ACC INDIA PVT. LTD.,DELHI V. ACIT, CIRCLE-1(1), DELHI

ITA 4833/DEL/2024

AI Insights

The case involves ACC India P. Ltd., which appealed against the order of the Commissioner of Income Tax (Appeals) confirming the addition of Rs. 1,02,61,893 as bogus expenses. The expenses were related to payments made to sub-contractors, which the Assessing Officer initially disallowed by estimating them as 50% bogus due to lack of confirmation from the creditors. The Tribunal noted that the factual matrix was similar to the previous year, where a similar addition was set aside. The Tribunal criticized the CIT(A) for not following the precedent set in the previous year without sufficient justification, leading to the decision to allow the appeal and set aside the addition.

• Counselvise Citation: [2026] 140 COUNSELVISE.COM (IT) 838141 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 4 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-02-2026
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2016-2017
• Appeal Filed On: 18-10-2024
• Other Referred Cases: ITA No. 650/Del/2020
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: AJAY KUMAR ARORA
• Assessee Lawyers: K. SAMAPATH; V
• Keywords: Set aside; Rule of consistency; TDS; Bogus
• Section: 142(1); 133(6)

Judgement Text

" 1 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH ‘A’: NEW DELHI BEFORE SHRI M. BALAGANESH, ACCOUNTANT MEMBER AND SHRI RAJ KUMAR CHAUHAN, JUDICIAL MEMBER ITA No.4833/Del/2024, A.Y. 2016-17 ACC India P. ltd. GL-02, Ground Floor Ashoka Estate, 24, Barakhamba Road, Connaught Place, New Delhi-110001 PAN: AAKCA9219Q Vs. Assistant Commissioner of Income Tax, Circle-1(1), Delhi (Appellant) (Respondent) Appellant by Sh. K. Samapath, Adv, & Sh. V. Rajakumar, Adv. Respondent by Sh. Ajay Kumar Arora, Sr. DR Date of Hearing 15/12/2025 Date of Pronouncement 18/02/2026 O R D E R PER RAJ KUMAR CHAUHAN , J.M. : 1. This appeal is directed against the order dated 23.08.2024 of Learned Commissioner of Income Tax (Appeals)/ NFAC, Delhi [hereinafter referred to as the “CIT(A)”], passed under section 250 of the Income Printed from counselvise.com ITA No. 4833/Del/2024 ACC India (P) Ltd. 2 Tax Act, 1961 [hereinafter referred to as “the Act”] wherein the assessment order dated 23.12.2018 making addition of Rs. 1,02,61,893/- as bogus expenses were confirmed. 2. Aggrieved by the impugned order, assessee is in appeal before us and raised following grounds of appeal: “On the facts and in the circumstances of the case and in law the NFAC, CIT(A), Delhi erred in confirming the action of the Assessing Officer in making adhoc addition of Rs. 1,02,61,893/- on account of alleged bogus expenses debited in the books of accounts at the rate of 50% of the total expenses claimed on payments made to sub-contractors; The above action being arbitrary, fallacious, unwarranted and illegal must be quashed with directions for appropriate relief.” 3. The facts in brief as culled out from the proceedings are that assessee/ appellant company was engaged in civil construction work with projects running at different places including India, Mumbai, Calcutta and Gurgaon with the head quarter, New Delhi. The assessee e-filed its return of income on 04.08.2016 for A.Y. 2016-17 declaring total income of Rs. 9,04,62,000/-. The case was selected for scrutiny through CASS by issuing notice u/s 143(2) of the Act dated 6th July, 2017 through speed post which was duly served. In response to notice u/s 142(1) issued on 1st August, 2018 along with questionnaire, the assessee Printed from counselvise.com ITA No. 4833/Del/2024 ACC India (P) Ltd. 3 submitted reply dated 13 August, 2018. Accordingly, the case was picked up for limited scrutiny with the following reasons: a) Large other expenses claimed in the Profit & Loss a/c and b) Large current liability in comparison to total asset in Balance Sheet (Part A-BS of ITR) The assessee was asked to furnish the details of other expenses as claimed in the return of income. The assessee in his reply has shown the expenditure under the following items within the head “Miscellaneous Expenses: Printed from counselvise.com ITA No. 4833/Del/2024 ACC India (P) Ltd. 4 4. During the assessment proceedings, The Ld. AO issued notice u/s 133(6) of the Act for verification to sum of the parties mentioned above. In many cases, the notices were returned unserved as the concerned persons were not found at the address given by the assessee. From some other persons, no confirmation was received despite valid service of notice. Accordingly, the show cause notice dated 13.12.2018 was issued wherein the assessee filed submission dated 18.12.2018 extracted as under: Printed from counselvise.com ITA No. 4833/Del/2024 ACC India (P) Ltd. 5 Printed from counselvise.com ITA No. 4833/Del/2024 ACC India (P) Ltd. 6 5. Subsequent to the show cause notice, the Ld. AO has accepted the transaction in the case of Prakash Yadav, M.I. Buildcon Pvt. Ltd., Bam Bam Mandal, Mujafarrudin Mirza, FEC India. In case of other parties to whom the assessee had claimed to have made expenditure during the year, no confirmations were produced, despite repeated opportunities, to establish the genuineness of transaction through any documentary evidence. Accordingly, in the absence of documentary evidence, the Ld. AO proceeded to make the addition of estimated amount of 50% by disallowing it as bogus expenses shown against the name of below stated parties: S. No. Name of the Assessee Amount 1. A4 Infra Pvt. Ltd. 4,54,902 2. Bidyut Biswas 44,19,564 3. Dayal Construction company (Santosh Dindayal 8,96,754 Printed from counselvise.com ITA No. 4833/Del/2024 ACC India (P) Ltd. 7 Jaiswal) 4. Doka India Pvt. Ltd. 3,07,000 5. Shree sai Gajanan Enterprises (Poonam Devi Mohan Sharma) 3,54,749 6. DEC Agencies (Samar Singh Jaiswal) 1,40,90,817 Total 20523786 Accordingly, the sum of Rs. 1,02,61,893/- was added to the total income as bogus expenses debited in the books of the assessee. 6. We have heard the Ld. AR for the assessee and Ld. DR for the Revenue and examined the record. The Ld. AR has filed written submissions where it is argued that the facts of the case for this assessment year leading to the disallowance are identical to those of the previous year and the reasons mentioned by the Ld. AO for the disallowance as stated in para 10.3 of the assessment order are the same which were in the preceding assessment year 2015-16 and the Hon’ble Jurisdictional Tribunal in ITA No. 650.Del.2020, order dated 24.09.2025 has found the said observation of the Ld. AO for disallowance not satisfactory and the addition so made was set aside. It is further argued that the order of the ld. CIT(A) which was confirmed by the Hon’ble Tribunal in ITA No. 650/Del/2020 was produced before the Ld. CIT(A) as well as Ld. AO but the authorities below has not considered the same in utter disregard Printed from counselvise.com ITA No. 4833/Del/2024 ACC India (P) Ltd. 8 of principle of continuity qua assessee and has made the disallowance in arbitrary manner. It is therefore, submitted that the impugned order be set aside and addition be deleted. 7. The Ld. DR on the other hand submitted that each year is to be decided on its own factual matrix and the facts of this case are allegedly different from the facts of the previous year because in the previous year case in the remand report submitted by the AO, no defect was pointed out in the documents relied and submitted by the assessee. Hence, the Ld. DR submitted that there is no illegality or perversity in the impugned order and appeal is liable to be dismissed. 8. We have considered the rival submission and examined the record. To find out the reasons given by Ld. CIT(A) in the impugned order for not following the principle of continuity and not relying the decision of the Ld. CIT(A) in the previous year for the similar disallowance made, we deem it expedient to extract the decision part of the order of the Ld. CIT(A) contained in para no. 5 to 5.1.3 of CIT(A) extracted as under: “5. Decision: 5.1 Ground of appeal no. 1 In this ground, the appellant contends that the addition made by the AO of Rs. 102,61,893, being 50% of the total outstanding of parties for want of receipt of confirmations from them was without any basis and is liable to be deleted. 5.1.1 During the course of assessment proceedings, multiple notices were issued to the appellant, to which replies have been furnished by it. partly in the replies submitted by the appellant, it contends that the Printed from counselvise.com ITA No. 4833/Del/2024 ACC India (P) Ltd. 9 following documents with respect to each of the 6 parties as tabulated in para 2.3 above have been submitted by it:- a. Ledger statements, vouchers and bills, Form 16 Issued against TDS done and bank statements reflecting the payments made to the parties, b. The appellant's responsibility was only limited towards providing desired information to the Ld. AO by way of names and addresses of the creditors which was duly complied with and therefore no adverse inference was supposed to be drawn. C. The Ld. CIT(A) 1, New Delhi vide his order dated 20.11.2019 in the appellant’s own case for A.Y. 2015-16, in similar set of facts for 39 sub- contractors, has provided relief to the appellant on the same issue. 5.1.2 The contentions of the appellant has been perused, however, they are not found tenable owning to the following reasons: - i. Mere filing of documentary evidences in the form of ledger statements, bills, Form 16 and bank statement evidencing the payment would not absolve the appellant of discharging its primary onus of proving genuineness of transactions with the creditors. ii. Fact that the notices u/s. 133(6) of the Act could not be delivered to the 6 payees neither any confirmation could be obtained from the said payees by the AD during the course of assessment proceedings or by the appellant during the course of assessment proceedings as well as during the course of appellate proceedings, would amply demonstrate that the first ingredient itself, viz the identity of the creditors remains shrouded under doubts. The appellant is incorrect in stating that once it has given basic documents in the form of ledger, bills, TDS done on the transactions and mode of payment being through banking channels. is responsibility and primary onus stood discharged. iii. Reliance placed by the appellant on the decision of the Ld. CIT(A)- 1, New Delhi dated 20.11.2019 would not come to its rescue, as in the said decision given for A.Y. 2015-16, the Ld. CIT(A) on the basis of confirmation arranged by the appellant during the course of appellate proceedings and on remand report submitted by the AO, not pointing out any deflect therein, relief was provided to the appellant. The fact about the confirmation being filed and remand report being submitted has been mentioned by the Ld. CIT(A) in para 5.4 of his order. 5.1.3 Therefore, the facts of the case decided upon by the Ld. CIT(A) for A.Y. 2015-16 are different from the facts of the present case in so far as after being given repeated opportunities, the appellant has failed to furnish confirmation from the alleged payees and therefore has failed Printed from counselvise.com ITA No. 4833/Del/2024 ACC India (P) Ltd. 10 to establish their identities. As such, ground of appeal raised by the appellant is dismissed.” 9. We have considered the said finding of the Ld. CIT(A) in the light of the finding of Ld. ITAT for the previous year in ITA No. 650/Del/2020 dated 24.09.2025 (supra), the same issue for the previous year was dealt with by the Hon’ble Jurisdictional Tribunal in para No. 6 extracted below as under: “6. On the first issue of bogus expenses, we have heard both the parties and perused the records. On the issue of disallowance of Rs. 4,05,31,291/- on account of bogus expenses debited in the books is concerned, we find that id. CIT(A) noted that during the assessment proceedings, the AO has sent Notices u/s 133(6) to 45 parties, out of that only 4 parties have responded and rest of the parties either not responded or the notices have returned undelivered and the AO has made additions of Rs. 4,05,31,291/- being 50% of total outstanding with these creditors on adhoc basis as bogus in spite of the facts that the assessee company has given the complete copy of account and bills/invoices of these creditors, verified the entries appearing in the bank statement of the company regarding payments made to these creditors, copies of Form 16A Issued to these creditors and also explained that the addresses of these creditors are as per the bills provided by them. In the assessment order the AO has observed that work done by persons in the projects of the company are not in the vicinity of the project site of the company and thus are bogus and non genuine in this regard Ld. Aft has argued that this observation of the A does not hold good as the person who supplies labour and machinery at one place can obviously supply labour and machinery in other places also and be need not be located in the nearby areas of the project. in any case this observation of the DCIT does not hold good in today's hi-tech system. Ld. CIT(A) carefully considered the facts of the case and noted that due to lack of opportunities: many young persons from Eastern part of India migrate to other parts of India and wok in construction sectors, farming sectors and other Industries. The contractors organize young workers from their native place, make arrangements for their Printed from counselvise.com ITA No. 4833/Del/2024 ACC India (P) Ltd. 11 travel and provide them food, jobs & accommodation near the place of their work. This is a very common practice in Eastern part of India. This cannot be a ground to treat the expenses as bogus. During the remand proceedings, the AO has made necessary verifications. In the remand report, the AO has observed as under: \"The confirmation of accounts viz-a-viz bills and ledger accounts of expenses claimed were verified on test check basis and nothing adverse was noticed in this regard.\" In the remand report the AO has reported that the assessee company submitted confirmations along with supporting documents of all the entities with whom the appellant company have made transactions during the F.Y. 2014-15. In the remand report the AO has stated that the assessee company was required to furnish the copy of agreement made with the sub-contractors to whom the sub-contracts were given during the F.Y. 2014-15 l.e. projects located in Kolkata, Mumbai, Noida and during the remand proceeding, the assessee company has produced all such details before the AO. During the remand proceedings, the AO has verified the confirmation of accounts viz-a-viz bills and ledger accounts of expenses claimed on test check basis. In this regard nothing adverse has been noticed by the AO. Considering the facts of the case, Ld. CIT(A) correctly noted that AO has erroneously made the addition of Rs. 4,05,31,291/- being 50% of total outstanding with the creditors on adhoc basis. Accordingly, the addition of Rs. 4,05,31,291/- on this account was rightly been deleted. In view of the aforesaid factual matrix, we do not find any infirmity in the finding of the id. CIT(A) on this issue, therefore, we uphold the same and reject the issue in dispute raised by the Revenue.” 10. On perusal of the finding of the Ld. CIT(A) vis-à-vis finding returned by the Hon’ble Co-ordinate Bench wherein the order of the ld. CIT(A) in the previous year was confirmed, we have noticed that the Ld. CIT(A) has simply not followed the decision on the ground of difference in the factual matrix. It is pertinent to note that the same documents were available before the Ld. AO for this year also as were filed for the Printed from counselvise.com ITA No. 4833/Del/2024 ACC India (P) Ltd. 12 previous year which were duly considered by the Ld. CIT(A) on the basis of the remand report submitted by the Ld. AO, wherein he has not pointed out any defects. We are not able to agree with the Ld. CIT(A) passing the impugned order that in this year since remand report is not called for showing any defects in the documents submitted and as such he has not followed the previous year order of Ld. CIT(A) despite having been brought to his notice. It is so because there was nothing which might prevent the Ld. CIT(A) to carry out the said inquiry himself if he was convinced that there was some defects in the document submitted by the assessee for this year. Merely by saying that there is no remand report does not justify the stand of the Ld. CIT(A) for not following the previous year’s order of his counterpart. For these reasons, we are of the considered opinion that the impugned order suffers from perversity, and is not legally sustainable, and is accordingly set aside. Respectfully following the decision of the Jurisdictional Tribunal in ITA No. 650/Del/2020, A.Y. 2015-16 (supra), we are of the considered opinion that the Ld. CIT(A) was not justified in confirming the disallowance of amount of Rs. 102,61,893/- made by the AO. Since, the factual matrix was similar and the reasoning for not following the previous year order on the similar facts was not found convincing, we are of the considered Printed from counselvise.com ITA No. 4833/Del/2024 ACC India (P) Ltd. 13 opinion that the end of justice required that the Ld. AO and the ld. CIT(A) should have followed the principle of consistency in the absence of any contrary material thereon. The impugned order is accordingly set aside and the appeal of the assessee is allowed. 11. In the result, the appeal of the assessee is allowed. Oder pronounced in open Court on 18th February, 2025 Sd/- Sd/- (M.BALAGANESH) (RAJ KUMAR CHAUHAN) ACCOUNTANT MEMBER JUDICIAL MEMBER Dated:18/02/2026 Binita, Sr. PS Copy forwarded to: 1. Appellant 2. Respondent 3. CIT/PCIT 4. CIT(Appeals) 5. Sr. DR: ITAT ASSISTANT REGISTRAR ITAT, NEW DELHI Printed from counselvise.com "