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Facts
The revenue appealed against the order of the CIT(A) for AY 2016-17. The AO had added Long Term Borrowings as income and disallowed expenses, finalizing the assessment at Rs. 14.15 Crores. The CIT(A) deleted these additions, finding the borrowings genuine as they were taken over by another entity as per an NCLT order.
Held
The factual findings of the CIT(A) were unrebutted. The Tribunal held that the genuineness of borrowings could not be doubted as they were taken over by another entity as per NCLT order. The adhoc disallowance by the AO was also without basis, and no excessive expenditure was claimed by the assessee.
Key Issues
Whether the CIT(A) was correct in deleting the additions made by the AO on account of long-term borrowings and disallowance of expenses, and whether the genuineness of the borrowings was established.
Sections Cited
143(3)
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Income Tax Appellate Tribunal, “DB” BENCH, AGRA
Before: HON’BLE SHRI SATBEER SINGH GODARA, JM & HON’BLE SHRI MANOJ KUMAR AGGARWAL, AM
आदेश / O R D E R Manoj Kumar Aggarwal (Accountant Member)
Aforesaid appeal by revenue for Assessment Year (AY) 2016-17 arises out of an order of Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi [CIT(A)] dated 01-11- 2021 in the matter of an assessment framed by Ld. Assessing Officer [AO] u/s. 143(3) of the Act on 29-12-2018. At the time of hearing, none appeared for assessee despite notice and accordingly, the case was proceeded with the able assistance of Ld. Sr. DR. After due consideration of case records, the appeal is disposed-off as under.
It could be seen that the assessee failed to respond to various queries raised by Ld. AO during the course of assessment proceedings. Consequently, Ld. AO added Long Term Borrowings as the income of the assessee and disallowed 15% of construction and other expenses and finalized the assessment at Rs.14.15 Crores. The major borrowings were from DMI Finance Pvt. Ltd.
The Ld. CIT(A), upon due consideration of assessee’s reply, rendered a factual finding that as per the order of Hon’ble NCLT, M/s Alchemist Company took over all the rights, titles and interests etc. of all loans given by M/s DMI Finance Pvt. Ltd. to the assessee. Therefore, the genuineness of borrowings stood established. The adhoc disallowance of expenses was also deleted. Aggrieved, the revenue is in further appeal before us.
The factual findings as rendered by Ld. CIT(A) remain unrebutted before us. When the borrowings of M/s DMI Finance Pvt. Ltd. has been taken over by other entity as per NCLT order, the genuineness of the borrowings could not be doubted. The adhoc disallowance as made by Ld. AO is also without any basis. There is no finding as to how excessive expenditure has been claimed by the assessee. Therefore, the adjudication of Ld. CIT(A) could not be faulted with. 5. The appeal stands dismissed. Order pronounced on 11th February, 2025.