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Facts
The assessee, Naveen Goyal, received an unsecured loan of Rs. 17.50 crores from M/s Vikas Granaries Ltd. to purchase shares. The Assessing Officer (AO) made an addition of Rs. 70 lakhs, treating it as 4% deemed commission on the loan amount, alleging it was routed money. The CIT(A) sustained this addition.
Held
The Tribunal held that the AO's addition was based on doubts and assumptions, and the assessee had discharged their primary burden by providing evidence of identity, capacity of lenders, and genuineness of the transaction. The Tribunal also noted that a similar loan to a family member was accepted as genuine. Therefore, the addition was deleted.
Key Issues
The key legal issue was the validity of the addition of deemed commission on an unsecured loan, specifically whether the assessee had sufficiently proved the genuineness of the loan and the identity and capacity of the lender.
Sections Cited
Section 144, Section 234A, Section 234B, Section 234C
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Income Tax Appellate Tribunal, JODHPUR BENCH, JODHPUR
ORDER DR. MITHA LAL MEENA, A.M.: This appeal is filed by assessee against the order of National Faceless Appeal Centre [hereinafter referred to as NFAC] Delhi dated 21.06.2024 with respect to Assessment Year 2018-19.
Grounds of Appeal
are as under:
1. 1. 1. 1. 1. 1. 1. The Ld. CIT(A) has erred in sustaining the order passed by Ld. Assessing Officer which is bad in law and bad on facts and is contrary to the principles of natural justice. The proceedings u/s 144 are bad in law and bad on facts.
2. The ld. CIT(A) has erred in sustaining the addition made by Assessing Officer by assuming deemed income of commission @ 4% on the loan taken amount 17,50,00,000/- taxed it at as an income from other source. Both the authorities have totally ignored whole relevant facts and documents submitted by the appellant. So the addition so made is arbitrary and unwarranted. The unsecured Asst. Year: 2018-19 2 loan taken Rs. 17,50,00,000/- during the year is genuine and fare so the addition may kindly be quashed.
3. The Ld. CIT(A) has erred in sustaining interest charged u/s 234A, 234B and 234C of the Act.
The appellant prays for justice and relief.
The sole and common issue challenged in the grounds of appeal pertains to an addition Rs. 70 lakh by treating 4% deemed commission on allegedly routing money of a director of the company by way of treating shares of 17.50 Cr as against unsecured loan of Rs. 17.00 Crore taken from M/s Vikas Granaries Ltd.
4. Heard both the sides and perusal the material on record. It is noted that Sh. B D Jindal was a Gaur Gum tycoon at that time and his family was having three or four BSE listed companies doing regular trading of stock. The Ld. AR submitted that during the relevant year, Sh. B D Jindal offered the appellant to buy 1,70,00,000/- shares of Vikash WSP Ltd., out of his promoter quota share at a price of 10/- per share, as BSE traded value on portal was also trending slightly above 10/-. The AR further submitted that during the financial year 2016-17, its share value was trending at 27/-, so this proposal looked highly profitable at that time. However, the appellant assessee, was unable to purchase these shares due to its weak financial position so he advanced a sum of 17,50,00,000/- from M/s Vikas Granaries Ltd. (later name of company Asst. Year: 2018-19 3 changed its name Vikas Proppant & granite Itd.), on his own guarantee. During that year Gaur (Gwar) was on a very new dimension and appellant was fully assured to gain profit from buying these shares but unfortunately it could not be happened. The appellant has submitted all the documents in relation to that loan Received 17.00 Crore to buy these shares (APB, Pgs. 19 to 75). The AR contended that the AO and the Ld. CIT (A)/NFAC has passed ex-parte orders in violation of principles of natural justice without appreciating the facts of the case.The AR contended that due to technical glitches in the faceless/virtual proceedings, the assessee could not made its submissions effectively. He prayed that the addition may be deleted. The Ld. DR supported the impugned order and argued that it was the fault in the system of the assessee and not in the department portal.
5. Admittedly, the AO has passed the assessment order exparte qua the assessee due to technical glitches in the IT Portal in virtual hearing where the appellant assessee could not make submissions effectively. It is noted that the Ld. CIT (A) has admitted the fact that the assessee has filed evidences such as confirmations, and bank statements with support of case law but he has neither addressed the submission of the assessee nor commented to disprove these evidences.
Asst. Year: 2018-19 4 6. In the present case, we find that the appellant has taken loan by cheques (APB, Pg.20); that the assessee has furnished copy of Confirmation of both the parties (APB, Pgs. 19 and 22); that a copy of Declaration by the Advance provider Company (APB, Pg.25) and that copy of ITR & Audit reports (AΡΒ, Pgs. 25 - 75). It is observed that the name of the Company stands changed from "VIKAS GRANARIES LIMITED" to "VIKAS PROPPANT & GRANITE LTD and this Company was listed on Bombay Stock Exchange portal and 'Permitted to trade' on NSE Portal. The assessee has furnished the copies of Balance sheet of the company in which the appellants loan is shown in short term advances under the head of Trade &other receivable (APB. Pgs. 71).
In our view, the addition appears to be made by the AO on doubts, assumptions and presumption by observing that how can a company lent this huge loan while income of the assessee is only Rs. 4,32,010/- Which looks quite weird basis. Since, the assessee had submitted all necessary evidences and discharged his primary burden, if the AO and the Ld. CIT (A) to disprove the claim of the assessee and the evidences furnished before them. The authorities below ought to have disprove the evidences furnished by the assessee by way of bringing on record necessary corroborative documentary evidence.
Asst. Year: 2018-19 5 8. In the present case, the Assessee had proved identity, capacity of lenders as well as genuineness of transaction. In our view, when the lender is assessed to tax, and in such a case, the assessee is required to file a confirmation with particulars of PAN only. Our view gets support from the judgements in the cases of CIT Vs. Orissa Corporation (P) Ltd. (159 ITR 78) (SC); CIT Vs. Rohini Builders (256 ITR 360) (Gujrat HC.); CIT VS Metachem Industries 2245 2360 Gauhati HC);Real Time Marketing 221 CTR 716 and Diamond Products 177 Taxman 331 Raj HC.
Without prejudice to the above facts and merits of the case, it is pertinent to mention here that on parity of facts in the case of appellants AUNTY Munni Devi Goyal which was also reassessed on the same ground for the same assessment year but in that case the said loan had been accepted as genuine, and no addition was made on this account. Copy of the assessment order passed in the case of AUNTY Munni Devi Goyalis is filed in the paper book (APB,Pgs. 77-78). The facts of loan in case of case Munni Devi Goyal is tabulated below:
Name of assessee Loan taken from Loan amount Addition which company made by AO Munni Devi Goyal Vikas Chemi 17,00,00,000/- NIL Gums (P) Ltd. Naveen Goyal Vikas Granaries 17,00,00,000/- 70,00,000/- Ltd.
Asst. Year: 2018-19 6 10. In our considered view, there cannot be two views on parity of facts in case of two members of same family. Accordingly, we hold that the decision of lower authorities is an arbitrary and unwarranted and that the impugned order is perverse to the facts on record. Accordingly, addition of Rs. 70,00,000/- is deleted.
In the result, the appeal of the assessee is allowed.
Order pronounced in the open court on 26/02/2026.