Case Law Details
DCIT Vs Eldeco Infrastructure & Properties Ltd (ITAT Delhi)
In the case of DCIT vs Eldeco Infrastructure & Properties Ltd, the dispute revolved around the addition of Rs 89,00,000/- as income by the Assessing Officer (AO), which was based on cash seized by the Central Bureau of Investigation (CBI) from the company’s locker room. The Income Tax Appellate Tribunal (ITAT) Delhi heard the appeal filed by the Revenue against the order of the Commissioner of Income-tax (Appeals) (CIT(A)), Kanpur-4, which had deleted this addition.
Eldeco Infrastructure & Properties Ltd (EIPL) is engaged in real estate development and uses the Percentage of Completion Method (POCM) for accounting. During a CBI raid on June 10, 2012, cash amounting to Rs 89,00,000/- was seized from EIPL’s premises. EIPL claimed this cash was part of its recorded cash balance and had arisen from receipts against property bookings and maintenance charges, duly recorded in their books of accounts.
Despite providing documentary evidence including cash books, subsidiary company cash records, customer receipts, and project-wise funds received, the AO disregarded EIPL’s explanations and treated the seized cash as unexplained income. The CIT(A), upon reviewing the case, found EIPL’s explanations credible and deleted the addition.
The ITAT’s deliberation focused on whether the CIT(A) was justified in deleting the addition. They observed that EIPL had substantiated the source of the cash through comprehensive documentation and that the AO had not identified any specific deficiencies in EIPL’s submissions. Additionally, they noted that the CBI had later released the seized cash to EIPL upon finding no wrongdoing during subsequent legal proceedings.
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