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Facts
The Revenue appealed against the relief granted by the CIT(A) in deleting additions made under Section 68 concerning unsecured loans from directors. The Assessing Officer had doubted the creditworthiness and genuineness of these transactions.
Held
The Tribunal noted that the CIT(A) had relied on a remand report where the Assessing Officer accepted the assessee's submissions and did not contest the additions. The Tribunal confirmed the CIT(A)'s order, stating that the Revenue's appeal failed due to the favorable remand report.
Key Issues
Whether the additions made by the Assessing Officer under Section 68 for alleged non-genuine unsecured loans were justified, especially after a remand report favored the assessee.
Sections Cited
68, 143(2), 46A, 44AD
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Income Tax Appellate Tribunal, DELHI ‘F’ BENCH,
Before: SHRI SATBEER SINGH GODARA
Date of Hearing :17.03.2025 Date of Pronouncement 21:.03.2025 Assessee by : Shri Sumit Lal chandani, Advocate Revenue by : Ms. Harpreet Kaur Hansra, Sr. DR ORDER PER BENCH This appeal filed by the assessee preferred against the order passed by National Faceless Appeal Centre, Delhi vide order dated 05.01.2024 arising out of the order of the Assessing Officer vide order dated 30.12.2017 for the A.Y. 2015-16.
The only issue contested , through its grounds of appeal , by the revenue is regarding the relief accorded by the ld CIT(A) in deleting additions of Rs 2,85,10,100/- ( actual figure as per para 4(c) of impugned appellate order should be Rs.2,55,45,000/-+3,22,000/-+13,03,000/-totaling to Rs. 76,70,000/-) . The Ld AO had made the impugned addition invoking provisions of section 68 and doubting the creditworthiness of lenders and genuineness of transactions. The Ld DR placed his full reliance of the order of the Ld AO. The Ld council for the assessee argued that the ld CIT(A) has comprehensively analyzed the facts of the case before according the relief. It was submitted that as evident from the order he had called for a remand report from the Ld AO and had relied upon such remand report while drawing his conclusions.
We have heard rival submissions in the light of material available on records. We have noted from para 4(b) to 4(c) on pages 5-8 of the appellate order that during the course of appellate proceedings, the appellant assessee had filed an application under Rule 46A for submission of additional evidences. Consequently, the same was accepted and in all fairness the Ld. CIT (A) provided an opportunity to the Ld. AO, to file his comments. The Ld. AO submitted his comments vide his remand report. The Ld. CIT (A) has extracted the impugned report in his order. We have noted that in the impugned Remand report, the assessing officer had accepted submissions of the assessee and did not contest, the additions made by the predecessor assessing officer. For the purposes of clarity relevant part is reproduced as under ;-
“…..4(b) The above submissions along with the evidences have been forwarded toAssessing Officer and was asked to submit remand report on the submissions of theevidences of the assessee company. The assessing officer vide letter dated19.11.2019 submitted his remand report which is hereby reproduced as under:- Sub: Appeal in the case of M/s Rampur Engineering Pvt Ltd, PAN: AAACK5878E, In Appeal No,.390/10398/17-18 for A.Y. 2015-16, -reg. Kindly refer to your office letter F. No. CIT(A)-7/20l9-20/55 dated15.05.2019, whereby it was directed to allow opportunity to the assessee for explaining its position based on paper book submitted earlier as theAdditional evidences under rule 46A and report was to be furnished. In this regard, in continuation of this office report dated 12.04.2019, wherein itwas stated that the assessee had been given enough opportunities asdetailed in the assessment order, and therefore, the original order passedmay please be sustained, following submissions are made on the merits ofthe additional evidence submitted by the assessee under Rule 46A of theIncome Tax Rules as called for:- Comments on merits of documents submitted:- Assessee filed its return of income on 30.09.2015 declaring an income ofRs. NIL and claiming a loss of Rs. 26,52,667/-. Further, the case wasselected for complete scrutiny. Accordingly notice u/s 143(2) of the IT Act,1961 dated 21.03.2016 was issued to the assessee and duly served upon. In compliance to the notice, the assessee submitted the documents andfiled replies as called for. As claimed, the assessee company wasengaged in business of Manufacturing Industry of Engineering Goods,during the year under consideration. During the assessment proceedings, on examining the details furnished by the assessee with regard to theunsecured loans taken from the directors, during the year underconsideration, it was found that assessee company has taken Rs.9,17,000/- from Sh. Rajendra Gupta, Rs. 2.62,90,000/- from Ms.Rachna Gupta and Rs. 13,03,100/- from Sh. Sanjay Gupta. Disallowances in case of Ms. RanchnaGupta :- The assessee company received a fresh unsecured loan ofRs.2,62,90,000/- from Ms. Rachna Gupta during the year underconsideration. The assessee company was unable to prove the source ofsource of loans received from Ms. Rachna Gupta. During the assessmentproceedings, it was noted that Ms. Rachna Gupta made a cash deposit ofRs.8,44,000/- in her Canara bank account and were transferredimmediately to the assessee company during the year under consideration. The assessee failed to proved the source of cash depositsmade by Ms. Rachna Gupta and were thus disallowed. Further, thebalance of Rs. 2,54,46,000/- was added under section 68 of the IncomeTax Act. On examining the evidence now submitted by the AR of the assessee,who attended in the remand proceedings only cash deposits ofRs.7,45,000/- has been transferred by Ms. Rachna Gupta to the assesseecompany account. However, the balance amount of Rs. 2,55,45,000/- have been transferred out of the loans raised from other director i.e. Sh.Rajendra Gupta through his bank account entries. It is,however, intriguingthat why Shri Rachna Gupta being one of the directors of the companyhad not transferred the funds directly from his bank account to the company account instead of given loan to Mrs. Rachna Gupta, whotransferred the amount through her bank account to the assesseecompany as unsecured loan. Hence, the same remained unexplained. Disallowances in case of Sh. Rajendra Gupta:- The assessee company received a fresh unsecured loan of RS. 9,17,000/-from Sh. Rajendra Gupta during the year. During the assessmentproceedings, it was noted that there was a cash deposit of Rs. 7,64,000/-in Sh. Rajendra Gupta’s bank account which was disallowed and thebalance amount or Rs. 1,53,000/- credited by the assessee company in itsbooks of account was added under section 68 of the Income Tax Act.Sh. Rajendra Gupta had filed a return of Rs. 64,25,221/- for theassessment year 2015-16. On examining the evidence now submitted bythe AR of the assessee, who attended in the remand proceedings, it wasobserved that there was total cash deposit of Rs. 6,95,000/- in Sh.Rajendra Gupta’s Canara Bank account and out of which only Rs. 5,95,000/- has been transferred to assessee company’s account andbalance of Rs. 3,22,000/- have been transferred from Sh. RajendraGupta’s Syndicate Bank account. However, no evidence has been filed tosubstantiate the source of cash deposited into Sh. Rajendra Gupta’s bank account. Therefore, an addition of Rs. 5,95,000/- which has beentransferred to assessee company’s account, is called for under section 68of the Income Tax act on the facts and evidence now submitted under rule 46A of the IT Rules, 1962. Disallowance in case of Shri Sanjay Gupta:- The assessee company received a fresh unsecured loan of Rs. 13,03,100/- from Sh. Sanjay Gupta during the year. During theassessment proceedings, it was noted that there was a cash deposit ofRs. 10,23,500/- in Sh. Sanjay Gupta's bank account which was transferredto the assessee company and was thus disallowed and the balanceamount of Rs. 2,79,600/- was added to the assessee’s income u/s 68 ofthe IT Act, 1961.
On examining the additional evidence submitted under Rule 46A theassessee during the remand proceedings, it was observed that Sh. SanjayGupta had filed an original return of Rs. 2,85,912/- for the assessmentyear 2015-16 which was revised to Rs 9,30,912/- for the sameassessment year dated 27.03.2017 showing an additional profit ofRs.6,45,000/- us 44AD on sale of surplus cloth on a turnover of Rs.68,50,000/- for which Sh. Sanjay Gupta partly received cash which was deposited in his bank account. After detailed examination of documents submitted during the remandproceeding, it is noted that there was total cash deposit of Rs. 9.24.500/- in his Canara Bank Account out of which only Rs.6,70,000/- has beentransferred to the assessee company and balance amount of Rs.6,33,100/- is transferred from credit entries in his bank account for whichevidence has been filed. Hence, the balance addition seems to beexplained except the amount debited by him to the assessee on accountof cash credit. Further, it is also to be noticed that the Sh. Sanjay Guptahas not produced the revised return at the time of framing assessmentunder section 143(3) of the Act which was completed on 30-12-2017 andthe same has now been produced at the time of remand proceedings. 4(c). I have gone through the assessee submissions and also gone through theremand report. After verifying the evidences files the AO submits that addition of Rs.07,45,000/- has been transferred by Mrs. Rachna Gupta by way of cash deposits andRs. 5,95,000/- has been transferred by Mr Rajendra Gupta by way of cash depositsand therefore the same are to be confirmed. After verification of assessee’ssubmission and remand report, Rs. 7,45,000/- is hereby confirmed out of the totalloan amount of Rs. 2,62,90,000/- given by Mrs. Rachna Gupta. Thus, the balance amount of Rs. 2,55,45,000/- is hereby deleted. In the case of Mr. Rajendra Gupta,out of total loan given of Rs. 9,17,000/-, Rs. 5,95,000/- is hereby confirmed andbalance of Rs. 3,22,000/- is hereby deleted. In the case of Mr. Sanjay Gupta, entireloan amount of Rs. 13,03,000/- is hereby deleted…..”
Thus, it has been seen that in the Remand report the Ld. AO has accepted the fact that no addition was actually called for. The relief has been accorded by the Ld. CIT(A) placing reliance upon the Remand report as well as his own analysis of the matter. The case of the Revenue therefore fails as the relief is a squarely resting upon a favorable Remand report of the assessing officer. Accordingly, we are of the opinion that no case is made out of any interference in the order of the learned CIT appeal at this stage. We therefore confirm the order of learned CIT appeal and dismiss all the grounds of appeal
raised by the Revenue.
5. In the result, appeal of the Revenue is dismissed. Order pronounced in the Open Court on 17.03.2025