ASHOK SHAH,MUZAFFARNAGAR V. DCIT, CENTRAL CIRCLE , MEERUT

ITA 6494/DEL/2019

AI Insights

The case involves Mr. Ashok Shah, the appellant, who contested the additions made to his income by the Assessing Officer (AO) under section 69A read with section 115BBE of the Income-tax Act, 1961, concerning unsecured loans received. The AO had added Rs 15,80,000 as undisclosed income, which was upheld by the Commissioner of Income Tax (Appeals) - CIT(A). However, the Tribunal found that the loans were from credible sources and the assessee had provided sufficient evidence of the lenders' creditworthiness, thus reversing the CIT(A)'s decision. The Tribunal also noted that the enhanced tax rate applied from AY 2018-19 was incorrectly applied to the assessee's case for AY 2015-16.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 470216 (ITAT-DELHI)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-02-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2015-2016
• Laws Referred To: Income-tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: JAVED AKHTAR
• Assessee Lawyers: SATISH KR. AGARWAL
• Keywords: Search and seizure
• Section: 132; 153A; 69A

Judgement Text

"Page | 1 INCOME TAX APPELLATE TRIBUNAL DELHI BENCH “A”: NEW DELHI BEFORE SHRI SATBEER SINGH GODARA, JUDICIAL MEMBER AND SHRI M. BALAGANESH, ACCOUNTANT MEMBER ITA No. 6494/Del/2019 (Assessment Year: 2015-16) Mr. Ashok Shah, 52B, Nai Mandi, Muzaffar Nagar, UP-251 001 Vs. DCIT, Central Circle, Meerut (Appellant) (Respondent) PAN:AFYPS3881A Assessee by : Shri Satish Kr. Agarwal, CA Revenue by: Mr. Javed Akhtar, CIT DR Date of Hearing 02/01/2025 Date of pronouncement 27/02/2025 O R D E R PER M. BALAGANESH, A. M.: 1. The appeal in ITA No.6494/Del/2019 for AY 2015-16, arises out of the order of the ld. Commissioner of Income Tax (Appeals)-IV, Kanpur [hereinafter referred to as ‘ld. CIT(A)’, in short] in Appeal No. CIT(A).KNP/10645, 10661, 10675, 10691, 10724 & 10735/DCIT- CC/MRT/2017-18/81-86 dated 20.05.2019 against the order of assessment passed u/s 153A(1)(b) of the Income-tax Act, 1961 (hereinafter referred to as ‘the Act’) dated 30.12.2017 by the Assessing Officer, DCIT, Central Circle, Meerut (hereinafter referred to as ‘ld. AO’). 2. Though the Assessee has raised several grounds of appeal, the only effective issue to be decided in this appeal for assessment year 2015-16 is as to whether the learned CITA was justified in confirming the addition made under section 69A read with section 115BBE of the Act in ITA No. 6494/Del/2019 Mr. Ashok Shah Page | 2 the sum of 15,80,000 on account of unsecured loans received from Sunil Trading Company in the facts and circumstances of the instant case. 3. We have heard the rival submissions and perused the materials available on record. The Assessee is an individual and had filed his return of income for the assessment year 2015-16 on 31-03-2016 declaring total income of Rs 4,80,050/-. A search and seizure operation was carried out in Dev Priya group and Assessee on 1-3- 2016 under section 132 of the Act pursuant to which the case of the Assessee was centralized vide order passed by the learned PCIT under section 127 of the Act on 27-09-2016. Accordingly, notice under section 153A of the Act stood issued to the Assessee for the year under consideration. The Assessee filed his return of income on 6-3-2017 declaring the same income of Rs 4,80,050/- in response to notice under section 153A of the Act. The Assessee filed a copy of statement of account with Punjab National Bank from 17-08-2013 onwards before the Learned AO. The Learned AO observed that this account is different with account number 3720002100034691 opened in the firm’s name i.e. M/s Ashok Laminators with Punjab National Bank and the transactions in both the accounts are different. In this account, a sum of Rs 15,80,000/- was found deposited among others. It was explained that the same represent unsecured loan received from the said party. In support of this, the Assessee furnished confirmation from the said party together with the copy of the income tax returns and bank statements before the Learned AO. The Learned AO not being satisfied with the same, proceeded to add the receipt of unsecured loan of Rs 15,80,000/- as undisclosed income under section 69A read with section 115BBE of the Act. This action of the Learned AO was upheld by the Learned CITA. ITA No. 6494/Del/2019 Mr. Ashok Shah Page | 3 4. The Learned CITA observed that there were cash deposits made in the account of the lender before the amounts were transferred as unsecured loan to the Assessee. A remand report was also obtained from the Learned AO in this regard, which is enclosed in page 10 of the paper book. The Learned CITA in para 6.3 of his order admits that no adverse comments were made by the Learned AO with regard to the said loan, pursuant to the inquiry carried on by the Learned AO in the remand proceedings. But since there were some cash deposits made in the lender account, the same were not accepted as genuine by the Learned CITA. It is pertinent to note that the Learned AO in the remand report had duly accepted the fact that the assessee had received loan only from his relatives and their concerns and their capacity to lend money to the assessee is also proved from the records. Despite that , the Learned CITA observes that he was not convinced with the remarks of the Learned AO on the ground that there were cash deposits made in the account of the lender. 5. We find that the case laws relied upon by the Learned CITA are factually distinguishable in view of the fact that even though there were cash deposits in the account of the investors prior to the investment of share application money by those assesses’, but it was not proved or established beyond reasonable doubt that the investors had sufficient cash balances in their books to make those cash deposits in their bank account. Whereas, in the instant case, the Learned AO had categorically given a finding in his remand report that the lender has got sufficient capacity and credit worthiness to advance monies in the form of unsecured loan to the assessee company. This clinching factual aspect distinguishes the case laws relied upon by the Learned CITA. Since there is a finding by the Learned AO that the creditors have got sufficient capacity to prove ITA No. 6494/Del/2019 Mr. Ashok Shah Page | 4 their credit worthiness, the unsecured loan received by the assessee from Sunil Trading Company becomes an explained transaction thereby warranting no addition to be made thereon. Further the enhanced rate of tax @ 60% as provided in section 115BBE of the Act cannot be made applicable for the year under consideration as it is applicable only from Assessment Year 2018-19. Accordingly, the grounds raised by the assessee are hereby allowed. 6. In the result, the appeal of the assessee is allowed for Assessment Year 2015-16. 7. The facts of Assessment Year 2016-17 are identical to Assessment Year 2015-16 save that assessee has borrowed loans from Sunil Trading Co of Rs 5,00,000/- and Chinnan Lal Magan Lal Shah of Rs 11,10,000/-. The findings of the Learned AO in the remand report and the findings of the Learned CITA are identical to those made in Assessment Year 2015- 16 and hence the decision rendered hereinabove for Assessment Year 2015-16 shall apply mutatis mutandis for this year also. 8. In the result, both the appeals of the assessee are allowed. Order pronounced in the open court on 27/02/2025. -Sd/- -Sd/- (SATBEER SINGH GODARA) (M BALAGANESH) JUDICIAL MEMBER ACCOUNTANT MEMBER Dated: 27/02/2025 A K Keot Copy forwarded to 1. Applicant 2. Respondent 3. CIT ITA No. 6494/Del/2019 Mr. Ashok Shah Page | 5 4. CIT (A) 5. DR:ITAT ASSISTANT REGISTRAR ITAT, New Delhi "