ITO Vs Anova Infracon Pvt. Ltd. (ITAT Delhi)
In this case, the Revenue challenged the deletion of additions made under Section 69 of the Income Tax Act, 1961 for Assessment Years (AYs) 2011-12 and 2012-13. The additions arose from payments made to Yamuna Expressway Industrial Development Authority (YEIDA) for acquisition of TS-03 land, which were discovered during a search conducted in the Karan Luthra Group cases.
For AY 2011-12, an addition of ₹10.10 crore was made. The assessment was completed ex parte under Section 144 because the assessee did not respond to notices issued by the department. Based on seized documents and confirmation obtained from YEIDA, the Assessing Officer (AO) treated the payment as unexplained investment under Section 69 and added it to the assessee’s income.
Before the Commissioner of Income Tax (Appeals) [CIT(A)], the assessee produced evidence showing that the payment to YEIDA had been made on its behalf by M/s Sidh Automobiles Ltd., an RBI-registered NBFC. The CIT(A) found that the payment was duly recorded in the books of account and that the source of funds had been explained. The CIT(A) observed that Section 69 requires two conditions to be satisfied: the investment must not be recorded in the books, and the assessee must fail to satisfactorily explain its nature and source. Since both conditions were not met, the addition was deleted.
