VIKAS CHAWLA,DELHI vs. INCOME TAX OFFICER, DELHI
Income Tax Appellate Tribunal, DELHI BENCH ‘F’, NEW DELHI
Before: SHRI SATBEER SINGH GODARA & SHRI NAVEEN CHANDRAAssessment Year: 2022-23 Vikas Chawla, 582/2, 1st Floor, Gali Ghanteshwar Katra Neel Chandni Chowk, New Delhi-110006 Vs Income Tax Officer, Ward-47(1), D.S. Building, New Delhi-110001 (APPELLANT) (RESPONDENT) PAN No. AFNPC7260A
PER NAVEEN CHANDRA [A. M]: The above captioned appeal is preferred by the assessee against the order dated 17.07.2025, passed by National Faceless Appeal Centre/Learned Commissioner of Income Tax (Appeals), New Delhi (hereinafter referred to as ‘ld. CIT(A)), under section 250 of the Income Tax Act, 1961 [hereinafter referred to as, “Act”] for Assessment Year 2022-23. The assessment order in this appeal is passed by the Assessing Officer [for short, AO] under section 143(3) of the Act. Vikas Chawla Page 2 of 6
The assessee has raised following grounds of appeal:- 1. That the order passed by the Learned CIT(A) is bad in law, void ab initio, against facts and circumstances of the case, and against principles of natural justice, and hence deserves to be quashed. 2. That the additions confirmed by the Learned CIT(A) are based on suspicion, surmises, and conjectures and not on cogent evidence or correct application of law. Grounds Relating to Loan Liability 3. That the Learned CIT(A) erred in confirming the addition of Rs.27,22,157/- representing loan liability from Mercedes-Benz Financial Services India Private Limited (Formerly Known as Daimler Financial Services India Private Limited), treating the same as unexplained income, despite the fact that: The liability was duly reflected in the balance sheet, Repayments were made by the assessee from his own bank account, and The lender is a well-known, identifiable NBFC and not a bogus party. The said addition is wholly without juri iction and contrary to provisions of Sections 41(1) and Section 68 of the Income Tax Act 1961, neither of which are attracted to the present facts. Grounds Relating to Depreciation, Interest and Expenses 4. That the Learned CIT(A) erred in law and facts in disallowing depreciation of Rs.12,48,730/- on Mercedes Benz, ignoring that: The assessee was in possession and beneficial owner of the vehicle by virtue of General Power of Attorney and duly used for the purpose of the business. Loan repayment and expenses were borne by the assessee; and 5. That the Learned CIT(A) further erred in upholding disallowance of interest on car loan of Rs.64,540/- and repairs & maintenance expenses of Rs.41,070/-, without appreciating that: The vehicle was used for the business of the appellant, All payments were made from assessee's accounts, and The disallowance of 50% of vehicle repairs & maintenance is purely on assumption and presumption of personal use, without bringing any cogent evidence on record. Grounds Relating to Ownership and Gift 6 That the Learned CIT(A) erred in holding that General Power of Attorney cannot constitute a valid transfer, without appreciating that: Possession, use and control of the asset were transferred to the assessee, Income-tax law recognizes beneficial ownership over legal registration, and Vikas Chawla Page 3 of 6
The rejection of case law cited by the assessee (Metalman
Auto, supra) is perfunctory and without proper distinction.
8.That the Learned CIT(A) erred in sustaining additions on the ground that assessee's declared income
"does not commensurate" with luxury car, which is an extraneous and irrelevant consideration having no basis in law.
9.Prayer In That the Learned CIT(A) failed to adjudicate properly on the penalty initiation u/s 270A despite full disclosure by the assessee, contrary to the ratio laid down by Hon'ble
Courts that mere disallowance of a bona fide claim cannot attract penalty.
The brief facts of the case are that the assessee is running a firm in the name and style of M/s Shilpa Impex, which is dealing in wholesale and retail trading of textile fabrics. The Assessee’s Balance Sheet showed a secured loan amounting to Rs.27,22,157/- against DTR 385(P&H). We further find the lender Mercedes Benz Financial Services India Pvt Ltd. is an identifiable NBFC and neither the AO nor the ld. CIT(A) has considered the same as bogus party or has placed any Vikas Chawla Page 5 of 6
evidence to show that the said loan from Mercedes Benz Financial
Services India Pvt Ltd is an accommodation entry or is a bogus loan. We thus hold that addition of the loan from Mercedes Benz Financial
Services India Pvt Ltd u/s 68 of the Act is not justified on the ground that the said loan was obtained in the name of the spouse of the assessee.
8. We further note that the disallowances of various expenses have mainly occurred on account of fact that the assessee’s spouse name was in the ownership document. We find that the AO has not controverted the fact that the possession as well as utilisation of the vehicle was by the assessee and that all the funds and expenses towards maintenance of the said vehicle were made from the account of the assessee. In such factual matrix of the instant case, we therefore, are of the considered view that the ld. CIT(A) has not appreciated the fact that the assessee was the beneficial owner of the vehicle by virtue of general power of attorney and therefore was entitled to claim all the expenses, depreciation on car and the interest on procurement of loan fund related to the said vehicle. In view of the same, all the additions made by the AO is directed to be deleted. The grounds of appeal of the assessee are allowed.
9. In the result, the appeal of the assessee ITA No.5625/Del/2025
is allowed.
Vikas Chawla
Page 6 of 6
Order was pronounced in the open court on 11.03.2026. (SATBEER SINGH GODARA) (NAVEEN CHANDRA)
JUDICIAL MEMBER
ACCOUNTANT MEMBER
Dated: 11.03.2026
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