GAYATRI SEWA SANSTHAN,UTTAR PRADESH vs. DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE-2(1)(1), GHAZIABAD, GHAZIABAD

On the other hand, Ld. Sr. DR for the Revenue submits that assessee is habitual defaulter and despite of repeated opportunities, details have not been filed before the AO nor before ld. CIT(A) and therefore, the delay should not be condoned.

Heard the contentions of both parties and perused the material available on record. Looking to the facts stated in the petition filed, we are of the considered view that assessee has sufficient and reasonable cause for filing the appeal delayed and it was under the Bonafide belief that the appellate proceedings were still pending who had dismissed the appeal without any further communication after filing the submissions online. Under these circumstances, we condone the delay and take up the appeal for adjudication.

Brief facts of the case are that assessee has filed return of income on 31.08.2010, declaring income of INR 9,84,900/-. The case was selected for scrutiny and the AO found that assessee has received loan of INR 90 Lakhs from M/s. Baldev Promoters Pvt. Ltd. and INR 25 Lakhs from Sri Raju Khan for which the assessee has failed to prove the creditworthiness and therefore, the addition was made of the said amounts of loans in the order passed u/s 143(3) of the Act. The matter travelled upto the Tribunal and the Tribunal in ITA No.4332/Del/2015 vide its order dated 18.08.2020 remanded the issue back to the file of the AO and direct the assessee to substantiate with evidences to the satisfaction of the AO about the identity and creditworthiness of the loan creditors and genuineness of transaction. In set aside proceedings, assessee filed details with respect to the loan creditors however, AO had not accepted the same and held that the assessee has failed to discharge the onus of establishing the identity and creditworthiness of the loan creditors and addition of INR 1.15 crore on account of loan taken from aforesaid loan creditors was made in the order passed u/s 143(3) r.w.s. 254 r.w.s. 144B of the Act dated 30.03.2022. 6. Against the said order, assessee filed an appeal before Ld. CIT(A) who vide impugned order dated 26.09.2024, upheld the order of the AO and dismissed the appeal of the assessee.

Aggrieved by the order of Ld.CIT(A), assessee is in appeal before the Tribunal by taking following grounds of appeal:-

“That on the facts and circumstances of the case and in law, the impugned order dated 26.09.2024 passed by the National Faceless Appeal Centre [('NFAC')/('CIT(A)')] upholding the assessment order dated 30.03.2022 passed by the National Faceless Assessment Centre (in short the "FAO"/ "assessing officer") under section 143(3) r.w.s. 254 of the Income-tax Act, 1961 ('the Act'), is invalid and bad in law. 1.1. That on the facts and circumstances of the case and in law, the impugned order dated 26.09.2024 passed by CIT(A) without allowing personal/ oral hearing is invalid. 1.2. That the CIT(A) erred on facts and in law in not holding that the assessment order passed without allowing effective opportunity of personal hearing to the appellant is invalid, being in violation of provisions of the Act and principles of natural justice. 1.3. That the CIT(A) erred on facts and in law in not appreciating that set aside assessment was completed by FAO by merely repeating the additions made in the original assessment without fresh examination and consideration of evidence filed, in violation of the directions issued by Hon'ble Tribunal vide order dated 18.08.2020 (first round) in ITA No.4332/Del/2015. 1.4. That the CIT(A) erred on facts and in law in not appreciating that considering that assessment was completed in a faceless manner, the appellant could not have suo-motu, without specific directions of FAO, produced the representatives of the creditors. Re: Addition u/s 68 of Rs.90,00,000/- qua loan from Baldev Promoters Pvt. Ltd. 2. That the CIT(A) erred on facts and in law in confirming the addition of Rs.90,00,000/-made by the assessing officer, being unsecured loan received from Baldev Promoters Pvt. Ltd. ('lender'), as alleged unexplained cash credit under section 68 of the Act. 2.1. That the assessing officer/ CIT(A) erred on facts and in law in holding that the appellant was not able to establish identity and creditworthiness of the lender and genuineness of the transaction, in total disregard of the contemporaneous evidence(s) filed. 2.2. That the assessing officer/ CIT(A) erred in not appreciating the crucial fact that the entire loan amount was repaid by the appellant during financial year 2014-15. Re: Addition u/s 68 of Rs.25,00,000/- qua loan from Shri Raju Khan 3. That the CIT(A) erred on facts and in law in confirming the addition of Rs.25,00,000/-made by the assessing officer, being unsecured loan received from Shri Raju Khan ('Sh. Raju), as alleged unexplained cash credit under section 68 of the Act. 3.1. That the assessing officer/ CIT(A) erred on facts and in law in holding that the appellant was not able to establish identity and creditworthiness of the lender and genuineness of the transaction, in total disregard of the contemporaneous evidence(s) filed. 3.2. That the assessing officer/ CIT(A) erred in not appreciating the crucial fact that the entire loan amount was repaid by the appellant during financial year 2012-13.”

Grounds of appeal Nos. 1 to 3 taken by the assessee are with respect to the additions of INR 1.15 crores made u/s 68 on account of loans taken by holding the same as unexplained cash credit u/s 68 of the Act thus, they are taken together for consideration.

Before us, ld. AR for the assessee submits that assessee has filed all the plausible details to establish the identity as well as creditworthiness of the lenders. Ld.AR submits that with respect to M/s Baldev Promoters Pvt. Ltd., assessee filed copy of its return of income for AYs 2008-09 to 2012-13, audited balance sheets for FYs 2007-08 to 2011-12, lists of its Directors, loan confirmation, relevant extract of the bank statement, copy of Form 16A regarding TDS on interest paid and further details filed by the bank u/s 131 directly to the AO. All these documents were available at page 86 to 137 of the Paper Book filed before us. Ld.AR submits that with the aforesaid documents assessee has discharged the burden of proving the creditworthiness and further by filing the its PAN card, certificate of incorporation, financial statement identity of lender company was established. Ld.AR further submits that since loan was taken from banking channel and copy of bank statements were provided therefore, the genuineness of transaction is also established. Regarding creditworthiness, as observed above, ld. AR drew our attention to the financial statements wherein the assessee was had sufficient net worth to provide loans to assessee and also submits that there were sufficient balances available as and when funds were transferred to assessee. In view of these facts, Ld. AR requested for the deletion of the addition made with respect to the loan taken from M/s. Baldev Promoters Pvt. Ltd. of INR 90 Lakhs.

Regarding Loan from Shri Raju Khan of INR 25 Lakhs, assessee filed confirmation, affidavit, other documents to support genuineness and identity and creditworthiness of the lender. Ld. AR also filed written submission which reads as under:-

On the other hand, Ld. Sr. DR for the Revenue supported the orders of lower authorities and submits that it is second round of proceedings yet the assessee has not been able to discharge its burden casted upon it of establishing the identity as well as creditworthiness of the loan creditors and therefore, lower authorities have rightly made the additions. He further submits that the Inspector in the report observed that lender company was not available at the given address and other inquiries was carried out by the AO which revealed that the company did not exist nor the whereabouts of other lender Shri Raju Khan was found thus even the identity was not established. Ld. Sr. DR thus, prayed for confirmation of the orders of lower authorities. 12. Heard the contentions of both parties and perused the material available on record. We find that it is the second round of proceedings wherein the Tribunal has given opportunity to the assessee to prove the identity and creditworthiness of both the loan creditors. It is observed that in case of M/s. Baldev Promoters Pvt. Ltd., assessee has filed every possible evidence which are tabulated in para 23 of the written submission as reproduced herein above. From the perusal of same, we find that by filing PAN card and copy of certificate of incorporation, identity of the lender company is established. Since the funds were received through banking channels and bank statements wherein these loan transactions are appearing, are also filed, genuineness of transactions is also proved. Regarding third ingredient of section 68 i.e. creditworthiness of the lender company, we find that assessee has filed copy of its ITRs and financial statements. From the perusal of these documents, it could be seen that M/s. Baldev Promoters Pvt. Ltd. was having regular income and showing profits as much as INR 18.68 Lakhs were declared in FY 2009-10. It is further seen that M/s. Baldev Promoters Pvt. Ltd. had its own Share Capital and Reserves to the tune of INR 8,19,76,653/-. This established that lender company has sufficient creditworthiness. It is further seen from the bank statement from the lender, that there were sufficient balances available out of which funds were given to the assessee. The relevant copy of the bank statement is appearing at page 117 of the Paper Book. In view of the above factual scenario, we find that assessee has been able to successfully discharges the burden casted upon it of proving the identity and creditworthiness of M/s. Baldev Promoters Pvt. Ltd. and accordingly, we delete the addition of INR 90 Lakhs of loan taken from M/s. Baldev Promoters Pvt. Ltd. 13. With respect to other loan of INR 25 Lakhs taken from Shri Raju Khan, we find that Shri Raju Khan is a non-filer of income tax and has closed the bank account after the loan transaction with the assessee. Further assessee has not been able to file any documents to establish the creditworthiness of Shri Raju Khan of giving loan of INR 25 Lakhs to the assessee.

In view of these facts, we are of the considered view that lower authorities have rightly hold the loan of INR 25 Lakhs taken from Shri Raju Khan as unexplained credit u/s 68 of the Act accordingly, the same is hereby, upheld.

In the result, the assessee will get relief of INR 90 Lakhs of the loan taken from M/s. Baldev Promoters Pvt. Ltd. and addition of INR 25 Lakhs of loan taken from Shri Raju Khan is hereby upheld. Accordingly, Ground of appeal Nos. 1 to 3 raised by the assessee are partly allowed.

In the result, the appeal of the assessee is partly allowed.