LIFEWAYS INFRASTATE PVT. LTD.,LUCKNOW V. D/ACIT-4, LUCKNOW

ITA 670/LKW/2024

AI Insights

The case involves Lifeways Infrastate Pvt Ltd, which appealed against the order of the Learned Commissioner of Income-tax (Appeals), National Faceless Appeal Centre (NFAC) concerning the assessment year 2017-18. The primary issues in the appeal included the addition of Rs 16,00,000 under section 68 of the Income Tax Act, disallowance of commission expenses amounting to Rs 22,28,521, and other additions related to service tax and cash deposits. The Tribunal noted that the CIT(A) had dismissed the appeal without adequately considering the submissions and explanations provided by the assessee, leading to a decision to remand the case back to the CIT(A) for a fresh assessment.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 471446 (ITAT-LUCKNOW)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-03-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2017-2018
• Laws Referred To: Income Tax Act
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SANJEEV KRISHNA SHARMA
• Assessee Lawyers: ASHWANI KUMAR
• Keywords: Set aside; Reasonable cause; Peak credit
• Section: 68; 133(6); 20

Judgement Text

"IN THE INCOME TAX APPELLATE TRIBUNAL LUCKNOW BENCH “A”, LUCKNOW BEFORE SHRI KUL BHARAT, VICE PRESIDENT AND SHRI NIKHIL CHOUDHARY, ACCOUNTANT MEMBER ITA No.670/LKW/2024 Assessment Year: 2017-18 Lifeways Infrastate Pvt Ltd 1st Floor, Raja Ram Kumar Plaza, 75, Hazratganj, Lucknow-226001. v. DCIT/ACIT-4 Prataykshkar Bhawan, Narahi, Lucknow-226001. PAN:AABCL8340C (Appellant) (Respondent) Appellant by: Shri Ashwani Kumar, C.A. Respondent by: Shri Sanjeev Krishna Sharma, Addl. CIT(DR) Date of hearing: 20 03 2025 Date of pronouncement: 26 03 2025 O R D E R PER KUL BHARAT, VICE PRESIDENT.: This appeal, by the assessee, is directed against the order of the Learned Commissioner of Income-tax (Appeals), National Faceless Appeal Centre (NFAC) dated 30.05.2024, pertaining to the assessment year 2017-18. The assessee has raised the following grounds of appeal: - “1. That the Income Returned should have been accepted. 2. That The learned assessing officer erred in facts and legal aspects of the case in making addition of Rs 16,00,000/- u/s 68. 3. That when all transactions were through banking channels and PAN and address of the lender were provided Learned Assessing Officer erred in making addition without sending notice u/s 133(6) 4. That without prejudice to the above grounds the addition made of 16 lacs when the peak credit was 6 lacs only is bad in law. 5. That the Learned Assessing Officer erred in facts and legal aspects of the case in disallowing Commission paid of Rs 22,28,521/- to agents for booking flats. 6. That the commission expenses were incurred for the purposes of business hence should have been allowed. ITA No.670/LKW/2024 Page 2 of 5 7. That when the amounts received against booking of flats were taken into consideration for working the revenue under % completion method and since the project had not reached the threshold in terms of ICDS the revenue was not recognised. The Commission expenses should have been allowed. 8. That when amount of Customer booking for the year was more than service tax returns filed, then making addition of Rs 1,59,775/- is band in law. 9. That Learned Assessing Officer erred in facts and legal aspects of the case in making addition of Rs 27.50 lacs u/s 68 being amount deposited in bank account during the year. 10. That when the amount deposited in bank account was less than the cash in hand balance as per regularly maintained cash book is bad in law, 11. That without prejudice to the above learned Assessing officer erred in even adding the amount of cash deposited in bank accounts in the months of May and July 16. 12. That when the books of accounts were accepted making addition of cash deposited in bank out of cash in hand is bad in law. 13. That any how without prejudice to the above the addition made is too excessive arbitrary and without any basis. 14 That the order passed is against the merit, circumstances and legal aspects of the case.” 2. The effective grounds are against sustaining the addition of Rs.16,00,000/- on account of unsecured loan, disallowance of commission of Rs.22,28,521/-, service tax of Rs.1,59,775/- and the cash deposited in bank account of Rs.27,50,000/-. The appeal of the assessee was dismissed by the Ld. CIT(A). Aggrieved against this, the assessee is in appeal before this Tribunal, raising multiple grounds against impugned additions. 3. It is reported by the Registry that the appeal is barred by limitation for 110 days. The assessee has filed an application seeking condonation of delay. The reason for delay is stated to be fire incident at the hotel premises owned by appellant. It is further stated that due to criminal proceedings, the appeal could not be filed within the limitation prescribed by law. In support of the contention an affidavit has also been filed dated 18.11.2024, supporting the contention made in the application. The Ld. Counsel for the assessee reiterated the contents of the affidavit ITA No.670/LKW/2024 Page 3 of 5 and the application. The Ld. DR opposed the submissions of the Ld. Counsel for the assessee and contended that there is no reasonable cause for filing the present appeal belatedly. Hence, the appeal deserves to be dismissed on this ground alone. 4. We have heard the rival submissions and perused the material on record. It is noticed that in support of the contention that there was a fire incident and the appellant was engaged in the criminal proceedings. A copy of FIR has been filed this fact is not rebutted by the Ld. DR. We, therefore, for the reasons stated in the application condoned the delay and admitted the appeal for hearing. 5. Apropos to the grounds of appeal, the Ld. Counsel for the assessee has drawn our attention to the impugned order passed by the Ld. CIT(A). He further drew our attention to the submissions made by the assessee before the First Appellate Authority. It is the case of the assessee that in respect of all the issues, the assessee had filed written explanation before the First Appellate Authority but the same are not considered. Under these facts, it is prayed by the Ld. Counsel for the assessee that the matter may be restored to the Ld. CIT(A) to decide the appeal afresh after considering the fact of the case. 6. On the other hand, the Ld. Departmental Representative (DR) opposed the submissions and supported the orders of the lower authorities. 7. Heard, the Ld. Representatives of the parties and perused the material available on record. Undisputedly, before the assessing authority, the assessee had filed certain explanation regarding unsecured loans and it was further contended that there was debit and credit entry in the bank account of the assessee. If, at all addition was required to be made it ought to ITA No.670/LKW/2024 Page 4 of 5 have been restricted to the extent of peak credit. Further, it was contended that in respect of the commission payments the assessee had deducted tax and also explained that the revenue is re-cognized on the basis of percentage completion method which is a well accepted mode. Further, in respect of service tax reconciliation statement was filed and it was also stated about the erroneous approach for making addition of the cash deposited in the month of May and July, 2016. However, the Ld. CIT(A) dismissed the appeal by way of non-speaking order without considering the submissions and verifying the correctness of the claim of the assessee. The relevant contents of the decision of the Ld. CIT(A) is reproduced as under: - “I have carefully considered the submission put forth and the documents furnished by the appellant, perused the facts of the case and brought other material on record, it is observed that the appellant has not replied nor submitted any replies. Therefore, on the basis of old submissions I hold the following: No logical explanation has been given by the appellant for the Ground Nos. 2, 5, 8 and 9. So, I have no reasons to interfere with this addition. Hence, these grounds are dismissed. Balance grounds are consequential in nature. Therefore, these are not adjudicated upon. 4. In view of the above, the appeal of the appeal is dismissed.” 8. From the above decision of the Ld. CIT(A), it is quite evident that the finding is erroneous and non-speaking. The Ld. CIT(A) has failed to deal with the submissions of the assessee in the impugned order. It is expected from the First Appellate Authority to consider the entire facts and material placed on record. There has to be some reasoning, as to how the submissions made and material placed on record lack merit. Nothing is coming out of the impugned order as to why peak credits cannot be applied as requested. We, therefore, set aside the impugned order and restore the appeal to the file of the Ld. CIT(A) to decide it afresh, after giving adequate opportunity of ITA No.670/LKW/2024 Page 5 of 5 hearing to the assessee. Grounds raised in this appeal are allowed for statistical purpose. 9. In the result, the appeal of the assessee is allowed for statistical purposes. Order pronounced in the open Court on 26/03/2025. Sd/- Sd/- [NIKHIL CHOUDHARY] [KUL BHARAT] ACCOUNTANT MEMBER VICE PRESIDENT DATED: 26/03/2025 Vijay Pal Singh, (Sr. PS) Copy forwarded to: 1. Appellant 2. Respondent 3. CIT 4. DR 5. Guard File By order // True Copy// Assistant Registrar "