DIAMOND REALCON PRIVATE LIMITED,DELHI vs. ACIT, CENTRAL CIRCLE-2, FARIDABAD

5.0 That on the facts and in the circumstances of the case, the Ld. CIT-(A) has erred in upholding the order of Ld. A.O without considering the fact that assumption of jurisdiction by issuing notice u/s 143(2) of the Act before supplying the reasons to believe to the appellant is bad in law.

6.0 That on the facts and in the circumstances of the case, the Ld. CIT-(A) has erred in upholding the order of Ld. AO without considering the fact that reasons recorded u/s 148 of the Act do not meet the requirement of law hence completely vague and untenable. 6.1 That on the facts and in the circumstances of the case, the Ld. CIT-(A) has erred in upholding the order of the Ld. AO without considering the fact, that the reasons to believe recorded by the Ld. AO for the initiation of reassessment proceedings u/s 147 of the Act was based on borrowed satisfaction and without application of mind.

6.2 That on the facts and in the circumstances of the case, the Ld. CIT-(A) has erred in upholding the order of Ld. AO without considering the fact that the reasons u/s 148 were recorded merely on the basis of suspicion and assumptions/ presumptions derived from search conducted in case of M3M Group.

6.3 That on the facts and in the circumstances of the case, the Ld. CIT-(A) has erred in upholding the order of the Ld. AO without considering the fact that the material which has been made the basis of recording reasons to believe for initiation of proceedings u/s 147 of the Act has never been supplied to the appellant.

7.0 That on the facts and in the circumstances of the case, the Ld. CIT-(A) has erred in upholding the order of Ld. AO without considering the fact that Ld. AO has changed his mind at each stage of assessment proceedings.

8.0. That on the facts and circumstances of the case, the Ld. CIT-(A) has erred without substantiate the fact that no approval accorded u/s 151 of the Act by the Ld. AO has been provided to the appellant.

9.0. That on the facts and circumstances of the case, the Ld. CIT-(A) has erred in upholding the order of Ld. AO passed u/s 147 r.ws 144 of the Act without consideration the fact that submissions were filed by the appellant in response to the notices and questionnaire issued and accordingly impugned order is annulled on this ground alone.

10.0 That on the facts and circumstances of the case, the Ld. CIT-(A) has erred in upholding the order of Ld. AO without appreciating the fact that the appellant has discharged onus laid down u/s 68 and 69 of the Act and hence additions made were baseless and invalid.

10.1 That on the facts and circumstances of the case, the Ld. CIT-(A) has erred in upholding the additions made by the Ld. AO u/s 68 on account on unexplained cash credits amounting to Rs. 2.75 crores and u/s 69 on account on investment made amounting to Rs. 7,20,34,392/-out of the unexplained funds without considering the facts and reply filed by the appellant.

10.2. That on the facts and circumstances of the case, the Ld. CIT-(A) has erred in upholding the addition made by the Ld. AO u/s 68 since bank statement cannot be construed to be books maintained by the assessee for the purpose of section 68 of the Act.

11.0 That on the facts and in the circumstances of the case, the Ld. CIT-(A) has erred in treating the appellant company as an accommodation entry recipient by relying on statement recorded at back of the appellant without providing an opportunity by the Ld. AO to cross examine the same.

12.0 That on the facts and in the circumstances of the case, the Ld. CIT-(A) has erred in upholding the additions made by the Ld. AO u/s 68 on account of cash credit and addition made u/s 69 as unexplained investments which tantamount to double taxation of the same amount in the hands of the appellant.

13.0 That the appellant craves leave, to add, to amend, modify, rescind, supplement, or alter any of the Grounds stated here- in-above, either before or at the time of hearing of this appeal.”

1.0 That, on the facts and in the circumstances of the case, the disallowance, imposition of tax, and interest with reference thereto, as well as the quantification of taxable income and tax liability, are unjustified, erroneous, and unsustainable, and it is prayed that necessary directions be issued to the Learned Assessing Officer (Ld. AO) to grant appropriate relief in accordance with the law. 2.0 That, on the facts and in the circumstances of the case, the Ld. CIT-(A) has erred in upholding the order of Ld. AO without considering the fact that the assessment completed u/s 147 r.w.s 143(3) was bad in law on various technical and jurisdictional grounds.

3.0 That on the facts and in the circumstances of the case, the Ld. CIT-(A) has erred in upholding the order of Ld. AO without appreciating the fact that recourse to section 147 of the Act would be unavailable in cases where the AO is empowered to proceed u/s 153C of the Act. 4.0 That, on the facts and in the circumstances of the case, the Ld. CIT-(A) has erred in upholding the order of Ld. AO without appreciating the fact that there was no failure on the part of the appellant to disclose fully and truly all material facts necessary for the assessment for the year under consideration and hence assumption of jurisdiction u/s 147 by issuance of notice u/s 148 beyond the period of 4 years was invalid and as such, could not be sustained in law. 5.0 That on the facts and in the circumstances of the case, the Ld. CIT-(A) has erred in upholding the order of Ld. A.O without considering the fact that assumption of jurisdiction by issuing notice u/s 143(2) of the Act before supplying the reasons to believe to the appellant is bad in law. 6.0 That on the facts and in the circumstances of the case, the Ld. CIT-(A) has erred in upholding the order of Ld. AO without considering the fact that reasons recorded u/s 148 of the Act do not meet the requirement of law hence completely vague and untenable. 6.1 That on the facts and in the circumstances of the case, the Ld. CIT-(A) has erred in upholding the order of the Ld. AO without considering the fact, that the reasons to believe recorded by the Ld. AO for the initiation of reassessment proceedings u/s 147 of the Act was based on borrowed satisfaction and without application of mind. 6.2 That on the facts and in the circumstances of the case, the Ld. CIT-(A) has erred in upholding the order of Ld. AO without considering the fact that the reasons u/s 148 were recorded merely on the basis of suspicion and assumptions/ presumptions derived from search conducted in case of M3M Group. 6.3 That on the facts and in the circumstances of the case, the Ld. CIT-(A) has erred in upholding the order of the Ld. AO without considering the fact that the material which has been made the basis of recording reasons to believe for initiation of proceedings u/s 14 7.0 That on the facts and in the circumstances of the case, the Ld. CIT-(A) has erred in upholding the order of Ld. AO without considering the fact that Ld. AO has changed his mind at each stage of assessment proceedings. 8.0 That on the facts and circumstances of the case, the Ld. CIT-(A) has erred without substantiate the fact that no approval accorded u/s 151 of the Act by the Ld. AO has been provided to the appellant. 9.0 That on the facts and circumstances of the case, the Ld. CIT-(A) has erred in upholding the order of Ld. AO without appreciating the fact that the appellant has discharged onus laid down u/s 69 of the Act and hence addition made was baseless and invalid. 9.1. That on the facts and circumstances of the case, the Ld. CIT-(A) has erred in upholding the addition made by the Ld. AO u/s 69 on account on investment made amounting to Rs. 4,29,13,125/-out of the unexplained funds without considering the facts and reply filed by the appellant. 9.2 That on the facts and circumstances of the case, the Ld. CIT-(A) has erred in upholding the addition made by the Ld. AO u/s 69 on account of unexplained investment without considering the fact that investments were duly recorded in books of account and details of the same i.e. purchase deeds were furnished during the course of assessment proceedings. 10.0 That on the facts and in the circumstances of the case, the Ld. CIT-(A) has erred in treating the appellant company as an accommodation entry recipient by relying on statement recorded at back of the appellant without providing an opportunity by the Ld. AO to cross examine the same. 11.0 That the appellant craves leave, to add, to amend, modify, rescind, supplement, or alter any of the Grounds stated here- in-above, either before or at the time of hearing of this appeal.”

ITA No. 1259/Del/2025 (A.Y. 2011-12)

Section 144 of the Act vide order dated 28/12/2018 by making an addition of Rs. 7,20,34,392/- on account of unexplainedinvestment u/s 69 of the Act and Rs. 2,75,00,000/- on account of unexplained cash credit u/s 68 of the Act. Aggrieved by the assessment order dated 28/12/2018, Assessee preferred an Appeal before the Ld. CIT(A). The Ld. CIT(A) vide order dated 28/01/2025, dismissed the Appeal of the Assessee. As against the order of the Ld. CIT(A), dated 28/01/2025, Assessee preferred the present Appeal on the Grounds mentioned above.

“We are, therefore, of the considered opinion that in the present case, the notice u/s. 148 dated 2-4-2022 Officer with any further jurisdiction to proceed to reassess the income of the petitioner. Consequently, the notice dated 2-4-2022 u/s. 148 of the Act issued to the petitioner being invalid and sought to be issued after three years from the end of the relevant assessment year 2015-16 with which we are concerned in this petition, any steps taken by the respondents in furtherance of notice dated 21-3-2022 issued under clause (b) of section 148A of the Act and order dated 2-4-2022 issued under clause (d) of section 148A of the Act, would be without jurisdiction, and therefore, arbitrary and contrary to Article 14 of the Constitution of India. Consequently, we quash and set aside the notice dated 2-4-2022 issued by the respondents u/s.148 of the Act, order dated 2-4-2022 under clause (b) of section 148A of the Act and notice dated 21-3-2022 issued under clause (b) of section 148A of the Act.

22. Rule is made absolute in terms of prayer clauses (a) & (b) of the petition.”

10. Addressing on the Ground No. 10.0, 10.1 and 10.2 of the Assessee, Ld. Assessee's Representative submitted that the A.O. passed

the reassessment without considering the detailed reply and documents furnished by the Assessee, such as ledger for purchase of land along with copy of sale deeds and copy of confirmation of accounts, ITR acknowledgment, bank statements and audited financials of all the parties form which loans has been taken. The Ld. Assessee's

Representative further submitted that the Assessee has duly repaid the loan amount within 60 days from the date of receipt through banking channel and also proved the genuineness of the transaction by providing cogent evidence. Thus, submitted that the Lower Authorities committed error in making and confirming the addition.

therefore, the addition has been rightly made which has been confirmed by the Ld. CIT(A). Thus, sought for dismissal of the Ground No. 10.0,

10.1 and 10.2 of the Assessee.

repaid the loan amount and provided the details of identity, creditworthiness and genuineness of the transaction before the A.O., however, the same has not been considered while framing the assessment. The Ld. Counsel has provided the chart showing re- payment made to the parties and also produced evidence in support of such re-payment made. The chart produced by the Assessee is reproduced as under:-

Name of the Amount of Date of Amount of Date of Kindly party Receipt (In receipt repayment repayment refer page Rs.) (in Rs.) of loan no. M/s 1,00,000/- 03/02/2011 - - 243 of ShaanRelacon 1,75,00,000/- 04/03/2011 - - Addl. PB Private 243 of Limited Addl. PB - - 2,75,00,000 28/03/2011 243 of Addl. PB

“9. On perusal of the para 5 of the first appellate order, we observe that the CIT(A) has acknowledged the factum of production of documentary evidences and subsequent repayment of loan to the creditors in FY 2013-14. The fact of independent enquiry carried out by the AO under s. 133(6) was also noticed by the CIT(A). The CIT(A) however, declined to grant relief to the assessee mainly in the light of judgement rendered by the Hon’ble Apex Court in the case of PCIT vs NRA Iron & Steel Pvt.Ltd. [2019] 412 ITR 161 (SC).

9.1. It is evident from the record that the assessee, on its part, has filed clinching documentary evidences to support the source of loan received. No legal obligation is prescribed upon the assessee in law to prove the creditworthiness of ‘source of source’ of receipts obtained by the assessee in view of firstly, the prospective insertion to proviso to section 68 of the Act from AY 2013-14 foisting such obligation and secondly, such proviso is limited in its scope and attributable to receipt of share application money, share capital, share premium etc. and does not extend to loan transactions. The legal propositions are derived from the judgement rendered in the case of Mod. Creations Pvt.Ltd. (supra); CIT vs Shiv Dhooti Pearls & Investments Ltd.(supra) and CIT vsGagandeep Infrastructure P.Ltd. 80 taxmann.com 272 (Bom.). 9.2. It is trite that additions under s. 68 cannot be made merely on the basis of some perception of culpability towards receipt of loan. The money in the instant case has been received from a company whose financial standing has been demonstrated to be fairly good. The defining feature in the instant case is repayment of such loan in the subsequent years which distinguishes the facts of this case vis-a-vis the facts involved in NRI Steel and other judgements quoted by the Revenue authorities. 9.3. The factum of repayment quells the apprehension entertained by the Revenue. The over-riding factum of repayment of loan itself repels any form of disguise on the part of the assessee and dispels the perception of any sordid or extraneous affairs. The clinching evidences towards loan procurement discharge the primary onus which lay upon the assessee under s. 68 of the Act. Besides, the loan itself having been repaid, the assessee does not ultimately stand to gain any spurious benefit from such alleged unexplained cash credit. Such fact justifies the plea of the assessee towards existence of bonafides in the transactions. In the totality of facts, where the trail for obtaining of loan and repayment thereof is proved and the lender has duly filed its return of income encompassing the transaction carried with the assessee, the action of the Revenue cannot be countenanced in law. 9.4. In the wake of peculiar facts subsisting in the present case, the additions towards unexplained credit under s. 68 and estimated addition under s. 69C is wholly unjustified. 9.5. The Hon’ble Gujarat High Court in the cases of CIT Vs. Ayachi Chandrasekhar Narsangji, 42 Taxmann.com 251 (Guj) and CIT Vs.

MahavirCrimpers, 95 Taxman.com 323 (Guj) have held that when the Department has accepted the factum of repayment, the additions under Section 68 is not sustainable in law. Similar view has been expressed in CIT Vs. Karaj Singh (2011) 15 Taxmann.com 70 (P&H) &Panna Devi Chowdhary Vs. CIT, 208 ITR 849 (Bom).

11. In conclusion, the order of the CIT(A) is set aside and the additions made by the AO are reversed and cancelled.”

cogent documents such as confirmation of accounts, ITR acknowledgment, bank statement and audited financial of the party from which loan has been taken in order to discharge the onus cast upon u/s 68 of the Act, but also repaid the loan. Therefore, by following the ratio laid down by the Tribunal in the case of Dazzling constructions

(P.) Ltd. Vs. ITO (supra), we delete the additions made by the A.O. which has been confirmed by the Ld. CIT(A). Accordingly, Ground No. 10.0,

10.1 and 10.2 of the Assessee’s Appeal are allowed.

17. Assessee filed return of income declaring loss of Rs. 72,839/- for the year under consideration. The case of the Assessee was selected for re-assessment by issuing notice under Section 148 of the Act. The A.O. completed the assessment proceedings u/s 147 r.w. Section 144 of the Act vide order dated 28/12/2018 by making an addition of Rs. 4,29,13,125/- on account of unexplained investment u/s 69 of the Act.

Aggrieved by the assessment order dated 28/12/2018, Assessee preferred an Appeal before the Ld. CIT(A). The Ld. CIT(A) vide order dated 28/01/2025, dismissed the Appeal of the Assessee. As against the order of the Ld. CIT(A) dated 28/01/2025, Assessee preferred the present Appeal on the Grounds mentioned above.