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Income Tax Appellate Tribunal, DELHI BENCH, ‘G’: NEW DELHI
Before: SHRI C.N. PRASAD & SHRI M. BALAGANESH
ORDER PER C.N. PRASAD, JM, All these appeals are filed by the revenue against different orders of the Ld. CIT(A)-3, Noida vide order dated 14.11.2023 for the A.Ys 2013-14 to 2016-17 in deleting the additions made u/s.68 of the Act in respect of unexplained cash credits being unsecured loans taken by the assessee. 2. First we take up the appeal for A.Y.2013-14 wherein the revenue has raised following common grounds in the appeal for A.Y’s 2013-14 to 2016-17 :-
1. ITA No.367/Del/2024 A.Y. 2013-14 1 Whether on facts and circumstances of the case and in law, the Ld. CTT(A)-3, Noida has erred in deleting the addition of Rs. 5,35,00,000/- made by the AO u/s 68 of the Act on account of unexplained cash credit being unexplained unsecured loan and Rs. 36,00,000/-w/s 68 of the Act on account of unexplained cash credits without appreciating the facts brought on record during the course of assessment proceedings. 2 Whether on facts and circumstances of the case and in law, the Ld. CIT(A) has erred in not appreciating the fact that creditworthiness of the lenders of the unsecured loans amounting to Rs. 5,35,00,000/- has not been established properly for want of ITR, complete bank accounts and other details during the course of assessment proceedings. 3 Whether on facts and circumstances of the case and in law, the Ld. CIT(A) has erred in not appreciating the fact that the assessee has failed to provide any details in respect of advance of Rs. 36,00,000/-received against the sale of plat of land during the entire assessment proceedings. 4 Whether on facts and circumstances of the case and in law, the Ld. CIT(A) is justified in pronouncing its decision only based upon the judgement in favor of the appellant by not considering the decision of Hon'ble Supreme Court in the case of Kale Khan Mohammad Hanif v. CIT wherein it has been held that "if an assessee fails to prove satisfactorily the source and nature of certain amount received during the accounting year, the AO is entitled to draw the inference that the receipts are of an assessable nature” Further in the case of Som Nath Maini v. CIT, the Hon’ble Punjab & Haryana High Court has also held that “ the burden of proving that income is subject to tax is on the Revenue but on the facts, to show that the transaction is genuine the burden is primarily on the assessee”
3. The brief facts of the case are that a search and seizure operation was conducted by the Investigation Wing, Ghaziabad on 05.02.2017 at the premises of the assessee including Sh. Vipin Kumar and others. The search warrant was the name of Sh. Sunder Singh and Smt. Kamlesh and others and search was conducted at the residential premises at 1402 & 1403 Vindhyanchal Tower, Kaushambi Ghaziabad. Pursuant to the search a notice u/s.153A of the Act was issued to the assessee on 14.09.2018. However, it appears that there was no compliance made by the assessee. Subsequently assessee filed returns on 12.12.2018 and a notice u/s.143(2) was issued on 21.12.2018 to the Assessee. In course of assessment proceedings though several notices and questionnaire were issued to the assessee, Assessee furnished only partial information. Based on the information available on record and the submissions of the assessee the AO treated the fresh unsecured loans taken by the Assessee during the assessment year as unexplained cash credit u/s.68 of the Act holding that the assessee has not filed any documents to prove the genuineness of transaction and creditworthiness of lender. The AO also made addition u/s.68 of the Act in respect of advances received by the assessee against sale of plot in the absence of documentary evidences. The assessee preferred appeal before the Ld. CIT(A) and in the course of appeal proceedings the assessee furnished various additional evidences which were admitted by the Ld. CIT(A) and a remand report was called for from the AO. The Ld. CIT(A) after considering the remand report of the AO, rejoinder of the Assessee and the additional evidences furnished by the assessee, deleted the additions made u/s.68 of the Act against which the revenue is in appeal before us.
4. The ld. DR strongly objecting to the deletion of the additions made by the AO. He submitted that the AO made additions u/s.68 in respect of unexplained loans and cash credits for all these assessment years based on seized materials and there was no compliance by the assessee during the course of assessment proceedings. The Ld. DR submitted that despite summon issued u/s.131 of the Act the assessee failed to appear and the AO proceeded to make the additions as per the available material. However, the Ld. CIT(A) deleted the additions made by the AO overlooking the non compliance by the Assessee before the AO. The Ld.DR, therefore, submitted that the order of the Ld. CIT(A) be reversed and uphold the additions made by the AO.
On the other hand the Ld. Counsel for the assessee strongly placed reliance on the orders of the Ld. CIT(A). The Counsel for the assessee submitted that the assessee furnished only partial information in the course of assessment proceedings and furnished additional evidences before the Ld. CIT(A) and the Ld. CIT(A) called for a remand report. The ld. Counsel submitted that the AO sent remand report to the Ld. CIT(A) with no adverse comments on the additional evidences furnished by the assessee. The Ld. Counsel for the assessee submitted that the Ld. CIT(A) considering the remand report of the AO and the additional evidences furnished by the Assessee deleted the additions and, therefore, the order of the Ld. CIT(A) be sustained. The Ld. Counsel further submitted that for the A.Y.2017-18 as a matter of fact the Ld. CIT(A) made enhancement of income on which the assessee is not in appeal.
6. The Ld. Counsel for the assessee further submitted as under :-
The respondent is an individual earning commission income and interest from bank. The respondent filed his ITR for the relevant year on 02.08.2013, declaring an income of Rs. 16,63,890/. A search and seizure operation was carried out on the respondent and other group entities / person on 05.02.2017. Accordingly a notice u/s 153A was issued to the respondent on 14.09.2018. In response to the said notice the respondent again filed his ITR on 12.12.2018, declaring the total income of Rs. 18.18,750/- 2. The assessment proceedings u/s 153A r.w.s. 143(3) of the Act, were completed vide assessment order dated 28.12.2018, wherein addition of Rs.5,71,00,000/- were made on the following 2 issues: An addition of Rs.5,35,00,000/- was made holding that the unsecured loans taken by the respondent from 3 entities details of which are tabled as under, were unexplained in terms of section 68 of the Act. Name of lender Amount of loan Accepted DY (Rs.) M/s. Ocean Apartments PVt. Ltd. 50,00,000/- M/s. Mahendra Dairy Pvt. Ltd 1,00,00,000/- M/s. Solitaire Foods Pvt. Ltd. 3,85,00,000/- Total 5,35,00,000/- An addition of Rs.36,00,000/- was made holding that the advances received from customers against sale of plots/land, were unexplained in terms of section 68 of the Act. 3. Aggrieved by the above, the respondent filed an appeal before the Ld. CIT(A)-3, Noida. During the course of the appeal proceedings, the respondent submitted confirmation, ITR's and Bank statements of all the three unsecured lenders, in explanation of the unsecured loans accepted by him during the relevant year. In Page | 5 explanation to the advances from customers the respondent filed List of persons from whom advances were received, their confirmatory letters and Copies of sale deeds executed in their favor during AY 2016-17 and 2017-18.
On the basis of the said documents, after calling the remand report from the Ld. A.O the id CIT(A) vide order dated 14.11.2023 decided both the issues in the favor of the respondent and deleted the additions as made by the Ld. A.O 5. Aggrieved by the same the department le the appellant has filed this appeal before your honor On the above facts the submissions of the respondent is as under- Regarding unsecured loans of Rs.5,35,00,000/- Documents relied upon/submissions 1. Written submissions dated 15.02.2023 as filed by the respondent before the Ld. CIT(A) during the course of the first appeal proceedings. Copy placed at page no. 1 to 8A of the paper book.
Order of the Id. CIT(A) -3, Noida.
During the course of the first appeal proceedings the respondent filed copies of confirmations ITR forms/ filling proofs and bank statements of all the 3 unsecured lenders, in support of the identity, creditworthiness and genuineness of the transactions under consideration. Copies of the said documents are placed at page nos. 11 to 52 of the paper book 4. The respondent also filed the audited balance sheets of M/s ocean Apartments Pvt. Ltd. vide letter dated 03.05.2023. Copies of the said documents are placed at page nos.257 to 268 of the paper book 5. The Id. A.O. in the remand proceedings could not find any error or inconsistency in the documents filed by the respondent. Copy of the remand report is placed at Page No. 269 to 271 of the paper book.
The Ld. A.O. even in remand proceedings did not make any investigation of its own. No letters u/s 133(6) or summons u/s 131 of the Act, were issued to any of the unsecured lenders. This proves that the addition was made only on the basis of his whims and surmises instead of any evidence on record.
Regarding advances of Rs.36,00,000/- Documents relied upon/submissions 1. Written submissions dated 15.02.2023 as filed by the respondent before the Ld. CIT(A). during the course of the first appeal proceedings. Copy placed at page no. 1 to 8A of the paper book.
2. Order of the Id. CIT(A) -3, Noida 3. During the course of the first appeal proceedings the respondent filed list of the persons from whom advances were received along with their confirmations, and sales deeds executed in their favor. Copies of the said documents are placed at page nos.53 to 256 of the paper book 4. The income on the said land sale transactions has also been assessed by the Ld. CIT(A) in the hands of the respondent in AY 2016-17 In view of the above, we request your honor to kindly dismiss the appeal of the revenue and upheld the order of the CIT(A) 7. Heard rival submissions, perused the orders of the authorities below and the evidences furnished before us.
Heard rival submissions, perused the orders of the authorities below and the evidences furnished by the assessee before us. It is observed that in the course of assessment proceedings the assessee partly furnished evidences with respect to the unsecured loans obtained by the assessee and the AO in the absence of the assessee furnishing complete details and evidences treated them as unexplained cash credit u/s. 68 of the Act. The assessee preferred appeal before the Ld. CIT(A) and furnished Page | 7 various additional evidences to prove the genuineness and credit worthiness of the creditors. The Ld. CIT(A) admitted additional evidences, called for remand report from the AO and also rejoinder from the assessee on the remand report sent by AO and considering both the remand report as well as rejoinder and the additional evidences deleted the addition made u/s.68 of the Act by observing as under :-
“6.3 Grounds of appeal
Nos. 3& 4: In these grounds, the AR contested the addition of Rs. 5,35,00,000/-& Rs. 36,00,000/- made by the AO u/s 68 of the Income Tax Act, 1961. Issue of Unsecured loan The AR during the course of appellate proceedings has submitted that during the year under consideration, the appellant received unsecured loan fromM/s Ocean Apartments Pvt. Ltd., M/s Mahendra Dairy Pvt. Ltd. & M/s Solitaire Foods Pvt. Ltd. The AO considered the credits from the above persons as unexplained u/s 68. During the course of appellate proceedings, the appellant submitted documents justifying the identity, genuineness and creditworthiness of the loan giver in the nature of PAN, Address, confirmed copy of account, Copy of ITR and the copies of bank account statement. The said documents were forwarded to the AO in remand and the report of the AO was received vide letter dated 05.10.2023. The AO in the relevant para of her report conveyed as under: "Now, during the course of appellate proceedings before your honor, the assessee has submit an application under Rule 46A of 1.T. Rules 1962 along with requisite details in support of the unsecured loans taken during the F.Y. 2012-13 relevant to A.Y. 2013-14. In its application it is stated that the unsecured loan has been received from 3 persons namely M/s Ocean Apartments Pvt. Ltd., M/s Mahendra Dairy Pvt. Ltd. & M/s Solitaire Foods Pvt. Ltd., with an amount of Rs.50,00.000/- Rs.1,00,00,000 & Rs.3,52,00.000/-respectively. In support of Page | 8
Identity, genuineness and credit worthiness of the transaction, the confirmed copy of account of the lender, copy of bank statements and the copies of respective ITR's, with an application under Rule 46A of the 1.1. Act. 1962, has been submitted by the assessee along with submission." 6.3.1 During the year under consideration, the assessee company had received unsecured loan from M/s Ocean Apartments Pvt. Ltd., M/s Mahendra Dairy Pvt. Ltd. & M/s Solitaire Foods Pvt. Ltd., with an amount of Rs.50,00.000/- Rs.1,00,00,000 & Rs.3,85,00.000/- respectively. The AO treated the outstanding amount of Rs. 5,35,00,000/- as income of the assessee u/s 68 of the Income Tax Act, 1961. The addition made by the AO u/s 68 requires the assessee to discharge its onus on the following three issues: a. The identity of the investors/loan giver b. The creditworthiness of the investor/loan giver c. The genuineness of the transactions 6.3.2 During the course of appellate proceedings, the submissions of the appellant were forwarded to the AO. The AO in her remand report sent vide letter dated 05.10.2023 filed detailed report. The AO has reported that the assessee has filed documents in support of identity, genuineness and creditworthiness of the transactions. The AO has also reported that the unsecured loan has been given out of the bank accounts of the lenders and the amount details are clearly mentioned. 6.3.3 The AR during the appellate proceedings submitted various documents in support of the identity, genuineness and creditworthiness of the investors which has been acknowledged by the AO. The confirmed copies of accounts are scanned below for ready reference:
6.3.4 Once the appellant has furnished the identity details of the investor / loan giver along with their bank account statement showing the creditworthiness and genuineness, the onus shifted on the AO to prove that the investor/ loan giver did not have sufficient balance of funds to provide the money to the assessee company. From the above, it is apparent that the AR has furnished complete details regarding the transactions. Issue of advances against land 6.3.5. In this ground, the AR has contested the addition of Rs.36,00,000/- u/s.68 of the Income Tax Act, 1961. During the course of appellate proceedings, the appellant filed complete details of the advances against land received and a detailed chart showing the advances received from various persons in AY 2013-14, AY 2014-15 & AY 2015-16 was furnished. The same is scanned below for ready reference :
6.3.6 Confirmations from respective persons who had given the said advances were also filed during the appellate proceedings. The appellant also filed the salle deeds executed in AY 2016-17 and AY 2017-18 against the said properties to Justify his contentions. The said documents were forwarded in remand to the Assessing Officer. The AO in remand report sent vide letter dated 05.10.2023 has commented as under:
Now, during the course of appellate proceedings before your honor, the assessee has submit an application under Rule 46A of I.T. Rules 1962 along with requisite details in support of the aggregate receipts of Rs.36,00,000/-received during the F.Y. 2012-13 relevant to A.Y. 2013-14.
6.3.7 From the submissions of the appellant and the report of the AO, it is clear that the appellant has furnished evidence with respect to the receipt of the advances against land from various persons whose confirmations have been filed and also forwarded to the AO during the remand proceedings. The said land has subsequently been sold in AY 2016-17 and AY 2017-18 for which the appellant has placed copies of sale deeds on record. As the land has been sold in the subsequent years, the purpose of credit also stands explained. It is apparent from above that the credits in the books of the appellant are duly explained.
6.3.8 The Hon'ble High Court of Punjab & Haryana in the case of Principal Commissioner of Income-tax, Bathinda vs. Amravati Infrastructures Developers (P.) Ltd. reported at [2020] 117 taxmann.com 152 (Punjab & Haryana), held as under:
Section 68 of the Income-tax Act, 1961 Cash credit (Share Capital) -Assessment year 2009-10- Assessing Officer made addition in hands of assessee-company on account of failure of assessee to prove identity and genuineness of persons who had introduced share capital and on account of failure to prove capacity of loan creditors as well as genuineness of transactions Commissioner (Appeals) found that shareholders were all private limited companies who had made investments out of their share capital and reserve through banking channels and assessee had filed a confirmation from loan creditors, regarding advancing of loan by them along with confirmation date, cheque No. and other relevant information along with PAN of companies Accordingly, he deleted additions Whether since question of genuineness of investors who Introduced share capital and capacity of persons from whom loan was borrowed and genuineness of transactions, had been considered at length by first appellate authority and revenue had failed to point out any infirmity in fact or law, no question of law arose for consideration – Held, yes [Para 8] {in favour of the assessee]
None of the above findings of the Ld. CIT(A) were rebutted with the evidences by the revenue before us. The assessee has filed confirmations from the creditors, PAN, address, copy of ITR’s and copy of bank statements of the lenders to prove the genuineness, creditworthiness and identity of the creditors. All the transactions were made through banking channels and in the remand proceedings veracity of these documents were questioned by the AO nor proved to be non-genuine. Further, no adverse comments were made by the AO. The Ld. CIT(A) considered all these evidences, the comments of the AO as well as rejoinder submitted by the assessee and treated these transactions as genuine. In our view, the assessee proved the genuineness, identity and creditworthiness of the unsecured loans received and accordingly the additions made u/s.68 of the Act were deleted rightly. We see no good reason to interfere with the findings of the Ld. CIT(A) in deleting the additions made u/s. 68 of the Act.
Therefore, sustaining the order of the ld. CIT(A) we reject the grounds raised by the revenue.
9. Coming to the appeals for A.Y.2014-15 to 2016-17, the facts in these appeals are identical to the facts in appeal for A.Y.2013-14 and, therefore, the decision taken therein shall apply mutatis mutandis for A.Y’s 2014-15 to 2016-17. We order accordingly.
10. In the result, all the appeals are filed by revenue are dismissed. Order pronounced in the open court on 31.12.2025.