ACIT, CENTRAL CIRCLE- 13, NEW DELHI V. LIZER CYLINDERS LTD., MUMBAI

ITA 7283/DEL/2017

AI Insights

The case involves the Assistant Commissioner of Income Tax, Central Circle-13, New Delhi as the appellant and M/s Lizer Cylinders Ltd. as the respondent. The dispute arose from an assessment order for the year 2013-14, where the Assessing Officer added Rs. 6,38,00,000 as unexplained cash credit under section 68 of the Income Tax Act, 1961, due to unsecured loans received by the assessee. The CIT(A) reversed this addition, leading to the Revenue's appeal to the Income Tax Appellate Tribunal. The Tribunal dismissed the Revenue's appeal, citing precedents and the absence of concrete evidence to support the additions made by the Assessing Officer.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 471786 (ITAT-DELHI)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-03-2025
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Assessment Year: 2013-2014
• Other Referred Cases: CIT-II v/s M/s Jansampark Av. & marketing (P) Ltd., M/s Andaman Timber Industries vs. CCE (SC), Minda Group of cases, Jay Auto Group, M/s Electronical & Electronics India Pvt. Ltd., M/s Heaven Suppliers Pvt. Ltd., M/s Manish Merchants Pvt. Ltd., M/s Panchmukhi Management Services Pvt Ltd., M/s Jay Ace Technologies Pvt. Ltd.
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SUMER SINGH MEENA
• Assessee Lawyers: SALIL AGGARWAL; .
• Keywords: Unexplained cash credit; Principle of natural justice; Search and seizure; Accommodation entries; Opportunity of cross examination
• Section: 142(1); 143(2); 153A; 68; 131; 13

Judgement Text

"IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH: ‘C’: NEW DELHI) BEFORE SHRI S RIFAUR RAHMAN, ACCOUNTANT MEMBER AND SHRI SUDHIR PAREEK, JUDICIAL MEMBER ITA No:- 7283/Del/2017 (Assessment Year- 2013-14) Assistant Commissioner of Income Tax, Central Circle-13, New Delhi. Vs. M/s Lizer Cylinders Ltd., 205, 2nd Floor, Samarpan, Chakala Link Road, Andheri East, Mumbai. PAN No: AABCL3501H APPELLANT RESPONDENT Revenue by : Shri Sumer Singh Meena, CIT(DR) Shri Dayainder Singh Sidhu, CIT(DR) Assessee by : Shri Salil Aggarwal, Sr. Adv., Shri Shailesh Gupta, CA & Shri Uma Shankar, Adv. and Madhur Aggarwal, Advocate Date of Hearing : 30.12.2024 Date of Pronouncement : 28.03.2025 ORDER PER SUDHIR PAREEK, JM: This appeal by Revenue preferred against the order of the Learned Commissioner of Income Tax (Appeals)-XXVI, New Delhi- 110092, (hereinafter referred to as [“Ld. CIT(A)”]), dated 01.09.2017 ITA No.- 7283/Del/2017 Lizer Cylinders Ltd. 2 pertaining to Assessment Year (A.Y.) 2013-14, on the following grounds of appeal: “1. The Ld. CIT(A) has erred on facts and in law in deleting the addition made u/s 68 of the I.T. Act, 1961 on account of receipt of unsecured loan aggregating to Rs. 6,38,00,000/- by assessee company. 2. The Ld. CIT(A) has erred on facts and in law in observing that the statement recorded u/s 131 of the I.T. Act, 1961 has no evidentiary value despite the fact that specific details and corroborative banking transactions were identified by the entry operator. 3. The Ld. CIT(A) has erred on facts and in law in observing that requisite details and evidences filed by the assessee were sufficient to prove the genuineness of the transaction related to share capital / premium where as the assessee failed to discharge the primary onus cast upon it u/s 68 of the IT Act 1961 of providing identity, satisfactorily explaining the creditworthiness and genuineness of these transactions. This is compounded by the fact that the assessee company failed to produce the director of the investing companies in spite of opportunities given. 4. The Ld. CIT(A) has erred on facts and in law in not even considering the statements of directors of the investing companies admitting that the investing companies in which they are directors, are actually paper companies meant for providing accommodation entries. 5. The Ld. CIT(A) has erred on facts and in law in observing that opportunity of cross examination was not being provided to the assessee without appreciating that a show cause notice was issued to the assessee giving details of the admission of a cash for entry transaction in the statement of the entry provider and assessee miserably failed to submit any plausible explanation as to why such a statement / admission should not be used against him. Without prejudice Ld. CIT(A) was well within his powers u/s 250(4) of the Act to permit a cross examination before deciding the matter as held by Hon’ble Delhi High court in the case of CIT-II v/s M/s Jansampark Av. & marketing (P) Ltd. 6. the appellant craves leave to add, amend any / all the grounds of appeal before or during the course of hearing of appeal.” ITA No.- 7283/Del/2017 Lizer Cylinders Ltd. 3 2. Facts of the case may be concisely described as that a search and seizure operation u/s 132(1) of the Act was carried out in J P Minda Group of cases on 20.09.2013. The case of the assessee was also covered in search action. In the course of proceedings, notice u/s 153A of the Act was issued on 08.06.2015 for furnishing of return of income within stipulated time and thereafter also notices u/s 143(2) / 142(1) of the Act, along with questionnaire was issued on 08.09.2015. After the completion of the assessment proceedings, the Ld. AO observed an amount of Rs. 6,38,00,000/- received as unsecured loans treated as unexplained cash credit u/s 68 of the Act, and so added to the income of the assessee company for the assessment year 2013-14. By dissatisfied with the addition in question the assessee / respondent file appeal before the Ld. CIT(A), where the assessee / respondent succeeded, as appeal of the assessee partly allowed. 3. Head rival submissions and carefully scanned the material available on record. 4. In the course of hearing, the Ld. DR reiterating the ground of appeal submitted that deletion of addition made u/s 68 of the Act, ITA No.- 7283/Del/2017 Lizer Cylinders Ltd. 4 on account of receipt of unsecured loan aggregating to Rs. 6,38,00,000/- is quite erroneous and Ld. CIT(A) strangely observed that the statement recorded u/s 131 of the Act has no evidentiary value despite the fact that specific details and corroborative banking transactions were identified by the entry operator and also gave finding that opportunity of cross examination was not being provided to the assessee without appreciating that a show-cause notice was issued to the assessee giving details of the admission of a cash for entry transaction in the statement of the entry provider. 5. Ld. CIT(A) vide impugned order specifically observed that the statement of Shri Rajesh Aggarwal was recorded at the back of the assessee and no opportunity of cross examination was provided to the appellant. The relevant operative part of the impugned order is reproduced as under: “Respectfully following the above judgment which is on identical factual matrix, it can be reasonably inferred that material found during the search in respect of the equity received by the assessee cannot lead to the conclusions drawn by the AO. Further, Statement of Shri Rajesh Aggarwal was recorded at the back of the assessee and no opportunity of cross examination was provided to the appellant. Further, no corroborative evidence is brought on record by Assessing Officer to prove that share capital/ share premium/ share application money/ unsecured loan is accommodation entry. Besides, appellant has discharged its onus and submitted all the documentary evidence in respect of share capital / share premium / ITA No.- 7283/Del/2017 Lizer Cylinders Ltd. 5 share application money in support of the genuineness of the investment. The details submitted in this regard by the appellant have also been made part of order by Assessing Officer. It is also undisputed fact that the director of the appellant companies have never any statement regarding the share capital /share premium / share application money and no surrender have been made with regard to share capital / share premium / share application money / unsecured loan.” 6. The Ld. AR submitted that aforesaid appeal by Revenue is squarely covered by the order of Co-ordinate Bench of ITAT, dated 23.12.2021 in the case of Minda Group of cases, wherein addition has been deleted on merits of the case, which are also applicable to the facts of the instant case and in this regard, in the case of Jay Auto Group in ITA No.- 6627/Del/2017 and others, and the Ld. AR also submitted that the aforesaid order and case of the assessee are vertatim same, only difference being unsecured loan instead of share capital in assessee’s case, and rest of all the findings and investigation made by the Ld. AO are identical in both the cases. It is also submitted that in the matter of Jai Auto along with various other companies of Minda Group decided on both on legal and merits, wherein relief provided by the Co-ordinate Bench, would also be applicable to the assessee company being part of Minda ITA No.- 7283/Del/2017 Lizer Cylinders Ltd. 6 Group and addition being arising out of same search and on same set of document and investigation report. It was observed that no concrete inquiry done by the Ld. AO and mere reliance on investigation report by AO and the revenue was failed to controvert the findings of the CIT(A), wherein relief has been provided on merits. It is relevant to mention here that there is no contrary fact produced by Revenue which may sufficient to controvert the submission of the assessee. 7. In the case of Jai Auto Group, the Co-ordinate Bench held that the addition so made are beyond the scope of assessment, so made u/s 153A of the Act and beyond jurisdiction. 8. It is pertinent to mention that in the case of Jai Auto Group (supra) Revenue assails the order of the coordinate bench and Hon’ble Delhi High Court, dismissed the appeal by observing that the assessee / respondent were denied the opportunity to cross examination Mr. Rajesh Aggarwal, despite a specific request, and this court is in agreement with the ITAT that his statement needs to excluded and cannot be relied upon as a piece of evidence to make addition. The relevant para 13 is reproduced as below: ITA No.- 7283/Del/2017 Lizer Cylinders Ltd. 7 “ 13. In any event, in the present cases, as the Respondents- Assessees were denied the opportunity to cross-examine Mr.Rajesh Agarwal, despite a specific request, this Court is in agreement with the ITAT that his statement needs to be excluded and cannot be relied upon as a piece of evidence to make any addition. In fact the Supreme Court in the case of M/s Andaman Timber Industries vs. CCE (SC), 127 DTR 241 has held \"...not allowing the assessee to cross-examine the witnesses by the Adjudicating Authority though the statements of those witnesses were made the basis of theimpugned order is a serious flaw which makes the order nullity inasmuch as it amounted to violation of principles of natural justice because of which the assessee was adversely affected.\" 9. It is also submitted that even in the case of lenders, who have given to loan to assessee company of a sum of Rs. 6,38,00,000/-, co-ordinate Bench in the case of M/s Electronical & Electronics India Pvt. Ltd. for A.Y. 2013-14 in which assessee received unsecured loan of a sum of Rs. 26,00,000/-, coordinate Bench held that addition has made beyond the scope of assessment, and further, the coordinate Bench, in case of M/s Heaven Suppliers Pvt. Ltd. for AY 2013-14, held that the assessee has received unsecured loan of a sum of Rs. 1,44,00,000/- form the said party, has deleted the addition on merits and has also held that the addition so made is beyond the scope of assessment, co-ordinate Bench in the case of M/s Manish Merchants Pvt. Ltd. for AY 2013-14, held that the assessee has received unsecured loan of a sum of Rs. 75, 00, 000/- ITA No.- 7283/Del/2017 Lizer Cylinders Ltd. 8 form the said party, has held that the addition so made is beyond the scope of assessment, and co-ordinate Bench in the case M/s Panchmukhi Management Services Pvt Ltd., held that the assessee has received unsecured loan of a sum of Rs. 15, 00, 000/- from the said party, has held that the addition so made is beyond the scope of assessment, co-ordinate Bench in the case of M/s Jay Ace Technologies Pvt. Ltd. for AY 2013-14, held that the assessee has received unsecured. loan of a sum of Rs. 3, 78, 00, 000/- from the said party. The said lender has been held to be genuine in the aforesaid order of Hon'ble ITAT and reliance is placed on the same. 10. On the basis of foregoing discussion and facts situations, we find material substance in submissions of assessee / respondent and there is no any ground exist to interfere with the finding of the Ld. CIT(A), and hence appeal of the Revenue is liable to be dismissed. ITA No.- 7283/Del/2017 Lizer Cylinders Ltd. 9 11. Consequently, appeal of the revenue is dismissed as indicated above. Order pronounced in the Open Court on 28.03.2025 SD/- SD/- (S RIFAUR RAHMAN) (SUDHIR PAREEK) ACCOUNTANT MEMBER JUDICIAL MEMBER Dated: 28/03/2025. Pooja/- Copy forwarded to: 1. Appellant 2. Respondent 3. CIT 4. CIT(Appeals) 5. DR: ITAT ASSISTANT REGISTRAR ITAT NEW DELHI ITA No.- 7283/Del/2017 Lizer Cylinders Ltd. 10 1. Date of dictation of Tribunal order 27.3.25 2. Date on which the typed draft Tribunal Order is placed before the Dictating Member 27.3.25 3. Date on which the typed draft Tribunal order is placed before the other Member 4. Date on which the approved draft Tribunal order comes to the Sr. PS/PS 5. Date on which the fair Tribunal order is placed before the Dictating Member for pronouncement 6. Date on which the signed order comes back to the Sr.PS/PS 7. Date on which the final Tribunal order is uploaded by the Sr.PS/PS on official website 8. Date on which the file goes to the Bench Clerk alongwith Tribunal order 9 Date of killing off the disposed of files on the judisis Portal of ITAT by the Bench Clerks 10. Date on which the file goes to the Supervisor (Judicial) 11. The date on which the file goes to the Assistant Registrar for endorsement of the order 12. Date of Dispatch of the order "