RAJKAMAL LIQUORS PVT. LTD.,DELHI vs. ITO WARD-21(1), DELHI

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ITA 9069/DEL/2025Status: DisposedITAT Delhi07 October 2026AY 2017-185 pages
AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that the addition of Rs. 25,00,000/- on account of unsecured loans was not justified. It reasoned that the lender had responded, and the source of the loan was established by bank entries and confirmation. The AO having the lender's bank statement, and without any suspicious entries or allegations of cash deposits in the lender's account, it was not justified to doubt the creditworthiness and identity of the lender solely for the non-furnishing of ITR or audited financials. The Tribunal also held that the addition of Rs. 73,25,000/- representing cash deposits during demonetization was not justified. It noted that the assessee is in the regulated liquor trade, and VAT and excise returns are verifiable. The Tribunal found that the NFAC's observations were based on generalized assertions and surmises, without pointing out any specific discrepancies or shortcomings in the quantitative evidence provided by the assessee, such as monthly purchase and sale details, cash ledger, and DVAT returns. Therefore, the Tribunal allowed the appeal and quashed the impugned assessment order.

What were the facts?

The assessee, Rajkamal Liquors Pvt. Ltd., filed a return of income declaring nil income for Assessment Year 2017-18. The Assessing Officer (AO) initiated assessment proceedings under Section 143(3) of the Income Tax Act, 1961. The AO made an addition of Rs. 25,00,000/- on account of an unsecured loan received from M/s Uchit Construction Pvt. Ltd., doubting its genuineness and creditworthiness. The AO also added Rs. 73,25,000/- representing cash deposited during the demonetization period, finding it unjustified from a valid source. The assessee had provided confirmation of the loan and bank statements of the lender, but the lender failed to furnish its ITR, audited financials, or loan agreement. The assessee appealed to the National Faceless Appeal Centre (NFAC), Delhi, which sustained the additions. The present appeal is filed by the assessee against the order of the NFAC.

What were the issues?

The Tribunal had to decide the following questions: 1. Whether the addition of Rs. 25,00,000/- on account of unsecured loans received from M/s Uchit Construction Pvt. Ltd. was justified, by wrongly invoking Section 68 read with Section 115BBE of the Act. 2. Whether the addition of Rs. 73,25,000/- being cash deposited in the bank was justified, by wrongly invoking Section 68 read with Section 115BBE of the Act. Assessee's contentions: - Regarding the loan of Rs. 25,00,000/-, the assessee argued that the source of the loan was established by bank entries and confirmation from the lender. The AO had the lender's bank statement and there were no suspicious entries. The failure to furnish ITR or audited financials by the lender should not lead to doubting the creditworthiness and identity of the lender, especially when the AO did not allege cash deposits in the lender's account. - Regarding the cash deposits of Rs. 73,25,000/-, the assessee, being in the liquor trade, contended that sales are regulated by the Excise Department and VAT returns are verifiable. The department could not doubt the deposits without alleging that the assessee had no stock of liquor to justify cash sales. The delay in depositing cash was due to security reasons. Revenue's contentions: The judgment does not record specific contentions made by the revenue before the Tribunal. However, the AO's actions and the NFAC's order imply that the revenue doubted the genuineness and source of the unsecured loan and the cash deposits.

Which sections of the Income-tax Act were involved?

Section 143(3),Section 68,Section 115BBE,Section 133(6),Section 133(1)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, DELHI BENCHES, NEW DELHI

Before: SHRI ANUBHAV SHARMA & SHRI SANJAY AWASTHI

Pronounced: 07.10.2026

PER SHRI ANUBHAV SHARMA, JUDICIAL MEMBER: This appeal is preferred by the assessee against the order dated 04.12.2025 of the Ld. National Faceless Appeal Centre, Delhi (hereinafter referred as Ld. First Appellate Authority or in short Ld. ‘FAA’) in DIN & Order No: ITBA/NFAC/S/250/2025-26/1083290581(1) arising out of the assessment order dated 15.12.2019 u/s 143(3) of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’) passed by ITO, Ward 21(1) for AY: 2017-18.

2.

Heard and perused the record. Facts in brief are that assesse filed its return of income declaring nil income and the case of assesse was selected for CASS scrutiny and assessment proceedings were initiated against the company which is engaged in the liquor trade. AO examined the issue of assesse receiving Rs.25,00,000/- unsecured loan from M/s Uchit Construction Pvt. Ltd. and notice u/s 133(6) of the Act was issued to the company through email and response was received of confirmation of account with bank account statement. AO observes that M/s Uchit Construction Pvt. Ltd. had failed to furnish ITR for AY: 2017-18 audited financials of the company, copy of loan/advance agreement and did not furnish any reply and further information was requested u/s 133(1) of the Act which was not responded. Thus, doubting the genuineness and creditworthiness of the transaction addition of Rs.25,00,000/- was made. Further, assesse deposited Rs.73,25,000/- during demonetization period, which was not found to be justified from a valid source. These additions are sustained by ld. CIT(A) and for which the assesse is in appeal and has raised following grounds:

“On the facts and in the circumstances of the case and in law the Ld. NFAC/CIT(A) erred in confirming the following actions of the Assessing Officer –

1.

passing order u/s 143(3) of the Act determining taxable income at Rs.98,25,000/- against NIL return; 2. making following additions to the NIL return income :- 2 i. Rs. 25,00,000/- being the amount of unsecured loans received from Uchit Construction P. Ltd. treating the same as unexplained by wrongly invoking section 68 r.w.s. 115BBE of the Act;

ii. Rs.73,25,000/- being the amount of cash deposited in bank by wrongly invoking section 68 r.w.s. 115BBE of the Act.”

3.

On hearing both sides as with regard to the addition on account of unexplained cash credit in the form of loan from M/s Uchit Construction Pvt. Ltd. is concerned, we find that it is not a case where the lender has not responded at all. The source of loan was established by the bank entries and the confirmation of the lender. Once, the bank account statement of the lender is available with the AO then without indicating that there are any suspicious entries about movement of funds in the bank statement, merely for not getting copy of ITR or audit financials statement in response to the notice u/s 133(6) of the Act is not justified to doubt the creditworthiness and the test identity. The source of source required to be examined could be well initiated by examining of bank statements and there is no allegation of cash deposits in the account of lender so as to attributed the same to assesse and allege that it was assessee’s unexplained cash which was credited in the books of lender and thus, recourse u/s 68 could be taken.

4.

In regard to cash deposits during demonetization we find that assesse is in the trade of liquor and such trade is regulated trade. The sale of liquor has to be duly regulated by Excise department in Delhi. The VAT returns and the returns submitted the excise department are duly verifiable and without alleging that assesse was not having any stock of the liquor shown to be a cash sales, the department cannot doubt the deposits. The assesse has explained that due to security reasons cash was not deposited immediately but in phases.

5.

The observations of ld. CIT(A) in para 7 to justify the additions of Rs.25,00,000/- u/s 68 or the deposits in cash, appear to be more doubt of generalized assertions. Ld. CIT(A) has observed that AO has clearly brought on record discrepancy in cash book patterns, abnormal accumulation of SBNs and lack of contemporaneous supporting evidence for the claimed SBN balance. However, the assessment order does not mention all these aspects. At page No. 1-107 assessee has provided copy of written submissions filed before NFAC dated 27.12.2023, 10.02.2024, 20.10.2025, 27.05.2025, 12.08.2025 and 24.10.2025 and at page No. 81 we find that apart from all the submissions which was asserted earlier assesse has mentioned all the paper book already submitted including copy of submission of monthly purchase and sale as Annexure 9, details of cash ledger as Annexure 10, copy of original DVAT return for the 1st Quarter to F.Y: 2016-17 onwards till 4th Quarter for F.Y. 2016-17. However, without pointing out any discrepancy and shortcomings in these quantitative evidences merely drawing conclusion on surmises ld. CIT(A) has also sustained the additions which is not justified.

6.

In the light of aforesaid facts and circumstances we are inclined to sustain the corresponding grounds. The appeal is allowed and impugned assessment order is quashed.

Order pronounced in the open court on 07.10.2026

Sd/- Sd/- SANJAY AWASTHI ANUBHAV SHARMA ACCOUNTANT MEMBER JUDICIAL MEMBER Delhi Dated: 07.10.2026 Rohit, Sr. PS

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