2025 (7) TMI 894

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.... up that the appeal of the Revenue was filed late by 70 days. No objection was taken by the ld. AR to the same and, accordingly, the delay stands condoned. 3. The assessee had filed cross objections and primarily the contention of the ld. AR was focused on the cross objections which were defended by the ld. DR by relying the orders of the ld. tax authorities. It comes up that the assessee filed the return declaring an income of Rs. 1,82,82,530/- and the assessment was completed u/s 143(3) of the Act on 28.12.2017 at an income of Rs. 1,83,68,785/- Thereafter, an order u/s 263 of the Act was passed on 24.12.2018 by the ld. PCIT, directing the AO to make the assessment denovo and, consequently, the impugned assessment order u/s 263 r.w.s. 1....

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....that Section 69C clearly stipulates that where, in any financial year, the assessee has incurred an expenditure and he offers no explanation about "the source of such expenditure or part thereof", or the explanation, if it is offered by him, is not, in the opinion of the Assessing Officer, satisfactory, the amount covered by such expenditure or part thereof, as the case may be, may be deemed to be the income of the assessee for such financial year. Thus, the focus of Section 69C is on the "source" of such expenditure and not on the authenticity of the expenditure itself. It is an admitted position that the expenditure was shown by the assessee in its regular books of accounts and it is because of this reason that the Income-tax Appellate Tr....

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....considered as unexplained expenditure and added to the income of the assessee. The NFAC while hearing the appeal has taken into account the fact that as the impugned assessment order was passed u/s 263 r.w.s. 143(3) of the Act as per the directions of the PCIT, the AO was supposed to examine the genuineness of the transaction. However, the AO failed to discharge its onus by an inquiry. The CIT(A) has also considered the plea that the expenditure towards contract expenses has been claimed at lower percentage with higher net profit ratio as compared to the preceding years. Thus, we are satisfied that the plea of the assessee that the basic pre-conditions for invoking the provisions of section 69C of the Act are that the expenditure incurred b....