M/S MORPHEUS DEVELOPERS PVT. LTD.,DELHI V. THE DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE 17(2), DELHI

ITA 5428/DEL/2025

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The case involves M/s Morpheus Developers Pvt. Ltd., which appealed against the order of the National Faceless Centre (NFAC) Delhi, which itself was an appeal against the assessment order passed by the Assessing Officer under Section 143(3) of the Income Tax Act, 1961 for the Assessment Year 2017-18. The primary contention of the assessee was the incorrect assessment of income and unjustified additions made by the Assessing Officer, including unexplained credits and incorrect treatment of Work in Progress as taxable income. The NFAC dismissed the appeal due to a significant delay in filing, which the Tribunal found to be an error, leading to the restoration of the matter to the Assessing Officer for a fresh assessment.

• Counselvise Citation: [2026] 140 COUNSELVISE.COM (IT) 828438 (ITAT-DELHI)
• Duration Of Justice: 4 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-01-2026
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: Delhi
• Assessment Year: misc
• Appeal Filed On: 01-09-2025
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MONIKA SINGH
• Keywords: Unexplained cash credit; Principle of natural justice
• Section: 143(3); 68

Judgement Text

" 1 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH ‘F’, NEW DELHI BEFORE SH. S. RIFAUR RAHMAN, ACCOUNTANT MEMBER AND SH. SUDHIR KUMAR, JUDICIAL MEMBER ITA No.5428/Del/2025 Assessment Year: 2017-18 M/s Morpheus Developers Pvt.Ltd. 1, Main Road Maujpur Delhi- 110053 Pan No. AAICM1972A Vs Deputy Commissioner of Income Tax Circle- 17(2) Delhi (APPELLANT) (RESPONDENT) Appellants by Shri Yudhishter Methani, CA Respondent by Ms. Monika Singh, CIT- DR. Date of hearing: 07/01/2026 Date of Pronouncement: 14/01/2026 ORDER PER SUDHIR KUMAR, JM: This appeal by the assessee is directed against the order of National Faceless Centre (NFAC) Delhi, [hereinafter referred to as “NFAC)”], vide order dated 03.07.2025 pertaining to A.Y. 2017-18 and arises out of the assessment order dated 20-12- 2019 passed by the Assessing Officer under Section 143(3) of the Income Tax Act, 1961 [hereinafter referred as ‘the Act’]. 2. The assessee has raised the following grounds in appeal: Printed from counselvise.com 2 1. That the appellant company denies its liability to be assed at total income of Rs.33,61,24,760/- as against the returned loss of Rs.33,56,318/- and accordingly denies its liability to pay tax ant interest demanded thereon. 2. That having regard to the facts and circumstances of the case, the Ld.AO has erred in law and facts in framing the impugned assessment order and that too without assuming jurisdiction as per law. 3. That having regard to the facts and circumstances of the case, the Ld.AO has erred in law and facts in making addition of Rs.8,63,10,315/- on account of increase of trade payables during the year under consideration and that too by treating it as alleged unexplained credits u/s 68 and by recording incorrect facts and findings and without following the principles of natural justice and providing any adverse material on record. 4.That in any case and in any view of the matter, action of the Ld. AO in making addition of Rs.8,63,10,315/- alleged unexplained credits u/s 68 is bad in law and against the facts and circumstances of the case. 5. That having regard to the facts and circumstances of the case, the Ld. Assessing Officer has erred in law and facts in making addition of Rs.98,42,752/- on account of increase of other Current liabilities and that too by treating it as alleged unexplained credits u/s 68 and that too by recording incorrect facts and findings and without following the principles of natural justice and providing any adverse material on record. 6. .That in any case and in any view of the matter, action of the Ld. AO in making addition of Rs,98,42,752/- on account of increase pf other Current liabilities and that too by treating it as alleged unexplained credits u/s 68 is bad in law and against the facts and circumstances of the case. 7. That having regard to the facts and circumstances of the case, the Ld. Assessing Officer has erred in law and facts in making disallowances of expenses incurred during into Work in Progress of Rs.24,33,28,011/- in account of Work in Progress and further by treating it as taxable income and that too by recording incorrect facts and findings and merely on the basis of surmises and conjectures and without observing principles of natural justice. Printed from counselvise.com 3 8 That in any case and in any view of the matter, action of the Ld. AO in making disallowances of expenses incurred into Work in Progress RS.24,33,28,011/- and treating it taxable income, is bad in law and against the facts and circumstances of the case. 9. That having regard to the facts and circumstances of the case, the Ld. Assessing Officer has erred in law and facts in charging interest u/s 234 B of the Income Tax Act, 1961. 10. That the appellant craves the leave to add modify amend or delete any of the grounds of appeal at the time of hearing and all the above grounds are without prejudice to each other. 3. The brief facts of the case are that the assessee filed its return of income on 30-03-2018 under section 139(4) of the Act declaring a loss of Rs.33,56,318/- . The case was selected for scrutiny through CASS for the following reasons: Low income in comparison to high loans /advances/Investment in shares appearing balance sheet. Large increase in unsecured loans during the year. Real estate business with high closing stock. 4. Notices were issued to the assessee but no compliance was made by the assessee. The Assessing officer completed the assessment after making the addition and assed the total income at Rs.33,61,24,760/-. 5. Aggrieved by the order of the AO, the assessee filed the appeal before the NFAC, who vide his order dated 03-07-2025 dismissed the appeal without condoning the delay. Being aggrieved order the assessee is in appeal before the Tribunal. Printed from counselvise.com 4 6. The Ld. AR has submitted that the Ld. NFAC dismissed the appeal of the assessee without going into the ground of the delay. He submitted that sufficient cause has been shown by the assessee not to file the appeal within time. He also submitted the Ld. NFAC should have condoned the delay and matter sent to the Assessing Officer because the Assessing Officer passed the ex-parte assessment order against the assessee. 7. Ld. Authorized Representative of the Revenue relied upon the orders of the below authorities. She submitted that the appeal was filed by 1231 days delay without any sufficient cause. The appeal was rightly dismissed by the Ld. NFAC. 8. We have heard the revival contention of the parties and gone through the material available on record. Perusal of the order of the Ld. NFAC revels that the appeal was dismissed on the technical point not condoning the delay of 1231 days. The assessee has shown the sufficient cause not filing the appeal within time. The Ld. NFAC should have condoned the delay and should have decided the appeal on merit, because in this appeal the Assessing Officer passed the ex-parte assessment order. In the facts and circumstances of the case, we deem it fit to restore the matter back to the file to the Assessing officer with a direction to grant one final opportunity to the assessee to substantiate its claim and decide the issue as per fact and law. The assessee is also directed to appear before the Assessing Printed from counselvise.com 5 Officer and co-operate in the proceedings. The grounds raised by the assessee are accordingly allowed for statistical purposes. 9. In the result, the appeal of the assessee is allowed for statistical purposes. Order pronounced in the open court on 14.01.2026. Sd/- SD/- ( S. RIFAUR RAHMAN) ( SUDHIR KUMAR) ACCOUNTANT MEMBER JUDICIAL MEMBER SR Bhatanaggar Date:- 14.01.2026 Copy forwarded to: 1.Appellant 2.Respondent 3.CIT 4.CIT(Appeals) ` 5.DR: ITAT ASSISTANT REGISTRAR ITAT NEW DELHI Printed from counselvise.com "