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Facts
The Revenue appealed against the CIT(A)'s order deleting additions made by the Assessing Officer (AO) related to electricity charges, finance costs, disallowance of past losses, and repayment of unsecured and secured loans. The CIT(A) found the assessee's explanations and documentary evidence sufficient.
Held
The Tribunal held that the CIT(A)'s findings were based on a true appreciation of facts and evidence. The Revenue failed to provide counter-evidence. Consequently, the Tribunal found no reason to intervene in the CIT(A)'s order.
Key Issues
Whether the CIT(A) erred in deleting additions made by the AO regarding electricity charges, finance costs, past losses, and loan repayments based on the assessee's evidence.
Sections Cited
143(3), 68
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Income Tax Appellate Tribunal, DELHI BENCH, ‘F’: NEW DELHI
Before: SHRI ANUBHAV SHARMA
Date of Hearing 28.10.2025 Date of Pronouncement 12.12.2025 ORDER PER AMITABH SHUKLA, AM,
This appeal has been preferred by the Revenue against order dated 27.11.2019 of Ld. Commissioner of Income Tax (Appeals), Rohtak (hereinafter referred to as ‘ld. CIT(A)), Rohtak, in Appeal no.109/2016-17, arising out of order passed u/s 143(3) of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’) by ACIT, Rewari Circle, pertaining to Assessment Year 2013-14.
2. The appellant revenue has raised five grounds of appeal contesting additions made by the ld. AO under different heads. The grounds of appeal raised by the Revenue are enumerated hereunder:-
Grounds of appeal:-
1. Whether on the facts and circumstances of the case and in law, the Ld CIT(A), Rohtak, has erred in deleting the addition of Rs. 69,338/- on account of electricity charges, whereas the A.O. had made this addition after proper verification during the time of assessment.
2. Whether on the facts and circumstances of the case and in law, the Ld CIT(A), Rohtak, has erred in deleting the addition of Rs. 1,49,79,416/- on account of financial cost - Bank charges disallowed, whereas AO, had made this addition after proper verification during the time of assessment.
3. Whether on the facts and circumstances of the case and in law, the Ld CIT(A), Rohtak, has erred in deleting the disallowances of past years loses, whereas the assessee had not explained the issue during the course of assessment proceedings.
4. Whether on the facts and circumstances of the case and in law, the Ld CIT(A), Rohtak, has erred in deleting the addition of Rs. 6,46,656/- on account of repayment of unsecured loans, whereas the AO, had made this addition after proper verification during the time of assessment.
5. Whether on the facts and circumstances of the case and in law, the Ld CIT(A), Rohtak, has erred in deleting the addition of Rs. 14,72,91,965/- on account of repayment of loans to State bank of Hyderbad, SIDBI, HSIIDC and various parties, - CC A/c, whereas the AO, had made this addition after proper verification during the time of assessment.
3. The issue of disallowance of expenditure of Rs.69,338/- on account of electricity charges and of Rs.1,49,79,416/- on account of financial cost-bank charges have been contested through grounds of appeal no.1 and 2. (supra). The ld DR invited our attention to para-5.1 of the AO’s order wherein the ld. AO has analyzed the reasons for making the addition of impugned expenses. Accordingly, the ld. AO made additions of impugned amounts. The ld. CIT(A) has discussed the issue in para-6.2 to 6.2.1 of his order according relief to the assessee.
The ld. DR vehemently argued in favour of the order of the ld. AO and assailed the order of the Ld. CIT(A) being made without proper appreciation of the facts of the case. It was stated that the relief allowed is excessive and deserves to be quashed.
The ld. Counsel for the assessee placed reliance upon the order of ld. CIT(A) and submitted that the same is based upon true appreciation of the facts of the case.
We have heard rival submissions in the light of materials available on records. We have noted that on the issue of addition of electricity charges, the ld. CIT(A) has clearly observed that the payment of electricity bill was not penal in nature since the payment was made by adjustment of security deposits.
The expenditure was held to be allowable save the component of penalty qua let payment of electricity bill. Similarly, he held that interest paid on TDS was also not allowed. Upon consideration, we have noted that the finding of the ld. CIT(A) are based upon true appreciation and understanding of the facts of the case. Revenue has not been able to place on record any evidence to counter the same. Consequently, we do not find any need for any intervention in the impugned matter at this stage. The decision of the ld. CIT(A) is confirmed and the ground of appeal no.1 raised by the Revenue is dismissed.
7. As regards, the second ground of addition of Rs.1,49,79,416/- on account of finance cost. The ld. AO has dealt the matter again in para-5.1 of his order.
The AO had concluded that the said finance cost was for non-business purposes and capital in nature. The ld. CIT(A) has considered the issue in para-6.2.3 of his order. From the financial statements submitted by the assessee, he concluded that the same were for business purposes having no connection with any element of capital expenses. He also referred to the remand proceedings during which confirmations were received from SIDBI, State Bank of Hyderabad and HSIIDC indicating that the loans were for business purposes.
He also concluded that continuation of any business activity in the present year was immaterial as far as treatment of the impugned expenses were concerned. Consequently, he deleted the same offering relief to the assessee.
The ld. DR vehemently argued in favour of the order of the ld. AO and assailed the order of the Ld. CIT(A) being made without proper appreciation of the facts of the case. It was stated that the relief allowed is excessive and deserves to be quashed.
The ld. Counsel for the assessee placed reliance upon the order of ld. CIT(A) and submitted that the same is based upon true appreciation of the facts of the case.
10. We have heard rival submissions in the light of materials available on records. Upon consideration, we have noted that the findings of the ld. CIT(A) are based upon true appreciation and understanding of the facts of the case. Revenue has not been able to place on record any evidence to counter the same. Consequently, we do not find any need for any intervention in the impugned matter at this stage. The decision of the ld. CIT(A) is confirmed and the ground of appeal no.2 raised by the Revenue is dismissed.
Ground of appeal no.3 raised by the Revenue is regarding deletion of disallowance of past years losses by the ld. CIT(A) in a situation when the assessee had not explained the same during assessment proceedings. The ld.AO has dealt this matter in para-5.3 of his order on the premise that assessee has not furnished any reply/justification in support of its claims. The ld. CIT(A) has discussed the issue in para-8.2 of his order. He concluded that perusal of ITR of the assessee from 2009-10 to 2013-14 except for AY 2011-12 showed that all the Returns of Income were filed on time. He accordingly allowed the contest raised by the assessee.
The ld. DR vehemently argued in favour of the order of the ld. AO and assailed the order of the Ld. CIT(A) being made without proper appreciation of the facts of the case. It was stated that the relief allowed is excessive and deserves to be quashed.
13. The ld. Counsel for the assessee placed reliance upon the order of ld. CIT(A) and submitted that the same is based upon true appreciation of the facts of the case.
We have heard rival submissions in the light of materials available on records. We have noted that the finding of the ld. CIT(A) that the present assessment year was for AY 2013-14 and that there was nothing in the Act to disallow losses claimed for earlier years without reopening proceedings thereof, is a correct finding of facts and cannot be reversed. Accordingly, we are of the considered view that no intervention is required to the order of the ld CIT(A) at this stage. The findings of the ld. CIT(A) is confirmed and ground of appeal no.3 raised by the Revenue is dismissed.
15. The ground no.4 of the appeal raised by the Revenue is regarding an addition of Rs.6,46,656/- made by the Ld. AO on account of repayment of loan of unsecured loans. The ld. DR submitted that the impugned addition was made on account of absence of any supporting documents forthcoming from the assessee. The ld. CIT(A) has observed in para-8.2 of his order that as per the order of predecessors CIT(A) for AY 2011-12 the said loans received from Shri Harpal Singh Ohri and Shri Sudhir Kumar were held to be genuine. He observed that consequently as, during the present year there was only a repayment of these loans through banking channel, no blame can be attached to the conduct of the assessee so as to warrant an addition. As regards, cash
The ld. DR vehemently argued in favour of the order of the ld. AO and assailed the order of the Ld. CIT(A) being made without proper appreciation of the facts of the case. It was stated that the relief allowed is excessive and deserves to be quashed.
The ld. Counsel for the assessee placed reliance upon the order of ld. CIT(A) and submitted that the same is based upon true appreciation of the facts of the case.
We have heard rival submissions in the light of materials available on records. We have noted that the findings of the ld. CIT(A) are based upon correct assessment of facts on record and cannot be legally or factually countered. We are of the considered view that there is no case for any intervention to the order of the Ld. CIT(A). The same is therefore confirmed and the ground of appeal no.4 raised by the Revenue is dismissed.
Ground of appeal no.5 raised by the Revenue is regarding the deletion of addition of Rs.14,72,91,965/- on account of repayment of loans to State Bank of Hyderabad, SIDBI, HSIIDC, etc. It is a case of the Revenue that the impugned addition was made after proper verification.
The ld. DR vehemently argued in favour of the order of the ld. AO and assailed the order of the Ld. CIT(A) being made without proper appreciation of the facts of the case. It was stated that the relief allowed is excessive and deserves to be quashed.
The ld. Counsel for the assessee placed reliance upon the order of ld. CIT(A) and submitted that the same is based upon true appreciation of the facts of the case. It was argued that the entire relief is based upon the evidences produced and enquiries made during remand proceedings.
We have heard rival submissions in the light of materials available on records. We have noted that the findings of the ld. CIT(A) qua this issue, on para 10.3 of his order are as under:-
“……10.3 A perusal of the documentary evidence given by the assessee and gathered by the AO during assessment and remand proceedings show that the payments as shown by the assessee were duly made to State Bank of Hyderabad, SIDBI, HSIIDC and it was done through the banking channel and has been confirmed by these organisations and so is found to be genuine and verifiable. As regards, all the loans received directly by the assessee or indirectly except that of Aravali Printer and Asian Developers as discussed in para 10.2 above, the transactions of receipts and repayment of loans are found to be genuine and verifiable. As regards, the creditworthiness it is seen that although major transactions appear to have been made by Kripalu Creation, in fact the short term loans are channelized through it but sourced from various directors and loans have been taken from related concern i.e KVR Infosys. As discussed above these parties have sound creditworthiness as per their ITRs, trading results of their concerns and bank statements. It is seen that Rs.2,85,00,000/- was given against machinery and Rs. 10.55 crores against land and building and the remaining amount of short terms loan of Rs.1.08 crores was from Anil Kumar Jain and Sunita Jain. There is no transaction other than through banking channel and no bank statement has any cash deposits prior to giving of loans so as to cast a doubt that money was introduced in the garb of loans. Rather as discussed and explained by the assessee by means of documentary evidence, it is a case where related parties are providing loans to a sister concern considering the business needs and the sources thereof are verifiable from record. The finding of AO on the basis of which addition was made u/s 68 of the Act has been addressed during the appellate and remand proceedings as discussed above by way of submission and documentary evidence. Thus it is held that assessee has been able to discharge the onus of substantiating the identity of creditors, genuineness of transaction and creditworthiness of creditors in respect of unsecured and secured loans with the exception of Aravali Printer and Asian Developers as discussed in para 10.2 above. The AO may recompute the quantum of addition under this head i.e. u/s 68 of the Act accordingly……”.
We have noted that the ld. CIT(A) has clearly observed that the findings of ld. AO in his remand report allude that the transactions are bona fide and fully documented to establish their credence. As the ld. AO has examined the matter during remand proceedings and did not report any challenge, the decision of ld. CIT(A) cannot be faulted. We are of the considered view that there is no case for any intervention with the order of ld. CIT(A) at this stage. The same is therefore sustained and the ground of appeal no.5 raised by the Revenue is dismissed.
In the result, the appeal of the Revenue is dismissed.
Order pronounced in the open court on 12th December, 2025.