CAPITAL AUTOMOTIVES PVT. LTD.,NEW DELHI V. ACIT, CIRCLE- 4(2), NEW DELHI

ITA 3726/DEL/2024

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Capital Automotive Pvt. Ltd. appealed against the order of the Commissioner of Income Tax (Appeals), which confirmed the addition of Rs. 4,99,49,080 as unexplained credits under section 68 of the Income Tax Act, 1961, and partly allowed the appeal by deleting an addition of Rs. 24,65,000 made under section 50C. The Tribunal found that the assessee had not received the Rs. 2 crores loan from M/s Fucon Technologies Ltd. as the cheques were dishonored. The Tribunal remanded the issue of the remaining loans back to the AO for verification, emphasizing the need for the assessee to participate and provide necessary evidence.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 126884 (ITAT-DELHI)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-04-2025
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Assessment Year: 2016-2017
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: RAJESH KUMAR DHANESTA
• Assessee Lawyers: SAURAV ROHATGI
• Keywords: Unexplained cash credit; Sale consideration of property below Jantri Value; Grounds of appeal; Satisfaction; National Faceless Appeal; Commissioner; Commissioner of Income Tax; AMP; Deleted; Sustaining additions; Directions; Department
• Section: 250; 68; 133(6); 50C

Judgement Text

" IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH ‘B’: NEW DELHI BEFORE SHRI MAHAVIR SINGH, VICE PRESIDENT AND SHRI MANISH AGARWAL, ACCOUNTANT MEMBER ITA No.3726/Del/2024 (ASSESSMENT YEAR 2016-17) Capital Automotive Pvt. Ltd., 16A, Uday Plaza, 230-E, Masjid Motj, New Delhi-110049. PAN-AADCC0547J Vs. ACIT, Cricle-4(2), New Delhi. (Appellant) (Respondent) Assessee by Shri Saurav Rohatgi, CA Department by Shri Rajesh Kumar Dhanesta, Sr. DR Date of Hearing 24/03/2025 Date of Pronouncement 23/04/2025 O R D E R PER MANISH AGARWAL, AM: This is an appeal filed by the assessee against the order of the ld. Commissioner of Income Tax (Appeals) [CIT(A), in short], National Faceless Appeal Centre (NFAC), Delhi dated 13.06.2024, for assessment year 2016-17 in appeal No. CIT(A), Delhi- 2/10302/2018-19 passed u/s 250 of the Income Tax Act, 1961 (the Act, in short). 2 ITA No.3726 /Del/2024 Capital Automotives Pvt. Ltd. vs. ACIT 2. Brief facts of the case are that assessee is a private limited company engaged in the business of manufacturing of special purpose machinery. The return of income was e-filed on 17.10.2016 declaring total income of Rs. 65,43,040/-. The case of the assessee was selected for scrutiny under CASS. During the course of assessment proceedings, the AO provided various opportunities to the assessee however, assessee has failed to submit requisite details therefore the assessment was completed by making additions of Rs. 4,99,49,080/- u/s 68 on account of unsecured loan taken by holding the same as unexplained credits and further addition of Rs. 24,65,000/- was made after invoking the provisions of section 50C of the Act and accordingly the total income of the assessee was assessed at Rs. 5,89,57,120/-. Against such order, an appeal was preferred before ld. CIT(A) who vide impugned order dated 13.06.2024 has partly allowed, the appeal of the assessee where addition on account of unsecured loan made u/s 68 of the Act at Rs. 4,99,49,080/- were confirmed and balance additions of Rs. 24,65,000/- made u/s 50C was deleted. 3. Aggrieved by the said order, the assessee is in appeal before the Tribunal by taking following grounds of appeal: “1. That under the facts and circumstances of the case both lower authorities erred in law in making and sustaining additions of Rs. 4,99,49,080/- u/s 68 of the Act. 2. That under the facts and circumstances of the case, no proper and reasonable opportunity of hearing has been allowed by ld. CIT(A). 3 ITA No.3726 /Del/2024 Capital Automotives Pvt. Ltd. vs. ACIT 3. That under the facts and circumstances of the case the ld. CIT(A) erred in law in not providing the remand report to the assessee for its rebuttal. 4. That under the facts and circumstances of the case, the ld. AO erred in not considering the documents filed by creditors during the remand proceedings. 5. That under the facts and circumstances of the case, no interest u/s 234B, 234C should have been charged. In any case, the calculation are excessive.” 4. All the four effective grounds of appeal taken by the assessee are in relation to the additions of Rs. 4,99,49,080/- made u/s 68 of the Act, thus the same are taken together for consideration. 5. Before us, the ld. AR of the assessee submitted that during the course of assessment proceedings, various documents were submitted before the Assessing Officer in order to establish the identity and creditworthiness of the creditors however the same were not considered by the AO. It is further submitted by ld. AR that most of the amounts were repaid during the year itself as is evident from the tax audit report. Ld. AR further submitted that amongst the total addition of Rs. 4,99,49,080/- made u/s 68 of the Act, an addition of Rs. 2 crores was made on account of loan taken from M/s Fucon Technologies Ltd. which amount was though credited in the bank account of the assessee and however on the very same day the cheques were bounced and amount was debited in the bank account. He drew our attention to the paper book pages 96 & 97 wherein at 4 ITA No.3726 /Del/2024 Capital Automotives Pvt. Ltd. vs. ACIT page 97 on 27.11.2015, there are three credit entries of Rs. 1 crore, Rs. 50 lacs and Rs. 50 lacs were appearing at 12:13:26 PM and on page 96, on the vary same day i.e. on 27.11.2015 at 04:06:34 PM, these three entries were debited. The assessee also submitted the copy of ledger account of the company as appearing in its books of accounts, where it is claimed that effectively no amount whatsoever was received and cheques received of Rs. 1 crore, Rs. 50 lacs and Rs.50 lacs were returned on account of insufficient funds. Therefore, no addition could be made towards the amount of Rs. 2 crores by holding the same as unexplained credit since such amount was never received by the assessee. With regard to the remaining loans, the ld. AR submitted that assessee during the course of appellate proceedings also filed the relevant details and a remand report was obtained by the ld. CIT(A) which is reproduced at page 23 to 25 of the appellate order. However, ld. CIT(A) has not accepted the claim of the assessee for the sole reason that the AO has observed in the remand report that notices issued u/s 133(6) to said parties were returned unserved. The ld. AR submitted that if the matter is remanded back to the file of the AO, the assessee would be in a position to get the verification of all the loan creditors to the satisfaction of the assessing officer and he prayed accordingly. 6. On the other hand, ld. Senior DR vehemently supported the orders of the lower authorities and submitted that despite of providing ample opportunities, the assessee company was not able to establish the creditworthiness of the loan creditors. He further 5 ITA No.3726 /Del/2024 Capital Automotives Pvt. Ltd. vs. ACIT submitted that even during the course of remand proceedings, the notices issued to the loan creditors were returned unserved which further proved that the parties are not existent and therefore, he prayed for the confirmation of the addition made. 7. We have heard the rival submissions and perused the material available on record. At the outset, it is seen that the assessee has failed to discharge the burden casted upon it of proving the identity and creditworthiness of the loan creditors despite of ample opportunities provided. It is further seen that out of the total loans of Rs. 4,99,49,080/- held as unexplained, assessee has been able to demonstrate before us that a sum of Rs. 2 crores stated to have been received from M/s Fucon Technologies Ltd. were never received and the cheques received were returned back / dishonoured on the same day for the reason “Insufficient Funds”. Thus, the addition of Rs. 2 crore for the amount which was never received by the assessee company could not be made and therefore, we directed to delete the addition of Rs. 2 crores towards the loan taken from M/s Fucon Technologies Ltd. With regard to the remaining addition of Rs. 2,99,49,080/- received from four loan creditors, it is seen that during the remand proceedings, the certain loan creditors had filed the details which are produced before us in the paper book filed by the assessee. Thus, in the interest of justice, we hereby accepted the prayer of the assessee and remand back this issue to the file of the AO for making necessary verifications of the remaining four creditors from whom loans of Rs. 2,99,49,080/- were received and decide as 6 ITA No.3726 /Del/2024 Capital Automotives Pvt. Ltd. vs. ACIT per law. The assessee is also directed to participate before the AO and file all the necessary evidences in this regard. With these directions, all the grounds taken by the assessee are partly allowed. 8. As a result, appeal of the assessee is partly allowed. Order is pronounced on 23.04.2025. Sd/- Sd/- (MAHAVIR SINGH) (MANISH AGARWAL) VICE PRESIDENT ACCOUNTANT MEMBER Dated: 23/04/2025 PK/Ps Copy forwarded to: 1. Appellant 2. Respondent 3. CIT 4. CIT(Appeals) 5. DR: ITAT ASSISTANT REGISTRAR ITAT, NEW DELHI "