DEPUTY COMMISSIONER OF INCOME TAX, AGRA V. GPL HOUSING PVT. LTD., AGRA

ITA 135/AGR/2024

AI Insights

The case involves an appeal by the Deputy Commissioner of Income Tax (DCIT), Agra against M/s GPL Housing Pvt. Ltd. concerning the assessment year 2018-19. The appeal arose from an order by the Commissioner of Income Tax (Appeals), Kanpur-4, which had partially deleted additions made by the Assessing Officer (AO) under Section 68 of the Income Tax Act. The AO had questioned the creditworthiness of two entities that provided unsecured loans to the assessee, alleging they were non-existent or merely paper entities. The CIT(A) found that the assessee had provided sufficient documentary evidence to establish the credibility of these entities, which the Tribunal agreed with, dismissing the revenue's appeal.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 472003 (ITAT-AGRA)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-03-2025
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: 2018-2019
• Other Referred Cases: CIT Vs Kamdhenu Steel & Alloys Ltd., S. Kamaljeet Singh
• Laws Referred To: Income Tax Act
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SUKESH KUMAR JAIN LD.
• Assessee Lawyers: ANURAG SINHA LD
• Keywords: Accommodation entries
• Section: 143(3); 153A; 68; 133(6)

Judgement Text

"1 IN THE INCOME TAX APPELLATE TRIBUNAL “DB” BENCH, AGRA BEFORE HON’BLE SHRI SATBEER SINGH GODARA, JM AND HON’BLE SHRI MANOJ KUMAR AGGARWAL, AM आयकरअपीलसं./ ITA No.135/Agr/2024 (िनधाŊरणवषŊ / Assessment Year: 2018-19) DCIT (Central Circle) 1st Floor, Aaykar Bhawan Sanjay Place, Agra - 282001 बनाम/ Vs. M/s GPL Housing Pvt. Ltd. 31/472, C/1, 1st Floor Sultanganj, By pass Road, Agra ̾थायीलेखासं./जीआइआरसं./PAN/GIR No. AAFCG-4255-P (अपीलाथŎ/Appellant) : (ŮȑथŎ / Respondent) अपीलाथŎकीओरसे/ Appellant by : Shri Sukesh Kumar Jain – Ld. CIT-DR ŮȑथŎकीओरसे/Respondent by : Shri Anurag Sinha (Advocate) –Ld.AR सुनवाईकीतारीख/Date of Hearing : 21-02-2025 घोषणाकीतारीख /Date of Pronouncement : 28-03-2025 आदेश / O R D E R Manoj Kumar Aggarwal (Accountant Member) 1. Aforesaid appeal by revenue for Assessment Year (AY) 2018-19 arises out of an order of learned Commissioner of Income Tax (Appeals), Kanpur-4 [CIT(A)] dated 03-01-2024 in the matter of an assessment framed by Ld. ACIT (Central Circle), Agra (AO) u/s 143(3) r.w.s.153A of the Act on 31-12-2019. The sole grievance of the revenue ispart deletion of certain addition as made by Ld. AO u/s 68 while framing the assessment order. Having heard vehement arguments of both the sides, the appeal is disposed-off as under. Assessment Proceedings 2 2.1 During assessment proceedings, pursuant to search action in the case of BNR group on 26-09-2017, notice u/s 153A was issued to the assessee. It transpired that the assessee raised unsecured loan of Rs.167 Lacs from an entity by the name M/s Sun Moon Vision Infra- Developers Pvt. Ltd. (SVIPL) and another loan of Rs.736 Lacs from M/s Sam Enterprises Pvt. Ltd. (SEPL). Accordingly, the assessee was required to satisfy the primary ingredients of Sec.68. The assessee furnished ledger account, Income Tax Returns, Bank Statements, PAN details etc, with respect to both the entities. 2.2 The Ld. AO doubted the creditworthiness of these entities on the ground that the assessee did not file any confirmation letters from these entities. The assessee also failed to produce directors of these entities to confirm the same. Notices issued u/s 133(6) to confirm the transactions yielded no response. The field enquiries revealed that no such company by the name M/s Sun Moon Vision Infra-Developers Pvt. Ltd. existed at the given address. Accordingly, Ld. AO alleged that the said entity was merely a paper entity. The transaction pattern in the bank account of this entityrevealed that the payment to the assessee was preceded by credit of almost equal amount from assessee’s group concerns. Accordingly, this entity was alleged to be engaged in providing accommodation entries to various entities. The statement of one of the directors of that entity was also recorded on the basis of which it was concluded by Ld. AO that the director acted as a dummy director only. 3 2.3 More or less, similar findings were recorded with respect to M/s Sam Enterprises Pvt. Ltd. Finally, Ld. AO, invoking the provisions of Sec.68, added both these items to the income of the assessee and framed the assessment. Appellate Proceedings 3.1 The assessee assailed each of the findings of Ld. AO by way of elaborate written submissions which are already extracted in the impugned order. The same were subjected to remand proceedings wherein the assessee furnished Audited financial statements and Income Tax Returns of these two entities. Still, Ld. AO referred to the field enquiries and justified the impugned addition. On the other hand, the assessee relied on plethora of judicial decisions holding the field in assessee’s favour. 3.2 The Ld. CIT(A), considering the provisions of Sec.68, noted that the assessee had filed various documents with respect to SEPL to establish the primary ingredients of Sec.68. These documents were - (a) Confirmation duly signed by the Director of SEPL for AY 2018-19 confirming the Loan transaction; (b) Acknowledgement of Income Tax Return of SEPL for AY 2018-19; (c) Copy of Bank Statement of SEPL for AY 2018-19 in evidence of transfer of credits aggregating to Rs.736 Lacs on various dates; (iv) Audited Balance Sheet for the year ended 31.03.2018 of SEPL. The Ld. CIT(A), in para 7.22 observed that SEPL was a body corporate and it was marked as an ‘active company’ on MCA portal. This entity was regularly assessed to Income Tax as well as registered with GST authorities. No efforts were made by Ld. AO to 4 conduct field enquiries as per addresses as given on MCA portal and he simply relied on the findings given in earlier assessment order. The Hon’ble Delhi High Court in the case of CIT Vs Kamdhenu Steel & Alloys Ltd. [2012] 19 Taxmann.com 26 (Delhi) held that the conclusion about non-existence of the Company cannot be formed without making enquiry from the Registrar of Companies (ROC). Had any such enquiry been made from the ROC, the conclusion as arrived by the AO regarding non-existence of the Company would not have been reached. Thus, the conclusion arrived by the AO could not be sustained. From financial statements of SEPL, it was quiteevident that this entity had sufficient share capital, long terms liabilities and current liabilities which aggregated to more than Rs.33.64 Crores. This entity made advances including loans to assessee which were reflected in its financial statements. Thus, this entity had sufficient creditworthiness to make loans to the assessee and Ld. AO erred in rejecting the same. Pertinently, prior to advancing loan to the assessee, there was credit in the bank account of that entity for Rs.10.66 Crores and there were no cash deposits. That entity filed Income Tax Return of Rs.50.76 Lacs and paid Income Tax of Rs.12.77 Lacs during AY 2023-24. The allegation that there was no fixed asset had nothing to do with the creditworthiness of the creditor. Upon perusal of statement of Shri Badan Singh (director of SEPL) as recorded on 27-12-2017, it was noted that there was no reference of SEPL and no question was posed to Sh. Badan Singh regarding 'SEPL' or affairs of 'SEPL'. Considering 5 all these facts, Ld. AO was directed to delete the impugned addition of Rs.736 Lacs. 3.3 More or less similar findings have been rendered with respect to SVIPL. The assessee furnished similar documentary evidences to establish the primary ingredient of Sec.68. The Ld. CIT(A) observed that this entity was an ‘active company’ on MCA portal and it had complied with all statutory compliances. This entity was regular income tax assessee as well as registered with GST authorities. As per financial statements, this entity had sufficient resources to make loans. This entity declared income of Rs.8.18 Crores and paid taxes of Rs.3.81 Lacs. Further, there was no reference of this entity in the statements as recorded from its directors. The addition was on mere suspicion and the assessee was not required to explain the source of source as per settled position of law. The Ld. CIT(A) referred to the decision of jurisdictional High Court in the case of S. Kamaljeet Singh (147 Taxmann.com 18) and various other judicial decisions to delete the impugned addition against which the revenue is in further appeal before us. Our findings and Adjudication 4. We find that Ld. CIT(A) has rendered pertinent factual findings in its order with respect to both the entities. These findings remain uncontroverted before us. We find that with respect to both the lenders, the assessee had furnished sufficient documentary evidences to satisfy the primary ingredients of Sec.68. In our considered opinion, by furnishing these documents, the primary onus of the assessee 6 stood discharged and it was the onus of Ld. AO to controvert the same. However, except for mere allegation, there is no concrete evidence to support the fact that the assessee’s own unaccounted money had flown back into its accounts in the grab of loans. Pertinently, the loans advanced to the assessee are preceded by credits through banking channels and there is no cash deposit in the bank account of the lender entities. The assessee, as per settled position of law, is not required to prove the source of the sourceof loan in this year. It is trite law that no addition could be made merely on the basis of suspicion, conjectures or surmises. The case laws as cited by Ld. CIT(A) in the impugned order duly supports the case of the assessee and the same would lead to an inescapable conclusion that the impugned additions would not be sustainable in law. Therefore, we concur with the adjudication of Ld., CIT(A) and see no reason to interfere in the same. 5. The appeal stands dismissed. Order pronounced u/r 34(4) of Income Tax (Appellate Tribunal) Rules, 1963. Sd/- Sd/- (SATBEER SINGH GODARA) (MANOJ KUMAR AGGARWAL) Ɋाियक सद˟ /JUDICIAL MEMBER लेखासद˟ /ACCOUNTANT MEMBER Dated: 28-03-2025 7 आदेश की Ůितिलिप अŤेिषत /Copy of the Order forwarded to : 1. अपीलाथŎ/Appellant 2. ŮȑथŎ/Respondent 3. आयकरआयुƅ/CIT 4. िवभागीयŮितिनिध/DR 5. गाडŊफाईल/GF ASSISTANT REGISTRAR ITAT AGRA "