DEPUTY COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE- 3, NEW DELHI, DELHI V. RUDRAVEERYA DEVELOPERS LTD., DELHI

ITA 2757/DEL/2023

AI Insights

The case involves appeals by the Deputy Commissioner of Income Tax, Central Circle 3, against Rudraveerya Developers Ltd., challenging the orders of the Commissioner of Income-tax Appeals which had deleted substantial disallowances made under section 68 of the Income-tax Act. The primary legal contention revolved around whether the additions made by the Assessing Officer were justified, given that no incriminating material was found during the search operations that could substantiate the additions. The Tribunal considered precedents and the specific circumstances of the case, including the merger of several companies into the assessee and the subsequent financial transactions that were scrutinized.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 471593 (ITAT-DELHI)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-02-2025
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: F
• Assessment Year: 2019-2020
• Other Referred Cases: B.R.Bamsi vs. CIT, Moralia & Sons vs. CIT, CIT vs. Cochin Refineries Ltd., Assam Company (I) Ltd vs. CIT, ITO vs. Gurvinder Kaur, CIT V. Varas International P.Ltd., Peter Vaz vs CIT, Sanjay Sawhney vs PCIT, PCIT vs Sun Pharmaceuticals Industries Ltd, Commissioner of Income-tax, Meerut vs Jindal Ployster Ltd
• Laws Referred To: Income-tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: JAVED AKHTAR
• Assessee Lawyers: GAUTAM JAIN
• Keywords: Set aside; Reassessment proceedings; Question of law; Search and seizure; Block assessment; Assessment record; Wholly owned subsidiary; Scheme of amalgamation
• Section: 143(3); 143(1); 132; 153A; 68; 22; 153C

Judgement Text

"IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH ‘F’: NEW DELHI BEFORE SHRI S.RIFAUR RAHMAN, ACCOUNTANT MEMBER and SHRI ANUBHAV SHARMA, JUDICIAL MEMBER ITA No.2757/DEL/2023 (Assessment Year: 2019-20) ITA No.2758/DEL/2023 (Assessment Year: 2020-21) DCIT, Central Circle 3, vs. Rudraveerya Developers Ltd., New Delhi. LD – 36, Pitampura, New Delhi. (PAN :AAHCR8667A) (APPELLANT) (RESPONDENT) ASSESSEE BY : Shri Gautam Jain, Advocate Shri Parth Singhal, Advocate REVENUE BY : Shri Javed Akhtar, CIT DR Date of Hearing : 03.12.2024 Date of Order : 28.02.2025 ORDER PER S.RIFAUR RAHMAN,AM: 1. These appeals are filed by the assessee against the order of ld. Commissioner of Income-tax Appeals-23, New Delhi [hereinafter referred to as ‘ld. CIT (A)] dated 29.07.2023 for Assessment Years 2019-20 & 2020-21. 2. Since the issues are common and the appeals are connected, hence the same are heard together and being disposed off by this common order. First we take ITA No.2757/Del/2023 for AY 2019-20 as lead case. 2 ITA Nos.2757 & 2758/DEL/2023 3. The Revenue in ITA No.2757/Del/2023 for AY 2019-20 raised the following grounds of appeal :- “1. The Ld. CIT(A) has erred on facts and in law in deleting the disallowance of Rs. 55,37,13,899/- made by the Assessing Officer u/s 68 of the Income-tax Act, 1961. 2. The Ld. CIT(A) has erred on facts and in law in deleting the disallowance of Rs.1,66,11,417/- made by the Assessing Officer u/s 68 of the Income-tax Act, 1961. 3. The Ld. CIT(A) has erred on facts and law in holding that the impounded material in the form of tally data did not pertain to Gopal Bansal. 4. The Ld. CIT(A) has erred is not regarding the fact that the impounded data in the form of tally data was authentic as it contained the name of the assessee, transactions through banking channels as well as cash transactions.” 4. At the time of hearing, ld. AR of the assessee submitted that assessee seeks to invoke Rule 27 of the Income Tax (Appellate Tribunal) Rules, 1963. In this regard, he submitted as under :- “1. It most respectfully submitted that the instant appeal has been filed by the revenue against an order of the learned Commissioner of Income Tax (Appeals) dated 29.7.2023, wherein the learned Commissioner of Income Tax (Appeals) has deleted the additions of Rs. 55,37,13,899/- by recording findings in paras 27 to 76 of the order and Rs.1,66,11,417/- by recording findings in paras 77 to 79 of the order. 1.1 It is respectfully submitted that since the assessee had succeeded in the appeal partly it did not prefer an appeal (as it would have been academic) despite the fact that the learned Commissioner of Income Tax (Appeals) did adjudicate the jurisdictional ground against the assessee. However, the revenue has since filed the instant appeal, the assessee-respondent seeks to support the order of the learned 3 ITA Nos.2757 & 2758/DEL/2023 Commissioner of Income Tax (Appeals) by contending that addition made is without jurisdiction. 1.2 To so contend, the assessee seeks to invoke Rule 27 of the Income Tax Appellate Tribunal Rules, 1963 which reads as under: \"27. Respondent may support order on grounds decided against him:- The respondent, though he may not have appealed, may support the order appealed against on any of the grounds decided against him.\" 1.3 The assessee seeks to place reliance on the following judicial pronouncements: i) 83 ITR 223 (Born) B.R.Bamsi vs. CIT) ii) 129 ITR 475 (All) Moralia & Sons vs. CIT iii) 220 ITR 398 (Ker) CIT vs. Cochin Refinieries Ltd. iv) 176 CTR 406 (Gau) Assam Company (I) Ltd vs. CIT v) 102 ITD 189 (Del) ITO vs. Gurvinder Kaur vi) 284 ITR 80 (SC) CIT V. Varas International P.Ltd. vii) 436 ITR 616 (Bombay) Peter Vaz vs CIT 25. At this stage, therefore we are not concerned with the issue as to whether the jurisdictional parameters for invoking the provisions of Section 153C of the IT Act were fulfilled or not. However, at this stage, we are concerned with the issue as to whether the ITAT was right and justified in preventing the Appellants/assessees from raising this jurisdictional issue either for want of cross-objections or because the delay in filing the cross-objections was not sufficiently accounted for. 26. To begin with therefore we propose to consider the issue as to whether there was any necessity for the Appellants/assessees to file cross- objections before the ITA T to raise the jurisdictional issue of compliance with jurisdictional parameters before any proceedings could be initiated under section 153C of the IT Act. 27. In this case, admittedly, the CIT (Appeals) had decided the matters in favor of the assessees and even set aside the 4 ITA Nos.2757 & 2758/DEL/2023 orders made by the Assessing Officers. Therefore, the assessees did not have to institute any further appeals to the ITAT. The Revenue in this case had appealed to the ITA T against the orders made by the CIT (Appeals). Therefore, the issue is, whether the assessees could have raised the issue of non- compliance with jurisdictional parameters set out under section 153C of the IT Act, before the IT AT, even without filing any cross-objections before the ITAT. 28. At least, prima facie, non-compliance with jurisdictional parameters set out under section 153C of the IT Act, if established, will go to the root of the matter and even nullify the very action initiated under section 153C of the IT Act. Based on the material furnished to the assessees, it was the case of the asses sees that what was found in the course of search proceedings under section 132 of the IT Act in the premises of the said firm and the said company, were the books of accounts belonging to the said firm and the said company. It is the case of the assessees that no books of accounts belonging to the assessees i.e. Peter Vaz and Edgar Afonso were found in the search proceedings under Section 132 in the premises of the said firm and the said company. Therefore, it was the case of the assessees that no proceedings under section 153C of the IT Act could ever have been initiated against these assessees. 29. Mr. Pardiwala stressed that the provisions of Section 153C as amended up to the year 2013 required the Assessing Officer to be satisfied that the books of the accounts belonging to the assessees who were proposed to be proceeded with under section 153C ought to have been found, as a precondition for any action under section 153C of the IT Act. For this purpose, he compared the provisions of Section 153C as amended up to 2020, in which, there is a significant departure. Amended provisions, which did not apply to the present case, provided that the action under section 153C was competent even if the books of accounts \"pertaining to\" and not belonging to the assessee were found during the search under section 132 upon a person not referred to in Section 153A of IT Act. He submitted that this was an issue of law and therefore, the ITAT should have permitted the asses sees to raise this issue even without the necessity of filing any cross-objections. He referred to Rule 27 of the Appellate Tribunal Rules, 1963 to contend that this Rule 5 ITA Nos.2757 & 2758/DEL/2023 gives a right to the Respondent in an appeal before the IT A T to support the order appealed against on any of the grounds decided against him, even though he may not have appealed against the order. 30. Rule 27 of the Appellate Tribunal Rules, 1963 reads as follows:- \"Respondent may support order on grounds decided against him. 27. The respondent, though he may not have appealed, may support the order appealed against on any of the grounds decided against him.\" 31. In this case, the assessees merely wanted to support the order made by the CIT (Appeals), which was entirely in their favor. The asses sees wished to raise an issue, that was at least prima facie going to the root of jurisdiction to initiate proceedings under section 153C of the IT Act. Having regard to the provisions of rule 27 referred to above, the ITAT in our opinion should have permitted the assessees who were Respondents before it, to support the orders of CIT (Appeals) on this ground, even without the necessity of filing any cross- objections. 32. In Dahod Sahakari Kharid Vechan Sangh Ltd. (supra), the Division Bench of Gujarat High Court was deciding whether, on the facts and in the circumstances of the case, the Tribunal was right in law in holding that the assessee needed to file cross-objections despite fully succeeding in appeal and therefore, being unable to challenge the finding of the CIT (Appeals) that the assessee was guilty of concealment of income and/or furnishing inaccurate particulars. 33. In the above case, the CIT (Appeals) recorded a finding that the assessee had concealed particulars of his income or furnished inaccurate particulars of his income but for detailed reasons set out, the CIT (Appeals) quashed the penalty imposed upon the assessee under section 271 of the IT Act. In the appeal filed by the Revenue before the ITAT, the assessee sought to assail the finding of concealment but the ITA T did not permit 6 ITA Nos.2757 & 2758/DEL/2023 the assessee to do so, on the ground that the assessee had failed to file any cross-objections. 34. The Division Bench of Gujarat High Court however held that the ITAT committed an error in law in not permitting the assessee to assail the finding of the concealment without filing cross objections. The Court held that the ITAT apparently lost sight of the fact that the assessee had succeeded before the CIT (Appeals) that had allowed the assessee's appeal and even set aside the penalty in its entirety. Therefore, the assessee did not have to appeal. The position in law is well settled that the cross- objections, for all intents and purposes, would amount to an appeal and the cross objector would have the same rights which an appellant has before the Tribunal. Since the assessee did not have to appeal, the ITAT could not have insisted upon the filing of cross objections as a precondition for permitting the assessee to assail the finding of concealment. 35. The Division Bench referred to the provisions of section 253 of the IT Act and after analyzing the scheme held that on a plain reading of the provision, it transpires that the party had been granted an option or a discretion to file cross-objections. In case a party having succeeded before the CIT (Appeals) opts not to file cross-objection even when an appeal is preferred by the other party, from that, it is not possible to infer that the said party had accepted the order or the part thereof which was against the respondent. Since the ITA T drew such an inference that was not supported by the plain language of Section 253, the High Court held that the ITAT was clearly in error. 36. The High Court then referred to Rule 27 quoted above and held that if the inference drawn by the ITAT is accepted as a correct proposition, then, it would render rule 27 of the Appellate Tribunal Rules, 1963 redundant and nugatory. The High Court held that it is not possible to interpret the provision in such a manner. Any interpretation placed on a provision has to be in harmony with the other provisions under the Act or the connected Rules and interpretation which makes other connected provisions otiose has to be avoided. Rule 27 of the Appellate Tribunal Rules is clear and unambiguous. The right granted to the respondent by the said Rule cannot be taken away by the Tribunal by referring to the provisions of Section 253(4) 7 ITA Nos.2757 & 2758/DEL/2023 of the IT Act. The ITAT was, therefore, in error in holding that the finding recorded by the CIT (Appeals) remained unchallenged since the assessee had not filed cross-objections. 37. The reference in this regard can also be made to the provisions of section 260A(7) of the IT Act which provides that save as otherwise provided in this Act, the provisions of the Code of Civil Procedure, 1908, relating to appeals to the High Court shall, as far as may apply in the case of appeals under this Section. Now in the context of the provisions of Order XLI Rule 22 of the CPC dealing with the cross-objections, the Hon'ble Supreme Court in the case of S. Nazeer Ahmed (supra) has held that the High Court was clearly in error in holding that the appellant not having filed a memorandum of cross- objections in terms of Order XLI Rule 22 of the Code, could not challenge the finding of the trial Court that the suit was not barred by Order II Rule 2 of the Code. The respondent in an appeal is entitled to support the decree of the trial Court even by challenging any of the findings that might have been rendered by the trial Court against himself. For supporting the decree passed by the trial Court, it is not necessary for the respondent in the appeal, to file a memorandum of cross-objections challenging a particular finding that is rendered by the trial Court against him when the ultimate decree itself is in his favor. A memorandum of cross-objections is needed only if the respondent claims any relief which had been negatived to him by the trial Court and in addition to what he has already been given by the decree under challenge. The Hon'ble Supreme Court, therefore, held that the respondent in the appeal had every right to canvas the correctness of the finding on the bar of Order II Rule 2 rendered by the trial Court. 38. In the present case, it is not as if the issue of non- fulfillment of jurisdictional parameters of Section 153C was raised but rejected by the CIT (Appeals). Such an issue was not raised before the CIT (Appeals). Having regard to the provisions of Rule 27 of the Appellate Tribunal Rules, 1963 as also the provisions of section 260A(7) read with Order XLI Rule 22 of CPC as interpreted by the Hon'ble Supreme Court in S. Nazeer Ahmed (supra) we think that the ITAT should not have precluded the assessees from raising the issue in the appeals instituted by the Revenue, even without the necessity of filing any 8 ITA Nos.2757 & 2758/DEL/2023 cross-objections. Accordingly, the additional substantial question of law is required to be answered in favor of the Appellants/assessees and against the Revenue. viii) 273 Taxman 332 (Delhi) Sanjay Sawhney vs PCIT 26. The upshot of the above discussion is that Rule 27 embodies a fundamental principal that a Respondent who may not have been aggrieved by the final order of the Lower Authority or the Court, and therefore, has not filed an appeal against the same, is entitled to defend such an order before the Appellate forum on all grounds, including the ground which has been held against him by the Lower Authority, though the final order is in its favour. In the instant case, the Assessee was not an aggrieved party, as he had succeeded before the CIT (A) in the ultimate analysis. Not having filed a cross objection, even when the appeal was preferred by the Revenue, it does not mean that an inference can be drawn that the Respondent- assessee had accepted the findings in part of the final order, that was decided against him. Therefore, when the Revenue filed an appeal before the ITAT, the Appellant herein (Respondent before the Tribunal) was entitled under law to defend the same and support the order in appeal on any of the grounds decided against it. The Respondent assessee had taken the ground of maintainability before Commissioner (Appeals) and, therefore, in the appeal filed by the Revenue, it could rely upon Rule 27 and advance his arguments, even though it had not filed cross objections against the findings which were against him. The ITAT, therefore, committed a mistake by not permitting the assessee to support the final order of CIT (A), by assailing the findings of the CIT(A) on the issues that had been decided against him. The Appellant - assessee, as a Respondent before the ITA T was entitled to agitate the jurisdictional issue relating to the validity of the reassessment proceedings. We are, therefore, of the considered opinion that the impugned order passed by the ITA T suffers from perversity in so far as it refused to allow the Appellant - assessee (Respondent before the Tribunal) to urge the grounds by way of an oral application under Rule 27. The question of law as framed is answered in favour of the Appellant - assessee and resultantly the impugned order is set aside. The matter is remanded back before the IT A T with a direction to hear the matter afresh by allowing the 9 ITA Nos.2757 & 2758/DEL/2023 Appellant- assessee to raise the additional grounds, under Rule 27 of the ITA T Rules, pertaining to issues relating to the assumption of jurisdiction and the validity of the reassessment proceedings under section I53C of the Act. ix) 408 ITR 517 (Gujarat) PCIT vs Sun Pharmaceuticals Industries Ltd 11. To put the controversy beyond doubt, Rule 27 of the Rules makes it clear that the respondent in appeal before the Tribunal even without filing an appeal can support the order appealed against on any of the grounds decided against him. It can be easily appreciated that all prayers in the appeal may be allowed by the Commissioner (Appeals), however, some of the contentions of the appellant may not have appealed to the Commissioner. When such an order of the Commissioner is at large before the Tribunal, the respondent before the Tribunal would be entitled to defend the order of the Commissioner on all grounds including on grounds held against him by the Commissioner without filing an independent appeal or cross- objection. 12. Rule 27 of the Rules is akin to Rule 22 Order XLI of the Civil Procedure Code. Sub-rule (1) provides that any respondent, though he may not have appealed from any part of the decree, may not only support the decree but may also state that the finding against him in the Court below in respect of any issue ought to have been decided in his favour; and may also take any cross-objection to the decree which he could have taken by way of an appeal. x) 397 ITR 282 (Allahabad) Commissioner of Income-tax, Meerut vs Jindal Ployster Ltd 1.4 It is therefore respectfully submitted that the respondent seeks to support the order of learned Commissioner of Income Tax (Appeals), allowing the appeal though on a ground in respect of which, the learned CIT(Appeals) had adjudicated in against. The respondent thus prays that it be permitted to urge the following legal ground: \"1 That the additions made are without jurisdiction since it is not based on any incriminating material found as a result of 10 ITA Nos.2757 & 2758/DEL/2023 search on the appellant, as have been also held by the judgments of Hon'ble Apex Court in the case of Pro CIT V. Abhisar Buildwell (P) Ltd. reported in 454 ITR 212.\" 1.5 The respondent prays that it be permitted to urge the aforesaid ground as raised and formulated in para 1.4 above in view of the aforesaid judgments as stated above. A copy of the aforesaid application is also being given to the appellant i.e. learned Departmental Representative.” 5. After considering the objections of the ld. DR of the Revenue, we proceeded to admit the submissions of the ld. AR on the admission of Rule 27 for adjudication. 6. At the time of hearing, ld. DR of the Revenue brought to our notice the relevant facts from the assessment record and appellate order and heavily relied on the findings of the Assessing Officer. 7. On the other hand, ld. AR of the assessee submitted as under :- “1. The Ld. Authorised Representative (AR) has contended that additions made are without jurisdiction since it is not based on any incriminating material found as a result of search on the assessee. The Ld. AR for the assessee submitted that notice issued u/s 153A of the Act, additions made and disputed in this appeal and the impugned assessment framed u/s 153A of the Act are without jurisdiction since additions made by the Assessing Officer is not based on any incriminating material found as a result of search on the assessee. It was submitted that in the instant case, search u/s 132 of the Act was conducted on 11.2.2021 and no proceedings were pending on the date of search for the instant assessment year. It was submitted that the original return of income was filed by the assessee on 31.10.2019 u/s 139(J) of the Act and accepted in an intimation u/s 143(1) of the Act and, as such, the assessment for the instant year was not pending on the date of search. Thus, the assessment made prior to search had not abated under second proviso to section 153A of the Act and, therefore, the additions made are beyond the scope of assessment framed u/s 153AI143(3) of the Act. It was submitted that as a result of search on the assessee, no incriminating material has been detected as a result of search and, therefore, additions made are without jurisdiction. 11 ITA Nos.2757 & 2758/DEL/2023 2 The learned AR further contended that the issue is no longer res- integra and stands concluded by the decision of Hon'ble Tribunal in the case of Brij Gopal Construction (P) Ltd. v. DCIT in ITA No(s). 2472/D/2023, 2473/D/2023, 2751/D/2023, 2752/D/2023, 2753/D/2023 and, 2754/D/2023 tiled by the revenue for Assessment years 2012-13, 2013-14, 2014-15, 2016-17, 2018-19 and 2019-20 and ITA No(s). 2321/D/2023, 2322/D/2023, 2323/D/2023 and 2324/D/2023 filed by the assessee for Assessment years 2014-15,2018-19,2019-20 and 2020- 21 dated 4.9.20224. 3 The learned AR also contended that the judgment of Hon'ble Jurisdictional High Court of Delhi in the case of Kabul Chawla (380 ITR 573) affirmed by the Hon'ble Supreme Court in the case of Abhisar Buildwell (P) Ltd. (454 ITR 212) are squarely apply making the impugned assessment order null and void.” 8. Considered the rival submissions and material placed on record. We observed that similar issue was considered by the coordinate Bench in the case of Brij Gopal Construction Company (P) Ltd. vs. DCIT in ITA Nos.2321 to 2324/Del/2023 & Ors. order dated 04.09.2024 and it was held as under :- “18. Considered the rival submissions and material placed on record. We observe that the addition was made in the hands of the assessee without their being any incriminating material found and merely relied on the material found in the premises of Shri Gopal Bansal in the survey proceedings. We observe that the Hon'ble Supreme Court in the case of Abhisar Buildwell [supra] has set at rest the entire quarrel revolving around the assessments devoid of incriminating material. The relevant findings read as under: “In view of the above and for the reasons stated above, it is concluded as under: i) that in case of search under Section 132 or requisition under Section 132A, the AO assumes the jurisdiction for block assessment under section 153A; 12 ITA Nos.2757 & 2758/DEL/2023 ii) all pending assessments/reassessments shall stand abated; iii) in case any incriminating material is found/unearthed, even, in case of unabated/completed assessments, the AO would assume the jurisdiction to assess or reassess the ‘total income’ taking into consideration the incriminating material unearthed during the search and the other material available with the AO including the income declared in the returns; and iv) in case no incriminating material is unearthed during the search, the AO cannot assess or reassess taking into consideration the other material in respect of completed assessments/unabated assessments. Meaning thereby, in respect of completed/unabated assessments, no addition can be made by the AO in absence of any incriminating material found during the course of search under Section 132 or requisition under Section 132A of the Act, 1961. However, the completed/unabated assessments can be re-opened by the AO in exercise of powers under Sections 147/148 of the Act, subject to fulfilment of the conditions as envisaged/mentioned under sections 147/148 of the Act and those powers are saved. The question involved in the present set of appeals and review petition is answered accordingly in terms of the above and the appeals and review petition preferred by the Revenue are hereby dismissed. No costs. 15. Insofar as the aforesaid Civil Appeals preferred by the assessee – M/s Kesarwani Zarda Bhandar Sahson, Allahabad are concerned, these appeals have been preferred against the impugned judgment and order dated 06.09.2016 passed in ITA Nos. 270/2014, 269/2014, 15/2015, 16/2015, 268/2014 and 17/2015, as also, against the order dated 21.09.2017 passed in the review application It is required to be noted that the issue before the Allahabad High Court was, whether in case of completed/unabated assessments, the AO would have jurisdiction to re-open the assessments made under Section 143(1)(a) or 143(3) of the Act, 1961 and to re- assess the total income taking notice of undisclosed income even found during the search and seizure operation. 13 ITA Nos.2757 & 2758/DEL/2023 15.1 In view of the discussion hereinabove, once during search undisclosed income is found on unearthing the incriminating material during the search, the AO would assume jurisdiction to assess or reassess the total income even in case of completed/unabated assessments. Therefore, the impugned judgment(s) and order(s) passed by the High Court taking the view that the AO has the power to reassess the return of the assessee not only for the undisclosed income, which was found during the search operation but also with regard to material that was available at the time of original assessment does not require any interference. Under the circumstances, the aforesaid appeals preferred by the assessee – M/s Kesarwani Zarda Bhandar, Sahson, Allahabad deserve to be dismissed and are accordingly dismissed. In the facts and circumstances of the case, no costs.” 19. Considering the facts on record in totality, we are of the considered view that the additions in the hands of assessee company has been made without there being any incriminating material found from their premises at the time of search. Therefore, following the decisions of the Hon'ble Supreme Court in the case of Abhisar Buildwell [supra], we delete the addition which has no relevance of any incriminating material. 20. Application u/r 27 of the ITAT Rules in the case of the assessee is allowed and accordingly, appeal filed by the revenue is dismissed.” 9. The facts in the present case are exactly similar and respectfully following the above decision, we are inclined to dismiss the grounds raised by the Revenue in the appeal. 10. In the result, the appeal filed by the Revenue for AY 2019-20 is dismissed. 11. The Revenue appeal in ITA No.2758/Del/2023 for AY 2020-21 has taken the following grounds of appeal :- “1. The Ld. CIT(A) has erred on facts and in law in deleting the disallowance of Rs.16,54,00,098/- made by the Assessing Officer u/s 68 of the Income-tax Act, 1961. 14 ITA Nos.2757 & 2758/DEL/2023 2. The Ld. CIT(A) has erred on facts and in law in deleting the disallowance of Rs.49,62,027/- made by the Assessing Officer u/s 68 of the Income-tax Act, 1961. 3. The Ld. CIT(A) has erred on facts and law in holding that the impounded material in the form of tally data did not pertain to Gopal Bansal. 4. The Ld. CIT(A) has erred is not regarding the fact that the impounded data in the form of tally data was authentic as it contained the name of the assessee, transactions through banking channels as well as cash transactions.” 12. Similarly, in AY 2020-21, ld. DR of the Revenue submitted that facts in this case are exactly similar to AY 2019-20 and he relied on the findings of the Assessing Officer. He submitted that ld. CIT (A) has deleted the addition holding that impounded material in the form of tally data did not pertain to Gopal Bansal and not considered the impounded data in the form of tally was authentic as it contained the name of the assessee, transaction through banking channel as well as cash transactions. In this regard, he submitted that the findings of the Assessing Officer may be sustained. 13. On the other hand, ld. AR of the assessee submitted as under :- “1. The Ld. Authorised Representative CAR) has contended that addition made of Rs. 16,54,00,908/- u/s 68 of the Act is not in accordance with law. The ld. AR further contended that entities were merged into the assessee company w.e.f. 1.4.2017. The following documents are on record: a) Details of transfer of shares, along with details of mode of payment, acquired by the assessee for the following entities: 15 ITA Nos.2757 & 2758/DEL/2023 a) E-tricks Enterprises Private Ltd.) b) Leena Infotech Private Ltd. c) SRK Tradelinks Ltd. d) Taxus Enterprises Private Ltd. e) Arise Infratech Private Ltd. f) BR Suppliers Private Ltd. b) Copy of Scheme of Amalgamation under section 233 of the Companies Act, 2013 filed before the Regional Director (NR) and Official Liquidator of Hon'ble Delhi High court on 20.12.2017 c) Copy of report received from the Office of the Registrar of Companies, NCT of Delhi and Haryana dated 26.03.2018 d) Copy of report received from the Official Liquidator of Hon'ble Delhi High Court dated 23.03.2018 e) Order of Regional Director (NR) dated 16.04.2018 for the amalgamation of 6 companies with the assessee 2 The ld. AR also contended that from the aforesaid reports of the Official liquidator attached to the High Court of Delhi and Registrar of Companies, NCT of Delhi and Haryana, it may be seen that the information/records of the 6 Transferor companies and Transferee companies were duly verified by both the Official liquidator and the Registrar of Companies, thereafter only the satisfactory reports were given to the Regional Director CNR). This itself justifies the existence and the genuineness of these companies. Also the copy of balance sheets of the 6 Transferor companies for the year ended on 31.03.2017 were filed before the learned Assessing officer, which shows the assets and liabilities of these companies. Thus, the advances given by the merged companies have been verified by the Official liquidator of Delhi High Court and the Registrar of Companies.. The ld. AR further placed a brief summary of the loans and advances given by the transferee companies in the assessee company during the preceding years is as under: 16 ITA Nos.2757 & 2758/DEL/2023 17 ITA Nos.2757 & 2758/DEL/2023 3. The ld. AR contended that the learned Assessing officer has verified has verified the aforesaid details during the course of assessment proceeding for the assessment year 2018-19 and not made any addition, The ld. AR further contended that transactions of M/s. SRK Tradelinks Ltd has been verified during the course of assessment proceeding u/s 143(3) of the Act for the assessment year 2016-17 and 2017-18. He has also contended that advances provided by the assessee company in the previous years has been verified and making the addition under the provisions of section 68 of the Act in the hands of the assessee for receiving its own money is invalid. 4. The ld. AR also contended the following contentions: i) That the learned Assessing officer has made addition on the basis that loan repayments from different parties as unexplained credit and accepted the repayment made by M/s. Brij Gopal Construction Company Pvt. Ltd.; ii) That the loans received back during the year was Rs.63,00,44,043/- out of which Rs.42,08,01,500/- was related to M/s. Brij Gopal Construction Company Pvt. Ltd. and balance of Rs. 18 ITA Nos.2757 & 2758/DEL/2023 20,92,42,903/- was related to other parties, however the learned Assessing officer has made the addition of Rs. 16,54,00,908/-; iii) That the detail of transactions for the period from 0l.04.20 19 to 3l.3.2020 with the parties to whom loans and advances were provided along with documentary evidences, which have been extracted at pages 30-50 of the order of CIT(A). iv) That the assessee has furnished the complete details/documents in support in order to provide the identity, creditworthiness and genuineness of the parties from whom loans were repaid. Further it is submitted that the aforesaid loans and repayment of loans have been duly disclosed in the audited financial statements of the assessee filed along with the return of income. v) That the most of the aforesaid loans given by the Transferee companies and the assessee were interest bearing, details of the interest income offered by these companies over the period are as follows: 19 ITA Nos.2757 & 2758/DEL/2023 vi) That affidavit of Sh. Gopal Bansal dated 11.4.2022 filed before the learned Assessing Officer wherein he has stated as under: \"1. It is certify that I have never received any cash and commission from M/s Brij Gopal Construction Company Private Limited and its group companies and M/s Rudraveerya Developers Limited. 2. I also affirm that during the Assessment proceedings Tally data provided by Central - Circle 3, New Delhi in Annexure' -7 does not belongs to me.\" vii) That borrowers/representatives has duly appeared before the learned Assessing Officer and has recorded their statement u/s 131 of the Act in respect of repayment of loans from the six entities merged into the assessee company. 5. On the basis of aforesaid contentions, it was contended that the Assessing Officer was not justified in treating as receipt of repayment of loans of Rs.16,54,00,908/- given by the assessee company as cash credits u/s 68 of the Act. In support of his arguments, the assessee furnished voluminous details and evidences. 6. The ld. AR also contended that they have provided each and every detail before the Revenue Authorities based on which the remission has been given by the ld. CIT(A). 7. Further addition made of Rs.49,62,027/-, the AR contended that the addition made by the learned Assessing Officer is not tenable as it is unsupported by any material and, in view of the judgment ‘of Apex Court in the case of Maharaja Bipin Singh Deo v. State of Orissa reported in 76 ITR 690. 14. Considered the rival submissions and material placed on record. We observed that a search and seizure proceedings u/s 132 of the Act was conducted in the case of the assessee, Gopal Bansal and Deep Chand Singhal. It was observed that assessee had purchased the shares of six companies in the AY 2017-18 and because of 20 ITA Nos.2757 & 2758/DEL/2023 purchase of shares, the assessee company wholly owned six subsidiaries and they are : (i) E-Tricks Enterprises (P) Ltd.; (ii) Leena Infotech (P) Ltd.; (iii) SRK Tradelinks Ltd.; (iv) Taxas Enterprises (P) Ltd.; (v) Arise Infratac (P) Ltd.; and (vi) BR Suppliers (P) Ltd. 15. In appellate proceedings, the assessee has submitted all the relevant Balance Sheet of the wholly owned subsidiary companies before the ld. CIT (A) and he has verified the relevant investment schedules. In pursuance to search on 11.02.2021, notice was issued to the assessee u/s 153A of the Act and assessee has submitted relevant information in response to notice u/s 153D of the Act. 16. Based on the information submitted by the assessee, ld. CIT (A) observed that by the order of Regional Director dated 16.04.2018 w.e.f. 01.04.2017 i.e. AY 2018-19, the above said companies were merged with the assessee company. In consequence to the merger of the companies, the assessee company has received back loans given to abovesaid six entities amounting to Rs.16,54,00,908/- from the abovesaid subsidiaries. During assessment proceedings, Assessing Officer observed that before the amalgamation, the aforesaid loan stood repaid by the entities from whom such loans were outstanding on the date of amalgamation. The Assessing Officer observed that during the period 01.04.2018 to 31.03.2021 almost 21 ITA Nos.2757 & 2758/DEL/2023 all the funds received by the assessee had been advanced to Sonal Mercantile Limited which has 50% shareholding of assessee company and it belongs to Goel Family. 17. Ld. CIT (A) analysed all the detailed informations, Balance Sheet and other documents submitted before him by the assessee during appellate proceedings relating to payment of loans as well as repayment of loan after amalgamation. Further he observed that the Official Liquidator attached to the High Court of Delhi and Registration of Companies, NCL of Delhi & Haryana has considered the details of Balance Sheet as on 31.03.2017 and 31.03.2018, which allowed the scheme of amalgamation. Based on that, the assessee has carried on the scheme of amalgamation and it is relevant to notice that the advances were given in AY 2016-17 and the amalgamation taken placed in AY 2018-19 based on the directions of Official Liquidator. Consequent to the amalgamation, the loan given to the companies under consideration, which has become wholly owned subsidiary of assessee’s company discharged the abovesaid loan duly after verification by the Official Liquidator. 18. After careful consideration, we observed that the Assessing Officer has treated the abovesaid six companies as shell companies. Further these companies were amalgamated with the recommendation of Official Liquidator by the Hon’ble High Courts in AY 2018-19 and this transaction was taken place much before the search taken place on 11.02.2021. In the current assessment year, the Assessing Officer analysed the transactions carried on by the assessee with the merged entities. The Assessing Officer made the addition u/s 68 of the Act with regard to the repayment 22 ITA Nos.2757 & 2758/DEL/2023 of loans in consequence of amalgamation of these entities. Therefore, we are inclined to agree with the findings of the ld. CIT (A) in deleting the additions made by the Assessing Officer after carefully examining on merits. Accordingly, the grounds taken by the Revenue are dismissed. 19. In the result, the appeal filed by the Revenue in AY 2020-21 is dismissed. 20. To sum up : both the appeals filed by the Revenue are dismissed. Order pronounced in the open court on this 28th day of February, 2025. Sd/- sd/- (ANUBHAV SHARMA) (S.RIFAUR RAHMAN) JUDICIAL MEMBER ACCOUNTANT MEMBER Dated: 28.02.2025 TS Copy forwarded to: 1. Appellant 2. Respondent 3. CIT 4. CIT(Appeals) 5. DR: ITAT ASSISTANT REGISTRAR ITAT, NEW DELHI "