INCOME TAX OFFICER, ITO vs. ALPHA INFRASOLUTION PVT. LTD., MAHILPUR EXTENSION

The assessee has also filed Cross-objections thus they are taken together and decided by a common order.

First, we take appeal of the Revenue in ITA No. 1006/Del/2025 for Assessment Year 2012-13.

Before us, ld. CIT DR for the Revenue vehemently supported the order of AO and submits that ld. CIT(A) has simply accepted the submissions made by the assessee wherein it was contended that it has discharge the burden casted upon it of proving the identity and creditworthiness of the lender companies by filing their ITR’s and confirmation of income and bank statements of the lender companies and their Balance Sheets. However, nowhere in the appellate order, the ld. CIT(A)

On the other hand, ld.AR for the assessee vehemently supported the order of AO and reiterated the arguments as raised before ld. CIT(A) which are reproduced in the appellate order. He further submits that ld. CIT(A) has deleted the addition after considering the factual details filed by the assessee and requested for the confirmation of the order of ld. CIT(A).

Heard the contentions of both parties at length and perused the material available on record. In the instant case, proceedings u/s 147 were initiated based on the information received from the AO, Central Circle that the assessee has received loans from Four entities which are being alleged as accommodation entries providers. Based on the material available, the AO has recorded the satisfaction that the income has escaped assessment and reassessment proceedings u/s 147 were initiated by issue of notice u/s 148 of the Act. Ld.CIT(A) while upholding the action of AO in re-opening the assessment, has observed that the AO has tangible material and relied upon the information in his possession before re-opening the case and the case has been opened after analyzing the information and with due application of mind. However, while adjudicating the issue on merits, ld. CIT(A) observed that AO has not conducted the inquiries which should have been conducted to examine the identity and creditworthiness of the lenders as well as genuineness of the transactions. Ld. CIT(A) further observed that the assessee by filing all the necessary documents has discharged the burden casted upon it and if the AO had any doubts about the existence and creditworthiness of the lender companies, summons u/s 133(6) of the Act could be issued to the lender companies or their Directions to examine the capacity for making such loans / advances and therefore, relying upon the various judicial redocuments, has deleted the additions made.

It is observed from the assessment order that the AO on 18.12.2019, has disposed off the objections raised by the assessee with respect to the reasons recorded and thereafter, on 23.12.2019, has passed the assessment order. Further, the assessee vide letter dated 26.11.2019 had filed the details with respect to the loans taken from four lender companies which comprised of confirmations, acknowledgements of their ITRs, bank statements and their financial statements. It is relevant to state here that the reassessment proceedings in the instant case, were carried out since September, 2019 when first notice was issued on 17.09.2019 however, the assessee at the very fag end of the proceedings i.e. on 26.11.2019, had filed the details of the lender companies for the first time before the AO. This clearly shows that the assessee has drag the proceedings to the fag end so that the AO cannot make any in-depth inquiry or investigation with respect to the funds borrowed. As observed above, ld. CIT(A) has failed to comment upon the deficiencies pointed out the AO with respect to the creditworthiness of the lender companies where all the four lender companies have one common and very peculiar facts that they all had issued Compulsory Convertible Debentures (CCD) and raised funds of more than INR 70.00 crores in each case. The precise figure of the CCD’s issued by all the four companies is as under:

Likewise, from the perusal of the financial statements of the assessee company, it is observed that the assessee company is not doing any regular business activity and was not having creditworthiness thus why any company would lend the funds out of its borrowed funds to such company and this fact raised serious doubts about the loan transactions of around INR 30.00 crores. All these facts were raised by the AO and remained unanswered by the assessee and this fact has been ignored by ld. CIT(A) while deleting the additions. It is true that source of source has introduced and made applicable from AY 2023-24 and onwards however, still it is the onus casted upon the assessee to prove the genuineness of the transaction and creditworthiness of the lenders.

Ld. CIT(A) has co-terminus powers as available to the AO and he himself can make necessary verification in terms of the powers given under section 250(4) of the Act or may direct the AO to make further enquiries and report the result.

After careful consideration of the aforesaid facts and in the circumstances of the case and discussions made herein above, we are of the considered view that ld. CIT(A) has failed to make proper and sufficient inquiries before reaching to the conclusion that the loans taken by the assessee are genuine nor the AO was provided sufficient opportunity to rebut the additional documents placed before the ld. CIRT(A). Accordingly, in the interest of justice, we set aside both the orders of the lower authorities and remanded the matter back to the file of AO with the directions to carry out the proper investigation by issue summons u/s 133(6) of the Act, if desired, and to decide the issue in accordance with law. With these directions, solitary Grounds of appeal raised by the Revenue is allowed for statistical purposes.

In the result, appeal of the Revenue is allowed for statistical purposes.

In the result, appeal of the Revenue in ITA No.1006/Del/2025 for Assessment Year 2012-13 is allowed for statistical purposes and Cross objection of the assessee in C. O. No. 192/Del/2025 is dismissed.