INCOME TAX OFFICER, C R BUILDING DELHI V. VIRAT PROMOTERS PRIVATE LIMITED, NEW DELHI

ITA 5746/DEL/2024

AI Insights

The case involves the Income Tax Officer appealing against the decision of the Commissioner of Income Tax (Appeals) which had allowed the appeal of Virat Promoters Private Limited, resulting in the deletion of additions made for unexplained expenditures. The reassessment was initially triggered by a notice under section 148, which was later found to be invalid as it was issued beyond the permissible time limit. The Tribunal's decision was influenced by precedents and the fact that the validity of the notice was not contested by the Revenue in their appeal.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 779184 (ITAT-DELHI)
• Duration Of Justice: 10 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-10-2025
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: H
• Assessment Year: 2013-2014
• Appeal Filed On: 12-12-2024
• Other Referred Cases: Union of India and Ors. vs. Ashish Agarwal, Union of India vs. Rajeev Bansal, ACIT vs. Green Gem Estate Pvt. Ltd., CIT vs. Prameshwar Bohra, CIT vs. Usha Stud Agricultural Farms Limited, Ivan Singh vs. ACIT, Rita Stephen Pinto vs. ITO, PCIT vs. Goodview Trading (P.) Ltd., ITO vs. Computer Home Information Plus Pvt. Ltd., D. J. Stock Broking Pvt. Ltd. vs. ITO, ACIT VS Harvans P. Chawla
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ABHISHEK DEVAL
• Assessee Lawyers: NEERAJ MANGALA; RUDRA DHELLORIA
• Keywords: Reassessment proceedings; Unexplained expenditure; TDS
• Section: 147; 148; 69C

Judgement Text

" IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH: ‘H’ NEW DELHI BEFORE SHRI PRAKASH CHAND YADAV, JUDICIAL MEMBER AND SHRI MANISH AGARWAL, ACCOUNTANT MEMBER ITA No.5746/Del/2024 (ASSESSMENT YEAR: 2013-14) Income Tax Officer, Room No.194A, C. R. Building, I.P. Estate, Delhi-110002. Vs. Virat Promoters Private Limited, A-68, New Friends Colony, Delhi-110025. PAN:AAECP0730B (Appellant) (Respondent) O R D E R PER MANISH AGARWAL, AM: This appeal is filed by the Revenue against the order of Commissioner of Income Tax (Appeal), [“CIT(A)”, in short] National Faceless Appeal Centre (NFAC), Delhi dated 04.12.2024 passed u/s 250 of the Income Tax Act, 1961 (“the Act”) for Asst. Year 2013-14. 2. Brief facts of the case are that assessee filed its return of income on 28.09.2013 declaring loss of Rs. 90.197/-. The case of the assessee was reopened u/s 147 of the Act by issue of notice u/s 148 on 30.06.2021, copy of the same is placed in PB-17 of the assessee. In terms of the decisions of Hon’ble Supreme Court in the case of Union of India and Ors. vs. Ashish Agarwal in Civil Appeal No.3005/2022 dated 04.05.2022, the said notice was treated as deemed to have been issued as notice u/s 148A(b) of the Act as per the amended provisions and Assessee by Shri Neeraj Mangala, AR & Shri Rudra Dhelloria, AR Department by Shri Abhishek Deval, Sr. DR Date of hearing 31.07.2025 Date of pronouncement 08.10.2025 Printed from counselvise.com 2 IT No.5746/Del/2024 ITO vs. Virat Promotoers Private Limited consequently, after receiving the submission from the assessee, order u/s 148A(d) was passed on dated 21.7.2022 and notice u/s 148 was issued on 22.07.2022, copy of the same is placed at PB pages 42. Thereafter, the re-assessment proceedings were completed, and order was passed u/s 147 r.w.s. 144B of the Act wherein addition of Rs.1,21,68,000/- was made in the hands of the assessee by treating the payment made for acquisition of immovable property as unexplained expenditure u/s 69A. Further addition of Rs. 3,16,28,603/- is made by holding the same as unexplained expenditure u/s 69C of the Act. Against the said order an appeal was filed before the Ld. CIT(A) who allowed the appeal of the assessee and deleted the additions made. 3. Aggrieved by the said order, revenue is in appeal before the Tribunal wherein the revenue has taken following grounds of appeal: “I. Whether on the facts of the case and in law, the Ld. Commissioner of Income tax (A), NFAC has erred in deleting the addition of Rs.1,21,68,000/- made on account of unexplained expenditure u/s 69A of the Income Tax Act, 1961. II. Whether on the facts of the case and in law, the Ld. CIT (A) has erred in deleting the addition of Rs.3,16,28,603/ on account of loan transaction with M/s Bazigar Trading Pvt. Ltd. whereas the assessee has failed to establish genuineness of the transaction. III. The appellant craves leave to be allowed to add any fresh ground(s) of appeal and or deleted or amend any of the ground(s) of appeal.” 4. Heard both the parties at length and perused the materials available on record. At the outset it is seen that Revenue in the present appeal before us has challenged the action of Ld. CIT(A) in deleting the additions of Rs.1,21,68,000/- and of Rs.3,16,28,603/- made u/s 69C of the Act after considering the merits of the issue. However, Revenue has not challenged the action of Ld. CIT(A) in holding the notice issued u/s 148 as invalid and quashed the entire reassessment proceedings. The relevant observations as made by Ld. CIT(A) in para 6.1.1 are as under: Printed from counselvise.com 3 IT No.5746/Del/2024 ITO vs. Virat Promotoers Private Limited “6.1.1 I agree with the submission of the appellant and the case laws relied upon. The notice u/s.148 was issued on 22.07.2022, while as per the judgment of Hon. Supreme Court in the case of Union of India vs. Rajeev Bansal, the notice should have been issued on 24.06.2022 i.e. within the surviving period. Hence, following the judgment of Hon. Supreme Court, the issue of notice u/s.148 is barred by limitation and hence notice u/s.148 is quashed on the basis of the judgment as mentioned above. Hence, the appellant succeeds on Grounds No.1 to 5”. 5. Thereafter the ld. CIT(A) has deleted the additions on the merits by making following observations: “6.2 Grounds No.6 to 10: Even on merits the appellant has filed written submission along with the evidences and documents. The case is decided on merits also. 6.2.1 In these grounds the appellant has challenged the addition of Rs. 4,37,06,406/. TheAO has made two additions of Rs3,16,28,603/- as unsecured loan received from M/s. Bazigar Trading Co. and Rs.1,21,68,000/- as source of investment u/s.69C of the Act. The AO made the addition of Rs3,16,28,603/- as creditworthiness of M/s. Bazigar Trading Co. was not proved during the course of assessment proceedings. The AO made the addition of Rs.1,21,68,000/- as the source of payment for the lease agreement was not proved. 6.2.2 Now, before me in the appellate proceedings, the appellant has filed written submission. The appellant has stated that the amount invested in property worth Rs.1,21,68,000/- pertain to A.Y. 2009-10 and A.Y. 2010-11. The addition of the same amounts cannot be made in A.Y. 2013-14. Hence, the appellant has made submission that these additions cannot be made in this year as the payments have been made through banking channels in earlier years and the same have been recorded in the Books of accounts of earlier years. For this the appellant had relied upon various judgments of various High Courts. (i) CIT vs. Prameshwar Bohra. (2008) 301 ITR 404 (Raj.), (ii) CIT vs. Usha Stud Agricultural Farms Limited (2008) 301 ITR 384 (Del), (iii) Ivan Singh vs. ACIT, (2020) 116 taxmann.com 499 (Bom)(HC), (iv) Rita Stephen Pinto vs. ITO 19(2)(2), ITA No. 1219/Mum/2013 Relying upon the decisions as mentioned above, the addition of Rs.1,21,68,000/- is deleted and appeal of the appellant is allowed. 6.2.3 The AO has made the addition of Rs.3,16,28,603/- on account of loans received from M/s. Bazigar Trading Co. as creditworthiness of the loan could not be proved before the AO. 6.2.4 Now, before me in the appellate proceedings,the appellant has filed (i) Confirmation of account (ii) Bank Statement (iii) ITR Acknowledgement (iv) Audited Balance Sheet (v) Proof of repayment of loan. Same was filed before Printed from counselvise.com 4 IT No.5746/Del/2024 ITO vs. Virat Promotoers Private Limited the AO also. The appellant has also filed the share capital and Reserves and Surplus account of M/s. Bazigar Trading Co. On perusal of the same it can be seen that M/s. Bazigar Trading Co. had got proper creditworthiness to provide loans. The appellant has mentioned that since M/s. Bazigar Trading Co. is a loss making entity and hence the remarks of the AO that the creditworthiness cannot be accepted cannot be held proper in view of various judgments of various High Courts. The appellant has relied upon the judgment of Hon. Delhi High Court in the case of (i) PCIT vs. Goodview Trading (P.) Ltd., [2017] 77 taxmann.com 204 (Delhi)(HC), (ii) ITO vs. Computer Home Information Plus Pvt. Ltd., ITA No. 5680/Del/2016, (iii) D. J. Stock Broking Pvt. Ltd. vs. ITO, ITA No. 313/Ahd/2017, Order dt. 03/03/2020, (iv) ACIT VS Harvans P. Chawla ITA Nos.5857&5858/2017 order dated 26.04.2021 ITAT Delhi.It has been further mentioned that since loans have been repaid in subsequent years hence the addition could not be made in this year. 6.2.5 I agree with the submission of the appellant that M/s. Bazigar Trading Co. had got net worth including capital and reserves of Rs.40,72,93,670/- as on 31.03.2012 andRs.39,21,31,451/- on 31.03.2013. Hence, the appellant had proved creditworthiness of M/s.Bazigar Trading Co. before the AO and before me in the appellate proceedings. The appellant has relied upon the judgments of Hon. Delhi High Court and Hon. Delhi ITAT in support of the claim that creditworthiness cannot be denied on the basis of the fact that the loss making entity has given loans. I also agree with the contention of the appellant since that TDS has been deducted on the loans and the loans have been repaid in subsequent years, no addition can be made on this amount. Hence, the addition of Rs.3,16,28,603/- is deleted and the appeal of the appellant is allowed. 7. The appeal of the appellant is Allowed.” 6. From the perusal of the findings given by ld. CIT(A) while allowing the appeal of the assessee, we find that Ld. CIT(A) has held that notice issued u/s 148 of the Act is invalid and thereby quashing the reassessment order which observations were not challenged by the Revenue before us in the present appeal. Thus, the findings of the Ld. CIT(A) on the issue of validity of notice u/s 148 of the Act attained finality. This being so, we do not find any reason to interfere in the findings of Ld. CIT(A) as once the reassessment proceedings are quashed, there is no occasion to consider and decide the additions made therein. Printed from counselvise.com 5 IT No.5746/Del/2024 ITO vs. Virat Promotoers Private Limited 7. The Co-ordinate Bench of Delhi Tribunal in the case of ACIT vs. Green Gem Estate Pvt. Ltd. in Appeal No.1732/Del/2016 vide order dt. 01.02.2024 has dismissed the appeal of the Revenue challenging the additions on merits and not challenged the action of ld. CIT(A) in quashing the reassessment proceedings initiated u/s 147 of the Act. This order stood confirmed by the Hon’ble Jurisdictional High Court by dismissing the Revenue’s appeal in ITA No.365/24 vide order dated 03.09.2024. 8. In view of the above facts and discussion and by respectfully following the decision of the Co-ordinate Bench of ITAT, Delhi in the case of ACIT vs. Green Gem Estates Pvt. Ltd. (supra), all the grounds of appeal taken by the Revenue are dismissed. 9. In the result, appeal of the Revenue is dismissed. Order pronounced in the open Court on 08.10.2025. Sd/- Sd/- /- (PRAKASH CHAND YADAV) (MANISH AGARWAL) JUDICIAL MEMBER ACCOUNTANT MEMBER Dated: 08.10.2025. PK/Sr. Ps Copy forwarded to: 1. Appellant 2. Respondent 3. CIT 4. CIT(A) 5. DR Asst. Registrar, ITAT, New Delhi Printed from counselvise.com "