SPERRY PLAST LTD,NEW DELHI vs. DCIT, NEW DELHI

That appellant craves to leave, alter, amend or modify the grounds of appeal before or during the hearing of the appeal.

Brief facts of the case are that, the Assessee filed return of income declaring NIL. The case of the Assessee was selected for scrutiny under CASS. Statutory notices were issued and assessment proceedings initiated against the Assessee. An assessment order came to be passed u/s 143(3) of the Act on 30/12/2019 by making an addition u/s 68 r.w. Section 115BBE of the Act of Rs. 22,01,62,000/- treating the unsecured loans received as bogus entries and further made addition of Rs. 24,42,000/- being cash deposited by the Assessee in the bank account during the demonization period treating the same as undisclosed income of the Assessee. Aggrieved by the assessment order dated 30/12/2019, the Assessee preferred an Appeal before the Ld. CIT(A). The Ld. CIT(A) vide order dated

It is relevant to mention that aggrieved by the deletion of the partial addition made by the Ld. CIT(A),the Department of Revenue has not preferred any Appeal.

Grounds of Appeal of the Assessee are regarding sustaining the addition of Rs. 2,50,00,000/- made by the A.O. on account of unsecured loan in respect of two parties i.e. Bhargabi Vinimav Pvt. Ltd. (2,00,00,000/-) and Pioneer Dealtrade Pvt. Ltd. (50,00,000/-).

The Ld. Counsel for the Assessee submitted that during the Remand Proceedings, A.O. made independent enquires from the above two parties by issuing notice to them. Notice issued by the A.O. were duly complied and replied by both the parties. The Assessee has produced all relevant documents to discharge the onus casted upon it u/s 68 of the Act.The A.O. has not considered confirmation, ITR acknowledgment, audited financial statement and bank statement of the creditors. Further the Ld. Assessee's Representative also 4 Sperry Plast Ltd. Vs. DCIT submitted that out of 2 crore, loan of Rs. 1,85,00,000/- was repaid within two days and remaining 15,00,000/- has been paid within a month, which is much before the assessment was reopened.The said fact itself proves the bona-fide of the transaction. The Assessing Officer has not doubted the identity of the creditors and the creditworthiness of the creditors. The A.O. has only doubted about the genuineness of the transaction and the Assessee has furnished all the necessary details and documentary evidence to discharge its onus u/s 68 of the Act. However, the authorities below have committed error in confirming the addition, thus, sought for deleting the same by allowing Grounds of the Assessee.

Per contra, the Ld. Departmental Representative relying on the orders of the Lower Authorit4is for dismissal of the Ground No. 1 of the Assessee.

We have heard both the parties and perused the material available on record. In the assessment proceedings, the Ld. A.O. 19,51,62,000/- pertaining to unsecured loan of 16 parties and confirmed the addition of Rs. 2,50,00,000/- in respect of two parties namely Bhargabi Vinimav Pvt. Ltd. and Pioneer Dealtrade Pvt. Ltd.

During the Remand Proceedings, the A.O. made independent enquiries from the above two parties by issuing notice to them. The noticeissued by the A.O. has been duly served and both the parties have replied. In so far as Bhargabi Vinimav Pvt. Ltd.,the reason assigned for the addition is that the reserve and surplus of the loan creditor was low and the loan creditor company had shown meager income. It is well settled law that the loan creditor creditworthiness is not only restricted to the current year income u/s 68 of the Act. What is relevant is the source and such source is not confined to current year income only. The source could be out of many factors such as money paid within its net-worth out of loan raised by them or out of income earned by them. As per the balance sheet of Bhargabi Vinimav Pvt. Ltd. they had availability of total source of fund of Rs. 26,36,29,338/- as on 31/03/2016 and Rs. 23,05,32,310/- as on 31/03/2017 respectively.

It is relevant to mention that the Assessee had taken total loan of Rs. two crore on 24/05/2016, out of which, Rs. 1,85,00,000/- was paid back within two days and remaining amount of Rs. 15,00,000/- was paid back within a month.