Deputy Commissioner Of Income Tax, Circle-8(1) vs DNC Infrastructure Private Limited

PER STABEER SINGH GODARA, JM:

These Revenue’s as well as three assessee’s cross appeals i.e., ITA Nos. 668 to 670/Del/2026 and IT(SS)A No. 2715/Del/2026 & ITA Nos. 2616 to 2717/Del/2026, for Assessment Years 2017-18 to 2019-20, arise against Commissioner of Income Tax (Appeals) [in short, the “CIT(A)”], New Delhi- 30’s order all dated 31.10.2025 passed in DINs & Orders Nos. ITBA/APL/M/250/2025-26/1082210113(1) (for A.Y: 2017-18), ITBA/ APL/ M/ 250/2025-26/1082210256(1) (for A.Y. 2018-19), ITBA/ APL/ M/ 250/ 2025-26/1082585164(1) (for A.Y. 2019-20), involving proceedings u/s 153A r.w.s. 143(3) of the Income Tax Act, 1961; hereinafter referred to as ‘the Act’; respectively.

Heard both the parties at length. Case files perused.

The assessee’s delay of 44 days each in former twin appeals ITA Nos. 2715 & 2716/Del/2026 and 16 days delay in the last one IT(SS)A No. 2717/Del/2026; stands condoned in the larger interest of justice and on account of circumstances stated to be beyond its control.

It transpires during the course of hearing that there arises the first and foremost issue of validity of the impugned section 153A r.w.s. 143(3) assessments framed in the assessee’s case by the learned Assessing Officer on 30.09.2021 in the former twin assessment years 2017-18 & 2018-19. We make it clear that the learned departmental authorities had carried out the search in issue in the assessee’s case on 01.11.2019. Meaning thereby that these former twin assessment years A.Y. 2017-18 & 2018-19 turn out to be “unabated” assessments wherein any addition ought to be made based on the corresponding incriminating seized material only as settled in PCIT vs Abhisar Buildwell Pvt. Ltd. (2023) 454 ITR 212 (SC).

That being the case, a combined perusal of these case files suggest that what all both the learned lower authorities have done in the assessee(s) case is to estimate GP @ 8% each in all these assessments framed on 30.09.2021 which stands restricted to that @ 5.5% i.e., 6.0% GP- 0.5% of other expenses; respectively, broadly guided by section 44AD of the Act, in the CIT(A)’s lower appellate discussion.

This what leaves both the department as well as assessee aggrieved who filed instant three cross appeals each before the tribunal.

It is in this factual backdrop that we sought to ascertain the relevant incriminating seized material in the assessee’s case in these former twin assessment years. Learned CIT(DR) takes us to the Assessing Officer’s detailed discussion taking note of a whatsapp chat between the assessee’s authorized person and other party(ies) as well as the search statement recorded on 22.09.2021. The same merely reveals some unsubstantiated discussions than being pointing any undisclosed income or cash seized or bogus claims in the assessee’s hands. We are further mindful of the fact that CBDT’s landmark circular dated 10.03.2003 has settled the issue at rest long back that such admissions during the course of search or survey etc., as the case may be; do not carry any evidentiary value.

Learned CIT(DR) at this stage further seeks to buttress the point that the departmental authorities came across very serious documentary evidence(s) in the assessee’s case which made the Assessing Officer to reject its books of accounts followed by GP estimation @ 8%. We are of the considered view that such a course of action in re-estimating the assessee’s GP going by its already declared book results could not be termed as incriminating material as per their lordships aforesaid landmark judicial precedent. We thus delete the impugned addition of GP estimation @ 6% at assessee’s hands in these facts and circumstances in very terms. The Revenue’s former twin appeals ITA Nos. 668 & 669/Del/2026 fail and the assessee’s cross-appeals ITA Nos. 2715 & 2716/Del/2026 succeed on the very analogy therefore.

Next comes the last assessment year 2019-20, involving the Revenue’s and the assessee’s cross appeals ITA Nos. 670 & 2717/Del/2026, raising the very issue of GP estimations. This last assessment year is admittedly an “abated” one only wherein it is nowhere necessary that impugned addition ought to be based on any seized material. We thus find no merit in the assessee’s case that the learned CIT(A) has erred in law and on facts in partly restricting the impugned GP @ 6% only. The Revenue’s appeal ITA No. 670/Del/2026 also meets the very outcome as such an estimation at the learned CIT(A) behest having exercised his powers co-terminus that the Assessing Officer does not deserve to be interfere with in the peculiar facts of the case. Both these parties instant last cross appeals are hereby rejected.

No other ground or argument has been pressed before us.

To sum up these Revenue’s three appeals ITA Nos. 668 to 670/Del/2026 are dismissed and the assessee’s cross appeals IT(SS)A Nos. 2715/Del/2026 & ITA No. 2716/Del/2026 stand accepted and its last appeal ITA No. 2717/Del/2026 fails; in above terms. A copy of this common order be placed in the respective case files.