IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH ‘E’: NEW DELHI BEFORE SHRI S. RIFAUR RAHMAN, ACCOUNTANT MEMBER AND SHRI RAJ KUMAR CHAUHAN, JUDICIAL MEMBER ITA No.3593/Del/2025, A.Y. 2020-21 ITA No.3593/Del/2025, A.Y. 2020-21 ITA No.3593/Del/2025, A.Y. 2020-21 ITA No.3593/Del/2025, A.Y. 2020-21 ITA No.3593/Del/2025, A.Y. 2020-21 ITA No.3593/Del/2025, A.Y. 2020-21 ITA No.3593/Del/2025, A.Y. 2020-21 ITA No.3593/Del/2025, A.Y. 2020-21 ITA No.3593/Del/2025, A.Y. 2020-21 ITA No.3593/Del/2025, A.Y. 2020-21 ITA No.3593/Del/2025, A.Y. 2020-21 Appellant by Sh. Ranjan Chopra, ms. Ank Respondent by Ms. Ankush Kalra, Sr.DR Date of Hearing 10/12/2025 Date of Pronouncement 16/01/2026 O R D E R PER RAJ KUMAR CHAUHAN (J.M.):

1. This appeal is directed against the order dated 27.03.25 of PCIT (Central), Delhi-1 under section 263 of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’) wherein assessment order dated

31.08.2022 was revised with the direction to the Assessing Officer (‘AO’) to take appropriate action or initiation of penalty proceeding under section 271E of the Act for levy of penalty amounting to Rs. 11,00,000/- for A.Y. 2020-21 for violation of provision of Section 269T of the Act.

2. The facts in brief as culled out from the order of the authorities below are that the appellant/assessee is into retail trade of textiles, apparel, footwear and leather and is running two separate showrooms at Delhi. The assessee filed his return of income for AY 2020-21 on 13th February, 2021 admitting an income of Rs.13,53,93,940/-. The case of the assessee was selected for scrutiny vide CASS under complete scrutiny category for the following reasons as enumerated in para 3 as extracted below: -

“3. Complete description of issues (issue wise)

The assessee's case was selected for scrutiny for the following reasons:

1. Large value receipt or repayment of loans other than through banking channels

2. As per New Schedule AL-1, the company has invested substantial part of its funds in assets like Residential House, Land or Building, Capital Contribution to other entities, Loans and Advances, Motor Vehicles, Aircrafts etc.

3. Deduction from Total Income (Chapter VI-A) (Business ITR)”

3. The assessee was asked to furnish various details item wise as under: -

“1. Donation u/s 80G-Rs. 54,90,452/-

2. Non-Current investments: Rs. 59,53,24,036/-

3. Cash Deposits: Rs. 3,97,06,452/-

4. Purchases: Rs. 4,04,91,936/-

5. Rental Income: Rs.8,86,14,791/-

6. Sales of service: Rs.9,66,05,036/-

7. Aggregate other Income: Rs. 7,13,90,455/-etc., 4. The assessee furnished submissions on various dates to the show cause notice during complete scrutiny assessment. With respect to the cash deposits, it was stated that the assessee has made cash deposits of Rs. 3,97,06,452/- in HDFC Bank Ltd. The source of cash deposits amounting to Rs. 3,95,56,047/- was only explained and the source of balance amount of Rs. 1,50,405/- was not explained.

5. Regarding the interest expenses, it was explained that the assessee has claimed interest expense of Rs. 44,43,821/- which according to the assessee are mainly due to OD limit exceeding charges and bank charges due to credit card sales. It was also explained that apart from the bank interest, it has claimed interest expenses paid to M/s. Atma Ram Trust to the extent of Rs. 10,48,480/- and also stated ‘copy of voucher attached’. According to the Assessing Officer (‘AO’), the assessee has not explained satisfactorily with the supporting documents about the interest expenses claimed as well as the cash deposit unexplained amount of Rs. 1,50,405/-. The AO therefore, proposed the variations unexplained cash credit of Rs. 1,50,405/- and disallowance of interest expenses of Rs. 10,48,480/- and total variations proposed was Rs. 11,98,885/-. With respect to the disputed balance cash deposit of Rs. 1,50,405/-, the assessee has not explained the said balance amount and has not filed reconciliation statement. Hence, accordingly treated as unexplained money u