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Income Tax Appellate Tribunal, DELHI BENCH ‘B’, NEW DELHI
Before: SHRI SATBEER SINGH GODARA & SHRI MANISH AGARWAL
Consolidated Appeals (10)
ORDER
PER MANISH AGARWAL, AM :
The captioned appeals are filed by the Assessee and by the Revenue and the Cross-Objections (C.Os) are filed by the assessee in case of captioned assessee’s for various Assessment years. Since the issues involved in all the cross appeals filed by both the parties and objection raised by the assessee in all the C.Os are common therefore, all these cross appeals and C.Os are taken together and decided through a common order.
CO No.-11/Del/2025 (AY 2013-14) M/s Filatax India Ltd 2. We first take the appeal filed by the Revenue in the case of Filatex India Ltd. in and the corresponding C.O. No. 11/Del/2025 filed by the assessee for AY 2013-14.
Brief facts of the case are that the assessee is a company engaged in the business of manufacturing Polyester Chips, Polyester/Nylon/Polypropylene Multi & Mono Filament Yarn and Narrow Fabrics. The return of income was originally filed electronically on 08.09.2013, declaring the net loss of INR 49,70,14,441/-. The , 5000, 2060, 4999, 4648, 3988, 2061, 1455, 2062 & 1456/Del/2024 & C.O.Nos.11, 32, 33, 34/Del/2025 & 89, 90 & 91/Del/2024 return of income was processed u/s 143(1) of the Act. A search and seizure action was carried out by the Department u/s 132 of the Act in the case of Filatex India Ltd. group on 01.09.2021. Consequent upon the search and after obtaining the necessary approval from the Competent Authority, the cases from various AYs were re-opened and notices u/s 148 of the Act were issued which inter-alia includes AY 2013-14 for which the notice u/s 148 of the Act was issued on 20.03.2023. In response to said notice, return of income was filed on 30.03.2023, declaring same income i.e. INR 49,70,14,441/- as was declared in the return of income filed u/s 139(1) of the Act. The AO observed that a search was simultaneously carried out in the case of Shri Ankit Bhageria who was alleged as the entry operator and involved in providing accommodation entries to various beneficiaries through Shell companies operated by him and the assessee is one of the beneficiaries. His statements were also recorded during the course of search and based on his statements, the AO concluded that the assessee group, Filatex India Group has taken bogus share capital including share premium and bogus unsecured loans from various Shell companies managed and operated by Shri Ankit Bhageria and Shri Vimal Bhageria (father of Shri Ankit Bhageria). After considering the financial capacity of the lender companies, the modus operandi and statement of various persons recorded during the course of search and also by referring certain WhatsApp chat, email and other material found as a result of search, the AO concluded that during the year, out of , 5000, 2060, 4999, 4648, 3988, 2061, 1455, 2062 & 1456/Del/2024 & C.O.Nos.11, 32, 33, 34/Del/2025 & 89, 90 & 91/Del/2024 total loans received of INR 24.25 crores from four entities tabulated as below, the credits of Rs. 5.90 crores were doubtful:- S.No. Name of the Entity from which Total credits credits have been taken received during the year (In Rs.) 1. M/s. ANM Fincap Private Limited 12,35,00,000 2. M/s. RMP Holdings Private Limited 9,65,00,000 3. M/s. Bhageria Finance Investment 50,00,000 Private Limited 4. M/s. RKG Finvest Limited 1,75,00,000 Total 24,25,00,000
4. Accordingly, the information so gathered was confronted to the assessee and the AO asked the assessee to explain and furnish the reply with respect to the loans of INR 5.90 crores with supporting documentary evidences taken from above four entities and further asked as to why not commission @ 0.25% be added as unexplained expenditure paid to obtain such accommodation entries. The AO also issued summons u/s 133(6) of the Act to these four companies from whom the loans were obtained during the year which were duly complied with.
5. After considering the submissions filed by the assessee and the compliance made by various companies, AO held that the assessee has failed to furnish the documentary evidences / explanation with respect to loans of INR 5.90 crores and made the addition of said amount of INR 5.90 crores as unexplained credits u/s 68 of the Act and further invoked the provision u/s 115BB of the Act. The interest paid of INR 1,00,53,494/- on the loans taken from four companies was disallowed by invoking the provisions of section u/s 37(1) of the Act and added , 5000, 2060, 4999, 4648, 3988, 2061, 1455, 2062 & 1456/Del/2024 & C.O.Nos.11, 32, 33, 34/Del/2025 & 89, 90 & 91/Del/2024 back to the total income of the assessee. The AO further made an addition of INR 7,87,500/- by holding the same as unexplained expenditure u/s 69C of the Act by alleging that the same was paid as commission @ 0.25% to obtain the bogus accommodation entries of INR 24.25 crores and further on the repayment of the loans of INR 7.25 crores though the addition of alleged unexplained credits was made for INR. 5.90 crores only.
6. Aggrieved by the said order, the assessee preferred the appeal before Ld. CIT(A) who vide impugned order dated 22.08.2024 in Appeal No. CIT(A), Delhi/23/10125/2012-13 passed u/s 250 of the Act has partly allowed the appeal of the assessee wherein the additions made towards unsecured loans by treating them as bogus, disallowance of interest and further addition u/s 69C of the Act towards alleged payment of commission to obtain accommodation entries were deleted by observing that the assessee has proved the identity and the creditworthiness of the parties and therefore, no addition could be made.
7. Against such order, the Revenue is in appeal before the Tribunal on the strength of following grounds of appeal:- 1. “The Ld. CIT(A) has erred in deleting the addition of Rs. 5,90,00,000/- made by Assessing Office u/s 68 of the Income-tax Act, 1961.
2. The Ld. CIT(A) has failed to appreciate that the creditors are only shell companies, created for abatement of, and legitimize, illicit means and evade taxes, and its legal identity is only a façade to hide its illegal operations.
, 5000, 2060, 4999, 4648, 3988, 2061, 1455, 2062 & 1456/Del/2024 & C.O.Nos.11, 32, 33, 34/Del/2025 & 89, 90 & 91/Del/2024 3. The Ld. CIT(A) has failed to appreciate that submissions of audited accounts and bank statements of alleged entry operator are necessary pre-requisite to give such entities a semblance of a genuine business. Filing of such documents does not mitigate lack of genuineness in its actual operations.
4. Ld. CIT(A) has failed to appreciate that accommodation entry operators have sufficient funds only in the form of investments in other non-genuine companies. There is hardly substantial balance in the bank account or genuine investment.
5. The Ld. CIT(A) failed to appreciate that there is no information of conduct of any audit/investigation by SEBI/RBI, while the search conducted by Investigation Wing brought out substantial evidence about actual financial conduct of these entry operators, masquerading in the guise of NBPC.
6. Whether the Ld. CIT(A) is correct in holding that the term "in evidence" used in section 132(4) of the Act cannot be treated as "as evidence" when statement u/s 132(4) made while confronting with incriminating material gathered during the search operations.
7. Ld. CIT(A) has erred in holding that the Assessing Officer should have conducted further enquiry to find about the source of fund of the entry operator, without appreciating that Ld. CIT(A) could have conducted such enquiry himself or directed the Assessing Officer to conduct requisite enquiry so as to ascertain the true nature and source of the cash credit.
8. Ld. CIT (A) has erred in not appreciating that whatsapp chats undertaken between the entry operator and promoter of the company clearly shows that cash are being exchanged and such chats are backed up by statements u/s 132(4) of respective parties.
9. Ld. CIT(A) has failed to appreciate that the evidence collected clearly reveals the cash trails and in reply to notice u/s 133(6) of the Act the entry operators are not expected to accept that the loan transactions are not genuine.
10. The Ld. CIT(A) erred in deleting the addition of Rs. 1,00,53,494/- without appreciating the fact that interest paid on account of bogus unsecured loan is also bogus in nature, therefore, the interest paid by the assessee to the tune of Rs. 1,00,53,494/- is not genuine expense.
, 5000, 2060, 4999, 4648, 3988, 2061, 1455, 2062 & 1456/Del/2024 & C.O.Nos.11, 32, 33, 34/Del/2025 & 89, 90 & 91/Del/2024 11. The Ld. CIT(A) erred in deleting the addition of Rs. 7,87,500/- without appreciating the fact that the accommodation entries to the tune of Rs. 5,90,00,000/- were taken during the year under consideration and commission must have paid to accommodate such entries.
The appellant craves to add or amend any/all the grounds of appeal before or during the hearing of the appeal.”
8. The assessee also filed C.O. wherein the following objections are taken by the assessee:- 1. “On the facts and in the circumstances of the case and in law, the learned CIT(A) should have quashed the assessment order as illegal, not tenable, void and without jurisdiction.
On the facts and in the circumstances of the case and in law, the learned CIT(A) ought to have deleted the addition by appreciating that the material relied upon by Assessing Officer is totally unrelated and irrelevant to the respondent and thus conditions laid down in forth proviso to section 153A r.w.s 153C and 149(1) are not satisfied.
3. On the facts and in the circumstances of the case and in law, the learned CIT(A) erred in not considering the fact that the assessment order passed by Assessing Officer had provided the new material directly in assessment order without confronting the same to the respondent company during assessment proceedings. On the basis of the principle of opportunity of being heard also, the addition was liable to be deleted.
4. On the facts and in the circumstances of the case and in law, the learned CIT(A) ought to have deleted the addition simply on the ground that the Whatsapp messages relied upon by Assessing Officer is totally unrelated and irrelevant to the respondent.
5. The respondent craves leave to add, alter, amend and/or withdraw any ground or grounds of cross objections either before or during the course of hearing of the same.”
9. Since all the grounds taken by the Revenue are related to the deletion of additions of INR 5.90 crores made u/s 68 of the Act and further disallowance of INR 1,00,53,494/- of interest payment u/s 37(1)
, 5000, 2060, 4999, 4648, 3988, 2061, 1455, 2062 & 1456/Del/2024 & C.O.Nos.11, 32, 33, 34/Del/2025 & 89, 90 & 91/Del/2024 of the Act and also addition of INR 7,87,500/- being alleged commission paid on such bogus loans u/s 69C of the Act and these grounds are inter-related, therefore, the same are taken together for consideration.
In support of the grounds of appeal taken by the Revenue, Ld. Sr. DR vehemently supported the orders of the AO and submits that the AO during the course of assessment proceedings has made detailed discussion about the modus operandi of the entry operators and it was found that the assessee group was obtaining accommodation entries in the shape of share capital including share premium and unsecured loans from the Shell companies managed and operated by Shri Ankit Bhageria and Shri Vimal Bhageria. He further submits that the AO has made detailed analysis of the financial statements of these companies and concluded with these companies has very low assets based and mostly having heavy share capital and premium only without any proper and regular business activities. As per ld Sr. DR the AO further relied upon the statements of Shri Ankit Bhageria and his employees who confirmed that the companies belonged to Shri Bhageria were used as conduit to provide accommodation entries to assessee group. Ld. Sr. DR further submits that the AO has referred certain WhatsApp chats and messages which clearly indicate that these loans are not genuine and therefore, requested for the restoration of the additions made by the AO in this regard.
11. Before us, Ld.AR supported the order of Ld.CIT(A) and submits that during the course of search, no incriminating material whatsoever , 5000, 2060, 4999, 4648, 3988, 2061, 1455, 2062 & 1456/Del/2024 & C.O.Nos.11, 32, 33, 34/Del/2025 & 89, 90 & 91/Del/2024 was found pertaining to the transactions carried out by the assessee for the year under appeal, based on which, it could be said that the assessee has obtained accommodation entries. Solely on suspicion, the AO has concluded that the loans taken were not genuine. The assessee discharged the onus lies upon it by filing all the relevant details as required to establish the genuineness of the loans u/s 68 of the Act. He further submits that the notice u/s 133(6) were issued to the lender companies and the same were duly complied with by them and no discrepancies whatsoever was pointed out in the details filed by these companies and the AO made general observations with respect to the capacity of the lender companies. He further submits that the loans taken were partly repaid in the year itself and partly were repaid in the subsequent AYs. Which facts are fortified from the assessment order itself and therefore, no addition could be made by holding these credits as unexplained. Ld. AR also stated that the additions have been made solely based on the statement recorded of the third party which were taken under exceptional circumstances and were retracted by the respective persons through affidavits filed before the AO, therefore, such statement deserves no credence. Ld. AR further submits that none of the loans were taken in cash, and it is not the case of the revenue that the cash was deposited in the bank accounts of the lender companies immediately before the loans were given to the assessee. Ld. Also stated that the assessee has also established the source of source in the hands of the companies by submitting the assessment , 5000, 2060, 4999, 4648, 3988, 2061, 1455, 2062 & 1456/Del/2024 & C.O.Nos.11, 32, 33, 34/Del/2025 & 89, 90 & 91/Del/2024 particulars and other documents of the entities from whom the funds were received by the lender companies.
12. With respect to the payment of interest, ld.AR submits that out of total loan of INR 24.25 crores, the AO alleged the loan of INR 5.90 crores as bogus however, interest paid on the gross amount of loan was disallowed which is contrary to the findings of the AO himself. He further submits that the loans were genuine, and the interest was paid at the rate of prevalent in the market after making TDS in accordance with law and therefore, no disallowance should be made u/s 37 of the Act as the interest payment is most genuine and in connection with the genuine loans taken by the assessee. The ld.AR thus, requested to confirm the order of Ld.CIT(A) in deleting the disallowance made by the AO.
13. With regard to the deletion of commission, Ld.AR submits that once the loans were treated as genuine, no addition on account of alleged commission could be made. He further submits that the AO has taken dual approach as on the one hand, out of total loans amount of INR 24.25 crores received during the year from four entities alleged as non-existent/non capable of granting such loan, however, only INR 5.90 crores of the loans were treated as bogus accommodation entries but the commission was calculated @ 0.25% on the total of loans received and repaid during the year itself. It is thus prayed by Ld. AR that additions were rightly deleted by Ld. CIT(A) and requested for confirmation of the orders of Ld. CIT(A). He also filed a written , 5000, 2060, 4999, 4648, 3988, 2061, 1455, 2062 & 1456/Del/2024 & C.O.Nos.11, 32, 33, 34/Del/2025 & 89, 90 & 91/Del/2024 submission and reliance is placed on various judicial pronouncements. The written submission as filed by the ld. AR of the assessee is reproduced as under:-
“The assessee has raised the following arguments before the AO and CIT(A) in response to the allegations made: 1. Regarding the addition being made on suspicion Though such evidences found during the course of search does give rise to suspicion but such suspicion alone cannot be the basis to reject all the documentary evidences filed by appellant in support of loans taken by it. It is also the presumption of law that the nature of the evidence or information gathered during the search should be of such nature that it instead of only raising doubt, the evidence establishes some wrong doing. No material pertaining to appellant is found. There is no scope of extrapolation and addition should be based on material pertains to appellant. Additions made based on presumptions that all loans are bogus without concrete evidence relating to any specific loan transactions, leading to an incorrect conclusion. Decisions relied: Hon'ble Supreme court in the case of Daulatram Rawatmull, (1964) 53 ITR 574. [no matter how strong suspicion is, it cannot take place of the evidence] Following the decision of Apex Court in the case of CIT vs. Singhad Education Society [The seized incriminating material have to pertain to the AY in question and have correlation, document-wise, with the AY] Hon'ble Delhi High Court in the case of Principal CIT versus Smt. Anita Rani reported in 392 ITR 501 (Delhi) [No scope of extrapolation in assessment] Hon'ble Delhi High court in the case of PCIT Vs Pilot Industries Ltd [2023] 146 taxmann.com 233 [no incriminating material for AY under consideration] The Hon'ble Delhi High Court in the case of PCIT, Central-2, Delhi vs Meeta Gutgutia (2017) 82 taxmann.com 287 (Delhi). [no incriminating material for AY under consideration] , 5000, 2060, 4999, 4648, 3988, 2061, 1455, 2062 & 1456/Del/2024 & C.O.Nos.11, 32, 33, 34/Del/2025 & 89, 90 & 91/Del/2024 2. The assessee has completely discharged the Onus u/s 68 The assessee has submitted the following documents before the Ld. AO as well as the CIT(A) to discharge the onus u/s 68: Particulars ITAT PB Page No. ANM RMP Bhageria RKG Fincap Holdings Finance Finvest Private Private Investment Limited Limited Limited Pvt. ltd. 1 Copy of confirmation of 66.65 96 122 152 Accounts 2. Copy of Bank statements of 67-71 97-99 123 153-154 Lender 3 Audited Financials of 72-87 100-114 124-144 155-180 Lender 4 Copy of ITR 88 115 145 181 Acknowledgement of Lenders 5 133(6) responses filed by 89095 116-121 146-151 Lenders The bank statements of the lenders as well as the PAN and Bank A/c details of the persons from whom the lenders have taken the Loan (Page 14-16 of CIT Oder, Para 7.24) are duly submitted so as to prove the source as well as the source of source of funds received. Further, notices u/s 133(6) have been complied with and no specific discrepancy in such details are pointed out by Assessing Officer. Identity: Confirmations, PAN details, and income returns of all alleged entities, conclusively establishing the identity of the depositors. Creditworthiness: The annual accounts of companies show their creditworthiness. Assessee provided source of source though not required u/s 68. The loan was taken through banking channels only. Genuineness: Appellant was advanced through banking channels. All lenders accepted the transaction with assessee complying with notice u/s 133(6). Assessment order of AY 2016-17 and 2018-19 of Satsai passed after the date of search in which it was not considered as shell entity.
, 5000, 2060, 4999, 4648, 3988, 2061, 1455, 2062 & 1456/Del/2024 & C.O.Nos.11, 32, 33, 34/Del/2025 & 89, 90 & 91/Del/2024 Decisions relied: Hon'ble Supreme Court of India in case of Commissioner of Income-tax v. Lovely Exports (P.) Ltd. [2008] 216 CTR 195 (SC) held: "..
2. Can the amount of share money be regarded as undisclosed income under section 68 of IT Act, 1961?. We find no merit in this Special Leave Petition for the simple reason that if the share application money is received by the assessee company from alleged bogus shareholders, whose names are given to the AO, then the Department is free to proceed to reopen their individual assessments in accordance with law. Hence, we find no infirmity with the impugned judgment." Hon'ble Supreme Court of India in the case of CIT v. Kamdhenu Steel & Alloys Ltd., SLP (CC) no. 15640 of 2012 (SLP Dismissed against Decision of Delhi HC): "... assessee discharged the burden in proving the identity of shareholders, genuineness of the transaction and creditworthiness of the shareholders, thereafter, in case such evidence is to be discarded or it is proved that the assessee has "created" evidence, the Revenue is supposed to make thorough probe before it could nail the assessee and fasten the assessee with such a liability under Section 68 and 69 of the Act..." Hon'ble Delhi High Court in the case of CIT(A) -9 Erstwhile CIT versus Vrindavan Farms (P) Ltd, ITA 71/2015, ITA 72/2015, ITA 84/2015. (No addition can be made when details of share applicants are furnished to the Assessing Officer complying condition of section 68) 3. Regarding Self Contradictory Findings of the Assessing Officer Addition made by AO is not tenable as Ld. AO himself has accepted that out of 1235 Lakhs received from ANM Fincap Rs. 1035 Lakhs is not bogus and out of 965 Lakhs received from RMP Holdings 800 Lakhs is not bogus. (Page 46, Para 57 and 58 of CIT(A)). Then finding of Ld. AO that the lenders are bogus is itself self-contradictory 4. Regarding the loans belong repaid in the subsequent Years The unsecured Loans has been repaid in subsequent Assessment Years which has been accepted by the AO and to substantiate the same, Ledger Accounts of the above Parties was submitted before CIT(A) and the same is Attached herewith in General Paperbook-2 page number 4-17. , 5000, 2060, 4999, 4648, 3988, 5000, 2060, 4999, 4648, 3988, 2061, 1455, 2062 & 1456/Del/2024 2061, 1455, 2062 & 1456/Del/2024 & C.O.Nos.11, 32, 33, 34/Del/2025 & 89, 90 & 91/Del/2024 & C.O.Nos.11, 32, 33, 34/Del/2025 & 89, 90 & 91/Del/2024
Decisions relied upon: Decisions relied upon: Commissioner of Income Commissioner of Income-tax vs. Shiv Dhooti Pearls & Investment Ltd. [2015] 64 tax vs. Shiv Dhooti Pearls & Investment Ltd. [2015] 64 taxmann.com 329 (Delhi)/[2016] 237 Taxman 104 (Delhi) [21 taxmann.com 329 (Delhi)/[2016] 237 Taxman 104 (Delhi) [21-12 12-2015] Commissioner of Income Commissioner of Income-tax, Rajkot-I vs. Ayachi Chandrashekhar Narsangji [2014] Ayachi Chandrashekhar Narsangji [2014] 42 taxmann.com 251 (Gujarat)/[2014] 221 Taxman 146 (Gujarat)[02 42 taxmann.com 251 (Gujarat)/[2014] 221 Taxman 146 (Gujarat)[02-12-2013] 42 taxmann.com 251 (Gujarat)/[2014] 221 Taxman 146 (Gujarat)[02 Commissioner of Income Commissioner of Income-tax, Surat-1 vs. Shri Mahavir Crimpers [2018] 95 1 vs. Shri Mahavir Crimpers [2018] 95 taxmann.com 323 (Gujarat) [13 taxmann.com 323 (Gujarat) [13-06-2018]; CIT v. Karaj Singh [2011] 15 tax CIT v. Karaj Singh [2011] 15 taxmann.com 70/203 Taxman 218 (Punj. & Har.) mann.com 70/203 Taxman 218 (Punj. & Har.) In these judgments, the Hon'ble High Courts have held that the factum of In these judgments, the Hon'ble High Courts have held that the factum of In these judgments, the Hon'ble High Courts have held that the factum of repayment are entitled to great weight while evaluating the bona fides of loan repayment are entitled to great weight while evaluating the bona fides of loan repayment are entitled to great weight while evaluating the bona fides of loan transactions.
, 5000, 2060, 4999, 4648, 3988, 2061, 1455, 2062 & 1456/Del/2024 & C.O.Nos.11, 32, 33, 34/Del/2025 & 89, 90 & 91/Del/2024 Assistant Commissioner of Income-tax, Circle-8(2) vs. Evermore Stock Brokers (P.) Ltd. [2024] 158 taxmann.com 211 (Delhi - Trib.)/[2023] 108 ITR(T) 13 (Delhi - Trib.)[19-09-2023] Director of Income-tax vs. Modern Charitable Foundation [2012] 20 taxmann.com 693 (Delhi) [18-05-2011]
5. Regarding addition being made solely on the basis of Statements The addition made by the AO is made only on the basis of statements recorded during the course of the search and no corroborative evidence has been brought on record by the AO. Further, these statements are also not reliable due to the following reasons: Purushottam Bhageria -He was diagnosed for arteries blockage on (MD of Filatex India 28th August 2021 and coronary angioplasty Limited) was scheduled on 2nd September 2021. -He was forced to reschedule the appointment and give the statement, the angioplasty was finally conducted on 18th September 2021. - He was pressurized to sign the statement (Page 222-223 in his Affidavit of general Paper book 1) - He stated that there is no relation between unsecured loan and cash transactions in his Affidavit. (Page 225 of General PB 1) - Such statement is general in nature and admission is not with reference to any specific transaction of loan by the appellant -Such statements are substantively clarified by duly notarized affidavit. Ankit Bhageria - Ankit's role was limited before passing away of his father, Vimal Bhageria in the month of April, 2021 (Q. 12). Therefore, loan taken in the year under consideration would not have any impact of his statement. - Statement was recorded in English. Ankit Bhageria could not understand the questions On 7th August 2021, doctor suggested him to go for Angiography to diagnose for any heart disease - he was pressurized and threatened to accept the allegation made by the AO to sign the statement - He could not comment on the questions as his , 5000, 2060, 4999, 4648, 3988, 2061, 1455, 2062 & 1456/Del/2024 & C.O.Nos.11, 32, 33, 34/Del/2025 & 89, 90 & 91/Del/2024 father was looking after the operations of the companies until the death of his father in April 2021. Therefore, his statement itself is not reliable as it could not be presumed of his awareness about any transaction (Q. 12 of his statement). (Page 143-144 in his Affidavit of General PB 1) - In response to Question No. 25 (Page 9 of General PB 1) of the statement of Ankit u/s. 132(4), he stated that source of unsecured loan was amount borrowed from various Body Corporate and individuals. Question No. 69 (Page 26 of General PB 1), Shri Ankit Bhageria had categorically denied of getting any direction from Purrshottam Bhageria regarding alleged cash transactions. Such statement is general in nature and admission is not with reference to any specific transaction of loan by the appellant - Such statements are substantively clarified by duly notarized affidavit Jitender Kumar He was pressurized to sign the statement. (Employee of Filatex) - The statement does not show what he stated. It is the version of the Officer. (in his Affidavit Page 146 of General PB 3) Such statement is general in nature and admission is not with reference to any specific transaction of loan by the appellant Such statements are substantively clarified by duly notarized affidavit Prabhakaran Pillai - He was a diabetic and Heart Patient. (Employee of Filatex) - he was put under pressure and the search was continued for 3 days - The statement does not show what he stated. It is the version of the Officer. (in his Affidavit Page 139 of General PB 3) - Such statement is general in nature and admission is not with reference to any specific transaction of loan by the appellant -Such statements are substantively clarified by duly notarized affidavit , 5000, 2060, 4999, 4648, 3988, 2061, 1455, 2062 & 1456/Del/2024 & C.O.Nos.11, 32, 33, 34/Del/2025 & 89, 90 & 91/Del/2024 As explained above, though the statements are not reliable, still even otherwise the additions cannot be made merely on the basis of statement without any corroborative evidences. Sec. 132(4) specifies word "used in evidence" not "Used as evidence" The usage of the word "used in evidence" signifies that if there are any other corroborative evidence or documentary evidence, in that case the statement can be used as one of the evidences Decisions relied: CIT Vs. Harjeev Aggarwal 70 taxmann.com 95 (Del-HC) [A statement under section 132(4) can be relied if it is corroborated by incriminating evidence] Sambhav Buildwell (P) Ltd vs. ACIT vide (Del- ITAT)[Unsecured loan cannot be termed bogus only on the basis of statement without corroborative material] Decision of Delhi High Court in the case of PCIT V. Pavitra Realcon Pvt. Ltd. (ITA 579/2018) Ajay Gupta Vs. DCIT 81 Taxmann.com 462 (Del-ITAT) [Incriminating material must have been found to correlate the undisclosed income with such statement.]
6. The AO could not find any corroborative evidence to prove that the contents of the Whatsapp Messages were true and linked with the unsecured loan taken by the assessee.
7. Further, no cash trail was established by the AO to prove that unsecured loans were taken in exchange of Cash Payments.
8. During the course of recording of statement of Shri Purshottam Bhageria, no independent witnesses remained present during the recording of the statement of Shri Purshottam Bhageria. The 2 witnesses required by Rule 112 were the drivers of the car in which the Search party came at the place of search. They were neither independent nor literate enough to understand the language in which the statements were recorded. 9. The statement of various employees as referred to in assessment order cannot be applied to facts of the appellant's case as such statements are general in nature and admission is not with reference to any specific transaction of loan by the appellant. 10. The A.O. has not doubted the utilization of such loans by appellant and such loan has been repaid in the same year or subsequent Assessment Years.
, 5000, 2060, 4999, 4648, 3988, 2061, 1455, 2062 & 1456/Del/2024 & C.O.Nos.11, 32, 33, 34/Del/2025 & 89, 90 & 91/Del/2024 Ld. CIT(A) on Page 62-Para 130 of the CIT(A) order has considered the submission of the assessee and summarily held that appellant has proved identity, creditworthiness, Capacity and Genuineness, AO has not doubted the utilization and repayment of such loans, TDS has been deducted on interest payments, 133(6) summons have been complied by the parties and details asked by Ld. AO were filed. Further, in the same Para point (vi) it was held by Ld. CIT(A) that WhatsApp chats relied upon by Ld. AO does gives rise to suspicion but the same nowhere proves that cash has been exchanged against any specific loan taken by appellant. This ground is in relation to the consequent Interest disallowance made by AO as the unsecured Loans were held bogus by Ld. AO. Since, the Loans were held genuine by CIT(A) and TDS has been deducted on the interest expenses claimed, the disallowance of the same made by AO was deleted by CIT(A). Ld. AO also made addition of alleged commission expense incurred by assessee for obtaining accommodation entries @0.25% on total credits as well as repayments i.e 0.25% of Rs. 3150 Lakhs (2425L +725L) which comes to Rs. 7,87,500/-. Since, the Loans were held genuine by CIT(A), the alleged unexplained expenditure for taking accommodation entries was also deleted by Ld. CIT(A).”
Heard both the parties and perused the material available on record. From the perusal of the order of Ld.CIT(A), it is found that Ld.CIT(A) after considering the submissions of the assessee and the observations made by the AO in the assessment order and further by following the judicial pronouncements relied upon and after referring the WhatsApp chat etc. deleted the additions made by the AO towards the unsecured loan and interest paid thereon and alleged payment of commission. The relevant conclusion drawn by the ld. CIT(A) in para 130 of the order is as under:
, 5000, 2060, 4999, 4648, 3988, 2061, 1455, 2062 & 1456/Del/2024 & C.O.Nos.11, 32, 33, 34/Del/2025 & 89, 90 & 91/Del/2024 130. “In view of above discussion, and considering relevant facts on record, it is observed as under: (i) The appellant has proved identity of the creditor which is not disputed by Assessing Officer in assessment order. (ii) The appellant has also proved creditworthiness of the creditor by submitting its audited annual account along with relevant bank statement of depositors. The Assessing Officer has not proved that any cash has been deposited prior to giving cheque to appellant even though appellant was not required to prove sources of source, the bank statement submitted by appellant clearly reflects such sources which is not doubted by A.O. nor any inquiry has been made by A.O. for concluding that loan received by appellant is accommodative loan from shell companies. As discussed herein above, when appellant was asked to further explain sources of source, the appellant has provided such details, availability of funds with depositors who have transferred funds to ANM, RMP, Bhageria Finance and RKG who have in turn transferred funds to appellant and their sources are mainly from sale of shares, fixed assets, redemption of mutual fund or unsecured loan taken from group entities or third parties. The appellant had also submitted relevant return of income of depositors of ANM, RMP, Bhageria Finance and RKG to prove that they have disclosed income arising from such transactions in return of income. The Assessing Officer has observed that relevant documents submitted by appellant prove creditworthiness of depositors. (iii) The appellant has taken loan from ANM, RMP, Bhageria Finance and RKG who are having sufficient funds as on 31st March, 2012 and 2013 and same is duly disclosed in audited annual accounts of such company. Thus, the capacity of depositor is proved by the appellant. (iv) The A.O. has not doubted the utilisation of such loans by appellant and such loan has been repaid in subsequent Assessment Years after making payment of interest and deducting TDS on such interest payment. (v) During the course of assessment proceedings, notice u/s 133(6) was issued ANM, RMP, Bhageria Finance and RKG and in response to such notice they have filed relevant details. If the Assessing Officer had any doubt about sources of funds either in balance sheet or sources of funds in their bank statement, he could have made further inquiries either under Section 133(6) or 131 of the Act. (vi) While making the addition Assessing Officer has relied upon various WhatsApp chats but such chats nowhere prove that those cash has been , 5000, 2060, 4999, 4648, 3988, 2061, 1455, 2062 & 1456/Del/2024 & C.O.Nos.11, 32, 33, 34/Del/2025 & 89, 90 & 91/Del/2024 exchanged against any specific loan taken by appellant. Though such evidences found during the course of search does give rise to suspicion but such suspicion alone cannot be the basis to reject all the documentary evidences filed by appellant in support of loans taken by it. (vii) Though according to Assessing Officer, Shri. Ankit Bhageria is an entry provider or he is operating shell companies, but what is required to be seen is whether in the case of Assessee the documents found during the course of search at their premises or from the premises of Shri. Ankit Bhageria or otherwise show that Assessee was beneficiary of any accommodation entry or not. In the present case, the A.O. sans any specific link about loan taken from ANM, RMP, Bhageria Finance and RKG with any cash trail and on the contrary ANM, RMP, Bhageria Finance and RKG in reply to notice u/s 133(6) has accepted that genuine loan was given to appellant. The A.O. has failed to prove any direct nexus linking the Assessee with accommodation entries from SFPL or Ankit Bhageria group entities.”
In the present case, the sole dispute is with respect to the unsecured loans taken by the assessee from four companies which were alleged as bogus accommodation entities. The assessee received total amount of loans of INR 24.25 crores from four companies however, the AO though had observed that these four companies are Shell companies which are managed and controlled by Shri Ankit Bhageria (alleged as entry operator) however, only loans of INR 5.90 crores were considered as accommodation entries and accepted the balance amount of loans of INR 18.35 crores received from the same lender companies as genuine loans. It is surprising that when the creditworthiness of lender companies is doubted and allegation has been made with respect to the lender companies as Shell companies as to what prevent the AO to hold that the entire loans taken were accommodation entries. Moreso, while making the additions for alleged payment of commission for obtaining such entries, the AO not only taken the entire loan , 5000, 2060, 4999, 4648, 3988, 2061, 1455, 2062 & 1456/Del/2024 & C.O.Nos.11, 32, 33, 34/Del/2025 & 89, 90 & 91/Del/2024 amount received at INR 24.25 crores but also taken into consideration the repayment made at Rs. 7.25 crores during the year. This at first hand raised doubts about the conclusion drawn by the AO in holding the said companies as Shell Companies and the loan received by assessee as accommodation entries. It is also relevant to state that during the year itself, repayment of INR 7.25 crores was made which has been ignored and also the fact that the loans were finally repaid in subsequent years was also ignored while holding these loans as accommodation entries.
Before AO, the assessee submitted detailed reply to the show cause notice issued and further filed all the plausible documentary evidences to support that the loans taken were genuine. At this juncture, we first refer to the provision of section 68 of the Act. Cash credits. 68. Where any sum is found credited in the books of an assessee maintained for any previous year, and the assessee offers no explanation about the nature and source thereof or the explanation offered by him is not, in the opinion of the Assessing Officer, satisfactory, the sum so credited may be charged to income-tax as the income of the assessee of that previous year : Provided that where the sum so credited consists of loan or borrowing or any such amount, by whatever name called, any explanation offered by such assessee shall be deemed to be not satisfactory, unless,— (a) the person in whose name such credit is recorded in the books of such assessee also offers an explanation about the nature and source of such sum so credited; and (b) such explanation in the opinion of the Assessing Officer aforesaid has been found to be satisfactory:
, 5000, 2060, 4999, 4648, 3988, 2061, 1455, 2062 & 1456/Del/2024 & C.O.Nos.11, 32, 33, 34/Del/2025 & 89, 90 & 91/Del/2024 Provided further that where the assessee is a company (not being a company in which the public are substantially interested), and the sum so credited consists of share application money, share capital, share premium or any such amount by whatever name called, any explanation offered by such assessee-company shall be deemed to be not satisfactory, unless— (a) the person, being a resident in whose name such credit is recorded in the books of such company also offers an explanation about the nature and source of such sum so credited; and (b) such explanation in the opinion of the Assessing Officer aforesaid has been found to be satisfactory: Provided also that nothing contained in the first proviso or second proviso shall apply if the person, in whose name the sum referred to therein is recorded, is a venture capital fund or a venture capital company as referred to in clause (23FB) of section 10.”
That a bare reading of Section 68 suggests that there has to be credit of amounts in the books maintained by an assessee; such credit has to be of a sum during the previous year; and the assessee offer no explanation about the nature and source of such credit found in the books; or the explanation offered by the assessee in the opinion of the Assessing Officer is not satisfactory, it is only then the sum so credited may be charged to income-tax as the income of the assessee of that previous year. The expression "the assessee offer no explanation" means where the assessee offer no proper, reasonable and acceptable explanation as regards the sums found credited in the books maintained by the assessee. It is true that the opinion of the Assessing Officer for not accepting the explanation offered by the assessee as not satisfactory is required to be based on proper appreciation of material and other attending circumstances available on record. The opinion of the Assessing Officer is required to be formed objectively with reference , 5000, 2060, 4999, 4648, 3988, 2061, 1455, 2062 & 1456/Del/2024 & C.O.Nos.11, 32, 33, 34/Del/2025 & 89, 90 & 91/Del/2024 to the material available on record. Application of mind is the sine qua non for forming the opinion.
Coming to the facts of the present case in the line of the above proposition of law, from the perusal of details filed by the assessee during the course of assessment proceedings as available in Paper Book at page 65 to 181, it is seen that in the case of four lender companies, the assessee filed the following documentary evidences:- (i) Confirmed Copy of account statement; (ii) Bank statement of the lender companies; (iii) Audited financial statement of the lender companies; (iv) Copy of ITR acknowledgement of the lender companies; and (v) Copy of compliance letter filed by the lender companies in response to notice u/s 133(6) of the Act issued by the AO
It is further seen that the assessee not only prove the source in the hands of the loan creditors but further prove the source of source of the funds advanced to the assessee company which is evident from the table given in page 15 & 16 of the order of Ld. CIT(A) in para 7.24 which is reproduced as under:- , 5000, 2060, 4999, 4648, 3988, 5000, 2060, 4999, 4648, 3988, 2061, 1455, 2062 & 1456/Del/2024 2061, 1455, 2062 & 1456/Del/2024 & C.O.Nos.11, 32, 33, 34/Del/2025 & 89, 90 & 91/Del/2024 & C.O.Nos.11, 32, 33, 34/Del/2025 & 89, 90 & 91/Del/2024 , 5000, 2060, 4999, 4648, 3988, 5000, 2060, 4999, 4648, 3988, 2061, 1455, 2062 & 1456/Del/2024 2061, 1455, 2062 & 1456/Del/2024 & C.O.Nos.11, 32, 33, 34/Del/2025 & 89, 90 & 91/Del/2024 & C.O.Nos.11, 32, 33, 34/Del/2025 & 89, 90 & 91/Del/2024
It is also relevant to state It is also relevant to state that an amendment is made vide an amendment is made vide Finance Act, 2022 wherein wherein second proviso to section 68 second proviso to section 68 is added so as to provide that the nature and source of any sum, whether in the form to provide that the nature and source of any sum, whether in the form to provide that the nature and source of any sum, whether in the form of loan or borrowing, or any other liability credited in the books of an of loan or borrowing, or any other liability credited in the books of an of loan or borrowing, or any other liability credited in the books of an assessee shall be treated as explained only if the source of funds is also assessee shall be treated as explained only if the source of funds is also assessee shall be treated as explained only if the source of funds is also explained in the hands of the c explained in the hands of the creditor or loan provider. However, this provider. However, this additional onus to prove to prove satisfactorily the source in the hands of the satisfactorily the source in the hands of the creditor, would not apply if the creditor is a well creditor, would not apply if the creditor is a well-regulated creditor, would not apply if the creditor is a well entity, i.e., it is a Venture Capital Fund, Venture Capital Company Venture Capital Fund, Venture Capital Company Venture Capital Fund, Venture Capital Company registered with SEBI. This amendment has taken effect from 1 This amendment has taken effect from 1stApril, , 5000, 2060, 4999, 4648, 3988, 2061, 1455, 2062 & 1456/Del/2024 & C.O.Nos.11, 32, 33, 34/Del/2025 & 89, 90 & 91/Del/2024 2023 and accordingly applies in relation to the assessment year 2023- 24 and subsequent assessment years. The year before us is AY 2013-14 thus this amendment is not applicable, yet the assessee has been able to establish the same as per the table reproduced herein above.
As observed above, the requirement of explaining ‘Source’ of ‘Source’ in respect of loans is applicable from A.Y. 2023-24 and subsequent years. Reliance in this regard is placed on coordinate bench of Delhi ITAT decision dated 31.05.2022 in the case of M/s Mall Hotels Ltd. Vs. CIT (ITA No. 2688/DEL/2014). The coordinate Delhi Bench of ITAT in the case of ACIT v Smt. Prem Anand (ITA No. 3514/Del/2014) vide its decision dated 13.04.2017 has held that amendment made in section 68 of the Act w.e.f. 01.04.2013 empowers the A.O. to examine source of source in case of share application money / share capital / share premium from 01.04.2013 and this amendment does not give power to the A.O. to examine source of source of non-share capital cases.
It is clear that the assessee has furnished source of source and if the AO has any doubts with respect to the source of source in the hands of the loan creditor, it could have made further enquiries from all such parties even after receiving their replies in response to the notices issued u/s 133(6) of the Act.
The Hon’ble Supreme Court in the case of Orissa Corporation reported in [1986] 159 ITR 78 (SC) has held that when the assessee , 5000, 2060, 4999, 4648, 3988, 2061, 1455, 2062 & 1456/Del/2024 & C.O.Nos.11, 32, 33, 34/Del/2025 & 89, 90 & 91/Del/2024 furnishes names and addresses of the alleged creditors and the GIR numbers, the burden shifts to the Department to establish the Revenue's case and in order to sustain the addition the Revenue has to pursue the enquiry and to establish the lack of creditworthiness and mere non-compliance of summons issued by the Assessing Officer under section 131, by the alleged creditors will not be sufficient to draw an adverse inference against the assessee.
It is further seen that no incriminating material was brought on record pertaining to the year under appeal from which it could be held that the loans taken by the assessee are not genuine. In this regard, we place reliance on the judgment of Hon’ble Supreme Court in the case of CIT-III, Pune vs Singhad Education Society in Civil Appeal No.11080/2017 arising out of SLP (C) No.25257/2015 wherein the Hon’ble Apex Court has held as under:- “The seized incriminating material have to pertain to the AY in question and have co-relation, document-wise, with the AY. This requirement u/s 153C is essential and becomes a jurisdictional fact. It is an essential condition precedent that any money, bullion or jewellery or other valuable articles or thing or books of accounts or documents seized or requisitioned should belong to a person other than the person referred to in S.153A.”
Hon’ble Supreme Court in the case of Pr. CIT v. Abhisar Buildwell (P.) Ltd. [2023] 149 taxman.com 399 (SC) has also held that “no addition could be made dehorse the incriminating material”. Ld.CIT(A) has also referred to certain judgements in this regard which are discussed in para 16 to 21 of the appellate order which are not controverted by the , 5000, 2060, 4999, 4648, 3988, 2061, 1455, 2062 & 1456/Del/2024 & C.O.Nos.11, 32, 33, 34/Del/2025 & 89, 90 & 91/Del/2024 Revenue therefore, the ratio laid down in these judgements is also applicable to the facts of the present case.
It is further seen that Ld.CIT(A) has made detailed discussion on the statement of various persons recorded during the course of search and post-search proceedings which were relied by the AO for holding the loans as bogus. The observations of Ld .CIT(A) as contained in para 23 to 43 in this regard speaks about the non-application of such statements and relied upon various judgments for not providing opportunity to cross examine those third parties to the assessee has not been controverted by the Revenue before us therefore, we find no infirmity in these observations of Ld.CIT(A).
Regarding surrounding circumstances, it is observed that while making addition u/s 68 of the Act, the AO has doubted the financial capacity of loan creditors but such addition cannot be made on preponderance of probability and there has to be some evidence and substance in contention. The Assessing Officer has not brought anything on record to establish that the sources in the hands of loan creditors is non-genuine. Merely because they have shown meager income or no sufficient sources as presumed by Assessing Officer, loan taken by appellant from them cannot be held to be accommodation entries. It is well-settled position of law that no matter how strong suspicion is, it cannot take place of the evidence. Therefore, in the absence of any evidence showing that in fact, appellant has given cash in lieu of unsecured loan taken, merely on the basis of suspicion, no 5000, 2060, 4999, 4648, 3988, 2061, 1455, 2062 & 1456/Del/2024 & C.O.Nos.11, 32, 33, 34/Del/2025 & 89, 90 & 91/Del/2024 addition can be made for which reliance is placed on decision of Hon'ble Supreme court in the case of Daulatram Rawatmull, (1964) 53 ITR 574.
The Hon’ble Allahabad High Court in the case of Principal Commissioner of Income-tax v. Anshika Consultants (P.) Ltd. reported in [2024] 162 taxmann.com 792 (Allahabad) held as under:- INCOME TAX: Where assessee had received unsecured interest bearing loans from three corporate entities and had furnished necessary acknowledgement of return, balance sheet, profit and loss account, etc., to prove identity, creditworthiness and genuineness of transaction of unsecured loan taken by it, addition under section 68 was not warranted.
Similarly in the case of Deputy Commissioner of Income-tax v. Paswara Papers Ltd. reported in [2024] 159 taxmann.com 604 (Allahabad), the Hon’ble Court has held as under: INCOME TAX : Where assessee received loan from various creditors who sold their old jewellery and gave loan to assessee out of sale consideration, since assessee had disclosed name of jewellers to whom jewellery was sold and also established mode of payment through banking channel, and moreover existence of deposits made to assessee by creditors was not in dispute, impugned addition under section 68 with respect to loan could not be sustained.
30. The Co-ordinate Bench of ITAT, Delhi in the case of ITO Vs. Alpha Contech Pvt. Ltd. in vide order dt. 28.07.2023 under identical circumstances while deleting the additions made by AO by alleging the loan creditors as bogus, has held as under: 7. On careful consideration of above rival submission, first of all, we note that the Assessing Officer made addition u/s. 68 of the Act, by observing that despite several opportunity the assessee failed to prove creditworthiness of lender and genuineness of transaction and thus could not discharge onus as per requirement of sec 68 of the Act. The assessee carried the matter before ld. CIT(A) and filed additional evidence under rule 46A of the Rules on which remand report was , 5000, 2060, 4999, 4648, 3988, 2061, 1455, 2062 & 1456/Del/2024 & C.O.Nos.11, 32, 33, 34/Del/2025 & 89, 90 & 91/Del/2024 called wherein the Assessing Officer did not made any adverse comment on the additional documentary evidence of assessee and also admitted that the lender company received amount of Rs. 7,30,62,000/- as share premium reserve during immediately preceding assessment year and amount of loan of Rs. 3.60 crore advanced to the assessee during present assessment year was from the said reserve amount. The remand report of the Assessing Officer supported the case of assessee which was based on the strength of additional evidence filed by the assessee without raising any doubt or discrepancy therein.
8. We also find and appropriate to reproduce the relevant operative part of first appellate order as follows:- The appellant company has received Rs.3,60,00,000/- from M/s Fennie Commercial Pvt. Ltd. as unsecured loan / share application money during the year. The same was added by the AO on the ground that appellant has failed to file confirmation as well as other supporting documents of the lender party before AO to prove identity, genuineness and creditworthiness of the party. During the course of appellate proceedings, appellant filed an application under Rule 46A and filed following documents to prove identity, genuineness and creditworthiness of the party:
i. Copy of Acknowledgement of IT. Paper Book page no. 48. ii. Copy of Audited Financial Statements along with all the annexures. Paper Book page no. 49-60. iii. Copy of Confirmed ledger account. Paper Book page no. 61. iv. Copy of Bank Statements reflecting the amount given to the assessee company. Paper Book page no. 62-63. v. Copy of confirmation. Paper Book page no. 64.
These documents were forwarded to the A for carrying out necessary enquiry with reference to the lender party. The Assessing Officer after conducting enquiries with reference to the lender party has submitted remand report vide his letter dated 2.03.2016 which was forwarded by the Addl. CIT, Range 2 vide his letter dated 08.03.2016. The relevant part of the remand report is submitted as under:
"4. As per directions received, the submissions made by the assessee before your good self as well as additional evidence submitted by it for admission at the appellate stage have been , 5000, 2060, 4999, 4648, 3988, 2061, 1455, 2062 & 1456/Del/2024 & C.O.Nos.11, 32, 33, 34/Del/2025 & 89, 90 & 91/Del/2024 carefully perused. Besides, the additional evidence furnished by the assessee has also been independently verified from this Office by way of issue of letter us 133(6) of the Income Tax Act, 1961, to the third party concerned, i.e., to Ms Fennie Commercial Private Limited, 96-AV9, Neelkanth Apartments, Kishan Ganj, Vasant Kunj, New Delhi - 110070.
The said party has furnished its detailed reply to the letter issued us 133(6) vide its letter dated 08.01.2016, which is placed on record. The said party has given the details of the share application money of Rs.3.60 crores advanced by it to the appellant company and also produced the ledger account of the assessee company in its books for the relevant period, apart from the copy of the ITR-V in its case, copy of the Audit Report, Balance sheet, P & L Account and annexures. It is also seen from the annexures to the Audit Report that under the head "Loans & Advances (totaling Rs. 7,41,00,000/-), the name of the appellant company is appearing the List of Share application money given details wherein the sum of Rs.3.60 crores has been shown against the name of the appellant company, amongst other entities to whom share application money had been advanced by this company. As regards the source of investment made by this company, it has been submitted that the same has been made out of its own sources. Further, the perusal of the Balance Sheet of this company shows that it has Share Premium Reserve of Rs.7,30,62,000/-, which is the same as in the immediately preceding previous year, out of which funds have been invested in the appellant company and others.
However, it is also seen from the P & L Account filed in this case that this company has no apparent business activity during the relevant period, i.e. during the FY 2010-11, and it has declared a nominal sum of Rs.35,600/- as Consultancy / Commission income. This company has also furnished a copy of the intimation us 143(1) in its case, issued by CPC, Bangalore, in response to the specific query regarding furnishing copy of assessment order passed in its case for AY 2011-12.
7. As regards the present position of the said money advanced by MIs Fennie Commercial Pvt. Ltd. to the appellant company, it has been stated that they have not received any shares from M/s Alfa Contech Private Limited till date and the said Sum is lying as Loans & Advances in their books. However, this company has not furnished copy of its latest IT filed as well as copy of Audit , 5000, 2060, 4999, 4648, 3988, 2061, 1455, 2062 & 1456/Del/2024 & C.O.Nos.11, 32, 33, 34/Del/2025 & 89, 90 & 91/Del/2024 Report, Balance Sheet and P & L Account despite being specifically called for in the letter issued us 133(6) to it.
8. It is also submitted here that as per the Balance Sheet of the appellant company for the AY 2011-12, it has shown a sum of Rs.3.60 crores as "Loans from Body Corporate", as per Schedule 3 annexed to the Balance Sheet and not as Share Application Money. Also, as per details filed by the appellant vide its letter dated 03.02.2014 during the course of the assessment proceedings in its case for AY 2011-12, it has furnished the name of Ms Fennie Commercial Private Limited, PAN AAACF9549A, from whom it had allegedly received unsecured loan of Rs.3.60 crores whereas the said party is showing this Loan & Advance as "Share Application Money". It is seen from the remand report that Assessing Officer has carried out enquiry with the lender party us 133(6) of the I.T. Act. The said party furnished the detailed reply vide its letter dated 08.01.2016. It has been reported by the AO that Ms Fennie Commercial Pvt. Ltd. has confirmed that it has given share application money of Rs.3.60 crore which has been accounted for by the appellant as unsecured loan in its balance sheet. The AO has also examined the ledger account of the appellant company from the lender party's books of accounts. The lender party has also filed copy of its return of income, audit report, balance sheet, profit & loss account and annexures. It has been observed by the AO from the annexures of the audit report that lender has shown loans and advances totalling Rs.7,41,00,000/- in its balance sheet. The appellant's name is also appearing in the loan and advances and has been shown as share application money of Rs.3.60 crore in the name of appellant. AO has also verified the balance sheet of the lender company and it is seen that said company has shown share premium reserve in its balance sheet in A.Y. 2010-11 out of which the amount has been given to the appellant. All these facts establish the identity, creditworthiness and genuineness of the transactions. It is seen that the said party has confirmed the transactions with the appellant and source of the money is also explained. M/s Fennie Commercial Pvt. Ltd. is assessed to tax with Ward 9(1). New Delhi and filing its return of income.
The appellant company has filed copies of their bank statement, balance sheets and profit & loss a/c of the lender company before me to prove the identity, creditworthiness and genuineness of the transaction. These facts have been verified by the AO in the remand proceedings and has submitted report in this regard. It is seen that name of the appellant , 5000, 2060, 4999, 4648, 3988, 2061, 1455, 2062 & 1456/Del/2024 & C.O.Nos.11, 32, 33, 34/Del/2025 & 89, 90 & 91/Del/2024 company is appearing in the balance sheet of the lender company. In view of the documents filed by the above named lender company before me as well as AO, it is established that the identity, source, creditworthiness of the lender company and genuineness of the transactions has been established.
I find that the AO has not been able to bring on record any evidence to negate the genuineness of the transaction done by the appellant. Therefore, the addition cannot be sustained only on suspicion and surmises. Considering the fact that the identity, genuineness and creditworthiness of the lender company duly established, the addition made by the A cannot be upheld and hence the AO is directed to delete the addition of Rs.3,60,00,000/- made on account of unexplained income us 68 of the I.T. Act. In support of my above decision, reliance is placed on following judicial pronouncements: a. CIT Vs. Fair finvest Itd. [ 2014 ] 44 taxmann.com 356 (Delhi) HIGH COURT OF DELHI "Section 68 of the Income-tax Act, 1961 - Cash credit - Assessment year 2002-03 - Where assessee had filed documents including certified copies issued by Registrar of Companies in relation to share application and affidavits of directors, Assessing Officer could not make addition on account of share application money solely on basis of investigation report [In favour of assessee.
Where assessee adduces evidence in support of share application monies, it is open to Assessing Officer to examine it and reject it on tenable grounds. In case he wishes to rely on report of investigation authorities, some meaningful enquiry ought to be conducted by him to establish a link between assessee and alleged hawala operators. Where assessee had filed documents including certified copies issued by Registrar of Companies in relation to share application, affidavits of directors, Form 2 filed with Registrar of Companies by such applicants, confirmations by applicants for company's shares, certificates by auditors, etc., Assessing Officer was not justified in making addition under section 68 on account of share application money merely on general inference to be drawn from the reading of the investigation report. The least that Assessing Officer ought to have done was to enquire into matter by, if necessary, invoking his powers under section 131 summoning the share applicants or directors.
, 5000, 2060, 4999, 4648, 3988, 2061, 1455, 2062 & 1456/Del/2024 & C.O.Nos.11, 32, 33, 34/Del/2025 & 89, 90 & 91/Del/2024 b. Commissioner of Income-tax v. Mark Hospitals (P.) Ltd. [ 2015 ] 58 taxmann.com 226 (Madras) HIGH COURT OF MADRAS "Section 68 of the Income-tax Act, 1961 - Cash credit (Burden of proof - Assessment year 2006-07 - Assessee had obtained unsecured loans from agriculturists and submitted their names and addresses, but did not provide their PAN cards - Assessing Officer made addition under section 68 - It was found that loans were given to assessee through cheques and all creditors had confirmed that they had advanced loans mentioned against their names to assessee and, thus, identity of creditors could not be disputed - Further, all creditors were agriculturists and therefore, they did not have PAN card - Whether, on facts, no addition could be made - Held, yes [Para 6] [In favour of assessee]" c. ITO Vs. Neelkanth Finbuild Ltd., [2015] 61 taxmann.com 132 (Delhi - Trib.), held that "6. Keeping in view the findings given so the Assessing Officer as well as the learned first appellate authority and the documentary finding by the assessee before us, we are of the considered view that the learned first appellate authority has deleted the addition in dispute on the basis of various documentary evidence filed by the assessee before the Assessing Officer as well as before him. The hon'ble Supreme Court of India (sic.) in the case of CIT v. Lovely Exports (P.) Ltd. [2008] 299 ITR 268 (Delhi) which has confirmed the order of the hon'ble Delhi High Court has held that once the identity of the shareholder have been established, even if there is a case of bogus share capital, it cannot be added in the hands of the company unless any adverse evidence is not on record. The learned first appellate authority has examined the documentary evidence filed by the assessee before the Assessing Officer as well as before him and held that the assessee has provided confirmations from all the parties as well as various evidences to establish the genuineness of the transaction, the assessee has also relied upon the judgment of Nemi Chand Kothari v. CIT [2003] 264 IT 254/[2004] 136 Taxman 213 (Gau.) wherein it has been held that it is a certain law that the assessee is to prove the genuineness of transaction as well as the creditworthiness of the creditor must remain confined to the transactions which have taken place between the assessee and the creditor. It is not the business of the assessee to find out the source of money of creditors. Similar observation has also been given in the case of S. Hastimal v. CIT [1963] 49 ITR 273 (Mad.) and CIT v. Daulat Ram Rawatmull [1973] 87 IT 349 (SC). The learned first , 5000, 2060, 4999, 4648, 3988, 2061, 1455, 2062 & 1456/Del/2024 & C.O.Nos.11, 32, 33, 34/Del/2025 & 89, 90 & 91/Del/2024 appellate authority has cited various decisions rendered by the hon'ble Supreme Court of India as well as the hon'ble jurisdictional High Court in the impugned order and finally has held that the assessee has substantiated the transaction regarding share application money received by it was genuine transaction and the same were not accommodation entries. He did not find any evidence collected by the Assessing Officer which could prove otherwise and deleted the additions in dispute. As regard the addition of Rs. 12,500 made on account of commission which was presumed to have been allowed by the assessee for obtaining the hawala entry in dispute, the learned Commissioner of Income-tax (Appeals) observed that the Assessing Officer was not able to bring anything on record that it was the assessee's own money which was routed in the form of share application money and has rightly deleted the same.
Keeping in view all the facts and circumstances, we are of the considered view that the learned first appellate authority has passed the impugned order under the law and according to the facts of the present case and has rightly deleted the addition in dispute. We find no infirmity in the impugned order and uphold the impugned order by dismissing the appeal filed by the Revenue."
d. Honorable Supreme Court of India in the case of CIT v. Kamdhenu Steel & Alloys Ltd., SLP (CC) no. 15640 of 2012, dated 17-09-2012 (Supreme Court), wherein the Hon'ble Supreme Court has dismissed the Special Leave Petition filed by the Revenue against the decision of Hon'ble Delhi High Court in the case CIT v. Kamdhenu Steel & Alloys Ltd. in which it has been held by Hon'ble Court that once adequate evidence/material given by the assessee, which would prima facie discharge the burden of the assessee in proving the identity of shareholders, genuineness of the transaction and creditworthiness of the shareholders, thereafter, in case such evidence is to be discarded or it is proved that the assessee has "created" evidence, the Revenue is supposed to make thorough probe before it could nail the assessee and fasten the assessee with such a liability under Section 68 and 69 of the Act." e. Commissioner of Income Tax -9 Erstwhile CIT-VI v. Vrindavan Farms (P) Ltd, ITA 71/2015, ITA 72/2015, ITA 84/2015, the High Court of Delhi held as under :
, 5000, 2060, 4999, 4648, 3988, 2061, 1455, 2062 & 1456/Del/2024 & C.O.Nos.11, 32, 33, 34/Del/2025 & 89, 90 & 91/Del/2024 "3. The ITAT has in the impugned order noticed that in the present case the Revenue has not doubted the identity of the share applicants. The sole basis for the Revenue to doubt their creditworthiness was the low income as reflected in their Income Tax Returns. The entire details of the share applicants were made available to the A by the Assessee. This included their PAN numbers, confirmations, their bank statements, their balance sheets and profit and loss accounts and the certificates of incorporation etc. It was observed by the ITAT that the AO had not undertaken any investigation of the veracity of the above documents submitted to him. It has been righty commented by the ITAT that without doubting the documents, the AO completed the assessment only on the presumption that low return of income was sufficient to doubt the credit worthiness of the share holders.
The Court is of the view that the Assessee by produced sufficient documentation discharged its initial onus of showing the genuineness and creditworthiness of the share applicants. It was incumbent to the AO to have undertaken some inquiry and investigation before coming to a conclusion on the issue of creditworthiness. In para 39 of the decision in Nova Promoters (supra), the Court has taken note of a situation where the complete particulars of the share applicants are furnished to the AO and the AO fails to conduct an inquiry. The Court has observed that in that event no addition can be made in the hands of the Assessee under Section 68 of the Act and it will be open to the Revenue to move against the share applicants in accordance with law.
5. In the facts and circumstances of the present appeals, the Court is satisfied that no substantial question of law arises. The appeals are dismissed."
The facts of the above cited judicial pronouncements are identical with the facts of the appellant case, therefore, the ratio of the above cited judicial pronouncements is squarely applicable to the facts of the appellant case, hence, unsecured loan received by the appellant from M/s Fennie Commercial Pvt. Ltd. cannot be termed as unexplained income of the appellant and cannot be added u/s 68 of the I.T. Act. Therefore, the unsecured loan received from the above mentioned party is treated as , 5000, 2060, 4999, 4648, 3988, 2061, 1455, 2062 & 1456/Del/2024 & C.O.Nos.11, 32, 33, 34/Del/2025 & 89, 90 & 91/Del/2024 genuine transaction and cannot be added us 68 of the I.T. Act. Therefore, the addition of Rs.3,60,00,000/- is deleted.
31. Further on the issue of discharging of onus, the Hon'ble Jurisdictional High Court in the case of Mod. Creations (P.) Ltd. v. ITO reported in [2013] 354 ITR 282, has been held as under: "It will have to be kept in mind that Section 68 of the I.T. Act only sets up a presumption against the Assessee whenever unexplained credits are found in the books of accounts of the Assessee. It cannot but be gainsaid that the presumption is rebuttable. In refuting the presumption raised, the initial burden is on the Assessee. This burden, which is placed on the Assessee, shifts as soon as the Assessee establishes the authenticity of transactions as executed between the Assessee and its creditors. It is no part of the Assessee's burden to prove either the genuineness of the transactions executed between the creditors and the sub-creditors nor is it the burden of the Assessee to prove the creditworthiness of the sub-creditors.
32. It was further observed by the Hon’ble court as under: 14. With this material on record in our view as far as the Assessee was concerned, it had discharged initial onus placed on it. In the event the revenue still had a doubt with regard to the genuineness of the transactions in issue, or as regards the creditworthiness of the creditors, it would have had to discharge the onus which had shifted on to it. A bald assertion by the ASSESSING OFFICER that the credits were a circular route adopted by the Assessee to plough back its own undisclosed income into its accounts, can be of no avail. The revenue was required to prove this allegation. An allegation by itself which is based on assumption will not pass muster in law. The revenue would be required to bridge the gap between the suspicions and proof in order to bring home this allegation. The ITAT, in our view, without adverting to the aforementioned principle laid stress on the fact that despite opportunities, the Assessee and/or the creditors had not proved the genuineness of the transaction. Based on this the ITAT construed the intentions of the Assessee as being mala Ride. In our view the ITAT ought to have analyzed the material rather than be burdened by the fact that some of the creditors had chosen not to make a personal appearance before the A.O. If the A.0. had any doubt about the material placed on record, which was largely bank statements or the creditors and their income tax returns, it could gather the necessary information from the sources to , 5000, 2060, 4999, 4648, 3988, 2061, 1455, 2062 & 1456/Del/2024 & C.O.Nos.11, 32, 33, 34/Del/2025 & 89, 90 & 91/Del/2024 which the said information was attributable to. No such exercise had been conducted by the A.O. In any event what both the A.O. and the ITAT lost track of was that it was dealing with the assessment of the company, i.e., the recipient of the loan and not that its directors and shareholders or that of the sub-creditors. If it had any doubts with regard to their credit worthiness, the revenue could always bring it to tax in the hands of the creditors and/or sub-creditors. [See CIT v. Divine Leasing & Finance Etd (20092-229-178.268 (Delhi) and CIT v. Lovely Exports (P.) Ltd. 2006) 215 CTR 495 (SC).*
Further, the Hon'ble Delhi High Court in the case of CIT vs. Vrindavan Farms Pvt. Ltd. etc. in of 2015 dated 12th August, 2015 held as under : "The sole basis for the Revenue to doubt their creditworthiness was the low income as reflected in their return of income. lt was observed by the ITAT that the Assessing Officer had not undertaken any investigation of the veracity of the documents submitted by the assessee, the departmental appeal was dismissed by the Hon’ble High court.”
The Hon'ble Delhi High Court in the case of PCIT vs. Agson Global Pvt. Ltd reported in [2022]134 Taxmann.com 256 (Delhi) while allowing the appeal in favour of the assessee towards the additions made u/s 68 of the Act has held as under: “Section 68 of the Income-tax Act, 1961 – Cash credits (Share capital money) – Assessment years 2012-13 to 2017-18 – Assessee-company received share capital and share premium money from several investors – Assessing Officer made addition in respect of same on account of unaccounted income under section 68 on basis of recorded statement of managing director of assessee-company – Whether since assessee placed sufficient documentary evidence to establish that money which assessee had paid to investors was routed back to it in form of share capital/share premium and identity, creditworthiness and genuineness of investors was proved, there was no justification to make addition under section 68 – Held, yes [Paras 11.4, 11.5 and 14.4] [In favour of assessee]”
, 5000, 2060, 4999, 4648, 3988, 2061, 1455, 2062 & 1456/Del/2024 & C.O.Nos.11, 32, 33, 34/Del/2025 & 89, 90 & 91/Del/2024 35. Regarding the additions made u/s 68 of the Act towards the unsecured loans though they were repaid subsequently, the Hon’ble Gujarat High Court in the case of PCIT vs Ojas Tarmake 150 taxmann.com 75 has observed as under: “where the appellant showed unsecured loans received during the relevant AY and AO made addition on the ground that appellant failed to discharge onus of liability as laid down u/s 68 of the Act since amount of loan received by the appellant was returned to the loan period during the year itself and all the transactions were carried out through banking channel, impugned addition was to be deleted.”
In view of above facts and the circumstances of the case, we are of the considered view that the decision of the Ld. CIT(A) deleting the additions made is based on the appreciation of fact that all the relevant documentary evidences were produced by the Assessee to establish the identity and creditworthiness of the lender companies and genuineness of the transactions. Further based on the legal precedents and the fact that the loans were received and repaid through banking channel had deleted the additions under consideration. We further observed that that Hon'ble Jurisdictional High Court in various cases has dealt with the fact that where assessee has discharged its burden by filing all the necessary evidences to prove the loans, provisions of section 68 cannot be invoked. Further Hon’ble Gujarat High Court in the case of PCIT Vs. Ojas Tarmake Pvt. Ltd. (supra) has held that where major portion of the credit has been repaid and also looking tot eh facts that in the instant case the AO had accepted the debit entries as genuine, the Hon'ble Court on the said facts ultimately affirmed the decision of the Tribunal in deleting the addition. Further the Hon’ble Gujarat High Court re- , 5000, 2060, 4999, 4648, 3988, 2061, 1455, 2062 & 1456/Del/2024 & C.O.Nos.11, 32, 33, 34/Del/2025 & 89, 90 & 91/Del/2024 affirmed this view in the case of PCIT Vs. Merrygold Gems Pvt. Ltd. Similar view is also expressed by the Hon’ble Punjab & Haryana High Court in the case of CIT Vs. Karaj Singh [2011] 15 taxmann.com 70.
In case of Andaman Timber Industries Vs. CCE (SC) reported in 281 CTR 241(SC), the Supreme Court found that the Adjudicating Authority had not granted an opportunity to the assessee to cross examine the witnesses and the tribunal merely observed that the cross examination of the dealers in that case, could not have brought out any material which would not otherwise be in possession of the appellant- assessee. The Supreme Court set aside the impugned order and observed that it was not for the Adjudicating Authority to presuppose as to what could be the subject matter of the cross examination and make the remarks such as was done in that case.
Thus, the denial of opportunity to cross examine which goes to the root of the matter and strikes at the very foundation of the assessment and, therefore, renders the assessment order passed by the AO not sustainable. Thus the additions made by the AO on the basis of such statement without any tangible material is not sustainable in law and liable to be deleted.
In view of the above discussion and further looking to the fact that when all the relevant details and documentary evidences produced by the assessee to establish the identity, creditworthiness and genuineness of the transactions, the said evidences cannot be rejected based on the , 5000, 2060, 4999, 4648, 3988, 2061, 1455, 2062 & 1456/Del/2024 & C.O.Nos.11, 32, 33, 34/Del/2025 & 89, 90 & 91/Del/2024 statements without any contrary documentary evidence. It is seen that transactions have been done through banking channels and on the date of making of loans, there was balance available in the accounts of the lenders, which proves the creditworthiness and genuineness of the transactions. It is also relevant that out total amount of loans of 24.50 crores received from these lender companies, the AO has despite of doubting their creditworthiness, had made the addition of INR. 5.90 crores only meaning thereby the creditworthiness for the remaining amount is not doubted though the facts and the circumstances while granting these loans remained the same. This creates serious doubts about the mode and manner of the additions made by the AO. Once it is accepted that the lender has creditworthiness for part of the amount, the remaining amount cannot be held as unexplained. There is no case of any cash deposition in the account of any of the lender companies at the time of issuing cheques/RTGS in favour of the Assessee. Therefore, Appellant has duly discharged the burden casted upon it u/s 68 of the Act.
It is trite law that suspicion, howsoever strong, cannot take the place of proof as held in Umacharan Shaw & Bros. vs. CIT (1959) 37 ITR 271 (SC). The Hon'ble Supreme Court in the case of Dhakeswari Cotton Mills Ltd v. Commissioner of Income Tax (1954) 26 ITR 775 (SC) has observed that powers given to the Revenue authority, howsoever, wide, do not entitle him to make the assessment on pure guess without reference to any evidence or material. The assessment cannot be framed only on bare suspicion. The assessment should rest on principles of law , 5000, 2060, 4999, 4648, 3988, 2061, 1455, 2062 & 1456/Del/2024 & C.O.Nos.11, 32, 33, 34/Del/2025 & 89, 90 & 91/Del/2024 and one should avoid presumption of evasion in every matter. The assessee, in the instant case, has sufficiently demonstrated the genuineness of transaction and creditworthiness of the loan creditors. On a broader reckoning, the apprehension raised by the Revenue authorities militates against the tangible material and is thus extraneous. Accordingly, we find no infirmity in the order of ld. CIT(A) in deleting the additions made u/s 68 towards the unsecured loans of Rs. 5.90 crores by holding the same as accommodation entries. Further since we have already held the loans taken from all four companies as genuine transaction question of treating the interest paid to them as ingenuine does not arise and therefore, disallowance of interest on such loans has rightly been deleted by ld. CIT(A) which order is hereby confirmed. Regarding the addition towards commission @ 2% as made by AO by alleging the loan transactions as accommodation entries, as has been observed above, we have already hold these loan transactions as genuine transactions thus question of payment of any commission for obtaining such loan does not arise. In view of these facts, we hereby uphold the order of ld. CIT(A) deleting the addition made on account of alleged commission payments. Accordingly, all the grounds of appeal of the revenue are dismissed.
Since we have already dismissed the grounds of appeal taken by the revenue, the objections raised in the C.O. of the assessee become academic and thus not adjudicated and is dismissed.
, 5000, 2060, 4999, 4648, 3988, 2061, 1455, 2062 & 1456/Del/2024 & C.O.Nos.11, 32, 33, 34/Del/2025 & 89, 90 & 91/Del/2024 42. In the result, appeal of the Revenue in C.O.No.11/Del/2025 of the assessee are dismissed.
& C.O.No.-32/Del/2025 (AY 2015-16) M/s Filatax India 43. In this year, an addition of INR 9.00 crores was made by holding the same as accommodation entries u/s 68 of the Act out of total loan amount of INR 17.75 crores received during the year from six companies tabulated at page 101 of the assessment order. The AO further observed that the assessee had paid interest of INR 5,13,00,543/- on the said loans which was further disallowed. Besides this, an addition of INR 8,76,250/- was made on account of alleged commission on the loans received at INR 17.75 crores and repaid at INR 17.30 crores during the year (though addition was made of INR 9 crores of loan as accommodation entry).
The facts and circumstances existed in the year under appeal and the observations and allegations made by the AO while making the additions/disallowance are the same, as were made in the assessment order passed for AY 2013-14. Further, Ld. CIT(A) also made similar observations as were made in AY 2013-14 while deleting the additions/disallowances.
As there is no change in the circumstances, which fact is admitted by both the parties during the course of hearing therefore, by following , 5000, 2060, 4999, 4648, 3988, 2061, 1455, 2062 & 1456/Del/2024 & C.O.Nos.11, 32, 33, 34/Del/2025 & 89, 90 & 91/Del/2024 the observations made by us in dismissing the appeal of the Revenue in Revenue’s appeal for AY 2015-16 in is also dismissed.
Since we have already dismissed the grounds of appeal taken by the revenue, the objections raised in the C.O. of the assessee become academic and thus not adjudicated and is dismissed.
In the result, appeal of the Revenue in and C.O.No.32/Del/2025 of the assessee are dismissed.
& C.O.No.89/Del/2024 (AY-2016-17)
In the cross objections filed by the assessee, cross-objections No. 1.1 & 1.2 are taken wherein assessee has challenged the action of the AO in making additions on the issues for which no reasons were recorded and on issue for which reason was recorded, no addition is made. The cross objections taken by the assessee are as under:
1.1 On the facts and in the circumstances of the case and in law, the learned CIT(A) should have quashed the assessment order as illegal, not tenable, void and without jurisdiction. 1.2 On the facts and in the circumstances of the case and in law, the learned CIT(A) erred in ignoring that no independent reason for re- opening was recorded, as the notice was issued on the basis of report of received from TDS ward 1(3)(1), International Taxation, Delhi. 1.3 On the facts and in the circumstances of the case and in law, the learned CIT(A) erred in not appreciating that the assessment order was passed without following the principle of natural justice by not providing the copies of statement of various persons relied upon by Assessing , 5000, 2060, 4999, 4648, 3988, 2061, 1455, 2062 & 1456/Del/2024 & C.O.Nos.11, 32, 33, 34/Del/2025 & 89, 90 & 91/Del/2024 Officer. On the ground of principle of natural justice also, the addition was liable to be deleted.
2. On the facts and in the circumstances of the case and in law, the learned CIT(A) ought to have deleted the addition simply on the ground that the material relied upon by Assessing Officer is totally unrelated and irrelevant to the respondent.
3. On the facts and in the circumstances of the case and in law, the learned CIT(A) erred in not considering the fact that the assessment order passed by Assessing Officer had provided the new material directly in assessment order without confronting the same to the respondent company during assessment proceedings. On the basis of the principle of opportunity of being heard also, the addition was liable to be deleted.
4. The respondent craves leave to add, alter, amend and/or withdraw any ground or grounds of cross objections either before or during the course of hearing of the same.
During the course of hearing it was requested by the ld.AR that the issues raised in cross objections No. 1.1 and 1.2 are legal and thus prayed to adjudicate the same separately, therefore, in the interest of justice and looking to the very nature of the cross objections, the same are hereby taken for consideration.
Before us, Ld.AR submits that the case of the assessee was reopened on the basis of the information received by the AO that the assessee has made payment on account of technical services to a foreign company and that these remittances are liable to withhold taxes within the definition of Fee for Technical Services under the provisions of Sec 9(1)(vi) and (vii) of the IT Act and as per Article 12(4) of the DTAA also, chargeable to tax u/s 115A(1)(b)(A) and 115A(1)(b)(B) of the Income Tax Act. The assessee was required to deduct Tax at source on , 5000, 2060, 4999, 4648, 3988, 2061, 1455, 2062 & 1456/Del/2024 & C.O.Nos.11, 32, 33, 34/Del/2025 & 89, 90 & 91/Del/2024 the remittance amounting to Rs. 87,34,375/- and thus after obtaining the approval from the competent authorities, notice u/s 148 was issued in 31.3.2021. Ld. AR submits that in response to said notice, return of income was filed on 14.07.2021. Thereafter, due enquiries were made by the AO and no addition was made on account of the reasons recorded and therefore, AO has no jurisdiction to make any other addition. For this, he placed reliance on the judgement of Hon’ble Jurisdictional High Court in the case of Ranbaxy Laboratories Ltd. vs CIT [2011] reported in 336 ITR 136 (Delhi) and in the case of CIT-II vs Jet Airways (I) Ltd. reported in [2011] 331 ITR 236 (Bom.). Ld. AR thus requested that the re-assessment order making additions of INR 100,11,32,484/- on the issues which are not the subject matter of reopening and without making additions on the issue for which reasons for reopening the assessment were recorded, is without jurisdiction and, therefore, the reassessment order deserves to be quashed.
On the other hand, Ld. Sr. DR for the Revenue supported the order of the lower authorities and stated that once the case is re- opened, the AO has jurisdiction to consider and decide all the issues which have come to his knowledge. He thus, requested for the confirmation of the initiation of the proceedings and consequent order passed u/s 143(3)/147 of the Act.
Heard the contentions of both the parties and perused the material available on record. From the perusal of the reassessment order it is seen that the case of the assessee was reopened on the issue , 5000, 2060, 4999, 4648, 3988, 2061, 1455, 2062 & 1456/Del/2024 & C.O.Nos.11, 32, 33, 34/Del/2025 & 89, 90 & 91/Del/2024 of the non-deduction of Tax at source on the payment made towards fees for technical services to a foreign company. The AO after reopening the case, vide notice issued on 24.3.2022 asked the assessee to file the details of transactions with foreign company which were replied by the assessee on 29.03.2022, as reproduced at re-assessment order at page 3. After considering the reply of the assessee, the AO in para 9.6 of the order observed that no adverse inference is drawn on this account. Thereafter, the AO from para 10 onwards of the reassessment order went on discussed the issue of accommodation entry and finally made the additions/ disallowance towards unsecured loans taken and interest paid thereon by holding the same as accommodation entries.
It is thus clear that the AO has recorded his satisfaction of the escapement of income of Rs. 87,34,375/- being the payment towards fee for technical services made to foreign company without making deduction of Tax at source. However, no adverse inference was taken on this issue as has been observed in para 9.6 of the order and no addition was made on this account. In the context, the Hon’ble Jurisdictional High Court in the case of Ranbaxy Laboratories Ltd. (supra) has held as under:- 18. “We are in complete agreement with the reasoning of the Division Bench of Bombay High Court in the case of V. Jaganmohan Rao (supra). We may also note that the heading of section 147 is "income escaping assessment" and that of section 148 "issue of notice where income escaped assessment". Section 148 is supplementary and complimentary to section 147. Sub-section (2) of section 148 mandates reasons for issuance of notice by the Assessing Officer and sub-section (1) thereof mandates service of notice to the assessee before the Assessing Officer proceeds to assess, reassess or recompute escaped income. Section 147 mandates , 5000, 2060, 4999, 4648, 3988, 2061, 1455, 2062 & 1456/Del/2024 & C.O.Nos.11, 32, 33, 34/Del/2025 & 89, 90 & 91/Del/2024 recording of reasons to believe by the Assessing Officer that the income chargeable to tax has escaped assessment. All these conditions are required to be fulfilled to assess or reassess the escaped income chargeable to tax. As per Explanation (3) if during the course of these proceedings the Assessing Officer comes to conclusion that some items have escaped assessment, then notwithstanding that those items were not included in the reasons to believe as recorded for initiation of the proceedings and the notice, he would be competent to make assessment of those items. However, the legislature could not be presumed to have intended to give blanket powers to the Assessing Officer that on assuming jurisdiction under section 147 regarding assessment or reassessment of escaped income, he would keep on making roving inquiry and thereby including different items of income not connected or related with the reasons to believe, on the basis of which he assumed jurisdiction. For every new issue coming before Assessing Officer during the course of proceedings of assessment or reassessment of escaped income, and which he intends to take into account, he would be required to issue a fresh notice under section 148.”
The Hon’ble jurisdictional High Court in the case of CIT vs Adhunik Niryat Ispat Ltd. reported in [2011] 63 DTR 212 (Delhi) has held as under: “Reassessment – Scope - Additional reason - Notice issued by AO on the ground that the assessee had accepted accommodation entries in the garb of share capital-During the reassessment proceedings additions made in respect of the credits received from some other parties additions for accommodation entries were made were not found valid and additions were deleted by the Tribunal-Additions in respect of other items which were not part of "reasons to believe" were also not sustainable.”
Further the hon’ble jurisdictional high court in the case of ATS Infrastructure Ltd. vs ACIT reported in [2025] 166 taxmann.com 61 (Delhi) has that AO cannot be permitted to improve the reasons recorded which form basis for initiating action under section 148A. The , 5000, 2060, 4999, 4648, 3988, 2061, 1455, 2062 & 1456/Del/2024 & C.O.Nos.11, 32, 33, 34/Del/2025 & 89, 90 & 91/Del/2024 relevant observations of the hon’ble high court as contained in para 29 to 32 of the order reads as under: 29. In our considered opinion, and bearing in mind the import of Explanation 3 as well as the language in which Section 147 of the Act stands couched, we find no justification to differ from the legal position which had been enunciated in Ranbaxy Laboratories Ltd. We also bear in consideration the said decision having been affirmed and approved subsequently in CIT (Exemption) v. Monarch Educational Society 2016 SCC OnLine Del 6636/[2017] 79 taxmann.com 43/387 ITR 416 (Delhi) and CIT v. Software Consultants 2012 SCC OnLine Del 316/[2012] 21 taxmann.com 155/211 Taxman 120/341 ITR 240 (Delhi).
We thus, come to the conclusion that the enunciation with respect to the indelible connection between Section 148A(b) and Section 148 A(d) of the Act are clearly not impacted by Explanation 3. As we read Sections 147 and 148 of the Act, we come to the firm conclusion that the subject of validity of initiation of reassessment would have to be independently evaluated and cannot be confused with the power that could ultimately be available in the hands of the AO and which could be invoked once an assessment has been validly reopened.
Explanation 3, or for that matter, the Explanation which presently forms part of Section 147, would come into play only once it is found that the power to reassess had been validly invoked and the formation of opinion entitled to be upheld in light of principles which are well settled. The Explanations would be applicable to issues which may come to the notice of the AO in the course of proceedings of reassessment subject to the supervening requirement of the reassessment action itself having been validly initiated.
Explanation 3, cannot consequently be read as enabling the AO to attempt to either deviate from the reasons originally recorded for initiating action under Section 147/148 of the Act nor can those Explanations be read as empowering the AO to improve upon, supplement or supplant the reasons which formed the bedrock for initiation of action under the aforenoted provisions.
Similarly, the Hon’ble Bombay High Court in the case of CIT vs Jet Airways (I) Ltd. (supra) has held that “it is not open to AO to , 5000, 2060, 4999, 4648, 3988, 2061, 1455, 2062 & 1456/Del/2024 & C.O.Nos.11, 32, 33, 34/Del/2025 & 89, 90 & 91/Del/2024 independently assess some income other than the income referred in section 148 for which reason was recorded”. The relevant head note of the judgement reads as under:- “Section 147 of the Income-tax Act, 1961 Income escaping assessment - Non- disclosure of primary facts Assessment years 1994-95 and 1995-96 Whether an Explanation to a statutory provision is intended to explain its content and cannot be construed to override it or to render substance and core nugatory Held, yes Whether after insertion of Explanation 3 to section 147 by Finance (No. 2) Act, 2009, with effect from 1-4-1989, section 147 has an effect that Assessing Officer has to assess or reassess income ('such income') which escaped assessment and which was basis of formation of belief and if he does so, he can also assess or reassess any other income which has escaped assessment and which comes to his notice during course of proceedings Held, yes Whether, however, if after issuing a notice under section 148, he accepts contention of assessee and holds that income, for which he had initially formed a reason to believe that it had escaped assessment, has, as a matter of fact, not escaped assessment, it is not open to him to independently assess some other income; if he intends to do so, a fresh notice under section 148 would be necessary, legality of which would be tested in event of a challenge by assessee - Held, yes Words and phrases: The words 'and also' as occurring in section 147 of the Income- tax Act, 1961.”
In view of the facts of the case as discussed above and by respectfully following the judgement of Hon’ble Delhi High Court and Hon’ble Bombay High Court, we are of the considered view that the AO in the instant case has exceeded its jurisdiction by making additions on the issue which is not forming part of the reasons recorded for re- opening the assessment when no addition was made on the issue covered in the reasons recorded. Therefore, no additions could be made dehorse the reasons recorded before issue of notice u/s 148 of the Act. Accordingly, the reassessment order passed u/s 147 of the Act is 5000, 2060, 4999, 4648, 3988, 2061, 1455, 2062 & 1456/Del/2024 & C.O.Nos.11, 32, 33, 34/Del/2025 & 89, 90 & 91/Del/2024 hereby quashed. Cross objections No. 1.1 and 1.2 taken by the assessee are accordingly allowed.
As we have already quashed the reassessment order dt. 31.03.2022 passed u/s 147 r.w.s. 143(3) of the Act while allowing the cross objections No. 1.1 & 1.2 taken by the assessee, thus the issues challenged by the revenue on the merits of the additions made in such reassessment order become infructuous and thus, the appeal of the Revenue in is hereby dismissed.
In the result, appeal of the Revenue in Del/2024 is dismissed and C.O.No.89/Del/2025 of the assessee is allowed.
& CO No.-33/Del/2025(AY 2017-18)
In this year, an addition of INR 48,72,50,000/- was made by holding the same as accommodation entries u/s 68 of the Act out of total amount of INR 68,25,00,000/- received during the year from eleven companies tabulated at page 110 of the assessment order. The AO further observed that the assessee had paid interest of INR 2,75,49,085/- on the said loans which was also disallowed. Besides this, an addition of INR 26,77,500/- was made on account of alleged commission @ 0.25% on the loans received of INR 39,90,00,000/-, repayment of 38,85,00,000/- and share capital and premium of Rs. 28,35,000/- received during the year by holding the same as unexplained payment made.
, 5000, 2060, 4999, 4648, 3988, 2061, 1455, 2062 & 1456/Del/2024 & C.O.Nos.11, 32, 33, 34/Del/2025 & 89, 90 & 91/Del/2024 61. The facts and circumstances existed in the year under appeal and the observations and allegations made by the AO while making the additions/disallowance are the same, as were made in the assessment order passed for AY 2013-14. Further, Ld. CIT(A) also made similar observation as were made in AY 2013-14 while deleting the additions/disallowances.
As there is no change in the circumstances, which fact is admitted by both the parties during the course of hearing therefore, by following the observations made by us while dismissing the appeal of the Revenue in Revenue’s appeal for AY 2017- 18 in is also dismissed.
Since we have already dismissed the grounds of appeal taken by the revenue, the objections raised in the C.O. of the assessee become academic and thus not adjudicated and is dismissed.
In the result, appeal of the Revenue in and C.O. No. 33/Del/2025 of the assessee are dismissed. (Revenue’s Appeal) & CO No.-34/Del/2025 and (AY 2019-20)
These are two cross appeals filed by the assessee and revenue and one cross objection filed by the assessee. Since the issues raised in revenue’s appeal and CO filed by the assessee are identical as were , 5000, 2060, 4999, 4648, 3988, 2061, 1455, 2062 & 1456/Del/2024 & C.O.Nos.11, 32, 33, 34/Del/2025 & 89, 90 & 91/Del/2024 taken in earlier assessment years thus these are taken first for consideration.
From the perusal of the assessment order, it is seen that an addition of INR 21,38,50,000/- was made by holding the same as accommodation entries u/s 68 of the Act out of total loan of Rs. of INR 29,08,50,000/- received during the year from five companies tabulated at page 98 of the assessment order. The AO further observed that the assessee had paid interest of INR 3,97,33,340/- on the entire loan amount which was also disallowed. Besides this, an addition of INR 11,55,500/- was made on account of alleged commission @ 0.25% on the loans received of INR 29,08,50,000/-, and repayment of INR 17,13,50,000/- made by holding the same as unexplained transactions.
The facts and circumstances existed in the year under appeal and the observations and allegations made by the AO while making the additions/disallowance are the same, as were made in the assessment order passed for AY 2013-14. Further, Ld. CIT(A) also made similar observations as were made in AY 2013-14 while deleting the additions/disallowances.
As there is no change in the circumstances, which fact is admitted by both the parties during the course of hearing therefore, by following the observations made by us while dismissing the appeal of the Revenue in Revenue’s appeal for AY 2019- 20 in is also dismissed.
, 5000, 2060, 4999, 4648, 3988, 2061, 1455, 2062 & 1456/Del/2024 & C.O.Nos.11, 32, 33, 34/Del/2025 & 89, 90 & 91/Del/2024
Since we have already dismissed the grounds of appeal taken by the revenue, the objections raised in the C.O. of the assessee become academic and thus not adjudicated and is dismissed.
Now we take up the appeal filed by the assessee in (AY 2019-20).
The assessee has raised following grounds of appeal in the present appeal:
1. On the facts and in the circumstances and in law, the learned CIT(Appeals) has erred in enhancing the income of Appellant by Rs.9,65,00,000 on account of unexplained money by invoking the provisions of ser on 69A of the Act.
2. On the facts and in the circumstances and in law, the learned CIT(A) has erred in invoking provisions of Section 115BBE of the Act with regard to above enhancement and charging tax and surcharges at higher rates. When the addition on which such tax and surcharge were charged itself is unsustainable, the CIT(A) may be directed to delete the same.
3. On the facts and in the circumstances and in law, the learned CIT(A) has erred in levying consequent interest u/s 234A, 234B, 234 of the Act. The appellant denies its liability to pay such interest. 4. On the facts and in the circumstances and in law, the learned CIT(A) has erred in initiating penalty proceedings u/s 274 r.w.s 271AAC(1) of the Act in respect of enhancement of Rs.9,65,00,000/- u/s 69A of the Act. The AO may be directed to not to initiate any such penalty proceedings. 5. The appellant craves leave to add, alter, amend and/or withdraw any ground or grounds of appeal either before or during the course of hearing of the appeal.
In Ground of appeal No. 1 assessee has challenged the enhancement of income of the assessee by Rs. 9,65,00,000/- by ld. , 5000, 2060, 4999, 4648, 3988, 2061, 1455, 2062 & 1456/Del/2024 & C.O.Nos.11, 32, 33, 34/Del/2025 & 89, 90 & 91/Del/2024 CIT(A) on the basis of WhatsApp chats found in the mobile phone of Shri Purushottam Bhageria, Managing Director of the company as unexplained money of the assessee company u/s 69A of the Act.
Brief facts leading to this issue are that ld. CIT(A) in para 86 of the order observed that during the course of search evidences were found which contained certain transactions related to the impugned year and no specific addition was made towards the said transaction. It is also observed by ld. CIT(A) that these transactions were carried out by the assessee company and were not recorded in the books of accounts and thus vide show cause notice dt. 11.07.2024, he started the proceedings for enhancement of the income of the assessee. The ld. CIT(A) referred to certain WhatsApp chats between Shri Purshottam Bhageria, MD of the assessee company and Shri Sudhir Bhageria, Prabhkaran Pillai and Sanjay Jhunjhunwala employed of the assessee company and tabulated all the chat transactions at pages 73-74 of the appellate order. Ld. CIT(A) alleged that as per these chats total sum of Rs. 9.65 crores were owned by the assessee and source of the same is not explained and further the assessee has not been able to establish that the impugned cash was recorded in the books of accounts of the assessee company. He, therefore, invoked the provisions of section 69A of the Act and proposed enhancement to the total income. In reply, assessee stated that on mere assumptions based on forwards messages from third party, it cannot be alleged that transactions of Rs. 9.65 crores belong to appellant. It is further submitted by assessee that these messages were forwards to Shri Purshottam Bhageria or Shri Pillai by some unknown , 5000, 2060, 4999, 4648, 3988, 2061, 1455, 2062 & 1456/Del/2024 & C.O.Nos.11, 32, 33, 34/Del/2025 & 89, 90 & 91/Del/2024 third party and nowhere contained the name of the assessee company and it is not clear whether the transactions referred therein were actually taken place. An affidavit of Shri Purshottam Bhageria was also filed wherein he categorically stated that these messages have not relationship with the loans taken by the assessee company. However, ld. CIT(A) by alleging that these chats were found from the mobile of Shri Purshottam Bhageria and no assessee company has failed to furnish any evidence that these transactions were recorded in its books of account, made the additions by holding the same as unexplained money of the assessee company u/s 69A of the Act.
Before us, Ld.AR of the assessee submits that Ld.CIT(A) has made the addition solely based on WhatsApp messages and further relying statement of Shri Purshottam Bhageria which were retracted by him by filing duly sworn in affidavit before the lower authorities explaining the circumstances under which the statements were recorded and also explaining the true nature of these chats. Ld. AR submits that such WhatsApp messages do not clearly indicate whether the said transactions were pertaining to the assessee company as neither the name of assessee is appearing nor any co-relation of these chats with the unsecured loans taken was established. It is further argued that despite the search carried out, no trail of huge cash was found by the Department based on which it could be said that such alleged cash transactions were taken place. Ld. AR further contended that the statements of third party were used against the assessee without providing an opportunity to cross-examine the said witnesses. In the , 5000, 2060, 4999, 4648, 3988, 2061, 1455, 2062 & 1456/Del/2024 & C.O.Nos.11, 32, 33, 34/Del/2025 & 89, 90 & 91/Del/2024 last, he submits that the strict provision of Indian Evidence Act is not applicable to Income Tax proceedings and WhatsApp messages alone do not constitute valid evidence for making such a huge addition. He, therefore, requested for the deletion of the enhancement so made by Ld. CIT(A).
Ld.AR further submits written submission before us, which is reproduced as under:- “The addition made by the CIT(A) has been made solely on the basis of Whatsapp Messages and the statement of Shri Purushottam Bhageria. We have reproduced a copy of the Whatsapp Messages Relied upon in the respective paper books for the quick reference of your honours.
The CIT(A) has relied on the statement of Shri Purushottam Bhageria taken u/s 132(4) and stated that all the amounts mentioned in the chats are "Rs. in lakhs". (100 KG denotes 100 Lakhs; 165 Sarees denote 165 Lakhs; and 30 Files denote 30 Lakhs). Accordingly the CIT(A) concluded that the assessee was the owner of cash amounting to Rs. 965 Lakhs which was not recorded in the books of accounts.
The summary of chats relied upon by the CIT(A) to make the enhancement are as follows:
AY 2019-20 (Screenshots of the Chat are reproduced at Paper book Page 2-5)
, 5000, 2060, 4999, 4648, 3988, 5000, 2060, 4999, 4648, 3988, 2061, 1455, 2062 & 1456/Del/2024 2061, 1455, 2062 & 1456/Del/2024 & C.O.Nos.11, 32, 33, 34/Del/2025 & 89, 90 & 91/Del/2024 & C.O.Nos.11, 32, 33, 34/Del/2025 & 89, 90 & 91/Del/2024 , 5000, 2060, 4999, 4648, 3988, 5000, 2060, 4999, 4648, 3988, 2061, 1455, 2062 & 1456/Del/2024 2061, 1455, 2062 & 1456/Del/2024 & C.O.Nos.11, 32, 33, 34/Del/2025 & 89, 90 & 91/Del/2024 & C.O.Nos.11, 32, 33, 34/Del/2025 & 89, 90 & 91/Del/2024
The enhancement cannot be sustained based on these messages due to the The enhancement cannot be sustained based on these messages due to the The enhancement cannot be sustained based on these messages due to the following reasons:
1. 1. The WhatsApp messages do not clearly indicate whether any alleged cash 1. The WhatsApp messages do not clearly indicate whether any alleged cash 1. The WhatsApp messages do not clearly indicate whether any alleged cash transaction actually took place transaction actually took place.
2. Shri Purshottam Bhageria, in his affidavit (Page 227, Para 8 of General PB 1) Shri Purshottam Bhageria, in his affidavit (Page 227, Para 8 of General PB 1) Shri Purshottam Bhageria, in his affidavit (Page 227, Para 8 of General PB 1) clarified that the WhatsApp messages bear no correlation to the unsecured loan clarified that the WhatsApp messages bear no correlation to the unsecured loan clarified that the WhatsApp messages bear no correlation to the unsecured loan taken by the appellant during the relevant financial year. taken by the appellant during the relevant financial year.
3. The name of the appellant does not a 3. The name of the appellant does not appear in any of the said WhatsApp ppear in any of the said WhatsApp messages.
4. The chats do not mention that the appellant was involved in any alleged 4. The chats do not mention that the appellant was involved in any alleged 4. The chats do not mention that the appellant was involved in any alleged cash transaction, nor does it establish that the said amount belonged to the cash transaction, nor does it establish that the said amount belonged to the cash transaction, nor does it establish that the said amount belonged to the appellant.
5. There is no evidence to substantiate that t 5. There is no evidence to substantiate that the appellant was in possession of he appellant was in possession of the cash or that any such amount changed hands as inferred from the chat. the cash or that any such amount changed hands as inferred from the chat. the cash or that any such amount changed hands as inferred from the chat.
6. No concrete evidence links the contents of the chat to the appellant. The mere 6. No concrete evidence links the contents of the chat to the appellant. The mere 6. No concrete evidence links the contents of the chat to the appellant. The mere existence of a WhatsApp conversation without supporting corrobora existence of a WhatsApp conversation without supporting corroborative existence of a WhatsApp conversation without supporting corrobora evidence cannot be considered proof of any financial transaction. evidence cannot be considered proof of any financial transaction. evidence cannot be considered proof of any financial transaction.
, 5000, 2060, 4999, 4648, 3988, 2061, 1455, 2062 & 1456/Del/2024 & C.O.Nos.11, 32, 33, 34/Del/2025 & 89, 90 & 91/Del/2024 7. The ld. CIT(A) has failed to ascertain against which transactions such cash transactions even after such detailed search and taking statements of so many people, including Shri Sudhir Bhimrajaka and Shri Prabhakaran Pillar (the parties with whom Shri Purushottam Bhageria has done the chats).
8. Further, the CIT(A) has also failed to ascertain against which transactions such cash alleged cash payments/receipts made. And therefore the addition merely on the basis presumptions, without any corroborative evidence and without any link with the actual transaction.
Further, the AO has made addition of both receipts and payments.
10. Even after the detailed search, the AO could not find any cash trail which could justify that the alleged cash transactions actually took place.
Most Importantly, the CIT(A) has made enhancement merely based on the statement of sender/receiver by the third party without any corroborative evidence. Further, though the statements of the third parties were recorded at the back of assessee, investigation wing officers failed to bring anything on record regarding the actual nature of transaction for which such cash receipt/payment transactions were carried out. Further, addition made by the CIT(A) is merely based on the statement of the Third Parties as stated above without giving Cross Examination. Further, the assessee would like to rely on the following judicial pronouncements to further substantiate that solely whatsapp messages cannot be relied upon to make the addition:
1. 1. The Hon'ble Supreme Court in A2Z Infraservices Ltd. v. Quippo Infrastructure Ltd. has held that WhatsApp messages lack evidentiary value, as digital content can easily be created or deleted.
2. Even if the strict provisions of the Indian Evidence Act do not apply to income tax proceedings, allegations must be supported by independent and corroborative evidence, as held by the Hon'ble Madras High Court in Saravana Selvarathnam Retails (P.) Ltd. v. CIT(A). [W.P. No. 9753, 9757 of 2023] 3. The Hon'ble Delhi ITAT in Designers Point (India) P. Ltd. ruled that WhatsApp chats alone do not constitute valid evidence to support legal action. [ITA 2517/DEL/2022] 4. Decision of ITAT Jaipur in the case of Virendra Singh Ratnawat v. ACIT IT (ITA 179 to 181 (JP) of 2022)
, 5000, 2060, 4999, 4648, 3988, 2061, 1455, 2062 & 1456/Del/2024 & C.O.Nos.11, 32, 33, 34/Del/2025 & 89, 90 & 91/Del/2024 5. Decision of in the case of Asstt CIT v. Shri Manchukonda Shyam (ITA 87 (Viz) of 2020) 6. Decision of in the case of A. Johnkumar v. DCIT CC 1(4) [ITA 3028 (Chny) of 2019] 7. A. Johnkumar v. DCIT CC 1(4) [IT Appeal 3028 (Chny) of 2019, dated 13-5- 2022. 8. Decision of Hon'ble Kolkata ITAT in the case of Atul Tatia [ITA 492/Kol/2021].”
On the other hand, Ld. Sr. DR supported the order of Ld.CIT(A) and submits that Ld. CIT(A) in para 86 to 99 had made a detailed discussion on this issue and thus requested for the confirmation of the enhancement so made by Ld. CIT(A).
Heard both the parties and perused the material available on record. From the perusal of the order of Ld. CIT(A), it is seen that the enhancement is made solely on the basis of WhatsApp chats between a third party Sudhir Bhageria and Shri Purshottam Bhageria, Managing Director, Shri Prabhakaran Pillai and Shri Sudhir Bhimrajka who are the employees of the assessee. Some of the chats are reproduced in page 71 to 77 of the appellate order of Ld. CIT(A). Further, the final description of these chats is tabulated by Ld. CIT(A) at pages 79-80 in para 90 of the order and reproduced by the assessee in its submission reproduced herein above. During the search from the mobile phone of Shri Purshottam Bhageria, certain WhatsApp chats were found according to which movement of cash was taken place which was recorded in coded forms. In his statement, Shri Purshottam Bhageria , 5000, 2060, 4999, 4648, 3988, 2061, 1455, 2062 & 1456/Del/2024 & C.O.Nos.11, 32, 33, 34/Del/2025 & 89, 90 & 91/Del/2024 stated that the figure given are in Lakhs and accordingly, the ld. CIT(A) worked out the total value of transactions stated at INR 9.65 crores.
It is further seen that no corroborative evidence or material was brought on record with respect to such alleged cash transactions either found as a result of search or collected during the post search investigation. Further, nowhere it is stated that these amounts were received by the assessee company as it is not clear that this pertains to the receipt of cash or payment of cash. It is a matter of fact that despite requests, the assessee was not provided with any opportunity of cross- examination of the persons whose statements were recorded in relation to these chats. It is a settled proposition of law that in case any statement of third party were used against the assessee for making addition, an opportunity to cross-examination should be provided to the assessee which has not been given in the instant case. Moreover, merely on the basis of WhatsApp chat in the absence of any corroborative evidence/material cannot be made as WhatsApp chat has not evidentiary value in the eyes of law.
The Co-ordinate Bench of the ITAT, Delhi Bench in the case of Designer Points India Pvt. Ltd. in has held that no addition could be made solely on the basis of WhatsApp chat with any corroborative evidence. The relevant observations of the hon’ble bench is reproduced as under: 6. On careful consideration of above submissions, from assessment order we note that the Assessing Officer has made addition of Rs. 9,50,000/- on account of unaccounted payment of salary in cash to four employees , 5000, 2060, 4999, 4648, 3988, 2061, 1455, 2062 & 1456/Del/2024 & C.O.Nos.11, 32, 33, 34/Del/2025 & 89, 90 & 91/Del/2024 u/s. 69C of the Act. The ld. CIT(A) deleted amounts pertaining to Shri Dhananjay & Ms Yamini but confirmed the addition pertaining to Ms Seema Dutta and Aman Sehgal amounting to Rs. 5,75,000/- by relying on the statements of said two employees. The basis of addition is that during search & seizure operation two different offer letters were found & seized and during statement the said employees supported the factum of part cash payment of salary. However, we note that there was no other evidence in the hands of AO supporting the factum of cash payment to said two employees. It is also pertinent to note that under identical facts and circumstances the ld. CIT(A) has deleted part addition pertaining to other two employees Shri Dhananjay Singh & Ms Yamini Singh in absence of any sustainable and reliable evidence but confirmed the addition on account of alleged cash payment to said two employees. We are also in agreement with the contention of ld. AR that in absence of providing cross examination on the said two employees whose statements have been relied by the Assessing Officer, such statements cannot be used against the assessee for making addition on account of part payment of salary in cash to the said two employees only on the basis whatsapp chats which has no evidentiary value in absence of other collaborative adverse material against the assessee showing part payment of salary in cash to the said two employees. 7. 1This is also pertinent to mention that the Assessing Officer has proceeded to make addition on the basis of whatsapp chats between Ms. Seema Dutta and Mr. Aman Sheghal and their statements only and no other documentary evidence or adverse positive material has been found and searched during the course of search and seizure operation. We are unable to see any distinction between the cases of Shri Dhananjay Singh & Ms. Yamini Singh with the cases of Mr. Aman Sheghal & Ms. Seema Dutta. The whatsapp chats standalone basis is not having valid evidence to support the action of the Assessing Officer making addition u/s. 69C of the Act on account of alleged part payment of salary in cash to said two persons. Therefore, sole grievance of assessee is allowed and Assessing Officer is directed to delete the addition.
In the result, the appeal of the assessee is allowed.
Similar view is taken by the Co-ordinate Bench of ITAT, Jaipur in the case of Virender Singh Ratnawat in ITA No. 179-181/JP/2022.
, 5000, 2060, 4999, 4648, 3988, 2061, 1455, 2062 & 1456/Del/2024 & C.O.Nos.11, 32, 33, 34/Del/2025 & 89, 90 & 91/Del/2024 81. It is further seen that the assessee before Ld. CIT(A), has categorically contended that the evidences so collected are without following the procedure laid down in section 65 of the Indian Evidence Act. The assessee also placed reliance on the judgment of Hon’ble Supreme Court in the case of Anvar P.V vs P.K.Basheer & Ors (2014) 10 SSC 473 wherein the Hon’ble Supreme Court has held that “where addition is made on the basis of electronic record like Excel Sheet, WhatsApp chat etc, conditions of section 65B of the Income Evidence Act, has to be complied with otherwise rendered the documents admissible in the eyes of law”. The relevant observations made by the Hon’ble Supreme Court are as under:- 14. “Any documentary evidence by way of an electronic record under the Evidence Act, in view of sections 59 and 65A, can be proved only in accordance with the procedure prescribed under section 65B. Section 65B deals with the admissibility of the electronic record. The purpose of these provisions is to sanctify, secondary evidence in electronic form, generated by a computer. It may be noted that the section starts with a non obstante clause. Thus, notwithstanding anything contained in the Evidence Act, any Information contained in an electronic record which is printed on a paper, stored, recorded or copied in optical or magnetic media produced by a computer shall be deemed to be a document only if the conditions mentioned under sub-section (2) are satisfied, without further proof or production of the original. The very admissibility of such a document, i.e. electronic record which is called as computer output, depends on the satisfaction of the four conditions under section 65B(2). Following are the specified conditions under section 65B(2) of the Evidence Act: (1) The electronic record containing the information should have been produced by the computer during the period over which the same was regularly used to store or process Information for the purpose of any activity regularly carried on over that period by the person having lawful control over the use of that computer; , 5000, 2060, 4999, 4648, 3988, 2061, 1455, 2062 & 1456/Del/2024 & C.O.Nos.11, 32, 33, 34/Del/2025 & 89, 90 & 91/Del/2024 (ii) The information of the kind contained in electronic record or of the kind from which the information is derived was regularly fed into the computer in the ordinary course of the said activity; (iii) During the material part of the sald period, the computer was operating properly and that even if it was not operating properly for some time, the break or breaks had not affected either the record or the accuracy of its contents, and (iv) The information contained in the record should be a reproduction or derivation from the information fed into the computer in the ordinary course of the said activity 15. Under section 65B(4) of the Evidence Act, if it is desired to give a statement in any proceedings pertaining to an electronic record, It is permissible provided the following conditions are satisfied: (i) There must be a certificate which identifies the electronic record containing the statement (ii) The certificate must describe the manner in which the electronic record was produced (iii) The certificate must furnish the particulars of the device involved in the production of that record; (iv) The certificate must deal with the applicable conditions mentioned under section 65B(2) of the Evidence Act (v) The certificate must be signed by a person occupying a responsible official position in relation to the operation of the relevant device 16. It is further clarified that the person need only to state in the certificate that the same is to the best of his knowledge and belief. Most Importantly, such a certificate must accompany the electronic record like computer printout, Compact Disc (CD), Video Compact Disc (VCD), pen drive, etc., pertaining to which a statement is sought to be given in evidence, when the same is produced in evidence. All these safeguards are taken to ensure the source and authenticity, which are the two hallmarks pertaining to electronic record sought to be used as evidence. Electronic records being more susceptible to tampering, alteration, transposition, excision, etc. without such safeguards, the whole trial based on proof of electronic records can lead to travesty of Justice"
, 5000, 2060, 4999, 4648, 3988, 2061, 1455, 2062 & 1456/Del/2024 & C.O.Nos.11, 32, 33, 34/Del/2025 & 89, 90 & 91/Del/2024 82. Ld.CIT(A) while making the enhancements has ignored such observations of the Hon’ble Supreme Court and made the addition on preponderance of probabilities and surrendering circumstances and ignored the fact that opportunities of cross-examination were not provided to the assessee. Once the assessee has objected to the transactions, it cannot be said that the presumption lies upon him u/s 132(4A) of the Act is not rebutted. The provisions of section 132(4A) are reproduced herein below:-
132(4A): Where any books of account, other documents, money, bullion, jewellery or other valuable article or thing are or is found in the possession or control of any person in the course of a search, it may be presumed - (i) That such books of account, other documents, money, bullion, jewellery or other valuable article or thing belong or belongs to such person; (ii) That the contents of such books of account and other documents are true; and (iii) That the signature and every other part of such books of account and other documents which purport to be in the handwriting of any particular person or which may reasonably be assumed to have been signed by, or to be in the handwriting of, any particular person, are in that person's handwriting, and in the case of a document stamped, executed or attested, that it was duly stamped and executed or attested by the person by whom it purports to have been so executed or attested.
From the plain reading of sub-section 132(4A), it is be seen that this provision is applicable to the books of accounts, other documents, money, bullion, jewellery or other valuable article or thing belongs to such person. The WhatsApp chats are neither books of accounts nor any valuable document etc. Further, in sub-section (4A) are "may be presumed". The presumption under sub-section (4A) is a rebuttable , 5000, 2060, 4999, 4648, 3988, 2061, 1455, 2062 & 1456/Del/2024 & C.O.Nos.11, 32, 33, 34/Del/2025 & 89, 90 & 91/Del/2024 presumption and not conclusive and it cannot be applied in the absence of corroborative evidence. Accordingly, the presumption under that sub-section would not be available for the purpose of framing a regular assessment. In the present case, the addition hinges on evidence gathered from the mobile phone of the Managing director of the assessee i.e. the third party document and the statements of various persons. The legal provision relating to presumption u/s 132(4A) is applicable to the person from whose possession or control the incriminating material is found & seized. Based on the incriminating material found from third party but not belonging to the appellant, this presumption will not be applicable unless corroborated by other evidence. Presumption under section 132(4A) is only against the person in whose possession the search material is found and not against any other person. In the case of Asst. CIT v Kishore Lal Balwani Rai [2007] 17 SOT 380 (Chd.), the coordinate bench of ITAT, Chandigarh held that though the diary seized enable the revenue to presume that its contents are true, such presumptions is available only against the person to whom it belongs and this is a rebuttable Presumption.
It is a well settled legal position that a non-speaking document without any corroborative documentary evidence on record and findings that such document has materialized into transaction giving rise to the income of the assessee had not been disclosed to the department by such assessee has to be disregarded for the purpose of assessment to be framed pursuant to search and seizure action. From the search and , 5000, 2060, 4999, 4648, 3988, 2061, 1455, 2062 & 1456/Del/2024 & C.O.Nos.11, 32, 33, 34/Del/2025 & 89, 90 & 91/Del/2024 seizure perspective such non-speaking documents are referred to as the dumb document. The coordinate bench of Delhi ITAT in case of Ashwini Kumar v. ITO reported in (1991) 39 ITD 183 held that in the case of dumb document, revenue should collect necessary evidence to prove that the figures represent incomes earned by the assessee. As the WhatsApp chat does not speaks about the real nature, the contents of the same cannot be held to be as belonging to the assessee and therefore, in our considered view, no addition could be made on the basis of such WhatsApp chat have not been corroborated by any other evidence found as a result of search or brought on record by making independent enquiries during the course of appellate proceedings by Ld.CIT(A) before making such enhancements. In view of the above discussions, the addition made by ld. CIT(A) at INR 9.65 crores as enhanced income is hereby deleted. Accordingly, the ground of appeal No. 1 taken by the assessee is allowed.
The Ground of appeal No. 2 is in relation to the invocation of the provisions of section 115BBE on the income enhanced by ld. CIT(A). Since we have already deleted the addition made by ld. CIT(A) by enhancing the income of the assessee, thus this ground of appeal becomes academic and is not adjudicated.
Grounds of appeal No. 3 is in respect of interest u/s 234A, 234B and 234C which is consequential and therefore, AO is directed to charge the interest as per law on the income computed after giving , 5000, 2060, 4999, 4648, 3988, 2061, 1455, 2062 & 1456/Del/2024 & C.O.Nos.11, 32, 33, 34/Del/2025 & 89, 90 & 91/Del/2024 effect to the order of the Tribunal. This ground of appeal is partly allowed.
Ground of appeal No. 4 is regarding the initiation of penalty proceedings u/s 274 r.w.s. 271AAC(10 which is premature at this stage and thus dismissed.
In the result, appeal of the assessee is partly allowed.
In the result, appeal of the Revenue in and C.O. No. 33/Del/2025 of the assessee are dismissed and appeal of the assessee in is partly allowed. (Revenue Appeal) CO No.-90/Del/2024 and (Assessee’s Appeal) (AY 2020-21) 90. These are two cross appeals filed by the assessee and revenue and one cross objection filed by the assessee. Since the issues raised in revenue’s appeal and CO filed by the assessee are identical as were taken in earlier assessment years thus these are taken first for consideration.
From the perusal of the assessment order, it is seen that an addition of INR 9,60,00,000/- was made by holding the same as accommodation entries u/s 68 of the Act received during the year from two lender companies tabulated at page 79 of the assessment order. The AO further observed that the assessee had paid interest of INR 46,20,853/- on the entire loan amount which was also disallowed.
, 5000, 2060, 4999, 4648, 3988, 2061, 1455, 2062 & 1456/Del/2024 & C.O.Nos.11, 32, 33, 34/Del/2025 & 89, 90 & 91/Del/2024 Besides this, an addition of INR 4,35,000/- was made on account of alleged commission @ 0.25% on the loans received of INR 9,60,00,000/- and repayment of INR 7,80,00,000/- made by holding the same as unexplained transactions.
The facts and circumstances existed in the year under appeal and the observations and allegations made by the AO while making the additions/disallowance are the same, as were made in the assessment order passed for AY 2013-14. Further, Ld. CIT(A) also made similar observation as were made in AY 2013-14 while deleting the additions/disallowances.
As there is no change in the circumstances, which fact is admitted by both the parties during the course of hearing therefore, by following the observations made by us while dismissing the appeal of the Revenue in Revenue’s appeal for AY 2020- 21 in is also dismissed.
Since we have already dismissed the grounds of appeal taken by the revenue, the objections raised in the C.O. of the assessee become academic and thus not adjudicated and is dismissed.
Now we take up the appeal filed by the assessee bearing (AY 2020-21).
The assessee has raised the following grounds of appeal in the present appeal:
, 5000, 2060, 4999, 4648, 3988, 2061, 1455, 2062 & 1456/Del/2024 & C.O.Nos.11, 32, 33, 34/Del/2025 & 89, 90 & 91/Del/2024 1. On the facts and in the circumstances and in law, the learned CIT(Appeals) has erred in making disallowance of Rs. 1,98,692/- u/s 40(a)ii) on account of Health and education cess. When such disallowance is not called for, the AO may be directed to delete the same.
2. On the facts and in the circumstances and in law, the learned CIT(A) has erred in making disallowance of Rs.21,56,755/- u/s 36(1)(va) on account of employee's contribution after the due date specified in the said section but before the due date of filing of Return of Income. When such disallowance is not called for, the AO may be directed to delete the same.
3. On the facts and in the circumstances and in law, the learned CIT(Appeals) has erred in enhancing the income of Appellant by Rs.35,00,000 on account of unexplained money by invoking the provisions of section 69A of the Act. When such disallowance is not called for, the AO may be directed to delete the same.
4. On the facts and in the circumstances and in law, the learned CIT(A) has erred in invoking provisions of Section 115BBE of the Act with regard to above enhancement and charging tax and surcharges at higher rates. When the addition on which such tax and surcharge were charged itself is unsustainable, the CIT(A) may be directed to delete the same.
5. On the facts and in the circumstances and in law, the learned CIT(A) has erred in levying consequent interest u/s 234A, 234B, 234C of the Act. The appellant denies its liability to pay such interest.
6. On the facts and in the circumstances and in law, the learned CIT(A) has erred in initiating penalty proceedings u/s 270A and 271AAC of the Act. The AO may be directed to not to initiate any such penalty proceedings.
7. On the facts and in the circumstances and in law, the learned CIT(A) has erred in initiating penalty proceedings u/s 271AAB(1A) of the Act in respect of enhancement of Rs.35,00,000/- u/s 69A of the Act. The AO may be directed to not to initiate any such penalty proceedings.
8. The appellant craves leave to add, alter, amend and/or withdraw any ground or grounds of appeal either before or during the course of hearing of the appeal.
97. Ground No.1 is with respect to disallowance of claim of education cess of INR 1,98,692/- u/s 40(a)(ii) of the Act. It is seen that Ld.CIT(A)
, 5000, 2060, 4999, 4648, 3988, 2061, 1455, 2062 & 1456/Del/2024 & C.O.Nos.11, 32, 33, 34/Del/2025 & 89, 90 & 91/Del/2024 has dismissed the claim of the assessee by relying upon the judgement of Hon’ble Supreme Court in the case of Sesa Goa Ltd. vs Joint Commissioner of Income Tax reported in 155 taxmann.com 342 (SC) wherein the Hon’ble Supreme Court has held that “education and Health Cess cannot be allowed as deduction while computing the income under head business or profession”. The Hon’ble apex Court further observed that the amendment made by Finance Act, 2022 is retrospective in nature.
In view of the above, we find no infirmity in the order of Ld.CIT(A) in confirming the disallowance of expenses claimed towards Education and Health Cess by the assessee. Thus, Ground of appeal No.1 raised by the assessee is dismissed.
In ground of appeal No. 2 assessee has challenged the disallowance made of INR 21,56,755/- on account of delayed payment of employees contribution of PF and ESI u/s 36(1)(va) of the Act. This issue has already been settled by the Hon’ble Supreme Court in the case of Checkmate Service Pvt. Ltd. reported in (2022) 143 taxmann.com 178 against the assessee. Thus, by respectfully following the judgment of Hon’ble Supreme Court in case of Checkmate Services (supra), we find no infirmity in the order of ld. CIT(A) who confirm the disallowance made by the AO by placing reliance on the aforesaid judgement of hon’ble Supreme Court. Accordingly, ground of appeal No.2 taken by the assessee is dismissed.
, 5000, 2060, 4999, 4648, 3988, 2061, 1455, 2062 & 1456/Del/2024 & C.O.Nos.11, 32, 33, 34/Del/2025 & 89, 90 & 91/Del/2024 100. In Ground of appeal No. 3, assessee has challenged the enhancement of income of the assessee by Rs. 35,00,000/- by ld. CIT(A) based on WhatsApp chats found in the mobile phone of Shri Purushottam Bhageria, Managing Director of the company as unexplained money of the assessee company u/s 69A of the Act.
The facts and circumstances existed in the year under appeal and the observations and allegations made by Ld. IT(A) while enhancing the income of the assessee are the same, as were made in the appellate order for AY 2019-20.
As there is no change in the circumstances, which fact is admitted by both the parties during the course of hearing therefore, by following the observations made by us while deleting the additions made by ld. CIT(A) by enhancing the income of the assessee in the appeal filed by the assessee in herein above, the addition of Rs. 35,00,000/- made by ld. CIT(A) is deleted. Accordingly, the Ground of appeal No. 3 taken by the assessee in the present appeal for AY 2020-21 is allowed.
The Ground of appeal No. 4 is in relation to the invocation of the provisions of section 115BBE on the income enhanced by ld. CIT(A). Since we have already deleted the addition made by ld. CIT(A) by enhancing the income of the assessee, thus this ground of appeal becomes academic and is not adjudicated.
, 5000, 2060, 4999, 4648, 3988, 2061, 1455, 2062 & 1456/Del/2024 & C.O.Nos.11, 32, 33, 34/Del/2025 & 89, 90 & 91/Del/2024 104. Grounds of appeal No. 5 is in respect of interest u/s 234A, 234B and 234C which is consequential and therefore, AO is directed to charge the interest as per law on the income computed after giving effect to the order of the Tribunal. This ground of appeal is partly allowed.
Ground of appeal No. 6 & 7 are regarding the initiation of penalty proceedings u/s 274 r.w.s. 271AAC and 271AAB(1A) of the Act which is premature at this stage and thus dismissed.
In the result, appeal of the assessee is partly allowed.
In the result, appeal of the Revenue in and C.O. No. 90/Del/2025 of the assessee are dismissed and appeal of the assessee in is partly allowed. (Revenue Appeal) CO No.-91/Del/2024 and (Assessee’s Appeal) (AY 2021-22) 108. These are two cross appeals filed by the assessee and revenue and one cross objection filed by the assessee. Since the issues raised in revenue’s appeal and CO filed by the assessee are identical as were taken in earlier assessment years thus these are taken first for consideration.
From the perusal of the assessment order, it is seen that an addition of INR 21,25,00,00,000/- was made by holding the same as accommodation entries u/s 68 of the Act received during the year from , 5000, 2060, 4999, 4648, 3988, 2061, 1455, 2062 & 1456/Del/2024 & C.O.Nos.11, 32, 33, 34/Del/2025 & 89, 90 & 91/Del/2024 one lender company tabulated at page 76 of the assessment order. The AO further observed that the assessee had paid interest of INR 2,95,12,755/- on the entire loan amount which was also disallowed. Besides this, an addition of INR 6,18,297/- was made on account of alleged commission @ 0.25% on the loans received of INR 21,25,00,000/- and repayment of INR 3,48,18,873/- made by holding the same as unexplained transactions.
The facts and circumstances existed in the year under appeal and the observations and allegations made by the AO while making the additions/disallowance are the same, as were made in the assessment order passed for AY 2013-14. Further, Ld. CIT(A) also made similar observations as were made in AY 2013-14 while deleting the additions/disallowances.
As there is no change in the circumstances, which fact is admitted by both the parties during the course of hearing therefore, by following the observations made by us while dismissing the appeal of the Revenue in Revenue’s appeal for AY 2021- 22 in is also dismissed.
Since we have already dismissed the grounds of appeal taken by the revenue, the objections raised in the C.O. of the assessee become academic and thus not adjudicated and is dismissed.
Now we take up the assessee’s appeal in (AY 2021-22). Page | 77 , 5000, 2060, 4999, 4648, 3988, 2061, 1455, 2062 & 1456/Del/2024 & C.O.Nos.11, 32, 33, 34/Del/2025 & 89, 90 & 91/Del/2024
The assessee has raised following grounds of appeal in the present appeal: 1. “On the facts and in the circumstances and in law, the learned CIT(Appeals) has erred in enhancing the income of Appellant by Rs. 1,50,00,000 on account of unexplained money by invoking the provisions of section 69A of the Act. When such disallowance is not called for, the AO may be directed to delete the same.
2. On the facts and in the circumstances and in law, the learned CIT(A) has erred in invoking provisions of Section 115BBE of the Act with regard to above enhancement and charging tax and surcharges at higher rates. When the addition on which such tax and surcharge were charged itself is unsustainable, the CIT(A) may be directed to delete the same.
3. On the facts and in the circumstances and in law, the learned CIT(A) has erred in levying consequent interest u/s 234A, 234B, 234C of the Act. The appellant denies its liability to pay such interest.
4. On the facts and in the circumstances and in law, the learned CIT(A) has erred in initiating penalty proceedings u/s 271AAB(1A) of the Act in respect of enhancement of Rs.1,50,00,000/- u/s 69A of the Act. The AO may be directed to not to initiate any such penalty proceedings.
5. The appellant craves leave to add, alter, amend and/or withdraw any ground or grounds of appeal either before or during the course of hearing of the appeal.”
In Ground of appeal No. 1, assessee has challenged the enhancement of income of the assessee by Rs. 1,50,00,000/- by ld. CIT(A) based on WhatsApp chats found in the mobile phone of Shri Purushottam Bhageria, Managing Director of the company as unexplained money of the assessee company u/s 69A of the Act.
The facts and circumstances existed in the year under appeal and the observations and allegations made by Ld. IT(A) while enhancing the , 5000, 2060, 4999, 4648, 3988, 2061, 1455, 2062 & 1456/Del/2024 & C.O.Nos.11, 32, 33, 34/Del/2025 & 89, 90 & 91/Del/2024 income of the assessee are the same, as were made in the appellate order for AY 2019-20 in ITA No. 3988/Del/2024.
As there is no change in the circumstances, which fact is admitted by both the parties during the course of hearing therefore, by following the observations made by us while deleting the additions made by ld. CIT(A) by enhancing the income of the assessee in the appeal filed by the assessee in herein above, the addition of Rs. 1,50,00,000/- made by ld. CIT(A) is deleted. Accordingly, the Ground of appeal No. 1 taken by the assessee in the present appeal for AY 2021-22 is allowed.
The Ground of appeal No. 2 is in relation to the invocation of the provisions of section 115BBE on the income enhanced by ld. CIT(A). Since we have already deleted the addition made by ld. CIT(A) by enhancing the income of the assessee, thus this ground of appeal becomes academic and is not adjudicated.
Grounds of appeal No. 3 is in respect of interest u/s 234A, 234B and 234C which is consequential and therefore, AO is directed to charge the interest as per law on the income computed after giving effect to the order of the Tribunal. This ground of appeal is partly allowed.
Ground of appeal No. 4 is regarding the initiation of penalty proceedings u/s 271AAB(1A) of the Act which is premature at this stage and thus dismissed.
, 5000, 2060, 4999, 4648, 3988, 2061, 1455, 2062 & 1456/Del/2024 & C.O.Nos.11, 32, 33, 34/Del/2025 & 89, 90 & 91/Del/2024
In the result, appeal of the assessee is partly allowed.
In the result, appeal of the Revenue in and C.O. No. 91/Del/2025 of the assessee are dismissed and appeal of the assessee in is partly allowed.
In the final result appeals filed by the revenue in 5000, 2060, 4999, 4648, 2061 and 2062/Del/2024 for AYrs. 2013- 14, 2015-16, 2016-17, 2017-18, 2019-20, 2020-21 and 2021-22 respectively, are dismissed.
The Cross Objections filed by the assessee in CO No. 11, 32, 33 and 34/Del/2025 for AYrs 2013-14, 2015-16, 2017-18 and 2019-20 respectively; and CO No. 89, 90 and 91/Del/2024 for AY 2016-17, 2020-21 and 2021-22 respective, are dismissed.
The appeals filed by the assessee in 1455 and 1456/Del/2024 2019-20, 2020-21 2021-22 for AYrs. and respectively, are partly allowed.
Order pronounced in the open Court on 30.06.2025.