G S PROMOTORS AND DEVELOPERS,PANCHKULA vs. INCOME TAX OFFICER, WARD-1, PANCHKULA

IN THE INCOME TAX APPELLATE TRIBUNAL “A” BENCH, CHANDIGARH HYBRID HEARING BEFORE HON’BLE SHRI LALIET KUMAR, JM AND HON’BLE SHRI MANOJ KUMAR AGGARWAL, AM आयकर अपील सं./ ITA No.310/CHANDI/2025 (िनधा�रण वष� / Assessment Year: 2017-18) M/s G S Promoters and Developers ITO Ward (1) बनाम/ Vs. SCO 409, Sector – 20, Panchkula Aaykar Bhawan, Panchkula Haryana - 134112 �ायीलेखासं./जीआइआरसं./PAN/GIR No. AAHFG-8261-E (अपीलाथ�/Appellant) : (��थ� / Respondent) अपीलाथ�कीओरसे/ Appellant by : Sh. Parikshit Aggarwal (CA) – Ld. AR (Virtual) ��थ�कीओरसे/Respondent by : Sh. Manav Bansal (CIT) - Ld. DR सुनवाईकीतारीख/Date of Hearing : 11-05-2026 घोषणाकीतारीख /Date of Pronouncement : 14-05-2026 आदेश / O R D E R Manoj Kumar Aggarwal (Accountant Member) 1. Aforesaid appeal by assessee for Assessment Year (AY) 2017-18 arises out of an order of learned Addl. / Joint Commissioner of Income Tax (Appeals)-9, Mumbai [CIT(A)] dated 26-12-2024 in the matter of an assessment framed by Ld. Assessing Officer [AO] u/s 143(3) of the Act on 20-12-2019. The registry has noted delay of one day in the appeal which stands condoned. The assessee is aggrieved by confirmation of disallowance u/s 40A(3) and addition of Rs.6.50 Lacs u/s 68. Having

heard rival submissions and upon perusal of case records, these issues are adjudicated as under. 2. Disallowance u/s 40A(3) This disallowance for Rs.2,65,730/- has been made by Ld. AO on the allegation that the assessee made cash payment to M/s Krishna Automobiles Ltd. which stood confirmed u/s 133(6). However, the assessee denied making any such payment and stated that no such expenditure was debited in the Profit & Loss Account. The Ld. CIT(A) confirmed the disallowance against which the assessee is in further appeal before us. Upon perusal of assessee’s financial statements as placed on record, it could be seen that no such car repair and maintenance expenditure has been claimed by the assessee in the Profit & Loss Account. In such a case, the provisions of Sec. 40A(3) could not have been invoked by Ld. AO since these provisions are applicable only when an expenditure has been claimed in the Profit & Loss Account. Therefore, this addition stand deleted. The corresponding grounds stand allowed. 3. Addition of unsecured loan of Rs.5 Lacs The assessee reflected loan of Rs.82.44 Lacs from M/s AP Shresth Colonizer which happened to be a related entity. This entity reflected income of Rs.23.66 Lacs. Upon perusal of bank statement of the lender, it was observed by Ld. AO that on 15-11-2016, the lender- entity advanced sum of Rs.7 Lacs to the assessee. However, on 10-11- 2016, the lender had deposited cash of Rs.5 Lacs in the bank account. The assessee filed cash book of that entity to demonstrate that the

cash was deposited out of available cash-in-hand. The cash-in-hand as on 01-11-2016 as available with the lender entity was for Rs.5.94 Lacs. However, Ld. AO rejected the same on the ground that the closing cash on 31-03-2016 was Rs.5.76 Lacs out of which the lender deposited Rs.1 Lacs on 30-07-2016. The remaining cash of Rs.4.46 Lacs was not sufficient enough to make deposits of Rs.5 Lacs. Therefore, the amount of Rs.5 Lacs was added as unexplained income of the assessee. The Ld. CIT(A) confirmed the addition against which the assessee is in further appeal before us. It could be seen that Ld. AO has ignored the fact that the cash available with the lender entity as on 01-11-2016 was for Rs.5.94 Lacs which is also evidenced from extract of cash book of lender entity as reproduced by Ld. AO in the assessment order. The available cash balance is sufficient enough to make the deposit of Rs.5 Lacs. In our opinion, the addition is merely on presumptions and without any material justifying the same. Therefore, impugned addition of Rs.5 Lacs stand deleted. 4. Unsecured Loan of Rs.1.50 Lacs from Ms. Shefali Singla The assessee obtained loan of Rs.9.35 Lacs from Ms. Shefali Singla who returned income of Rs.2.10 Lacs. In support of loan, the assessee furnished Balance Sheet of the lender along with her bank statements. However, summons issued by Ld. AO u/s 131 to lender remained to be complied with and accordingly, Ld. AO added the amount of Rs.1.50 Lacs to the income of the assessee. The Ld. CIT(A) confirmed the addition against which the assessee is in further appeal before us.

Upon perusal of bank statement of the lender as kept in Page No.14 of the paper-book, it could be seen that the lender has advanced sum of Rs.9.35 Lacs through banking channels to the assessee on 29-03- 2017. The advances have been sourced out of credits received through banking channels only. The only reason to make impugned addition of Rs.1.50 Lacs is the fact that there is cash deposit on 22-03-2017. However, Ld. AO has doubted only part of the loan while accepting substantial part of the loan which is unjustified. There is no adverse material to demonstrate that the said cash deposit belonged to the assessee. The lender has reflected the loans in her financial statements. Therefore, this addition stand deleted. No other ground has been urged in the appeal. 5. The appeal stand partly allowed. Order pronounced on 14th May, 2026. -Sd- -Sd- (LALIET KUMAR) (MANOJ KUMAR AGGARWAL) JUDICIAL MEMBER ACCOUNTANT MEMBER AS Dated: 14-05-2026 आदेश की �ितिलिप अ�ेिषत /Copy of the Order forwarded to : 1. अपीलाथ�/Appellant 2. ��थ�/Respondent 3. आयकरआयु�/CIT 4. िवभागीय�ितिनिध/DR 5. गाड�फाईल/GF

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