Case Law Details
Bath Affair Vs ITO (ITAT Delhi)
The Income Tax Appellate Tribunal (ITAT), Delhi, considered an appeal against an order passed under Section 250 dated 29.12.2023, whereby the National Faceless Appeal Centre had confirmed an addition of Rs. 1,53,03,000 made by the Assessing Officer. The dispute related to the addition made under Section 68 on account of alleged unexplained cash deposits in the assessee’s bank account.
The assessee argued that the show cause notice issued by the Assessing Officer was vague because it referred to Sections 68/69 without clearly specifying the applicable provision. Before the first appellate authority, the assessee contended that Section 68 could not apply since the cash credits were reflected in the bank account and not directly in the assessee’s own books. The assessee further submitted that although the appellate authority agreed that Section 68 was not applicable, it still confirmed the addition under Section 69A.
The assessee argued that Section 69A applies only where transactions are not recorded in the books of account. In the present case, the Assessing Officer himself had recorded a finding that all transactions were entered in the books of account. The assessee also filed a paper book containing details of recorded sales, VAT returns, and related documents to show that all sales were duly accounted for.
The Tribunal observed that there was merit in the assessee’s arguments. It noted that once the Assessing Officer had accepted that the transactions were recorded in the books of account, there was no justification for invoking Section 69A. The Tribunal also noted that the audited books of account had been accepted without any defects being pointed out under Section 145. Further, the paper book filed by the assessee contained instances showing that the sales were recorded in the books.
However, the Tribunal held that the ends of justice would be met if the Assessing Officer was given an opportunity to verify the documents filed by the assessee, including the paper book dated 12.03.2025. Accordingly, the orders of the lower authorities were set aside and the matter was restored to the Assessing Officer for limited verification. The Tribunal directed that if the sales are found duly recorded in the books of account, the addition of Rs. 1,53,03,000 should be deleted after giving the assessee an opportunity of being heard.
The appeal was allowed for statistical purposes. The additional legal grounds challenging the assessment and appellate orders were left open.
FULL TEXT OF THE ORDER OF ITAT DELHI
The Assessee is contesting order u/s 250 dated 29.12.2023, passed by NFaC confirming addition of Rs. 1,53,03,000/- made by the Ld. Assessing Officer.
2.0 The only issue raised by the assessee through its Ground of Appeal, that arises in this case is regarding an addition of Rs. 1,53,03,000/- made by the Ld. Assessing Officer u/s 68 on account of unexplained cash deposits in the bank account of the assessee. The Ld. Council of the assessee argued that the show cause notice issued by the Ld. Assessing Officer was vague and cryptic in as much as it was issued for taxing the income u/s 68/69 of the Act. Thus, the Ld. Assessing Officer was not confident as to whether the impugned addition was liable to be made u/s 68 or u/s 69 of the Act.
Before the Ld. First Appellate Authority, assessee had taken to argument that no addition u/s 68 was permissible since the credit in the form of cash was available in assessee’s bank account or to say in the books of account of the banks and not of the assessee’s. The Ld. Council for the assessee submitted that whereas Ld. First Appellate Authority concurred that section 68 was not applicable it proceeded to confirm the addition u/s 69A of the Act. It is the case of assessee that section 69A of the Act gets attracted in a case where books of account are not maintained by the assessee and that in the present case the Ld. Assessing Officer has himself given a finding that all the transactions were recorded in the books of account. The Ld. Council for the assessee further filed a comprehensive paper book indicating that all the sales made by it was recorded in its books of account. The Ld. DR placed reliance upon the order of lower authorities.
3.0 We have heard rival submissions in the light of material available on records. As regards, the controversy regarding confirmation of addition made by the Ld. Assessing Officer, by the Ld. CIT(A) u/s 69A is concerned, we find force in the argument of the assessee that as the Ld. Assessing Officer himself the given a finding in the order that transactions were recorded in assessee’s books of account, there cannot be any justifications for making addition u/s 69A. Coming to the next limb of controversy that if the transactions were recorded in assessee’s books of accountthere cannot be any justifications for making addition u/s 69A, we find that again there exists sufficient force in the arguments of the assessee that section 69A is only attracted in cases where transaction are not recorded in the assessee’s books of account and that since in the present case, the same were, admitted by the Assessing Officer himself, recorded in the assessee’s books of account there cannot be any case of addition in impugned section. The assessee on its part have also through its paper book submitted details to indicate that all the sales was recorded in the books of account, VAT returns etc. We also find force in the arguments of Ld. Council qua acceptance of assesee’s audited books of account by the Assessing Officer without pointing any defect u /si45.We have also noted the extensive paper book filed by the assessee dated 12.03.2025 , from pages 14 to 28 contains instances alluding that sales were indeed recorded in the assessee’s books of account. Be that as it may be, we are of the view that ends of justice would be made if the Ld. Assessing Officer is given an opportunity to examine the details filed by the assessee before us through its paper book dated 12.03.2025. Accordingly, the order of lower authorities is set aside and the Ld. Assessing Officer is directed to conduct a limited verification of details filed before us including paper book dated 12.03.2025. In the event of impugned sales are found duly recorded in the assessee’s books of account, the Ld. Assessing Officer is directed to delete the addition of Rs. 1,53,03,000/-. The Ld. Assessing Officer shall give due opportunity of being heard to the assessee. Accordingly, all the grounds of appeal raised by the assessee on this issue are allowed for statistical purposes.
4.0 Before us the assessee has raised the additional grounds of appeal challenging the Assessment Order and Appellate Order on legal parameters. As, we have accepted the challenge of the assessee qua non-application of section 153A in this case and directed the Ld. Assessing Officer to conduct a limited verification and to consequently delete the addition, the impugned additional ground is left open.
5.0 In the result, the appeal of the assessee is allowed for statistical purposes.
Order pronounced in the Open Court on 21-03.2025
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