SCAN HOLDINGS PRIVATE LIMITED,DELHI V. DEPUTY COMMISSIONER OF INCOME TAX, DELHI

CO 38/DEL/2025

AI Insights

The case involves an appeal by the Revenue against the order of the CIT(A) which deleted certain additions and disallowances made by the Assessing Officer (AO) in the assessment of M/s Scan Holdings (P) Ltd. for the Assessment Year 2008-09. The AO had reopened the assessment based on complaints of tax evasion and alleged money laundering activities involving the assessee. The CIT(A) upheld the reopening but deleted the additions and disallowances on various grounds including lack of evidence and improper application of law. The Revenue challenged these deletions, leading to the present appeal.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 781284 (ITAT-DELHI)
• Duration Of Justice: 6 month(s) 27 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 24-10-2025
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: G
• Assessment Year: 2008-2009
• Appeal Filed On: 27-03-2025
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: MANISH GUPTA
• Assessee Lawyers: S. KRISHNAN
• Keywords: Set aside; Business income; Business expenditure; Corroborative evidences; Unexplained cash credit; Unexplained expenditure; Depreciation; TDS; Source of fund; Competent authority; Wholly owned subsidiary; Reason to believe; Bogus
• Section: 147; 148; 143(3); 68; 260A

Judgement Text

"IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH, G: NEW DELHI BEFORE SHRI CHALLA NAGENDRA PRASAD, JUDICIAL MEMBER AND SHRI BRAJESH KUMAR SINGH, ACCOUNTANT MEMBER ITA No.3753/Del/2024 [Assessment Year: 2008-09] DCIT, Circle-22(2), Room No.- 225E C.R. Building, I.P. Estate, New Delhi-110002 Vs M/s Scan Holdings (P) Ltd., F-4, Shopping Complex, A-Block, Meera Bagh, Delhi-110087. PAN- PAN- AABCS0852N Revenue Assessee C.O. No.- 38/Del/2025 Arising Out of ITA No.3753/Del/2024 [Assessment Year: 2008-09] M/s Scan Holdings (P) Ltd., F-4, Shopping Complex, A-Block, Meera Bagh, Delhi-110087. Vs DCIT, Circle-22(2), Room No.- 225E C.R. Building, I.P. Estate, New Delhi-110002 PAN- AABCS0852N Assessee Revenue Revenue by Shri Manish Gupta, Sr. DR Assessee by Shri S. Krishnan, CA Date of Hearing 28.07.2025 Date of Pronouncement 24.10.2025 Printed from counselvise.com ITA No.- 3753/Del/2024 & C.O. No.- 38/Del/2025 Scan Holdings (P) Ltd. 2 ORDER PER BRAJESH KUMAR SINGH, AM, This appeal (ITA No.- 3753/Del/2024) filed by the Revenue and the Cross Objection (C.O. No.- 38/Del/2025) filed by the assessee, are against the order dated 10.06.2024 of the National Faceless Appeal Centre [hereinafter referred to as ‘the Ld. CIT(A)], arising out of order dated 27.12.2018, passed by the DCIT/ACIT, Circle 22(2), Delhi under Section 143(3)/147 r.w.s. 260A of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’), pertaining to Assessment Year (A.Y.) 2008-09. 2. The assessee e-filed its return of income for A.Y.2008-09 on 28.09.2008 declaring an income of Rs. 3,64,26,780/- under the normal provisions. In this case, according to the AO, the information in the form of complaint of tax evasion dated 10.12.2014 and 12.03.2015 was received in its office making serious allegations on the assessee company and notice u/s 148 of the Act, was issued on 31.03.2015. Printed from counselvise.com ITA No.- 3753/Del/2024 & C.O. No.- 38/Del/2025 Scan Holdings (P) Ltd. 3 3. Against the Notice u/s 148 dated 31.03.2015, the assessee vide letter dated 17.04.2015 submitted that return filed on 28.09.2008 should be treated as its return filed against notice u/s 148 of the Act. The assessee company sought copy of the reasons recorded which was supplied to the assesse company by the AO on 27.04.2015 and at the same time the assessee company was issued notice u/s 143(2) of the IT Act 1961 dated 27.04.2015. Thereafter, assessee vide letter dated 10.06.2015, filed his objection with respect to re-opening of the case on the following grounds: o The contents of complaint on the basis of which the case with reopened cannot be treated as material for reopening the case o The contents of complaint on the basis of which the case was reopened cannot lead to any belief as to escapement of income. o The reopening appears to be mechanical and is non reasoned. o Commission income earned from M/s Ball Packaging has been duly offered to tax. o No disallowance can be made on account of Section 14A, Bogus expenses and foreign Travel expenditure, rent paid to directors or depreciation on office premises 3.1. The submission made by the assessee was considered but considered by AO and was found not acceptable. According to the AO, in the present case the case for the relevant assessment year was not Printed from counselvise.com ITA No.- 3753/Del/2024 & C.O. No.- 38/Del/2025 Scan Holdings (P) Ltd. 4 assessed u/s 143(3) of the Act and six years had not elapsed for the relevant assessment year and prior approval as per Act was taken from the Competent Authority before issuing the notice u/s 148, hence the AO held that the notice u/s 148 of the Act for assessment of the assessee Company's case was valid and as per law. 3.2. The AO passed an order disposing the objections to the notice u/s 148 of the Act, on 11.09.2015 and communicated to the assessee company. Aggrieved by it, the assessee company filed Civil Writ petition before the Hon'ble High court of Delhi vide WP(C) No. 9800/15 before the Division Bench-02. The Hon'ble High Court vide its order dated 14.10.2015 stayed proceedings pursuant to notice u/s 148 of the Income Tax Act, 1961 dated 31.03.2015 for the assessment year under consideration and further vide order dated 18.12.2018 set aside the order dated 11.09.2015 of the AO with a direction of remand to the Assessing officer to pass a fresh order after hearing the petitioner or its authorised representative, without being influenced by the earlier order dated 11st September, 2015 or by this order, and also observing that the court had not formed any firm opinion on merits of the re-opening of the assessment. Thereafter, in the light of Printed from counselvise.com ITA No.- 3753/Del/2024 & C.O. No.- 38/Del/2025 Scan Holdings (P) Ltd. 5 the above order, order disposing of objections to the notice u/s 148 was passed on 18.12.2018 afresh as per Hon’ble High court direction above and the same was communicated to the assessee company through speed-post. Thereafter, the assessment was completed on 27.12.2018 inter-alia making several additions / disallowances as later discussed in this order. 3.3 Against the said order dated 27.12.2018, the assessee preferred an appeal before the Ld. CIT(A), challenging the validity of initiating the proceedings u/s 147 of the Act and on merits. The Ld. CIT(A) vide his order dated 10.06.2024, dismissed the appeal of the assessee on the legal ground and upheld the assessment made u/s 147 of the Act. However, the Ld. CIT(A) deleted the additions / disallowances made in the assessment order. 3.4 Aggrieved with the said deletion of the additions / disallowances made in the assessment order, the Revenue has filed the present appeal and against the upholding of the proceedings u/s 147 of the Act, the assessee has filed the present cross objection. 4. First, we take up the appeal filed by the Revenue. Printed from counselvise.com ITA No.- 3753/Del/2024 & C.O. No.- 38/Del/2025 Scan Holdings (P) Ltd. 6 4.1 Ground no. 1 of the appeal does not emanate either from the assessment order or from the order of the Ld. CIT(A). Neither the Revenue has made any submission in this regard. Hence, ground of appeal is not considered as relevant and hence dismissed. 5. Ground no. 2 of the appeal is against the deletion of the addition in respect of Rs. 2,19,71,126/- being commission received by the assessee company and the said ground of the appeal is reproduced as under: “2. Whether in facts and circumstances of the case, the Ld. CIT(A) has erred in deleting the addition in respect of Rs.21971126/- being commission received.” 5.1 The reasons recorded by the AO for reopening the assessment in this case, on this issue along with the finding of the AO in the assessment order, are reproduced as under: Reasons recorded on this issue 1. “Commission on sales received: In the case, information in the form of complaint of tax evasion dated 10.12.2014 & 12.03.2015 has been received in this office. As per the information received, the company is stated to be involved in money laundering. The company has tried to convert its black money into legitimate business income. The modus operandi of the case is that a company i.e. M/s Boll Corporation (a listed company on NYSE) has incorporated a wholly owned subsidiary in India namely M/s Ball Packing India Pvt. Ltd. with Printed from counselvise.com ITA No.- 3753/Del/2024 & C.O. No.- 38/Del/2025 Scan Holdings (P) Ltd. 7 the object of installation of beverage can manufacturing unit in India. It is also alleged that the said company has paid substantial amount to the assessee company as bribe to get the various clearances/licences/permission from govt departments. The Ball Corporation has made a payment of Rs. 1,26,20,250/- and Rs. 2,19,71,126/- as commission on sales. The total amount of commission declared was received by a singly cheque by M/s Scan Holdings Pvt. Ltd. who has also declared this amount as commission of Rs. 1,26,20,250/-in FY 2007-08pertaining to AY 2008-09 but n fact, no commission has been paid M/s Ball Corporation. Further the payment is received in foreign currency but shown in Indian currency. As per the complaint, there are no legitimated business activity between two parties which looks like a sham transaction. It could be an accommodation entry transaction which needs to be examined/verified deeply to known the sources of income/funds.” Relevant extract of the assessment order: “8. Commission on sales received: Assessee company has submitted his reply vide dated 10.12.2018 in which commission income of Rs. 2,19,71,126/- is related to A.Y. 2009-10 and the other amount of Rs. 1,26,26,250/-pertains to this relevant year. But the Authorized Representative on behalf of assessee company has not furnished the supporting evidence in connection with such income has been considered in the financial statement of assessee company is for next succeeding previous year. The assessee company has not furnished supporting documents like banker certificate, copy of shift code etc. for such remittance during the transactions. Under such circumstances, the undersigned has no option but to treated an amount of Rs. 2,19,71,126/- as unexplained amount u/s 68 of the Income Tax Act, 1961. Accordingly, the same is added back to the total income of the assessee company.” Printed from counselvise.com ITA No.- 3753/Del/2024 & C.O. No.- 38/Del/2025 Scan Holdings (P) Ltd. 8 5.2 Aggrieved with the said addition, the assessee preferred an appeal before the Ld. CIT(A), who deleted the said addition. The relevant finding of the Ld. CIT(A) is reproduced as under: “Having duly considered the facts on record and the appellant's submissions supported by documentary evidence, it is observed that the commission income has been offered in the respective A.Ys 2009-10 and 2008-09. The A.O's cited reasons such as lack of supporting documents \"like banker certificate, copy of shift code etc.\" for such remittance as the reason for treating the same as unexplained are found to be irrelevant. Section 68 pertains to unexplained credits. In the present case, the credits are not only explained but duly offered to tax. The addition is thus found to be unjustified and is deleted. This ground is allowed.” 5.3 We have heard both the parties and perused the material available on record. The AO had disallowed the amount on the ground that the assessee did not submit supporting evidences in support of his claim that the amount of Rs. 2,19,79,126/- was declared by the assessee in A.Y. 2009-10. However, before the Ld. CIT(A) the assessee submitted the necessary documents, which were verified and accepted by the Ld. CIT(A), who accordingly deleted the said addition. Before us, the assessee has also filed P & L account for or A.Y. 2008-09, wherein commission received has been shown at Rs. 4,09,77,630/- (page no. 134 of the Paper Book), which includes a sum of Rs. 2,18,12,000/- Printed from counselvise.com ITA No.- 3753/Del/2024 & C.O. No.- 38/Del/2025 Scan Holdings (P) Ltd. 9 received from M/s Ball Packaging India Pvt. Ltd. (pg. no. 141 of the Paper Book). Further, supporting evidences in this regard, has been filed on page no. 151, Form no. 26AS at page no. 153 of the Paper Book, in which the credit of such commission income amounting to Rs. 2,18,12,000/- received from M/s Ball Packaging India Pvt. Ltd, on which TDS amounting to Rs. 24,71,300/- has been deducted is reflected. No evidence for invoking section 68 of the Act has been demonstrated by the A.O. in the assessment order and since the payment was received from M/s Ball Packaging India Pvt. Ltd., an Indian entity, which was paid in India, the requirement of shift code for remittance was not required in this case. The Ld. Sr. DR has not brought any material fact to negate the finding of the Ld. CIT(A). Therefore, we are of the considered view that the order passed by the ld. CIT (A) is justified and the same is upheld. Consequently, ground no. 2 of revenue’s appeal is dismissed. 6. Ground no. 3 of the appeal is against deletion of the addition of Rs.2,65,734/- made u/s 68 of the Income Tax Act, and the said ground of the Revenue is reproduced as under: Printed from counselvise.com ITA No.- 3753/Del/2024 & C.O. No.- 38/Del/2025 Scan Holdings (P) Ltd. 10 “ 3. Whether in facts and circumstances of the case, the Ld. CIT(A) has erred in deleting the addition of Rs.2,65,734/- made u/s 68 of the Income Tax Act.” 6.1 The reasons recorded by the AO for reopening the assessment in this case, on this issue along with the finding of the AO, are reproduced as under: Reasons recorded on this issue “2. Income escaped from investment of Rs 2,65,734/- in Joint Venture in Singapore: On perusal of the Balance Sheet of the company it is noticed that the company has invested Rs. 2,65,734/- in Joint Venture of Scan Holdings Ltd. Singapore. On perusal of P&L A/c of the company, it revealed that no income from the above investment has been shown by the company resulting in escapement of income. The Escapement of Income cannot be quantified at this juncture but I have reason to believe that some Income has Escapement Assessment.” Relevant extract of the assessment order: “ 9. Income escaped from investment of Rs 2,65,734/- in joint Venture in Singapore: On perusal of the balance sheet of the assesse company it is noticed that the assessee company has invested Rs. 265734/-in Joint Venture of Scan Holding Ltd. Singapore. On the basis of the replies submitted by the assessee company it is noticed that no Board Resolution/agreement signed with the other party during the foreign visit are produced for such investments. Hence, Rs. 2,65,734/- are added back to the income of the assessee as unexplained expenses u/s 68 IT Act, 1961.” Printed from counselvise.com ITA No.- 3753/Del/2024 & C.O. No.- 38/Del/2025 Scan Holdings (P) Ltd. 11 6.2 Aggrieved with the said addition, the assessee preferred an appeal before the Ld. CIT(A), who deleted the said addition. The relevant finding of the Ld. CIT(A) is reproduced as under: “6.3 Ground of appeal No. 7 assails the action of the AO in holding an investment made in earlier years to be unexplained expenditure under section 68. The A.O noted from the balance sheet of the appellant company that it had invested Rs. 265734/- in Joint Venture of Scan Holding Ltd. Singapore. Observing on the basis of the replies submitted by the appellant company that no Board Resolution/agreement signed with the other party during the foreign visit was produced for such investments, the amount was added back to the income of the assessee as unexplained expenses u/s 68 IT Act, 1961. In this regard it is pertinent to note that as evident from the financial statements and from the facts on record, the investment was made in the year 2002 and not in the relevant A.Y. Neither is it an unexplained credit to warrant addition u/s 68. The addition is found to be unwarranted and is deleted forthwith. This ground is allowed.” 6.3 We have heard both the parties and perused the material available on record. 6.4 The A.O. disallowed the amount on the ground that no board resolution / agreement signed with the other party during the foreign visit was produced to support such investments, and accordingly, the said amount was added u/s 68 of the Act. However, the assessee produced evidences before the ld. CIT (A), wherein it was found that the above investment of Rs. 2,65,734/- Printed from counselvise.com ITA No.- 3753/Del/2024 & C.O. No.- 38/Del/2025 Scan Holdings (P) Ltd. 12 was made in financial year 2001-02, and therefore, the Ld. CIT (A) held that this amount cannot be added during the year. Necessary evidences in this regard have been also submitted by the assessee before us, on page nos. 157-168 of the paper book more particularly at page no. 160 of the Paper Book where it is shown that the said amount is shown as ‘Investment (at cost) - 10000/- shares in Scan Holdings (Pte) Ltd.’. After examination of the same, we are of the considered view that this addition cannot be made during the year. Therefore, the order of the ld. CIT (A) is justified and deserves to be upheld. Accordingly, this ground of revenue’s appeal is dismissed. 7. Ground no. 4 of the appeal is against deletion of the disallowance of Rs.4,10,391/- on account of Domestic Travelling expenditure and Rs.3,46,595/- on account of Foreign Travelling Expenses, the said ground is reproduced as under: “ 4. Whether in facts and circumstances of the case, the Ld. CIT(A) has erred in deleting the disallowance of Rs.410391 on account of Domestic Travelling expenditure and Rs.346595 on account of Foreign Travelling Expenses.” Printed from counselvise.com ITA No.- 3753/Del/2024 & C.O. No.- 38/Del/2025 Scan Holdings (P) Ltd. 13 7.1 The reasons recorded by the AO for reopening the assessment in this case, on this issue along with the finding of the AO, are reproduced as under: Reasons recorded on this issue 4. Bogus and Personal expenses: Information has also been received that the assessee has claimed bogus and personal expenses as business expenses to suppress the income and therefore lowering or avoiding to payment of tax. The same issue was also raised in the AY 2007- 08. However, he amount cannot be quantified at this point of time out I have reason to believe that this issue needs to the scrutinized and this type of expenses is liable to be disallowed. 5. Expenditure on account of Foreign Travelling: It is noticed from perusal of P&L Account that the company has debited Rs. 3465948/-as Foreign Travelling in its P&L A/c. The same issue was also raised in the AY 2007-08. However, the amount cannot be quantified at this point of time but I have reason to believe that this issue needs to be scrutinized and this type of expenses is liable to be disallowed.” Relevant extract of the assessment order: “ 10. Foreign travelling expenses: The assessee company was required to furnish bills/vouchers of foreign travelling expenses along with purpose of business travel. In response thereto the assessee company filed details including details of travelling undertaken by the employees and the Directors along with copies of bills for purchase of foreign currency given to the directors and employees for meeting expenses during the course of travel. It was further required to furnish breakup of such expenses which was submitted by the assessee company vide letter dated 27.11.2018. The assessee furnished a detailed chart of visit under taken which is reproduced below:- Printed from counselvise.com ITA No.- 3753/Del/2024 & C.O. No.- 38/Del/2025 Scan Holdings (P) Ltd. 14 10.1 A perusal of the details filed shows that the assessee company has not furnish anything in support of its claim. It is apparent that the director / employee have travelled however the actual amount spent is not verifiable in the absence of supporting vouchers /documents. It is seen that total days of travelling as per details furnished are 86 and amount claimed to have been spent on lodging, boarding etc is also not furnished. 10.2 Considering all the facts and circumstances of the case a sum equal to 10% of expenses claimed under the head i.e. Rs. 3,46,595/- are disallowed for non-business purpose/un- vouched / personal element and added to the income of the assessee company. [Addition: Rs. 3,46,595/-]” 11. Domestic travelling expenses: “During scrutiny of ledger of Domestic travelling expenditure it has noticed that cash payment is made for Rs. 6,03,754/-. Out of which Rs. 3,88,906/-, pertains to cash payment more than Rs. 20,000/- and balance of Rs. 2,14,848/- relates to cash payment less than 20,000/-. In the absence of any verifiable documents, 100% of Rs. 3,88,906 and 10% of Rs. 2,14,848/- Le Rs. 21,485/ is disallowed and added back to the total income of the assessee company. (Rs. 4,10,391/-)” Printed from counselvise.com ITA No.- 3753/Del/2024 & C.O. No.- 38/Del/2025 Scan Holdings (P) Ltd. 15 7.2 Aggrieved with the said disallowance, the assessee preferred an appeal before the Ld. CIT(A), who deleted the said disallowance. The relevant finding of the Ld. CIT(A) is reproduced as under: “On the issue of foreign travel expenses, admittedly the appellant had furnished. complete details of the same. However, the A.O disallowed 10% of such expenses on the ground that actual amount and that the amount claimed to have been spent on lodging, boarding etc. is also not furnished. Having duly considered the facts on record and the appellant's submissions I find that the appellant has furnished complete details of the expenses claimed along with supporting evidence such as bills, vouchers, credit card statements, forex bills, and tickets. In such a scenario when there is no reason to doubt the genuineness of the expenses incurred, disallowing a portion of such expenses on estimate basis is not justified. Accordingly, the addition on this account is deleted. With regard to domestic travel, it is noted from the ledger account for domestic travel expenses that there is no cash payment exceeding Rs 20,000/- Documentary evidence in the form of bank statements, bills and vouchers were also produced to support the expenses claimed under this head. This being the case, the addition made by the A.O is found to be unwarranted and is hereby deleted. This ground is allowed.” 7.3 We have heard both the parties and perused the material available on record. 7.4 The A.O disallowed 10% of domestic travelling and foreign travelling expenses on an ad-hoc basis, without pointing out any specific reason as to why the expenses claimed by the assessee were Printed from counselvise.com ITA No.- 3753/Del/2024 & C.O. No.- 38/Del/2025 Scan Holdings (P) Ltd. 16 not allowable. The Ld. CIT (A) had duly examined the necessary documents in support of above claim of the assessee filed before him. The ld. CIT(A) also noted on the perusal of the ledger account of domestic travel that there were no expenses in cash exceeding Rs. 20,000/- as alleged by the AO. Necessary documents of support of the same is also filed by the assessee before us on page nos. 266 to 267 in respect of foreign travel and on page nos. 378 to 590 in respect of details of domestic travel. The Ld. Sr. DR has not brought any material fact to negate the finding of the Ld. CIT(A). Therefore, we are of the considered view that the order passed by the ld. CIT (A) is justified and the same is upheld. Consequently, ground no. 4 of revenue’s appeal is dismissed. 8. Ground no. 5 of the appeal is against deletion of the disallowance on account of rent Paid to Directors amounting to Rs 4,05,000/-, the said ground of the appeal is reproduced as under: “ 5. Whether in facts and circumstances of the case, the Ld. CIT(A) has erred in deleting the disallowance on account of rent Paid to Directors amounting to Rs 405000/-.” Printed from counselvise.com ITA No.- 3753/Del/2024 & C.O. No.- 38/Del/2025 Scan Holdings (P) Ltd. 17 8.1 The reasons recorded by the AO for reopening the assessment in this case, on this issue along with the finding of the AO, are reproduced as under: Reasons recorded on this issue: “6. Rent to Directors: It is stated by the complainant that the rent paid to directors is just on adjustment entries as there no rent basis. Further, the company office is lying vacant still rent is paid for the office related to directors.” Relevant extract of the assessment order: “ Rent paid to Directors: 13.1 During the year under consideration, the assessee company has incurred Rs. 4,05,000/-. Vide submission dated 11.12.2018, the assessee company has submitted that \".....rent has been paid to directors on their property used for business. There are no formal agreements.\" Since the assessee company could not furnished formal rent agreement, the expenditure of Rs. 4,05,000/- incurred on rent is disallowed and added back to the total income of the assessee company. As per the assessee company submitted its reply, assessee company has not provided rent agreement for officers taken on rent so expenditure incurred on rent for Rs. 4,05,000/- is to be disallowed and added back to the income of the assessee company.” 8.2 Aggrieved with the said disallowance, the assessee preferred an appeal before the Ld. CIT(A), who deleted the said disallowance. The relevant finding of the Ld. CIT(A) is reproduced as under: Printed from counselvise.com ITA No.- 3753/Del/2024 & C.O. No.- 38/Del/2025 Scan Holdings (P) Ltd. 18 6.6 Ground of appeal No. 10 contends that the AO erred in making a disallowance in respect of rent paid to directors Rs.4,05,000. During the year under consideration, the appellant company had incurred Rs. 4,05,000/-, as rent paid to directors on their property used for business for which there were no formal agreements. Since the appellant could not furnish formal rent agreement, the expenditure of Rs. 4,05,000/- incurred on rent was disallowed and added back to the total income. On consideration of the facts on record, and the appellant's submissions it is pertinent to note that the genuineness of the expense claimed under the head of rent paid to directors nor its allowability as a business expenditure is not in question, Further the appellant has also submitted evidence indicating that such rental income was duly offered for tax by the recipients. In view of the above, the addition made on this ground is found to be unjustified and is hence deleted. This ground is allowed. 8.3 We have heard both parties and perused the material available on record. 8.4 The A.O disallowed the above expenses towards rent paid to the director for the property, on the ground that there was no formal agreement. The ld. CIT (A) after examining the facts, noted that the neither the genuineness of the expenses claimed under the head of rent paid to director nor its allowability as the business expenditure was in question. Further, the ld. CIT (A) also noted that the such rental income was duly offered to tax by the recipients. In view of these facts, the ld. CIT (A) allowed the appeal of the assessee. Necessary supporting evidences in respect of rent payments have Printed from counselvise.com ITA No.- 3753/Del/2024 & C.O. No.- 38/Del/2025 Scan Holdings (P) Ltd. 19 also been filed before us at page 235 to 265 of the paper book. Upon examination of entire facts before us, we find that the order of the learned CIT(A) is justified and the same is upheld. Accordingly, the ground raised by the revenue is dismissed. 9. Ground no. 6 of the appeal is against deletion of the disallowance of Rs.68,06,326/- on account of salary paid to employees/directors and the said ground of appeal is reproduced as under: “ 6. Whether in facts and circumstances of the case, the Ld. CIT(A) has erred in deleting the disallowance of Rs.6806326 on account of salary paid to employees/directors.” 9.1 No reasons were recorded by the AO for reopening the assessment in this case, on this issue and the findings of the AO, for making this disallowance are reproduced as under: “ 12. Salary 12.1 On perusal of salary sheet, assessee company has not provided supporting evidences, such as Form 16A, pay register, attendance register etc. which could established that salary has been paid to such and such employees, for salary paid to employees and Directors. In the absence of such documents, salary paid to employees/directors of Rs. 68,06,326/- is disallowed and added back to the income of the assessee. (Rs. 68,06,326/-)” Printed from counselvise.com ITA No.- 3753/Del/2024 & C.O. No.- 38/Del/2025 Scan Holdings (P) Ltd. 20 9.2 Aggrieved with the said disallowance, the assessee preferred an appeal before the Ld. CIT(A), who deleted the said disallowance. The relevant finding of the Ld. CIT(A) is reproduced as under: “6.5 Ground of appeal No. 9 is against the action of the AO in disallowing entire salary paid to employees and directors for the subject year, amounting to Rs.68,06,326. The disallowance was made by the A.O on the ground that the appellant had not provided supporting evidences, such as Form 16A, pay register, attendance register etc. which could establish that salary has been paid. In the absence of such documents, salary paid to employees/directors of Rs. 68,66,326/- was disallowed and added back to the income of the assessee. Having duly considered the facts on record and the appellant's submissions, it is pertinent to note that the bulk of the salary expenses pertaining to payment-made-to the promoter/ directors was duly evidenced by Form 16 and bank statements. The appellant's contention that it is inconceivable that a company can function without paying salaries is incontrovertible, more so when backed with supporting evidence in the form of salary ledger accounts and bank statements. Accordingly, the addition made on this account is found to be without merit and is deleted. This ground is allowed. 10 We have heard both the parties and perused the material available on record. 10.1 The A.O had made the disallowance on the ground that the assessee had not provided supporting evidences such as Form 16-A, pay register, attendance register to establish that the salary has been Printed from counselvise.com ITA No.- 3753/Del/2024 & C.O. No.- 38/Del/2025 Scan Holdings (P) Ltd. 21 paid. The ld. CIT(A), upon examination of the supporting evidences in the form of salary ledger account, bank statement and Form 16, allowed the appeal of the assessee and deleted the said addition. Necessary supporting evidences relating to the details of salary payments have also been filed by the assessee before us at pages 169 to 234 of the paper book. The Ld. Sr. DR has not brought any material fact to negate the finding of the Ld. CIT(A). Therefore, we are of the considered view that the order passed by the ld. CIT (A) is justified and the same is upheld. Consequently, ground no. 6 of revenue’s appeal is dismissed. 11. Since the appeal filed by the Revenue has been dismissed, the Cross Objection filed by the assessee has become academic and thus the issue of validity of reopening of proceedings u/s 148 of the Act, is kept open in this case. 12. To sum, the appeal of the Revenue is dismissed and the C.O. of the assessee is dismissed as academic in nature. Order pronounced in the open court on 24th October, 2025. Sd/- Sd/- [CHALLA NAGENDRA PRASAD] [BRAJESH KUMAR SINGH] JUDICIAL MEMBER ACCOUNTANT MEMBER Printed from counselvise.com ITA No.- 3753/Del/2024 & C.O. No.- 38/Del/2025 Scan Holdings (P) Ltd. 22 Dated- 24 .10.2025. Pooja. Copy forwarded to: 1. Assessee 2. Respondent 3. CIT 4. CIT(A) 5. DR Asst. Registrar, ITAT, New Delhi, Printed from counselvise.com "