Matrix Info Systems Pvt. Ltd. vs DCIT, Central Circle-26, Delhi

PER AMITABH SHUKLA, AM:

These two appeals filed by the Assessee against the separate orders of Learned Commissioner of Income Tax (Appeals)-29, New Delhi, both dated 10.09.2025 arising out of assessment orders passed by the DCIT/ACIT, Circle-26, New Delhi, dated 17.12.2018 for Assessment Year 2017-18 and dated 21.12.2019 for Assessment Year 2016-17 under section 143(3) of the Income Tax Act, 1961. The word ‘Act’ herein this order would mean Income Tax Act, 1961.

Both appeals are of the same assessee containing few common grounds and therefore the same were heard together and for the purposes of convenience are being adjudicated by this common order. The decision taken upon common grounds and issues in ITA No.5766/Del/2025 shall apply mutatis mutandis to ITA NO.5767/Del/2025 also.

The assessee has raised following grounds of appeal for AY 2016-17 and AY 2017-18 :

The assessee has raised following grounds of appeal for AY 2017-18:

As per brief factual matrix of the case the assessee had filed its Return of Income declaring income of Rs.13,44,3502/- on 31.03.2017. In this case, a search u/s 132 was conducted on 09.06.2019 on one Shri Sunil Jain and his group companies. The appellant assessee was also covered in the said search. The case of the assessee was selected for scrutiny under CASS module. In view of assessee having undertaken international transactions, the ld. Assessing Officer had made a reference to the ld. TPO for determination of arm’s length price under section 92CA of the Act. The ld. Assessing Officer has recorded in his order that, the ld. TPO did not make any disturbance to disclose transactions. The ld. Assessing Officer recorded in para-4.2 and 4.3 of his order deficit compliance of the appellant to submit requisite details and after considering statement of Shri Sunil Jain, material available on records, etc, proceeded to determine total income of the appellant of Rs.1,33,13,770/- after making additions under different heads. In appeal, the ld. First Appellate Authority confirmed the order of the ld. Assessing Officer concurring with the arguments taken by the ld. Assessing Officer.

Heard both the parties and perused the material available on record.

At the outset, ld. Counsel for the assessee submitted that it would not like to press its ground of appeal no.8. Accordingly, ground of appeal no.8 is dismissed as not pressed.

The first issue emanating from the above raised grounds of appeal by the assessee is regarding an addition of Rs.24,86,269/- made by the ld. Assessing Officer on account of unverified sundry creditors. It is the case of the revenue that the appellant had not provided any details to the ld. Assessing Officer in this regard. Before us, the ld. Counsel for the assessee has placed a voluminous paper book comprising extracts of ledger copies, bank statement, confirmations from the parties so as to allude genuineness of transaction, creditworthiness and identity of the parties. It has been vehemently argued that the impugned details were made available both the ld. Assessing Officer as well as with ld. CIT(A) and which got omitted to be considered in their true perspective. The ld. Counsel has argued that it had given the same set of documents to both the ld. TPO as well as ld. Assessing Officer and the former did not draw any adverse inferences. The ld. Counsel through references to its paper book has indicated that in view of cogent evidences on record, the impugned additions of Rs.24,86,269/- was unwarranted.

The ld. DR placed reliance upon the orders of the lower authorities. The non-compliance of the assessee before the ld. Assessing Officer was reiterated.

We have noted from perusal of page nos.71 to 86, 89, 91, 97, 128 and 131 of the paper books filed by the assessee that their sufficient evidences to allude veracity of argument taken by the appellant of the transactions being genuine, from identified parties having sufficient creditworthiness. Accordingly, we are of the considered view that the decision of the lower authorities is not based upon true understanding and appreciation of facts. We therefore set-aside the order of the lower authorities and direct the ld. Assessing Officer to delete the impugned addition of Rs.24,86,269/-. The grounds of appeal raised by the assessee on this issue are therefore allowed.

The next issue raised by the appellant through its ground of appeal is regarding an addition of Rs.61 lakhs on account of cash deposits in appellant’s bank account. The ld. Assessing Officer has narrated his observations in para-6 to 6.2 of his order. In brief, the ld. Assessing Officer held that the relationship between cash sales and cash deposits could not be established as the veracity of sales, considering unsigned computer printouts, per se doubtful. The ld. CIT(A) in para-7.4 of his order concurred with the ld. Assessing Officer’s findings.

The ld. Counsel for the assessee has argued that the learned lower authorities have failed to consider the contents of its submissions/evidences provided during proceeding before them. The ld. Counsel for the assessee citing references to its voluminous paper book alluded that all the cash sales were duly recorded in the books of accounts and disclosed in the VAT returns. Branch wise details alluded that the cash deposits were directly connected with the impugned sales.

The ld. DR would like to make us believe on the correctness of the orders of the lower authorities. Heavy reliance was placed upon the statement of Shri Sunil Jain, during search proceedings which was countered by the appellant submitting that it has no evidentiary value considering its subsequent retraction.

From the perusal of contents of the paper book filed by the appellant, we have noted that the assessee had, provided requisite evidences before the lower authorities. Copies of assessee’s submissions on pages-68 to 134, 122 to 436 of its paper book for AY 2016-17 are clearly indicative that the appellant was providing requested information to the ld. Assessing Officer. In fact in the above backdrop, the hypothesis contained in the assessment order of assessee not complying with Assessing Officer’s notices becomes incomprehensible and far from convincing. We have also noted from para-6.0 To 6.2 of the assessment order that the ld. Assessing Officer was giving purely un contextual, unclear and incomprehensible observations while making the impugned addition. Evidences have not been properly brought on record by the lower authorities and their views are purely resting on conjectures and surmises. Accordingly, we set-aside the order of the lower authorities and direct the ld. Assessing Officer to delete the impugned addition of Rs.61 lakhs. The respective ground of appeal stands allowed in favour of the assessee.

The next issue raised by the assessee is regarding an addition of Rs.33.83 lakhs. The Ld. Assessing Officer has made following observations in para-6.3 of his order as under:-

Considering the above decision, the ld. CIT(A) concurred with Assessing Officer’s finding and proceeded to confirm the addition holding that the responsibility to defend its case satisfactorily was upon the assessee. The assessee was simultaneously held guilty of insufficient compliance.

It is the case of the assessee that the addition of Rs.33.83lakhs is totally unwarranted. It has been argued that no show-cause was ever given to the assessee by the ld. Assessing Officer. It has also been contended that the assessee is totally unware as to its relationship with the impugned parties. The ld. Counsel for the assessee Ms. Meenal Goyal, vehemently argued that the assessee has not transacted with the above parties in any undisclosed transactions.

The ld. DR placed reliance upon the order of lower authorities.

We have noted from the order of the ld. Assessing Officer that the addition has been made in the most cryptic, summary and ad-hoc fashion. Nothing has been brought on records as to what is the role of appellant assessee in taking or giving any accommodation entries to the parties namely John Infotect Pvt. Ltd. and M/s Aryan Infrotronics. There is no reference to any seized document, statement of persons, etc by the ld. Assessing Officer. Accordingly, in the interest of justice, we set-aside the order of the lower authorities and direct the ld. Assessing Officer to delete the impugned addition of Rs.33.83 lakhs. The respective ground of appeal is allowed.

In the result, the appeal of the assessee in ITA No.5766/Del/2025 for Assessment Year 2016-17 is partly allowed.

The twin additions contested by the assessee through its above grounds of appeal are regarding an addition of Rs.72,34,000/- and Rs.1,51,53,235/- on account of cash deposits made in assessee’s bank account for which apparently no satisfactory explanation was forthcoming. As per the brief factual matrix narrated by ld. Assessing Officer in his impugned assessment order observed that a search action u/s 132 had taken place on 08.06.2016 in the case of Shri Sunil Jain Group of cases. The assessee had filed its Return of Income on 31.10.2017 declaring income of Rs.49,71,220/-. The assessee company is engaged in the business of trading of computer hardware software and related accessories. The ld. Assessing Officer has made following observations about non-compliance of assessee to his statutory notices in para-6 of his order.

Considering the above, the, ld. Assessing Officer proceeded to add an amount of Rs.72.34 lakhs and of Rs.1,51,83,235/- as unexplained cash deposits. The ld. CIT(A) confirmed the addition made by the ld. Assessing Officer holding that the assessee had admitted regarding non-availability of books of accounts. It was concluded that the identity of the buyers, itemised invoices were not available on records nor was there any reconsideration of deposits.

The ld. Counsel for the assessee has placed on record a voluminous paper book titled as paper book for AY 2017-18, inter alia, containing submissions and evidences filed before the ld. Assessing Officer and the ld. CIT(A). Ms. Meenal Goyal vehemently argued that the allegation of lower authorities of non-compliance is thus not true. She submitted that both the ld. Assessing Officer as well as the ld. CIT(A) have failed to consider the assessee had filed detailed submissions and evidences to support the veracity of cash deposits. It was clearly identified that the appellant was having a PAN India sales network and that the impugned deposits had direct connection with the sales made in Delhi, Chandigarh, Mumbai and Jaipur Outlets. The ld. Counsel also drew our attention to that the sales tallied with the stock summary and that they were evenly supported by disclosures in the VAT returns. The ld. Counsel placed reliance upon the decision of this Tribunal in the case of Sahil Study Circle, so as to support the inter branch movement of cash and corresponding cash sales. It was also contended that in any case, no additions u/s 68 was permissible as regular books of accounts were maintained.

The ld. DR would like to make us believe on the correctness of the orders of the lower authorities. Heavy reliance was placed upon the statement of Shri Sunil Jain, during search proceedings which was countered by the appellant submitting that it has no evidentiary value considering its subsequent retraction.

Heard rival submissions in the light of material available on records.

We have noted from the para-6 of the order of the ld. Assessing Officer that the entire addition is resting upon the hypothesis of non-compliance by the assessee to the statutory notices. We have noted however from the para-3 of the order of the ld. Assessing Officer that the impugned finding is contradictory as in this para, the ld. Assessing Officer says that the assessee had submitted documents as per his questionnaire. The contradictory findings of the Assessing Officer thus allude towards an addition resting on unverified and unsubstantiated findings. The impugned conclusion is relevant considering the voluminous paper book of the appellant wherein it has indicated in his paper book for AY 2017-18 that details replies, submissions and evidences were submitted before the lower authorities as evident from pages 1 to 2, 6 to 7, 11 to 18, 31 to 34, 49, 61-100, 101-104, 105-532 and 535 to 586. Thus, it is not a case, where the assessee was not responding to the statutory notices. Accordingly, we find force in the argument of the ld. Counsel that the ld. Lower authorities have failed to correctly understand and appreciate the facts available on records.

In the interest of justice, we set-aside the order of the lower authorities and direct the ld. Assessing Officer to delete the impugned addition of Rs.72,34,000/- and Rs.1,91,93,235/- made on account of alleged unexplained and unsubstantiated cash deposits. Accordingly, grounds of appeal raised by the assessee on this issue is allowed.

In the result, the appeal in ITA No.5766/Del/2025 is partly allowed whereas appeal in ITA No.5767/Del/2025 is allowed.