IFL PROMOTERS LIMITED,NEW DELHI V. ITO WARD - 12(1), NEW DELHI

ITA 8484/DEL/2019

AI Insights

The case involves M/s. IFL Promoters Limited, an NBFC, which appealed against the orders of the Income Tax Officer (ITO) and the Commissioner of Income Tax (Appeals) [CIT(A)]. The primary issues were the additions made to the assessee's income for the Assessment Year 2015-16, which included Rs.28,88,484 as undisclosed income from alleged brokerage activities and Rs.42,98,000 as unexplained cash credits under Section 68 of the Income Tax Act. The tribunal found that both issues required further verification and examination, leading to the decision to remit the matter back to the AO.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 312905 (ITAT-DELHI)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-04-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Assessment Year: 2015-2016
• Laws Referred To: Income Tax Act
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: OM PRAKASH
• Assessee Lawyers: K. SAMPATH
• Keywords: Unexplained cash credit; Bogus
• Section: 68

Judgement Text

"IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH: ‘C’: NEW DELHI) BEFORE SHRI SHAMIM YAHYA, ACCOUNTANT MEMBER AND SHRI SUDHIR PAREEK, JUDICIAL MEMBER ITA No:-8484/Del/2019 (Assessment Years- 2015-16) M/s. IFL Promoters Limited, A-66, 2nd Floor, Guru Nanak Pura, Vikas Marg, Laxmi Nagar, New Delhi-110092 Vs. ITO Ward- 12 (1) New Delhi PAN No:AAACI5322C APPELLANT RESPONDENT Assessee by : Shri K.Sampath, Advocate Sh. V. RajaKumar, Advocate Revenue by : Shri Om Prakash, Sr.(DR) Date of Hearing :17.03.2025 Date of Pronouncement :30.04.2025 ORDER PER SUDHIR PAREEK, JM The aforetitled appeal arising out of the order dated 23.05.2024 passed by the Learned Commissioner of Income Tax (Appeals)-44, New Delhi (for the sake of convenience, here in after referred in short Page 2 of 9 as Ld. CIT(A)] passed against the order dated 30.12.2017 passed by the Assessing Officer [(for the sake of convenience, hereinafter referred in short as Ld. AO)] for A.Y. 2015-16. 2. The assessee has raised following grounds of appeal : - 1 On the facts and in the circumstances of the case and in law the Ld. CIT (Appeals) erred in confirming the following additions made by the Assessing Officer: i. Rs.28,88,484/- being the amount of alleged commission received on surmises and conjectures without there being any evidence in this regard: ii. Rs.42,98,000/- on account of alleged mis-match in the cash deposited with the bank. Both the above actions being erroneous, unlawful and untenable it is prayed that the same must be quashed with directions for appropriate relief. 3. The brief facts of the case are that the assessee company was engaged in providing financial services and working as an NBFC. The assessee filed its return of income on 30.09.2015 for the assessment year 2015-16 declaring an income of Nil. Thereafter, Page 3 of 9 the case was selected through CASS for complete scrutiny. On the basis of information received , the Learned AO observed that the assessee company was engaged in the trading of shares of M/s. Sunrise Asian Ltd.(sell at Rs.28,72,85,967/- and buy at Rs.29,04,10,933/-) and M/s. Turbo Tech Engineering Ltd to Rs.17,840 as a broker. The Learned AO observed that the transactions in those shares were tainted and held that the brokerage earned on those transactions at 0.5% amounting to Rs.28,88,484/- was required to be added as undisclosed income. Accordingly, the Learned AO further observed that the assessee company has played role of a broker in conducting transactions of bogus penny script i.e. M/s. Sunrise Asian Limited of Rs.28,88,484/- on account of unaccounted brokerage received by the assessee company @ 0.5% of the total quantum of transactions carried out by in the bogus penny stock script of M/s. Sunrise Asian Limited and considered the same as undisclosed income of the assessee. Accordingly, AO added back the said amount to the income to the returned income for the year under consideration. Further, the assessing officer observed that the total cash deposited in the bank account of the assessee company during the year Page 4 of 9 comes to Rs.68,98,000/-. However, he observed that as per the cash book furnished on 04.12.2017 the total amount deposited in the bank account is only Rs.26,00,000/-. The Learned also observed that the assessee has to explain the source of balance of Rs.42,98,000/- deposited in the bank on various dates during the year as per the details given in the assessment order and accordingly treated the said amount of Rs.42,98,000/- as unexplained cash credit as per the provisions of section 68 of the Act and added back to the returned income of the assessee for the year under consideration. The Learned AO completed the assessment at an income of Rs.71,86,484/- by making addition of Rs.28,88,484/- and Rs.42,98,000/-. 4. Aggrieved by the order of the AO, the assessee is in appeal before CIT(A). The CIT(A),after going through submissions of the assessee and assessment order, confirmed the addition. 5. Aggrieved by the order of the CIT(A), the assessee is in appeal before us. 6. Heard rival submissions and carefully scanned the material available on record. Page 5 of 9 7. With regard to addition of Rs.28,88,484/-, the Ld. Counsel submitted that the allegation that the assessee company has acted as broker in receipt of the reported transactions for selling and buying is contrary to facts and assessee is not a broker. He further submitted that assessee does not enjoy any sub broker ship either and it is registered only as an NBFC and not as a broker. Further he submitted that an unregistered entity with SEBI cannot act as broker and it could not have carried out brokerage to earn 0.5% commission without being an accredited broker. Accordingly, he submitted that in this way the attribution of brokerage income to the assessee is per se improper and erroneous. He submitted that not one instance of the assessee acting as a broker was cited by the authorities below and since the assessee has not carried out any such transactions as alleged by the AO and confirmed by the CIT(A), he pleaded that the same may be quashed and addition be deleted. 7.1. With regard to addition ofRs.42,98,000/- it is submitted that on account of alleged mismatch of cash book with the bank statement, the Ld. AR submitted that the amount has been added u/s. 68 of Page 6 of 9 the Act and said section is a deeming provision which can be invoked only if the conditionalities contained in the deeming provision are fulfilled. He submitted that it is a basic requirement of any deeming provisions and the rudimentary condition required to be satisfied u/s. 68 of the Act is that the relevant entry ought to be a cash credit and a cash credit essentially and invariably Involves the availing of on credit from an outsider and it indubitably envisages a liability. Itwas further submitted that nowhere in the order the AO has identified the person to whom the assessee owes the credit on account of those missing entries and the monies in question have not emanated or come to hand of the Assessee from any external sources. He further submitted that they are funds which have been generated during the normal course of business activities of the assessee. The Learned AR vehemently pleaded that being so, the invocation of Sec.68 of the Act is patently wrong and the beneficiary of this liability has not even been named by the AO and in the circumstances of an inadvertent clerical error in filing a wrong cash book by a Trainee cannot factually culminate into an addition u/s. 68 of the Act and he prayed that the same be deleted and the appeal allowed. Page 7 of 9 7. Per contra, the Ld. DR relied upon the orders of the authorities belowby submitting that the grounds/appeal liable to be dismissed as it lacks substance. 8. By perusal of the material available on record and gone through rival submissions, both issues regarding whether assessee/appellant company has acted broker at relevant time or not and alleged mismatching of Cash books requires proper verification/examination and for this purpose,it is expedient to remit the issues back to the Learned AO with the direction to decide afresh after providing effective opportunity to assessee/appellant 18. Consequently, the appeal of the assessee is allowed as indicated above for statistical purpose. Order pronounced in the Open Court on 30.04.2025 SD/- SD/- (SHAMIM YAHYA) (SUDHIR PAREEK) ACCOUNTANT MEMBER JUDICIAL MEMBER Dated: 30/04/2025. Neha, Sr. PS "