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Judgment
PER SATBEER SINGH GODARA, JM
This assessee’s appeal for assessment year 2017-18, arises against the Commissioner of Income Tax (Appeals)-30 [in short, the “CIT(A)”], New Delhi’s DIN and order no. ITBA/APL/M/250/2025-26/1079379122(1), dated 07.08.2025, involving proceedings under section 143(3) of the Income-tax Act, 1961 (hereinafter referred to as ‘the Act’). Heard both the parties. Case file perused.
For the reasons stated in the assessee’s condonation averments, delay of 24 days in filing of the instant appeal is condoned in light of Collector, Land & Acquisition vs. Mst. Katiji & Others (1987) 167 ITR 471 (SC).
It transpires during the course of hearing that the learned Assessing Officer had framed his section 143(3) assessment in the assessee’s case on 25.12.2019 adding alleged unexplained cash credits amounting to Rs.16,01,91,326/- on account of its failure in proving genuineness/creditworthiness by way of filing cogent supportive evidence. Coming to the CIT(A)’s lower appellate discussion, we find that he has partly modified the impugned addition thereby treating a majority portion thereof to the tune or Rs.15,29,11,326/- as an instance of cessation of old liabilities under section 41(1) and confirmed the remaining amount of Rs.72.80 lakhs; respectively.
This is what leaves the assessee aggrieved.
It is in this factual backdrop that there arises the first and foremost issue of validity of the learned CIT(A)’s action partly modifying the assessment findings thereby changing the head of addition itself. The Revenue vehemently supports the same by turning it as an exercise of co-terminus powers in light of Commissioner of Income-Tax, U.P. v. Kanpur Coal Syndicate (1964) 53 ITR 225 (SC) as well as Jute Corporation of India Vs. CIT (1991) 187 ITR 688 (SC). It could hardly dispute that case law Shapoorji CIT Vs. Shapoorji Pallonji Mistry (1962) 44 ITR 891 (SC); CIT Vs. Sardari Lal & Co. (2001) 251 ITR 864 (Del.) and CIT Vs. Union Tyres (1999) 240 ITR 556 (Del.) have already settled the very issue in assessee’s favour and against the department that such a head of income could not be changed even in the garb of enhancement under section 251(1) of the Act in the lower appellate proceedings. We thus find merit in the assessee’s instant first and foremost argument/ground that the impugned section 41(1) addition taken recourse to in the learned CIT(A)’s lower appellate discussion; from that under section 68 by the Assessing Officer (supra), is not sustainable in law. This is indeed coupled with the fact that even section 41(1) addition of the alleged deemed cessation of liability is also not sustainable on merits as well for want of actual evidence to this effect in the assesses books as per CIT v. Sugauli Sugar Works (P) Ltd. (1983) 140 ITR 286. We thus delete the instant former section 41(1) addition of Rs.15,29,11,326/- in foregoing terms.
The outcome of the remaining section 68 addition of Rs.72.80 lakhs also turns out to be hardly any different. We make it clear that the assessee had received the same from its director Sh. Jangi Lal Oswal who had all along supported its case by way of filing complete documentary evidence; for example, confirmation, bank statement, as well as source thereof coming from realization of sale proceeds of shares to satisfy the three folded test of identity, genuineness and creditworthiness; respectively. We thus delete the impugned latter addition as well.
All other remaining pleadings between the parties stand rendered academic.
This assessee’s appeal is allowed in above terms.