DCIT, CIRCLE-25(1), NEW DELHI V. TERA CONSTRUCTION PVT. LTD., DELHI

ITA 9378/DEL/2019

AI Insights

The case involves an appeal by the Department of Revenue against Tera Construction Pvt. Ltd. concerning the assessment year 2011-12. The primary issues in the appeal were the deletion of an addition of Rs. 3,13,37,238 under section 68 of the Income Tax Act, 1961, and the deletion of a disallowance of loss from the sale of liquor amounting to Rs. 4,03,321. The Assessing Officer had initially made these additions and disallowances, which were later contested and removed by the CIT(A). The Department of Revenue appealed against the CIT(A)'s decision, which was heard by the Income Tax Appellate Tribunal.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 314629 (ITAT-DELHI)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-05-2025
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Assessment Year: 2011-2012
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: OM PRAKASH; CHEQUE OF KARURVYSYA BANK
• Assessee Lawyers: TARANDEEP SINGH
• Keywords: Unexplained cash credit
• Section: 143(3); 68

Judgement Text

" 1 ITA No. 9378/Del/2019 DCIT Vs. Tera Construction Pvt. Ltd. IN THE INCOME TAX APPELLATE TRIBUNAL DELHI DELHI BENCH ‘C’ NEW DELHI BEFORE SHRI YOGESH KUMAR U.S., JUDICIAL MEMBER AND SHRI NAVEEN CHANDRA, ACCOUNTANT MEMBER ITA No. 9378/DEL/2019 (A.Y. 2011-12) DCIT Circle-25(1) New Delhi Vs. Tera Construction Pvt. Ltd. 2802, Top floor, Guru Nanak Building, Bara Bazar, Kashmere Gate, Delhi PAN: AAACT2579E Appellant Respondent Assessee by Sh. Tarandeep Singh, Adv Revenue by Sh. Om Prakash, Sr. DR Date of Hearing 08/04/2025 Date of Pronouncement 09/05/2025 ORDER PER YOGESH KUMAR, U.S. JM: The present appeal is filed by the Department of Revenue against the order of the Ld. Commissioner of Income Tax Appeal-9 (‘Ld. CIT(A)’ for short] dated 30/09/2019 pertaining to Assessment Year 2011-12. 2. The grounds of appeal are as under:- “1. \"On the facts and circumstances of the case, the Id. CIT(A) erred in deleting the addition made u/s 68 of the I.T Act, 1961 of Rs.3,13,37,238/- made by the Assessing Officer since the evidences available during assessment proceedings, on the face of it, establishes that the transactions with the directors are not genuine which is evident from the comparison of figures of loan given and income of the individuals as mentioned in the ITRs which proves that creditworthiness of to such extent of loan is not justified. 2. \"On the facts and circumstances of the case, the Id. CIT(A) erred in deleting the disallowance of loss from the sale of liquor of Rs. 4,03,321/- being destroyed due to repair work. Since 2 ITA No. 9378/Del/2019 DCIT Vs. Tera Construction Pvt. Ltd. liquor amounting to Rs.3.4 Lacs was the sale of the assessee and therefore assessee won't stock up liquor of Rs.4 Lacs in one go. 3. On the facts and circumstances of the case the order of Ld. CIT(A) is perverse.\" 4. \"The appellant craves, leave or reserving the right to amend modify, alter, add or forego any ground(s) of appeal at any time before or during the hearing of this appeal.\" 3. Brief facts of the case are that, the Assessee filed return of income declaring the total loss of Rs. 66,09,497/- for Assessment Year 2011-12. The case of the Assessee was selected for scrutiny and an assessment order came to be passed u/s 143(3) of Income Tax Act, 1961 (‘Act’ for short) on 31/03/2014by making addition of Rs. 3,13,37,238/- u/s 68 of the Act and also disallowed sale of liquor of Rs. 4,03,321/-. Aggrieved by the assessment order dated 31/03/2014, the Assessee preferred an Appeal before the Ld. CIT(A). The Ld. CIT(A) vide order dated 30/09/2019, allowed the Appeal of the Assessee by deleting the addition/disallowance made by the A.O. Aggrieved by the order of the Ld. CIT(A), the Department of Revenue preferred the present Appeal on the Grounds mentioned above. 4. Ground No. 1 of the Revenue is against the deletion of the addition of Rs. 3,13,37,238/- made by the A.O. u/s 68 of the Act. The Ld. Ld. Departmental Representative vehemently submitted that the Ld. CIT(A) committed error in deleting the addition made by the A.O., though 3 ITA No. 9378/Del/2019 DCIT Vs. Tera Construction Pvt. Ltd. the evidence on record established that transactions with the Directors are not genuine. The Ld. Departmental Representative has also contended that as per the comparison of figures of loan given and the income of the individual as mentioned in the ITRs proves that the Ld. CIT(A) has not justified in deleting the addition in the absence of provingthe creditworthiness of the persons to justify the loan. The Ld. Departmental Representative relying on the findings of the A.O., sought for reversing the order of the Ld. CIT(A). Accordingly, prayed for allowing the Ground No.1. 5. Per contra, the Ld. Assessee's Representative submitted that the assessee has discharged its onus on proving the creditworthiness of all the three persons. There were sufficient opening balance in the accounts and payments were made through banking channels. The Ld. Assessee's Representative relying on the order of the Ld. CIT(A), sought for dismissing the Ground No. 1 of the Revenue. 6. We have heard and perused the material available on record. The Ld. A.O. while making the addition held that the loan forwarded by Smt. NeerjaGhura, Ms. ZeniaGhura and Sh. Gurdeep Singh held to be unaccounted cash credit on the ground that the Assessee failed to prove 4 ITA No. 9378/Del/2019 DCIT Vs. Tera Construction Pvt. Ltd. the creditworthiness and genuineness of the transaction. However, the Ld. CIT(A) while deleting the addition observed as under:- “4.3. Smt. NeerjaGhura: In the assessment proceedings, the loan forwarded by Mrs. Neerjaghura of amounting to Rs. 1,49,53,238/- was held to be unaccounted cash credit for the reason that appellant had failed to prove creditworthiness and genuineness of the transaction. Now, as far as the identity is concerned, the appellant has provided the PAN no. of Smt. NeerjaGhura which proves the identity of the lender. Second parameter as regards to creditworthiness is concerned, the appellant has provided the bank statements and details of income of Smt. NeerjaGhura as per ITRs for the AYs 2006-07 is Rs. 32,79,765/-, 2007-08 is Rs. 11,74,813/-, 2008-09 is Rs. 4,49,969/-, 2009-10 is Rs. 22,29,450/-, 2010-11 is Rs. 16,12,135/-. The copy of the account of Smt. NeerjaGhura is as under:- Date Particulars Vch Type Debit Credit 1-4-2010 Dr. Opening Balance 1,70,18,238.01 30-04-2010 Dr. The K V B Ltd. Receipt 4,75,000.00 06-05-2010 Dr. The K V B Ltd. Receipt 5,40,000.00 07-05-2010 Dr. The K V B Ltd. Receipt 7,00,000.00 21-05-2010 Dr. The K V B Ltd. Receipt 13,00,000.00 28-10-2010 Dr. The K V B Ltd. Receipt 20,000.00 26-03-2011 Cr. The KVB Ltd. Payment 50,00,000.00 30-03-2011 Cr. The K V B Ltd. Payment 1,00,000.00 51,00,000.00 2,00,53,238.01 Cr. Closing Balance 1,49,53,238.01 2,00,53,238.01 2,00,53,238.01 4.4. It is noted from the above that there was an opening credit balance of Rs. 1,70,18,238/-as on 01.04.2010. The appellant has received amounts of Rs. 4,75,000/-, Rs. 5,40,000/-, Rs. 7,00,0000/-, Rs. 20.000/- and Rs. 13,00,000/- from the Karur Bank of the lender, referred to as M/s KVB Ltd in the copy of ledger account filed as above before the AO. The amount was transferred through banking channels. In fact, the amount added by the AO was closing balance of Rs. 1,49,53,238/-, which was less than the opening 5 ITA No. 9378/Del/2019 DCIT Vs. Tera Construction Pvt. Ltd. balance of Rs. 1,70,18,238/-. It is also noted that the credit entries made during the year were of Rs. 30,35,000/-, which have been duly explained as received by cheques of KV Bank. The amounts were received by the appellant were by cheques of Karur Bank. The appellant has submitted the detail of source as well as source of source to prove the legitimacy of the funds in the hands of lender. An explanation given by the appellant duly substantiates the creditworthiness of the lender. 4.5 Ms. ZeniaGhura: In the assessment proceedings, the loan forwarded by Ms. ZeniaGhura of amounting to Rs. 32,31,500/- was held to be unaccounted cash credit for the reason that appellant had failed to prove creditworthiness and genuineness of the transaction. Now, as far as the identity is concerned, the appellant has provided the PAN no. of Ms. ZeniaGhura which proves the identity of the lender. Second parameter as regards to creditworthiness is concerned, the appellant has provided the copy of account of Ms. ZeniaGhura. The copy of the account of Ms. ZeniaGhura is as under:- Date Particulars Vch Type Debit Credit 1-4-2010 Dr. Opening Balance 27,32,300.00 03-04-2010 Dr. The KVB Ltd. Receipt 1,65,00,000/- 13-04-2010 Cr. The KV B Ltd. Payment 1,80,000.00 17-04-2010 Cr. The KVB Ltd. Payment 35,000.00 22-04-2010 Cr. The K V B Ltd. Payment 9,10,000.00 21-05-2010 Dr. The KVB Ltd. Receipt 3,40,000.00 21-05-2010 Dr. The KVB Ltd. Receipt 8,00,000.00 23-03-2011 Cr. The KVB Ltd. Payment 1,00,83,500.00 30-03-2011 Cr. The KVB Ltd. Payment 1,00,000.00 10,00,000.00 30-03-2011 Cr. The KVB Ltd. Payment 31,00,000.00 1,44,08,500.00 2,03,72,300.00 Cr. Closing Balance 59,63,800.00 2,03,72,300.00 2,03,72,300.00 4.6 It is noted from the copy of account that the amounts were received in her account in by cheques of KarurVysya Bank referred to as M/s KVB Ltd in the above copy of account by the appellant. A sum of Rs. 1.65,00,000/- was transferred from 6 ITA No. 9378/Del/2019 DCIT Vs. Tera Construction Pvt. Ltd. her account to the appellant by cheque of KarurVysya Bank. There were subsequent transactions of receipt and payment by cheque from M/s KVB Ltd in her account. The appellant claims that the provisions of section 68, applies on the basis of credit entries and not on the basis of difference of closing and opening balances. Further, the appellant has submitted detail of source as well as source of source with respect to the credit received in the year under consideration where in it is apparent that findings have been received from indentified parties by lender out of which payments were made to the appellant. 4.7 Sh. Gurdeep Singh:- In the assessment proceedings, the loan forwarded by Sh. Gurdeep Singh who happens to be the Director of Tera Constructions to the appellant company of amounting to Rs. 1,31,52,500/- was held to be unaccounted cash credit for the reason that appellant had failed to prove creditworthiness and genuineness of the transaction. Now, as far as the identity is concerned, the appellant has provided the PAN no. of Sh. Gurdeep Singh which proves the identity of the lender. Second parameter as regards to creditworthiness is concerned, the appellant has provided the bank statements and details of income of Sh. Gurdeep Singh as per ITRs for the AYs 2006-07 is Rs. 69,47,594/-, 2007-08 is Rs. 18,12,960/-, 2008-09 is Rs. 26,71,789/-, 2009-10 is Rs. 49,83,346/-, 2010- 11 is Rs. 64,42,374/-. The copy of account of Sh. Gurdeep Singh, in the books of the appellant, was as under: Gurdip Singh Ledger Account 1-Apr-2010 to 31.Mar.2011 Date Particulars Vch Type Debit Credit 1-4-2010 Dr. Opening Balance 95,56,793.23 03-04-2010 Cr. The K V B Ltd. Payment 20,00,000.00 22-04-2010 Dr. The K V B Ltd. Receipt 11,00,000.00 21-05-2010 Dr. The K V B Ltd. Receipt 30,00,000.00 31-08-2010 Dr. The K V B Ltd. Receipt 25,60,000.00 12-10-2010 Dr. The K V B Ltd. Receipt 15,00,000.00 18-10-2010 Dr. The K V B Ltd. Receipt 5,55,000.00 04-02-2011 Dr. The K V B Ltd. Receipt 40,00,000.00 07-02-2011 Dr. The K V B Ltd. Receipt 10,00,000.00 14-02-2011 Dr. The KVB Ltd. Receipt 10,00,000.00 28-03-2011 Cr. The K V B Ltd. Payment 34,00,000.00 29-03-2011 Dr. The K V B Ltd. Receipt 39,37,500.00 7 ITA No. 9378/Del/2019 DCIT Vs. Tera Construction Pvt. Ltd. 30-03-2011 Cr. The K V B Ltd. Payment 1,00,000.00 55,00,000.00 2,82,09,293.23 Cr. Closing Balance 2,27,09,293.23 2,82,09,293.23 2,82,09,293.23 • The A.O. accepted the credits made in the accounts, but, it appears has added the difference between closing balance and opening balance. Closing Balance Rs. 2,27,09,293/- Opening Balance Rs. 95,56,793/- Difference Rs. 1,31,52,500 Thus, while in case of MsNeerjaGhura, entire closing balance was added, here the difference between opening and closing balance was added as in case of Sh. Gurdip Singh. It will be seen from the copy of account that the amounts were transferred from his bank account in KarurVysya Bank, referred to as M/s KVB Ltd in the copy of account filed. Total amount of Rs. 1.47,15,000/- was transferred from his account to the appellant by cheques of the KarurVysya Bank on various dates between 22.04.2010 to 14.02.2011. There were other transactions of receipt by cheque from his bank account in KarurVysya Bank (M/s KVB Ltd). The appellant claims that all the entries were properly explained before the AO and the credit entries have been considered as unexplained. The amounts were received from cheques of KarurVysya Bank. Further, the appellant has submitted detail of source as well as source of source with respect to the credit received in the year under consideration where in it is apparent that funds have been received from indentified parties by lender out of which payments were made to the appellant.” 7. The Ld. CIT(A) while deleting the addition has also relied on plethora of Judgments. As could be seen from the order of the Ld. CIT(A) and also the material available on record, the Assessee has discharged 8 ITA No. 9378/Del/2019 DCIT Vs. Tera Construction Pvt. Ltd. the onus of proving the creditworthiness from Smt. Neerja Ghura. In so far as Ms.Zenia Ghura is concerned, the Ld. CIT(A) observed that the said Miss Zenia Ghura was having joint account with Sh. Gurdeep Singh and also found that there were number of transaction in the account which are made through Karur Vysya Bank and further observed that there were sufficient opening balance in the account and the payment and the receipt from her were made through banking channel. Thus, the Ld. CIT(A) held that the Assessee has discharged its onus of proving the credits from Miss ZeniaGhura. 8. Further, the Ld. A.O. while making the addition added difference between opening and closing balance without examining the various entries in the accounts in cases of Ms. Zenia Ghura, Sh. Gurdeep Singh. The Ld. CIT(A) found that there was no basis for either consider the credit as not genuine or making difference in opening and closing balance as basis for addition. Even in the case of Sh. Grudeep Singh, there were sufficient opening balance and there were various debits and credits which were payment received and payment made by Sh. Gurdeep Singh through cheque of KarurVysya Bank and the entire transactions were made through banking channel. Considering the fact that the transactions were made through banking channel and the identity of the creditor and the creditworthiness of the creditor as well as genuineness 9 ITA No. 9378/Del/2019 DCIT Vs. Tera Construction Pvt. Ltd. of the transaction has been duly proved by the Assessee. In the absence of bringing any material on record by the Revenue to disprove the transaction or to controvert the findings of the Ld. CIT(A), we find no reason to interfere with the findings and the conclusion of the Ld. CIT(A) in deleting the addition. Accordingly, Ground No. 1 of the Revenue is dismissed. 9. Ground No. 2 is regarding deletion of addition of disallowance of Rs. 4,03,321/-. The Ld. Departmental Representative submitted that the Ld. CIT(A) committed error in deleting the disallowance of loss from sale of liquor of Rs. 4,03,321/- being destroyed due to repair work since the liquor amounting to Rs. 3.4 lakhs was the sale of the Assessee therefore, the Assessee could not have had stocked up to Rs. 4,00,000/-, thus sought for allowing Ground No. 2 of the Revenue. 10. Per contra, the Ld. Assessee's Representative submitted that the stocks were destroyed due to repair work carried out in the premises and the bottles kept were broken. The Ld. CIT(A) has rightly deleted the addition as there is no reason for the A.O. to disbelieve the explanation and reject the claim of loss. The Ld. Assessee's Representative sought four dismissing the Ground No. 2 of the Revenue. 10 ITA No. 9378/Del/2019 DCIT Vs. Tera Construction Pvt. Ltd. 11. We have heard both the parties and perused the material available on record. The only reason for the A.O. to disallow the loss was that the Assessee has shown the sale of liquor at Rs. 3,40,385/- as against cost shown at Rs. 7,43,703/-. It was the case of the Assessee that stock was badly destroyed due to repair work carried out in the premises and the bottles kept thereon were broken. In the absence of no reason to disbelieve the version of the Assessee, the A.O. committed error in disbelieving and the claim of the Revenue and disallowed the loss. The Ld. CIT(A) after appreciating the facts rightly deleted the disallowance of Rs. 3,40,385/- which is in our considered opinion requires no interference, accordingly, Ground No. 2 of the Revenue is dismissed. 12. In the result, the Appeal of the Revenue is dismissed. Order pronounced in the open court on 09th May, 2025 Sd/- Sd/- (NAVEEN CHANDRA) (YOGESH KUMAR U.S.) ACCOUNTANT MEMBER JUDICIAL MEMBER Date:- 09.05.2025 R.N, Sr.P.S* Copy forwarded to: 1. Appellant 2. Respondent 3. CIT 4. CIT(Appeals) 5. DR: ITAT ASSISTANT REGISTRAR ITAT, NEW DELHI 11 ITA No. 9378/Del/2019 DCIT Vs. Tera Construction Pvt. Ltd. "