Robust Resorts & Hospitality LLP Vs DCIT (ITAT Delhi)
If the allegation in the notice is not the basis of final addition, the assessment is vitiated- AO Cannot Travel Beyond Show-Cause Notice- ITAT Delhi Quashes 69C Addition
In this appeal, Assessee challenged an addition of ₹2,25,87,173 made u/s 69C on account of alleged unaccounted expenditure, based on material found during survey on Mayfair Resorts India Pvt Ltd. AO issued a show-cause notice asking why transactions with Mayfair Resorts should not be treated as bogus expenses, even though AO himself recorded in the assessment order that Assessee had no transactions with Mayfair during the relevant year. Despite this, AO invoked s.69C & made addition of the entire amount.
CIT(A) granted partial relief of ₹1.43 crore on the basis that ₹53.05 lakh was already recorded in Assessee’s books & ₹90 lakh was incurred by a partner personally, but sustained ₹82,82,173.
Before Tribunal, Assessee argued that there was a fundamental mismatch between the show-cause notice & the final addition, violating natural justice.
Tribunal held that an AO cannot travel beyond the show-cause notice. If the allegation in the notice is not the basis of final addition, the assessment is vitiated. Relying on Bombay High Court judgment in Vivek Jaishing Asher, Tribunal noted that a defective or vague show-cause notice renders the consequential addition invalid. Tribunal also held that s.69C applies only when unexplained expenditure is established, while AO’s show-cause related only to bogus expenses-an issue falling under s.37, not s.69C.
