HILLS TRADE-RK(JV),DELHI V. INCOME TAX OFFICER WARD 62(4), DELHI

ITA 478/DEL/2025

AI Insights

The case involves Hills Trade RK(JV), the appellant, contesting an order by the Income Tax Officer (ITO) which added Rs. 9,54,60,860 to their income for the Assessment Year 2017-18. This addition was based on the observation that the assessee had debited this amount as purchase expenses in their Profit & Loss Account, despite having sublet the entire contract work to another entity. The ITO and the CIT(A) found that the assessee failed to provide adequate justification for this expense being recorded under their account, leading to the dismissal of their appeal. The Tribunal, after hearing the Department's representative and reviewing the materials, decided to dismiss the appeal due to the absence of any supporting evidence from the assessee.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 775856 (ITAT-DELHI)
• Duration Of Justice: 7 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-09-2025
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2017-2018
• Appeal Filed On: 27-01-2025
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Section: 143(3)

Judgement Text

"1 ITA No. 478/Del/2025 Hills Trade IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH “B”: NEW DELHI BEFORE Ms. MADHUMITA ROY, JUDICIAL MEMBER AND SHRI NAVEEN CHANDRA, ACCOUNTANT MEMBER ITA No. 478/DEL/2025 Assessment Year: 2017-18 Hills Trade –RK(JV), F-25, Ist Floor, Mansarover Garden, New Delhi-110015. PAN: AABAH 3425 N Vs Income Tax Officer, Ward-62(4), Delhi. APPELLANT RESPONDENT Assessee represented by None Department represented by Shri Rajesh Kumar Dhanesta, Sr. DR Date of hearing 09.09.2025 Date of pronouncement 12.09.2025 O R D E R PER Ms. MADHUMITA ROY, JM: The instant appeal, preferred by the assessee, is directed against the order dated 30.11.2024 [DIN & Notice No. ITBA/NFAC/S/250/ 2024-25/1070776773(1) passed by the CIT(A)/NFAC, Delhi under Section 143(3) of the Income Tax Act, 1961 (hereinafter referred to as “the Act”) for the Assessment Year 2017-18. Printed from counselvise.com 2 ITA No. 478/Del/2025 Hills Trade 2. None appeared on behalf of the assessee at the time of hearing of the matter. We thus, considering the facts of non-appearance of the assessee even before earlier occasions, proceed to dispose of the appeal, ex parte, qua the assessee. We have heard the Ld. DR and perused the materials available on record. 3. The sole effective ground raised in assessee’s instant appeal is against the Ld. CIT(A)’s action in upholding the addition of Rs. 9,54,60,860/- made by the Ld. AO. In assessment the Ld. AO made the addition of Rs. 9,54,60,860/-, inter alia, by observing as under: “On perusal of P&L Account for year ending 31.03.2017, it is noticed that besides other expenses the assessee has also debited expense on alc of purchases amounting to Rs.9.54.60,860/- The JV has sublet entire contract work to the 1 member as per agreement dated 12.11.2015. Logically, if the responsibility of completing the entire civil construction work is sublet to 1 member for which the entire contract receipts would also accrue to it, then the expenses related to the said construction work should also be bome by it. Therefore, the assessee vide notice dated 23.12.2019 was required to show cause as to why purchase debited to the P&L account should not be disallowed as the same was not its liability. In response, the assessee vide reply dated 28.12.2019 stated as under \"The PWD releases the essential material only in name of concern in whose favour the contract has been awarded. HENCE, ALL THE Road Building material like Bitumen & Boulder has been issued in name of M/s Hills Trade RK JV. The copy of invoices bear the name of M/s Hills Trade RK JV as buyer of product” Reply of the assessee was considered and found to be not tenable. The entire work has been sublet to M/s Hills Trade Agencies. The JV has debited purchase expenses amounting to Rs.9.54,60,860/- in the P&L account for which no payment has been made by the sub contractor i.e. to M/s Hills Printed from counselvise.com 3 ITA No. 478/Del/2025 Hills Trade trade Agencies to the JV. When the work has been sublet to Mis Hills Trade Agency, then the purchase expense ought to be borne by the sub contractor. Otherwise it would be passing on benefits to a related party without passing the attached liabilities. The flow in the explanation offered by the assessee JV is apparent from the fact that thought it has claimed that the purchase expenses have been claimed as the material was issued to it(JV) by the contractee. However, it has not taken into account the fact that though the contract payment have been released by the assessee JV by the contractee, yet the same has been passed on the member executing the work. Therefore, the reply of the assessee is not acceptable. Consequently the entire purchases of Rs.9,54,60,860/- debited to the P&L account is disallowed and is added back to the total income of the assessee, being not related to the assessee JV. (Addition of Rs.9,54,60,860/-).” 4. Aggrieved against the said order of the Ld. AO the assessee preferred appeal before the Ld. CIT(A), who affirmed the action of the Ld. AO, inter alia, by observing as under: “4.5 Having referred to the relevant portions of the order and the appeal, I am of the view that the appellant has failed to come up with a clear picture. The appellant failed to produce the details of the entire receipts and purchases before the Id. AO as well me. The least appellant could have done is to provide in tabulated form the receipts and purchases made by appellant and parties of the JV, Instead of clarifying the genuine doubt of the Id. AO, the appellant has simply commented as to what all did the Id. AO presumed. In the absence of details, it is very difficult to comprehend anything out of the submissions made by the appellant. The appellant has failed to provide detailed information that would offer a clear picture of all the transactions under the Joint Venture (JV), including its partners and their treatment in the accounts. In the absence of such clarity, I am not inclined to interfere with the order of the Ld. AO.” Printed from counselvise.com 4 ITA No. 478/Del/2025 Hills Trade 5. A perusal of the order of the Ld. CIT(A) reveals that he has affirmed the action of Ld. AO by observing that the assessee failed to produce the details of entire receipts and purchases before the Ld. AO as well as before him. Even before us no documentary evidence in support of his claim has been filed on behalf of the assessee. In view of these facts, we are constrained to uphold the order of Ld. CIT(A), upholding the impugned addition, particularly in the absence of any assistance rendered by the assessee. 6. Consequently, assessee’s appeal in ITA No. 478/Del/2025 is dismissed. Order pronounced in open court on 12.09.2025. Sd/- Sd/- (NAVEEN CHANDRA) (MS. MADHUMITA ROY) ACCOUNTANT MEMBER JUDICIAL MEMBER Dated: 12.09.2025. *MP* Copy forwarded to: 1. Appellant 2. Respondent 3. CIT 4. CIT(Appeals) 5. DR: ITAT ASSISTANT REGISTRAR ITAT, NEW DELHI Printed from counselvise.com "