M/s. Alvin Reality Pvt. Ltd., New Delhi V. DCIT, Ghaziabad

ITA 1620/DEL/2017

AI Insights

The case involves Alvin Reality Pvt. Ltd., which appealed against the order of the CIT(A), Ghaziabad, sustaining the additions made by the AO under section 68 of the Income Tax Act, 1961. The AO had added Rs. 14,69,55,000 to the income of the assessee, treating the unsecured loans from M/s Abhirati Infrastructure Pvt. Ltd. and M/s Bridgette Infrastructure Pvt. Ltd. as unexplained. The CIT(A) and the Tribunal upheld this addition, citing insufficient evidence from the assessee to prove the creditworthiness and genuineness of the loan transactions. The Tribunal noted that the companies purportedly giving loans did not exist at the addresses provided, and their financials were inadequate to support such large loans.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 115544 (ITAT-DELHI)
• Duration Of Justice: 6 year(s) 5 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-08-2023
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 22-08-2023
• Assessment Year: 2012-2013
• Appeal Filed On: 19-03-2017
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Section: 68; 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI (DELHI BENCH ‘A’ : NEW DELHI) BEFORE SH. G.S.PANNU, HON’BLE PRESIDENT AND SH. ANUBHAV SHARMA, JUDICIAL MEMBER ITA No. 1620/Del/2017 (Assessment Year : 2012-13) M/s. Alvin Reality Pvt. Ltd. B-165, Flat-D, Ground Floor, Insha Manzil, New Ashok Nagar, New Delhi-110096 Vs. DCIT, Circle-1, Ghaziabad (APPELLANT) (RESPONDENT) Assessee by None Revenue by Sh. Kanv Bali, SR DR Date of hearing: 23.08.2023 Date of Pronouncement: 30.08.2023 ORDER PER ANUBHAV SHARMA, JM: The appeal has been preferred by the Assessee against the order dated 14.09.2016 of CIT(A), Ghaziabad (hereinafter referred as Ld. First Appellate Authority or in short Ld. ‘FAA’) in Appeal No. 059/2015-16/GZB arising out of an appeal before it against the order dated 18.03.2015 passed u/s 143(3) of the Income Tax Act, 1961 (hereinafter referred as ‘the Act’) by the DCIT, Circle-1, Ghaziabad (hereinafter referred as the Ld. AO). ITA No. 1620/Del/2017 Alvin Reality Pvt. Ltd. 2 2. The brief facts of the case are that the appellant has filed its return of income for the A.Y. 2012-13 declaring net loss of Rs. 4,06,82,842/-. The assessment in this case was completed u/s 143(3) of the I.T.Act, 1961 vide order dt. 18.03.2015 at total income of Rs. 10,58,92,142/- i.e. by making addition of Rs. 14,69,55,000/- under section 68 of the I.T.Act, 1961 being unsecured loan of Rs. 14,69,55,000/- (Rs. 3,75,75,000/- from M/s. Abhirati Infrastructure (P) Ltd. + and Rs. 10,93,80,000/- from M/s Bridgette Infrastructure (P) Ltd.) treating it as unexplained, sham, bogus and non-genuine. 2.1 The above said additions were made by officer by rejecting the documents produced before him and by rejecting explanations/ submissions made by appellant firm during the course of assessment proceedings and making field enquiries. 3. Ld. CIT(A) considered the issue and decided the same against the assessee with following relevant finding in para 5.2 and 5.2.1 as reproduced as below ; “5.2 Grounds Nos. 2, 3 & 4: Appellant has challenged addition of Rs. 14,69,55,000/- u/s 68 of IT Act, 1961. During the year assessee has claimed to have received a loan of Rs. 3,75,75,000/- from M/s Abhirati Infrastructure Pvt. Ltd. and Rs. 10,93,80,000/- from M/s Bridgette Infrastructure (P) Ltd). During the course of assessment proceedings, the AO asked assessee to prove the identity, genuineness and creditworthiness of the two companies who have extended loans to the assessee. Assessee furnished copy of confirmation alongwith their copies of bank statement and ITR and claimed that the two are corporate bodies and transactions are through bank thus the onus u/s 68 has been discharged by the appellant. However, the AO observed that M/s Abhirati Infrastructure Pvt. Ltd had total income of Rs. 1,841/- and M/s Bridgette Infrastructure (P) Ltd), had declared income of Rs. 1,490/-. The AO conducted local enquiries to verify the genuineness of loan through an inspector of these loans extending companies and found that at the addresses given, such ITA No. 1620/Del/2017 Alvin Reality Pvt. Ltd. 3 companies do not exist. The same facts were confronted to the appellant by the AO. The appellant simply stated that the two companies who have extended loans, do not have permanent staff and Director of the company remain out of office and mostly out of station, in search and negotiation of projects. Hence the office remains dosed most of the time and requested AO not to draw any adverse inference. Thus, at assessment stage no further evidence were given by assessee to substantiate the creditworthiness of two companies extending loan during the year even when burden of proof was shifted on the appellant after filed enquiries by AO in respect of these companies. 5.2.1 Even, during appellate proceedings appellant's main contention was that it has already given copy of ITR, bank statements, confirmation to substantiate the loans. However, copies of the audited accounts shows that M/s Abhirati Infrastructure Pvt. Ltd. has a share capital of Rs. 1 lac and reserve the surplus of Rs. 2,188/-. Similarly, the share capital of M/s Bridgette Infrastructure (P) Ltd) is Rs. 1 lac and reserve and surpluses of Rs. 1,778/-, which definitely fail to substantiate the creditworthiness of these loan giving parties. Further, it is reiterated that the assessee failed to discharge the burden of proof shifted on it as a result of field enquiry conducted by AO.” 4. The assessee is in appeal raising following grounds ; “1. That the order of the Commissioner of Income Tax (Appeals) [hereinafter referred to as “the Ld. CIT(A)"], Ghaziabad, dated 14.09.2016, sustaining the additions made by the learned assessing officer, is bad in law and on facts. 2. That the Ld. CIT(A) has erred in law and on facts in sustaining the addition of Rs. 14,69,55,000/- made by the ld. AO under section 68 of the Income Tax Act, 1961 [hereinafter referred to as "the Act”] being unsecured loans taken from M/s Abhirati Infrastructure (P) Ltd. and M/s Bridgette Infrastructure (P) Ltd. 2.1 That the Ld. CIT(A) has erred in law and on facts in sustaining the addition of Rs. 14,69,55,000/- made by the ld. ITA No. 1620/Del/2017 Alvin Reality Pvt. Ltd. 4 AO under section 68 of the Act even though major amounts were repaid during the assessment year itself. 2.2 That the Ld. CIT(A) has erred in law and on facts in sustaining the addition of Rs. 14,69,55,000/- made by the ld. AO under section 68 of the Act even though onus casted upon the assessee u/s 68 was fully discharged by proving the identity of the creditor, genuineness of transaction and creditworthiness of parties. 2.3 That the ld. AO has completely bypassed the principles of natural justice by not confronting report of inspector used as a basis for making the impugned addition of Rs 14,69,55,000/-, nor allowing any right of cross examination. 3. That the appellant craves leave to add, alter, amend, substitute, delete and modify any or all the grounds of appeal, which are without prejudice to one another, before or at the time of hearing of the appeal.” 5. Heard and perused the record. 6. As the case was called for hearing on 23.08.2023, non-appeared for the assessee. Record shows repeatedly notices have been issued and occasionally appearance has been put up by professionals, seeking adjournments but without filing any valid power of attorney. No purpose will be served by issuing further notices. Arguments of ld. DR were heard who supported the findings of Ld. Tax Authorities below. 7. The Bench has taken into consideration the matter on record and is of the firm view that where the local enquiries conducted by Inspector established that persons who gave loan were not found that at the address given and identity of entities was not established then mere fact that the loan was given through banking channels, is not sufficient to establish the genuineness of loan transaction. Ld. CIT(A) has taken rational view on the basis of share capital and ITA No. 1620/Del/2017 Alvin Reality Pvt. Ltd. 5 reserves of the loan extending companies, to hold that they even did not have creditworthiness to give the loans. There is no material to hold a different opinion. The findings of ld. CIT(A) requires no interference. Accordingly, the grounds have no substance and the appeal of assessee is dismissed. Order pronounced in the open court on 30 th August, 2023. Sd/- Sd/- (G.S.PANNU) (ANUBHAV SHARMA) PRESIDENT JUDICIAL MEMBER Date:- 30 th .08.2023 *Binita, SR.P.S* Copy forwarded to: 1. Appellant 2. Respondent 3. CIT 4. CIT(Appeals) 5. DR: ITAT AR, ITAT New Delhi