RUPESH AGGARWAL,GHAZIABAD V. PR,CIT, GHAZIABAD

ITA 2955/DEL/2024

AI Insights

The case involves Shri Rupesh Agarwal, who appealed against the order of the PCIT, Ghaziabad, which revised the assessment made by the Assessing Officer (AO) under sections 144 and 144B of the Income-tax Act, 1961. The original assessment for the AY 2018-19 included significant additions to the assessee's income, which the PCIT later sought to revise, citing errors and prejudicial impacts on the revenue. The Tribunal examined the grounds for revision, including the non-initiation of penalty under section 271B, treatment of loans as unexplained under section 68, and issues related to sundry creditors. The Tribunal upheld the revision concerning the examination of unsecured loans but rejected the need to examine sundry creditors separately, as their examination was subsumed in the profit estimation from the rejected books of accounts.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 34840 (ITAT-DELHI)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-03-2025
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: F
• Assessment Year: 2018-2019
• Laws Referred To: Income-tax Act, 1961
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: RAJESH KUMAR
• Assessee Lawyers: ANKIT KUMAR
• Keywords: Rejection of books of accounts
• Section: 144; 263; 68; 145(3); 271B

Judgement Text

"Page | 1 INCOME TAX APPELLATE TRIBUNAL DELHI BENCH “F”: NEW DELHI BEFORE SHRI M. BALAGANESH, ACCOUNTANT MEMBER AND SHRI YOGESH KUMAR U.S., JUDICIAL MEMBER ITA No. 2955/Del/2024 (Assessment Year: 2018-19) Shri Rupesh Agarwal, 107, Model Town West, Ghaziabad, HO Ghaziabad, UP 2010001 Vs. Pr. CIT, Ghaziabad (Appellant) (Respondent) PAN: ALZPA7694L Assessee by : Shri Ankit Kumar, Adv Shri Parth Singhal, Adv Revenue by: Shri Rajesh Kumar, CIT DR Date of Hearing 02/01/2025 Date of pronouncement 13/03/2025 O R D E R PER M. BALAGANESH, A. M.: 1. The appeal in ITA No.2955/Del/2024 for AY 2018-19, arises out of the order of the Pr. Commissioner of Income Tax, Ghaziabad [hereinafter referred to as ‘ld. Pr. CIT’, in short] dated 27.03.2024 against the order of assessment passed u/s 144 r.w.s. 144B of the Income-tax Act, 1961 (hereinafter referred to as ‘the Act’) dated 30.04.2021 by the Assessing Officer, ITO, New Delhi (hereinafter referred to as ‘ld. AO’). 2. At the outset, we find that there is a delay in filing of appeal by the assessee by 19 days before us. Considering the reasons adduced in the condonation petition, we find that assessee was prevented from sufficient cause in preferring the appeal in time. Accordingly, the delay is hereby condoned and the appeal of the assessee is hereby admitted for adjudication. ITA No. 2955/Del/2024 Shri Rupesh Agarwal Page | 2 3. The only effective issue to be decided in this appeal is as to whether the Leonard PCIT was justified in assuming revisionary jurisdiction under section 263 of the Act in the facts and circumstances of the instant case. 4. We have heard the rival submissions and peruse the materials available on record. The assessee is an individual and had filed his return of income for the assessment year 2018-19 on 31-03-2019 declaring total income of Rs 10,19,601/-. The assessment was completed under section 144 r.w.s. 144B of the Act on 30-4-21 determining total income at Rs 11,15,55,584/-. In the said assessment, the addition on account of estimation of profit at the rate of 7 percent of turnover in the sum of Rs 11,05,26,953/- was made after rejection of books of accounts in terms of section 145(3) of the Act. This assessment was sought to be revised by the Learned PCIT by assuming revision jurisdiction under section 263 of the Act on the ground that the said assessment order is erroneous in as much as it is prejudicial to the interest of the revenue. 5. We find that assessee is engaged in the business of purchase and sale of iron and steel. In response to the questionnaires issued by the assessing officer, the assessee did not respond before the assessment proceedings. Accordingly, the assessment was completed under section 144 of the Act. The Learned PCIT had assumed revision jurisdiction on the following grounds:- a) Penalty under section 271B of the Act should have been initiated by the Learned AO. b) Loans received in the sum of Rs 65,07,700/- to be treated as unexplained under section 68 of the Act and taxed under section 115BBE of the Act. ITA No. 2955/Del/2024 Shri Rupesh Agarwal Page | 3 c) Sundry Creditors are more than the Purchases disclosed in the books, which shows that the entire business is run only from the borrowed funds. Capital account of assessee after drawings is a negative figure. Hence the entire Sundry Creditors in the figure of Rs 22,65,99,097/- as against Rs 193,08,19,247/- during Assessment Year 2018-19 is required to be examined by the Learned AO. 6. We find that once the books of accounts of the assessee have been rejected in terms of section 145(3) of the Act and profit estimated thereon, there is no question of examination of sundry creditors separately as sundry creditors thereon emanate only out of purchases which issue gets subsumed in the estimation of profit itself. Hence the direction of the learned PCIT to examine the sundry creditors is devoid of merit and is hereby cancelled. 7. However with regard to unsecured loans under section 68 of the Act, it is a fact that the learned AO had not examined the same at the time of original assessment proceedings. Hence the order of the learned AO becomes erroneous and prejudicial to the interest of the revenue. Hence the direction of the learned PCIT in this regard is justified. To this extent, the assumption of revision jurisdiction under section 263 of the Act is hereby allowed. 8. In view of the above observations, the revision order passed by the learned PCIT under section 263 of the Act is modified to the extent of limited purpose of verification of unsecured loans in the sum of Rs 65,07,700/- alone. The learned AO is directed to examine only the unsecured loans pursuant to the directions of the learned PCIT under section 263 of the Act. Accordingly, the grounds raised by the assessee are partly allowed. ITA No. 2955/Del/2024 Shri Rupesh Agarwal Page | 4 9. In the result, the appeal of the assessee is partly allowed. Order pronounced in the open court on 13/03/2025. -Sd/- -Sd/- (YOGESH KUMAR U.S.) (M. BALAGANESH) JUDICIAL MEMBER ACCOUNTANT MEMBER Dated: 13/03/2025 A K Keot Copy forwarded to 1. Applicant 2. Respondent 3. CIT 4. CIT (A) 5. DR:ITAT ASSISTANT REGISTRAR ITAT, New Delhi "