ACIT, CIRCLE 22(2), NEW DELHI vs. SHRIDHAM DISTRIBUTORS P.LTD, KOLKATA

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ITA 1537/DEL/2023Status: DisposedITAT Delhi14 May 2025AY 2016-17Bench: SHRI M. BALAGANESH, ACCOUNTANT MEMBER AND SH. YOGESH KUMAR U.S. (Judicial Member)1 pages
AI SummaryPartly Allowed

What did the Tribunal hold?

The Tribunal found that the addresses of the lender companies were bogus, and there were immediate credits and debits in their accounts. The assessee failed to prove the genuineness and creditworthiness of the transactions. Therefore, the CIT(A)'s order was set aside.

What were the facts?

The assessee filed its return of income for AY 2016-17 declaring Rs. 34,70,470/-. The AO made additions of Rs. 9,80,91,000/- and Rs. 544,67,79,391/-. The CIT(A) deleted these additions, aggrieved by which the department has appealed.

What were the issues?

Whether the CIT(A) erred in deleting additions made by the AO on account of unexplained credits and expenses, when the genuineness and creditworthiness of the transactions were not proved by the assessee.

Which sections of the Income-tax Act were involved?

Section 68,Section 69C,Section 143(3),Section 56(viib),Section 69

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, DELHI

Before: SHRI M. BALAGANESH & SH. YOGESH KUMAR U.S.

Hearing: 06/05/2025Pronounced: 14/05/2025

Appellant Respondent Assessee by None Revenue by Sh. Mahesh Kumar, CIT(DR) Date of Hearing 06/05/2025 Date of Pronouncement 14/05/2025 ORDER

PER YOGESH KUMAR, U.S. JM:

1.

The present appeal is filed by the Department of Revenue against the order of the Ld. CIT(A)/National Faceless Appeal Centre (‘NFAC ’ for short) dated 20/03/2023 pertaining to Assessment Year 2016-17.

2.

The grounds of Appeal are as under:-

“1. Whether on the facts and circumstances of the case, the Ld. CIT(A) erred in holding that the "as there is no credit outstanding in the books of the appellant in case of fully repaid loans, these credits cannot be treated as unexplained credits".

2. Whether on the facts and circumstances of the case, the Ld. CIT(A) erred in deleting the addition made by the Assessing Officer of Rs. 535,23,19,470/- u/s 68 of the Act as the creditworthiness & genuineness of transactions were not proved in this case.

3. Whether on the facts and circumstances of the case, the Ld. CIT(A) erred in deleting the addition made by the Assessing Officer of Rs. 9,44,59,921/-u/s 69C of the Act as the interest expenses was claimed on fictitious loans.

4. The appellant craves to amend, modify, alter, add or forego any ground of appeal at any time before or during the hearing of this appeal.”

3.

Brief facts of the case are that, the Assessee filed return of income for Assessment Year 2016-17 declaring total income of Rs. 34,70,470/-.

The case of the Assessee was selected for scrutiny under CASS. An assessment order came to be passed u/s 143(3) of the Income Tax Act, 1961 ('Act' for short) on 31/12/2018 by determining the total income of the Assessee at Rs. 554,83,40,861/- by making addition of Rs. 9,80,91,000/- u/s 56(viib) of the Act and Rs. 544,67,79,391/- u/s 69C of the Act. Aggrieved by the assessment order dated 31/12/2018, the Assessee preferred an appeal before the Ld. CIT(A). The Ld. CIT(A) vide order dated 20/03/2023, deleted the additions made by the A.O.

Aggrieved by the order of the Ld. CIT(A) dated 20/03/2023, the Department of Revenue preferred the present Appeal on the grounds mentioned above.

4.

None appeared for the Assessee. Order sheet reveals that at no point of time, neither the Assessee nor the representative of the Assessee have appeared before the Tribunal. The notices issued by the registry have been returned with an endorsement ‘door locked’. The Department was directed by the Bench to serve the notice of the Assessee and the Department has served the notice by way of affixture and produced the proof of the same. Considering the above, we deem it fit to decide the present appeal on hearing the Ld. Departmental Representative and on verifying the material available on record.

5.

The Ld. Departmental Representative vehemently submitted that though the creditworthiness and genuineness of the transactionwere not proved, the Ld. CIT(A) has proceededto delete the addition of Rs. 535,23,19,470/- made by the A.O. u/s 68 of the Act. The Ld. Departmental Representative also submitted that the Ld. CIT(A) committed error in deleting the addition of Rs. 9,44,59,921/- made u/s 69 of the Act as the interest expense was claimed on fictitious loan. The Ld. Departmental Representative relying on the assessment order, sought for allowing the Appeal.

6.

We have heard the Ld. Departmental Representative and perused the material available on record. The Assessee had received fresh unsecured loan amounting to Rs. 544,06,58,000/- during the year under consideration from various Companies mentioned as under:-

7.

In order to verify the genuineness of the said financial transactions an inspector has deputed by the A.O. for the field enquiry. However, the inspector submitted the Report stating that all the address of the various lendercompaniesare found to be ‘bogus’. Apart from the same, the Assessee has not produced any of the Directors and it is found that all those Companies were showing either loss of marginal profit and have no creditworthiness of lend such huge loan. Even during the first appellate proceedings, the Assessee called for Remand Report. The Ld. A.O. in his Remand Report categorically stated that the additional evidence produced by the Assessee should not be admitted since the same are not admissible as per Rule 46A of IT Rules. However, the Ld. CIT(A) erroneously observed that ‘after furnishing the documents by the Assessee, the A.O. did not carry out any necessary enquiries independently’. It is found that the A.O. indeed carried out enquiries and found that the addresses of the lender companies are ‘bogus’and there were immediate credits and debits in the accounts of those Companies.

Apart from the same, the Assessee has also not produced any of the Directors before the A.O. to prove the genuineness of the transaction and creditworthiness of the parties. Onus on the Assessee to prove the identity and creditworthiness of the creditors and genuineness of the transaction which has not been discharged by the Assessee in the present case. The Ld. CIT(A) has recorded factually incorrect finding and deleted the addition. In view of the same, we set aside the order of the Ld. CIT(A) and remand the matter to the file of the Ld. CIT(A) with a direction to the Assessee to produce all the lenders and substantiate its claim in order to contest the additions made by the A.O. The Ld. CIT(A) is directed to pass the order afresh in accordance with law after providing opportunity of being heard to the Assessee.

8.

In the result, the Appeal of the Revenue is partly allowed for statistical purpose.

Order pronounced in the open court on 14th May , 2025

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