RAHUL GARG,NEW DELHI vs. ITO, WARD-24(3), NEW DELHI
What did the Tribunal hold?
The Tribunal found that the Assessing Officer had not considered the fund flow statements of the lenders, who were family members and regularly assessed to tax. The assessee was directed to pay an additional Rs. 50 lakhs, and the balance demand was stayed pending appeal disposal.
What were the facts?
The assessee sought a stay on a demand of Rs. 4.67 crores arising from an assessment order. The Assessing Officer made an addition of Rs. 10.20 crores under Section 68 for alleged failure to prove the creditworthiness of lenders.
What were the issues?
Whether the addition made under Section 68 was justified solely on the basis of the lenders' disproportionate income without considering fund flow statements and the creditworthiness of family members.
Which sections of the Income-tax Act were involved?
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, DELHI
Before: MS. SUSHMA CHOWLASHRI N.K. BILLAIYA
Heard together (2 matters)
Read from the judgment's own cause title. This page is filed under one of them.
PER N.K. BILLAIYA, ACCOUNTANT MEMBER,
With this stay application, the assessee prays for stay of demand arising out of the assessment order dated 10.12.2018 framed u/s 143(3) of the Income tax Act, 1961 [hereinafter referred to as 'The Act' for short] for assessment year 2016-17.
Before us, the ld. counsel for the assessee pointed out that out of the total demand of Rs. 4.67 crores, which includes tax and interest, the assessee has already paid a sum of Rs. 93.51 lakhs, which comes to 20% of the total demand and requested for stay of the balance demand of Rs. 3.71 crores.
The ld. counsel for the assessee explained the facts and circumstances which prompted the Assessing Officer to make the impugned additions and vehemently stated that the assessee has a very good case before the Tribunal.
Per contra, the ld. DR strongly opposed the stay application and stated that the assessee has failed to discharge the onus cast upon her by provisions of section 68 of the Act.
We have given thoughtful consideration to the assessment order.
The bone of contention is the addition of Rs. 10.20 crores made u/s 68 of the Act. We find that the Assessing Officer has made additions solely on the ground that the assessee has failed to prove the credit worthiness of the lenders as the return of income of the lenders is disproportionate to the amount of loan given by them respectively.
In our considered opinion, the Assessing Officer has simply considered the return of income and not the fund flow statement of the lenders. We further find that all the lenders are family members of the assessee and are regularly assessed to tax. In our considered opinion, the assessee has a prima facie good case to defend. However, at the same time, we find that the assessee has paid only 20% of the demand. Therefore, we direct the assessee to pay a further sum of Rs. 50 lakhs on or before 30th day of December 2019 and subject to the payment of this sum, balance demand is stayed for a period of six months or till the disposal of the appeal, whichever is earlier.
The Registry is directed to list the case for hearing on 05.02.2020. Since the date of hearing was announced in the open court, which is in the knowledge of both the representatives, no notice shall be served. Needless to mention that the assessee shall not seek adjournment without any justifiable cause and shall file relevant paper books prior to the date of hearing, as per provisions of the law.
In the result, the stay application of the assessee in SA No. 1028/DEL/2019 is disposed of accordingly.
The order is pronounced in the open court on 06.12.2019.
More judgments on Section 68
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- Neo Incorporation, Rajkot vs DCIT Circle- 1(2), RajkotITA 471/RJT/2026[2012-2013]Status: Disposed21 Oct 2026AY 2012-2013
- Bliss Dealtrade Private Limited, Kolkata vs Income Tax Officer - Ward 9(2) Kolkata…ITA 208/KOL/2026[2012-13]Status: Disposed21 Oct 2026AY 2012-13
- Hemal Paresh Madeka, Rajkot vs Asst.Commissioner of Income Tax…ITA 955/RJT/2026[2020-21]Status: Disposed19 Oct 2026AY 2020-21
- Ajaybhai Dineshbhai Bagdai, Near Central… vs The Income Tax Officer, Ward-1(2)(1), New…ITA 74/RJT/2026[2013-14]Status: Disposed19 Oct 2026AY 2013-14
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