A1 INFRASTRUCTURE ENGINEERS AND CONTRACTORS,GHAZIABAD V. ACIT CIRCLE- 2(1)(1), GHAZIABAD

ITA 576/DEL/2024

AI Insights

The case involves A1 Infrastructure Engineers and Contractors, who appealed against the order of the Commissioner of Income-tax (Appeals), which confirmed the additions made by the AO regarding unexplained cash deposits and the enhancement of profit margin. The Tribunal found that the lower tax authorities doubted the cash deposits due to a lack of evidence and made additions by enhancing the profit margin and considering some deposits as unexplained cash under Section 69A during the demonetization period. The Tribunal noted that the assessee had reported receipts subjected to TDS and had not filed bank statements, leading to the AO's decision to not apply the provisions of Section 44AD.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 23832 (ITAT-DELHI)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-02-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2017-2018
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Matter Remanded
• Court: TRIBUNAL
• Department Lawyers: ASHISH TRIPATHI
• Assessee Lawyers: ROHIT TIWARI
• Keywords: TDS
• Section: 143(3); 250; 201; 44AD; 69A

Judgement Text

" IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCHES: A : NEW DELHI BEFORE SHRI ANUBHAV SHARMA, JUDICIAL MEMBER AND SHRI AVDHESH KUMAR MISHRA, ACCOUNTANT MEMBER ITA No.576/Del/2024 Assessment Year: 2017-18 A1 Infrastructure Engineers and Contractors, 432/A, Near Cambridge School, Bhatia Road, Daulat Pura, Ghaziabad – 201 001, Uttar Pradesh. PAN: AAUFA0931G Vs ACIT, Circle-2(1)(1), Ghaziabad. (Appellants) (Respondents) Assessee by : Shri Rohit Tiwari, & Ms Shivani, Advocates Revenue by : Shri Ashish Tripathi, Sr. DR Date of Hearing : 25.02.2025 Date of Pronouncement : 28.02.2025 ORDER PER ANUBHAV SHARMA, JM: This appeal is preferred by the assessee against the order dated 13.12.2023 of the Commissioner of Income-tax (Appeals), National Faceless Appeal Centre, Delhi (hereinafter referred as ITA No.576/Del/2024 2 Ld. First Appellate Authority or in short Ld. ‘FAA’) in appeal No.CIT(A), Ghaziabad/11262/2019-20 arising out of the appeal before it against the order dated 16.12.2019 passed u/s 143(3) of the Income Tax Act, 1961 (hereinafter referred as ‘the Act’) by the ACIT, Circle-2(1)(1), Ghaziabad (hereinafter referred to as the Ld. AO). 2. The grounds of appeal taken by the assessee read as under:- “1. The assessment order passed under Section 250 of the Income Tax Act, 1961 by the Commissioner of Income Tax (Appeals) CIT(A), Circle 2(1)(1), Ghaziabad, is vitiated by errors of law and facts, and as such, is unsustainable in the eyes of law, warranting annulment. 2. The learned CIT(A) has grievously erred in law and on the facts in confirming the Assessing Officer's (Ld. AO) total addition of Rs.64,33,106/- (comprising Rs.38,16,106/- and Rs.26,17,000/-) to the income of the assessee, which is arbitrary and without any legal justification. 3. The CIT(A) has erroneously confirmed the AO's addition of Rs.38,16,106/- on account of unexplained cash deposits in the bank, by improperly enhancing the profit margin from 6.46% to 8%, without any cogent reasons or basis in fact. 4. The CIT(A) has further erred in confirming the AO's addition of Rs. 26,17,000/- as unexplained cash deposit under Section 69A of the Act during the demonetization period, absent any substantive justification or adherence to the principles of natural justice. 5. The cumulative effect of the errors as enumerated above has resulted in an unjust and prejudicial order against the assessee, which is contrary to the principles of equity, law, and settled judicial precedents. ITA No.576/Del/2024 3 6. The appellant humbly craves the liberty to add, amend, modify, or withdraw any of the above grounds of appeal either before or during the hearing of the appeal. That the above grounds of appeal are without prejudice to each other. 7. That the appellant reserves its right to add, alter, amend or withdraw any ground of appeal either before or at the time of hearing of this appeal.” 3. On hearing both the sides, we find that the ld. tax authorities below have primarily doubted the cash deposits in the bank account of the assessee on the basis of lack of evidence and accordingly made additions on two counts, by enhancing the profit margin from 6.46% to 8% and as unexplained cash deposit under Section 69A of the Act during the demonetization period. 4. The ld. AR has successfully pointed out before us that in the financials the assessee had reported about the receipts on account of revenue which was subjected to TDS and Form No.26AS was filed. However, as the bank account statements were not filed, the ld. AO has considered it not a fit case to give the assessee benefit of the provisions of section 44AD of the Act and has applied prescribed rate of 8% while the assessee has shown a net profit rate of 6.46% claiming all the receipts were by banking transactions. ITA No.576/Del/2024 4 5. Then assessee has come up with a case that deposits in the bank account were out of the withdrawals which were made for the contingencies arising out of the nature of the assessee’s business being contractor where cash payments are made to the labourers. The ld. AR has placed before us a detailed account of the withdrawals from the bank account which was the subject of the disputed cash deposit on 1st December. 6. However, this all require verification. Accordingly, we consider it an appropriate case to restore both the issues on merits to the files of the AO, who shall give a fresh opportunity of hearing to the assessee to explain the source of deposits in the bank accounts and that the mandate of section 44AD of the Act was complied. 7. In the result, the appeal is allowed for statistical purposes only. Order pronounced in the open court on 28.02.2025. Sd/- Sd/- (AVDHESH KUMAR MISHRA) (ANUBHAV SHARMA) ACCOUNTANT MEMBER JUDICIAL MEMBER Dated: 28th February, 2025. dk ITA No.576/Del/2024 5 Copy forwarded to: 1. Appellant 2. Respondent 3. CIT 4. CIT(A) 5. DR Asstt. Registrar, ITAT, New Delhi s "