DCIT, New Delhi V. M/s. A.D. Textiles Pvt. Ltd., New Delhi

ITA 1365/DEL/2016

• Counselvise Citation: [2022] 104 COUNSELVISE.COM (IT) 1121 (ITAT-DELHI)
• Duration Of Justice: 6 year(s) 7 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-10-2022
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 28-09-2022
• Assessment Year: 2011-2012
• Appeal Filed On: 10-03-2016
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Keywords: Unexplained cash credit; Opportunity of being heard
• Section: 131; 68; 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH ‘B’ : NEW DELHI) SHRI SHAMIM YAHYA, ACCOUNTANT MEMBER and SHRI YOGESH KUMAR US, JUDICIAL MEMBER ITA No.1365/Del./2016 (ASSESSMENT YEAR : 2011-12) DCIT, Circle 1 (1), vs. M/s. A.D. Textiles Pvt. Ltd., New Delhi. RR – 25, Miawali Nagar, New Delhi – 110 087. (PAN : AAFCA0952M) (APPELLANT) (RESPONDENT) ASSESSEE BY : None REVENUE BY : Shri S.L. Anuragi, Sr. DR Date of Hearing : 29.09.2022 Date of Order : 12.10.2022 ORDER PER SHAMIM YAHYA, ACCOUNTANT MEMBER : This appeal by the Revenue is directed against the order of the ld. CIT (Appeals)-I, New Delhi dated 28.12.2015 for the assessment year 2011-12. 2. The ground of appeal taken by the Revenue reads as under :- “On the facts and in the circumstances of the case, the Ld. CIT (A) has erred in deleting the addition of Rs.7,79,95,009/- made u/s 68 of the I.T. Act.” 3. Brief facts of the case are that the assessee company is engaged in manufacturing and trading of home furnishing hand loom items i.e. bath ITA No.1365/Del./2016 2 mats, durries, fabrics etc. The main revenue stream of the assessee company is from trading of fabric used as raw material for various home furnishing items. In this case, return of income was filed on 30.09.2011 declaring a loss of Rs.57,91,202/-. Subsequently, the assessee revised its return of income on 05.08.2012 declaring a loss of Rs.39,67,579/-. Assessment u/s 143(3) of the Income-tax Act, 1961 (for short 'the Act') was made on 28.03.2014 determining total income at Rs.7,40,27,430/-. In the assessment order passed, Assessing Officer added share capital of Rs.4,99,95,009/- received from Smt. Salma Chugh and Madhu Chugh during the year and also added Rs.2,80,00,000/- as unsecured loan received from VHA Commotrade Pvt. Ltd. as unexplained cash credits in the hands of the assessee company. The details of these unsecured loans are as under :- S.No. Name of shareholders Address Amount introduced during the year by way of share application money Share premium 1 Salma Chugh 595, Huda Sector-11, Panipat 10,00,000/- 2,90,00,000 2 Madhu Chugh 595, Huda Sector -11, Panipat 6,66,509/- 1,93,28,500/- Total 16,66,509/- 4,83,28,500/- S.No. Name of the party Amount Remark 1. VHA Commotrade 2,80,00,000/- Unsecured loan ITA No.1365/Del./2016 3 4. It was observed by the AO that share application money has been received from Salma Chugh and Madhu Chugh who happens to be the wife and sister in law of Satish Kumar Chugh, Director of the assessee company. The AO has held that Smt. Salma Chugh has received money from her husband, Sh. Satish Kumar Chugh who in turn has received money from M/s Sheena Export. It is also mentioned by the AO that source of money in case of Sheena Export was not clear. As regards Madhu Chugh, the Assessing Officer has mentioned that she has received Rs.4 crore from M/s Tejasvi Vinimay Pvt. Ltd. as advance against the property. The AO has mentioned that during the course of assessment proceedings, summons u/s 131 were issued to Smt. Salma Chugh, Madhu Chugh and Satish Chugh for attending before him for examination. However, none of the above mentioned person attended before the AO. The AO has also conducted enquiries through DDIT (Inv.), Kolkata with respect to M/s Tejasvi Vinimay Pvt. Ltd. The AO has mentioned that no reply was received from M/s Tejasvi Vinimay in response to summons issued by DDIT (Inv.), Kolkata. As regards the unsecured loan of Rs.2,80,00,000/- received from VHA Commotrade, the AO has mentioned that he had issued commission u/s 131D of the I.T. Act to DDIT (Inv.), Kolkata for ascertaining genuineness of the company. The DDIT Kolkata submitted the report that Inspector of the DDIT could not ITA No.1365/Del./2016 4 locate the company on the given address. In view of the above, Assessing Officer held that these are mere paper companies and have no financial backgrounds or business activities. Hence, the money received as share application money from Salma Chugh and Madhu Chugh and unsecured loan of Rs.2,80,00,000/- received from VHA Commotrade was treated as unexplained income of the appellant u/s 68 of the I.T. Act. 5. Upon assessee’s appeal, ld. CIT (A) referred to various documents and on the basis of which he was of the opinion that in view of the documents filed by the parties, identity, source, creditworthiness of the investors and the lender company and genuineness of the transactions have been established. Strangely ld. CIT (A) also noted that these documents were already before the AO. However, AO’s order is strangely silent in this regard. 6. Against this order, assessee is in appeal before us. We have heard the ld. DR for the Revenue. Nobody is appearing on behalf of the assessee for the past several occasions. The notices have also returned unserved. In this view of the matter, we are disposing off this appeal by hearing ld. DR for the Revenue and perusing the record. 7. We note that AO has made the disallowance of share premium and loan account of non-traceability of the source. On the other hand, ld. CIT(A) has given a finding that on the basis documents submitted, the ITA No.1365/Del./2016 5 addition should be deleted. Though ld. CIT (A) has remarked that these documents were also before the AO, there is no mention in AO’s order. Furthermore, mere referring to the documents cannot establish the identity, creditworthiness and genuineness of the transaction and parties. Proper finding on the loan agreement, share application papers and analysis of financials to establish the creditworthiness has to be brought on record. We find that ld. CIT (A)’s order does not properly address the issue. 8. In this view of the aforegoing and in our considered opinion, this issue is required to be remitted to the file of AO and AO is directed to examine the issue afresh in the light of the documents referred by the ld. CIT (A) our observation above and then decide as per law. Needless to say that assessee should be given an opportunity of being heard. 8. In the result, the appeal filed by the Revenue is allowed for statistical purposes. Order pronounced in the open court on this day 12 th of October, 2022. Sd/- sd/- (YOGESH KUMAR US ) (SHAMIM YAHYA) JUDICIAL MEMBER ACCOUNTANT MEMBER Dated the 12 th day of October, 2022 TS ITA No.1365/Del./2016 6 Copy forwarded to: 1.Appellant 2.Respondent 3.CIT 4.CIT (A)-I, New Delhi. 5.CIT(ITAT), New Delhi. AR, ITAT NEW DELHI.