Vikas Surya Developers Pvt. Ltd. Vs DCIT (ITAT Delhi)
The Delhi Bench of the Income Tax Appellate Tribunal has rejected the contention that loans recorded on the liability side of a balance sheet necessarily fall outside the definition of “asset” under Explanation 2 to Section 153A. The Tribunal upheld initiation of proceedings under Section 153C and sustained an addition of ₹1.20 crore based on seized material.
However, it deleted separate additions of ₹2.80 lakh and ₹12 lakh, finding that they lacked incriminating material.
The order was pronounced on 11 November 2026 by Judicial Member Satbeer Singh Godara and Accountant Member Naveen Chandra in Vikas Surya Developers Pvt. Ltd. v. DCIT, ITA No.1599/Del/2026, concerning Assessment Year 2014-15, as identified in the appeal heading.
Background of the Dispute
The assessee had filed its return on 24 September 2014, declaring nil income. Subsequently, the Income Tax Department conducted a search under Section 132 in the Alankit Group cases on 18 October 2019.
Material found during the search led to satisfaction being recorded for initiating proceedings against the assessee under Section 153C.
The Tribunal noted that the searched person’s Assessing Officer recorded satisfaction concerning the seized material. The assessee’s Assessing Officer subsequently recorded satisfaction on 17 February 2022, finding that the material relating to financial year 2013-14 had a bearing on its total income.
The assessment resulted in additions concerning alleged unaccounted receipts, a loan-related amount and commission expenditure. These were upheld by the CIT(A), prompting the appeal.
Assessee Challenged the Statutory “Asset” Requirement
The assessee argued that the satisfaction did not meet the requirements of the fourth proviso to Section 153A, read with Explanation 2, because the material did not disclose an asset of the prescribed nature.
Its principal submission was that loans received represent liabilities, rather than assets. Consequently, entries concerning such loans could not satisfy the statutory condition.
The assessee relied on judicial decisions, including Fortune Vanijya Private Limited, and the explanatory material accompanying the relevant amendment.
The Tribunal examined the inclusive definition, which refers to land or buildings, shares and securities, loans and advances, and bank deposits.
Balance Sheet Classification Was Not Decisive
The Tribunal rejected the argument that the statutory expression must be confined to items appearing on the asset side of a balance sheet.
According to the Bench, the legislation did not expressly introduce such a limitation. It therefore held that the reference to “loans” encompassed entries on both the asset and liability sides.
The assessee could not exclude the transactions solely by describing the loans as liabilities in its accounts.
The Tribunal also accepted that the satisfaction referred to corresponding seized entries and met the applicable ₹50 lakh threshold concerning escaped income. It consequently declined to invalidate the Section 153C proceedings on this ground.
Cross-Examination Objection Rejected on the Facts
The assessee next contended that the additions violated natural justice because an opportunity for cross-examination had not been provided.
The Tribunal noted that the relevant ledger was found on the laptop of Sunil Kumar Gupta, whom it identified as the assessee’s employee.
It observed that the assessee had not sought his cross-examination. Referring to the statutory presumption under Section 292C, the Bench held that the assessee could not shift the burden to the Department in these circumstances.
The cross-examination challenge was therefore rejected on the particular factual record.
Physical Possession at Search Was Not Essential
The assessee also argued that it had not been found in possession of the alleged unexplained money and challenged the ₹1.20 crore addition under Section 69A.
The Tribunal rejected the suggestion that the Department had to establish continued physical possession of the same cash from the relevant financial year until the search in October 2019.
It relied on the seized material connected with the assessee’s employee and held that the absence of such continuing possession did not defeat the addition.
The ₹1.20 crore addition was accordingly sustained.
Loan-Related and Commission Additions Deleted
The assessee submitted that the ₹2.80 lakh amount had already been disclosed in its books. The Tribunal recorded that this submission remained unrebutted by the Revenue.
It found no basis to sustain that addition or the separate ₹12 lakh commission addition.
Relying on PCIT v. Abhisar Buildwell Pvt. Ltd., the Bench deleted both amounts because they were not supported by incriminating material.
Thus, while the jurisdictional challenge failed, the assessee obtained relief on two individual additions.
Appeal Partly Allowed
The Tribunal partly allowed the appeal, retaining only the ₹1.20 crore addition and deleting additions aggregating ₹14.80 lakh.
The decision illustrates that sustaining search-related jurisdiction does not automatically validate every resulting addition. Each disputed amount must still withstand examination against the evidence and applicable legal requirements.
Editorial note: The order contains inconsistent references to the assessment year and one addition amount. This article follows the appeal heading and the express operative findings granting relief.
Cases Discussed
- Smt Tarulata Shyam v. CIT — (1977) 108 ITR 345 (SC): Strict interpretation of taxing statutes.
- CIT v. Thane Electricity Supply Ltd. — (1994) 206 ITR 727 (Bombay): Judicial precedent and territorial jurisdiction.
- Commissioner v. Dilip Kumar and Company — (2018) 9 SCC 1 (SC): Strict interpretation of fiscal provisions.
- PCIT v. Abhisar Buildwell Pvt. Ltd. — (2023) 454 ITR 212 (SC): Search assessments and incriminating material.
- ACIT v. Fortune Vanijya Private Limited — Citation unverified: Scope of assets and extended-period search assessment.
- Tech Consultancy and Services Private Limited — Citation unverified: Asset requirement in Section 153A.
- Annapurna Buildcon Private Limited — Citation unverified: Asset requirement in Section 153A.
- Smart Chip Private Limited — (2025) ITR 389 (Delhi), as cited in source: Satisfaction note requirements.
- DIT v. American Express Bank Limited — (2026) 484 ITR 137 (SC): Interpretation of tax statutes.
