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Income Tax Appellate Tribunal, DELHI
The present appeal is filed by the Assessee against the order of office of the Commissioner of Income Tax (Appeals)-3, Gurgaon, (‘Ld.
CIT(A) ’ for short)- dated 27/01/2025 pertaining for Assessment Year 2011-12.
The grounds of Appeal are as under:-
1. “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.ws 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 L.d. 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 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 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 objections raised by the appellant was not disposed by the Ld. AO by way of speaking order. 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. 30.50 crores and u/s 69 on account on investment made amounting to Rs. 12,70,36,200/- 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.”
Brief facts of the case are that, the Assessee being Private Limited Company engaged in business of real estate, filed return of income under Section 139 of the Income Tax Act, 1961 ('Act' for short) declaring Rs.76,562/- for the year under consideration. The case of the Assessee was selected for re-assessment under Section 147 of the Act. A.O. completed the assessment proceedings u/s 147 r.w. Section 143(3) of the Act vide order dated 28/12/2018 by making an addition of Rs. 12,70,36,200/- u/s 69 of the Act and Rs. 30,50,00,000/- 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 27/01/2025, dismissed the Appeal of the Assessee.
As against the order of the Ld. CIT(A) dated 27/01/2025, Assessee preferred the present Appeal on the Grounds mentioned above.
The Ld. Counsel for the Assessee addressing on Ground No. 6 of the Appeal submitted that, the Ld. A.O. reopened the case of the Assessee u/s 147 of the Act on the ground that there were some discrepancies between the transaction value and the circle rate of properties purchased by the Assessee, accordingly computed the difference between the transaction value and the circle rate as taxable under Section 50C of the Act. The Ld. Counsel further submitted that the provisions of Section 50C of the Act is applicable to the seller of the immovable property and the said Section is not applicable to the purchaser of the property, therefore, submitted that the Ld. A.O. committed error in framing the assessment against the Assessee who is a purchaser of the property. The Ld. Counsel has also relied on Judgment of Jurisdictional High Court in the case of Oriental Insurance Company Vs. CIT reported in 378 ITR 421 and the order of the Co-ordinate Bench of the Tribunal in the case of M/s Sharan and sought for allowing Ground No. 6 of the Assessee.
Per contra, the Ld. Department's Representative submitted that the assessment has been rightly reopened and the addition has been made on its merits and the Ground No. 6 of the Assessee is devoid of merit. Relying on the findings and the conclusions of the Lower Authorities, the Ld. Department's Representative sought for dismissal of Ground No.6 of the Assessee.
We have heard both the parties and perused the material available on record. The case of the Assessee has been reopened citing the discrepancies between transaction value and the circle rate of property purchased by the Assessee. However, A.O. computed the difference between transaction value and circle rate as taxable under Section 50C of the Act and made addition in the hands of the Assessee who is the purchaser. For the sake of convenience Section 50Cof the Act is reproduced as under:-
“Special provision for full value of consideration in certain cases. 50C. (1) Where the consideration received or accruing as a result of the transfer by an assessee of a capital asset, being land or building or both, is less than the value adopted or assessed [or assessable] by any authority of a State Government (hereafter in this section referred to as the "stamp valuation authority") for the purpose of payment of stamp duty in respect of such transfer, the value so adopted or assessed [or assessable] shall, for the purposes of section 48, be deemed to be the full value of the consideration received or accruing as a result of such transfer.”
As could be seen from the above, the provisions of Section 50C of the Act is applicable to the seller of the immovable properties and not applicable to the purchaser of the immovable property.
The Co-ordinate Bench of the Tribunal in the case of SharanSvadha, LLP (supra), held as under:-
8.1 Then relevant Section 50C cannot be invoked as the said section is applicable in the case of seller of the property only while the appellant is a buyer. Section 56(2)(vii)(a) and Section 56(2)(vii)(b) of the Act are also not applicable in case of partnership firm or LLP and the assessee is a LLP. The Section 56(2)(x) which may be applicable in case of partnership firm or LLP was introduced with effect from A.Y. 2018-19 while the present case is with regard to A.Y. 2015-16. Thus, in the absence of any statutory presumption the Ld. AO was under obligation to establish by definite evidence that purchaser had made more payment then stated in sale deed. Circumstances of distress sale are on record and there was no attempt of ld. AO to discredit the same. The Ld. CIT(A) has rightly taken all these aspects into consideration while allowing the relief of deletion and no interference is required. In the light of aforesaid, there is no substance in the grounds raised on behalf of revenue. The Appeal of Revenue is dismissed.”
In the present case, the A.O. has reopened the case of the Assessee on the ground of discrepancies between the transaction value and the circle
rate of the properties purchased by the Assessee, however, made addition u/ Section 50C of the Act which is not applicable to the Assessee as the Assessee is a purchaser and not the seller of the property. In view of the above, by following the ratio laid down in the case of M/s Sharan Svadha,
LLP (supra), we find merit in the Ground No. 6 of the Assessee, accordingly, addition made thereupon is hereby deleted and the Ground No. 6 of the Assessee is allowed.
10. Addressing on the Ground No. 9 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 of purchase of land along with copy of sale deed, copy of confirmation of account, ITR acknowledgment, Bank statement and audited financials of all the parties from whom loans have been taken. The Ld.
Assessee's Representative further submitted that the Assessee has duly repaid the loan amount and also proved the genuineness of the transaction by providing cogent evidence to the A.O. Thus, submitted that the Lower
Authorities committed error in making and confirming the addition.
Per contra, the Ld. Department's Representative submitted that the Assessee has not proved the identity and creditworthiness of the lenders
therefore, the addition has been rightly made which has been confirmed by the Ld. CIT(A). Thus, sought for dismissal of the Ground No. 9 of the Assessee.
We have heard both the parties and perused the material available on record. It is the specific case of the Assessee that the Assessee has duly
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 party Amount of Date of Paper Book Page No. Repayment (in Rs) Repayment of loan M/s Grand Realcon Pvt. Ltd. 11,00,00,000/- 29/03/2011 107 of Addl. PB (Date of Receipt-25-03-2011- 5,47,28,335/- 29/03/2011 107 of Addl. PB Rs. 15,00,00,000/- and 8,00,00,000/- 25/03/2011 107 of Addl. PB 01/03/2011 Rs.30,00,000/- (Kindly refer Page No. 107 of addl. PB) same F.Y M/s Sunrise Probuild Pvt. Ltd. 1,35,00,000/- 23/03/2012 120of Addl. PB (Date of receipt-22-02-2011 Rs. 8,00,00,000/- same F.Y
M/s Starlite Builders Pvt.Ltd. 6,35,00,000,- 28/03/2014 125 of Addl. PB (Date of receipt- 16/12/2010 Rs. 10,00,000/- & 25/01/2011, 1,00,00,000/- and 31/03/2011, Rs. 1,90,00,000/- sane F.Y
Further, in order to prove the identity, creditworthiness and genuineness of the parties, the Assessee along with the reply filed before the A.O., produced the copy of confirmation of accounts, ITR acknowledgement, bank statements and audited financial statements of all the parties from which loans have been taken. Those documents are placed by the Assessee in the paper book at page no. 34 to 110.
Further, the Co-ordinate Bench of the Tribunal in the case of Dazzling constructions (P.) Ltd. Vs. ITO in order dated 26/03/ 2025 reported in [2025]172 taxmann.com 860 (Delhi-Trib), while deleting the addition on the similar facts and circumstances, held as under:-
“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. Mahavir Crimpers, 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).
In the light of the view expressed on merits in favour of the assessee, we are not inclined to examine the nuances of challenge to the jurisdiction assumed under s. 147 of the Act, approval granted under s. 151 of the Act, invocation of s. 147 instead of s. 153C and absence of DIN on the body of the assessment order.
11. In conclusion, the order of the CIT(A) is set aside and the additions made by the AO are reversed and cancelled.”
Considering the fact that the Assessee not only produced cogent
documents such as confirmation of accounts, ITR acknowledgment,bank statement and audited financial of all the parties from which loans have been taken in order to discharge the onus cast upon u/s 68 of the Act, but also repaid the loan in the very same financial year. 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. 9 of the Assessee is allowed.
Since we have allowed the Grounds No. 6 and 9 of the Assessee and deleted the addition, otherGrounds of Appeal requires no adjudication.
In the result, Appeal of the Assessee is partly allowed.