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Income Tax Appellate Tribunal, DELHI BENCH: ‘G’ NEW DELHI
Before: SHRI SATBEER SINGH GODARA & SHRI NAVEEN CHANDRA
Date of hearing 04.11.2025 Date of pronouncement 04.11.2025 ORDER
PER SATBEER SINGH GODARA, JM
This Revenue’s appeal for assessment year 2018-19, arises against the Commissioner of Income Tax (Appeals)/National Faceless Appeal Centre [in short, the “CIT(A)/NFAC”], Delhi’s DIN and order no. ITBA/NFAC/S/250/2023-24/1056088203(1), dated 14.09.2023 involving proceedings under section 143(3) of the Income-tax Act, 1961 (hereinafter referred to as ‘the Act’).
Case called twice. None appears at the assessee’s/respondent’s behest. He is accordingly proceeded ex- parte.
2. This Revenue’s appeal raises the following substantive grounds: “1. The Ld. CIT (A) grossly erred in deleting the addition of Rs.1,60,20,000/- under section 68 of the Income-tax Act, 1961.
Whether, the Ld. CIT (A) is correct in law in deleting the additions made under the provisions of section 68 of the Income Tax Act, 1961 and treating the transactions done by the assessee with the sister concern company/related person(s) genuine as transaction and not a colorable transaction to evade tax.
3. Whether the Ld. CIT (A) is correct in concluding that AO did not bring any material on record against assessee in respect of transactions done by the assessee.
The appellant contends that he may be allowed to add, amend, alter, forgo any of the grounds at the time of hearing.
The above grounds are independent and without prejudice to one another.
3. The Revenue next invites our attention to the CIT(A)/NFAC’s lower appellate discussion deleting the impugned addition of Rs.1,60,20,000/- made by the Assessing Officer under section 68, as follows: “2. Facts of the case: The appellant is an individual and was running the business of waste and metal scrap from the last several years in the name of M/s Goyal Iron & Steel Traders. Assessee filed his original Return of Income on 31.10.2018 declaring total income of Rs. 22,79,120/- and a revised Return of Income was also filed on 30.10.2018 declaring total income of Rs. 21,79,120/-. In revised return, the assessee claimed 50% deduction u/s 80G of Rs. 1,00,000/- for donation made of Rs. 2,00,000/- to Maharaha Aggarsain Charitable Hospital, Rohtak Road, West Punjabi Bagh, New Delhi.
2 | P a g e 2.2 The appellant claimed to have taken unsecured loan from M/s Golden Steel (Prop. Visha Suresh Goyal) during the year under consideration of Rs. 2,14,00,000/- for which no interest was paid by the appellant to M/s Golden Steel. The appellant deposited Rs.1,60,20,000/- in the account of M/s Golden Steel and the same money was received back as loan advanced by M/s Golden Steel to appellant. The instant case was selected in CASS under complete scrutiny to examine the issue ‘Refund Claim and Unsecured Loan’. The scrutiny assessment was completed u/s 143(3) r.w.s. 144B of the Act on 10.05.2021 by making an addition of Rs. 1,60,20,000/- in the total income of the appellant. Being aggrieved by the aforesaid addition of Rs. 1,60,20,000/- as ‘Unexplained Cash Credit u/s 68 of the Act’, the appellant has filed this appeal.
Grounds of appeal
filed by the appellant as per Form 35: 3.1 The amount of Rs.1,60,20,000/- should not be added to the total income, as it is not explained cash credit. 3.2 That the amount should not be considered as unexplained cash credit. 3.3 Any other grounds as may be urged at the time of hearing.
4. During the course of appellate proceedings, the appellant has furnished his written submission the same is reproduced as under: “Addition of Rs. 1,60,20,000/- under section 68 of the Act: While framing the assessment order for the Assessment Year 2018- 19 the Ld. Assessing officer has added an amount of Rs.1.60,20,000/- under section 68 of the Act as unexplained cash credit. We have to submit that the appellant is mainly engaged in the business of sale and purchase of metal scrap of any kind in proprietorship under the name and style of M/s Goyal Iron and Steel Traders. The appellant in engaged in business with government organisation and his sundry debtors sometimes take time to realise and the fact was submitted during assessment proceedings To tide over the liquidity situation the assessee takes loans from related parties including his major son namely Mr Vishal Suresh Goyal. During the year under reference the appellant as a part of his business practice and business prudence purchased material from M/s Golden Steels a proprietary firm of M/s Vishal Suresh Goyal and made payments from time-to-time against those purchases. During the year under reference the appellant made purchases of 3 | P a g e Rs.1,24.70.000/- and against the said purchases made a payment of Rs.1,60,20 000/-. The purchases are duly recorded in the books of account of the appellant which has been tax audited and the same has not been denied by the assessing officer while framing the assessment order The books of Mr Vishal Suresh Goyal Prop. M/s Golden Steels are also tax audited and have accounted for the sales of Rs.1,24,70,000/- to the appellant. Similarly the receipt of payment of Rs.1,60,20,000/- against the sales have been accounted for in the audited books of accounts of M/s Golden Steels. The amounts of Rs.1,60,20,000/- has been paid by the appellant out of his own bank accounts disclosed with the income tax department into the bank accounts of Sh. Vishal Suresh Goyal which also have been declared by him. Another fact is that Sh. Vishal Goyal has given an unsecured Loan of Rs.2,14,00 000/- to the appellant during the year reference on different dates and the copy of account of the loan was placed on record during assessment proceedings. The addition of Rs.1,60,20,000/- under section 68 of the Act out of the unsecured loan of Rs.2,14,00,000/- is equivalent to amount paid by the appellant during the year reference as payment towards purchase of material from M/s Golden Steels which is proprietary firm of appellant’s son (Vishal Goyal). During the year under review the appellant in the course of normal business has purchased material from M/s Golden Steels and Assessee has made a payment of Rs.1,60,20,000/- against the purchases. The Assessing Officer in his show cause notice dated 26- 04-2021 has alleged that amount paid for bona fide purchases by the appellant has been routed through Golden steels as the unaccounted money of the appellant himself. The Assessing Officer has tried in vain to connect the payment made for purchases and unsecured loans received which are different in amounts and have been paid and received on different dates and even none of the amounts paid or received match. Further the assessing Officer has not disputed and in fact accepted the purchases and payments made for the same. The payments towards purchases have been made by the appellant out of declared bank accounts and the bank accounts are part of the books that have been tax audited. Therefore, it is incomprehensible to agree that amount paid out of bank accounts for bona fide purchases which have not been contested can be added as unaccounted money of the assessee out of the unsecured loans given by the same person on different dates and in different amounts Further even if for the sake of arguments we agree that it is the same money as the Assessing Officer has alleged it is 4 | P a g e impossible to believe that it is unaccounted money of the appellant as it has been paid out of the bank accounts and no cash transactions are involved and all the transactions are recorded in the audited books of account on the basis of which the income tax return has been prepared and filed. The records of purchases, payment against the same and ITR and bank statement of the person giving the unsecured loans (who is also appellant’s son) has been placed on record During the year under reference the appellant has withdrawn an amount of Rs.28,07,000/- cash from the bank accounts which have already been submitted on record and have deposited only Rs.4,00,000/- in the bank out of the cash withdrawn only. The Assessing Officer while issuing show cause notice has alleged that: “In the instant case, in respect of the unsecured loan claimed to have been received from M/s. Golden Steel, it is quite evident that the lender has rerouted the appellant’s own money back to the appellant in the garb of loan In view of the same, the onus cast on the appellant to substantiate the genuineness of this transaction credit worthiness of the said lenders and the nature and sources of these funds claimed to have been received as Unsecured loans' remained undercharged Since the appellant has failed to discharge onus cast upon him of proving the credit worthiness and genuineness of the transaction the credit so appearing in appellant’s books of Rs.1,60,20,000/- stands unexplained in the meaning of section 68 calling thereby taxing of same u/s 68 of Income Tax Act 1961. As per the provision of Section 68 of the IT Act, 1961 where any sum is found credited in the book of an assessee maintained for any previous year and the assessee offers no explanation about the nature and source thereof or the explanation offered by him is not in the opinion of the Assessing Officer satisfactory, the sum so credited may be changed to Income Tax as the income of the assessee of that previous year Since the alleged loan introduced in the books of account is not offered to tax and the assessee fails to prove the credit worthiness and genuineness of the transaction penalty proceedings u/s 271AAC of the Act is initiated in respect of this unexplained income" Further the Assessing Officer has opined in the assessment order “In order to prove that the transaction is not hit by section 68, the appellant has to establish, first the identity, second the creditworthiness of the creditor and third the genuineness of the transaction. Only when these three ingredients are established, prima facie, that the onus shifts on the department. In the instant case albeit, the appellant has established the identity of the lender but the 5 | P a g e creditworthiness and genuineness of the transaction remains to be established at the cost of repetition, it is pertinent to refer to the relevant portion of tabular format as above which the assessee himself and transferred the money to the purported lender on various dates as mentioned in the above table and the same money is rerouted into the appellant’s books as loan on various dates. For the above three things emerge: First the identity: The same has been established. Second the creditworthiness of the creditor: the same has also been established beyond doubt as the payee is an income tax assessee his balance sheet has been tax audited and moreover the payee is major son of the appellant. Third the genuineness of the transactions: The appellant has made the payment to out of his bank account where is no cash credit has been made and the payee has given the money out of his bank accounts declared and there is not cash deposit only withdrawal. The transactions entered into by the appellant with Vishal Suresh Goyal are proper business transaction and have been accounted for in the audited books of accounts of the appellant and completely genuine. The Assessing Officer while building his case for adding the amount of Rs.1,60,20,000/- as unaccounted money has tried to colour the genuine transaction on account of payment of purchase from declared bank accounts of the appellant to the vendor and then advance of unsecured by the same person on different dates, in different denominations as in genuine transactions unaccounted money not brought to tax and many more adjectives which are totally his figments of imagination, fiction and fabricated untruth and does not hold any water in the face of facts and circumstances of the case. The addition of Rs.1,60,20,000/- on account of unexplained cash credit is misplaced and has no basis and is mere surmise and conjecture and is totally busted in the face of facts and circumstances of case and is liable to be deleted.”
5. Condonation of delay in filling the appeal: The appellant has also petitioned for condonation of delay in filling the appeal, stating as under: Appeal was supposed to be filed on or before 09.06.2021 but due to lockdown in Delhi, COVID-19 crisis in family and non functioning of Income Tax portal, the appellant was unable to file the appeal within time.
6 | P a g e From the above pleading, it is evident that the appellant had sufficient cause for the delay in filling the appeal and therefore the same is condoned and the instant appeal is proceeded with.
Decision: During the course of appeal proceedings, hearing notices were sent and the appellant e-filed documents / submissions. I have gone through the facts of the case and also submissions made by the appellant. The issues raised in the grounds, which require adjudication, are as under: 6.1 The reply submitted by the appellant during the appellate proceedings and the facts narrated in the assessment order has been considered. The Assessing Officer has held that the assessee in the garb of the loan trying to circulate his own unaccounted money through different channel so as to give the transaction a colour of loan. Accordingly, the Assessing Officer stated that the appellant has failed to prove the creditworthiness of the lender and genuineness of the transaction. The Assessing Officer has also emphasized that the loan was taken from M/s Golden Steel which is none other than the proprietor concern of the son of the appellant, Mr. Vishal Suresh Goyal and the appellant has not paid any interest on the unsecured loan taken from M/s Golden Steel during the year for Rs.2,14,00,000/-. In view of the above contention, the Assessing Officer has invoked Section 68 of the Act that the above loan transaction has not been satisfactorily explained. 6.2 The appellant was given an opportunity of being heard and during the appellate proceedings, the appellant has emphasized that he has been regularly doing business transaction with M/s Golden Steel. In support of the same, the appellant has submitted the ledger accounts of the appellant in the books of M/s Golden Steel for the A.Ys. 2015-16, 2016-17 and 2017-18 and also emphasized that it was a regular business transaction and all the transactions have been made through the banking channels. Infact, the Assessing Officer has not disputed the purchases made by the appellant from M/s Golden Steel and the payments made for the said purchases. The said payments were made by the appellant out of his declared bank account. The appellant also submitted the sample copies of bills of purchases and sales to substantiate the transactions. 6.3 The appellant has further contended that there is no bar on doing business transaction with the related party concerns and also getting loan from those concerns. 6.4 Further, no evidence was brought out by the Assessing Officer to prove that the appellant’s unaccounted money was routed as 7 | P a g e unsecured loan in the assessment order. Since the appellant has furnished necessary evidence that it was a routine business transaction with the related party and also submitted evidences for the same, the action of the Assessing Officer by treating the said receipt of Rs.1,60,20,000/- as cash credit u/s 68 of the Act is not acceptable. It is also observed that there was no cash deposits found in the said related party account immediately before the payment of such unsecured loan to the appellant. 6.5 In view of the above facts, the addition made by the Assessing Officer on the receipt of loan of Rs.1,60,20,000/- is not substantiate and accordingly the grounds of appeal on the issue of cash credit u/s 68 of the Act is allowed. 7. As a result, the appeal is allowed.” This is what leaves the Revenue aggrieved.
4. We have given our thoughtful consideration to the Revenue’s and the assessee’s respective stands all along. We make it clear that there is no material quoted at the Revenue’s behest during the course of hearing rebutting the CIT(A)/NFAC’s clinching findings on fact that the impugned sum as unsecured loan from M/s. Golden Steels was in the nature of regular business transactions only. The fact, however, remains that the assessee could not plead and prove all of his detailed evidence before the Assessing Officer to the entire satisfaction of the Assessing Officer. We according are of the considered view that a lumpsum addition of Rs.1.5 lakhs only in the given facts would be just and proper with a rider that the same shall not be treated as a precedent. We make it clear that the 8 | P a g e learned CIT(A)/NFAC’s lower appellate findings deleting the impugned addition to the extent of Rs.1,58,70,000/- stand upheld in other words. Necessary computation shall follow as per law.