A. Addition of Rs.9,31,00,000/- under section 68 of the Act:
5. Before us, the Ld. Counsel submitted that the assessee, a builder &
developer, had sold its one of the immovable properties for Rs.9,31,00,000/- during the relevant year through its authorized signatory; namely, Shri Vijay Israni and Shri Sunny Israni. The sale of said property had been duly disclosed in the books of accounts and ITR filed in response to the notice under section 148 of the Act. It was further submitted that this transaction dully got reflected in the assessee’s 26AS based on the Annual Information Report (AIR) filed by the concerned sub-