DCIT CENTRAL CIRCLE-6, ARA CENTRE V. ARCHOHM CONSULTS PRIVATE LIMITED , ANAND LOK

ITA 2/DEL/2024

AI Insights

The case involves an appeal by the Deputy Commissioner of Income Tax (DCIT), Central Circle-6, against Archohm Consults Pvt Ltd concerning the assessment year 2017-18. The appeal was directed against the order of the Commissioner of Income Tax (Appeals)-24, New Delhi, which had deleted several additions made by the Assessing Officer under various sections of the Income-tax Act, 1961. The revenue contested the deletions related to cash deposits during the demonetization period, unexplained investments, inventory reductions, and various disallowances under section 14A and 37(1). The Tribunal's decision emphasized the lack of adverse comments from the Assessing Officer in the remand proceedings and the absence of any exempt income during the year, which negated the applicability of section 14A.

• Counselvise Citation: [2024] 140 COUNSELVISE.COM (IT) 34874 (ITAT-DELHI)
• Duration Of Justice: 9 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-10-2024
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: H
• Next Hearing Date: 01-10-2024
• Assessment Year: 2017-2018
• Appeal Filed On: 01-01-2024
• Other Referred Cases: Smt B Jayalakshmi Vs. ACIT, PCIT Vs. Era Infrastructure Ltd
• Laws Referred To: Income-tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SANJAY KUMAR
• Assessee Lawyers: R.S. SINGHVI
• Keywords: Depreciation; Earning of tax free income
• Section: 144; 69A; 14A; 37(1)

Judgement Text

"Page | 1 INCOME TAX APPELLATE TRIBUNAL DELHI BENCH “H”: NEW DELHI BEFORE SHRI M. BALAGANESH, ACCOUNTANT MEMBER AND SHRI VIMAL KUMAR, JUDICIAL MEMBER ITA No. 2/Del/2024 (Assessment Year: 2017-18) DCIT, Central Circle-6, ARA Centre, Delhi Vs. Archohm Consults Pvt Ltd, Anand Lok, New Delhi (Appellant) (Respondent) PAN:AACCA6996Q Assessee by : Shri R. S. Singhvi,CA Shri Rajat Garg, CA Shri Satyajeet Goel, CA Revenue by: Shri Sanjay Kumar, CIT DR Date of Hearing 01/10/2024 Date of pronouncement 11/10/2024 O R D E R PER M. BALAGANESH, A. M.: 1. The appeal in ITA No.2/Del/2024 for AY 2017-18, arises out of the order of the Commissioner of Income Tax (Appeals)-24, New Delhi [hereinafter referred to as ‘ld. CIT(A)’, in short] in Appeal No. CIT(A), Delhi-1/10385/2019-20 dated 11.10.2023 against the order of assessment passed u/s 144 of the Income-tax Act, 1961 (hereinafter referred to as ‘the Act’) dated 17.12.2019 by the Assessing Officer, DCIT, Circle-3(1), New Delhi (hereinafter referred to as ‘ld. AO’). 2. The revenue has raised the following grounds of appeal before us:- “1 The Id. CIT(A) has erred in deleting the addition made by the Assessing Officer amounting to 50,68,350/-u/s 68 of the Act on the ITA No. 2/Del/2024 Archohm Consults Pvt Ltd Page | 2 issue of cash deposited during the demonetization period. The Id. CIT(A) has failed to consider any cash book showing the day-to-day receipt of cash as well as cash expenditure to substantiate the cash in hand. The Id. CIT(A) has failed to examine any authentic documents to explain the source of cash deposits made during the demonetization period The Id. CIT(A) has erred in considering the abnormal increase in cash deposits during the period of demonetisation compared to pre-demonetisation period. 2 The Id. CIT(A) has erred in deleting the addition of Rs 3,60,50,216/- made u/s 69A of the Act as the Source of investment made by the assessee- company had not been substantiated with documentary evidence. 3 The Ld. CIT(A) has erred in deleting the addition of Rs.2,27,19,026/- made by the AO on account of inventories. The Id. CIT(A) has erred in deleting the addition made by the AO without considering the facts of the case that the assessee has reduced the inventories to Nil. The bills raised before the Government of Uttar Pradesh either may have been cleared by the Government of UP or must have been under settlement or dispute resolution. Booking entries of UP Government on assumption basis as loss is not justifiable, 4 The Id. CIT(A) has erred in deleting the disallowance u/s 14A of the Act r.w.r 8D of IT Rules, 1962 amounting to Rs.1,80,251/-. The Ld. CIT(A) has erred in not considering the CBDT circular No 5/2014 dated 11.02.2014, clarifying that section 14A r.w.r. 8D provides for disallowance of the expenditure even where the tax payer has not earned any exempt income. 5. The Ld. CIT(A) has erred in deleting the disallowance made by the Assessing Officer of Rs. 10,64,995/- which was only 10% of the total expenses of Rs.1,06,49,951/-, The Ld. CIT(A) has erred in considering the genuineness of the expenses of Rs.10,64,995/- incurred during the year under consideration. 6. The Ld CIT(A) has erred in deleting the disallowance made by the Assessing amounting to Rs.32,13,000/- paid on account of rent during the year under consideration. The Ld. CIT(A) has erred in deleting the disallowance made by the Assessing Officer of Rs.32,13,000/- as the expenses incurred on account of rent was not for business purpose and there was no agreement was executed between the assessee-company and landlord. 7. The Ld. CIT(A) has erred in deleting the disallowance made by the AO u/s 37(1) of the Act amounting to Rs. 1,23,94,635/-, The Ld. CIT(A) has erred in considering the genuineness of the expenses amounting to Rs.1,23,94,635/- incurred during the year under consideration. ITA No. 2/Del/2024 Archohm Consults Pvt Ltd Page | 3 8 The Ld. CIT(A) has erred in deleting the disallowance made by the AO of Rs.3,75,000/- on account of kumaoni rasoi and cash payment. The Ld. CIT(A) has erred in deleting the disallowance made by the Assessing Officer amounting to Rs.3,75,000/- as the assessee- company had declared cash vouchers for payment towards kumaoni rasoi. 9 The Ld. CIT(A) has erred in deleting the disallowance made by the AO amounting to Rs.3,09,429/-on account of depreciation The Ld. CIT(A) has erred in deleting the disallowance made by the AO amounting to Rs.3,09,429/- as the assets was not used more than 180 days during the year under consideration. 10 The Ld. CIT(A) has erred in deleting the addition made by the Assessing Officer amounting to Rs.33,06,853/-on account of unsecured loans. The Ld CIT(A) has erred in deleting the addition of Rs 33,06,853/- made by the AO on account of unsecured loans without considering the creditworthiness and genuineness of the lender company. 3. We have heard the rival submissions and perused the material available on record. At the outset, we find that the entire issues raised by the revenue except ground No. 4 in their grounds of appeal were accepted by the ld AO in the remand proceedings and the ld CIT(A) had granted relief to the assessee after considering the remand report of the ld. AO. No adverse comments were given by the ld AO in the remand proceedings. We find that the ld CIT(A) had taken cognizance of the remand report while adjudicating each issue and had granted relief to the assessee. In our considered opinion, there could be no grievance that could be left to the revenue. Hence, logically the revenue ought not to have even preferred an appeal on these issues since, the ld AO had accepted to the contentions of the assessee in the remand proceedings. Reliance in this regard is placed on the decision of the Hon’ble Madras High Court in the case of Smt B Jayalakshmi Vs. ACIT reported in 96 taxmann.com 486 (Mad HC). Accordingly, Ground Nos. 1 to 3 and 5 to 10 raised by the revenue are dismissed. ITA No. 2/Del/2024 Archohm Consults Pvt Ltd Page | 4 4. Ground No. 4 raised by the revenue is challenging deletion of disallowance u/s 14A of the Act. We find that there was no exempt income derived by the assessee during the year under consideration and hence there cannot be any applicability of provisions of section 14A of the Act. Reliance in this regard is placed on the decision of the Hon’ble Jurisdictional High Court in the case of PCIT Vs. Era Infrastructure Ltd reported in 448 ITR 674 (Del). Respectfully following the same, ground No. 4 raised by the revenue is dismissed. 5. In the result, the appeal of the revenue is dismissed. Order pronounced in the open court on 11/10/2024. -Sd/- -Sd/- (VIMAL KUMAR) (M. BALAGANESH) JUDICIAL MEMBER ACCOUNTANT MEMBER Dated:11/10/2024 A K Keot Copy forwarded to 1. Applicant 2. Respondent 3. CIT 4. CIT (A) 5. DR:ITAT ASSISTANT REGISTRAR ITAT, New Delhi "