DNK ROSHANS DEPARTMENTAL STORES PVT LTD,NEW DELHI V. DCIT,CIRCLE-7(1), NEW DELHI

ITA 1137/DEL/2024

AI Insights

The case involves DNK Roshans Departmental Stores Pvt. Ltd., which appealed against the additions made by the Assessing Officer under section 68 of the Income Tax Act, 1961, concerning unexplained loans and credits. The CIT(A) upheld some of these additions, leading to further appeals by both the assessee and the Revenue. The Tribunal found procedural irregularities in how additional evidence was handled and decided to remand the case back to the AO for a fresh assessment, ensuring that all parties have a fair opportunity to present their case.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 22850 (ITAT-DELHI)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-01-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2016-2017
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RAJESH KUMAR DHANESTA
• Assessee Lawyers: PUNEET THUKRAL
• Keywords: Set aside; Additional evidence; Onus to prove
• Section: 143(3); 142(1); 68

Judgement Text

" 1 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH ‘B’: NEW DELHI BEFORE SHRI YOGESH KUMAR US, JUDICIAL MEMBER AND SHRI AVDHESH KUMAR MISHRA, ACCOUNTANT MEMBER ITA No.1137/Del/2024, A.Y. 2016-17 DNK Roshans Departmental Stores Pvt. Ltd. 56, Ring Road, Lajpat Nagar-3, New Delhi PAN:AACCD0576B Vs. DCIT, Circle-7(1),New Delhi (Appellant) (Respondent) ITA No.1170/Del/2024, A.Y. 2016-17 DCIT, Circle-7(1),New Delhi Vs. DNK RoshansDepartmental Stores Pvt. Ltd. 56, Ring Road,Lajpat Nagar-3, New Delhi PAN:AACCD0576B (Appellant) (Respondent) Appellantby Sh. Puneet Thukral, CA Respondent by Sh. Rajesh Kumar Dhanesta, Sr. DR Date of Hearing 27/01/2025 Date of Pronouncement 31/01/2025 ORDER PER AVDHESH KUMAR MISHRA, AM These are cross appeals filed by the Revenue and assessee. Since the facts involved in these appeals are common; hence, these were heard together and are being decided by this common order. ITA No.1137 & 1170/Del/2024 DNK Roshans Departmental Stores Pvt. Ltd. 2 2. Assessee has raised following grounds: “(1) The Id. CIT(A), National faceless Appeal Centre(NFAC) has erred in law and on facts in confirming an unwarranted addition of Rs.1,74,78,593/- made by the Assessing officer. 2) Whether on facts and in the circumstances of the case and in law, the Id. CIT(A) (NFAC) has erred in confirming an addition of Rs.71,94,000/- u/s 68 of the Income Tax Act, being loan received from Directors, their families and HUF Concerns:- (i) despite the fact that all the necessary conditions viz. identity, capacity and genuineness were confirmed. (ii) Without considering the documentary evidence including additional evidence filed before him. The Id. CIT(A) NFAC has further erred in simply reproducing the order of the Assessing officer without passing a single independent comment at all. 3) Whether on the facts and in the circumstances of the case and in law the CIT(A) NFAC has erred in confirming an addition of creditors amounting to Rs.1,02,84,593/- by wrongly stating that no confirmations have been filed before him despite the fact that confirmed copy of ledger account of creditors amounting to Rs. 3,90,27,877/- were duly filed as additional evidence. 4) Whether on the facts and in the circumstances of the case and in law the CIT(A) NFAC has erred in confirming an addition of creditors amounting to Rs. 1,02,84,593/- on adhoc basis only and without any specific finding. 5) That the appellant craves the leave to add, modify, amend or delete any or all the grounds of appeal.” 2.1 Revenue has raised following grounds: “1. Whether on the facts and circumstances of the case and in law, the Ld. NFAC has erred in deleting the addition of Rs. 1,50,83,933/ made by the AO u/s 68 of the Act, without appreciating that the assessee failed to discharge its onus to prove the three limbs of Section 68 1.e., ITA No.1137 & 1170/Del/2024 DNK Roshans Departmental Stores Pvt. Ltd. 3 Identity, creditworthiness of the source and genuineness of the transaction? 2. Whether on the facts and circumstances of the case and in law, the Ld. NFAC has erred in restricting the addition made by the AO on account of huge increase in creditors to Rs.1,02,84,593/- ignoring the fact that the assessee could not furnish any explanation about huge increase in creditors to Rs.11.86 Crs. compared to previous year Rs. 3.19 Cr. during the assessment proceedings. 3. The appellant craves leave for 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. The relevant facts giving rise to these appeals are that the assessee, engaged in the business of trading in Sarees, embroidered Sarees, LehangsLachas, Suits, Sherwanis etc., filed its Income Tax Return (hereinafter, the ‘ITR’) on 22.09.2016 declaring income of Rs.65,14,740/-. The case was picked up for scrutiny. Consequentially, the assessment was completed under section 143(3) of the Income Tax Act, 1961 (hereinafter, the ‘Act’) at income of Rs.5,16,32,673/- wherein the Ld. Assessing Officer (hereinafter,the ‘AO’) held the unsecured loans and credits appearing in the bank account of the assessee as unexplained and taxed the sameobserving as under: “ During the year under consideration, the assessee company is doing business activities as trading of sarees, embroidered sarees, Lehanga Choli, Lachas, Suits Dupatta and Sherwanies etc. a) During the assessment proceedings, vide notice u/s.142(1) dated 15.11.2018, the assessee was asked to prove the genuineness of the unsecured loan with in the criteria laid down in section 68 of the I.T. ITA No.1137 & 1170/Del/2024 DNK Roshans Departmental Stores Pvt. Ltd. 4 Act. Vide submissions dated 12/11/2018, the assessee informed that it had received a sum of Rs. 2,56,56,999 from Mr. Parvesh Kohli. The assessee submitted copy of ledger account of Mr. Parvesh Kohli in its Books showing opening credit of Rs. 2,80,35,467/-. The aggregate of credit is Rs. 5,74,41,467/- which shows that the assessee company received Rs. 2,94,06,000/- in the account against Rs. 25656999/- informed as stated above. The assessee company furnished photocopy of bank passbook of Indian Overseas Bank from where the amounts have been transferred. On perusal of the same it is revealed, that the assessee received Rs. 1,50,80,000/- on 03/09/2015 the source of which is two entries of Rs 70,81,344 and Rs 80,01,172 with the balance figure of Rs 1,50,83,922/- from where 1,50,80,000 has been sent through RTGS. The narration against these amounts written is security Rental Advance. However, the assessee has not submitted any confirmation or any other documentary evidencing that the amount of Rs 1,50,83,933 is Security Rental Advance. Further, the assessee files ITR of Rs 29 lakhs which also does not justify such a high security/ Advance Rental. Therefore, evidence submitted is not complete. Hence, the same is added u/s 68 of the I.T.Act. (Net Addition: 1,50,83,933) b) It is also observed that the assessee has not submitted any Bank Statement for the following credits as these do not appear in the Bank Passbook as narrated above in para (a) above …………… ………….. For the above amounts, the assessee has not submitted any Bank Pass Books to complete the evidence. Hence, Rs 11,65,000 is added. (Net Addition: Rs. 11,65,000) (c). Perusal of other Lenders Ledger Account reveals the following: ………………………………….. ITA No.1137 & 1170/Del/2024 DNK Roshans Departmental Stores Pvt. Ltd. 5 In view of non-submissions of Bank statement, the creditworthiness of the creditors could not be established the assessee was specifically asked vide notice u/s 142(1) dated 15.10.2018 to specifically prove the creditworthiness, genuineness and to produce the bank statements with respect to the same. However, the assessee has failed to prove it and has not been able to substantiate his claim. Hence, addition of Rs 71,94,000/- is made. (Net Addition: Rs.71,94,000/-) (2) During the assessment proceedings, the Assessee was asked to explain the large increase in current Liabilities and prove the genuineness of the same. The assessee was also specifically show caused with respect to the same on 06.12.2018. In the first submission, the assessee stated that the balances appearing in current liabilities represent the party balances to whom the assessee company has sold the goods. The explanation submitted is erroneous because current liabilities represent credit balances and not debit balances on account of sale of goods. The assessee company has also submitted comparative details of trade payables of 3 years. The assessee company has neither submitted copies of ledger account nor the confirmation from the parties to prove the genuineness of the same has been submitted. On perusal of detail of Trade Payables, it is revealed that some of the balances are static and there are huge credits in the name of some parties. In absence of any clarifications and in view of huge increase in creditors of Rs. 11.86 crores (Pr. Year 3.19 crores) genuineness of the same has not been established. Hence, 25% of increased amount of Rs. 8.67 crores (11.86 cr- 3.19 cr) is added to the income of the assessee. (Net Addition: 2,16,75,000)” 4. Aggrieved, the assessee filed appeal before the CIT(A), who allowed part relief. Out of the above-mentioned additions, the Ld. CIT(A) upheld the addition of Rs.1,74,78,593/- and Rs. 71,94,000/- under section 68 of the Act. Further, Ld. CIT(A) also confirmed unexplained sundry creditor of ITA No.1137 & 1170/Del/2024 DNK Roshans Departmental Stores Pvt. Ltd. 6 Rs.1,02,84,593/-. Before us, the Ld. Dr. DR brought our attention to the facts that the assessee had produced various additional evidence during the course of appellate proceedings. However, the same was admitted and considered by the Ld. CIT(A) without affording any opportunity to the AO. The Sr. DR contended that the action of the LD. CIT(A) was not in accordance with the Rule 46A of the I. T. Rules. Hence, he requested that such additional evidence should be remanded back to the AO for doing needful. On the other hand, the Ld. Authorized Representative (hereinafter, the ‘AR’) submitted that wherever he had furnished specific details and copies of various documents, confirmations, bank account, etc. before the Ld. CIT(A), who after examining the same allowed part relief. Hence, the Ld. AR requested that the issues decided by the Ld. CIT(A) on merit after examining the fresh evidence should not be reverted back to the AO. Further, the Ld. AR also requested that the issues decided on merit and not on the basis of any additional evidence by the Ld. CIT(A) should also not be reverted back to the AO. The Ld. Sr. DR also brought our attention to the fact that the detailed submission uploaded, online, by the assessee just a day before finalization of the assessment was not considered by the AO as the same might be not available on his portal. 5. We have heard parties and have perused the material available on record. We find some merit in the arguments/contention/submission of ITA No.1137 & 1170/Del/2024 DNK Roshans Departmental Stores Pvt. Ltd. 7 both the parties. However, in the interest of justice, we are of the considered view that the Ld. CIT(A) has considered additional evidence contrary to the Rule 46A of the I. T. Rules. Neither the AO nor the Ld. CIT(A) has examined the evidence brought before them during assessments/appellate proceedings for proper adjudication of the issues. We therefore, consider it fit to set aside the impugned order and remit the matter back to the file of the AO for denovo assessment. Accordingly, we ordered so. The assessee should ensure compliances during the remitted proceedings before the AO. The AO is also required to provide reasonable opportunities of being heard to the assessee before deciding the case on merit. 6. Both appeals are allowed for statistical purposes. Order pronounced in open Court on 31st January, 2025 Sd/- Sd/- (YOGESH KUMAR US) (AVDHESH KUMAR MISHRA) JUDICIAL MEMBER ACCOUNTANT MEMBER Dated: 31/01/2024 Binita, Sr. PS Copy forwarded to: 1. Appellant 2. Respondent 3. CIT/PCIT 4. CIT(Appeals) 5. Sr. DR: ITAT ASSISTANT REGISTRAR ITAT, NEW DELHI "