PCIT Vs Uttam Chand Rakesh Kumar (Delhi High Court)
Summary: By way of an appeal under Section 260A of the Income Tax Act, 1961, the Revenue challenged the order dated 18.12.2024 passed by the Income Tax Appellate Tribunal, Delhi Bench ‘F’, New Delhi in Appeal No. 1653/De1/2023 for assessment year 2018-19. The Tribunal order arose from the order dated 31.03.2023 passed by the Principal Commissioner of Income Tax under Section 263, whereby the Assessing Officer’s order had been set aside with a direction to levy tax at a higher rate on additions of Rs. 3.75 crores towards unexplained investments and receivables under Section 69 read with Section 115BBE of the Act of 1961. The Tribunal had allowed the assessee’s appeal, holding inter-alia that the addition was essentially in the nature of business income and could not have been added under Section 69. Before the High Court, Mr. Mann, learned Junior Standing Counsel for the appellant, argued that excess stock/undisclosed cash etc. had been found during the course of search and that the Commissioner was justified in directing levy of tax at the higher rate. The respondent’s counsel relied upon the assessment order dated 28.03.2021 and the Tribunal’s findings and submitted that there was no evidence showing that any cash or excess stock was found; rather, the Assessing Officer had found it to be a case of shortage of stock. The Delhi High Court held that neither the Assessing Officer nor the Commissioner had recorded any finding about the unearthing or existence of any undisclosed or unaccounted assets or investments. The Court held that the absence of unexplained investments rendered the applicability of Section 69 out of question and, since applicability of Section 69 had not been established, the higher rate of tax under Section 115BBE also went out of question. Finding no merit or substance in the Revenue’s appeal, the Court dismissed it.
