DCIT, Circle- 7(1), New Delhi V. Delhi Art Gallery Pvt. Ltd., New Delhi

ITA 6404/DEL/2017

• Counselvise Citation: [2021] 107 COUNSELVISE.COM (IT) 3515 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 11 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-10-2021
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2014-2015
• Appeal Filed On: 18-10-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Unexplained cash credit; Assessment record; TDS
• Section: 143(3); 13; 131; 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH B, NEW DELHI BEFORE MS. SUCHITRA KAMBLE, JUDICIAL MEMBER DR. B. R. R. KUMAR, ACCOUNTANT MEMBER (THROUGH VIDEO CONFERENCING) ITA NO. 6404/DEL/2017 : ASSTT. YEAR : 2014-15 DCIT, CIRCLE-7(1), NEW DELHI VS DELHI ART GALLERY PVT. LTD., 11, HAUZ KHAS VILLAGE, NEW DELHI-110016 (APPELLANT) (RESPONDENT) PAN NO. A A BCD8460 F ASSESSEE BY : SH. RAJAT JAIN, CA REVENUE BY : SH. UMESH TAKYAR, SR. DR DATE OF HEAR ING: 11 . 10 .20 2 1 DATE OF PRONOUNCEMENT: 13 .10 .20 2 1 ORDER PER DR. B. R. R. KUMAR, ACCOUNTANT MEMBER: THE PRESENT APPEAL HAS BEEN FILED BY THE REVENUE A GAINST THE ORDER OF THE LD. CIT(A)-3, DATED 24.07.2017. 2. FOLLOWING GROUNDS HAVE BEEN RAISED BY THE REVENU E: 1. LD. COMMISSIONER OF INCOME-TAX (APPEALS) ERRED IN LAW ON THE FACTS OF THE CASE IN DELETING THE ADDITI ON OF RS.8,48,00,000/- MADE BY THE AO ON ACCOUNT OF UNEXPLAINED CREDIT U/S 68 OF THE INCOME TAX ACT, 19 61. 2. LD. COMMISSIONER OF INCOME-TAX (APPEALS) ERRED I N LAW ON THE FACTS OF THE CASE IN DELETING THE ADDITI ON OF RS.12,59,870/- MADE BY THE AO ON ACCOUNT OF DISALLOWANCE OF INTEREST EXPENSES. ITA NO. 6404/DEL/2017 DELHI ART GALLERY PVT. LTD. 2 3. THE ASSESSEE COMPANY WAS ENGAGED IN THE BUSINESS OF TRADING OF PAINTINGS AND OTHER ART WORKS. 4. THE REVENUE HAS RAISED AN APPEAL REGARDING THE D ELETION OF RS.8,48,00,000/- MADE BY THE ASSESSING OFFICER U/S 68 OF THE ACT ON ACCOUNT OF UNEXPLAINED UNSECURED LOANS FROM 9 PARTIES. THE ADDITION HAS MADE BY THE ASSESSING OFFICER OWIN G TO NON- PRODUCTION OF PRINCIPLE OFFICER OF THE 9 ENTITIES W HO HAVE LEND THE MONIES TO THE ASSESSEE. 5. BEFORE THE ASSESSING OFFICER, THE ASSESSEE HAS S UBMITTED THE FOLLOWING DETAILS TO PROVE THE GENUINENESS OF T HE LOAN: A) COMPANY MASTER DETAILS - PRINTOUT FROM MINISTRY OF CORPORATE AFFAIRS B) COPY OF DETAIL OF PAIM OF THE COMPANY C) INCOME TAX RETURN ACKNOWLEDGEMENT D) COPY OF CONFIRMATION CONTAINING ALL THE DETAILS OF AMOUNT INVESTED. E) COPIES OF AUDITED ACCOUNTS F) COPY OF BANK STATEMENT REFLECTING THE RELEVANT TRAN SACTION 6. REBUTTING THE ABOVE SUBMISSION, THE ASSESSING OF FICER MADE ADDITION OF THESE AMOUNTS HOLDING AS UNDER: 3.16 ON EXAMINING THE BANKS STATEMENT OF SUCH ENTI TIES THE CREDITWORTHINESS OF THE CREDITORS IS NOT PROVED AS SUCH ENTITIES, FROM THE NATURE OF THE TRANSACTIONS REFLECTED, SEEMS TO BE ENTRY OPERATOR PROVIDERS. NEITHER OF THE ENTITIES WERE N BFC, FURTHER IN THE BUSINESS WORLD THERE IS HARDLY ANY A CTIVITY, WHERE MATCHING CREDIT AND DEBIT MATCH EACH OTHER IN BANKS STATEMENT. ITA NO. 6404/DEL/2017 DELHI ART GALLERY PVT. LTD. 3 THE PLEA OF THE ASSESSEE THAT THEY ARE IN FINANCE B USINESS IS NOT SUBSTANTIATED BY ANY PROOF, AS EVEN IN FINANCE RELA TED ACTIVITIES, THERE ARE LOTS OF CREDITS ENTRIES AND DEBIT ENTRIES REGARDING INTEREST AND TDS WHICH IS NOT IN THE PRESENT CASE. IN CASE SUCH CORRESPONDING CREDIT AND DEBITS ARE REMOVED THE CREDITORS DOES NOT HAVE THE REQUIRED CREDIT WORTHINESS. IT WAS ONLY ON EXAMINATION OF THE DIRECTORS THAT TRUTH WOULD HA VE COME OUT AS THEY COULD HAVE THROWN LIGHT ON THE NATURE OF TR ANSACTION. 7. THE ASSESSING OFFICER FURTHER HELD THAT THE ASSE SSEE HAS FAILED TO PROVE CREDITWORTHINESS OF THE PARTIES AND HAS FAILED TO PRODUCE THE DIRECTORS SO AS TO IDENTIFY THE REAL PE RSON CONTROLLING THE LEGAL OPERATIONS OF THE LEGAL ENTIT IES. PLACING RELIANCE ON VARIOUS JUDICIAL PRONOUNCEMENTS NAMELY, M/S NOVA PROMOTERS & FINLEASE PVT. LTD., M/S NEELKANTH ISPAT UDHYOG (P) LTD., N.R. PORTFOLIO PVT. LTD. AND SANRAJ ENGINEERI NG CO. THE AO HELD THAT THE ONUS IS ON THE ASSESSEE TO PROVE UNDI SPUTABLY REGARDING THE SOURCES OF THE CREDITS. 8. DURING THE PROCEEDINGS BEFORE THE FIRST APPELLAT E AUTHORITY IN ACCORDANCE WITH THE SUB-SECTION (4) OF SECTION 2 50, THE LD. CIT(A) ISSUED SUMMONS U/S 131 TO THE PRINCIPLE OFFI CERS OF THE LOAN PARTIES. THE COMPLETE DETAILS ARE AS UNDER: ITA NO. 6404/DEL/2017 DELHI ART GALLERY PVT. LTD. 4 NAME OF THE COMPANY ADDRESS AS PER MASTER DATA ADDRESS AS PER SUMMONS STRUM INFRA DEVELOPMENT PVT. LTD. C-17, GROUND FLOOR, GURU NANAK PURA, LAXMI NAGAR, DELHI-110092 4132/307, A-1, 3 RD FLOOR, NAYA BAZAR, DELHI-110006 SHILPKAR BUILD TECH PVT. LTD. C- 17, GROUND FLOOR, GURU NANAK PURA, LAXMI NAGAR, DELHI-110092 4132/307, A-1, 3 RD FLOOR, NAYA BAZAR, DELHI-110006 SHRI ENTERTAINMENT PVT. LTD. FLAT NO. C-283, 2 ND FLOOR, POCKET- II, DDA JANTA FLATS, JASOLA, NEW DELHI-110025 CABIN NO. 5, PLOT NO. 150, KILO KRAI BDC COMPLEX, MAHARANI BAGH, NEW DELHI-110025 NOIDA TOURISM PVT. LTD. EXTN., PL-853, T.NO.1036, MAIN JAITPUR ROAD, NEW DELHI-110044 BDC COMPLEX, MAHARAN BAGH, NEW DELHI-110025 NIMISHA MARKETING & SERVICES PVT. LTD H.NO.3/12, 3 RD FLOOR, ASAF ALI ROAD, NEAR DELITE CINEMA HALL , DELHI-110002 CABIN NO. 5, PLOT NO. 150, KILO KRAI BDC COMPLEX, MAHARANI BAGH, NEW DELHI-110025 NCR BUILDTECE LIMITED PRIVATE H.NO.3/12, 3 RD FLOOR, ASAF ALI ROAD, NEAR DELITE CINEMA HALL, DELHI-110002 CABIN NO. 5, PLOT NO. 150, KILO KRAI BDC COMPLEX, MAHARANI BAGH, NEW DELHI-110025 L.T. BUILDWELL PVT. LTD. 32/1, GALI NO.8, GROUND FLOOR, BHIKHAM SINGH COLONY, DELHI-110032 A -38, F-14, STREE T NO.2, MADHU VIHAR, NEW DELHI-110092 JEEVAN ANAND MULTI SERVICES PRIVATE LIMITED H.NO.3/12, 3 RD FLOOR, ASAF ALI ROAD, NEAR DELITE CINEMA HALL, DELHI-110002 CABIN NO. 5, PLOT NO. 150, KILO KRAI BDC COMPLEX, MAHARANI BAGH, NEW DELHI-110025 ITA NO. 6404/DEL/2017 DELHI ART GALLERY PVT. LTD. 5 IN THE CASE OF I. M/S NIMISHA MARKETING & SERVICES PVT. LTD. II. M/S SHRI ENTERTAINMENT PVT. LTD. III. M/S JEEVAN ANAND MULTI SERVICES PVT. LTD. SHRI. JOGINDER PAL GUPTA ATTENDED THE PROCEEDINGS I N PURSUANCE TO THE SUMMONS UNDER SECTION 131 OF THE ACT. THE DI RECTOR STATED THAT THE COMPANY AT NO.1 HAS GIVEN THE LOAN OF RS.1 CRORE TO THE ASSESSEE ON 25.03.2014 & 27.03.2014. T HE COMPANY HAD FILED THE RETURN OF INCOME REGULARLY AN D SUBMITTED THE COPY OF ORDER UNDER SECTION 143(3) OF THE ACT. THE COMPANY HAD THE OPENING BALANCE OF RESERVES AND SURPLUS OF RS.2,45,06,491/- AS ON 01.04.2013. THE COMPANY IS D OING THE MARKETING/TRADING IN THE CLOTH. THE LOAN IS REPAID BACK IN THE CURRENT FINANCIAL YEAR. (2) SHRI ENTERTAINMENT PVT. LTD.- THE DIRECTOR STA TED THAT THE COMPANY HAS GIVEN THE LOAN OF RS.50 LAKHS TO THE AS SESSEE. THE COMPANY REGULARLY FILES THE RETURN OF INCOME AND TH E TURNOVER DURING THE YEAR IS RS.1,54,38,245/- (CONTRACTS INCO ME). THE COMPANY HAD OPENING BALANCE OF RESERVES OF RS.04.02 .02,55 AS ON 01.04.2013. THE LOAN HAS BEEN REPAID BACK IN THE CURRENT FINANCIAL YEAR. (3) M/S JEEVAN ANAND MULTI SERVICES PVT. LTD.- THE COMPANY HAS GIVEN THE LOAN OF RS.50 LAKHS AND RECEIVED THE QUARTERLY INTEREST. THE COMPANY FILES THE REGULAR RETURN OF I NCOME. THE OPENING BALANCE OF THE RESERVES AS ON 01.04.2013 WA S RS.1,96,42,072/-. THE LOAN HAS BEEN REPAID BACK IN THE CURRENT FINANCIAL YEAR. ITA NO. 6404/DEL/2017 DELHI ART GALLERY PVT. LTD. 6 (4) M/S SHILPKAR BUILDTECH PVT. LTD.- SHRI JOGINDE R PAL GUPTA HAS POA FROM SH. VINOD KUMAR WHO WAS OUT OF STATION . THE COMPANY HAS GIVEN THE LOAN OF RS.75 LAKHS ON 18TH M AY, 2013. THE INTEREST ON QUARTERLY BASIS HAS BEEN REGULARLY RECEIVED. THE COMPANY FILES THE RETURN OF INCOME REGULARLY. THE C OMPANY HAD OPENING BALANCE OF RESERVES AS ON 01.04.2013 OF RS.6,62,33,930/-. THE COMPANY IS ENGAGED IN REAL ES TATE BUSINESS AND RECEIVED THE REVENUE RECEIPTS OF RS.1, 06,13,161/-. THE LOAN IS REPAID BACK IN THE CURRENT FINANCIAL YE AR. THE DIRECTOR STATED THAT THE COMPANIES DO THE GENUINE B USINESS AND CONFIRMED THAT THE DETAILS REGARDING THE CREDITWORT HINESS WERE FILED BEFORE THE ASSESSING OFFICER THROUGH THE AUTH ORIZED REPRESENTATIVE. (5) SH. RAJU MALIK DIRECTOR OF M/S NCR BUILDTECH PV T. LTD. ATTENDED THE PROCEEDINGS ON 14.07.2017. THE COMPANY IS DOING THE CONTRACT JOBS FOR THE GOVT. THE COMPANY HAS GIV EN THE LOAN OF RS.1 CRORE TO THE ASSESSEE AND THE INTEREST HAS REGULARLY RECEIVED ON THE LOAN AMOUNT. THE LOAN IS REPAID BAC K IN THE CURRENT FINANCIAL YEAR. THE RETURN OF INCOME IS FIL ED REGULARLY. THE OPENING BALANCE OF THE RESERVES AS ON 01.04.201 3 IS RS.2,11,26,556/-. SH. RAJU MLIK IS EX-DIRECTOR IN T HE FOLLOWING COMPANIES: 1. M/S NOIDA GOLDEN TOURISM PVT. LTD. 2. M/S CAPITAL INFRATECH PVT. LTD. THE COMPANY AT NO.1 HAS GIVEN THE LOAN OF RS.1 CROR E WHICH IS REPAID IN THE CURRENT FINANCIAL YEAR. THE OPENING B ALANCE OF RESERVES ON 01.04.2013 IS RS.3,84,84,484/-. THE COM PANY ITA NO. 6404/DEL/2017 DELHI ART GALLERY PVT. LTD. 7 PROVIDES THE TOURISM RELATED SERVICES. THE COMPANY AT SERIAL NO.2 HAS GIVEN THE LOAN OF RS.60 LAKHS. THE COMPANY REGULARLY FILES THE RETURN OF INCOME AND RECEIVES THE COMMISS ION INCOME. THE OPENING BALANCE OF THE RESERVES AS ON 01.04.201 3 IS RS.2,36,62,106/-. THE LOAN IS REPAID BACK DURING TH E CURRENT FINANCIAL YEAR AND THE INTEREST WAS RECEIVED ON REG ULAR BASIS. HE CONFIRMED THAT THE CONFIRMATIONS BANK STATEMENT ETC . WERE FILED BEFORE THE ASSESSING OFFICER THROUGH THE AR AND STA TED THAT THE COMPANIES HAVE EXTENDED THE LOAN ON THE COMMERCIAL BASIS. (6) SH. VINOD GUPTA WHO IS A FINANCIAL CONSULTANT F OR THE FOLLOWING COMPANIES ATTENDED ON 17.07.2017:- 1. M/S STRUM INFRA DEVELOPMENT PVT. LTD. 2. M/S L. T. BUILDWELL PVT. LTD. THE COMPANY AT SERIAL NO.1 HAS GIVEN THE LOAN OF RS .2.13 CRORE ON DIFFERENT DATES AS GIVEN IN THE CONFIRMATION. TH E INTEREST HAS BEEN RECEIVED ANNUALLY AND THE IDS HAS BEEN DEDUCTE D FROM THE INTEREST INCOME. THE RETURN OF INCOME HAS BEEN REGU LARLY FILED. THE COMPANY DO THE CONTRACT WORK FOR THE DEVELOPMEN T OF THE REAL ESTATE. THE REVENUE OF RS.67,21,412/- WAS EARN ED IN THE CONCERNED FINANCIAL YEAR. THE OPENING BALANCE OF TH E RESERVES AS ON 01.04.2013 WAS RS.5,67,24,847/- AND THE FINAN CIAL CONSULTANT CONFIRMED HAVING GIVEN THE LOAN AS A COM MERCIAL TRANSACTION. M/S R.T. BUILDWELL PVT. LTD: THE COMPANY HAS EXTEND ED THE LOAN OF RS.1 CRORE IN THE FINANCIAL YEAR. THE COMPANY HA S RECEIVED THE INTEREST ON YEARLY BASIS. THE COMPANY REGULARLY FILES THE RETURN OF INCOME. THE COMPANY HAS OPENING BALANCE O F THE ITA NO. 6404/DEL/2017 DELHI ART GALLERY PVT. LTD. 8 RESERVES OF RS.97,90,97,481/- AS ON 01.04.2013. THE COMPANY IS DOING THE BUSINESS OF THE DEVELOPMENT/CONTRACT W ORK FOR THE PRIVATE CONSTRUCTION. THE CONSULTANT STATED THAT TH E COMPANY IS ALMOST 10 YEARS OLD AND CONFIRMED THE TRANSACTION T O BE GENUINE AND EXTENDED ON THE COMMERCIAL BASIS. 9. THE LD. CIT(A) HELD THAT THE CREDITWORTHINESS AN D THE GENUINENESS OF TRANSACTIONS HAS BEEN ESTABLISHED FR OM THE FACT THAT ALL THE COMPANIES ARE HAVING THE OPENING BALAN CE OF THE RESERVES AND SURPLUS AS ON 1ST APRIL, 2013. THE BAN K STATEMENT FILED DURING THE ASSESSMENT AS WELL AS APPELLATE PR OCEEDINGS SHOW THAT THERE ARE NO CASH DEPOSITS AND THE LOANS HAVE BEEN ADVANCED FROM THE RESERVES WHICH ARE AVAILABLE WITH THE COMPANIES AS ON 31.03.2013. 10. THE LOANS HAVE BEEN REPAID BY THE 7 COMPANIES O UT OF THE 9 COMPANIES AND THE INTEREST HAS BEEN REGULARLY PAI D BY THE ASSESSEE TO THE RESPECTIVE COMPANIES AFTER DEDUCTIN G THE REQUISITE TAX AT SOURCE AS APPLICABLE BY THE RESPEC TIVE PROVISIONS OF THE ACT. THE LD. CIT(A) HAS ALSO NOTE D THE PRESENCE OF MRS. SAROJINI XESS POSTED AS DEPUTY COM MISSIONER OF INCOME TAX, CIRCLE 7(1), NEW DELHI ON 19.07.2017 ALONG WITH THE ASSESSMENT RECORDS AND WAS DULY APPRISED THAT T HE DIRECTORS/AUTHORIZED REPRESENTATIVES WERE SUMMONED BY THE LD. CIT(A) U/S 131 OF THE ACT AND THEIR IDENTITY, CREDITWORTHINESS/GENUINENESS WAS EXAMINED IN DETAIL . 11. FROM THE SUBMISSIONS AND THE EVIDENCES ADDUCED BY THE DIRECTORS, IT WAS HELD THAT THE COMPANIES THAT HAVE ADVANCED THE LOANS TO THE ASSESSEE HAVE THE REQUISITE CAPACI TY TO LEND. THE POSITION OF FUNDS WITH THE LENDING COMPANIES IS AS UNDER: ITA NO. 6404/DEL/2017 DELHI ART GALLERY PVT. LTD. 9 S. NO. NAME RESERVE AND SURPLUS F.Y. 2012-13 F.Y. 2013-14 1 STRUM INFRA DEVELOPMENT PVT. LTD. -DO- 78,885,155.00 107,739,430 2 LT B UILDWELL PRIVATE LTD. -DO- 9790,97,481.00 9791,00,309.04 3 NCR BUILDTECH PVT. LTD. -DO- 21,649,199 21,66,745 4 CAPITAL INFRATECH PVT. LTD. -DO- 23,662,106 23,663,814 5 NOIDA GOLDEN TOURISM PVT. LTD. -DO- 34,484,484 38,496,308 6 SHRI ENTERTAINMENT PVT. LTD. -DO- 40,202,555 40,743,369 7 JEEVAN ANAND MULTI SERVICES PVT. LTD. -DO- 19,642,072 19,643,720 8 SHILPKAR BUILDTECH PVT. LTD. -DO- 66,233,930.00 53,130,035.00 9 NIMISHA MARKETING & SERVICES PVT. LTD. -DO- 24,506,491 24,509,419 12. THE FACTS OF THE CASE STATE THAT THE LENDERS HA VE THE REQUISITE FUNDS WITH THEM IN THE PRECEDING YEAR TO THE YEAR UNDER CONSIDERATION, THE LD. CIT(A) HELD THAT THE A DDITION UNDER SECTION 68 OF THE ACT, IS NOT CALLED FOR. 13. HAVING HEARD THE ARGUMENTS OF BOTH THE PARTIES. WE FIND THAT THE ASSESSEE HAS GIVEN THE NEW ADDRESSES AND R EQUESTED THE ASSESSING OFFICER TO SEND THE SUMMONS U/S 131 T O THE NEW ADDRESS WHICH THE AO FAILED TO DO. HAVING FAILED TO ISSUE THE SUMMONS AND MAKING THE ENQUIRIES AT THE NEW ADDRESS DESPITE HAVING THE INFORMATION PROVIDED TO THE AO BY THE AS SESSEE, THE ASSESSING OFFICER MADE THE ADDITION, HOLDING THAT T HE DIRECTORS OF THE COMPANIES HAVE FAILED TO ATTEND FOR RECORDIN G OF THE STATEMENT. THE LD. CIT(A) ISSUED SUMMONS WHICH HAVE BEEN DULY COMPLIED BY THE PRINCIPLE OFFICER OF THE LOAN PARTIES AND ITA NO. 6404/DEL/2017 DELHI ART GALLERY PVT. LTD. 10 DULY RECORDED THE STATEMENT. THE FACTS OF RECORDING OF THE STATEMENT AND THE COMPLIANCE MADE HAS ALSO BEEN CON VEYED TO THE ASSESSING OFFICER WHO HAS NOT OBJECTED TO THE P ROCEEDINGS BEFORE THE LD. CIT(A). 14. HENCE, IN VIEW OF THE UNDISPUTED FACTS ON THE R ECORD WITH REGARD TO PROVING OF THE IDENTITY, CREDITWORTHINESS , GENUINENESS OF THE LOAN PARTIES, THE STATEMENT RECORDED BY THE LD. CIT(A), THE TURNOVER OF THE COMPANIES & THE PROFITS EARNED THEREOF, THE POSITION OF THE RESERVES & SURPLUS AVAILABLE WITH T HE LENDERS, WE HEREBY DECLINE TO INTERFERE WITH THE WELL REASONED ORDER OF THE LD. CIT(A). 15. ACCORDINGLY, THE INTEREST OF RS.12,59,870/- DIS ALLOWED BY THE ASSESSING OFFICER ON ACCOUNT OF INTEREST EXPENS ES CLAIMED BY THE ASSESSEE IS ALSO DIRECTED TO BE DELETED. 16. IN THE RESULT, THE APPEAL OF THE REVENUE IS DIS MISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 13/10/2021. SD/- SD/- (SUCHITRA KAMBLE) (DR. B. R. R. KUMAR) JUDICIAL MEMBER ACC OUNTANT MEMBER DATED: 13/10/2021 *SUBODH KUMAR, SR. PS* COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT ASSISTANT REGISTRAR