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Facts
The assessee, ADRS Infra Services P. Ltd., filed a NIL return for AY 2015-16. During assessment, the AO found an unsecured loan of Rs. 20,00,000/- from M/s. Arti Securities and Services P. Ltd., identifying it as an accommodation entry. The assessee failed to prove the identity and creditworthiness of the lender or the genuineness of the transaction, leading to additions under Section 68 and Section 69C (commission), and a disallowance under Section 14 r.w.r. 8D. The CIT(A) upheld the additions under Sections 68 and 69C, while granting partial relief on Section 14A/8D disallowance.
Held
The Tribunal noted the assessee's repeated non-appearance and lack of interest in pursuing the appeal. It upheld the validity of the notice issued under Section 143(2) and confirmed the additions of Rs. 20,00,000/- under Section 68 and Rs. 40,000/- under Section 69C, as the assessee failed to discharge its onus or provide controverting material. The findings of the CIT(A) were upheld across all contested grounds.
Key Issues
1. Whether the additions made under Section 68 for unsecured loans and Section 69C for unexplained expenditure (commission) were sustainable. 2. Whether the notice issued under Section 143(2) was valid.
Sections Cited
Section 14, Rule 8D, Section 68, Section 69C, Section 133(6), Section 142(2), Section 143(2), Section 143(3)
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, DELHI BENCH “SMC”, DELHI
Before: SHRI VIKAS AWASTHY
बनाम Vs. Income Tax Officer, Ward-1(1) ..... �ितवादी/Respondent R. No. 380 A, C.R Building, New Delhi अपीलाथ� �ारा/ Appellant by : None �ितवादी�ारा/Respondent by : Ms. Shivani Bansal , Sr. DR सुनवाई क� ितिथ/ Date of hearing : 12/09/2024 घोषणा क� ितिथ/ Date of pronouncement : : 29/11/2024 आदेश/ORDER
PER VIKAS AWASTHY, JM:
This appeal by the assessee is directed against the order of Commissioner of Income Tax (Appeals)-I, New Delhi (hereinafter referred to as 'the CIT(A)') dated 28.02.2019, for assessment year 2015-16.
A perusal of file shows that appeal was listed for hearing 28 times in the past four years. The appeal was repeatedly adjourned either on the request of Representative of the assessee or for non appearance of any Authorized Representative (AR) from assessee’s side. Today again no one is present to represent the assessee, nor any written request for adjournment has been (A.Y.2015-16) received from the assessee’s side. It seems that the assessee is not interested in pursuing the appeal. Hence, this appeal is taken up for hearing with the assistance of ld. Departmental Representative (DR) and on the basis of documents already on record.
Brief facts of the case as emanating from records are: That the assessee filed its return of income declaring total income as ‘NIL’ and carry forward losses amounting to Rs.1,20,383/-. In assessment proceedings the Assessing Officer (AO) found that the assessee has received unsecured loans of Rs.20,00,000/- from M/s. Arti Securities and Services P. Ltd. during the Financial Year 2014-15. A search & seizure action was carried out on Mukesh Kumar & Deepak Aggarwal and their group concerns. The name of assessee figured in the list of beneficiaries of unsecured loan from M/s. Arti Securities & Services Ltd., one of the concern controlled by Mukesh Kumar & Deepak Aggarwal. The assessee was asked to prove identity and creditworthiness of the lender and genuineness of the transaction. The assessee filed confirmations from M/s. Arti Securities and Services P. Ltd. and it was further stated that loan amount was received through banking channel. Not satisfied with the submissions and documents furnished on behalf of the assessee, the Assessing Officer issued notice u/s. 133(6) of the Income Tax Act, 1961(hereinafter referred to as ‘the Act’) to M/s. Arti Securities and Services P. Ltd. None responded to said notice; opportunity was given to the assessee to produce the directors of lender company. However, the assessee instead of producing directors of the company furnished copies of ITR, Bank Statements and Financials of the lender. The Assessing Officer was not satisfied with the documents furnished by the assessee, hence, made addition of Rs.20,00,000/- u/s. 68 of the Act.
(A.Y.2015-16) 3.1. The AO further observed that the assessee paid commission for securing accommodation entries. The AO estimated commission at the rate of 2% and made addition of Rs.40,000/- u/s. 69C of the Act. 3.2. Apart from above, the AO made disallowance of Rs.44,250/- u/s. 14 r.w.r 8D of the Act. 3.3. Against the Assessment Order dated 24.10.2017 passed u/s. 143(3) of the Act, the assessee filed appeal before the CIT(A). The CIT(A) vide impugned order granted part relief to the assessee deleting disallowance made u/s. 14A r.w.r. 8D. In so far as other two additions, the CIT(A) confirmed the same. Hence, present appeal by the assessee.
Ms. Shivani Bansal, representing the department vehemently supporting the impugned order submits that the assessee has taken accommodation entries indicating unsecured loans from M/s. Arti Securities and Services P. Ltd. The said company is managed by Deepak Agarwal and Mukesh Kumar for providing accommodation entries. The assessee failed to discharge its onus in proving identity and creditworthiness of the lenders and genuineness of the transaction. The assessee was asked to produce directors of M/s. Arti Securities and Services P. Ltd., notice u/s. 133(6) of the Act was also issued to the company, neither the assessee could produce the directors nor the said company responded to aforesaid notice. The AO granted ample opportunity to the assessee to discharge onus u/s. 68 of the Act, but the assessee failed to do so. She further pointed that a factual report from the AO was called for. The same was furnished on 18.09.2023 before the Bench. The ld. DR reiterating findings of the CIT(A) prayed for dismissing appeal of the assessee.
(A.Y.2015-16) 5. Submissions made by ld. DR heard and orders of the authorities below examined. The assessee in ground no. 1 & 2 of appeal has assailed validity of notice issued u/s. 142(2) of the Act. In ground no. 3 & 4 of appeal, the assessee has assailed addition of Rs.20,00,000/-made u/s. 68 of the Act. In ground no. 5 of appeal, the assessee has challenged addition of Rs.40,000/- u/s. 69C of the Act on account of commission charges. From perusal of grounds of appeal and documents on record it is apparent that the assessee has for the first time questioned validity of notice u/s. 143(2) of the Act. However, to substantiate its contention no material has been placed on record by the assessee. A report from the AO is placed on record by the Revenue in this regard. As per the report notice u/s. 143(2) of the Act was issued to the assessee on 30.09.2016 after seeking approval from the Competent Authority. After examining documents placed on record by the Department, I find no infirmity in the approval and notice issued u/s. 143(2) of the Act. Hence, ground no. 1 & 2 of appeal are dismissed.
6. In ground no. 3 & 4 of appeal, the assessee has assailed addition of Rs.20,00,000/- u/s. 68 of the Act. The AO has made said addition as the assessee failed to discharge its onus in proving identity and creditworthiness of the lender, and genuineness of the transaction. The assessee has failed to make any submissions or place on record any documents controvert findings of the authorities below. Therefore, I find no reason to interfere with the order of CIT(A) on these grounds. Hence, ground no. 3 & 4 of appeal are dismissed.
7. In ground no. 5 of appeal, the assesses has assailed addition of Rs.40,000/- on account of unexplained expenditure of commission. Since, no material is available before the Bench controverting findings of the CIT(A), the findings of the CIT(A) on this issue are upheld.