GLOBAL STAINLESS,DELHI vs. ACIT,CIRCLE-34(1), DELHI
Income Tax Appellate Tribunal, DELHI BENCHES : G : NEW DELHI
Before: MS. MADHUMITA ROY & SHRI NAVEEN CHANDRAAssessment Year : 2018-19
PER MADHUMITA ROY:
The instant appeal filed by the assessee is directed against the order dated
28.04.2025 of the Ld. Commissioner of Income-tax (Appeals), NFAC, Delhi
[hereinafter referred to as the Ld. CIT(A)] u/s 250 of the Income Tax Act, 1961
(hereinafter referred to as ‘the Act’) arising out of the assessment order dated
31.03.2021 passed by the NeFAC, Delhi (hereinafter referred to as ‘the ld. AO’) under Section 143(3) r.w.s. 143(3A) & 143(3B) of the Act for Assessment Year
2018-19. 2
The assessee filed the return of income for AY 2018-19 on 25.09.2018 declaring gross total income of Rs.28,60,540/- which was processed u/s 143(1) of the Act on 10.02.2019. The assessee has received unsecured loans during the year from two parties, namely, M/s Steel Impex and M/s Cloud Zone to the tune of Rs.3,33,00,000/- and Rs.2,58,21,000, respectively. The said amounts were paid back during the year itself through proper banking channel as claimed by the assessee. The case of the assessee was selected for scrutiny under CASS on account of “unsecured loans.” Notices, therefore, u/s 143(2) of the Act dated 22.09.2019 was served upon the assessee. The assessee was further requested to verify unsecured loans squared up during the year as reflected in the balance sheet. Few documents were also sought for from the assessee by the AO as it is evident from page 2 of the assessment order in response thereto the assessee duly submitted the details pertaining to unsecured loans claimed at Rs.19,65,67,060/- as per the return of income/books of accounts. In regard to the two loan creditors, namely, M/s Steel Impex and M/s Cloud Zone involving total amount of Rs.5.91 crores supporting details whereof having not been placed by the assessee as claimed. However, the Ld. AO added the same in the hands of the assessee which was further confirmed by the First Appellate Authority, hence, the instant appeal before us.
It is the case of the Revenue that basic details of the return of income/PANs/bank accounts/assessee’s ledger extract in their books of Steel 3
Impex and Cloud Zone the transaction found to be unexplained. The PAN No.
given by the assessee was found to be not relatable to the loan creditor, namely,
M/s Steel Impex and the referred to a non-related individual Rahul Chawla and, therefore, Section 136 inquiries could not be made by the AO to verify the claim of the assessee. In absence of the details, particularly the claim of unsecured loans to the extent to these two parties stood un-reconciled and unexplainable, the same was treated as bogus claims of the assessee. In support of the claim following submissions made by the assessee:
A. “3. Thea ssessee has received unsecured loans during the year from various parties including from these two parties i. M/s Steel Impex (ii) M/s Cloud Zone : Rs.3,30,00,000 (Rs. Three Crore
Proprietor: Mr. Rahul Chawla
(Thirty Lakh Only)
PAN: ADIPC0422B
8819, Street No. 3 Multani Dhanda
Paharganj, New Delhi -110055
E-Mail ID: rdschawlal980@gmail.com:
ii.
M/s Cloud Zone
: Rs.2,58,21,000/-
PAN: AAMFC8905C
(RS. Two Crore Fifty Eight
320/1335, Durga Chambers
Lakh Twenty One Thousand
Desh Bandhu Gupta road
Only)
Karol Bagh,
New Delhi – 110 005. E-Mail ID:zonecloud0603@gmail.com
(i) The amount was received during the year from these two parties and was repaid back during the year itself through proper banking channels. The assesses received a show cause notice dt.24.03.2021 vide which confirmation, PAN, Address, Mail-ID, Bank statements were required of these above two parties by 27.03.2021. The assessee submitted following details on 27.03.2021:- i. Confirmation of Account in their ledger (Parties ledger extracts). ii. PAN iii. Address 4
iv.
E-mail address v.
The bank statement was submitted on 30.03.2021
(ii) The AO in his assessment order at S.No.4 says that with reference to one loan creditor assessee submitted PAN for further cross verification U/s 133(6). In ITBA the same was found to be not relatable to this loan creditor M/s Steel Impex and the same refer to non-related individual Mr. Rahul Chawla etc. Hence 133(6) enquiries could not be made as the assessee submitted wrong PAN.
Explanation: M/s Steel impex is a proprietorship firm and its proprietor is Rahul Chawla who has signed confirmation of account as per his ledger acts. The PAN: ADIPC0422B belongs to Mr. Rahul Chawla as confirmed and accepted by AO in his assessment order.
3 (iii) Comprehensive confirmation from these parties as appearing in their books of accounts confirming the closing balances were submitted on 27.03.2021 including their Name, Address, PAN, E-Mail ID, Signatures.
The assessee offered to verify the correctness of Name, Address, PAN of the firms by sending letter or personally someone which was not done by the Department. Bank Statement of these parties was submitted on 30.03,2021 i. e. before passing the assessment order on dt. 31.03.2021. The above details are on record.
3 (iv) The submissions were not taken on record by the Department and the assessment order was framed as per show cause notice itself on dt.
31.03.2021. The assessee was able to submit the required details well within time on dt. 27.03.2021 and 30.03.2021 i.e. before passing the assessment order on dt. 31.03.2021 but the same were not taken on record and the assessment order was framed without considering the same. It is against the Principles of Natural Justice. The impugned assessment order and notices of penalty have been passed in gloss violation of Principles of Natural Justice without taking on record the submissions of the assessee,
3 (v) The show cause notice dt. 24.03.2021 alongwith draft assessment order of even date required the assessee to make compliance by 27.03.2021
as to why the assessment should not be completed as per the draft assessment order. The assessee submitted his reply to the said show cause notice on 27.03.2021 and 30.03.2021. The impugned assessment order was passed on 31.03.2021 without having regard to the aforesaid reply dt.
30.03.2021 submitted by the assessee,
A perusal of the assessment order shows that the AO has made on addition to the assessee Income of Rs. 59121000/- U/s 68 of the income Tax Act, 1961 concerning the A.Y. 2018-19. The addition has been made on account of purported explained unsecured loans. 5
4(i) It is assessee's contention that he had via the material placed before the AO, alongwith its reply on 27.03.2021 and 30.03.2021 explained and established the genuineness of unsecured loans received. It is quite evident that the AO has not taken into account the explanation and material placed before him by the assessee alongwith its reply on dt. 27.03.2021 and 30.03.2021. This aspect is brought to fore, if one were to pursue paragraph
6 of the impugned assessment order. For the sake of convenience, the same is extracted hereinafter.
"In view of the above discussion, It is seen that mere reflection of a liability in the books of accounts does not support the existence and correctness of unsecured loans and same is again to infusion of unexplained capital into assessee business in the guise of bogus unsecured loans. In the absence of the information/confirmation in respect of these two loan creditors to the tune of Rs. 59121000/- appearing as a liability in the books of the assessee stands unexplained is added back to the income of the assessee U/s 68 of the IT Act as the assessee was unable to offer any explanation about the nature and source of such credit/genuineness of the same could not be established by the assessee inspite of availing sufficient time and opportunities as per IT Act."
In view of the above, the assessee requests your honour to delete the additions made by the AO and drop the penalty proceedings initiated.
The assessee relies on various orders passed by Hon'ble Delhi High Court.
(i)
DJ Surfactants vs National E-Assessment Centre Delhi, W.P. (C)
4814/2021 dt. 03.05.2021
(ii)
Lemon Tree Hotels Limited vs NFAC Delhi, W.P. {C} 5427/2021
dt. 21.05.2021. (iii)
Naresh Kumar Goyai vs NFAC Delhi WP(C) 6245/2021 dt.
12.07.2021. The assessee reserves the right to add after modify, amend, delete any ground before Hon'ble CIT (A)”
B.
“WRITTEN SUBMISSIONS BEFORE THE COMMISSIONER OF INCOME TAX (APPEALS) IN THE CASE OF M/s GLOBAL
STAINLESS, 17 MEERA TOWER GROUND FLOOR, WAZIRPUR
INDUSTRIAL AREA, NEW DELHI - 110052 FOR THE ASSESMENT
YEAR 2018-19
6
PAN : AAJFG7209G
ASSTT. YEAR : 2018-19
The assessment is bad in law and on facts. It is against the principles of natural justice as everything has been done without going into the facts and submissions of the case. The submissions made by the assessee have not been taken on record and the assessment order has been passed without taking submissions into consideration.
The assessee received a show cause notice dt. 24.03.2021 vide which Confirmation, PAN, Address, Mail-ID, Bank statements were required of two Unsecured Loans namely M/s Steel Impex and M/s Cloud Zone by dt. 27.03.2021:-
The assessee submitted the required details on dt. 27.03,2021 : - i.
Confirmation of Account in their ledger (Parties ledger extracts).
ii.
PAN iii.
Address iv.
E-mail address v.
The bank statement was submitted on 30,03.2021 i.e. before passing the assessment order on dt. 31.03.2021 but the same were not taken on record and the assessment order, was framed as per show cause notice without considering the same. It is against the Principles of Natural Justice.
The AO in his assessment order at S. No. 4 says that i. With reference to these two unsecured loan creditors,
M/s Steel Impex
M/s Cloud Zone assessee could not give basic details of PAN /
Bank Account Statement /
comprehensive confirmation from these parties of at least ledger extracts of assessee as appearing in their books confirming the closing balances.
Explanation: Comprehensive confirmation from these parties as appearing in their books of accounts confirming the closing balances were submitted on 27.03.2021 including their Name, Address, PAN, E-Mail ID,
Signatures.Bank Statement of these parties was submitted on 30.03.2021
i.e. before passing the assessment order on dt. 31.03.2021. The above details are on record. But the same were not considered by AO and the assessment order was framed without considering these documents.
ii.
The AO alleged that with reference to one loan creditor assessee submitted PAN (ADIPC0422B) for further cross verification U/s 133(6). In 1TBA the same was found to be not retatable to this loan creditor
M/s Steel Impex and the same refer to non-related individual Mr. Rahul
7
Chawla etc. Hence 133(6) enquiries could not be made as the assessee submitted wrong PAN.
Explanation: M/s Steel Impex is a Proprietorship Firm and its proprietor is Mr. Rahul Chawla who has signed the confirmation of account as per his ledger extracts. The PAN: ADIPC0422B belongs to Mr. Rahul Chawla as confirmed and accepted by AO in his assessment order.
The Proprietorship firm M/s Steel Impex is owned by Mr. Rahul Chawla and his
PAN is ADIPC0422B which has been confirmed by AO himself.
iii.
The AO further alleged that with reference to other loan creditors M/s Cloud Zone, the assessee merely submitted PAN without giving verifiable details of email - id etc. to examine the claim u/s 133(6) with this loan creditor. Accordingly, this loan creditor also apparently neither reconcilable nor explainable as claimed by the assessee and also as assessee failed to submit basic details of this loan creditors involving PAN,
Email-id etc. to examine the assessee claim u/s 133(6).
Explanation : - Comprehensive confirmation from M/s CIoud Zone as appearing in their books of accounts confirming the closing balance was submitted on 27.03.2021 including their Name, Address, PAN, E-Mail ID,
Signatures. Bank Statement of these parties was submitted on 30.03.2021
i.e. before passing the assessment order on dt. 31.03.2021. The above details are on record. But the same were not considered and the assessment order was framed without considering the documents and submission of the assessee.
The submissions are on record but the same were not considered by the Assessing Officer and the assessment order was framed as per show cause notice itself on dt. 31.03.2021. The assessee was able to submit the required details well within time on dt. 27.03.2021 and 30.03.2021 i.e. before passing, the assessment order on dt. 31.03.2021 but the same were not taken on record and the assessment order was framed without considering the same. It is against the Principles of Natural Justice. The impugned assessment order and notices of penalty have been passed in gross violation of Principles of Natural Justice without taking on record the submissions of the assessee. The show cause notice dt. 24.03.2021 alongwith draft assessment order of even date required the assessee to make compliance by 27.03.2021 as to 'why the assessment should not be completed as per the draft assessment order. The assessee submitted his reply to the said show cause notice on 27.03.2021. The impugned assessment order was passed on 31.03.2021without having regard to the aforesaid reply dt. 27.03.2021 & 30.03.2021 submitted by the assessee. it seems that the AO was predecided in passing the assessment order and he had made up his mind for making additions. 8
A perusal of the assessment order shows that the AO has made on addition to the assessee Income of Rs. 59121000/- U/s 68 of the income Tax Act, 1961 concerning the A.Y. 2018-19. The addition has been made on account of purported unexplained unsecured loans.
The assessee has accepted unsecured loans during the year from various parties. The assessee was asked by the Department to submit following details regarding unsecured loans taken during the year and as reflected in the balance sheet: - a)
Name and Address of the lender of the loan, b)
PAN of the lenders.
c)
Amount of loan accepted during the year.
d)
Mode of Transaction.
e)
Amount of loan repaid during the year.
f)
Quantum of interest paid and rate of interest.
g)
Whether TDS was deducted on the payment.
h)
Business purpose for which loan was taken.
The assessee was asked to submit documentary evidence to substantiate the identity, ITR of the tenders, creditworthiness and confirmation along with bank statement. The assessee submitted the details on various dates as and when required by the Department. The AO says that the assessee submitted confirmations from these loan creditors with supporting details as applicable to these loan creditors except in the case of two loan creditors involving total amount of Rs. 5.91 crores against these two parties namely (i) M/s Steel Impex (ii) M/s Cloud Zone.
The assessee has received unsecured loans during the year from various parties including from these two parties: - i. M/s Steel Impex
(a)
Proprietor: Mr. Rahul Chawla
: Rs. 3,08,00,000/-
PAN: ADIPC0422B
8819, Street No. S
Multani Dhanda
Paharganj,
New Delhi -110055
E-Mail ID: rdschawlal980@gmail.com
(b) Proprietor: Mr. Gaurav Goel : Rs. 25,00,000/-
PAN : AMPPG8095G
76A, Dilshad Garden
Shahdara,
New Delhi - 110055
E-Mail ID : bdstube@yahoo.com
9
M/s Cloud Zone
: Rs. 2,58,21,000/-
Partnership Firm
PAN: AAMFC8905C
320/1335, Durga Chambers
Desh Bandhu Gupta Road
Karol Bagh, New Delhi -110005
E-Mail ID: zonecloud0603@gmail.com
M/s Steel Impex- Rs. 33300000/- (Three Crore Thirty Three Lakhs Only) -
The assessee has received Rs. 30800000/- from M/s Steel Impex
(Proprietor Sh. Rahul Chawla) having PAN - ADIPC0422B and Rs.
2500000/- from another M/s Steel Impex {Proprietor Gaurav Goel) having
PAN - AMPPG8095G. Due to same name of both the parties "M/s Steel
Impex", the accountant has wrongly entered all the entries in the same one account. Copy of Confirmation of accounts in their Books of accounts and Bank Statements reflecting the entries from both parties are enclosed herewith. Everything is through proper banking channels and nothing is beyond that ii) M/s Cloud Zone. Rs. 25821000/- (Two Crore Fifty Eight Lakhs
Twenty One Thousand Only)
The assessee has received Rs. 25821000/- from M/s Cloud Zone having
.PAN — AAMFC8905C. Copy of Confirmation of accounts in their Books of accounts and Bank Statements reflecting the entries are enclosed herewith.
It is assessee's contention that he had via the material placed before the AO, alongwith its reply on 27.03.2021 and 30.03.2021 explained and established the genuineness of unsecured loans received. It is quite evident that the AO has not taken into account the explanation and material placed before him by the assessee alongwith its reply on dt. 27.03.2021 and 30.03.2021. This aspect is brought to fore, if one were to pursue paragraph 6 of the impugned assessment order. For the sake of convenience, the same is extracted hereinafter.
"In view of the above discussion, it is seen that mere reflection of a liability in the books of accounts does not support the existence and correctness of unsecured loans and same is again to infusion of unexplained capital into assessee business in the guise of bogus unsecured loans. In the absence of the information / confirmation in respect of these two loan creditors to the tune of Rs. 59121000/- appearing as a liability in the books of the assessee stands unexplained is added back to the income of the assessee U/s 68 of the IT Act as the assessee was unable to offer any explanation about the nature and source of such credit / genuineness of the same could not be established by the assessee inspite of availing sufficient time and opportunities as per IT Act"
10
In view of the above, the assessee requests your honour to delete the additions made by the AO and drop the penalty proceedings initiated.
The assessee relies on various orders passed by Hon'ble
Delhi High Court.
(i)
DJ Surfactants vs National E-Assessment Centre Delhi, W.P.(C)
814/2021 dt. 03.05.2021
(ii)
Lemon Tree Hotels Limited vs NFAC Delhi, W.P.(C) 5427/2021 it 21.05.2021. iii) Naresh Kumar Goyal vs NFAC Delhi WP(C) 6245/2021 12.07.2021. The assessee reserves the right to add, alter, modify, amend, any ground before Hon'ble CIT(A)”
It appears that the Ld. AO while making addition observed that the confirmations stated to have been submitted were never submitted, neither the ledger account of the two creditors in the books of account of the assessee were furnished before him. The confirmations/bank accounts, e-mail ids of sundry creditors for the impugned transactions being unsecured loans amounting to Rs.3,33,00,000/- and Rs.2,58,21,000/- from M/s Steel Impex and M/s Cloud Zone, respectively, were not furnished and, therefore, show cause were issued to the assessee whereupon only bald confirmation as appearing in the books of the assessee without obtaining proper and comprehensive confirmation from these parties were furnished. Therefore, according to the Ld. AO the loans are not proved to be confirmed by these parties and inquiries conducted under Section 133(6) of the Act did not yield any result which proves unexplainable nature of these two parties’ loan as against other parties in whose case the assessee was able to reconcile the claim. Thus, finally, as the assessee was unable to offer any 11
explanation in regard to these impugned transactions, the same were added in the hands of the assessee under Section 68 of the Act. The Ld. CIT(A) reiterated the same that no cogent document/evidence in support of the claim of the assessee in fact was submitted before it. The copy of the bank statement of M/s Steel Impex and Bank Account Statement of ICICI Bank of M/s Cloud Zone clearly indicate that huge sum of money in lakhs/crores were credited by some entities and the same were transferred to various other entities including the appellant immediately invariably on the same day leaving a bank balance which was almost negligible, i.e., only upto a few thousand rupees. This particular aspect of the matter cannot be brushed aside having regard to the case made out by the Revenue.
The Ld. CIT(A) while confirming the addition observed as follows:- “6.6. The assessee also stated that the said unsecured loan was squared off in subsequent years through Banking Channel as and when the appellant had liquidity the loan was duly paid off and claimed that no addition is to be made in current year on account of cash credit. The claim of the appellant is not acceptable as the unsecured loans received by the appellant has been held to be bogus in the preceding paragraphs. As the loans have been held as bogus, the repayment of loans in the subsequent years does not make the transaction genuine.
7 Reliance is placed on the decision of the Hon’ble ITAT, Mumbai in the case of J K Global 167 taxmann.com 15 (Mumbai - Trib.), where the facts are exactly same as the present case. The Hon’ble ITAT upheld the addition made u/s 68 of the Act on account of unsecured loans taken from three companies for 2010-11 to 2012-13 as information received from DGIT (Investigation) revealed that assessee had taken accommodation entries in form of bogus unsecured loans from said companies which were operated by one Praveen Kumar .lain who had admitted that companies under their control were paper companies with no real business transactions. The Hon’ble ITAT also rejected the assessee's contention that the loans have been repaid during the year under consideration therefore 12
the set off of the same should also be given to the assessee. The relevant portion of the order is reproduced as under:
“4. For the sake of conciseness and brevity, in AY 2010-11 unsecured loans have been taken from Ryan International of Rs. 25 lakhs, in AY
2011-12 from Casper Enterprises Pvt. Ltd of Rs 5 lakhs and in AY
201213 Rs. 20 lakhs taken from Duke Business Pvt Ltd. The common cause for treating the unsecured loan as unexplained and added u/s 68
of the Act is the information received from DGIT (Investigation).
Mumbai that Shri Pravin Kumar Jain through a web of concerns run and operated by him is engaged in providing accommodation entries in the nature of bogus unsecured loans, bogus share application etc through various paper entities and the assessee is one of the beneficiaries who has taken accommodation entry. Statement of Shri
Pravin Kumar Jain was recorded u/s 132(4) of the Act wherein, he has categorically admitted that the entire business of accommodation entries is through him and Pankaj Jain and companies under their control, which are either owned by him or directly or indirectly controlled are paper companies with no real business transactions.
The coordinate bench in the appeal of Praveen Kumar Jain v. Dy. CIT [IT Appeal No. 7191 (Mum.) of 2018, dated 19-1-2023] for AY 2008-09 to 2014-15 had the occasion to consider the statement of Shri Praveen Kumar Jain which reads as under: ………… …………
On perusal of the aforementioned statement showed that in the list of companies given the accommodation entries names of Duke Business Pvt. Ltd, Casper Enterprises Pvt. Ltd and Ryan International are mentioned which means that as per the order of the coordinate bench it has been established that these companies were providing accommodation entries through unsecured loans claimed to have been borrowed from these companies by the assessee during the year under consideration as unexplained and rightly added u/s 68
"17. It is also brought to the notice of the Bench by the Ld. DR for the Revenue that in hundreds of cases, Shri Pravin Kumar Jain has provided accommodation entry for unsecured loans, bogus share application money, etc. without carrying out any real business, but operating through dummy / paper companies. So in these circumstances, we are of the considered view that the Assessing Officer as well as Ld.CIT(A) have rightly quantified the unaccounted commission earned by the assessees during the year under consideration from 54 companies which is nothing but a huge network of unlawful business to evade the tax for companies operating through them and by the assessee themselves also.
Rather, they are in to money laundering.
In view of what has been discussed above, we are of the considered view that Assessing Officer as well as Ld.CIT(A) have passed / 13
confirmed legally valid orders to which assessee has failed to controvert by putting in appearance. Assessee has challenged the impugned order passed by Ld.CIT(A) on generic grounds which he has failed to prove by putting in appearance, by producing any evidence and by assisting the Bench despite availing numerous opportunities. Consequently, we find no illegality or perversity in the impugned order passed by Ld.CIT(A), hence, aforesaid appeals filed by both the assessees, namely, Shri Pravin
Kumar Jain and Shri Pankaj Jain are hereby dismissed.
19 Since addition of Rs. 12,39,00,000/- in hands of Casper Enterprises
Pvt Ltd is on protective basis, the substantive addition having already made in the hands of Shri Pravin Kumar Jain, the addition of Rs.99,56,560/- in case of Casper Enterprises Pvt Ltd is confirmed."
Considering the facts of the case in toto and in the light of the decisions of the coordinate bench (supra), we have no hesitation in confirming the addition made u/s 68 of the Act for the captioned Assessment years. The contention of the Id. counsel that the, loans have been re-paid during the year under consideration therefore the set off of the same should also be given to the assessee does not hold any water as it has been established that the impugned loans were nothing but accommodation entries and the repayment is also nothing but return of accommodation entries therefore, the money which has been brought in the garb of unsecured loan is nothing but the unaccounted money of the assessee and the repayment of the same does not make any sense.
In the tight of the decision of the coordinate bench the additions are confirmed for all the assessment years under consideration since the loan amount has been treated as unaccounted money of the assessee for payment of interest of such loan amount claimed as unexplained and added by the AO is also confirmed.
In the result, the captioned appeals of the assessee are dismissed.”
8 In view of the facts and circumstances of the case, the addition made u/s 68 on account of bogus unsecured loans received from M/s Steel Impex and M/s Cloud Zone are upheld. Accordingly, ground no. 2 to 4 raised by the appellant is treated as dismissed.”
It appears from the above that the Ld. CIT(A) has also taking into consideration the case sought to be made out by the assessee to this effect that 14
the unsecured loan was squared up in the subsequent years through banking channel as and when the appellant had liquidity the loan was duly paid off and claimed that no addition was to be made in the current year on account of cash credit, which was further reiterated by the ld. Counsel for the assessee appearing before us, concluded that as the unsecured loan received by the assessee has already been held to be bogus in the preceding paragraphs and rejected such case of the assessee. Having regard to the entire aspect of the matter, the conduct of the assessee particularly in not cooperating with the authorities below in not discharging onus under Section 68 as regards the genuineness of the transaction to the satisfaction of the Ld. Assessing Officer or that the submissions that the transactions having been made through banking channel or the companies were the income tax assessees registered with the