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Facts
The assessee, M/s Auto Decor Pvt. Ltd., received unsecured loans totaling Rs. 2,31,20,000 from its director, Smt. Anuradha Sachdev, and other companies during the Assessment Year 2012-13. The lower authorities made additions under Section 68, stating that the assessee failed to provide satisfactory explanations and confirmations for these loans.
Held
For the loan from Smt. Anuradha Sachdev (Rs. 1,61,20,000), the Tribunal found that her identity, creditworthiness (salary, other income, joint account), and the genuineness of the transaction (bank transfers, ITR, statement u/s 131) were established. The Tribunal held that even if the source of funds was not fully explained by her, the addition should be made in her hands as the owner of the funds, not the company's. Consequently, the addition related to this specific loan was deleted.
Key Issues
Whether the addition under Section 68 for unsecured loans could be sustained against the company when the lender's identity, creditworthiness, and genuineness of transaction were proven, and if such an addition should instead be made in the hands of the individual lender.
Sections Cited
Section 68, Section 131, Section 133(6)
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, DELHI BENCH ‘A’, NEW DELHI
Before: Sh. Kul BharatDr. B. R. R. Kumar
ORDER
Per Dr. B. R. R. Kumar, Accountant Member:
The present appeal has been filed by the assessee against the order of ld. CIT(A)-I, New Delhi dated 10.03.2017. 2. Following grounds have been raised by the assessee:
“1……… 2. a. That under the facts & circumstances of case, both the lower authorities erred in law & on merits in making and then sustaining the additions of Rs.2,31,20,000/- u/s 68 which is being on unsecured loans taken from Director of assessee company and other companies. b. That both the lower authorities erred on law and on merits for not considering the submissions of assessee, where all documents were submitted before the ld. CIT(A)
2 Auto Décor Pvt. Ltd. and even after examining on oath, Director of the company in person by ld. CIT(A) himself, no relief was provide.” 3. The assessee filed appeal on 29.05.2017. The case was fixed for hearing on 08.02.2021, 30.06.2021, 07.09.2021, 15.11.2022, 15.02.2023, 20.04.2023, 05.07.2023, 19.09.2023 and 12.02.2024. None attended on behalf of the assessee. Hence, the case is being adjudicated based on the material available on record.
During the year, the assessee has received loans from the following parties:
S. No. Name of Banks/Financial Institutions Additions during the year 1. Mrs. Anuradha Sachdev 1,61,20,000 2. AB Buildpro Pvt. Ltd. 21,00,000 3. Arise Infratech Pvt. Ltd. 25,00,000 4. P. Seven General Finance Pvt. Ltd. 15,00,000 5. Sonal Mercantile Ltd. 9,00,0000 Total 2,31,20,000 Sonal Mercantile Ltd.- Rs.9,00,000/- P. Seven General Finance Pvt. Ltd. – Rs.15,00,000/- Arise Infratech Pvt. Ltd. – Rs.25,00,000/- AB Buildpro Pvt. Ltd. – Rs.21,00,000/-:
The AO has not considered the above as well as other documents duly submitted before him during the course of remand proceedings. The ld. CIT(A) held that no confirmation was filed by the appellant nor any reply in response to notice u/s 133(6) has been received from the said party by the AO in the remand proceedings. The ld. CIT(A) held that on going through the confirmation which is claimed to be of lender, it is seen that same is a xerox copy and old dated. Further, the 3 Auto Décor Pvt. Ltd. notice issued u/s 133(6) has been received back / no reply received, therefore, the confirmation cannot be relied upon. In the absence of any material contra, the order of the ld. CIT(A) is hereby affirmed.
Mrs. Anuradha Sachdev – Rs.1,61,20,000/-:
The appellant produced Smt. Anuradha Sachdev, Director and her statement u/s 131 of the Act was recorded which is placed on the record. In her statement Smt. Anuradha Sachdev confirmed of having advancing of loans of Rs 1,61,20,000/- during the year. It is also confirmed by Smt. Anuradha Sachdev that she is receiving salary from the appellant company of Rs.4,00,000/- per month. She has also received bonus and other perquisites. She has also stated that loan to the appellant company were given from the joint account held by her with her husband with HDFC Bank Ltd. It is also stated by her that, the loan was given in different instalments and same was received back during the year itself and at the end of the year i.e. 31.03.2012 only Rs. 72,022/- was outstanding When she was asked about the non-furnishing reply she has stated that their internal system is not working well, therefore, the communication from the department has not reached to her.
Smt. Anuradha Sachdev has filed copy of ITR, bank statement, confirmation of loan and she has been produced before the Assessing Officer and the statement has been recorded. All the receipt of loans and repayment has been repaid through bank account. The appellant has also filed analysis of the bank statement of Smt. Anuradha Sachdev vide his letter dated 28.02.2017 which is placed on record of the 4 Auto Décor Pvt. Ltd. revenue officials. Hence, based on the evidences and the statement given by Smt. Anuradha Sachdev who is also Director of the company, even if it is assumed the sources as not explained, the addition has to be made in the hands of Smt. Anuradha Sachdev who owned the funds. Hence, the addition made on the loan received from Smt. Anuradha Sachdev is liable to be deleted.
In the result, the appeal of the assessee is partly allowed. Order Pronounced in the Open Court on 07/05/2024.