ACIT, CC, Meerut V. Dev Priya Industries Ltd., Meerut

ITA 1302/DEL/2021

AI Insights

The case involves an appeal by the Revenue against the order of the Commissioner of Income Tax (Appeals), Kanpur-4, which pertained to the assessment year 2016-17. The primary issue was the deletion of an addition of Rs.2.90 crore made by the Assessing Officer under section 68 of the Income Tax Act, which concerns unexplained cash credits. The Revenue contended that the CIT(A) erred in deleting this addition, which was alleged to be received as unsecured loans and bogus share capital through accommodation entries. The Tribunal reviewed extensive documentary evidence, including income tax returns, bank statements, and confirmations from the parties involved, and found that the assessee had adequately substantiated the genuineness of the transactions.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 108381 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 6 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-04-2023
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: G
• Next Hearing Date: 26-04-2023
• Assessment Year: 2016-2017
• Appeal Filed On: 03-10-2021
• Laws Referred To: Income Tax Act
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Bogus Share capital; TDS; Bogus
• Section: 143(3)

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL, DELHI ‘H’ BENCH, NEW DELHI BEFORE SHRI N.K. BILLAIYA, ACCOUNTANT MEMBER, AND SHRI ANUBHAV SHARMA, JUDICIAL MEMBER ITA No. 1302/DEL/2021 [Assessment Year: 2016-17] ACIT CC Meerut PAN No. AAACD 4171 A Vs. Dev Priya Industries Ltd. Village Saini, Mawana Road, Meerut, UP [Appellant] [Respondent] Date of Hearing : 27.04.2023 Date of Pronouncement : 28.04.2023 Assessee by : Shri Gautam Jain, Adv. Revenue by : Ms Sapna Bhatia, CIT-DR ORDER PER N. K. BILLAIYA, ACCOUNTANT MEMBER : This appeal by the Revenue is preferred against the order of the Commissioner of Income Tax (Appeals), Kanpur-4 dated 31.05.2021 framed u/s 250(6) of the Act pertaining to A.Y. 2016-17. 2. The sum and substance of the grievance of the Revenue is that the CIT(A) erred in deleting the addition of Rs.2.90 crore made by AO u/s 68 of the Act. 2 3. The representatives of both the sides were heard at length, the case records carefully perused and with the assistance of the ld. Counsel, we have carefully considered the documentary evidences brought on record in the form of Paper Book in light of Rule 18(6) of ITAT Rules and have also perused the Judicial decisions relied upon by the both the sides. 4. The quarrel is in respect of the allegation that the assessee has received unsecured loans/bogus share capital through accommodation entries provided by the entry operators. The dispute is in respect of the share application money from (i) Brown Veopur Pvt. Ltd. Rs.1 crore (ii) Mahendra Kumar Gupta & Sons (HUF) Rs.1.65 crore and (iii) Amit Gupta & Sons (HUF) Rs.25 lac, totalling to Rs.2.90 crore. 5. To prove the genuineness of the transaction in the light of the provision of Section 68 of the Act, assessee furnished (i) copy of acknowledgment of return of income along with the computation of income, financial statement for A.Y. 2016-17, (ii) copy of confirmation of accounts from the applicant (iii) copy of bank statement. In the case of Mahendra Kumar Gupta & Sons (HUF) and Amit Gupta & Sons (HUF), the assessee has also furnished the copy of the assessment order for A.Y. 2016-17. 6. On further perusal all the documents and in particular the following entire picture becomes clear : 3 4 7. From the above chart it is crystal clear that all the three parties involved have transacted with the assessee since A.Y. 2011-12. The assessee have been taking loans/advances from the impugned three parties from previous assessment years and it can be seen from the assessment chart in all the years, the assessment have been completed u/s 143(3) of the Act wherein the borrowings from the three parties have been accepted. In fact a close perusal would show that in earlier assessment years the borrowings were much higher than what has been shown in the year under consideration. 8. Surprisingly in the remand report dated 27.05.2019 submitted by the Officer there is a categorical admission which was the basis of making the impugned additions and the same reads as under: “On going through the case record, it has been observed that no addition, on the basis of statement of Sh. SudhirGarg and Sh. Ashok Kumar Shah recorded during the search & seizure operation and post search enquiries, has been made in the case of the assessee. Further, no addition on account of loans, share capital or share premium from parties related to Sh. SudhirGarg and Sh. Ashok Kumar Shah has been made by the AO during the year under consideration. Therefore, AR of the assessee has not demanded cross examination of Sh. SudhirGarg and Sh. Ashok Kumar Shah in this case.” 9. It can be seen from the above that the basis which triggered the impugned proceedings was demolished by the AO himself admitting that no such addition was made in the light of the remand report and on the documentary evidences furnished by the assessee, the CIT(A) held as under : 5 “6.9 I have considered the fact of the case, findings of the A.O., remand report of the A.O.. submission and rejoinder to remand report of the appellant and have taken note as under..  The appellant has filed confirmed copies of accounts, income tax particulars of the depositors, return filing proofs, bank accounts showing the advancement of loans to the appellant..  The appellant has further filed confirmation of the parties from whom the depositors have received funds prior to issuance of cheques. The appellant vide rejoinder to remand report dated 13.02 2020 has submitted as under:- "Regarding M/s Brown Veopar Pvt. Ltd :- Confirmation of account. Audited Balance Sheet and Profit & Loss Sheet (placed at page nos. 99 to 105 in the paper book) Bank statement, confirmed copy of depositor account in the books of D.P. Builders in order to prove source of source (placed at page nos 115 to 117 in the paper book). Regarding M/s Amit Gupta & Sons HUF :- Confirmation of account, return filing proof, computation of total income, wealth statement and reconciliation of wealth statement (placed at page nos 94 to 98 in the paper book) confirmed copy of depositor's account in the books of Amit Gupta (individual) in order to prove source of source, photocopy of bank statement of karta Mr. Amit Gupta, where from the refunded the loan of his HUF was made (placed at page nos 118 to 123 in the paper book). Regarding M/s Mahendra Kumar Gupta & Sons HUF - Confirmation of account, return filing proof, computation of total income (placed at page nos 106 to 109 in the paper book) confirmed copy of depositor's account in the books of Mahendra Kumar Gupta and Sumit Gupta from whom the earlier given loans were received back. Photocopy of bank statements of members of depositar HUF Shri Mahendra Kumar Gupta and Shri Sumit Gupta, showing the repayment to the appellant, balance sheet as on 31.03.2016 showing deposit with the appellant at Rs 1,69,60,205/- (inclusive of interest net off TDS) (placed at page nos. 124 to 130 in the paper book)." 6 6.10 I am of the considered view that by filing the aforesaid documents, which contain the Income tax particulars of depositors, the appellant has discharged the onus cast upon it to prove the unsecured loans in terms of section 68 of IT Act From the documentary evidences on record, it is apparent that the depositors are persons of means, capable of advancing the loans under reference Hence on totality of facts, I delete the addition of Rs.2.90,00,000/- as made by the A.O. 6.11 In view of the deletion of addition of unsecured loans of Rs.2,90,00,000/- received from the three parties hereinabove, the disallowance of interest of Rs. 13,13,460/- on the same, stands deleted. In the result, these grounds of appeal are allowed.” 10. As no factual error has been pointed out by the Ld. DR in respect of the chart exhibited elsewhere and also in the findings of CIT(A), we do not find any reason to interfere with the findings of the CIT(A). 11. In the result, appeal of Revenue is dismissed. Order pronounced in the open court on 28.04.2023 Sd/- Sd/- (ANUBHAV SHARMA) (NARENDRA KUMAR BILLAIYA) JUDICIAL MEMBER ACCOUNTANT MEMBER Date:- 28.04.2023 PY* Copy forwarded to: 1. Appellant 2. Respondent 3. CIT 4. CIT(Appeals) 5. DR: ITAT ASSISTANT REGISTRAR ITAT NEW DELHI