PERT CONSULTANTS LTD,NEW DELHI vs. ITO, WARD-19(4), NEW DELHI

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ITA 6003/DEL/2019Status: DisposedITAT Delhi05 February 2021AY 2011-124 pages

In favour of the assessee: the assessee's appeal was allowed. From the AI summary of this appeal.

AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that Section 68 of the Income Tax Act is not applicable as it pertains to unexplained cash credits received by the assessee, not loans advanced by the assessee. Therefore, the addition made by the AO was deleted.

What were the facts?

The assessee company declared Nil income for AY 2011-12. The assessment was reopened, and the Assessing Officer (AO) added Rs. 4,00,000/- on the basis that the assessee had advanced this amount as a loan to another company and failed to provide a satisfactory explanation.

What were the issues?

Whether Section 68 of the Income Tax Act, dealing with unexplained cash credits, can be invoked for an amount advanced as a loan by the assessee.

Which sections of the Income-tax Act were involved?

Section 68

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, DELHI

For Respondent: Shri Vinod Sharma, Sr. D.R
Hearing: 28/12/2020Pronounced: 05/02/2021

ORDER

PER ANIL CHATURVEDI, AM:

1.

This appeal filed by the assessee is directed against the order dated 22.05.2019 passed by the Commissioner of Income Tax (Appeals)-7, New Delhi relating to Assessment Year 2011-12.

2.

The relevant facts as culled from the material on records are as under :

3.

Assessee is a company who has filed its return of income for A.Y. 2011-12 on 22.09.2011 declaring Nil income. The -Del-2019 Pert Consultants Ltd. vs. ITO A.Y. 2011-12 2 assessment was reopened u/s 147 and the notice u/s 148 was issued on 31.03.2018 and thereafter the case was taken up for scrutiny and thereafter the assessment was framed u/s 147 of the Act vide order dated 30.10.2018 and the total income was determined at Rs. 4,00,000/-. Aggrieved by the order of AO, assessee carried the matter before the CIT(A) who vide order dated 22.05.2019 in Appeal No.10492/487/CIT(A)-7/Del/2018- 19 dismissed the appeal of the assessee. Aggrieved by the order of CIT(A), assessee is now in appeal and has raised the following grounds:

1. “Grossly erred in adding income of Rs.4,00,000/-.

2. Without considering the fact and circumstances of the case and added income of Rs.4,00,000/-

3. Craves Leave to add/alter amend or delete any ground.”

4. Before me, Learned AR submitted that the case was reopened on the basis of the information received by AO from DDIT (Inv.) wherein it was informed that M/s. Delhi Spot Bullions Trading Company Pvt. Ltd. had received unsecured loan aggregating to Rs.3,27,59,499/- from various entities. It was noted that assessee was one of the entity who had given loan to Delhi Spot Bullions Trading Company Pvt. Ltd. during the financial year 2010-11. He submitted that on the basis of the details with the AO, it was noted that assessee had advanced Rs. 4,00,000/- to Delhi Spot Bullions Trading Company Pvt. Ltd. Since the assessee had failed to explain genuine business activity and purpose of loan, AO in the absence of satisfactory -Del-2019 Pert Consultants Ltd. vs. ITO A.Y. 2011-12 3 explanation made addition of Rs.4,00,000/- u/s 68 of the Act. Aggrieved by the order of AO, assessee carried the matter before the CIT(A) who upheld the order of AO. Assessee is therefore now in appeal.

5.

Before me, Learned AR submitted that the provision u/s 68 of the Act are not applicable to the present case because it is not a case of assessee having received any loan or cash credit but on the contrary it is a case of assessee advancing the loan through banking channels. He therefore, submitted that the impugned amount cannot be treated as unexplained cash credit u/s 68 of the Act.

6.

Learned DR on the other hand, supported the order of lower authorities.

7.

I have heard the rival submissions and perused the material on record. I find that in the present case AO has made the addition of Rs. 4,00,000/- u/s 68 of the Act. Provision of Section 68 of the Act can be attracted when there are a credit found in the books of account and the assessee fails to offer any explanation or explanations offered by the assessee is not satisfactory in the opinion of the Assessing Officer. In the present case, it is an undisputed fact that it is not a case of receipt of loan or money by the assessee or a case of credit found in the books of assessee. On the contrary, it is a case where assessee is stated to -Del-2019 Pert Consultants Ltd. vs. ITO A.Y. 2011-12 4 have advanced loan to Delhi Spot Bullions Trading Company Pvt. Ltd. In such a situation it cannot be considered to be a case of cash credit within the meaning of Section 68 of the Act. I am therefore of the view that provisions of Section 68 are not applicable in the present case. I therefore direct the deletion of addition of Rs. 4 lakh in this case. Thus the ground of the assessee is allowed.

In the result, appeal of the assessee is allowed. 8.

Order pronounced in the open court on 05.02.2021

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