AKRITI SALES PVT LTD,KOLKATA V. DCIT CC 2(2) KOLKATA, KOLKATA

CO 70/KOL/2025

AI Insights

The case involves appeals by the Revenue and a Cross Objection by the assessee, Akriti Sales Pvt. Ltd., against the order of the Commissioner of Income-tax (Appeals), Kolkata-26, which pertained to the assessment year 2015-16. The primary issue was the treatment of 3,421,39,900/- received as cash advances for the sale of flats during a survey operation under section 133A of the Income Tax Act. The Assessing Officer (AO) initially added this amount as unexplained cash credit under section 68, but the CIT(A) later partly allowed the assessee's appeal, treating some of the amount as business income. The Tribunal, referencing decisions from other ITAT benches, concluded that the entire amount should be treated as business income, dismissing the Revenue's appeal and allowing the assessee's CO.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 790737 (ITAT-KOLKATA)
• Duration Of Justice: 1 month(s) 27 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 04-12-2025
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2015-2016
• Appeal Filed On: 07-10-2025
• Other Referred Cases: ACIT Vs Rahil Agencies ITA No.4413/Mum/2014, Lovish Singhal ITA No. 143/Jodh/2018
• Laws Referred To: Income Tax Act
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: MANAS MONDAL
• Assessee Lawyers: S.M. SURANA
• Keywords: Business income; Unexplained cash credit
• Section: 68; 133A

Judgement Text

" IN THE INCOME TAX APPELLATE TRIBUNAL “A” BENCH, KOLKATA BEFORE SHRI RAJESH KUMAR, AM AND SHRIPRADIP KUMAR CHOUBEY, JM ITA No.1779/KOL/2025 (Assessment Year: 2015-16) DCIT CC2(2) Kolkata Aaykar Bhawan Poorva 110 Shanti Pally, Kolkata, Kolkata-700107, West Bengal Vs. Akriti Sales Pvt. Ltd. 34 Indra Kumar Karnani Street, Kolkata-700001, West Bengal (Appellant) (Respondent) PAN No. AAGCA2765B CO No. 70/KOL/2025 (ITA No. 1779/KOL/2025 for A.Y. 2015-16) Akriti Sales Pvt. Ltd. 34 Indra Kumar Karnani Street, Kolkata-700001, West Bengal Vs. DCIT CC2(2) Kolkata Aaykar Bhawan Poorva 110 Shanti Pally, Kolkata, Kolkata-700107, West Bengal (Appellant) (Respondent) Assessee by : Shri S.M. Surana, AR Revenue by : Shri Manas Mondal, DR Date of hearing: 16.10.2025 Date of pronouncement: 04.12.2025 O R D E R Per Rajesh Kumar, AM: These are appeals preferred by the Revenue and CO by the assessee against the order of the Commissioner of Income-tax (Appeals), Kolkata-26 (hereinafter referred to as the “Ld. CIT(A)”] dated 23.12.2024 for the AY 2015-16. 2. At the outset, we note that the appeal of the assessee is barred by limitation by 159 days. At the time of hearing the counsel of the assessee explained the reasons for delay in filing the appeal. The Ld. Printed from counselvise.com Page | 2 ITA no. 1779/KOL/2025 Akriti Sales Pvt. Ltd.; A.Y. 2015-16 D.R did raise objection in condoning the delay. After hearing the rival contentions and perusing the materials available on record, we find that the delay is for bonafide and genuine reasons and hence, we condone the delay and admit the appeal for adjudication. 3. The only issue raised by the Revenue is against the deletion of addition of ₹4,21,39,900/- by the ld. CIT (A) as added by the ld. AO u/s 68 of the Act in respect of undisclosed income in the form of cash sales found during the course of survey operation u/s 133A of the Act. 3.1. The facts in brief are that a survey operation u/s 133A of the Act was conducted on 30.10.2014, at office premises of Arya Group of cases. The assessee is engaged in the business of construction and real estate development. The assessee filed the return of income on 27.02.2017, declaring total income of ₹3,51,13,710/-. The case of the assessee was selected for scrutiny and statutory notices along with questionnaire were duly issued and served upon the assessee. During the course of assessment proceedings, the ld. AO upon perusal of the impounded documents observed that during the survey operation it was found that the assessee had undisclosed sales of ₹4,21,39,911/- which were accepted by Shri Rajendra Kumar Mourya, the key person of the Arya Group. The Arya Group admitted that the undisclosed income was on account of cash received as advance against the booking of flats in A.Y. 2014-15 and in earlier years in his disclosures before the DDIT, Unit-2(3), Investigation Wing, Kolkata on 18.02.2015 and 20.02.2015. The ld. AO observed from the return of income that assessee did not include the undisclosed income on account of suppressed sales in the total income and accordingly, the assessee was asked to explain the Printed from counselvise.com Page | 3 ITA no. 1779/KOL/2025 Akriti Sales Pvt. Ltd.; A.Y. 2015-16 same. The assessee submitted before the ld. AO that out of disclosure of ₹4,21,39,900/-, ₹2,85,99,365/- was included in the turnover and duly disclosed in the Profit and Loss account and the balance amount of ₹1,35,40,535/- was included in the computation of income. The ld. AO was not satisfied with the explanation of the assessee and accordingly, a show cause notice was issued as to why ₹4,21,39,900/- should not be considered as cash credit u/s 68 of the Act read with section 115BBE of the Act. The assessee filed the reply before the ld. AO which is extracted at page no.2 of para no.4.2 in the assessment order. Thereafter, the ld. AO rejected the submission of the assessee and added the amount to the income of the assessee as unexplained cash credit. The ld. CIT (A) in the appellate proceedings, partly allowed the appeal of the assessee. 3.2. After hearing the rival contentions and perusing the materials available on record, we find that there was survey u/s 133A in the case of the assessee on 30.10.2014.The assessee is developer of properties and derives income from sale of flats. In the course of survey, some papers were found from which it was noticed that the assessee has received Rs. 4,21,39,900/- in cash as advance for sale of flats which was not disclosed in the books of accounts. In the same papers it was also found that the assessee incurred cash expenses of Rs. 1,35,40,555/- towards construction of flats which too were not recorded in the books. The assessee disclosed the entire amount of cash sale during the course of survey as its income. We note that in the books the assessee credited only the net cash amount of Rs. 2,85,99,365/-(Total cash received of Rs. 4,21,39,900/- cash expenses incurred of Rs. 1,35,40,555/-) which was added with the turnover and consequently shown in the income in the profit and loss account. We further note that the expenses Printed from counselvise.com Page | 4 ITA no. 1779/KOL/2025 Akriti Sales Pvt. Ltd.; A.Y. 2015-16 incurred by the assessee for construction of flats out of books of accounts as mentioned above of Rs. 1,35,40,555/- was again added by the assessee to its income in the computation of income and offered to tax accordingly. Thus, the assessee disclosed the entire amount of Rs. 4,21,39,900/- as income from business on sale of flats without even claiming the expenses of Rs. 1,35,40,555/-. 3.3. We also note that that the amount disclosed as income during survey was specifically admitted by the Id assessee as having been received as advance against the sale of flats which was noted by the ld. AO vide para 4.1 as well as para 4.3 of the assessment order. However, while computing the total income, the Ld AO reduced the said amount from the income from business computed by the assessee and again added back the same as cash credit u/s 68 of the Act. It may be noted that tax rate on business income as well as on the income as added u/s 68 of the Act by the AO was same during the assessment year in question. The assessee filed appeal before the Ld. CIT (A), objected to the treatment of business income as cash credit u/s 68 when the AO himself admitted that the income was derived from sale of flats. In other words, the income from business was proved from the impounded documents and accepted as such and even otherwise the presumption u/s 292C was applicable that the contents of the impounded papers in survey u/s 133A were true. The Ld. CIT(A) accepted that the contention of the assessee that the income was income from business which was proved from the seized papers itself by relying on the decision of Hon'ble ITAT Mumbai, in ACIT Vs Rahil Agencies ITA No.4413/Mum/2014 dated 23.11.2016 However, the ld. CIT(A) allowed this issue partly by accepting the income disclosed and credited in the books of accounts of Rs.2,85,99,365/- only as income from business on the ground Printed from counselvise.com Page | 5 ITA no. 1779/KOL/2025 Akriti Sales Pvt. Ltd.; A.Y. 2015-16 that the assessee credited only the aforesaid the said sum in the books. For the balance amount of Rs. 1,35,40,535/- which was included by the assessee in the computation of income was not accepted on the ground that the same was not included in turnover and held that provisions of section 115BBE of the Act were applicable. 3.4. In our opinion the conclusion of the ld. CIT(A) is wrong as the entire income of Rs. 421,39,900/- was from sale of flats which was business of the assessee and was also admitted fact by the lower authorities. When the same was so accepted, the income has necessarily to be assessed as business income whether or not the same was included in the turnover or not. In our opinion the assessee has wrongly included the amount of expenses in the computation of income of Rs.1,35,40,535/- , since the same was already spent as cash expenses towards construction of the sold flats. If the said amount was included in the turnover, the same amount was to be shown as expenses in the debit side. However, the assessee has neither included the said amount in the turnover nor debited the said amount as expenses in the profit and loss account. The result was the same and the income remained the same. Since however the amount was disclosed, the assessee did not claim the amount as expenses, yet the aforesaid amount was offered for assessment by including the same in computation of total income. There was no cash credit of the said amount in the books so as to be assessed u/s 68. The decision of Jodhpur Bench of ITAT in the case of Lovish Singhal (ITA No. 143/Jodh/2018) is also cited wherein number of judgements on the issue have been relied on. The amount contested by the department was added as income from other sources whereas the assessee himself declared he same as income Printed from counselvise.com Page | 6 ITA no. 1779/KOL/2025 Akriti Sales Pvt. Ltd.; A.Y. 2015-16 from business. The assessee is LLP and the maximum normal rate on LLP was 30% and also u/s 115BBE the rate was 30% during the assessment year in question. Hence there the entire exercise is tax neutral. In so far as the CO No.70/KOL/2025, of the assessee is concerned, as we have already decided the issues raise therein by holding that ₹1,35,40,535/- is income from business. Consequently, the appeal of the revenue is dismissed and Cross Objection of the assessee is allowed. 4. In the result, the appeal of the Revenue is dismissed and CO of the assessee is allowed. Order pronounced in the open court on 04.12.2025. Sd/- Sd/- (PRADIP KUMAR CHOUBEY) (RAJESH KUMAR) (JUDICIAL MEMBER) (ACCOUNTANT MEMBER) Kolkata, Dated: 04.12.2025 Sudip Sarkar, Sr.PS Copy of the Order forwarded to: BY ORDER, True Copy// Sr. Private Secretary/ Asst. Registrar Income Tax Appellate Tribunal, Kolkata 1. The Appellant 2. The Respondent 3. CIT 4. DR, ITAT, 5. Guard file. Printed from counselvise.com "