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Income Tax Appellate Tribunal, DELHI BENCH ‘C’: NEW DELHI
Before: SHRI VIKAS AWASTHY & SHRI AVDHESH KUMAR MISHRA
ORDER
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 Israni Buildwell Pvt. Ltd. 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. 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 Israni Buildwell Pvt. Ltd. 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:
Israni Buildwell Pvt. Ltd. "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 “…… Israni Buildwell Pvt. Ltd. 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.
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).
Israni Buildwell Pvt. Ltd. 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- registrar. Thus, the said sale of the property and sale consideration received in lieu thereof were not under dispute. Therefore, the same had been wrongly treated as unexplained by the AO and taxed under section 68 of the Act contrary to the provisions of the Act.
The Ld. Counsel impressed upon the fact that no additional evidence was ever filed before the Ld. CIT(A). Our attention was drawn to various documents, details, etc. to demonstrate that all the evidences filed before the Ld. AO were again filed before the Ld. CIT(A). Hence, the AO has narrated wrong facts that the assessee did not ensure any compliance. The Ld. Counsel submitted that the sale consideration of Rs.9,31,00,000/- was received during the year from buyers of the property who had also deducted TDS thereon before making payment to the assessee. It was submitted that the said sale consideration of Israni Buildwell Pvt. Ltd. Rs.9,31,00,000/- had been duly disclosed in regular books of accounts of the assessee. Further, it was submitted that the assessee had incurred various expenses, such as interest of Rs.13,83,860 and contractual payment of Rs.4,50,000/- from the funds available with it, which had been duly disclosed in regular books of accounts. Similarly, the assessee had invested the sum of Rs.50,00,000/- in the Time Deposit, which had been duly disclosed in regular books of accounts.
It was specifically submitted by the Ld. Counsel that the turnover disclosed in the Profit & Loss Account of the assessee annexed with the ITR was Rs.13,83,36,423/- which also included the disputed sale consideration of Rs.9,31,00,000/-. It was submitted that the above- mentioned details, documents, etc. were filed before the Ld. AO; however, he did not take the cognizance thereof. It was specifically submitted that the information available with the AO had originated from 26AS of the assessee and the TDS returns filed by the assessee. The Ld. AO not only accepted books result but also worked out income taking the income disclosed in ITR filed in pursuance of notice under section 148 of the Act. Thus, the Ld. AO accepted the sales disclosed in the ITR of the assessee which also included the sum of Rs.9,31,00,000/-. Since the sum of Rs.9,31,00,000/- had already been offered for tax in the Profit & Loss Account of the assessee; therefore, income embedded therein got taxed being part of the net profit. Hence, taxing the same again tantamounted to Israni Buildwell Pvt. Ltd. double taxation; thus, prima-facie, it was unjustified, contended by the Ld. Counsel. To buttress his submission, the Ld. Counsel drew our attention to the reply filed by the assessee before the AO on 22.03.2022, which was also filed before the Ld. CIT(A), who remanded it to the Ld. AO to comet thereon. In the remand report extracted in the impugned order, the Ld. AO did not offer any comment on merit of the case.
Further, the Ld. Counsel drew our attention to the reasons recorded by the Ld. AO for reopening the case to emphasize the fact that the sale consideration of Rs.9,31,00,000/- was received by the assessee after deduction of tax (TDS) by buyers of the property as evident from 26AS of the assessee. The reasons recorded for reopening the case reads as under:
Enquiries made by the AO as sequel to information collected/received: On perusal of records available with this office or ITBA portal, it is noticed that assessee has failed filed 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 large amount in banks as time deposit and the source of the same was remain unverified. Further, it is also observed that assessee has paid interest other then 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 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 Israni Buildwell Pvt. Ltd. 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.
The Ld. Counsel contended that the Ld. AO, as evident from the above reasons recorded for reopening the assessment and details mentioned in 26AS of the assessee, had admitted that the sum of Rs.9,31,00,000/- was nothing but the sale consideration received, after deduction of tax (TDS), from buyers of the property. Then, assessing the same under section 68 of the Act was not justified because the identity of buyers of the property was not in dispute and if the source thereof was unexplained; then the same should had been taxed in the hands of buyers of the property as unexplained investment rather than as unexplained cash credits in the hands of the assessee, argued the Ld. Counsel.
The Ld. Counsel further drew our attention to the finding of the Ld. CIT(A) in para 4.2.1 to 4.2.7 of the impugned order, which reads as under:
4.2.1 In Ground No. 2, the appellant has contended that the AO has grossly erred in making additions of Rs.9,31,00,000/- u/s 68 of the Income Tax Act as (a) the same has been already part of the profit & loss account and the Income Tax Return filed in response to Notice u/s 148 of the act; (b) the information was duly reflecting in the Form 26AS submitted during assessment proceedings, reflecting the details of the Tax deducted thereon.
Israni Buildwell Pvt. Ltd. (c) the details of buyer of the parties were duly available in Form 26AS alongwith the details of tax deducted as source thereon. whereas the same was held unexplained and the addition has been made illegally and is liable to be deleted. 4.2.2 As per assessment order, the Assessing Officer has observed the following:
1. 1. On the basis of information received, that the assessee has entered into a huge financial transaction i.e. sale of an immovable property amounting to Rs.9,31,00,000/- through its authorized signatories Sh. Vijay Israni and Sh. Sunny Israni. The facts related to the fund credited thereof to the account of the assessee for the sale of the said property in AY 2014-15 stands unexplained by the assessee company as no response has been received from it even making best efforts.
2. Hence, during the year under consideration, M/s Israni Buildwell Pvt. Ltd. sold properties at Rs.9,31,00,000/- and fund credited thereof to the account of the assessee for the sale of the said property in AY 2015-16 remained unexplained as the assessee has not filed its return of income.
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……"
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 attention is being drawn to the provision of Section 144 of the Income Tax Act, 1961. Section 144 (1) (b) states that "......"
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 Israni Buildwell Pvt. Ltd. company on account of un-explained cash credit u/s 68 of the Income Tax Act, 1961 to the best of my judgment. 4.2.3 During appellate proceedings, the appellant submitted evidences which included the details of property sold alongwith sale deed, TDS u/s 194IA and a comprehensive reply. Subsequently, the remand report was called by undersigned. Specific comments of the Assessing Officer are extracted as below: ….. "i). In response to notice u/s 148 dated 31.03.2021, the assessee did not file its ITR for AY 2014-15 with 30 days of issue of notice. Therefore, a show cause notice dated 12.01.2022 was issued u/s 274 r.w.s 271F fixing the date for hearing on 17.01.2021. In response to the above show cause notice the assessee filed its ITR on 24.01.2022 on at an income of Rs.13,83,860/-. ii). Thereafter, notice u/s 143(2) dated 27.01.2022 and Notice u/s 142(1) dated 01.02.2022 were issued to the assessee for verification of information along with the documentary evidences related to information filed by the assessee and fixing the date for submitting its reply on 07.02.2022. In response to the notice u/s 142(1) the assessee company did not file its reply. iii). The assessee vide its letter dated 07.02.2022 sought for adjournment in the view of filing writ petition but stay on proceeding was not granted by the court. In view of the above circumstances, a show cause notice u/s 274 r.w.s 271(1)(b) dated 10.02.2022 for initiation of penalty for non-compliance was issued to the assessee fixing the date of hearing on 15.02.2022. In response to the said show cause notice, the assessee did not file any response. iv). Further, summonses u/s 131 of the Act dated 17.02.2022 were issued to the Directors of the assessee company, Sh. Vijay Israni and Sh. Sunny Israni to appear before the undersigned on 21.02.2022. However, none of them appeared on the said date v). Further the case was getting time barred on 31.03.2022 and no reply has been filed by the assessee till date. In view of the above, it is clear that in spite of giving reasonable opportunities and sufficient Israni Buildwell Pvt. Ltd. time, the assessee failed to make any submissions related to verification of information along with the documentary evidences related to information filed by the assessee hence final show cause notice dated 15.03.2022 was issued to the assessee in the view of principal of natural justice by giving the final opportunity on 21.03.2022 to file the detailed reply for verification of information filed by the assessee along with the documentary evidences, however, in response to this show cause notice the assessee did not file any reply hence assessment order was passed on 22.03.2022 after consideration of information available in record till the date of passing of order. The Ld. CIT may examine the same." 4.2.4 It is clear that the assessment was completed because assessee could not submit the required documents. It is part of the record that appellant was also into writ proceedings before the Hon'ble High Court and only in last stage of income-tax proceedings, appellant started cooperating. In given situation, conclusive evidences in support of assessee, were not examined by the Assessing Officer. 4.2.5 However, facts on record clearly suggest that the said amount of Rs.9.31 crores is already part of Profit & Loss account and reflected in Form 26AS in following manner: The details of amount of Rs.9,31,00,000/- as reflecting in the Form 26AS is as under …………. 4.2.6 Appellant had filed Balance Sheet and Audit Report wherein the said amount of Rs.9.31 Crores is shown to be part of sale of Rs.13,83,36,423.36/- in profit & loss account. Assessee has duly reconciled it as below: …………. Note-1: TDS was not deducted on the amount of Rs.1,59,00,000/- out of the total sale proceeds of Rs.1,95,00,000/- in respect of property A-96, Defence Colony, New Delhi, because the said amount was paid by buyers before 01.06.2013 i.e. the date of applicability of Section 194IA and the same is clearly evident from the Copy of Sale Deed already submitted.
Israni Buildwell Pvt. Ltd. Note-2: TDS was not deducted on the total sale consideration of Rs.1,70,00,000/- in respect of property A-142 Defence Colony, New Delhi, because the consideration amount was paid by the buyers before 01.06.2013 i.e. the date of applicability of Section 194IA and the same is clearly evident from the Copy of Sale Deed already submitted. 4.2.7 In view of the above facts, in my considered opinion, addition of Rs.9.31 crores is not warranted in this case. Appellant succeeds on this [Emphasis supplied] ground.”
We have heard both parties and have perused the material available on record. We find merit in the submissions/contentions/arguments of the Ld. Counsel as the Ld. CIT-DR has failed to bring any material on the record to contradict the finding of the Ld. CIT(A). We have taken note of the fact that the Ld. AO has neither rejected the books of accounts nor brought any material on the record to demonstrate that the sum of Rs.9,31,00,000/- is not disclosed as sale in the Profit & Loss Account and 26AS of the assessee. As per the impugned order, the Ld. CIT(A) has remanded the entire submission filed before him to comment on merit of the case; however, the Ld. AO reiterated the fact that the assessee did not file any details during the assessment proceedings and the assessment order was passed on 22.03.2021. Hence, it appears that the Ld. AO has not consideration the submission filed on 22.03.2022. But the impugned order clearly shows that the Ld. AO has not offered any comment on the merit of the material sent to him by the Ld. CIT(A). Thus, keeping in view the material available on the record, we are of the considered view that the Ld. CIT(A) has called a remand report from the Ld. AO; however, the Israni Buildwell Pvt. Ltd. same was not fully availed by the Ld. AO. Hence, raising of the ground that “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?” is held to have no merit as the assessee is not precluded for filing any additional evidence in accordance with the law before the Appellate Authorities and strictly speaking the same are not additional evidence as the said details/ information are available in 26AS of the assessee. Thus, the ground raising the issue of admission of additional evidence stands dismissed.
We find merit in the submissions/contentions/arguments of the Ld. Counsel that the profit embedded in sales of Rs.9,31,00,000/- reflected/ disclosed in the Profit & Loss Account and 26AS of the assessee taxed as income derived from sale as per the ITR can be taxed again as unexplained cash credits under section 68 of the Act as the same sum once held as genuine sale disclosed in the Profit & Loss Account cannot be unexplained cash credits at the same time. Therefore, keeping in view the entire facts of the case, material available on the record and specific finding of finding of the Ld. CIT(A) on the issue of addition of Rs.9,31,00,000/-, we are not inclined to interfere with the finding of the Ld. CIT(A) on this score as the impugned order deleting the addition of B. Addition of Rs.17,92,814/- (4,85,000 + 13,07,814) under section 69C of the Act: Before us, the Ld. Counsel submitted that the above sum of 13. Rs.17,92,814/- was the receipt of the assessee found duly reflected in its Profit & Loss Account and 26AS of the relevant year. The sum of Rs.17,92,814/- 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) and TDS returns filed by the concerned persons. Therefore, the incoming receipts had been wrongly treated as unexplained by the AO under section 69C of the Act.
The Ld. Counsel contended that the Ld. AO, as evident from the reasons recorded for reopening the assessment and details mentioned in 26AS of the assessee, had admitted that the sum of Rs.17,92,814/- was nothing but the interest and contract receipts received after deduction of tax (TDS), from payers of the said sums. Then, assessing the same under section 69C of the Act was not justified because the sum of Rs.17,92,814/- was not an expenditure at all, which clearly showed non- application of mind on the part of the AO, argued the Ld. Counsel. identity of buyers of the property was not in dispute and if the source “4.3.1 In Ground No. 3, the appellant has contended that the AO has grossly erred in making addition of Rs. 13,07,814/- as unexplained expenditure under section 69C of the income Tax Act as: (a) the said amount was infact the income of the assessee which was duly disclosed in the profit & loss account and the Income Tax Return filed in response to Notice u/s 148 of the act; and (b) the TDS was deducted on the same amount which is verifiable from the form 26AS; whereas the same was held unexplained expenditure stating that TDS has not been deducted by the assessee and therefore, the addition has been made illegally and is liable to be deleted. 4.3.2 In Ground No. 4, the appellant has contended that the AO has grossly erred in making addition of Rs.4,85,000/- as unexplained expenditure under section 69C of the income tax Act as: a) The said amount was infact the income of the assessee which was duly disclosed in the profit & loss account and the Income Tax Return filed in response to Notice u/s 148 of the act, and b) the TDS was deducted on the same amount which is verifiable from the Form 26AS whereas the same was held unexplained expenditure slating that TDS has not been deducted by the assessee and therefore, the addition has been made illegally and is liable to be deleted. 4.3.3 Since Ground Nos. 3 & 4 of appeal are related to same issue, hence both grounds are adjudicated together. 4.3.4 As per assessment order, the Assessing Officer has observed the following: 1. On the basis of information received, the assessee has entered into a 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 Israni Buildwell Pvt. Ltd. unverified. During the year under consideration, the assessee has also paid an amount of Rs.4,85,000/- to contractor, but fails to d 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.
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 unexplained 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: ……..
In the pertinent case, a show cause notice was issued to the assessee of which no compliance has been made by the assessee. In this regard attention is being drawn to the provision of Section 144 of the Income Tax Act, 1961. Section 144 (1) (b) states that ………..
4. Proviso given under the said Section further states that 5. 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. 4.3.5 In the Ground No. 3, the Assessing Officer has made addition of Rs.13,07,814/- treating the same as Interest expenses and disallowed the same u/s 69C of the Income Tax Act stating that no TDS was deducted by the assessee. 4.3.6 It is seen from the records that the said amount was an interest income earned by the appellant not the interest expense as alleged by the Assessing Officer, which is also evident from the Form 26AS which shows only incomes not expenses. The said Israni Buildwell Pvt. Ltd. amount has been part of Interest Income - on Loans/Advances as per Schedule 17 "Other Income" to the Balance Sheet. 4.3.7 Further, it is also important to indicate the specific comments of the Assessing Officer in Remand Report- ……. 4.3.8 In view of the above facts, it is clear that the said amount of income is already offered for taxation and it is wrongly added u/s 69C of Income Tax Act. Appellant succeeds on Ground No. 3 of appeal.” [Emphasis supplied] 16. We have heard both parties and have perused the material available on record. We find merit in the submissions/contentions/arguments of the Ld. Counsel as the Ld. CIT-DR has failed to bring any material on the record to contradict the finding of the Ld. CIT(A). We have taken note of the fact that the Ld. AO has neither rejected the books of accounts nor brought any material on the record to demonstrate that the sum of Rs.17,92,814/- (4,85,000 + 13,07,814) is not disclosed as receipt in the Profit & Loss Account and 26AS of the assessee. As per the impugned order, the Ld. CIT(A) has remanded the entire submission filed before him to comment on merit of the case; however, the Ld. AO reiterated the fact that the assessee did not file any details during the assessment proceedings and the assessment order was passed on 22.03.2021. As discussed above, we are of the considered view that the Ld. CIT(A) has called a remand report from the Ld. AO; however, the same was not fully availed by the Ld. AO. Hence, raising of the ground that on the issue of Israni Buildwell Pvt. Ltd. admission of additional evidence is held to have no merit as the assessee is not precluded for filing any additional evidence in accordance with the law before the Appellate Authorities and strictly speaking the same are not additional evidence as the said details/information are available in 26AS of the assessee and the same is in nature of income and not expenditure.
We find merit in the submissions/contentions/arguments of the Ld. Counsel that the sum of Rs.17,92,814/- (4,85,000 + 13,07,814) is nothing but receipt in the Profit & Loss Account and 26AS of the assessee and the same is reflected/disclosed in the Profit & Loss Account and 26AS of the assessee as income in the ITR. Thus, we are not able to understand the reasoning of the Ld. AO that how the receipt gets converted into expenditure and can be taxed again as unexplained expenditure under section 69C of the Act after accepting the same as genuine receipt disclosed in the Profit & Loss Account and 26AS of the assessee. Therefore, keeping in view the entire facts of the case, material available on the record and specific finding of finding of the Ld. CIT(A) on the issue of addition of Rs.17,92,814/-, we are not inclined to interfere with the finding of the Ld. CIT(A) on this score as the impugned order deleting the addition of Rs.17,92,814/- is very well reasoned. The ground raised by the Revenue stands dismissed being devoid of any merit.
C. Addition of Rs.50,00,000 under section 69 of the Act:
Israni Buildwell Pvt. Ltd.
The next issue is regarding the taxability of the sum of Rs.50,00,000/- as unexplained investment under section 69 of the Act which has been dealt in by the Ld. CIT(A) in 4.4.1 to 4.4.3 which reads as under: - “4.4.1 In Ground No. 5, the appellant has contended that the AO has grossly erred in making additions of Rs. 50,00,000/- as unexplained investments u/s 69 of the Income Tax Act and the same is liable to be deleted. 4.4.2 As per assessment order, the Assessing Officer has observed the following:
1. 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.
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: …….
3. In the pertinent case, a show cause notice was issued to the assessee of which no compliance has been made by the assessee. In this regard attention is being drawn to the provision of Section 144 of the Income Tax Act, 1961. Section 144 (1) (b) states that ......
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.
Israni Buildwell Pvt. Ltd. 4.4.3 This ground is related to issue of addition of Rs. 50,00,000/- as unexplained investment u/s 69 of Income Tax Act. It is seen from the available records that the cheque No. 1063131 dated 18.09.2013 for Rs.1,22,84,000/- has been received by appellant as part of total Sale Proceeds of Rs.2,16,00,000/- and out of the same, term deposits of Rs.50,00,000/- was made on 25.09.2013 which duly proved the source of Fixed Deposits made by appellant. Appellant has a turnover of Rs. 13.83 Crores in given year and HDFC Bank statement already shows the chronology of events which led to investment of Rs. 50,00,000/-. Assessing Officer also in remand report did not raise any contrarian facts. In view of the above discussion, I am of the considered opinion, addition of Rs. 50 Lakh is not warranted in this case. Accordingly, Ground No. 5 of appeal is allowed.” [Emphasis supplied] 19. We have heard both parties and have perused the material available on record. We find merit in the submissions/contentions/arguments of the Ld. Counsel as the Ld. CIT-DR has failed to bring any material on the record to contradict the finding of the Ld. CIT(A). We have taken note of the fact that the Ld. AO has neither rejected the books of accounts nor brought any material on the record to demonstrate that the investment of Rs.50,00,000/- is not disclosed in the Balance sheet of the assessee. As per the impugned order, the Ld. CIT(A) has remanded the entire submission filed before him to comment on merit of the case; however, the Ld. AO reiterated the fact that the assessee did not file any details during the assessment proceedings and the assessment order was passed on 22.03.2021. As discussed above, we are of the considered view that the
We find merit in the submissions/contentions/arguments of the Ld. Counsel that the investment of Rs.50,00,000/- is disclosed in the Balance sheet of the assessee. Keeping in view the entire facts of the case, material available on the record and specific finding of finding of the Ld. CIT(A) on the issue of addition of Rs.50,00,000/-, we are not inclined to interfere with the finding of the Ld. CIT(A) on this score as the impugned order deleting the addition of Rs.50,00,000/- is very well reasoned. The ground raised by the Revenue stands dismissed being devoid of any merit.
In the result, the appeal of the Revenue stands dismissed.
Order pronounced in open Court on 17th October, 2025