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Facts
The assessee's income was assessed at Rs. 51,79,869/-, with additions of Rs. 48,49,500/- under Section 68 and Rs. 21,430/- under Section 41(1). The Ld. CIT(A) partly allowed the appeal, confirming additions of Rs. 44,00,000/- under Section 68 and Rs. 21,430/- for bogus liability, while allowing Rs. 4,49,500/- after verification.
Held
The Tribunal set aside the orders regarding the Rs. 44,00,000/- addition, remanding the issue to the AO for verification of documents related to capital contribution. It deleted the addition of Rs. 21,430/- for bogus liability, stating that mere non-production of a creditor does not make the liability bogus if purchases were allowed and the creditor was not written off.
Key Issues
The key legal issues were the unexplained cash credit under Section 68 regarding a partner's capital contribution and the addition of an alleged bogus liability under Section 41(1).
Sections Cited
Section 68, Section 41(1), Section 143(3), Section 133(6), Section 131
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Income Tax Appellate Tribunal, DEHRADUN BENCH ‘DB’: DEHRADUN
O R D E R
PER MANISH AGARWAL, AM:
This appeal is filed by the Assessee against the order of the Ld. Commissioner of Income Tax (Appeals), National Faceless Appeal Centre, Delhi [‘Ld. CIT(A)’ in short], dated 25.08.2025 in Appeal No. CIT(A)/Dehradun/10654/2019-20 arising out of the assessment order passed u/s 143(3) of the Act, 1961 (the Act’ in short) dated 16.12.2029 for Assessment Year 2017-18.
Brief facts of the case are that assessee had filed its return of income declaring total income at Rs.3,08,939/-. The case was selected for scrutiny and assessment was completed vide order dated 16.12.2019 at a total income of Rs.51,79,869/- by making additions of Rs.48,49,500/- u/s 68 of the Act and Rs.21,430/- u/s 41(1) of the Act.
A-One Enterprises vs. ITO 3. Aggrieved by the said order, the assessee preferred an appeal before the Ld. CIT(A) who partly allowed the appeal by allowing the additions of Rs.4,49,500/- after verification by the AO and confirmed the remaining additions of Rs. 44.00 lacs made u/s 68 of the Act and Rs. 21,430/- towards bogus liability.
Aggrieved by the said order, the assessee is in appeal before the Tribunal by taking following grounds of appeal.
1. That the impugned order passed by the Learned Commissioner of Income Tax (Appeals) is bad in law, contrary to the facts and circumstances of the case, and passed without proper appreciation of evidence and principles of natural justice.
2. That the Learned Commissioner of Income Tax Appeals failed to appreciate that the partner had duly explained the sources of addition to capital amounting to 44,00,000 through (i) loan from his wife, (ii) past savings from pension income, and (iii) loan received back from M/s Allied Marketing, all supported by PAN, ITR, confirmation letters, and bank statements.
3. That the Learned Commissioner of Income Tax (Appeals) erred in sustaining the addition without conducting any independent verification of the alleged sources from where capital was infused, and in complete disregard of the corroborative documentary evidences filed.
4. That the Ld. CIT(A) has erred in confirming the addition of ₹21,430/- on account of alleged bogus liability in the name of M/s Hindu Brothers, without appreciating the fact that the appellant had duly submitted the creditor's ledger account, PAN, address, and invoice. Also, the liability was genuine and duly reflected in the regular books of accounts which were duly audited.
5. That the appellant craves leave to add, amend, alter, or withdraw any of the foregoing grounds of appeal at the time of hearing.
Heard both the parties and perused the materials available on record.
Grounds of appeal No.1 to 3 are with respect to the additions of Rs.44,00,000/- made towards the capital contribution by one of the partner namely Shri Surendra Kumar Goyal, as unexplained cash credit u/s 68 of the Act. Claim of the assessee was that the amount was contributed by Shri Surendra Kumar Goyal, partner out of the funds borrowed from his wife Smt. Anita Goyel of Rs. 35.00 lacs, received back
A-One Enterprises vs. ITO loan earlier given to one M/s Allied Marketing of Rs. 4.25 lacs and remaining amount of 3.75 lacs was out of his pension savings. During the assessment proceedings, confirmation with respect to loans taken from Smt. Anita Goyal was filed. The AO observed that no details were filed to prove the creditworthiness of Sh. Surender Kumar Goyal for making contribution to the firm. Before Ld. CIT(A) all these facts were submitted along with confirmations, bank statements etc. however, Ld. CIT(A) for the reason that these documents were not found filed before the AO, had not admitted the same and confirmed the additions made by the AO.
6.1 From the perusal of the replies filed by the assessee before the lower authorities, it is observed that the assessee has stated before the AO that he is filing the confirmations, however, no evidence is placed before us in this regard. However, in the appellate proceedings before ld. CIT(A), assessee had filed all the evidences vide submissions dated 29.05.2025, placed at PB pages 86 onwards.
6.2 Thus looking to the entirety of the facts, we are of the view that assessee has been able to furnish all the documents before the lower authorities to establish the creditworthiness of the partner who had made contribution towards his capital. It appears that these documents were filed in piecemeal before the lower authorities therefore, they were not appreciated and could not be verified by the AO. Accordingly, we set aside both the order of the lower authorities and sent back this issue to the file of AO with the directions to verify the documents filed by the assessee containing confirmations, bank statements and other details with regard to capital contribution of Rs. 44.00 lacs made by Shri Surendra Kumar Goyal, partner of the assessee firm. With these directions, grounds of appeal No.1 to 3 are allowed for statistical purposes.