M/S. CITYON SYSTEMS (INDIA) LTD.,DELHI V. ITO, NEW DELHI

ITA 488/DEL/2017

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 23578 (ITAT-DELHI)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-02-2025
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2011-2012
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: RAJESH KUMAR DHANESTA
• Keywords: Capital asset; Sale consideration of property below Jantri Value
• Section: 68; 50C

Judgement Text

" IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH ‘B’, NEW DELHI BEFORE SHRI M. BALAGANESH, ACCOUNTANT MEMBER AND MS. MADHUMITA ROY, JUDICIAL MEMBER I.T.A. No. 488/Del/2017 (Assessment Year : 2011-12) M/s. Cityon Systems (Ind.) Ltd. 215, Delhi Chambers, Delhi Gate, Delhi -110 002 PAN: AACCC 3822 B Vs. ITO Ward – 3(3) New Delhi (Appellant) (Respondent) Appellant by : -None- Respondent by : Shri Rajesh Kumar Dhanesta, Sr. D.R. Date of Hearing : 1 17.02.2025 Date of Pronouncement : 21.02.2025 O R D E R PER MS. MADHUMITA ROY – JUDICIAL MEMBER : The instant appeal filed by the assessee is directed against the order dated 14.10.2016 passed by the Commissioner of Income Tax (Appeals)-2, New Delhi under section 250(6) of the Income Tax Act, 1961 (hereinafter referred as to ‘the Act’) arising out of the assessment order dated 31.03.2014 passed by the AO under Section 143(3)/144 of the Act for the Assessment Year (A.Y.) 2011-12, whereby and where under, appeal preferred by assessee stood dismissed. ITA No.488/Del/2017 Cityon System (India) Ltd. vs. ITO Asst.Year –2011-12 - 2 - 2. At the time of hearing of the matter, none appeared on behalf of the assessee neither any adjournment has been sought for. It appears from the record that previously on many occasions whenever the matter was taken up for hearing, no one appeared on behalf of the assessee in spite of service of notice. Hence, having no other alternative, we have decided to proceed with the matter ex parte. 3. Heard the Learned DR. 4. The brief facts leading to the case are that the assessee is declaring an income of Rs.2,52,280/- on 28.09.2011. The case was selected for scrutiny assessment through CASS and upon compliance of all requisite formalities under the law the assessment was finalized upon making additions of Rs.4,55,23,870/- on account of Short-term Capital Gain (STCG), Rs.3,04,66,000/- on account of unexplained cash deposits under section 68 of the Act and Rs.95,16,955/- on account of disallowance of expenses claimed in Profit and Loss account on account of non-production of books of accounts. Relevant to mention that the assessee was not represented before the AO and the order was passed ex parte. 5. Before the First Appellate Authority, assessee filed the written note of submissions. ITA No.488/Del/2017 Cityon System (India) Ltd. vs. ITO Asst.Year –2011-12 - 3 -  Additions on account of Short Term Capital Gain (STCG) :- 6. The assessee purchased an immovable property on auction by the Debt Recovery Tribunal (DRT), belonging to one M/s. Trimurti Fertilizers. Advance against the said property was paid during the F.Y. 2009-10, which was reflected in the Balance Sheet as on 31.03.2010 under the head “current assets” and sub head “others”. The registration of the said property was conducted in the F.Y. 2010-11. The said property was purchased for an amount of Rs.5.29 crores and sold during the very same F.Y. at Rs.4.59 crores. Resulting loss of Rs.70.86 lacs on sale of the property as a bad debt was shown in the books whereas the circle rate of the property is as much as higher at Rs.9.84 crores. Neither the assessee being able to show the transaction is made in the nature of normal business transaction. Thus, the land purchased and sold would have been treated as a capital asset and thereby, attracting the provisions of section 50C of the Act and thus, liable to pay tax on the deemed Short-term Capital Gain of Rs.4.55 crores rather than claiming bad debt of Rs.70.86 lacs as found by Revenue. It is the case of the Revenue that even in the subsequent year or earlier years, the assessee was never engaged in transaction of purchase or sale of any property. Further that, at the time of survey, no evidence was found that the assessee was engaged in real estate business. The assessee showed the advance it gave against purchase of the property during the preceding year as “other current asset” does not necessarily impart to it the character of a current asset when facts prove otherwise and finally bad debt has been found to be a ploy to circumvent the provisions of Section 50C of the Act and thus, added to the total income of the assessee. Learned CIT(A) with the following observation confirming the same considering the final observation made by AO as acceptable. ITA No.488/Del/2017 Cityon System (India) Ltd. vs. ITO Asst.Year –2011-12 - 4 - 7. Having regard to the facts and circumstances of the matter and the reasons assigned by the authorities below, we do not find any reason to interfere with the order of the learned CIT(A) which is found to be just and proper particularly in the absence of any assistance rendered by the assessee before us. The order passed by the CIT(A) is therefore, upheld. Thus, ground of appeal preferred by the assessee is dismissed.  Addition on account of disallowing expenses :- 8. The complete books of account, the bills and vouchers though directed to be produced, the same was never produced by the assessee before authorities below. The books of account were neither found at any of the addresses provided by the Director of the Company. The contradictory statements were also contradicted to each other regarding the whereabouts of the books of account and the persons in whose custody the books of account could be expected to be found. Before the CIT(A), it was claimed by the assessee that the cash book, copies of ledger accounts and audit report were filed by the AO to complete the books of accounts. Bills and vouchers were found to have been never produced. In that view of the matter, the AO assessed the income of the appellant to the best of his judgment under the provisions of section 144(1)(c) of the Act by disallowing 25% of the purchases and indirect expenses, which was further being confirmed by the learned CIT(A) in the absence of proper assistance rendered by the assessee which in our considered opinion is found to be just and proper so as not to warrant interference in the absence of any assistance rendered by the assessee. This addition is thus upheld. ITA No.488/Del/2017 Cityon System (India) Ltd. vs. ITO Asst.Year –2011-12 - 5 -  Additions on account of unexplained Cash deposits :- 9. The cash book was never produced not the books of account in regard to the cash deposit of Rs.3,04,66,000/- in its bank account. On the other hand, the assessee only stated that these emanated from its business transactions and produced a few pages of its cash book, which found to have not been the proof of source of such cash deposits particularly, in the absence of complete cash book and other books of accounts. Thus, the said cash deposits was added by the AO confirmed by the CIT(A) which is found to be just and proper so as not to warrant interference particularly, in the absence of any assistance rendered by the assessee. 10. In the result, appeal filed by the assessee is, therefore, dismissed. This Order pronounced in Open Court on 21/02/2025 Sd/- Sd/- S sss (M. BALAGANESH) (Ms. MADHUMITA ROY) ACCOUNTANT MEMBER JUDICIAL MEMBER Dated 21/02/2025 Priti Yadav, Sr.PS Copy forwarded to: 1. Appellant 2. Respondent 3. CIT 4. CIT(Appeals) 5. DR: ITAT ASSISTANT REGISTRAR ITAT NEW DELHI "