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Income Tax Appellate Tribunal, DELHI BENCH ‘B’: NEW DELHI
This appeal by Assessee is filed against the order of Learned Commissioner of Income Tax (Appeals)-1 Gurgaon [“Ld. CIT(A)”, for short], dated 26/03/2019 for Assessment Year 2013-14.
Grounds taken in this appeal are as under:
“1. That having regard to the facts and circumstances of the case, Ld. CIT(A) has erred in law and on facts in confirming the action of Ld. AO in making aggregate addition of Rs.25,00,000/- on account of unsecured loan received from M/s Blush Equity (P) Ltd. and M/s Page 1 of 11
Dalip Kumar Yadav vs. ITO Glaxo Buildcon (P) Ltd. and that too by recording incorrect facts and findings and in violation of principles of natural justice.
2. That in any case and in any view of the matter, action of Ld. CIT(A) in confirming the action of Ld. AO in making aggregate addition of Rs.25,00,000/- on account of unsecured loan, is bad in law and against the facts and circumstances of the case.
3. That having regard to the facts and circumstances of the case, Ld. CIT(A) has erred in law and on facts in confirming the action of Ld. AO in making addition of Rs.26,13,060/- on account of sundry creditor and that too by recording the incorrect facts and findings and in violation of principles of natural justice and without considering the submission of the assessee.
4. That in any case and in any view of the matter, action of Ld. CIT(A) in confirming the action of Ld. AO in making addition of Rs.26,13,060/- on account of sundry creditor, is bad in law and against the facts and circumstances of the case.
5. That having regard to the facts and circumstances of the case, Ld. CIT(A) has erred in law and on facts in confirming the action of Ld. AO in making disallowance of Rs.58,000/- on account of salary payable.
6. That having regard to the facts and circumstances of the case, Ld. CIT(A) has erred in law and on facts in sustaining the action of Ld. AO in making disallowance of Rs.1,56,325/- (i.e.1/10th of Rs.15,63,245/-) on account of various expenses.
That the appellant craves the leave to add, modify, amend or delete any of the grounds of appeal at the time of hearing and all the above grounds are without prejudice to each other.”
Brief facts of the case are that, the assessee filed return declaring income of Rs. 22,91,470/-, the case was selected for scrutiny and an assessment order u/s 143(3) of the Act came to be passed by assessing
Dalip Kumar Yadav vs. ITO the income at Rs. 1,86,18,743/-. Aggrieved by the assessment order, the assessee preferred an Appeal before the CIT(A), the Ld. CIT(A) vide order dated 26/03/2019 confirmed the addition of Rs. 25,00,000/- made by the A.O. on account of unsecured loans received from M/s Blush Equity (P) Ltd. and M/S Glaxo Buildcon Pvt. Ltd., confirmed the addition of Rs. 26,13,060/- made on account of Sundry Creditor, confirmed the disallowance of Rs. 58,000/- claimed on account of salary payable and also restricted the disallowance of Rs. 1,56,325/- (i.e. 1/10th of Rs. 15,63,245/-) on account of various expenses. Aggrieved by the order of the CIT(A) , the assessee preferred the present Appeal on the grounds mentioned above.
Ground No. 1 and 2 are relating to aggregate addition of Rs.25,00,000/- on account of unsecured loans received from M/s Blush Equity (P.) Ltd. and M/s Glaxo Buildcon Pvt. Ltd. which has been confirmed by the CIT(A). The Ld. Counsel for the assessee submitted that the amount has been paid to the assessee by banking channel and the assessee had produced the audit financial statement of the lenders which proves the creditworthiness of the parties, the assessee had also produced confirmation from the lenders, ITR, PAN details etc. and also produced the bank statements showing that the aforesaid loans were Dalip Kumar Yadav vs. ITO repaid on 21/09/2016, therefore, the orders of the Lower Authorities requires to be reversed.
Per contra, the Ld. Departmental Representative relied on the findings and conclusion of the CIT(A).
We have heard both the parties and perused the material available on record. The assessee had received the amount from the lenders through the banking channels and the assessee has also produced audited financial statement of M/s Blush Equity P. Ltd. and audited financial statement of and M/s Glaxo Buildcon Pvt. Ltd. which shows that the lenders were having sufficient funds for advancing the loan to the assessee. Apart from the same, both the lenders have issued confirmation of the loan given to the assessee and also provided PAN & ITR details. Further considering the fact that the assessee had repaid the above said loans on 21/09/2016 and 22/09/2016 (bank statements in support of repayment of the loan produced at PB 140 & 142), we find no reason for the authorities to doubt the lenders, creditworthiness and genuineness of the transaction and the identity of the lenders.
Therefore, the above addition of Rs. 25,00,000/- made by the A.O. which was confirmed by the CIT(A) is hereby deleted.
Dalip Kumar Yadav vs. ITO 7. Ground No. 3 & 4 relating to addition of Rs. 26,13,060/- being the amount of unexplained Sundry creditors which has been confirmed by the CIT(A).
The Ld. Assessee's Representative submitted that the CIT(A) committed an error in law and on facts in confirming the Action of the A.O. in making addition of Rs. 26,13,060/- on account of Sundry Creditors and that to by recording in correct facts and findings and in violation of principals of natural justice without considering the submission of the assessee.
Per contra, the Ld. Departmental Representative submitted that the assessee was asked to furnish documents regarding genuineness of the transactions, but the assessee has not furnished the same. Thus, the genuineness of the transaction remained unverified, therefore, the addition was rightly made by the A.O. which has been confirmed by the CIT(A). Therefore, prayed for dismissal of the Ground No. 3 & 4.
During the assessment proceedings, while making the additions, the A.O. observed as under:-
Dalip Kumar Yadav vs. ITO “5. Vide questionnaire dated 03.08.2015 and 28.10.2015 the assessee was asked to furnish the copy of accounts of all sundry creditors amounting to Rs. 51,63,257/-. their complete details. The assessee has not come forward with any reply. Thus, the genuineness of the transaction is not established. Therefore, in the absence of any reply/explanation/evidence, the amount of Rs. 51,63,257/- become unexplained and added back to the returned income of the assessee as income from undisclosed sources.”
The Ld. CIT(A) while restricting the addition of Rs. 51,63,257/-to Rs. 26,13,060/- observed as under:-
“ Unexplained Sundry Creditors A. In this regard, it is seen from the documents filed by the appellant that there is no satisfactory explanation or evidence with regard to the genuineness of the transactions. The appellant has filed merely the confirmation from the various creditors. Perusal of the confirmation reveals that the same do not carry any details with regard to the day to day transactions between the appellant and creditors. The appellant also did not furnish these details in-spite of being specifically asked by me to file the same. It is also seen that no payments has been made by the appellant to any of the creditors except one during the year under consideration. It is highly improbable that a small town trader could survive after allowing credit for almost 2-3 years without asking for Page 6 of 11
Dalip Kumar Yadav vs. ITO payment. On Further enquiry it was noted that all the payments were claimed to have been made in cash over the years. Copies of the year wise accounts of the creditors showing payments made by the appellant are enclosed as Annexure-I to this order. It is seen that the repayments are either in cash or through transfer of plant & machinery. Cash payments are shown in amounts of less than Rs. 20,000/- per day in a number of installments. In these circumstances, notwithstanding the fact that some of the creditors had furnished confirmations, it is evident that the creditors were not genuine and the credit balances were created with an intention of inflating the expenses. All these facts show that the appellant has not been able to establish the genuineness of these credit entries. It is a settled law that the onus to prove the genuineness of the credit entries lies on the appellant. The appellant failed to discharge the onus. The addition made on this account is also confirmed. The appellant has submitted that the opening balances of Sundry Creditors was Rs. 25,95,197/- and further purchases were made from these parties aggregating to Rs 26,13,060/- during the year under consideration. The AO is directed to verify this facts from record. The addition is restricted to the credit balance added during the year under consideration.”
It is the specific case of the assessee is that the A.O. and the CIT(A) have recorded incorrect facts and violated the principals of natural justice without considering the submissions of the assessee and also not Dalip Kumar Yadav vs. ITO considered the documents produced by the assessee in support of the contentions of the assessee. Considering the above facts and circumstances and also the submission made by the Ld. AR, we remand the issue involved in Ground No. 3 & 4 to the file of the A.O. with a direction to consider all the documents and the submissions made by the assessee and decide the issue afresh.
Ground No. 5 is related to disallowance of Rs. 58,000/- which wsas claimed being the amount of salary and the same has been confirmed by the CIT(A). The Ld. Assessee's Representative submitted that the assessee produced Adhar Card of the employees before the A.O., for proving identity of the employees to whom the salary were paid and also submitted the details of salary paid to the employees showing the name, post, amount and their signature on the receipts together with confirmation from the employees confirming the facts of receipt of the salary, but the same has been ignored by the authorities.
Per contra, the Ld. Departmental Representative relied on the order of the CIT(A).
Considering the fact that the assessee has provided the Adhar cards of the employees for the purpose of proving the identity and also Page 8 of 11
Dalip Kumar Yadav vs. ITO details of the salary paid to the employees showing the names, post, amount on the signature of the receipt of the salary together with the confirmation and considering the quantum of the amount involved, we delete the disallowance made by the A.O. of Rs. 58,000/- being the amount of salary which has confirmed by the CIT(A), accordingly we allow Ground No. 5 of the assessee.
The Ground No. 6 is regarding disallowance of Rs. 1,56,325/- being 1/10th of the various expenses which has been confirmed by the CIT(A). the Ld. Counsel for the assessee submitted that the CIT(A) has erred in law in sustaining the disallowance of Rs. 1,56,325/- which is 1/10th of Rs. 15,63,245/- made by the A.O. on account of various expenses which requires to be deleted.
The Ld. Departmental Representative relied on the orders of the Lower Authorities and sought for dismissal of the Ground No.6.
We have heard both the parties and perused the material available on record. During the assessment proceedings, the assessee has been asked to justify the expenses debited to Profit and Loss account and also asked to furnish the ledger copy of the expenditure debited from P & L Account with supporting documents but the assessee had not provided
Dalip Kumar Yadav vs. ITO any details/evidence, therefore, the A.O. disallowed 1/5th of the expenses of Rs. 15,63,245/- which has been worked out to Rs. 3,14,649/- which has been added back to the returned income of the assessee. The CIT(A) while dealing the said issue, reduced and restricted the disallowance to 1/10th of the expenses claimed by the assessee. Since, the assessee had not provided any details or any satisfactory evidence with regard to the genuineness of the expenses and considering the nature of the expenses claimed and also the nature of business of the Assessee, in our opinion, the CIT(A) rightly restricted the disallowance to 1/10th of the expenses claimed under the said head which is reasonable as well. Accordingly, we dismiss the Ground No. 6 of the assessee.
In the result, Appeal filed by the assessee is partly allowed for statistical purpose.