Feather Infotech Pvt. Ltd. Vs DCIT (ITAT Delhi)
The case of Feather Infotech Pvt. Ltd. Vs DCIT, adjudicated at ITAT Delhi, revolves around the applicability of Sections 68 and 69C of the Income Tax Act. The crux of the matter lies in assessing whether these sections are pertinent to the outgo or payment on account of expenditure. Let’s delve deeper into the analysis.
The contention primarily revolves around Section 68, which mandates the credit of amounts in the books maintained by the assessee. However, in this case, the transactions pertain to outgo or payment on account of expenditure, rendering Section 68 inapplicable. The absence of any credit in the books of account regarding the impugned additions further strengthens this argument.
Moreover, Section 69C is not applicable as it pertains to explaining the source of expenditure, whereas in this scenario, the focus is on the expenditure itself, not its source of payment. The modification by the CIT(A) to broaden the charge to encompass Section 68 lacks procedural fairness, as the assessee was not afforded an opportunity to counter such a proposal.
In conclusion, the application of Sections 68 and 69C by the Revenue Authorities in this case is unjustified. The impugned additions cannot be upheld as neither the expenditure has been claimed as revenue expenditure nor does it pertain to the assessment year in question. Thus, the actions of the Revenue Authorities, including the modification by the CIT(A), warrant scrutiny and possibly reversal.
FULL TEXT OF THE ORDER OF ITAT DELHI
Both the captioned appeals arise from the order of the Commissioner of Income Tax (Appeals)-3, Gurgaon in respective assessment orders passed by the Assessing Officer tabulated hereunder:
