ITO WARD-20(1), NEW DELHI vs. POLTAVSKY- TPS POWER SERVICES LTD., NEW DELHI

This appeal by the Revenue is directed against the order of Commissioner of Income Tax (Appeals)-7, New Delhi (hereinafter referred to as ‘the CIT(A)’), dated 28.03.2019, for assessment year 2010-11.

The solitary issue raised by the Department in appeal is against deleting the addition of Rs. 1,47,17,316/- by the CIT(A). The contention of Department is that the assessee was not able to prove creditworthiness of the creditors and (A.Y.2010-11) genuineness of the transaction, despite that the First Appellate Authority deleted the addition. 3. The facts of the case as emanating from records are; the assessee company was established in technical collaboration with JSC Poltava Turbomechanical Plant of Ukraine. The assessee is purportedly engaged in the businesses of supplying Steam Turbine Parts of 200 MW to Government agencies. The assessee filed its return of income for the impugned assessment year on 12.10.2010 declaring total income of Rs. 18,39,697/-. Notice u/s.143(2) of the Income Tax Act, 1961 (in short ‘the Act’) was issued to the assessee on 19.08.2010. In response to the said notice, the Authorized Representative of the assessee appeared before the Assessing Officer (AO) and sought time to furnish details. The necessary details were furnished initially. Thereafter, the AO issued show cause notice u/s 142(1) of the Act, on 28.02.2013 making a detailed inquiry. In response to the said notice, the assessee furnished some documents through its Authorized Representative; however, no submissions explaining the documents were allegedly made by the assessee. The AO found documents furnished by the assessee not to the satisfaction; hence, another show cause notice was issued on 28.02.2013. The assessee again without furnishing any reply/detailed submissions to the notice only filed copy of bank statement. Since, the assessee failed to assist the AO and provide necessary details in the specified manner, the AO proceeded to complete assessment u/s 144 of the Act. The AO vide order dated 28.03.2013 made addition of Rs. 3,91,67,316/- u/s. 68 of the Act, on account of unexplained bank credits. The AO further disallowed interest expenses of Rs. 28,38,943/- u/s. 37 of the Act.

Shri Vivek Vardhan, representing the Department vehemently defended the assessment order and remand report given by AO in respect of the additional evidences filed by the assessee.

On the other hand, Ms. Sangeeta Singh, appearing on behalf of the assessee strongly supported the order of CIT(A) and prayed for dismissing appeal of the Revenue. She pointed that AO in remand report has given his observation which clearly vindicate submissions made by the assessee.

We have heard the submissions made by rival sides and have examined the order of authorities below. During the course of assessment proceedings the AO made addition of Rs. 3,91,67,316/- u/s 68 of the Act. During First Appellate proceedings, the assessee furnished necessary evidences to discharge its onus in proving genuineness of the loan transactions and the creditors. The additional evidences filed by the assessee were forwarded to the AO for his report. The relevant extract of remand report dated 23.09.2015 is reproduced by the CIT(A) in para 4.4 of the impugned order. The CIT(A) after considering comments of the AO and submissions of the assessee has dealt with various additions made u/s. 68 of the Act individually. The CIT(A) has given breakup of share application money