ACIT Vs Faridabad Presswell Pvt. Ltd (ITAT Delhi)
Rule 27 Has Limits: Delhi ITAT Rejects Assessee’s Jurisdictional Defence but Upholds Deletion of ₹8 Crore Addition
The Delhi Bench of the ITAT dismissed the Revenue’s appeal and upheld the deletion of an ₹8 crore addition for alleged unexplained cash investment in the case of Faridabad Presswell Pvt. Ltd. (AY 2015-16). The Tribunal agreed with the CIT(A) that although incriminating material in the form of excel sheets was found during search, the alleged cash payments pertained to FY 2013-14 (AY 2014-15) and not to the year under consideration; hence, no addition could be sustained in AY 2015-16.
On the assessee’s Rule 27 application, the ITAT laid down important boundaries. It held that Rule 27 permits a respondent to support a favourable order only on grounds decided against it by the CIT(A). The assessee’s additional pleas—challenging mechanical approval under section 153D, absence of DIN, and lack of incriminating material for section 153C—were rejected as they were either not raised before the CIT(A), not specifically adjudicated, or already decided in favour of the assessee.
The Tribunal clarified that Rule 27 cannot be used to introduce entirely new jurisdictional objections or to expand the controversy beyond what was actually decided against the respondent. Nevertheless, on merits, the ITAT confirmed that the CIT(A) was correct in deleting the addition since the impugned cash transaction did not belong to the relevant assessment year. Consequently, the Revenue’s appeal was dismissed, while the assessee’s Rule 27 grounds were rejected.
FULL TEXT OF THE ORDER OF ITAT DELHI
