SIKKA INFRASTRUCTURE PRIVATE LIMITED,NEW DELHI V. CENTRAL CIRCLE-3, NEW DELHI

ITA 2362/DEL/2024

AI Insights

The case involves Sikka Infrastructure Pvt Ltd, which was assessed for the Assessment Year 2017-18. Initially, the company filed a return declaring nil income, which was accepted without additions. However, following a re-assessment notice under section 148 due to substantial cash deposits during the demonetization period, the Assessing Officer again accepted the return. The PCIT later invoked section 263, claiming the assessment was erroneous and prejudicial to the revenue's interests, directing the addition of unexplained cash credits. The Tribunal found that the PCIT's order was based on a misinterpretation of the financial records and that the Assessing Officer had adequately addressed the issues during the re-assessment.

• Counselvise Citation: [2026] 140 COUNSELVISE.COM (IT) 839176 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 9 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-02-2026
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: G
• Assessment Year: 2017-2018
• Appeal Filed On: 13-05-2024
• Other Referred Cases: CIT vs. Sunbeam Auto Ltd. (332 ITR 167), Raghav Bahl v. DCIT [2025] 176 taxmann.com 229, Malabar Industrial Co. Ltd., 243 ITR 83
• Laws Referred To: Income-tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MANISH GUPTA
• Assessee Lawyers: MADHAV KAPUR
• Keywords: Difference of opinion; Change of opinion; Revenue expenditure; Unexplained cash credit; Capital expenditure; Revision of order
• Section: 148; 143(3); 263; 68

Judgement Text

"IN THE INCOME TAX APPELLATE TRIBUNAL, DELHI ‘G’ BENCH, NEW DELHI BEFORE MS. MADHUMITA ROY, JUDICIAL MEMBER, AND SHRI NAVEEN CHANDRA, ACCOUNTANT MEMBER ITA No. 2362/DEL/2024 [A.Y. 2017-18] Sikka Infrastructure Pvt Ltd Vs. The A.C.I.T C- 60, Sikka House, Preet Vihar Central Circle-3 New Delhi New Delhi PAN – AAOCS 8666 H (Applicant) (Respondent) Assessee By : Shri Madhav Kapur, Adv Department By : Shri Manish Gupta, Sr. DR Date of Hearing : 14.01.2026 Date of Pronouncement : 18. 02.2026 ORDER PER NAVEEN CHANDRA, ACCOUNTANT MEMBER:- This appeal by the assessee is directed against the order of the ld. ld. PCIT, Central, Delhi dated 31.01.2024 pertaining to A.Y 2017-18. 2. The sum and substance of the grievances of the assessee is that the PCIT erred in assuming jurisdiction u/s 263 of the Income-tax Act, 1961 [the Act, for short], and further erred in holding that the assessment order Printed from counselvise.com ITA No. 2362/DEL/2024 [A.Y. 2017-18]) M/s Sikka Infrastructure Vs ACIT Page 2 of 9 dated 8.06.2017 framed u/s 143(3) of the Act is not only erroneous but also prejudicial to the interest of the revenue. 3. Representatives of both the sides were heard at length. Case records carefully perused. Relevant documentary evidence brought on record duly considered in light of Rule 18(6) of the ITAT Rules. Judicial decisions relied upon duly considered. 4. Briefly stated, the facts of the case are that M/s Sikka Infrastructure Private Limited is engaged in construction/infrastructure activity, which is inherently cash-intensive and has filed its original return of income u/s 139(1) of the Income Tax Act, 1961 (hereinafter referred to as 'the Act') on 31.10.2017 for A.Y. 2017-18 declaring total income of Rs. Nil. The case was selected for scrutiny and assessment order u/s 143(3) of I.T. Act was passed on 31.12.2019 at the returned income, without making any addition. 5. The case was re-opened by issue of notice u/s 148 of the Act on 30.06.2021 on the basis of information received from the Investigation Wing, that cash of Rs. 2,06,00,000/- was found deposited during demonetization period as compared to Rs. 27,90,750/- deposited in last 7 months before demonetization and that the details of cash deposited of Rs. 2,33,90,750/- was not shown in its ITR. The AO after examining the Printed from counselvise.com ITA No. 2362/DEL/2024 [A.Y. 2017-18]) M/s Sikka Infrastructure Vs ACIT Page 3 of 9 issues at hand, accepted the return filed u/s 148 of the Act u/s 143(3)/147 of the Act vide order dated 30.03.2022. 6. Thereafter, assuming jurisdiction u/s 263 of the Act, the PCIT observed that the Assessing Officer has failed to make adequate inquiry to determine the source of unexplained cash of Rs. 1,95,00,000/- and held that the assessment order in question is erroneous in so far as it is prejudicial to the interests of the revenue. Hence, the Assessing Officer was directed to add back unexplained cash credit of Rs. 1,95,00,000/- to the income of the assessee u/s 68 of the Act. The provisions of section 115BBE were also invoked. 7. Aggrieved, the assessee is in appeal before us. 8. Before us, the ld. counsel for the assessee submitted vehemently that jurisdiction assumed by the assessee PCIT u/s 263 of the Act fails as there is no \"Lack of Enquiry\". The Assessing Officer raised a specific query on cash deposits and their source. The assessee furnished replies, schedules and balance sheet. The Assessing Officer applied his mind and accepted the explanation. Once enquiry is conducted and a view is taken, section 263 of the Act cannot be invoked merely because the PCIT desires further enquiry. Printed from counselvise.com ITA No. 2362/DEL/2024 [A.Y. 2017-18]) M/s Sikka Infrastructure Vs ACIT Page 4 of 9 9. For this settled proposition, the ld. counsel for the assessee relied upon the decision of the Hon'ble Delhi High Court in the case of CIT vs. Sunbeam Auto Ltd. (332 ITR 167), wherein it has been held that inadequate enquiry is not a ground for invoking section 263; only lack of enquiry can justify revision. The ld. counsel for the assessee contended that the present case is squarely covered by the recent decision of Delhi ITAT in Raghav Bahl v. DCIT [2025] 176 taxmann.com 229 wherein the co- ordinate Bench has given a categorical finding that where the assessee had submitted all documents, the Assessing Officer had examined the issue during assessment/reassessment, and the same material was already on record, Explanation-2 to section 263 has no application, and the revision order \"has no legs to stand\". 10. The ld. counsel for the assessee continued by saying that the facts of the present case are on a stronger footing, as the Assessing Officer specifically examined cash deposits during demonetization, and the PCIT has not disputed the filing of schedules and replies. The ld. PCIT proceeded on incorrect assumption of facts. The very foundation of the PCIT's order is factually incorrect, inasmuch as the amount of Rs 2.35 crore is duly reflected in the balance sheet under Advances Recoverable (in Cash or Kind) the schedule of imprest/staff advances was filed during Printed from counselvise.com ITA No. 2362/DEL/2024 [A.Y. 2017-18]) M/s Sikka Infrastructure Vs ACIT Page 5 of 9 reassessment; disclosure of staff advances and HO cash was also made in earlier proceedings. Mere classification under a different accounting head cannot render the source unexplained, particularly when the amount is recorded in audited books. Revision based on incorrect appreciation of balance sheet entries is void ab initio. 11. The ld. counsel for the assessee concluded by saying that the PCIT's emphasis on questions such as, who physically held the cash, where the cash was kept, is legally irrelevant once the source of cash is explained, the amount is recorded in books, and the Assessing Officer is satisfied after enquiry. The law does not mandate the Assessing Officer to undertake endless or roving enquiries; revision under section 263 of the Act on such a premise would amount to impermissible substitution of the Commissioner's opinion for that of the Assessing Officer. 12. Finally, the ld. counsel for the assessee submitted that in the present case there is no error in the assessment order, there is no prejudice to the revenue, and the revision is based solely on change of opinion and incorrect factual assumptions. Accordingly, it was prayed that the impugned order passed u/s 263 dated 31.01.2024 be quashed and all consequential proceedings be held as invalid in law. 14. Per contra, the ld. DR relied upon the orders of the PCIT. Printed from counselvise.com ITA No. 2362/DEL/2024 [A.Y. 2017-18]) M/s Sikka Infrastructure Vs ACIT Page 6 of 9 15. We have heard the rival submissions and have perused the relevant material on record. It is a settled position of law as laid down by the Hon'ble Supreme Court in Malabar Industrial Co. Ltd., 243 ITR 83 that powers u/s 263 of the Act can be exercised by the Commissioner on satisfaction of twin conditions, i.e., the assessment order should be erroneous and prejudicial to the interest of the Revenue. By 'erroneous' is meant contrary to law. Thus, this power cannot be exercised unless the Commissioner is able to establish that the order of the Assessing Officer is erroneous and prejudicial to the interest of the Revenue. 19. We find that the PCIT invoked his power u/s 263 of the Act on the basis that the assessee had incorrectly claimed cash of Rs 2.35 crore in ‘imprest to staff’ account as on 20.03.2016 being the source from where the cash of Rs 1.95 crore was withdrawn and deposited as cash in November 2016. The PCIT based his finding by examining the ITR which reflected cash in hand of Rs 15,83,633/- only as on 31.03.2016 and the balance sheet for AY 2016-17 nowhere reflected cash accounted as ‘imprest to staff’. In view of the same, he held that Rs 1.95 crore as unexplained cash credit and directed the AO to add the same u/s 68. 20. We find that the AO reopened the assessment u/s 148 and conducted enquiries on the precise issue of cash deposit during demonetisation period Printed from counselvise.com ITA No. 2362/DEL/2024 [A.Y. 2017-18]) M/s Sikka Infrastructure Vs ACIT Page 7 of 9 and carried out due scrutiny. Upon being satisfied with assessee’s explanation and Audited balance sheet/documents, accepted the return. The ld. PCIT questioned the credibility of amount of Rs 2.35 crore as ‘imprest to staff’ account, which we find, are duly reflected in the balance sheet under Advances Recoverable (in Cash or Kind) and the schedule of imprest/staff advances. We therefore, agree with the assessee that mere classification under a different accounting head cannot render the source unexplained, particularly when the amount is recorded in audited books. We are therefore of the considered view that the ld PCIT has attempted to invoke revisionary powers u/s 263 of the Act based on incorrect appreciation of balance sheet entries and therefore reached a different conclusion. Considering the facts of the case in totality, we do not find any error or infirmity in the reassessment order which could make it erroneous and prejudicial to the interest of the revenue. Accordingly, we quash the impugned order passed u/s 263 dated 31.01.2024 as invalid in law. 21. We are fortified by the Hon'ble Delhi High Court in the case of CIT Vs Sunbeam Auto reported in 332 ITR 167 which has held as under: “12. We have considered the rival submissions of the counsel on the other side and have gone through the records. The first issue that arises for our consideration is about the exercise of power by the CIT under s. 263 of the IT Act. As noted above, the submission of learned Printed from counselvise.com ITA No. 2362/DEL/2024 [A.Y. 2017-18]) M/s Sikka Infrastructure Vs ACIT Page 8 of 9 counsel for the Revenue was that while passing the assessment order, the AO did not consider this aspect specifically whether the expenditure in question was revenue or capital expenditure. This argument predicates on the assessment order, which apparently does not give any reasons while allowing the entire expenditure as revenue expenditure. However, that by itself would not be indicative of the fact that the AO had not applied his mind on the issue. There are judgments galore laying down the principle that the AO in the assessing order is not required to give detailed reason in respect of each and every item of deduction, etc. Therefore, one has to see from the record as to whether there was application of mind before allowing the expenditure in question as revenue expenditure. Learned counsel for the assessee is right in his submission that one has to keep in mind the distinction between \"lack of inquiry\" and \"inadequate inquiry\". If there was any inquiry, even inadequate that would not by itself give occasion to the CIT to pass orders under s. 263 of the Act, merely because he has different opinion in the matter. It is only in cases of \"lack of inquiry\" that such a course of action would be open”. 22. In the result, the appeal of the assessee in ITA No. 2362/DEL/2024 is allowed. The order is pronounced in the open court on 18.02.2026. Sd/- Sd/- [MADHUMITA ROY] [NAVEEN CHANDRA] JUDICIAL MEMBER ACCOUNTANT MEMBER Dated: 18th February, 2026. VL/ Copy forwarded to: Printed from counselvise.com ITA No. 2362/DEL/2024 [A.Y. 2017-18]) M/s Sikka Infrastructure Vs ACIT Page 9 of 9 1. Appellant 2. Respondent 3. CIT 4. CIT(A) Asst. Registrar, 5. DR ITAT, New Delhi Sl No. PARTICULARS DATES 1. Date of dictation of Tribunal Order 2. Date on which the typed draft order is placed before the Dictating Member 3. Date on which the typed draft order is placed before the other Member [in case of DB] 4. Date on which the approved draft order comes to the Sr. P.S./P.S. 5. Date on which the fair Order is placed before the Dictating Member for sign 6. Date on which the fair order is placed before the other Member for sign [in case of DB] 7. Date on which the Order comes back to the Sr. P.S./P.S for uploading on ITAT website 8. Date of uploading, inf not, reason for not uploading 9. Date on which the file goes to the Bench Clerk 10. Date on which the file goes for Xerox 11. Date on which the file goes for endorsement 12. The date on which the file goes to the Superintendent for checking 13. Date on which the file goes to the Assistant Registrar for signature on the order 14. Date on which the file goes to the dispatch section for dispatch the Tribunal order 15. Date of Dispatch of the Order 16. Date on which the file goes to the Record Room after dispatch the order Printed from counselvise.com "