DCIT, CIRCLE- 21(1), NEW DELHI V. RAJASTHAN EXPLOSIVES CHEMICALS LTD., NEW DELHI

ITA 5951/DEL/2019

AI Insights

The case involves multiple appeals by the Revenue against the orders of the Commissioner of Income Tax (Appeals) for various assessment years concerning Rajasthan Explosives Chemicals Ltd. The primary issues revolved around the late deposit of employees' contributions to Provident Fund, disallowance of interest on unneeded loans, rejection of books of account under section 145(3), and the allowance of depreciation. The Tribunal examined each issue in the context of the submissions and evidence presented, including the financial transactions and the application of relevant sections of the Income Tax Act. The Tribunal's decision reflects a detailed analysis of the legal provisions and the factual matrix of the case.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 41826 (ITAT-DELHI)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-03-2025
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: F
• Assessment Year: 2016-2017
• Other Referred Cases: Checkmate Services Pvt. Ltd. vs. CIT, Madhav Prasad Jatia vs. CIT, S. A. Builders Ltd. v CIT, CIT v Dalmia Cement Ltd., State of Madras vs. Coelho, CIT vs. Orissa Corporation Ltd.
• Laws Referred To: Income Tax Act 1961
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: D.S. SIDHU; WAY OF ADDITIONAL EVIDENCE HAD ALSO
• Assessee Lawyers: SALIL KAPOOR
• Keywords: Proportionate interest; Additional evidence; Revenue expenditure; Business expenditure; Question of law; Unexplained cash credit; Depreciation; Commercial expediency; Capital receipt
• Section: 144; 201; 32; 68; 131; 145(3)

Judgement Text

" IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH ‘F’: NEW DELHI BEFORE SHRI S.RIFAUR RAHMAN, ACCOUNTANT MEMBER and MS. MADHUMITA ROY, JUDICIAL MEMBER ITA No.4164/DEL/2018 (Assessment Year: 2011-12) ITA No.5186/DEL/2018 (Assessment Year: 2012-13) ITA No.5187/DEL/2018 (Assessment Year: 2013-14) ITA No.5188/DEL/2018 (Assessment Year: 2014-15) ITA No.5951/DEL/2019 (Assessment Year: 2016-17) JCIT, Circle 21 (1), vs. Rajasthan Explosives Chemicals Ltd., New Delhi. 2, First Floor, R.K. Puram Market, Sector 8, New Delhi – 110 022. (PAN : AAACR9819F) CO No.155/Del/2018 (in ITA No.4164/DEL/2018) (Assessment Year: 2011-12) CO No.183/Del/2018 (in ITA No.5186/DEL/2018 (Assessment Year: 2012-13) CO No.184/Del/2018 (in ITA No.5187/DEL/2018 (Assessment Year: 2013-14) CO No.185/Del/2018 (in ITA No.5188/DEL/2018 (Assessment Year: 2014-15) 2 ITA Nos.4164, 5186, 5187, 5188/Del/2018 ITA No.5951/Del/2019 CO Nos.155, 183, 184 & 185/Del/2018 CO No.143/Del/2019 CO No.143/Del/2019 (in ITA No.5951/DEL/2019 (Assessment Year: 2016-17) Rajasthan Explosives Chemicals Ltd., vs. JCIT, Circle 21 (1), 2, First Floor, R.K. Puram Market, New Delhi. Sector 8, New Delhi – 110 022. (PAN : AAACR9819F) (APPELLANT) (RESPONDENT) ASSESSEE BY : Shri Salil Kapoor, Advocate Ms. Ananya Kapoor, Advocate Shri Utkarsa Gupta, Advocate Shri Tarun Chanana, Advocate Shri Shivam Yadav, Advocate REVENUE BY : Shri D.S. Sidhu, CIT DR Date of Hearing : 13.02.2025 Date of Order : 19.03.2025 O R D E R PER S. RIFAUR RAHMAN, ACCOUNTANT MEMBER : 1. These appeals filed by the Revenue are directed against the orders of the ld. Commissioner of Income Tax (Appeals)-7, New Delhi [“ld. CIT(A)”, for short] dated 12.03.2018, 15.05.2018, 16.05.2018, 16.05.2018 & 30.05.2019 for the AYs 2011-12, 2012-13, 2013-14, 2014-15 & 2016-17. The assessee has also filed cross objections in all the aforesaid assessment years under consideration 3 ITA Nos.4164, 5186, 5187, 5188/Del/2018 ITA No.5951/Del/2019 CO Nos.155, 183, 184 & 185/Del/2018 CO No.143/Del/2019 2. Since the issues are common and the appeals are connected, therefore, the same are heard together and being disposed off by this common order. First we take up ITA No.4164/Del/2018 for AY 2011-12 as the lead case and the Revenue has taken the following grounds of appeal in Assessment Year 2011-12 :- “1. On the facts and under the circumstances of the case, the Ld.CIT (A) is justified in allowing the appeal of the assessee on late deposit of employees' contribution to PF ignoring the CBDT circular No.22/2015 dated 17.12.2018. 2. On the facts and under the circumstances of the case, the Ld. CIT (A) is justified in allowing the interest of Rs.2,35,97,700/- ignoring the fact that the assessee on one side had invested huge amounts of Rs.18,50,80,000/- in the company (in which director of the assessee company is owner) at without any return, on the other hand the assessee company is having loans on which it is paying. 3. On the facts and under the circumstances of the case, the Ld. CIT (A) is justified in allowing the appeal of the assessee ignoring the discrepancies found by the AO during the assessment proceedings based on which the AO has rejected the books of account u/s 145(3) on the basis of surmises and junctures and making addition of Rs.1,66,12,630/- by applying fictional gross profit rate @ 15.63% as the book results declared by the assessee are not reliable and does not give the fair picture of books result of the assessee company. 4. On the facts and under the circumstances of the case, the Ld. CIT (A) is justified in allowing the depreciation of Rs.78,75,889/-. From the section 32 of I.T. Act 1961 it is clearly evident that depreciation should be allowed if the asset has been used for the purposes of the business. But in the case of assessee firm business activity has been carried out only for seven months during the year under consideration. 4 ITA Nos.4164, 5186, 5187, 5188/Del/2018 ITA No.5951/Del/2019 CO Nos.155, 183, 184 & 185/Del/2018 CO No.143/Del/2019 5. On the facts and under the circumstances of the case, the Ld. CIT (A) is justified in allowing the appeal of the assessee of Rs.3,62,00,000/- u/s 68 of the Act without appreciating the fact that capital receipts in the name of the genuine tax payers introduced in the books of the assessee are to be assessed in the hands of such an assessee. 6. On the facts and under the circumstances of the case, the Ld. CIT (A) is justified in allowing the appeal of the assessee of Rs.2,10,11,198/- on unsecured loans ignoring the discrepancies found by the AO during the assessment proceedings and the assessee has failed to discharge his primary onus of providing the identity & creditworthiness of the lender and genuineness of the transaction.” 3. With regard to issue of late deposit of employees’ contribution to Provident Fund (PF), we observed that the issue under consideration is against the assessee based on the decision of Hon’ble Supreme Court in the case of Checkmate Services Pvt. Ltd. vs. CIT 143 taxmann.com 178. Accordingly, first ground of appeal raised by the Department is allowed. 4. With regard to Ground No.2 relating to disallowance of interest on unneeded loans, relevant facts are, in the assessment proceedings, Assessing Officer has observed that the assessee had invested Rs.18,50,80,000/- in share of M/s. XLR Capital (Cyprus) Limited and he observed that assessee had not shown any profit or any receipts from the above company. One of the Directors of the assessee company is Kuldip Singh who owned 100% of M/s. XLR Capital (Cyprus) Limited. Since 5 ITA Nos.4164, 5186, 5187, 5188/Del/2018 ITA No.5951/Del/2019 CO Nos.155, 183, 184 & 185/Del/2018 CO No.143/Del/2019 assessee has not earned any return from the investment made in M/s. XLR Capital (Cyprus) Limited, he observed that the assessee company is paying interest on unsecured loans from M/s. Global Minetec Ltd. @ 12% and interest to State Bank of Bikaner and Jaipur @ 12.75% per annum. With the above observation, AO disallowed the proportionate interest paid on unsecured loans and bank loan at the average rate of 12.75% on the investment made by the assessee in M/s. XLR Capital (Cyprus) Limited and determined the proportionate interest of Rs.2,35,97,700/- and disallowed the same. 5. He further observed that the assessee is manufacturing ‘industrial explosives’ and it has made investment in some other company which is not part and parcel of the business of the assessee and also there is no profit in the business of the assessee from said investment. 6. Aggrieved with the above order, assessee preferred an appeal before the ld. CIT(A) and ld. CIT (A) after considering the detailed submissions allowed the ground raised by the assessee with the following observations:- “7.3 I have carefully considered the assessment order and written submission filed by the Ld. AR. The appellant is a Limited Company and during the year under consideration the appellant company was engaged in the business of explosives for mining purpose. The disallowance of Rs.2,35,97,700/- u/s 36(1)(iii) of the Act was made on account of disallowance of interest expenditure 6 ITA Nos.4164, 5186, 5187, 5188/Del/2018 ITA No.5951/Del/2019 CO Nos.155, 183, 184 & 185/Del/2018 CO No.143/Del/2019 corresponding to amount invested in a subsidiary group company for non-business purpose. The Appellant Company entered in the Joint venture Agreement with M/s XLR Capital (Cyprus) Ltd (XLR) on 29.01.2010 for making the investment in the share capital of M/s Ethiopotash BV, a company registered under the law of Netherland and having registered office at Industrieweg 10, 4541 HJ, Sluiskil,Netherland. MIs XLR Capital (Cyprus) Ltd. was incorporated on 13.01.2009 under law of Cyprus with an intention to invest in the shares/bonds/debentures in various companies. Ethiopotash B. V. was incorporated on 15.05.2009 under the law of Netherland for exploration of the Potash Project in Musley Area in Danakhil Depression, Ethiopia. As per the above J.V agreement, the cost of project was estimated at 25 million USD (equivalent to approx Rs 115 crores). Out of which 50% of the total project cost has to be contributed by Yara Netherland BV. and remaining 12.5 Million USD has to be contributed by M/s XLR Capital (Cyprus) Ltd. XLR Capital (Cyprus) Ltd. approached M/s Rajasthan Explosives and Chemical Ltd. (RECL) to invest USD 8.50 Millions in its equity for getting 32.43% stake in XLR and both parties entered into a Joint Venture Agreement dated 29.01.2010 as stated above. 7.4. The appellant Company has made above investment in the M/s XLR Capital Cyrus Ltd vide joint venture agreement dated 29.01.2010 by virtue of same the Appellant Company indirectly purchase 18.59% stake in Ethiopotash Project. On perusal of the impugned order, it is quite evident that the AO has made proportionate disallowance of Interest amounted to Rs.2,35,97,7001- purely on the basis of conjectures and without placing any corroborative material on record which could indicate that there is no element of commercial expediency in the advances given by the appellant to its subsidiary. It is pertinent to note that the AO while making the said proportionate disallowance amounting to Rs.2,35,97,700/- couldn't point out any specific instance to show as to how the investment in its subsidiary company had not been incurred wholly and exclusively for the purpose of the business. The appellant has quoted the case of the Hon'ble Supreme Court in Madhav Prasad Jatia vs. CIT, AIR 1979 SC 1291: 118 ITR 200, 208, wherein it was held that the expression \"for the purpose of business\" occurring under the 7 ITA Nos.4164, 5186, 5187, 5188/Del/2018 ITA No.5951/Del/2019 CO Nos.155, 183, 184 & 185/Del/2018 CO No.143/Del/2019 provision is wider in scope than the expression \"for the purpose of earning income, profits or gains.\" 7.5. The judgment of M/s S. A. Builders Ltd. v CIT held that what is relevant is whether the amount was advanced as a measure of commercial expediency. The judgment of the Hon'ble Delhi High Court in the case of CIT v Dalmia Cement Ltd. has held that it should be established that there was nexus between the expenditure and purpose of the business. 7.6. In state of Madras vs. Coelho (GJ), the Supreme Court has held that, in ordinary commercial practice, payment of interest is taken as a revenue expenditure. The money borrowed must be for the purposes of the appellant's business or profession that is carried on during the year of account. 7.7. The issue whether borrowed capital had been actually used for business is one relating to facts and does not give rise to a question of law. The inference that borrowing is for non-business purposes on the particular facts of the case has not been brought by the AO while the Ld. AR in his submissions has vehemently argued that it was utilized for business purpose. 7.8. It is quite apparent that the appellant is not incurring any such expenditure which is not a business expenditure. All expenditure has been incurred for the purpose of business. The appellant had borrowed funds which was for business purposes and was paying interest on these funds. In view thereof, the disallowance of Rs.2,35,97,700/- is deleted. The ground of appeal is ruled in favour of the appellant.” 7. Aggrieved, Revenue is in appeal before us. At the time of hearing, ld. DR of the Revenue objected to the relief granted by the ld. CIT (A) and submitted that the assessee has invested in M/s. Ethiopotash B.V.. He wondered whether M/s. Ethiopotash B.V. had allotted share capital to the 8 ITA Nos.4164, 5186, 5187, 5188/Del/2018 ITA No.5951/Del/2019 CO Nos.155, 183, 184 & 185/Del/2018 CO No.143/Del/2019 assessee. He heavily relied on the findings of the AO that one of the Directors who is also a Director in M/s. XLR Capital (Cyprus) Limited and since no benefit accrued to the assessee, the assessee cannot claim the interest expenditure which is not incurred for the purpose of business. 8. On the other hand, ld. AR of the assessee brought to our notice findings of the ld. CIT (A) that assessee has entered into Joint Venture Agreement with M/s. XLR Capital (Cyprus) Limited for making the investment in share capital of M/s. Ethiopotash B.V. and he submitted that Potassium is an important ingredient in the business of the assessee and the company, M/s. Ethiopotash B.V. is a Netherland base company which is involved for exploration of the Potash Project in Musley Area in Danakhil Depression, Ethiopia. Based on the joint venture, assessee has invested the share capital through a joint venture set up. It may not have earned benefit during the year but assessee will reap the benefit in the subsequent years and Potassium being the important raw material for the assessee controlling the inflow of material will be a huge benefit to the assessee company, therefore, he relied on the findings of the ld. CIT (A). 9. Considered the rival submissions and material placed on record. We observed that the assessee has entered into joint venture agreement through M/s. XLR Capital (Cyprus) Limited and M/s. Ethiopotash B.V., 9 ITA Nos.4164, 5186, 5187, 5188/Del/2018 ITA No.5951/Del/2019 CO Nos.155, 183, 184 & 185/Del/2018 CO No.143/Del/2019 Netherland based exploration company. We observed that as per the joint venture agreement, the cost of the project was estimated at 25 million USD and out of which, 50% of the total project cost was to be contributed by Yara Netherland B.V. and balance was to be contributed by M/s. XLR Capital (Cyprus) Ltd. M/s. XLR Capital (Cyprus) Ltd. has approached the assessee to invest 8.50 million USD in its equity for getting 32.43% stake in M/s. XLR Capital (Cyprus) Ltd.. Just because assessee has not earned any income during the year, the AO proceeded to disallow the proportionate interest relating to the above said investment. After careful consideration, we are of the view that assessee has invested in M/s. Ethiopotash B.V. for exploration of Potash Project in Musley Area in Danakhil Depression, Ethiopia. The assessee has invested 32.43% stake in M/s. XLR Capital (Cyprus) Ltd. which in turn has invested 12.5 million USD in M/s. Ethiopotash B.V. company. The controlling of the raw material supply is key to any organization and assessee has invested to control the supply of raw material from Ethiopia. Therefore, the investment made by the assessee is directly linked to the business of the assessee. Therefore, we do not see any reason to disturb the findings of the ld. CIT (A) and accordingly, ground no.2 raised by the Revenue is dismissed. 10 ITA Nos.4164, 5186, 5187, 5188/Del/2018 ITA No.5951/Del/2019 CO Nos.155, 183, 184 & 185/Del/2018 CO No.143/Del/2019 10. With regard to Ground No.3 raised by the Revenue on the issue of rejection of books of account under section 145(3) of the Act, the relevant facts are, during assessment proceedings, the AO asked the assessee to furnish gross profit working for the last three years and directed to explain the reasons and justification for gross profit vide questionnaire dated 26.07.2013. In response, assessee has submitted the reasons for fall in the gross profit and also explained that the company is in operation for only part of the year from April 2010 to August 2010. Assessee has submitted the details of purchases, sales and expenses incurred by the assessee during the year along with quantity-wise details. However, after considering the above submissions, the AO rejected the contentions of the assessee and estimated the gross profit. 11. Aggrieved assessee preferred an appeal before the ld. CIT (A) and submitted detailed submissions countering observations of the AO. After considering the detailed submissions of the assessee, ld. CIT (A) remanded the matter back to the AO and AO submitted detailed remand report which is reproduced at page 23 and 24 of the appellate order. After considering the submissions and remand report submitted by the AO, ld. CIT (A) allowed the claim of the assessee as under :- “8.4. Therefore, in view of these facts the very foundation to reject the appellant's trading results has been effectively demonstrated by 11 ITA Nos.4164, 5186, 5187, 5188/Del/2018 ITA No.5951/Del/2019 CO Nos.155, 183, 184 & 185/Del/2018 CO No.143/Del/2019 the appellant that the AO was in error in making assumption and presumption in the original assessment and thereafter in the remand proceedings when the details were filed by the appellant explaining the month-wise consumption, production as well as filing the VAT returns and stock register, there was no adverse comments by the AO except for stating that they should have been produced at assessment stage. The appellant has filed ledger copies of the purchases and sales have also filed the stock register and VAT returns in the paper book included in the additional evidence which was sent to the Assessing Officer. 8.5. The provisions of section 145(3) would be applicable only when the AO is able to demonstrate that he is not satisfied about the correctness or completeness of the accounts of the appellant or where the method of accounting provided in sub-section (1) has not been regularly followed by him. Under such situation the AO may make an assessment in the manner provided u/s 144 of the Act. 8.6. In the present case, the rejection of the trading results on the basis of non- production of certain details I vouchers cannot lead to an inference that there are sales made outside the books and to draw an adverse inference against the appellant. If the AO has doubted the correctness or completeness of the account, some concrete evidence was required to be obtained. The fact of stoppage of production cannot be ignored once it was substantiated by the Ministry. 8.7. The Ld. AR has also relied on the judgements of Hon'ble Allahabad High Court in the case of Imran Ahmed vs. CIT (1982) Tax CR (NOC) III (A11) held that on account of new absence of vouchers to substantiate entry for accounts, accounts in total cannot be rejected. It is well settled that reasonableness of expenditure should be judged from the view point of the business carried on by the appellant and not from the view point of the revenue authorities. 8.8 Further, Hon'ble Supreme Court and the various High Courts in number of cases have held that before invoking the provisions of Section 145(3) of the Act, the Assessing Officer has to bring on record material on the basis of which he has arrived at the 12 ITA Nos.4164, 5186, 5187, 5188/Del/2018 ITA No.5951/Del/2019 CO Nos.155, 183, 184 & 185/Del/2018 CO No.143/Del/2019 conclusion with regard to correctness or completeness of the accounts of the appellant or the method of accounting employed by it. 8.9 The AO had made an addition invoking the provisions of Section 145(3) of the Act rejecting the manufacturing and trading results. 8.10 The Ld. AR has demonstrated the errors made by the AO as well as deficiency in the working of the yield as discussed in this order above, The appellant by way of additional evidence had also filed details of production of VAT returns, Purchase and sale records etc. have been verified by the AO in remand proceedings and no material adverse inference is drawn. In view of these facts, the AO's action in rejecting the book results is not sustainable. Therefore, the ad-hoc addition of RS.1,66,12,630/- after applying the provisions of Section 145(3) is directed to be deleted. This ground of appeal is ruled in favour of the appellant.” 12. Aggrieved Revenue is in appeal before us. 13. At the time of hearing, ld. DR relied on the findings of the AO. 14. On the other hand, ld. AR submitted as under :- “With respect to the aforesaid issue, during the assessment proceedings, the Assessing Officer directed the Appellant Company to furnish the Gross Profit working for last three years and to explain the reasons and justification in decrease in Gross Profit in the current Assessment Year. The Appellant Company submitted that in the year under assessment the company was in operation for only part of the years from April 2010 to August 2010 due to which ratio of the company decreased substantially as compared to previous assessment years, but wages of the worker were paid for complete years. The Appellant also submitted party wise details of purchase and sales exceeding Rs. 5,00,000/- along with copy of account of respective party. The Appellant also submitted details of Salary & 13 ITA Nos.4164, 5186, 5187, 5188/Del/2018 ITA No.5951/Del/2019 CO Nos.155, 183, 184 & 185/Del/2018 CO No.143/Del/2019 Wages paid and Quantity wise details of sale/purchase made. In view of above the appellant complied with all the details asked for and the Assessing Officer nowhere asked to further details to substantiate the decrease in Gross Profit Ratio. However, the Assessing Officer without appreciating the aforesaid rejected the books of accounts on flimsy grounds and without according proper reasons. Therefore, in light of the above, the Appellant Company submitted additional evidences before the CIT(A), which are as under: 1) Copy of VAT returns filed for year under assessment along with reconciliation of Sales as appearing in Profit & Loss account. 2) Copy of Stock Register for the month of April 2010 & March 2011 as per excise records along its reconciliation with opening and closing stock appearing in Balance Sheet. 3) Copy of permission dt. 20.12.2010 of Chief controller of Explosives Nagpur, Ministry of Commerce & Industry, Petroleum, and Explosives Safety Organization for sale of explosives lying in factory of appellant. 4) Party wise details of sales exceeding Rs. 5 Lacs with amount of sales. 5) Party wise details of purchase exceeding Rs. 5 Lacs with amount of purchase. It may be noted that the Chief controller of Explosives Nagpur, Ministry of Commerce & Industry, Petroleum, and Explosives Safety Organization has suspended the licenses of the Appellant Company with effect from 27th August 2010 and the suspension of licenses was revoked on 29.08.2011 however the Appellant Company has obtained the permission to sale out the stock in hand. The above permission was granted vide letter dated 20.12.2010 because the stock of the Appellant Company has shelf life of 6 month. 14 ITA Nos.4164, 5186, 5187, 5188/Del/2018 ITA No.5951/Del/2019 CO Nos.155, 183, 184 & 185/Del/2018 CO No.143/Del/2019 It may further be noted that during the month of February and March 2011, the Appellant Company only cleared out its stock, which is otherwise not saleable in the market after the 6 month i.e. shelf life of the stock. During the aforesaid period, Appellant Company has not concentrated on the profitability; rather the focus was on clearing out the stock. Had the Appellant Company not been able to clear out its stock, then the Appellant Company had to incur the high disposal cost apart from the cost of stock not sold off. Appellant Company submitted chart showing the G.P ratio for the aforesaid periods which shows that G.P Ratio of the Appellant Company has substantially decreased (in fact negative ratio of 35.74% due to gross loss suffered) in license suspension period. Further, during the A. Y., the turnover of the Appellant Company also decreased substantially from 68.06 Cr to 21.83 Cr. due to above suspension of license, whereas the fixed cost of salary & wages, power & fuel, water and stores & spares etc. was not proportionately reduced. However, due to the fixed component, the salary & wages remained at Rs. 2.42 Cr. In A. Y. 11-12 as compared to Rs. 4.09 Cr in A.Y. 10-11 & 3.42 Cr in A.Y. 09-10. The Appellant Company had to pay salaries for the complete year to retain its qualified and trained staff in view of the facts that the Appellant Company was rigorously pursuing the revocation of the suspension of license, which was revoked on 24/08/2011 and the Appellant Company has started its production activities at their Dholpur plant w.e.f. 31110/2011. Moreover, the site location i.e. Dholpur is a remote area wherein the hiring of new qualified and trained staff will be very difficult, once the old staff retrenched. Moreover, any lay off plans will invite inherent problems like strikes, employees unrest etc. which may damage the machineries or prevent the new staff from coming to company and also bring bad name to the Company. Hence despite all the odds, the Appellant Company has to incur the fixed cost of salaries. Similarly, Fixed cost of power & fuel (like monthly rental of electricity bills), water and stores & spares (to keep the machinery in running condition) has not been reduced proportionately to the 15 ITA Nos.4164, 5186, 5187, 5188/Del/2018 ITA No.5951/Del/2019 CO Nos.155, 183, 184 & 185/Del/2018 CO No.143/Del/2019 turnover. The additional evidences submitted by the Appellant were sent to AO for remand by the CIT(A). The CIT(A) admitted the additional evidences after detailed discussion on AO's reply on remand report and rejoinder of Appellant on AO's reply. During the appellate proceedings, the Appellant Company demonstrated the errors made by the Assessing Officer as well as deficiency in the working of the yield by filing additional evidences as submitted above. The additional evidences were verified by the AO in the remand proceedings and no adverse inference is drawn and hence, the decision of the CIT(A) to delete the ad-hoc addition too ought to be sustained.” 15. Considered the rival submissions and material available on record. We observed that the AO has rejected the books of account merely relying on the variation in the GP recorded by the assessee in the past three years and in remand proceedings, the AO has accepted the various details submitted by the assessee and has not made any negative observations on the details furnished by the assessee. After careful consideration, we observed that ld. CIT (A) has elaborately discussed that AO has not made preliminary verification of the information submitted by the assessee and rejected the books of account and proceeded to estimate the income. After careful consideration of the findings of the ld. CIT (A) and also remand proceedings submitted by the AO, we are inclined to agree with the findings of the ld. CIT (A). Accordingly, ground no.3 raised by the Revenue is dismissed. 16 ITA Nos.4164, 5186, 5187, 5188/Del/2018 ITA No.5951/Del/2019 CO Nos.155, 183, 184 & 185/Del/2018 CO No.143/Del/2019 16. With regard to Ground No.4, disallowance of depreciation, relevant facts are, the AO observed that assessee has claimed depreciation of Rs.1,89,02,134/- and observed that assessee vide reply dated 08.10.2013 in Annexure 7 that the company was in operation only a part of the year from April 2010 to October 2010. The AO observed that as per section 32 of the Act , depreciation should be allowed if the asset was used for the purpose of business. Since the assessee has carried out the business only for seven months, accordingly he disallowed the depreciation for the proportionate period in which the plant was not functional and treated the claim of the depreciation as excess claim and disallowed an amount of Rs.78,75,8889/-. 17. Aggrieved assessee preferred an appeal before the ld. CIT (A) and before ld. CIT (A), the assessee has submitted that in the similar facts, ITAT in assessee’s own case in AY 2000-01 has decided the issue in favour of the assessee and placed on record relevant findings. After considering the findings of the ITAT in assessee’s own case, he allowed the claim of the assessee. 18. Aggrieved Revenue is in appeal before us. 19. At the time of hearing, ld. DR of the Revenue relied on the findings of the AO and ld. AR of the assessee relied on the findings of the ld. CIT (A). 17 ITA Nos.4164, 5186, 5187, 5188/Del/2018 ITA No.5951/Del/2019 CO Nos.155, 183, 184 & 185/Del/2018 CO No.143/Del/2019 20. Considered the rival submissions and material available on record. We observed that the assessee has claimed depreciation for the whole year based on the concept of wear and tear and in the similar situation, assessee has given lay off for the plant in the AY 2000-01 and the coordinate Bench has decided the issue in favour of the assessee. Respectfully following the above decision, we are inclined to allow the claim of the assessee in the year under consideration also. Accordingly, ground no.4 raised by the Revenue is dismissed. 21. With regard to Ground No.5 regarding share application money, the relevant facts are, during assessment proceedings, AO observed that the assessee has received share application money of Rs.2.66 crores which was introduced during the relevant assessment year and assessee was asked to submit the details of subscribers along with address and payment details. In response, assessee has submitted the relevant details. On the basis of list, the Assessing Officer issued summon u/s 131(1) of the Act to the relevant applicants to attend the office along with supporting documents and their identity, creditworthiness and genuineness of the transaction. In response, M/s. Maneesha Finlease Ltd. and Ms. Indu Solanki has submitted requisite details and in respect of M/s. Blastec (India) Pvt. Ltd. summon was returned with the remarks as left. 18 ITA Nos.4164, 5186, 5187, 5188/Del/2018 ITA No.5951/Del/2019 CO Nos.155, 183, 184 & 185/Del/2018 CO No.143/Del/2019 Subsequently, assessee provided the required details as the said company is a sister concern. AO observed that since the abovesaid applicant has not attended the proceedings and only documents were filed which could not prove the genuineness of the transactions by them. Further he observed certain discrepancies in documents filed by the ld. AR of the assessee. After discussing the above defects, he treated the share application money introduced by M/s. Maneesha Finlease Ltd. and M/s. Blastec (India) Pvt. Ltd. amounting to Rs.3.62 crores as unsubstantiated and proceeded to make addition under section 68 of the Act. 22. Aggrieved assessee preferred an appeal before the ld. CIT (A) and filed detailed submissions before the ld. CIT (A) as under :- \"The Ld. AO added back share application money received from M/s Blastec (India) Pvt. Ltd. and M/s Maneesha Finlease Ltd. of Rs.2,66,00,000/- and 96,00,000/- respectively u/s 68 of The Income Tax Act, 1961. The Ld. AD has made various allegations while making the above addition Our allegation wise reply is as under: 1. Summons u/s 131 were issued to applicants. However summons sent to M/s. Blastec (India) Pvt. Ltd. was returned with the remarks of \"left\". The summons were issued to M/s Blastec (India) Pvt. Ltd on 18, First Floor, Satya Niketan, Opp. Shri Venkteshwar College, New Delhi on 30th January, 2014. The registered office of the company of Appellant was also situated there till 1st August, 2013 and later on shifted to 0-4, Clarion Collection (Qutub Hotel), Shaeed Jeet Singh Marg, New Delhi. The above notice may have returned due to misunderstanding by postal Department regarding change of 19 ITA Nos.4164, 5186, 5187, 5188/Del/2018 ITA No.5951/Del/2019 CO Nos.155, 183, 184 & 185/Del/2018 CO No.143/Del/2019 Registered office of the Appellant as M/s Blastec (India) Pvt. Ltd was also sharing the same office premises with Appellant. However as mentioned by the Ld. AD in his order that Appellant has provided the requisite details and mentioned also that M/s Blastec (India) Pvt. Ltd. is a sister concern of the Appellant company. Moreover Maj. Niranjan Singh (Retd.) who is Managing Director of Appellant is also Director in M/s Blastec (India) Pvt. Ltd and Ex.Capt. K.S. Solanki is common shareholder of M/s Blastec (India) Pvt. Ltd. and Appellant. Therefore no adverse inference of same should be taken of return of summon in the light of following documents, which were submitted to prove the existence and genuineness of transaction:  Details of Share Application Money, ITR Acknowledgement, Bank Statement of M/s Blastec (India) Pvt. Ltd. and copy of A/c of M/s Blastec (India) Pvt. Ltd. as appearing in the books of appellant were submitted during assessment proceedings along with letter dt. 26.12.2013 in response to query no. 7 raised vide questionnaire dt. 05.12.2013.  Letter dt. 15.02.2014, duly signed by Major Niranjan Singh Solanki, Director of M/s Blastec (India) Pvt. Ltd. was submitted in response to summons issued through authorized representatives of the Appellant' Company, Mr. Gaurav Panda, Chartered Accountant containing with complete Bank Statements for the F. Y. 10-11, Income Tax Return Acknowledgement, complete Balance Sheet as on 31.03.2011 and confirmation duly signed by above Director. 2. Applicant has not attended the proceedings and only documents were filed which could not proved their existence and genuineness of transaction with them. Mere confirmation and other documents in which even the signatures put in by the persons giving confirmation are not verifiable, cannot be relied upon in view of circumstances of the case. Summons issued to Maneesha Finlease Ltd. was duly complied by Authorized Representative of that company. Maneesha Finlease Ltd. is also sister concern of the Appellant company and the same is also evident from related party disclosure at Point no. 8 of the Notes to Accounts of Balance Sheet of Appel/ant company. Further 20 ITA Nos.4164, 5186, 5187, 5188/Del/2018 ITA No.5951/Del/2019 CO Nos.155, 183, 184 & 185/Del/2018 CO No.143/Del/2019 Maneesha Finlease Ltd. is Public Limited Company promoted by Capt. K. S. Solanki, who is also common shareholder in Maneesha Finlease Ltd and Appellant. The summons were complied through Authorized representative as registered office of the company is situated at 153, Vasant Enclave, New Delhi and its director Capt. K. S. Solanki also resides in New Delhi. As the company cannot represent itself, It is normal practice in the case of Company to represent itself through Authorized Representative. In that case, a director representing the company is also a authorized representative of the company. Therefore on adverse inference of same should be taken in the light of following documents, which were submitted to prove the existence and genuineness of transaction:  Details of Share Application Money, ITR Acknowledgement of M/s Maneesha Finlease Limited and copy of A/c of M/s Maneesha Finlease Limited as appearing in the books of appellant were submitted during assessment proceedings alongwith letter dt. 26.12.2013 in response to query no. 7 raised vide questionnaire dt. 05.12.2013.  Letter dt. 10.02.2014, duly signed by Ex-Capt: Kuldeep Singh Solanki, Director of M/s Maneesha Finlease Ltd. was submitted on 14.02.2014 in response to summons issued through authorized representatives, Sh. Naresh Kumar, Chartered Accountant and Partner of M/s G Singh & Co., Chartered Accountants containing, Bank Statements, Income Tax Return Acknowledgement, complete Balance Sheet as on 31.03.2011 and confirmation duly signed by above Director.  Also Explanation of the basis of applying for the shares of Appellant Company was also submitted along with above letter at annexure 3. 3. Amount of application money of M/s Maneesha Finlease Ltd. is not verifiable from its bank statement. Amount of application was shown at Rs.96,00,000/- while on perusal of bank statement it was not verifiable. Hence, genuineness of transaction could not prove in its case. The Ld. AO was not able to trace the payment of Rs. 96,00,000/- from the Bank Statement of M/s Maneesha Finlease Ltd. as the 21 ITA Nos.4164, 5186, 5187, 5188/Del/2018 ITA No.5951/Del/2019 CO Nos.155, 183, 184 & 185/Del/2018 CO No.143/Del/2019 same was not paid from Bank A/c of M/s Maneesha Finlease Ltd. However the Ld. A.O. is ignored the explanations of the basis of applying for the shares of appellant company submitted with letter dt. 10.02.2014 as mentioned at Point 2, which clearly show that Rs. 96,00,000/- was paid to Appellant company as per details given below:- (i) Share Application Money As on 31st March, 2011 Maneesha Finlease Limited has given share application money Rs.3,82,40,000/- as per the details (a) & (b) below:- (a) Share application money given to Rajasthan Explosive & Chemicals Ltd. Rs.78,00,000/- (Bank statement enclosed) S.No. Particulars From Amount Date 1 Ch-092417 Bank of India Capt K.S. Solanki on behalf of Maneesha Finlease Ltd. 38,00,000/- 06/12/2010 2 Ch-092425 Bank of India Capt K.S. Solanki on behalf of Maneesha Finlease Ltd. 40,00,000/- 23/12/2010 (b) Share application money of Rs. 3,04,40,000/- transferred from the following companies on account of merger with Maneesha Finlease Limited S.No. Particulars From Opening Transfer 1 Opening as 01/04/2010 Harbour Commotrade (P) Ltd. 76,40,000/- 76,40,000/- 2 Opening as 01/04/2010 Adbhut Consultancy Services (P) Ltd. 15,00,000/- Ch-049093 09/10/2010 Adbhut Consultancy Services (P) Ltd. 9,00,000/- Ch-049097 28/12/2010 Adbhut Consultancy Services (P) Ltd. 9,00,000/- 33,00,000/- 3 Opening as 01/04/2010 Abhivadan Management & Consultancy (P) Ltd. 60,00,000/- 60,00,000/- 4 Opening as 01/04/2010 Mystery Finlease (P) Ltd. 15,00,000/- 15,00,000/- 22 ITA Nos.4164, 5186, 5187, 5188/Del/2018 ITA No.5951/Del/2019 CO Nos.155, 183, 184 & 185/Del/2018 CO No.143/Del/2019 5 Opening as 01/04/2010 Black Gold Transport (P) Ltd. 50,50,000/- 50,50,000/- 6 Opening as 01/04/2010 Sainik Cement (P) Ltd. 69,50,000/- 69,50,000/- Therefore an amount of Rs.96,00,000/- was given as share application money to the appellant as mentioned above in bold i.e. (38,00,000/- + 40,00,000/- + 9,00,000/- + 9,00,000/-). The Copies of Bank Statement were also submitted with above letter along with merger order dt.31.01.2011 of Delhi High Court by virtue of same \"M/s Papyrus International Limited, Harbour Commotrade Private Limited, Adbhut Consultancy Services (P) Ltd., Abhivadan Management & Consultants Private Limited, Today Leasefin Pvt. Ltd., Mystery Finlease Private Limited, Sainik Cement Private Limited & Ex-Servicemen Blackgold Transporters (India) Private Limited were merged in M/s Maneesha Finlease Ltd. 4. On perusal of bank statement of M/s Maneesha Finlease Ltd it was found that there were credit entries appearing from the sister concerns of group just before and/or after the amount advanced to appellant company. Hence, genuineness of transaction could not be proved in this case. We are unable to understand the observation of Ld. AO. How appearance of credit entries from sister concerns of group just before or after the advance make the transaction non genuine? 5. It is also not verifiable from the balance sheet of the M/s Maneesha Finlease Ltd. that it has given Share Application Money to the appellant company. Nowhere, name of appellant company has been appeared in the books of M/s Maneesha Finlease Ltd. which could establish about the fact that appellant company has received application money from M/s Maneesha Finlease Ltd. Hence, genuineness of transaction again could not proved. The Ld. A.O. ignored the details of schedule (i.e list / groupings) of balance sheet, wherein Rs.3,82,40,000/- is mentioned as share application money given to appellant company. However, the same 23 ITA Nos.4164, 5186, 5187, 5188/Del/2018 ITA No.5951/Del/2019 CO Nos.155, 183, 184 & 185/Del/2018 CO No.143/Del/2019 are enclosed at Page No. 362, wherein we have highlighted the related portion. Further note that these details of schedule (i.e. list / groupings) are part & parcels of Balance Sheet of M/s Maneesha Finlease Ltd. and are duly certified by their statutory auditors. On perusal of ITR of M/s Blastec (India) Pvt. Ltd. it was found that it is a loss making company and shown loss of Rs.1,49,61,163/-. Therefore, creditworthiness of the applicant could not be proved. There is no bar on giving share application money by a loss making company. We would like to draw your kind attention to Balance Sheet of M/s Blastec (India) Pvt. Ltd., which have share capital of Rs.5,70,26,600/- and Reserves & Surplus of Rs.1,79,73,260.85. The sum total of both figures comes to Rs. 7,49,99,860.85 which is quite more than the share application money given of Rs. 2,66,00,000/-. This figure also shows the credit worthiness of M/s Blastec (India) Pvt. Ltd. The Balance Sheet of n/s Blastec (India) Pvt. Ltd. is duly audited by their statutory auditors and there should not be any doubt in the mind of Ld. A. O. regarding Assets, Liabilities and Net Worth of M/s Blastec (India) Pvt. Ltd. 6. On perusal of bank statement of M/s Blastech India Pvt. Ltd. it was found that there were credit entries appearing just before and/or after the amount advanced to assessee company. Hence, genuineness of transaction could not proved in its case. We are unable to understand the observation of Ld. AO. How appearance of credit entries from sister concerns of group just before or after the advance make the transaction non genuine? In view of above, you are requested to delete the above additions.\" 23. After considering the detailed submissions of the assessee, ld. CIT (A) allowed the claim of the assessee by observing as under :- 24 ITA Nos.4164, 5186, 5187, 5188/Del/2018 ITA No.5951/Del/2019 CO Nos.155, 183, 184 & 185/Del/2018 CO No.143/Del/2019 “10.3. Moreover, M/s Maneesha Finlease Ltd. is also sister concern of the Appellant company and the same is also evident from related party disclosure at Point no. 8 of the Notes to Accounts of Balance Sheet of Appellant company. Further Maneesha Finlease Ltd. is Public Limited Company promoted by Capt. K. S. Solanki, who is also common shareholder in Maneesha Finlease Ltd and Appellant. The summons were complied through Authorized representative as registered office of the company is situated at 153, Vasant Enclave, New Delhi and its director Capt. K. S. Solanki also resides in New Delhi. As the company cannot represent itself, it is normal practice in the case of company to represent itself through Authorized Representative. In that case, a director representing the company is also an authorized representative of the company. Therefore, on adverse inference of same should be taken in the light of following documents, which were submitted to prove the existence and genuineness of transaction:  Details of Share Application Money, ITR Acknowledgement of M/s Maneesha Finlease Limited and copy of A/c of M/s Maneesha Finlease Limited as appearing in the books of appellant were submitted during assessment proceedings alongwith letter dt. 26.12.2013 in response to query no. 7 raised vide questionnaire dt. 05.12.2013.  Letter dt. 10.02.2014, duly signed by Ex-Capt. Kuldeep Singh Solanki, Director of M/s Maneesha Finlease Ltd. was submitted on 14.02.2014 in response to summons issued through authorized representatives, Sh. Naresh Kumar, Chartered Accountant and Partner of M/s G Singh & Co., Chartered Accountants containing, Bank Statements, Income Tax Return Acknowledgement, complete Balance Sheet as on 31.03.2011 and confirmation duly signed by above director. 10.4. The reconciliation has also been filed. No adverse inference has been drawn by the AO with regard to the evidence filed. Merely on this ground i.e. non receipt of reply to notice, it cannot be held that the appellant has not discharged the onus of receipt of monies from these concerns. The Hon'ble Apex Court in the case of CIT vs. Orissa Corporation Ltd. reported in 159 ITR 78 held as under: 25 ITA Nos.4164, 5186, 5187, 5188/Del/2018 ITA No.5951/Del/2019 CO Nos.155, 183, 184 & 185/Del/2018 CO No.143/Del/2019 \"In this case the assessee had given the names and addresses of the alleged creditors. It was in the knowledge of the Revenue that the said creditors were income-tax assessees. Their index number was in the file of the Revenue. The Revenue, apart from issuing notices under section 131 at the instance of the assessee, did not pursue the matter further. The Revenue did not examine the source of income of the said alleged creditors to find out whether they were credit- worthy or were such who could advance the alleged loans. There was no effort made to pursue the so called alleged creditors. In those circumstances, the assessee could not do any further. In the premises, if the Tribunal came to the conclusion that the assessee had discharged the burden that lay on him then it could not be said that such a conclusion was unreasonable or perverse or based on no evidence. If the conclusions based on some evidence on which a conclusion could be arrived at, no question of law as such arises.\" 10.5. Adverting to the facts of the case, the appellant has furnished the addresses, income tax particulars of concerns from whom share application money has been received and supported by the fact that the amounts were received through banking channels. Therefore, there cannot be valid justification to suggest that the burden of the appellant viz a viz the creditworthiness of the share applicants has not been discharged. In view thereof, and considering the totality of facts and circumstances obtaining with respect to the share applicants, where reply was not received, it is not a sufficient reason to invoke provisions of section 68 and the treat the same as unexplained credits. More so, in the light of evidences filed during assessment proceedings on which no adverse inference is drawn by the AO. Since the appellant company has discharged the burden in respect of identity, creditworthiness and genuineness of transactions in respect of share applicants which are also sister concerns, the addition of Rs.3,62,00,000/- made by the AO u/s 68 of the Act cannot be sustained and is, therefore, directed to be deleted. This ground of appeal is ruled in favour of the appellant. 24. Aggrieved Revenue is in appeal before us. 26 ITA Nos.4164, 5186, 5187, 5188/Del/2018 ITA No.5951/Del/2019 CO Nos.155, 183, 184 & 185/Del/2018 CO No.143/Del/2019 25. At the time of hearing, ld. DR of the Revenue brought to our notice findings of the AO at para 4.9 of the assessment order and relied on the findings of the AO. 26. On the other hand, ld. AR of the assessee submitted as under :- “With respect to the issue relating to Share Application Money, during the assessment proceedings, the Assessing Officer observed that summons sent to MIs Blastec (India) Pvt. Ltd. was returned and that the same was a loss making entity. Further, with regards to Share Application Money received from M/s Maneesha Finlease Ltd., the Assessing Officer observed that name of appellant company has not appeared in the books of M/s Maneesha Finlease Ltd. and that the same were not traceable from the bank statement of M/s Maneesha Finlease Ltd. With regards to the aforesaid observation by the Assessing Officer it is to be seen that M/s Blastec (India) Pvt. Ltd., a sister concern of the Appellant Company, had share capital of Rs.5,70,26,600/- and Reserves & Surplus of Rs.1,79,73,260.85/-. The sum total of both figures comes to Rs.7,49,99,860.85/- which is quite more than the share application money given ofRs.2,66,00,000/-. This figure also shows the credit worthiness of M/s Blastec (India) Pvt. Ltd. The Balance Sheet of M/s Blastec (India) Pvt. Ltd. is duly audited by their statutory auditors and there should not be any doubt in the mind of Ld. A.O. regarding Assets, Liabilities and Net Worth of M/s Blastec (India) Pvt. Ltd. Further, it is to be noted that the summons were issued to MIs Blastec (India) Pvt. Ltd on 18, First Floor, Satya Niketan, Opp. Shri Venkteshwar College, New Delhi on 30th January, 2014. The registered office of the company of Appellant was situated there till 1st August, 2013. The above notice may have returned due to misunderstanding by postal Department regarding change of Registered office of the Appellant as M/s Blastec (India) Pvt. Ltd was also sharing the same office premises with Appellant. 27 ITA Nos.4164, 5186, 5187, 5188/Del/2018 ITA No.5951/Del/2019 CO Nos.155, 183, 184 & 185/Del/2018 CO No.143/Del/2019 The Assessing Officer was not able to trace the payment of Rs.96,00,000/- from the Bank Statement of M/s Maneesha Finlease Ltd. as the same was not paid from Bank A/c of M/s Maneesha Finlease Ltd. However, the Assessing Officer ignored the explanations of the basis of applying for the shares of appellant company submitted during assessment proceedings, which clearly show that Rs.96,00,000/- was paid to Appellant company by Capt. K S Solanki on behalf of Maneesha Finlease Ltd. and 2 merged companies of Maneesha Finlease Ltd. The Assessing Officer ignored the details of schedule (i.e., list I groupings) of balance sheet, wherein Rs.3,82,40,000/- is mentioned as share application money given to appellant company as on 31.03.2011. Details of schedule (i.e. list / groupings) are part & parcels of Balance Sheet of M/s Maneesha Finlease Ltd. and are duly certified by their statutory auditors. Further, details of Share Application Money, ITR Acknowledgement of both entities and copy of A/c of both entities as appearing in the books of appellant were submitted during assessment proceedings and hence, the decision of the CIT(A) to delete the aforesaid addition too ought not to be disturbed. 27. Considered the rival submissions and material available on record. We observed that the AO has treated the share application money introduced by the sister concern of the assessee as unsubstantiated on the basis of non-appearance of the respective companies during assessment proceedings. However, ld. AR of the assessee represented the case of the sister concern and filed the relevant information as called for. Ld. CIT (A) has appreciated the fact that both these companies are sister concerns of assessee company wherein common promoters were promoted these companies and the summons issued by the AO were complied through 28 ITA Nos.4164, 5186, 5187, 5188/Del/2018 ITA No.5951/Del/2019 CO Nos.155, 183, 184 & 185/Del/2018 CO No.143/Del/2019 authorized representative. Ld. CIT (A) appreciated the relevant documents submitted by the assessee during the assessment proceedings as well as during appellate proceedings and ld. CIT (A) has found that the documents submitted by the assessee are proper and accordingly gave relief to the assessee. Considering the facts on record, we are inclined to dismiss the ground raised by the Revenue and we are inclined to agree with the findings of the ld. CIT (A). Accordingly, ground no.5 raised by the Revenue is dismissed. 28. With regard to ground no.6 regarding addition on account of unsecured loans, relevant facts are, the AO observed that the assessee has received unsecured loan from M/s. Maneesha Finlease Ltd.. When the assessee was asked to submit the copy of ledger of the lender, copy of ITR of lender, copy of bank statement and confirmation etc., assessee has filed confirmation and copy of ITR of M/s. Maneesha Finlease Ltd. After perusing the Balance Sheet of M/s. Maneesha Finlease Ltd., the AO observed that nowhere name of the assessee company was appearing in loans and advances shown on asset side of the Balance Sheet. On perusal of the bank statement of M/s. Maneesha Finlease Ltd., the relevant amount of loan advanced is not verifiable. The assessee also not filed ledger account of M/s. Maneesha Finlease Ltd. and confirmation filed by 29 ITA Nos.4164, 5186, 5187, 5188/Del/2018 ITA No.5951/Del/2019 CO Nos.155, 183, 184 & 185/Del/2018 CO No.143/Del/2019 the assessee does not mention the name of the person who confirmed the statement and observed that there were credit entries appearing just before and after the amount advanced to the assessee and, therefore, genuineness of the transaction could not be proved in this case and further observed that the name of the assessee is appearing as sundry creditors on liability side while the company has claimed it as obtained unsecured loan from M/s. Maneesha Finlease Ltd. With the above observation, the AO observed that assessee failed to discharge its preliminary onus of identity, creditworthiness and genuineness of transaction and accordingly he disallowed the unsecured loan of Rs.2,10,11,198/-. 29. Aggrieved assessee preferred an appeal before the ld. CIT (A) and filed detailed submissions as under :- “The Ld. AO added back unsecured loan of Rs.2,10,11,198/- received from M/S Maneesha Finlease Limited. Details of Unsecured Loans along with confirmation from M/s Maneesha Finlease Limited, ITR Acknowledgement of M/s Maneesha Finlease Limited and copy of A/c of M/s Maneesha Finlease Limited as appearing in the books of appellant were submitted during assessment proceedings alongwith letter dt. 08,10.2013 in response to query no. 6 raised vide questionnaire dt. 26.07.2013. Copies of the same are enclosed herewith at Page No. 129 to 132. Further detail of Unsecured Loan from promoter and their associates and others was also submitted along with letter dt. 26.12.2013 in response to query no. 8 raised vide questionnaire dt. 05. 12. 2013. No questionnaire dt. 13.12.2013 as mentioned by Ld. A.O, in his Assessment Order was issued in the case of appellant. However, 30 ITA Nos.4164, 5186, 5187, 5188/Del/2018 ITA No.5951/Del/2019 CO Nos.155, 183, 184 & 185/Del/2018 CO No.143/Del/2019 summons issued to Maneesha Finlease Ltd. was duly complied by Authorized Representative of that company on 14.02.2014 and letter dt. 10.02.2014, duly signed by Ex-Capt. Kuldeep Singh Solanki, Director of Maneesha Finlease Ltd. was submitted on 14.02.2014 in response to summons issued through authorized representatives, Sh. Naresh Kumar, Chartered Accountant and Partner of M/s G Singh & Co., Chartered Accountants containing, Bank Statements, Income Tax Return Acknowledgement, complete Balance Sheet as on 31. 03. 201 1 and confirmation duly signed by above Director. We would also like to draw your kind attention to the fact that unsecured loan received from M/s Maneesha Finlease Limited during the year was 1,42,00,000/- and not Rs.2,10,11,198/- which is apparent from above copy of account of M/s Maneesha Finlease Limited submitted during assessment proceedings and also from explanation of amount paid as unsecured loans as annexed annexure 3 of reply submitted by M/s Maneesha Finlease Limited with above letter dt.10.02.2014 in response to summons issued. The detail of same is as under :- (ii) Inter Corporate Deposit Maneesha Finlease Limited has given inter corporate deposit Rs.1,42,00,000/- to Rajasthan during the year. The closing balance as on 31.3.2011 was Rs.2,10,11,198/- Sr. No. Particulars From Amount Date 1 Opening as 01/04/2010 Maneesha Finlease Ltd. 52,00,000/- 01/04/2010 2 Ch-167117 Bank of India Maneesha Finlease Ltd. 40,00,000/- 09/08/2010 3 Ch-167134 Bank of India Maneesha Finlease Ltd. 1,02,00,000/- 06/12/2010 4 Interest F.Y. 2010-11 Maneesha Finlease Ltd. 16,11,198/- 31/03/2011 The Ld. AO has made various allegations while making the above addition. Our allegation wise reply is as under: 31 ITA Nos.4164, 5186, 5187, 5188/Del/2018 ITA No.5951/Del/2019 CO Nos.155, 183, 184 & 185/Del/2018 CO No.143/Del/2019 1. On perusal of the balance sheet of the M/s Maneesha Finlease Ltd. it was found that no where name of the appellant company was appearing in \"Loan & Advances\" shown on assets side of balance sheet. It seems that Ld. A.O. has ignored the details of schedule (i.e list/ groupings), wherein Rs.2,10,11,198/- is mentioned as inter corporate deposit given to appellant company. However the same are enclosed herewith at Page No. 362, wherein we have highlighted the related portion. Further note that these details of schedule (i.e. list/ groupings) are part & parcels of Balance Sheet of M/s Maneesha Finlease Ltd. and are duly certified by their statutory auditors. 2. On perusal of bank statement of M/s Maneesha Finlease Limited this amount of loan advanced is not verifiable. It seems that the Ld. AO ignored the bank statement filed with above letter dt. 10.02.2014 filed on 14.02.2014, wherein amount of unsecured loan paid of Rs.1,42,00,000/- is clearly mentioned. The details of amount debited in above bank statement is as under: - Sr. No. Particulars Amount Date 1 Ch-167117 Bank of India 40,00,000/- 09/08/2010 2 Ch-167134 Bank of India 1,02,00,000/- 06/12/2010 Furthermore the Ld. A.O. also ignored the copy of cheque issued for making RTGS of Rs.1,02,00,000/- and covering letter issued by M/s. Maneesha Finlease Limited to bank for the same attached in above letter. 3. Appellant has not filed ledger account of M/s. Maneesha Finlease Limited. As submitted above the ledger a/c of M/s. Maneesha Finlease Limited was field with letter dt. 08.10.2010. 4. The confirmation filed by M/s. Maneesha Finlease Limited does not mention the name of the person who confirmed the statement. Hence, Mere confirmation in which even the signatures 32 ITA Nos.4164, 5186, 5187, 5188/Del/2018 ITA No.5951/Del/2019 CO Nos.155, 183, 184 & 185/Del/2018 CO No.143/Del/2019 put in by the persons giving confirmation which are not verifiable, cannot be relied upon. As submitted above the confirmation and ITR Acknowledgement was filed on 08.10.2009. However, the Ld. AO never raised any query or doubt during further assessment proceedings regarding name and verification of signature of authorized signatory who have signed the same. Furthermore Summons were also issued to Maneesha Finlease Ltd. was duly complied by Authorised Representative of that company. Maneesha Finlease Ltd. is also sister concern of the Appellant company and the same is also evident from related party disclosure at Point no. 8 of the Notes to Accounts of Balance Sheet of Appellant company. Further Maneesha Finlease Ltd. is Public Limited Company promoted by Capt. K. S. Solanki, who is also a director and common share holder of Appellant Company. The summons were complied through Authorized Representative as registered office of the company is situated at 153, Vasant Enclave, New Delhi and its director Capt.K. S. Solanki also resides in New Delhi. As the company cannot represent itself, it is normal practice in the case of company to represent itself through a authorized Representative. In that case, a director representing the company is also authorized representative. Therefore on adverse inference of same should be taken in the light of following documents, which were submitted to prove the existence and genuineness of transaction:  Bank Statements, Income Tax Return Acknowledgement, complete Balance Sheet as on 31.03.2Ot1 and confirmation duly signed by above Director.  Explanation of Unsecured Loan given to Appellant Company as annexure 3. 5. On perusal of bank statement of M/s Maneesha Finlease Ltd it was found that there were credit entries appearing from the sister concerns of group just before and/or after the amount advanced to appellant company. Hence, genuineness of transaction could not be proved in this case. 33 ITA Nos.4164, 5186, 5187, 5188/Del/2018 ITA No.5951/Del/2019 CO Nos.155, 183, 184 & 185/Del/2018 CO No.143/Del/2019 We are unable to understand the observation of Ld. A0. How appearance of credit entries from Sister concerns of group just before or after the advance make the transaction non genuine? 6. On perusal of Balance Sheet of M/s Maneesha Finlease Limited it is found that appellant company is appearing as sundry creditor on liability side while appellant company has claimed that it has obtained unsecured loan from M/s Maneesha Finlease Limited. Hence, genuineness of the transaction is not proved. The Ld. A.O. is referring to details of schedules (i.e. list / groupings) of balance sheet of M/s Maneesha Finlease Limited, wherein Rs.62,52,475/- due to appellant company is appearing in the list of sundry creditor. However, strangely the Ld. A.O. ignored the next page of details of schedule (i.e list / groupings), wherein Rs.2,10,11,198/- is mentioned as inter corporate deposit given to appellant company. In view of above, you are requested to delete the above additions.” 30. After considering the detailed submissions of the assessee, ld. CIT (A) allowed the claim of the assessee by observing as under :- “11.3. The Ld. AR submitted that details of Unsecured Loans along with confirmation from M/s Maneesha Finlease Ltd. ITR Acknowledgement of M/s Maneesha Finlease Ltd. and copy of A/c of M/s Maneesha Finlease Ltd. as appearing in the books of appellant were submitted during assessment proceedings alongwith letter dated 08.10.2013 in response to query no. 6 raised vide questionnaire dated 26.07.2013. Further, detail of Unsecured Loan from promoter and their associates and others was also submitted along with letter dated 26.12.2013 in response to query no. 8 raised vide questionnaire dated 05.12.2013. We would also like to draw your kind attention to the fact that unsecured loan received from M/s Maneesha Finlease Ltd. during the year was Rs.1,42,00,000/- and not Rs.2,10,11,198/- which is apparent from above copy of account of M/s Maneesha Finlease Ltd. submitted during assessment proceedings and reply submitted by M/s Maneesha 34 ITA Nos.4164, 5186, 5187, 5188/Del/2018 ITA No.5951/Del/2019 CO Nos.155, 183, 184 & 185/Del/2018 CO No.143/Del/2019 Finlease Ltd. with above letter dated 10.02.2014 in response to summons issued. 11.4. In view of above, it is apparent that the appellant has established the identity of the lender - in this case being a sister concern and also established the creditworthiness and genuineness of the transaction. Therefore, addition of Rs.2,10,11,198/- made by the AO on account of unsecured loan cannot be sustained and is, directed to be deleted. This ground of appeal is ruled in favour of the appellant.” 31. Aggrieved with the above order, Revenue is in appeal before us. 32. At the time of hearing, ld. DR of the Revenue brought to our notice relevant facts on record at para 4.1 of the assessment order and submitted that assessee has not proved the genuineness of the transaction and relied on the findings of the AO. 33. On the other hand, ld. AR of the assessee submitted as under :- “With respect to the issue relating to unsecured loans, in the assessment order, the Assessing Officer noted that the appellant company's name did not appear in 'Loan & Advances' of M/s Maneesha Finlease Ltd. and that the loan amount was not verifiable, and no ledger account was filed by the appellant. The confirmation provided did not mention the name of person confirming the statement. Additionally, the appellant appears as a sundry creditor, despite claiming an unsecured loan, further questioning the transaction's genuineness. It is pertinent to note that the Assessing Officer ignored the details of schedule (i.e., list/groupings), wherein Rs. 2,10,11,198/- is mentioned as inter corporate deposit given to appellant company. Ld. AO ignored the bank statement filed during assessment proceedings, wherein amount of unsecured loan paid of Rs.1,42,00,000/- is clearly mentioned. Ld. A.O. also ignored the 35 ITA Nos.4164, 5186, 5187, 5188/Del/2018 ITA No.5951/Del/2019 CO Nos.155, 183, 184 & 185/Del/2018 CO No.143/Del/2019 copy of cheques issued for making RTGS of Rs.1,02,00,000/- and covering letter issued by M/s Maneesha Finlease Limited to bank for the same. M/s Maneesha Finlease Ltd. is also sister concern of the Appellant company and the same is also evident from related party disclosure at Point no. 8 of the Notes to Accounts of Balance Sheet of Appellant company. Further Maneesha Finlease Ltd. is Public Limited Company promoted by Capt. K. S. Solanki, who is also a director and common share holder of Appellant Company. Following documents, which were submitted to prove the existence and genuineness of transaction: 1) Bank Statements, Income Tax Return Acknowledgement, complete Balance Sheet as on 31.03.2011 and confirmation duly signed by above Director. 2) Explanation of Unsecured Loan given to Appellant Company. The Assessing Officer in its order has referred to details of schedules (i.e., list/groupings) of balance sheet of M/s Maneesha Finlease Limited, wherein Rs.62,52,475/- due to appellant company is appearing in the list of sundry creditors. However, strangely the Assessing Officer ignored the next page of details of schedule (i.e., list / groupings), wherein Rs. 2,10,11,198/- is mentioned as inter corporate deposit given to appellant company. Considering the aforesaid aspects, the CIT(A) allowed the appeal of the assessee. Hence, in light of the aforesaid the said ground too raised by the Revenue ought to be dismissed and the order of CIT(A) ought to be upheld.” 34. Considered the rival submissions and material available on record. We observed that the assessee has submitted the details of taking unsecured loan of Rs.1,42,00,000/- during the year and there was opening balance of Rs.52,00,000/- and the assessee has booked interest of Rs.16,11,1998 36 ITA Nos.4164, 5186, 5187, 5188/Del/2018 ITA No.5951/Del/2019 CO Nos.155, 183, 184 & 185/Del/2018 CO No.143/Del/2019 during the year. It is also submitted before the ld. CIT (A) that M/s. Maneesha Finlease Limited is a sister concern of the assessee company and being a sister concern, assessee has already proved identity and established creditworthiness. With regard to genuineness of the transaction, assessee has submitted relevant confirmation and actual transactions of receiving unsecured loan of Rs.1,42,00,000/-. We observed that AO has added the outstanding balance at the end of the year without properly verifying actual transactions during the year. Since ld. CIT (A) has appreciated the complete facts on record and found that the genuineness of the transaction was already proved by the assessee. Therefore, we are inclined to agree with the findings of the ld. CIT(A) and accordingly inclined to dismiss ground no.6 raised by the Revenue. 35. In the result, the appeal filed by the Revenue being ITA No.4166/Del/2017 for AY 2010-11 is partly allowed. 36. Ground No.1 of AYs 2012-13, 2013-14, 2014-15 & 2016-17 is decided by us in Ground No.2 of AY 2011-12 vide Paras 4 to 9 against the Department. Since the facts are exactly similar to AY 2011-12 our above findings in AY 2011-12 are applicable mutatis mutandis in AYs 2012-13, 2013-14, 2014-15 & 2016-17. Accordingly, Ground No.1 of AYs 2012- 13, 2013-14, 2014-15 & 2016-17 is dismissed. 37 ITA Nos.4164, 5186, 5187, 5188/Del/2018 ITA No.5951/Del/2019 CO Nos.155, 183, 184 & 185/Del/2018 CO No.143/Del/2019 37. Ground No.2 of AY 2014-15 is decided by us in Ground No.1 of AY 2011-12 vide Para 3 in favour of the Department. Since the facts are exactly similar to AY 2011-12 our above findings in AY 2011-12 are applicable mutatis mutandis in AY 2014-15. Accordingly, Ground No.2 of AY 2014-15 is allowed. 38. In the result, the appeals filed by the Revenue in AYs 2012-13, 2013-14, 2014-15 & 2016-17 are partly allowed. 39. Further, assessee has filed cross objections in the aforesaid assessment years to the extent of objections raised relating to appeals filed by the Revenue, since we have already adjudicated in favour of the assessee, the same are dismissed being infructuous. 40. To sum up : the appeals filed by the Revenue are partly allowed and the cross objections filed by the assessee are dismissed. Order pronounced in the open court on this 19th day of March, 2025. Sd/- sd/- (MADHUMITA ROY) (S.RIFAUR RAHMAN) JUDICIAL MEMBER ACCOUNTANT MEMBER Dated: 19.03.2025 TS 38 ITA Nos.4164, 5186, 5187, 5188/Del/2018 ITA No.5951/Del/2019 CO Nos.155, 183, 184 & 185/Del/2018 CO No.143/Del/2019 Copy forwarded to: 1. Appellant 2. Respondent 3. CIT 4. CIT(Appeals). 5. DR: ITAT ASSISTANT REGISTRAR ITAT, NEW DELHI "