RELIANCE MEDICO PVT. LTD.,SAHARANPUR vs. ITO, WARD- 3(3), SAHARANPUR

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ITA 5904/DEL/2018Status: DisposedITAT Delhi13 January 2020AY 2015-163 pages

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

AI SummaryDismissed

What did the Tribunal hold?

The Tribunal held that the assessee failed to prove the creditworthiness of the lenders, as the source of cash deposits into their accounts was not satisfactorily explained. The CIT(A)'s confirmation of the addition was found to be in order.

What were the facts?

The assessee company received unsecured loans of Rs. 1,28,500 and Rs. 88,000 from its directors, Neha Handa and Neeraj Handa, respectively, through account payee cheques. The AO noted that cash was deposited into the lenders' accounts before issuing the cheques, and the assessee failed to satisfactorily explain the source of these cash deposits.

What were the issues?

Whether the assessee proved the identity, genuineness, and creditworthiness of the unsecured loans received from directors, especially when the source of funds deposited as cash into the lenders' accounts was not explained.

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 BENCH “SMC +C”: NEW DELHI

Before: SHRI PRASHANT MAHARISHI & SHRI K.N.CHARY

For Respondent: Ms. Ekta Vishnoi, Sr. DR
Hearing: 15/10/2019Pronounced: 13/01/2020

O R D E R PER PRASHANT MAHARISHI, A. M. 1. This appeal is filed by the assessee against the order of the ld CIT(A), Muzaffarnagar dated 20.06.2018 for the Assessment Year 2015-16. 2. The assessee has raised the following grounds of appeal:- “1. That the Ld AO has grossly erred in law and facts of the case to make an addition of Rs 216500/- U/s 68 on account of unsecured loans from directors observing that following loans are not genuine Neha Handa 128500 Neeraj Handa 88000 216500

2. That without prejudice to the above the Ld CIT(A) has erred (through order dated 20.8.2018) in sustaining the addition of an amt of Rs 216500/- by failing to appreciate that provision of sec 68 are not applicable to the case.

3. That identity of genuineness and creditworthiness of the depositors are proved before the ld A.O. as well as before Ld CIT(A) therefore there was no ground before them to make additions U/s 68 read with sec 115BBE. As both the depositors are assessed to tax from last so many years and all the deposits were made through a/c payee cheques and deposits have duly shown in their statement of affairs, which have been filed before the Ld A.O

4. That there was absolutely no jurisdiction before the ld C1T(A) to uphold the order of Ld AO as the identity genuineness and creditworthiness of Page | 1 both the depositors has been proved by the appellant and both the deposits are routed through banking channel and depositors have sufficient cash in hand as source of deposits in Bank before giving loan to Appellant.

5. That the ld CIT(A) is absolutely wrong in not considering the evidences in support and confirmation of depositors and also wrong in brushed aside all the evidences submitted before him during the course of assessment, proceeding merely on suspicion, conjecture and surmise.

6. That the assessment is erroneous, contrary to the facts and law of the case, therefore, additions made by the ld AO and sustaining by the Ld CIT(A) must be deleted and merit to be modified.”

3.

The facts shows that the assessee is a private limited company, filed return of income on 26.09.2015 at Nil income. Assessee is a company which is deriving its income from trading of medicine. The assessee have directors Shri Neeraj Handa, Smt Kamlesh Handa and Smt Neha Handa. The loans were received from two of persons. The assessee received Rs. 128500/- from Smt Neha Handa and Rs. 88,000/- from Neeraj Handa. The company was taken loan through account payee cheque and all the persons are stated to be family members and directors of the company. The ld AO noted that before giving loan to the assessee company, in the account of these persons there were bank account transfer and deposits in cash. With respect to the deposit of cash in the account of lenders assessee could not submit the source to the satisfaction of the ld AO. However, the assessee submitted the copy of the return of income and balance sheets. With respect to the genuineness, assessee submitted that these are family members and cash is deposited out of cash in hand available with them. The ld AO rejected the explanation of the assessee and made an addition of Rs. 216500/- u/s 68 of the Act. The assessment was passed on 15.12.2017 of Rs. 216500/-.

4.

The assessee preferred appeal before the ld CIT(A). The ld CIT(A) confirmed the above additions. Therefore, the assessee is in appeal.

5.

At the time of hearing none appeared on behalf of the assessee. On the earlier occasions also the assessee did not appear. Therefore, the issue is decided on the merits of the case.

6.

The ld DR relied upon the order of the lower authorities.

7.

We have carefully considered the contentions of the ld DR and the facts emerging out of the orders. This is apparent that assessee has taken unsecured loan of Rs. 128500/- and Rs. 88000/- from Smt Neha Handa Page | 2

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