DCIT, CIRCLE- 2, DEHRADUN vs. V K AGARWAL & CO., NEW DELHI

IN THE INCOME TAX APPELLATE TRIBUNAL, DEHRADUN CIRCUIT BENCH: DEHRADUN BEFORE, SHRI SAKTIJIT DEY, VICE PRESIDENT AND SHRI M. BALAGANESH, ACCOUNTANT MEMBER ITA No.3390/Del/2018 (Assessment Year: 2014-15) DCIT, Sh. V.K. Agarwal & Co., Circle-2, B-117, 1st Floor, Lajpat Dehradun Vs Nagar, Part-1, New Delhi

PAN –AAGFV5869A (Appellant) (Respondent)

Appellant By Sh. Himanshu Sharma, CA Respondent by Sh. A.S. Rana, Sr. DR Date of Hearing 21.06.2023 Date of Pronouncement 23.06.2023

ORDER This is an appeal against order dated 23.02.2018 passed by

learned Commissioner of Income Tax (Appeals) [hereinafter referred

to as the learned CIT(A) ] Haldwani, pertaining to assessment year

2014-15.

ITA No.3390/Del/2018 AY: 2014-15 vouchers for verification before the AO during the course of assessment proceedings. 2. The Ld. CIT(A) has erred in law and on facts in deleting the addition of Rs.34,00,000/- made on account of unsecured loan u/s 68 of the I.T. Act, 1961 as the assessee could not furnish/produce the confirmation of unsecured loan from M/s Tirupati Investment. 3. The order of the Ld. CIT(A) be set-a-side and the order of the AO be restored.

materials available on record. The assessee is a partnership firm

engaged in the business of civil contract. The return of income for

the assessment year 2014-15 was filed on 30.11.2014 declaring

total income of Rs.1,99,28,729/-. The learned Assessing Officer

during the course or assessment proceedings directed the assessee

to produce the books of accounts. Since the books of accounts were

not produced by the assessee before the learned AO for

examination, the learned AO proceeded to reject the book results

and estimated the profit at the rate of 8% on turnover in terms of

section 44AD of the Act. Accordingly, he made an addition of

Rs.3,21,42,095/- in the assessment towards estimation of net profit

in the assessment.

ITA No.3390/Del/2018 AY: 2014-15 4. The learned AO also observed that the assessee has taken

unsecured loan of 34 lakhs from Tirupati Investment, for which the

assessee had not furnished PAN or address or confirmation from

the lender. Accordingly, the learned AO concluded that since the

assessee had not proved the three necessary ingredients of section

68 of the Income-tax Act, 1961 (hereinafter referred to as ‘the Act’),

viz., identity of the creditors, creditworthiness of the creditors and

genuineness of the transaction, he proceeded to treat the said loan

as unexplained cash credit under section 68 of the Act in the

assessment order.

accounts and all the documents pertaining to the loan creditors to

prove the three necessary ingredients of section 68 of the Act. The

learned CIT(A) called for a remand report from the learned AO. The

learned AO in the remand report stated that the books of account

were properly maintained by the assessee but, however, pointed out

certain discrepancies on account of non-deduction of tax for certain

expenses and non-allowability of certain expenses as deduction

ITA No.3390/Del/2018 AY: 2014-15 under section 37(1) of the Act. The learned Assessing Officer

furnished the remand report on 01.02.2018 before the learned

CIT(A). The copy of the remand report was forwarded to the

assessee for its rejoinder. The assessee submitted its rejoinder vide

letter dated 20.02.2018 before the learned CIT(A). The learned

CIT(A) based on the remand report made the disallowance of certain

expenses for violation of provisions of section 40(a)(ia) of the Act in

the sum of Rs.17,86,353/- ; certain capital loss wrongly claimed as

deduction in the sum of Rs.3,73,592/- and disallowance of

donation in the sum of Rs.21000/- in his appellate order.

CIT(A) had forwarded the various documents submitted by the

assessee to the learned AO for obtaining remand report. In the

remand report submitted on 01.02.2018, learned AO stated that he

had commissioned inquiry with DCIT/ACIT, Central Circle,

Dhanbad, Jharkhand, to verify the confirmation of unsecured loan

received from Tirupati Investment, Kolkata and reply is still

awaited. Learned AO further stated that the assessee has furnished

ITA No.3390/Del/2018 AY: 2014-15 the copy of ledger account which reflected the repayment of loan

made to Tirupati Investment in subsequent years. The assessee in

its rejoinder stated that the confirmation of loan was filed from the

lender; loan has been repaid to the lender in subsequent years and

in support of which ledger account has been placed on record

before the learned AO and further it was pointed out that the

assessee has taken unsecured loan from the same party in the

previous years also and that the said account is a running account.

It was also pointed out by the assessee that the loan has been

received through the regular banking channels and three

ingredients of section 68 of the Act had been fulfilled in respect of

said loan.

addition of net profit had duly taken into account the remand

report obtained from the learned AO, wherein, no adverse

inferences were drawn about the manner in which books of account

were maintained by the assessee. We further find that the other

discrepancies noticed by the learned AO in the books of account

ITA No.3390/Del/2018 AY: 2014-15 submitted before him in the remand proceedings were duly added

by learned CIT(A) in his appellate order. Hence, we do not find any

infirmity in the order of learned CIT(A) as the deletion of estimated

addition on net profit was made based on the remand of the learned

AO. In this regard, once an issue has been accepted by the learned

AO in the remand report, the learned AO would be precluded from

filing further appeal to the Tribunal as he could not have any

grievance in the matter. This issue is settled by the decision of

Hon’ble Madras High Court in the case of Smt. B. Jayalakshmi Vs.

ACIT, reported in 258 taxman 318 (Mad.).

account of unsecured loan under section 68 of the Act, we find that

the assessee had provided confirmation of loan from the creditor,

ITR of creditor, evidence for receipt of loan through banking

channel and evidence of repayment of loan through banking

channels in subsequent years. All these additional evidences were

duly admitted by learned CIT(A) and a remand report was called for

from the learned AO. The learned AO sought to examine the veracity

ITA No.3390/Del/2018 AY: 2014-15 of the evidences from DCIT, Central Circle, Dhanbad, Jharkhand.

Since, no reply was received from Dhanbad Office, the learned AO

did not make any adverse comments on the evidences filed by the

assessee. Based on that, the learned CIT(A) also concluded that

since all the documents were duly placed on record by the assessee

and no adverse comments has been made by learned AO, there is

no scope for making any addition under section 68 of the Act. This

goes to prove that the assessee, on its part, has discharged its

primary onus caused in terms of section 68 of the Act by proving

the three necessary ingredients thereon. Hence, we do not find any

infirmity in the order of learned CIT(A) in granting relief to the

assessee in this regard. Accordingly, the grounds raised by the

Revenue are dismissed.

Sd/- Sd/- (SAKTIJIT DEY) (M. BALAGANESH) VICE PRESIDENT ACCOUNTANT MEMBER Dated: 23/06/2023 RK/Sr.PS 7

ITA No.3390/Del/2018 AY: 2014-15