Rajesh Kapoor Vs ACIT (ITAT Delhi)
Absence of Legal Heir Certificate Alone Cannot Justify Section 68 Addition; ITAT Delhi Reduces GP Estimation
Material Facts
The assessee appealed against the order dated 18.11.2024 passed by the Commissioner of Income Tax (Appeals) under Section 250 for Assessment Year 2016-17, arising from an assessment order dated 25.12.2018 passed under Section 144 of the Income-tax Act, 1961. The appeal before the Tribunal was delayed by 38 days, which the assessee attributed to the death of his father, who had managed his business affairs. The Tribunal condoned the delay after finding sufficient cause.
The assessee had filed a return declaring total income of ₹57,59,950. The Assessing Officer (AO) made additions of:
- ₹15,50,25,441under Section 68 towards unsecured loans.
- ₹3,20,45,584under Section 68 towards increase in capital.
- ₹2,18,92,400as trading addition by rejecting the books under Section 145(3) and applying a gross profit (GP) rate of 82% instead of the declared 2.33%. The assessed income was determined at ₹21,47,23,375.
The CIT(A) partly allowed the appeal by deleting part of the addition relating to unsecured loans but sustained:
- ₹6,69,18,805under Section 68 towards unsecured loans;
- ₹3,20,45,584towards unexplained capital; and
- the trading addition of ₹2,18,92,400.
Legal Issues
- Whether the addition of ₹6,69,18,805under Section 68 in respect of unsecured loans was sustainable.
- Whether the addition of ₹3,20,45,584under Section 68 towards capital introduction was justified.
- Whether rejection of books under Section 145(3)and application of a GP rate of 82% were justified.
Relevant Statutory Provisions
- Sections 68, 133(6), 143(2), 142(1), 144, 145(3)and 250 of the Income-tax Act, 1961.
Parties’ Submissions
