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Facts
A search and seizure operation uncovered a loan receipt of Rs. 22,50,000 allegedly from Shri Shamik Chokshi to the assessee. Another document indicated capital introduction and loan details concerning Bloomtap Technologies Pvt. Ltd. and Atom Corporation. The assessee denied receiving the loan and explained the capital introductions.
Held
The Tribunal held that the loan receipt lacked corroborative evidence and the assessee's denial and explanation of capital introduction were sufficient. The addition of Rs. 22,50,000 as unexplained income was deleted. The addition of Rs. 25,000 for capital contribution to a partnership firm was also deleted as it was duly reflected in the books of account.
Key Issues
Whether the additions made to the assessee's income based on an alleged loan receipt and capital introduction documents without sufficient corroborative evidence are justified.
Sections Cited
153C, 132(4), 131(1A), 69A, 292C, 68
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, DELHI BENCHES: G : NEW DELHI
Before: SHRI ANUBHAV SHARMA & SHRI MANISH AGARWAL
Assessment Year: 2018-19 Sachet Duggal, Vs DCIT, B16/22, DLF Phase-1, Central Circle-8, Sikanderpur Ghosi (68), New Delhi. DLF QE, SO. Gurgaon, Haryana – 122 002. PAN: AOTPD0607B (Appellant) (Respondent) Assessee by : Shri Raghav Sharma, CA & Chandrima Chaudhary, Advocate Revenue by : Shri Mahesh Kumar, CIT-DR Date of Hearing : 03.06.2025 Date of Pronouncement : 13.06.2025 ORDER PER ANUBHAV SHARMA, JM:
This appeal is preferred by the assessee against the order dated 17.04.2023 of the Ld. Commissioner of Income-tax (Appeals)-24, New Delhi (hereinafter referred to as the Ld. First Appellate Authority or ‘the Ld. FAA’, for short) in Appeal No.CIT(A), Delhi-24/10337/2017-18 arising out of the appeal before it against the order dated 30.12.2022 passed u/s 153C of the Income Tax Act, 1961 (hereinafter referred as ‘the Act’) by the DCIT, Central Circle-8, New Delhi (hereinafter referred to as the Ld. AO).
A search and seizure action was conducted in the case of Navneet Dawar & others group on 03.01.2018 wherein residential and business premises of various persons including the father of the present assessee was searched. During the search and seizure operations, certain documents were recovered. Amongst them a document relied by the AO belonging to Shri Sachet Duggal S/o Shri Gurvinder Singh Duggal. This alleged incriminating document Annexure A-5 has been reproduced by the AO in the assessment order at page No.3 as a scanned document. Further, the contents of the same is that it is titled as a loan receipt document which narrates states that Sachet Duggal S/o Shri Gurvinder Singh Duggal has received Rs.22,50,000/- as loan from Shri Shamik Chokshi on 30.09.2017. The document bears the date 30.09.2017, is revenue stamped, is signed by Shri Sachet Duggal and is witnessed by one Shri Sumit Gupta, a resident of Gurugram. The assessee, when confronted with it has denied receiving any loan and submitted that it was executed in anticipation of receiving loan. This document was also confronted to Shri Gurvinder Singh Duggal and his statement u/s 132(4) of the Act was recorded where he denied knowing about it and statement u/s 131(1A) of the Act was recorded of Shri Sachet Duggal who denied to have received this loan in cash and stated that the loan receipt was prepared, however, no loan was received in cash or cheque.
However, the AO, relying the statement of Shri Sachet Duggal that the document was signed by him, considered it to be an established fact that the loan was received in cash and that it was not disclosed in the return of income. Therefore, the same has been added as an unexplained money in the hands of the assessee.
Another incriminating document was found from the premises of Sh. Gurvinder Singh Duggal situated at G-9, Greater Kailash-lll, Masjid Moth, New Delhi was impounded as Page No. 92-94 of Annexure A-12, which contain the details of loan given by Sh. Sachet Duggal to M/s. Bloomtap Technologies Pvt. Ltd. It also contains the details of capital introduced by Sh. Sachet Duggal and Sh. Gurvinder Singh Duggal in Atom Corporation. The capital introduced by Sh. Sachet Duggal of Rs. 1,28,15,000/- and Sh. Sachet Duggal. Further, the amount of loan given of Rs. 22,50,000/-. The assessee was show caused on this issue and asked that why these amounts should not be added to your income as undisclosed investment for the A.Y. 2018-19. In response to this the assessee filed reply and stated that in the A.Y. 2018- 19, assessee had given loan of Rs. 25,37,478/- to M/s. Bloom Tap Technologies Pvt. Ltd. The assessee also submitted copy of ledger account of assessee in the books of Bloomtap Technologies Pvt. Ltd. alongwith balance sheet of Bloomtap Technologies Pvt. Ltd. Further, assessee stated that during the A.Y. 2018-19 assessee had a capital balance of Rs. 1,17,20,085/- and enclosed copy of ledger of assessee in the books of Atom Corporation along with reconciliation statement and balance sheet of Atom Corporation. The reply filed by the assessee was considered and AO found that the total loan given to M/s. Bloomtap Technologies Pvt. Ltd. is Rs. 25,37,478/- which is greater than the amount of show cause and the amount of loan given has been taken in the books of M/s. Bloomtap Technologies Pvt. Ltd. Further, on perusal of balance sheet of Atom corporation it is found that the total capital introduced by Sachet during the F.Y. 2017-18 is Rs. 1,17,20,085/-. Further, the capital amount of Rs.10,00,000/- has been introduced through banking channel. Further, on perusal it is found that the amount of Rs. 25,000/- has been introduced in cash. Therefore, the amount of Rs.25,000/- was held to be unexplained money in the hands of the assessee. Therefore, the amount of Rs. 25,000/- was added in the income of Sh. Sachet Duggal u/s 69A of the Act.
The ld.CIT(A) has sustained the same for which the assessee is in appeal raising the following grounds:- “
1 That on facts and circumstances of the case, the order passed by the Ld. CIT (Appeal) is bad both in the eyes of law and on facts.
2. The Ld. CIT(A) has erred on facts and in law in upholding the order passed by the Assessing Officer under section 153C of the income tax act, 1961
3. The Ld, CIT(A) has erred on facts and in law in confirming the addition of Rs. 22,50,001/- u/s 68 on account of alleged cash loan received by the assessee from Samik Chokshi upholding the order passed by the Assessing Officer under section 153C of the income tax act, 1961
3. The Ld. CIT(A) has erred on facts and in law in confirming the addition of Rs. 22,50,001/- u/s 68 on account of alleged cash loan received by the assessee from Samik Chokshi. 4
4 The Ld. CIT(A) has erred on facts and in law in confirming the addition of Rs. 25,000/- u/s 68 on account of capital informed in the partnership firm. 4 That the Ld. CIT(A) has erred on facts and in law ignoring the well- established judicial pronouncements including that of the jurisdiction High Court 5 That the Ld. CIT(A) has erred on facts and in law in not considering the replies and submissions filed by the assessee. 7 That the impugned appellate order is arbitrary, illegal, bad in law and in violation of rudimentary principles of Contemporary jurisprudence 8 That the appellant craves leave to add/alter/any/all grounds of appeal before or at the time of hearing of the appeal.”
5. On hearing both the sides and appreciating the material on record we find that there is absence of corroborative evidence in regard to the impugned original receipt found during the course of search at Gurvinder Singh Duggal. The assessing officer had not recorded a finding that the amount of Rs. 22,50,000/- was the income of the assessee because it was neither any loan nor a deposit. The admissions alone, if to be relied, are only with regard to the execution of document but there is no admission in statements about the transaction being completed and any money actually exchanged hands. No addition can be made on the basis of assessee not being able to establish a negative fact of not receiving back any cash. Presumption u/s 132(4A) r.w.s 292C of the Act only gets attracted in the case of searched person and not the third person in absence of any corroborative evidence.
6. Even otherwise loan per se cannot be considered to be income and, therefore, the same cannot be treated to be income of the assessee to be added u/s 69A of the Act as unexplained money. Assessee, as borrower, cannot be said to have been found to be the ‘owner’ of money not recorded in the books of account. At the same time, source of loan transaction stood duly explained by the content of alleged incriminating document itself. Reliance is rightly placed by ld. AR on the decision of coordinate bench at Delhi in case of ACIT vs Vatika Greenfield (p) Ltd [2009] 121 TTJ wherein it is held that the AO cannot be permitted to treat the amount of loan as income for the purpose of assessing tax thereon while framing the assessment. Thus the ground no 1 to 3 deserves to be sustained. The addition deserves to be deleted.
In regard to ground no 4 arising out of addition on account of introduction of cash Rs.25,000. We find that the assessee entered into a partnership in a firm Atom Corporation. At the time of setting up of the firm, some expenses had to be incurred. The firm did not have any bank account and therefore cash was required to meet the day-to-day expenses for this purpose the assessee introduced Rs.25,000 in cash towards his capital contribution. This amount is duly reflected in the cash book of the assessee. The amount was introduced out of the cash available with the assessee. Copy of the Bank Statement of M/s. Atom Corporation and the cash account of the assessee stand filed. Ld. CIT (A) however, felt that assesse could not conclusively prove that the cash amounting to Rs. 25,000/- has been sourced from regular books of accounts as opening cash balance has not been established. However, we are of the considered view that capital introduced by way of directly bearing petty expenditure by a partner cannot be considered to be unexplained money u/s 69A of the Act, as not recorded in his books if same is duly reflected in capital account of the partner. Assessee has filed cash book entry of 1.7.2017 of the himself showing capital introduced in partnership of firm. The opening balance is shown to be Rs. 3,63,383/- as on 1.7.2017. That was sufficient explanation of source of cash in the hands of the assessee for making capital contribution to meet out petty expenditure of the firm. Further, this amount of Rs. 25,000/- is duly reflected in capital account of the assessee as partner in the books of firm also. In view of these facts, in our considered opinion, when necessary entries are found recorded in the books of account of both the entities, no addition could be made u/s 69A of the Act. Accordingly, we direct to delete the addition of Rs.25,000/-. The Ground of Appeal
No.4 is allowed.