Basera Interiors & Builders P. Ltd. vs Deputy Commissioner Of Income Tax, Gurgaon

“1.

That in view of the facts and circumstances of the case, the order passed by Deputy Commissioner of Income Tax, Circle 1(1), Gurgaon ("Assessing Officer"/ "AO") under Section 143(3) of the Income Tax Act, 1961 ("the Act") dated 26.12.2016 as partly upheld by the National Faceless Appeal Centre, Delhi ("NFAC/CIT(A)") vide order dated 22.08.2025 and the additions made therein is illegal, bad in law, without jurisdiction and void ab-initio. The additions made are erroneous, unjustified and illegal.

2.

That in view of the facts and circumstances of the case, the NFAC has erred both on facts and in law in confirming the addition of Rs. 3,15,24,746/- under section 68 of the Act on account of advances received from parties alleged to be unexplained credits in the books of the assessee company and the fact that the said amount is received as advances in the normal course of business.

3.

That in view of the facts and circumstances of the case and in law, the AO has failed to appreciate that the mandatory pre-conditions for invoking Section 68 of the Act, have not been fulfilled in the present case and thus the additions made are illegal, bad in law and liable to be deleted. The additions under Section 68 are illegal and not justified.

4.

That in view of the facts and circumstances of the case and in law, the NFAC has erred in upholding by confirming addition on account of advance received of Rs. 35,17,346/- from Munesh Sharma from one account and Rs. 72,40,287/- being duly repaid to him in the other account maintained by the Assessee in the same year. The remaining amount was net debit balance of Rs. 37,22,941/-, therefore in a nutshell there is NIL amount of advance received from Munesh Sharma during the year under consideration.

5.

That in view of the facts and circumstances of the case and in law, the NFAC has erred in upholding by confirming addition on account of advance received Rs. 29,07,000/- from Tania Mishra and that the same being duly repaid to her in tranches in A.Y. 2015-16 and Α.Υ. 2017-18.

6.

That in view of the facts and circumstances of the case and in law, the NFAC has erred in upholding by confirming addition of Rs. 50,00,000/- on account of advance received from Laxmi Sharma on 03.01.2014 in respect of a property duly sold to her on 27.06.2014 during the subsequent Assessment Year.

7.

That in view of the facts and circumstances of the case and in law, the NFAC has erred in upholding by confirming addition of Rs. 1,00,00,000/- on account of advance received from Manoj Kumar and the same being duly repaid to him in tranches in A.Y. 2015-16 and A.Y. 2016-17.

8.

That in view of the facts and circumstances of the case and in law, the NFAC has erred in upholding by confirming addition of Rs. 40,00,000/- on account of advance received from Ramesh Pandit Builders & Promoters Pvt. Ltd. and the same being duly repaid in tranches in A.Y. 2016-17.

9.

That in the view of the facts and circumstances of the case and in law, the NFAC has erred in upholding by confirming addition of Rs. 12,00,000/- on account of advance received from Rewa Puri which was further forfeited and shown as income in the books of the Assessee Company in A.Υ. 2017-18.

10.

That in the view of the facts and circumstances of the case and in law, the NFAC has erred in upholding by confirming addition of Rs. 4,00,000/- on account of advance received from Mohit Malhotra which was further forfeited and shown as income in the books of Assessee Company in A.Y. 2016-17.

11.

That in the view of the facts and circumstances of the case and in law, the NFAC has erred in upholding by confirming the addition of Rs. 45,00,000/- on account of advance received from Kishan Lal Sardana which was further forfeited and shown as income in the books of Assessee Company in A.Y. 2017-18.

12.

That in view of the facts and circumstances of the case and in law, the additions have been made on mere assumptions and conjectures and the NFAC has erred in partly upholding by rejecting the explanations and evidences brought on record by the Assessee company to prove the following: the identity, genuineness and creditworthiness of the transaction.

13.

That in view of the facts and circumstances of the case and in law, the AO and NFAC have grossly erred in not appreciating the submissions/documents/evidences filed by the Assessee company. That the entire assessment is based on conjectures, surmises, and assumptions without any direct evidence against the Assessee, thereby rendering the order perverse and unsustainable in law.

14.

The NFAC has erred in passing an order under section 250(6) of the Act by not giving adequate opportunity of being heard, thereby violating the principles of natural justice.

15.

That in view of the facts and circumstances of the case and in law, the AO has erred both on facts & in law in charging interest under section 234A, 234B and 234C of the Act.

16.

That in view of the facts and circumstances of the case and in law, the AO has erred in initiating penalty under section 274 read with section 271(1)(c) of the Act.”

“ 5. While setting aside the order of the Commissioner of Income-tax (Appeals), the Tribunal relied upon two decisions of this court, namely, CIT v. Stellar Investment Ltd. [1991] 192 ITR 287 and a Full Bench decision in CIT v. Sophia Finance Ltd. [1994] 205 ITR 98. Several other decisions have been rendered by this court following the above two decisions. The principle that has been laid down by the various decisions rendered by this court from time to time is that if the existence of the applicant is proved, normally no further inquiry is necessary.

6.

Learned counsel for the Revenue subinits that the creditworthiness of the applicants can nevertheless be examined by the Assessing Officer. It is quite obvious that is very difficult for the assessee to show the credit-worthiness of strangers. If the Revenue has any doubt with regard to their ability to make the investment, their returns may be reopened by the Department.

7.

In any case, what is clinching is the additional burden on the Revenue. It must show that even if the applicant does not have the means to make the investment, the investment made by the applicant actually emanated from the coffers of the assessee so as to enable it to be treated as the undisclosed income of the assessee. This has not been done in so far as the present case is concerned and that has been noted by the Tribunal also.”