Ajay Alloys (P) Ltd., New Delhi V. DCIT, Circle- 2(1), New Delhi

ITA 7190/DEL/2017

• Counselvise Citation: [2022] 106 COUNSELVISE.COM (IT) 9134 (ITAT-DELHI)
• Duration Of Justice: 4 year(s) 8 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-08-2022
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2012-2013
• Appeal Filed On: 30-11-2017
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Keywords: Unexplained cash credit; Unexplained expenditure; TDS; Rule 8D
• Section: 68; 69C; 143(3); 14A; 40(a)(ia); 194A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI (DELHI BENCH ‘A’ : NEW DELHI) BEFORE SH. N.K.BILLAIYA, ACCOUNTANT MEMBER AND SH. ANUBHAV SHARMA, JUDICIAL MEMBER ITA No.7190/Del/2017, A.Y. 2012-13 M/s. Ajay Alloys (P) Ltd. 10578/29, Sadar Thana Road Motia Khan, New Delhi-110055 PAN : AAECA9815E Vs. DCIT, Circle 2(1) New Delhi (APPELLANT) (RESPONDENT) Assessee by None Revenue by Shri Kanav Bali, Sr. DR Date of hearing: 08.08.2022 Date of Pronouncement: 8 th .08.2022 ORDER PER ANUBHAV SHARMA, JM: The appeal has been filed by the Assessee against order dated 14.03.2017 in appeal no. 91/15-16 in assessment year 2012-13 passed by Commissioner of Income Tax (Appeals)-1, New Delhi (hereinafter referred to as the First Appellate Authority in short ‘Ld. F.A.A.’) in regard to the appeal before it arising out of assessment order dated 23.03.2015 u/s 143(3) ITA No. 7190/Del/2017 Ajay Alloys (P) Ltd. New Delhi 2 of the Income Tax Act, 1961 passed by DCIT, Circle 2(1), New Delhi (hereinafter referred to as the Assessing Officer ‘AO’). 2. The assessee has come in appeal raising following grounds :- “1. That the learned Commissioner of Income Tax (Appeals)-l, New Delhi has erred both in law and on facts in upholding a disallowance of a sum of Rs. 11,22,827/- by incorrectly invoking section 14A of the Act read with Rule 8D of the Income Tax Rules’ 1962. 2. That the learned Commissioner of Income Tax (Appeals) has also erred both in law and on facts in upholding a disallowance of a sum of Rs. 22,87,827/- representing interest paid by the assessee by invoking section 40(a)(ia) of the Act. 2.1 That the learned Commissioner of Income Tax (Appeals) has failed to appreciate that, provisions u/s 40(a)(ia) of the Act read with section 194A of the Act were inapplicable and as such, disallowance so made and sustained is not in accordance with law. 3 That the learned Commissioner of Income Tax (Appeals) has even otherwise erred both in law and on facts in confirming an addition of Rs. 2,53,00,000/- representing sums received from M/s First High Fin Ltd. as share capital and erroneously held as unexplained cash credit under section 68 of the Act 3.1 That the learned Commissioner of Income Tax (Appeals) has failed to comprehend that share capital received represented the amount invested by the share applicants whose identity was well established from material on record, and as such in absence of discharge of burden by the learned Assessing Officer to establish that the amount did not represent share capital but was merely in the nature of cash credit which burden has not been discharged and addition upheld is not in accordance with law. 3.2 That even other-wise the learned Commissioner of Income Tax (Appeals) has failed to appreciate that sum of 2,53,00,000/- received by the appellant company as share capital had been fully substantiated by documentary evidence placed on record including permanent account number, confirmation, address, etc. and, therefore such sum could not in law or on fact be held to be unexplained cash credit u/s 68 of the Act. 3.3 That the learned Commissioner of Income Tax (Appeals) has failed to appreciate that shareholder was a corporate entity, duly assessed to tax and, had subscribed to share-capital through banking channels and supported by necessary documents and therefore, once such shareholder was an identifiable company, share capital received could not in law or on fact be brought to tax u/s 68 of the Act. 3.4 That various adverse findings by the learned Commissioner of Income Tax (Appeals) to sustain the addition is factually incorrect, contrary to record and are not based on proper appreciation of law and therefore, untenable. ITA No. 7190/Del/2017 Ajay Alloys (P) Ltd. New Delhi 3 3.5 That further, the learned Commissioner of Income Tax (Appeals) has failed to appreciate that in absence of cross examination of the Director of the investor company whose statement has been recoded obtained by revenue to sustain the addition, such a statement had no evidentiary value and ought to have excluded and should not be relied upon. 4. That the learned Commissioner of Income Tax (Appeals) has further erred both in law and on facts in upholding the proportionate addition representing alleged unexplained expenditure incurred under section 69C of the Act in respect of the share capital subscribed by the shareholder of Rs. 1,26,500/- in the instant year. 5. That both the authorities below have framed the impugned order without granting sufficient proper opportunity to the appellant company and therefore the same are contrary to principle of natural justice and hence vitiated. 6. That the learned Commissioner of income Tax (Appeals) has erred both in alw and on facts in upholding the levy of interest of Rs. 35,87,208/- under section234B of the Act which are not leviable on the facts and circumstances of the case of the appellant company. It is therefore, prayed that addition/ disallowances so upheld by the learned Commissioner of Income Tax (Appeals) alongwith interest levied be deleted and appeal of the appellant company be allowed.” 3. Heard and perused the record. 4. At the time of hearing today, none has appeared for the assessee and earlier on seven occasions also non-appeared. The notices were issued through DR and the report is filed by revenue that when the premises of assessee was visited, no company was found to be in-existence. No further opportunity of hearing is justified. On merits, the Ld. Sr. DR submitted that there is no error in the findings of ld. Trail Court. 5. Giving thoughtful consideration to the matter on record it can be observed that in regard to ground no. 1 the Ld. CIT(A) has taken into consideration all the facts including the recording of satisfaction by AO for not taking into consideration the suo moto disallowance. There is no error in the findings on Ld. CIT(A). ITA No. 7190/Del/2017 Ajay Alloys (P) Ltd. New Delhi 4 6. Ground no. 2 and 2.1; In regard to these grounds it can be observed that Ld. CIT(A) has taken into consideration all the arguments raised and rightly concluded that where assessee admits of not having deducted TDS on interest payments, there is no error of findings of ld. AO. 7. Ground no. 3 ; In regard to this ground along with sub grounds it can be observed that Ld. CIT(A) has factually verified every entry with regard to alleged introduction of share capital with disproportionate and not sustainable premium. The trail of transactions as examined by Ld. CIT(A) leave no doubt that there is no error in confirmation of the addition. 8. Ground no. 4 ; In regard to this ground it can be observed that Ld. CIT(A) has rightly concluded about addition of unexplained expenditure in getting the accommodation entries for which addition has been also sustained u/s 68 of the Act. 9. Ground no. 5 and 6 ; Being consequential in nature to the aforesaid grounds as raised are decided against assessee. As the ground no. 1 to 4, as discussed above have been determined against the assessee. There is no substance in the appeal, the same is dismissed. Order pronounced in the open court on 8 th August, 2022. Sd/- Sd/- (N. K. BILLAIYA) (ANUBHAV SHARMA) ACCOUNTANT MEMBER JUDICIAL MEMBER Date:- 08 .08.2022 *Binita, SR.P.S* Copy forwarded to: 1. Appellant 2. Respondent 3. CIT ITA No. 7190/Del/2017 Ajay Alloys (P) Ltd. New Delhi 5 4. CIT(Appeals) 5. DR: ITAT ASSISTANT REGISTRAR ITAT, NEW DELHI