ITO, WARD-43(1), DELHI, NEW DELHI V. SUPER CARE GAS AGENCY, DELHI

ITA 5515/DEL/2024

AI Insights

The case involves the Income Tax Officer, Ward-43(1), Delhi as the appellant and Super Care Gas Agency as the respondent. The dispute arose from the assessment order dated 28.12.2019, where the Assessing Officer made several additions to the income of Super Care Gas Agency for the Assessment Year 2017-18. These additions were challenged and subsequently deleted by the CIT(A) in 2024. The Revenue, aggrieved by this decision, filed an appeal before the Income Tax Appellate Tribunal, which also dismissed the appeal, agreeing with the CIT(A)'s findings and rejecting the Revenue's arguments.

• Counselvise Citation: [2026] 140 COUNSELVISE.COM (IT) 839851 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 2 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-02-2026
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: G
• Assessment Year: 2017-2018
• Appeal Filed On: 28-11-2024
• Other Referred Cases: Laxmichand Baijnath vs CIT, State of Kerala vs C. Velukutty
• Laws Referred To: Income Tax Act
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: VIRENDER CHAUHAN
• Keywords: Condonation of delay; Depreciation; Period of limitation; Bogus
• Section: 143(3); 142(1); 68

Judgement Text

" IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH ‘G’: NEW DELHI BEFORE SHRI S. RIFAUR RAHMAN, ACCOUNTANT MEMBER AND SHRI VIMAL KUMAR, JUDICIAL MEMBER ITA No.5515/Del/2024 (ASSESSMENT YEAR 2017-18) Income Tax Officer, Ward-43(1), Delhi. Vs. Super Care Gas Agency, G-1, Pochanpur Road, Palam Extention, Part-1, Sector-7, Dwarka, New Delhi-110075. PAN-ACBFS2237E (Appellant) (Respondent) Assessee by Shri Virender Chauhan, CA Department by Shri Manish Gupta, Sr. DR Date of Hearing 27.11.2025 Date of Pronouncement 23.02.2026 O R D E R PER VIMAL KUMAR, JM: An application for condonation of delay of 89 days in filing appeal and the appeal filed by the Revenue are against order dated 21.06.2024 of the Learned Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC) [hereinafter referred to as ‘the Ld. CIT(A)’] arising out of assessment order dated 28.12.2019 of the Ld. Assessing Officer/ Assistant Commissioner of Income Tax, Circle-43(1), Delhi u/s 143(3) of the Act for Assessment Year 2017-18. 2. Brief facts of the case are that the assessee filed return of income on 31.01.2018 u/s 139(4) of the Act declaring total income of Rs.43,46,160/-. The case was selected for scrutiny through CASS on following reasons: Printed from counselvise.com 2 ITA No.5515/Del/2024 ITO vs. Super Care Gas Agency (a) There is substantial difference between opening written down value of fixed assets as per ITR of current year and closing written down value of fixed asset as per ITR of preceding year. (b) Large value of cash deposited during demonetization period. 3. Notice u/s 143(2) of the Act dated 24.09.2018 was issued by the Office of ITO, Ward-44(5), New Delhi. Subsequently, the case was transferred to the office of the ACIT, Circle-45(1), New Delhi. Notice u/s 142(1) of the Act along with questionnaire were issued on various dates. In response to notices assessee submitted necessary details and documents. Notices u/s 142(1) dated 18.06.2019, 19.09.2019 were issued. No reply was received from the assessee. Notice u/s 272A(1)(d) r.w.s. 274 of the Act dated 07.10.2019 was issued which was not complied with. Another notice u/s 142(1) of the Act dated 06.11.2019 was issued. Show cause notice dated 25.11.2019, assessee did not file any reply but submitted partial reply and details of cash deposited during demonetization. The reminder to notice u/s 142(1) was issued on 26.12.219. On completion of proceedings, Ld. AO vide order dated 28.12.2019 made following additions: “Addition as per para 7 Rs. 29,23,824/- Addition as per para 8 Rs. 77,51,577/- Addition as per para 9(a) Rs. 57,71,212/- Addition as per para 9(b) Rs. 86,697/- Addition as per para 9(c) Rs. 9,858/- Addition as per para 9(d) Rs. 18,575/- Addition as per para 9(e) Rs. 41,122/- Addition as per para 9(1) Rs. 22,485/- Addition as per para 9(g) Rs. 43,574/- Addition as per para 9(h) Rs. 21,861/-” Printed from counselvise.com 3 ITA No.5515/Del/2024 ITO vs. Super Care Gas Agency 4. Against order dated 28.12.2019, assessee filed appeal before Ld. CIT(A) which was allowed vide order dated 21.06.2024. 5. Being aggrieved application for condonation of delay of 89 days in filing appeal along with appeal were preferred by the Revenue on following grounds of appeal: “1. On the facts and circumstances of the case & in law, the Ld. CIT(A) has erred in deleting the addition of Rs. 77.51,577/-made on account of unexplained Sundry Creditors ignoring the fact that no supporting documents have been produced by the assessee on record to prove the actual transfer of goods relating to business including bank statement. 2. On the facts and circumstances of the case & in law, the Ld. CIT(A) has erred in deleting the addition of Rs. 29,23,824/-made u/s 68 on account of unexplained cash deposited without appreciating the fact that the assessee has failed to explain the said cash deposited in the bank account through bills/invoices raised during the period and merely producing cash book does not explain the genuineness of the same. 3. On the facts and circumstances of the case & in law, the Ld. CIT(A) has erred in deleting the addition of Rs. 60,15,384/-made on account of unexplained expenses ignoring the fact that the ledger of the expenses, payment in respect of the same has not been corroborated by the assessee.” 6. Ld. Departmental Representative submitted that the delay in filing appeal was due to transfer of case from DCIT, Circle- 43(1), Delhi along with record. The explanation for delay of 89 days in filing appeal does not smack of malafide as appellant has not gained anything by not filing appeal within a period of limitation. Therefore, delay of 89 days in filing appeal is condoned. 7. Ld. Departmental Representative for the Revenue submitted that Ld. CIT(A) erred in deleting addition of Rs.77,51,577/- on account of unexplained sundry creditors ignoring the facts that no supporting documents were produced by the assessee to prove the actual transfer of goods relating to business including bank statement. Ld. CIT(A) erred in deleting addition of Rs.29,23,824/- u/s 68 on account Printed from counselvise.com 4 ITA No.5515/Del/2024 ITO vs. Super Care Gas Agency of unexplained cash deposited in the bank which the assessee failed to explain that the cash deposit in bank account through bills/invoices raised during the period and merely cash book was produced. Ld. CIT(A) erred in deleting addition of Rs.60,15,384/- made on account of unexplained expenses ignoring the fact that ledger of expenses, payment in respect of the same has not been corroborated by the assessee. 8. Ld. Authorized Representative for assessee relied on the order of Ld. CIT(A). 9. From the examination of record in light of aforesaid rival contention, it is crystal clear that Ld. AO vide order dated 28.12.2019 made additions of Rs.77,51,577/- on account of unexplained Sundry Creditors, Rs.29,23,824/- on account of unexplained cash deposit demonetization period and Rs.60,15,384/- on account of unexplained expenses. 9.1 Ld. CIT(A) vide order dated 21.06.2024 in para No.3.1 to 4.1 observed as under: “3.1 The assessee filed details of cash deposited during demonetization, copy of bank account statement, copy of partnership agreement, copy of cash book and copy of VAT return for F.Y.2016-17. Trading A/c, Profit & Loss A/c, Balance Sheet, Audit Report u/s 44AB etc. along with bank statements during appeal and assessment proceedings. The appellant stated that cash deposits during the demonetization period was Rs.3,80,34,250/- as against Rs.4,49,17,875/- for the same period in preceding year. There was less cash deposit and cash sales during the relevant assessment year as compared to the earlier year. Further the source of cash deposit in the bank account is out of cash receipts reflected in the books of account, accumulated against cash sales. In the instant case the assessee maintained books of accounts which have been audited u/s 44AB of the Income Tax Act. There are credit entries for cash against sale of goods as supported by tax invoices. Supreme Court in the case of Laxmichand Baijnath vs CIT in 35 ITR 416 held that, amount credited in business books can normally be presumed as related to business. Payments received from various customers cannot be doubted until contrary material is brought on record. To treat a receipt as unexplained, the AO needs to be in possession of some material indicating that the assessee has received certain Printed from counselvise.com 5 ITA No.5515/Del/2024 ITO vs. Super Care Gas Agency amounts which have not been reflected in the books of account. Receipts recorded in the books of accounts were already part of the income which was already credited in P&L account. A.O. has not given any valid finding regarding irregularities regarding sales made by the appellant. Hence percentage addition of Rs.29,23,824/- u/s 68 is uncalled for. 3.2 Assessee had shown sundry creditors to the tune of Rs.77,51,577. The details of sundry creditors as per schedule-2 of the balance sheet are as under: Name of Parties Amount Aggarwal Store 7751577.00 Bharat Petroleum Corp. Ltd. -6660627.00 Total 1090950.00 The Assessing Officer held that, the assessee failed to provide the confirmation of the creditor to the tune of Rs.77,51,577. In the absence of any documentary evidence, unverified sundry creditors to the tune of Rs.77,51,577/- was being added back u/s 68 to the income of the assessee. During appeal proceedings, appellant filed confirmation letter of the creditor's wife along with death certificate and income tax return of Shri Subhash Chander Gupta (late), Prop. M/s Aggarwal Store along with comparative chart of creditor balance as on 01.04.2016, addition, payment and closing balance as on 31.03.2017. Copies of confirmation from Aggarwal Store and financials for the A.Y.2017-18 were also uploaded. The submissions were verified and it is clear that there is no reason to consider this creditor as bogus. Hence it is held that addition of Rs.77,51,577 under section 68 regarding sundry creditor is unwarranted. As a result, ground no 1 is allowed. 4. Ground No.2 was raised against 10(%) percentage disallowance of various expenses claimed by the appellant, total amounting to Rs.60,15,384/-. Details are as under; 1. Addition of Rs.57,71,212 10% of Rs.5,77,12,118 claimed as Repairs of trucks. 2. Addition of Rs.86,697 10% of Rs.8,66,972 claimed as Workmen and Staff Welfare Expense. 3. Addition of Rs.9,858 10% of Rs.98,576 claimed as telephone expenses. 4. Addition of Rs.18,575 10% of Rs.185,748 claimed as festival expenses. 5. Addition of Rs.41,122 10% of Rs.411,217 claimed as office expenses. 6 Addition of Rs.22,485 10% of Rs.224,852 claimed as printing and stationary expenses. 7. Addition of Rs.43,574 10% of Rs.435,745 claimed as godown expenses. 8. Addition of Rs.21,861 10% of Rs.218,614 claimed as miscellaneous expenses. The Assessing Officer disallowed these expenses as the assessee failed to provide any bills/vouchers during assessment proceedings and therefore in the absence of Printed from counselvise.com 6 ITA No.5515/Del/2024 ITO vs. Super Care Gas Agency supporting vouchers/bills, 10% of above expenses were disallowed and added back to the income of the 4.1 During appeal proceedings the appellant submitted bills and vouchers for repairs of trucks with copies of bills/vouchers (page 142-359 of the paper book). WDV of trucks are shown in the depreciation chart. In addition to the business of gas agency, the appellant has shown transportation income for the plying of trucks for Bharat Petroleum Corporation. The appellant has also uploaded bills and vouchers of telephone expenses (Rs.98,576), staff welfare expenses (Rs.866,972), miscellaneous expenses (Rs.218,614), printing and stationary (Rs.224,852), office expenses (Rs.411,217), godown expenses (Rs.435,745) and diwali expenses (Rs.190,748) in pages 360 to 475 of the paper book. Unfortunately, the assessing officer did not verify them. It is seen that all expenses claimed by the appellant firm were specifically incurred for the purpose of business. In the case of State of Kerala -vs.-C. Velukutty (1966) 60 ITR 239 the Supreme Court held that, though there is an element of guesswork in a 'best judgment assessment', it should not be a wild one, but should have a reasonable nexus to the available material and the circumstances of each case. Though the section provides for a summary method because of the default of the assessee, it does not enable the assessing authority to function capriciously without regard to the available material. On perusal of the above, it is clear that addition on adhoc basis is not sustainable as bills and vouchers were uploaded by the appellant. Even in the case where there lies no material on record before the AO to uphold the addition on estimate basis, the said disallowance is not sustainable being purely made on surmises and conjectures. Hence estimated additions are not sustainable in this case. As a result, ground no 2 is allowed. 5. In result, the appeal is allowed. 10. From the perusal of above discussion and findings, it is apparent on record that the assessee is a partnership firm is engaged in business of operating the Gas Agency of Bharat Petroleum Corporation Ltd. (BPCL). Ld. AO without recording any findings of irregularities regarding sale recorded in books of accounts had made addition of Rs.29,23,884/-. During appeal proceedings, assessee filed confirmation letter of the creditor’s wife along with death certificate and income tax return of Shir Subhash Chander Gupta (late), Prop. M/s Aggarwal Store along with comparative chart of creditor balance as on 01.06.2016, addition, payment and closing balance as on 31.03.2017, so, the addition of Rs.77,51,577/- u/s 68 regarding sundry creditor Printed from counselvise.com 7 ITA No.5515/Del/2024 ITO vs. Super Care Gas Agency was held to be unwarranted. In appeal proceedings, assessee has submitted bills/vouchers and deprecation chart regarding the expenses and had explained the expenses on basis of same the addition of Rs.60,15,384/- on account of unexplained expenses was deleted. In view of above material facts and in absence of anything to the contrary, the grounds of appeal being devoid of merit are untenable. 11. In the result, application for condonation of delay of 89 days is in filing appeal is allowed and appeal of the Revenue is dismissed. Order is pronounced in the Open Court 23.02. 2026. Sd/- Sd/- -/- (S. RIFAUR RAHMAN) (VIMAL KUMAR) ACCOUNTANT MEMBER JUDICIAL MEMBER Dated: 23.02.2026 *PK, Sr. Ps* Copy forwarded to: 1. Appellant 2. Respondent 3. CIT 4. CIT(Appeals) 5. DR: ITAT ASSISTANT REGISTRAR ITAT NEW DELHI Printed from counselvise.com "