Colourful Estates Pvt. Ltd. Vs DCIT (ITAT Delhi)
ITAT Delhi held that enhancement made by CIT(A) in absence of show cause notice issued under section 251 of the Income Tax Act is wholly unsustainable in law. Accordingly, the appeal is allowed and enhancement is quashed.
Facts- Vide the present appeal, the assessee has essentially challenged additions on account of undisclosed income attributable to certain entries discovered in the course of search u/s. 132 of the Act from the residential premises of Rakesh Kumar Yadav (RKY) who is Director in the assessee company as well as in several other Real Estate Companies including Antariksh Developers and Promoters (P) Ltd. (Antarish Developers in short) and enhancement towards accrual of income under ‘Percentage of Completion Method’ (“PoCM”) amounting to INR 17,56,87,260/- without any show cause notice or opportunity to the proposed enhancement under s. 251 of the Act.
Conclusion- Held that making additions towards such entries without concrete proof is wholly justified and opposed to the facts available on record as held in the earlier years. In the absence of any adverse material having been brought against the assessee in relation to impugned entries by way of statement under s. 132(4) of the Act or statements of any other stake holders or independent corroborative material, the additions cannot be sustained on the strength of suspicion or surmises. The factual position being similar, we do not wish to reiterate the process of reasoning adopted in earlier years. In consonance with the view expressed earlier year AY 2011-12, the additions made is held to be without legal foundation and thus cannot be countenanced in law. The additions sustained by the CIT(A) thus deserves to be cancelled and set aside. The AO is directed to reverse the impugned additions based on such entries. The Assessee thus gets relief on this score.
