DCIT, CIRCLE-25(1), NEW DELHI vs. TERA CONSTRUCTION PVT. LTD., DELHI
Before: SHRI YOGESH KUMAR U.S. & SHRI NAVEEN CHANDRADCIT Circle-25(1) New Delhi
PER YOGESH KUMAR, U.S. JM: The present appeal is filed by the Department of Revenue against the order of the Ld. Commissioner of Income Tax Appeal-9 (‘Ld. CIT(A)’ for short] dated 30/09/2019 pertaining to Assessment Year 2011-12. 2. The grounds of appeal are as under:- “1. "On the facts and circumstances of the case, the Id. CIT(A) erred in deleting the addition made u/s 68 of the I.T Act, 1961 of Rs.3,13,37,238/- made by the Assessing Officer since the evidences available during assessment proceedings, on the face of it, establishes that the transactions with the directors are not genuine which is evident from the comparison of figures of loan given and income of the individuals as mentioned in the ITRs which proves that creditworthiness of to such extent of loan is not justified.
"On the facts and circumstances of the case, the Id. CIT(A) erred in deleting the disallowance of loss from the sale of liquor of Rs. 4,03,321/- being destroyed due to repair work. Since
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liquor amounting to Rs.3.4 Lacs was the sale of the assessee and therefore assessee won't stock up liquor of Rs.4 Lacs in one go.
On the facts and circumstances of the case the order of Ld. CIT(A) is perverse."
"The appellant craves, leave or reserving the right to amend modify, alter, add or forego any ground(s) of appeal at any time before or during the hearing of this appeal."
Brief facts of the case are that, the Assessee filed return of income declaring the total loss of Rs. 66,09,497/- for Assessment Year 2011-12. The case of the Assessee was selected for scrutiny and an assessment order came to be passed u/s 143(3) of Income Tax Act, 1961 (‘Act’ for short) on 31/03/2014by making addition of Rs. 3,13,37,238/- u/s 68 of the Act and also disallowed sale of liquor of Rs. 4,03,321/-. Aggrieved by the assessment order dated 31/03/2014, the Assessee preferred an Appeal before the Ld. CIT(A). The Ld. CIT(A) vide order dated 30/09/2019, allowed the Appeal of the Assessee by deleting the addition/disallowance made by the A.O. Aggrieved by the order of the Ld. CIT(A), the Department of Revenue preferred the present Appeal on the Grounds mentioned above. 4. Ground No. 1 of the Revenue is against the deletion of the addition of Rs. 3,13,37,238/- made by the A.O. u/s 68 of the Act. The Ld. Ld. Departmental Representative vehemently submitted that the Ld. Departmental Representative relying on the findings of the A.O., sought for reversing the order of the Ld. CIT(A). Accordingly, prayed for allowing the Ground No.1. 5. Per contra, the Ld. Assessee's Representative submitted that the assessee has discharged its onus on proving the creditworthiness of all the three persons. There were sufficient opening balance in the accounts and payments were made through banking channels. The Ld. Assessee's the creditworthiness and genuineness of the transaction. However, the Ld. CIT(A) while deleting the addition observed as under:- “4.3. Smt. NeerjaGhura: In the assessment proceedings, the loan forwarded by Mrs. Neerjaghura of amounting to Rs. 1,49,53,238/- was held to be unaccounted cash credit for the reason that appellant had failed to prove creditworthiness and genuineness of the transaction. Now, as far as the identity is concerned, the appellant has provided the PAN no. of Smt. NeerjaGhura which proves the identity of the lender. Second parameter as regards to creditworthiness is concerned, the appellant has provided the bank statements and details of income of Smt. NeerjaGhura as per ITRs for the AYs 2006-07 is Rs. 32,79,765/-, 2007-08 is Rs. 11,74,813/-, 2008-09 is Rs. 4,49,969/-, 2009-10 is Rs. 22,29,450/-, 2010-11 is Rs. 16,12,135/-. The copy of the account of Smt. NeerjaGhura is as under:- Date
Particulars
Vch Type
Debit
Credit
1-4-2010
Dr.
Opening Balance
1,70,18,238.01
30-04-2010
Dr.
The K V B Ltd.
Receipt
4,75,000.00
06-05-2010
Dr.
The K V B Ltd.
Receipt
5,40,000.00
07-05-2010
Dr.
The K V B Ltd.
Receipt
7,00,000.00
21-05-2010
Dr.
The K V B Ltd.
Receipt
13,00,000.00
28-10-2010
Dr.
The K V B Ltd.
Receipt
20,000.00
26-03-2011
Cr.
The KVB Ltd.
Payment
50,00,000.00
30-03-2011
Cr.
The K V B Ltd.
Payment
1,00,000.00
51,00,000.00
2,00,53,238.01
Cr.
Closing Balance
1,49,53,238.01
2,00,53,238.01
2,00,53,238.01
4. It is noted from the above that there was an opening credit balance of Rs. 1,70,18,238/-as on 01.04.2010. The appellant has received amounts of Rs. 4,75,000/-, Rs. 5,40,000/-, Rs. 7,00,0000/-, Rs. 20.000/- and Rs. 13,00,000/- from the Karur Bank of the lender, referred to as M/s KVB Ltd in the copy of ledger account filed as above before the AO. The amount was transferred through banking channels. In fact, the amount added by the AO was closing balance of Rs. 1,49,53,238/-, which was less than the opening
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balance of Rs. 1,70,18,238/-. It is also noted that the credit entries made during the year were of Rs. 30,35,000/-, which have been duly explained as received by cheques of KV Bank.
The amounts were received by the appellant were by cheques of Karur Bank. The appellant has submitted the detail of source as well as source of source to prove the legitimacy of the funds in the hands of lender. An explanation given by the appellant duly substantiates the creditworthiness of the lender.
4.5 Ms. ZeniaGhura: In the assessment proceedings, the loan forwarded by Ms. ZeniaGhura of amounting to Rs. 32,31,500/- was held to be unaccounted cash credit for the reason that appellant had failed to prove creditworthiness and genuineness of the transaction. Now, as far as the identity is concerned, the appellant has provided the PAN no. of Ms.
ZeniaGhura which proves the identity of the lender. Second parameter as regards to creditworthiness is concerned, the appellant has provided the copy of account of Ms. ZeniaGhura.
The copy of the account of Ms. ZeniaGhura is as under:-
Date
Particulars
Vch Type
Debit
Credit
1-4-2010
Dr.
Opening Balance
27,32,300.00
03-04-2010
Dr.
The KVB Ltd.
Receipt
1,65,00,000/-
13-04-2010
Cr.
The KV B Ltd.
Payment
1,80,000.00
17-04-2010
Cr.
The KVB Ltd.
Payment
35,000.00
22-04-2010
Cr.
The K V B Ltd.
Payment
9,10,000.00
21-05-2010
Dr.
The KVB Ltd.
Receipt
3,40,000.00
21-05-2010
Dr.
The KVB Ltd.
Receipt
8,00,000.00
23-03-2011
Cr.
The KVB Ltd.
Payment
1,00,83,500.00
30-03-2011
Cr.
The KVB Ltd.
Payment
1,00,000.00
10,00,000.00
30-03-2011
Cr.
The KVB Ltd.
Payment
31,00,000.00
1,44,08,500.00 2,03,72,300.00
Cr.
Closing Balance
59,63,800.00
2,03,72,300.00
2,03,72,300.00
4.6 It is noted from the copy of account that the amounts were received in her account in by cheques of KarurVysya Bank referred to as M/s KVB Ltd in the above copy of account by the appellant. A sum of Rs. 1.65,00,000/- was transferred from 6
There were subsequent transactions of receipt and payment by cheque from M/s KVB Ltd in her account. The appellant claims that the provisions of section 68, applies on the basis of credit entries and not on the basis of difference of closing and opening balances. Further, the appellant has submitted detail of source as well as source of source with respect to the credit received in the year under consideration where in it is apparent that findings have been received from indentified parties by lender out of which payments were made to the appellant.
4.7 Sh. Gurdeep Singh:- In the assessment proceedings, the loan forwarded by Sh. Gurdeep Singh who happens to be the Director of Tera Constructions to the appellant company of amounting to Rs. 1,31,52,500/- was held to be unaccounted cash credit for the reason that appellant had failed to prove creditworthiness and genuineness of the transaction. Now, as far as the identity is concerned, the appellant has provided the PAN no. of Sh. Gurdeep Singh which proves the identity of the lender. Second parameter as regards to creditworthiness is concerned, the appellant has provided the bank statements and details of income of Sh. Gurdeep Singh as per ITRs for the AYs 2006-07 is Rs. 69,47,594/-, 2007-08 is Rs. 18,12,960/-,
2008-09 is Rs. 26,71,789/-, 2009-10 is Rs. 49,83,346/-, 2010-
11 is Rs. 64,42,374/-. The copy of account of Sh. Gurdeep
Singh, in the books of the appellant, was as under:
Gurdip Singh
Ledger Account
1-Apr-2010 to 31.Mar.2011
Date
Particulars
Vch Type
Debit
Credit
1-4-2010
Dr.
Opening Balance
95,56,793.23
03-04-2010
Cr.
The K V B Ltd.
Payment
20,00,000.00
22-04-2010
Dr.
The K V B Ltd.
Receipt
11,00,000.00
21-05-2010
Dr.
The K V B Ltd.
Receipt
30,00,000.00
31-08-2010
Dr.
The K V B Ltd.
Receipt
25,60,000.00
12-10-2010
Dr.
The K V B Ltd.
Receipt
15,00,000.00
18-10-2010
Dr.
The K V B Ltd.
Receipt
5,55,000.00
04-02-2011
Dr.
The K V B Ltd.
Receipt
40,00,000.00
07-02-2011
Dr.
The K V B Ltd.
Receipt
10,00,000.00
14-02-2011
Dr.
The KVB Ltd.
Receipt
10,00,000.00
28-03-2011
Cr.
The K V B Ltd.
Payment
34,00,000.00
29-03-2011
30-03-2011
Cr.
The K V B Ltd.
Payment
1,00,000.00
55,00,000.00
2,82,09,293.23
Cr.
Closing Balance
2,27,09,293.23
2,82,09,293.23
2,82,09,293.23
• The A.O. accepted the credits made in the accounts, but, it appears has added the difference between closing balance and opening balance.
Closing Balance
Rs. 2,27,09,293/-
Opening Balance
Rs. 95,56,793/-
Difference
Rs. 1,31,52,500
Thus, while in case of MsNeerjaGhura, entire closing balance was added, here the difference between opening and closing balance was added as in case of Sh. Gurdip
Singh. It will be seen from the copy of account that the amounts were transferred from his bank account in KarurVysya Bank, referred to as M/s KVB Ltd in the copy of account filed. Total amount of Rs. 1.47,15,000/- was transferred from his account to the appellant by cheques of the KarurVysya Bank on various dates between 22.04.2010 to 14.02.2011. There were other transactions of receipt by cheque from his bank account in KarurVysya Bank (M/s KVB Ltd). The appellant claims that all the entries were properly explained before the AO and the credit entries have been considered as unexplained. The amounts were received from cheques of KarurVysya Bank. Further, the appellant has submitted detail of source as well as source of source with respect to the credit received in the year under consideration where in it is apparent that funds have been received from indentified parties by lender out of which payments were made to the appellant.”
The Ld. CIT(A) while deleting the addition has also relied on plethora of Judgments. As could be seen from the order of the Ld. CIT(A) and also the material available on record, the Assessee has discharged
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9. Ground No. 2 is regarding deletion of addition of disallowance of Rs. 4,03,321/-. The Ld. Departmental Representative submitted that the Ld. CIT(A) committed error in deleting the disallowance of loss from sale of liquor of Rs. 4,03,321/- being destroyed due to repair work since the liquor amounting to Rs. 3.4 lakhs was the sale of the Assessee therefore, the Assessee could not have had stocked up to Rs. 4,00,000/-, thus sought for allowing Ground No. 2 of the Revenue.
10. Per contra, the Ld. Assessee's Representative submitted that the stocks were destroyed due to repair work carried out in the premises and the bottles kept were broken. The Ld. CIT(A) has rightly deleted the addition as there is no reason for the A.O. to disbelieve the explanation and reject the claim of loss. The Ld. Assessee's Representative sought four dismissing the Ground No. 2 of the Revenue.
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11. We have heard both the parties and perused the material available on record. The only reason for the A.O. to disallow the loss was that the Assessee has shown the sale of liquor at Rs. 3,40,385/- as against cost shown at Rs. 7,43,703/-. It was the case of the Assessee that stock was badly destroyed due to repair work carried out in the premises and the bottles kept thereon were broken. In the absence of no reason to disbelieve the version of the Assessee, the A.O. committed error in disbelieving and the claim of the Revenue and disallowed the loss. The Ld. CIT(A) after appreciating the facts rightly deleted the disallowance of Rs. 3,40,385/- which is in our considered opinion requires no interference, accordingly, Ground No. 2 of the Revenue is dismissed.
12. In the result, the Appeal of the Revenue is dismissed.
Order pronounced in the open court on 09th May, 2025 (NAVEEN CHANDRA)
JUDICIAL MEMBER
Date:- 09.05.2025
R.N, Sr.P.S*