ACIT, Circle-58(1), New Delhi V. Satish Arora, Delhi

ITA 8650/DEL/2019

• Counselvise Citation: [2022] 104 COUNSELVISE.COM (IT) 1109 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 11 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-10-2022
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: G
• Next Hearing Date: 26-09-2022
• Assessment Year: 2013-2014
• Appeal Filed On: 04-11-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Additional evidence; TDS; Set aside
• Section: 68; 191

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH : G : NEW DELHI BEFORE SHRI C.M. GARG, JUDICIAL MEMBER AND SHRI PRADIP KUMAR KEDIA, ACCOUNTANT MEMBER ITA No.8650/Del/2019 Assessment Year: 2013-14 ACIT, Circle-58(1), New Delhi. Vs. Satish Arora, Prop., M/s Satish Arora, B-202, Viek Vihar, Phase-I, New Delhi. (Appellant) (Respondent) Assessee by : Shri S.K. Gupta, CA Revenue by : Shri Jeetender Chand, Sr. DR Date of Hearing : 27.09.2022 Date of Pronouncement : 12.10.2022 ORDER PER C.M. GARG, JM: This appeal filed by the Revenue is directed against the order dated 19.08.2019 of the CIT(A)-27, New Delhi, relating to Assessment Year 2013-14. 2. The grounds raised by the Revenue read as under:- “1. The Ld.CIT(A) has erred both on the facts and in law in deleting an amount of Rs.1,71,24,439/- without considering the facts on record. 2. The ld.CIT(A) is not justified and erred in deleting the addition of Rs.1,00,000/- as wages Labour expenses. 3. The appellant craves leave to add, allow or amend any/all the ground of appeal before during the course of hearing of the appeal.” ITA No.8650/Del/2019 2 3. The ld. Sr. DR, supporting the assessment order, submitted that the ld.CIT(A) has erred both on the facts and in law in deleting the amount of Rs.1,71,24,439/- without considering the facts of the case already on record. Drawing our attention to the relevant para of the assessment order, the ld. Sr. DR submitted that since the assessee was afforded reasonable opportunities which were not availed by the assessee, therefore, the AO was right in treating the impugned unsecured loans as bogus in absence of proper confirmations from parties. The ld. Sr. DR also submitted that it was not possible to evaluate and examine the genuineness of transaction and capacity and credit worthiness of the unsecured loan creditors, therefore, the AO was right in making the addition in the hands of the assessee treating the unsecured loans as bogus. The ld. Sr. DR submitted that the ld.CIT(A) has granted relief to the assessee without any basis, therefore, the impugned first appellate order may kindly be set aside by restoring that of the AO. 4. Replying to the above, the ld. Assessee’s Representative (ld. AR), supporting the first appellate order, took us to the relevant para 6.1 to 6.14 of the first appellate order and submitted that during the course of first appellate order, the AO proceeded to make the addition in the hands of the assessee treating the unsecured loan creditors as bogus without allowing due opportunity of hearing to the assessee. He further submitted that during the course of first appellate proceedings, the assessee has filed all the details and relevant documentary evidence regarding the unsecured loan taken during the year as additional ITA No.8650/Del/2019 3 evidence and remand report was called for by the ld.CIT(A) from the AO and the assessee was also allowed to place his rejoinder to the remand report which have been reproduced by the ld.CIT(A) in the first appellate order. The ld. AR submitted that after properly evaluating the facts and circumstances along with supportive evidence of the assessee the ld.CIT(A) rightly held that the addition made by the AO on account of brought forward loans from earlier years (Sl.No.1 to sl. No.5) was rightly deleted by the AO as many of these amounts had already been repaid by the appellant in the subsequent assessment year including the year under consideration. 5. The ld. AR also submitted that regarding other three loans from Sonia Arora (wife of the assessee), Shri Sanjiv Arora (brother of the assessee) and Shri R.K. Kathuria, the ld.CIT(A), after considering the facts in detail, rightly held that the genuineness of transaction and identity and credit worthiness of the creditor have been successfully substantiated by the assessee, therefore, no addition is called for in this regard and the ld.CIT(A) was right in deleting the entire amount of impugned addition. 6. On careful consideration of the above submissions, we note that the ld.CIT(A), regarding the amount of loans brought forward from earlier years listed at Sl. No.1 to 5, the same were deleted with the following observations and findings:- ITA No.8650/Del/2019 4 ITA No.8650/Del/2019 5 ITA No.8650/Del/2019 6 7. On being asked by the Bench, the ld. Sr. DR could not controvert the factum that the unsecured loan creditors listed at sl. No.1 to 5 were brought forward in the books of account of the assessee from earlier financial periods. In this situation, no addition can be made in the hands of the assessee u/s 68 of the Act in the present assessment year keeping in view the very peculiar facts that the many of these amounts have been repaid by the appellant during the subsequent assessment year including the year under consideration. In view of the above, the ld.CIT(A) was right in deleting the impugned addition partly pertaining to these five creditors. Further, from the relevant paras of first appellate order, we also ITA No.8650/Del/2019 7 observe that the ld.CIT(A) has deleted the addition pertaining to the remaining three unsecured loan creditors. 8. First of all, we note that the assessee could not file explanation and relevant evidence on the issue of unsecured creditors, but, the same was filed before the ld.CIT(A) as additional evidence. It is also not in dispute that the AO also allowed the assessee to filed its rejoinder to the remand report and, thereafter adjudicated the issue. The ld.CIT(A) had refused the remand report dated 10.12.2018 as well as the supplementary remand report dated 26.03.2019 in the first appellate order wherein the AO reiterated that the creditors had made debit and credit transactions in their bank accounts and treated them as loan taken from different parties and given to other parties, thus, the documents provided by the creditors are not enough to prove the credit worthiness and genuineness of the transaction as loan taken by the assessee. 9. In the rejoinder, the assessee, placing reliance on the various judicial pronouncements, submitted that the additional evidence may kindly be admitted for consideration and the impugned addition may kindly be deleted. Regarding the remaining three loan creditors, the assessee submitted that for AY 2013-14, the AO is not empowered to ask the assessee to explain the source of the source of loan received by him. He further submitted that the assessee submitted all the relevant documentary evidence including copies of the return of income for AY 2013-14, confirmation and copies of balance sheet and P&L Account to establish ITA No.8650/Del/2019 8 the genuineness of transaction and identity and credit worthiness of the unsecured loan creditors. The ld. AR submitted that the assessee had submitted all possible evidence under his command before the ld.CIT(A) which have also been confronted to the AO, therefore, the ld.CIT(A) was right in deleting the addition. 10. The ld. Sr. DR submitted that the AO was right in making addition in the hands of the assessee u/s 68 whereas the ld.CIT(A) has deleted the impugned addition without any logic and basis. Therefore, the impugned order may kindly be set aside by restoring that of the AO. 11. Precisely reiterating the written submissions placed before the ld.CIT(A) and additional evidence, the ld. AR submitted that the assessee had submitted all relevant factual position in the form of written submissions and relevant documentary evidence before the ld.CIT(A) and the AO was also confronted to the same. The ld. Sr. DR submitted that the assessee could not substantiate the genuineness of the transaction and credit worthiness of the loan creditors, therefore, the AO was right in making the addition in the hands of the assessee. He submitted that the ld.CIT(A) has gone beyond his limits in admitting the additional evidence and granting relief to the assessee. Therefore, the impugned first appellate order may kindly be set aside by restoring that of the AO. 12. Precisely reiterating the written submissions, rejoinder to the remand report and other relevant documents, the ld. AR submitted that the assessee was not allowed due opportunity of hearing before the AO and, thus, the relevant ITA No.8650/Del/2019 9 documentary evidence and written submissions filed before the ld.CIT(A) as additional evidence which was rightly considered and admitted by the ld. First appellate authority as per the provisions of Rule 46A of the Income-tax Rules. He also submitted that the AO was confronted with the additional evidence and written submissions of the assessee along with the supporting documents and the AO, in the remand report, could not bring on record any positive evidence or adverse material to substantiate his action of making addition in the hands of the assessee u/s 68 of the Act. The ld. AR vehemently pointed out that the AO wants to doubt the unsecured loan taken by the assessee from his wife Sonia Arora and his real brother Shri Sanjeev Arora and close relative/friend Shri R.K. Kathuria without any justified reasoning and basis. The ld. AR submitted that the assessee had submitted all possible documentary evidence under his command before the authorities below and the ld. CIT(A) by properly appreciating and considering the same, has granted relief to the assessee, therefore, the first appellate order may kindly be upheld by dismissing the ground of the assessee. 13. From the first appellate order, we observe that the ld.CIT(A) has granted relief to the assessee with the following observations and findings. ITA No.8650/Del/2019 10 ITA No.8650/Del/2019 11 ITA No.8650/Del/2019 12 ITA No.8650/Del/2019 13 ITA No.8650/Del/2019 14 ITA No.8650/Del/2019 15 14. In view of the above, we clearly note that the ld.CIT(A) has admitted additional evidence filed by the assessee in accordance with the procedure prescribed under Rule 46A of the Income-tax Rules, 1962. The AO was allowed due opportunity to submit remand report on the written submissions as well as additional evidence of the assessee and the assessee was also allowed to place his rejoinder to the same. From the relevant part of the first appellate order (supra), it is clear that the ld.CIT(A) analysed the facts and circumstances and documentary evidence pertaining to all three loan creditors. From the paper book of the assessee spread over 212 pages, it is amply clear that the assessee has filed copies of ITR and statement of affairs of creditor Mrs. Sonia Arora at PB pages 70-102; copy of ITR and statement of affairs of the creditor Mr. Sanjeev Arora at PB pages 103-127 for three assessment year including the present AY 2013-14 and for the immediately preceding two assessment year. We also note that the assessee had also submitted the details of unsecured loan of the assessee for AY 2013-14 along with copies of the accounts of the lender available at pages 127- 142. In addition to that, the assessee also filed confirmation of loan from Shri R.K. Kathuria with copies of the bank statement showing loan transaction at pages 146-151 and copy of letters dated 30.07.2019 filed with the CIT(A)-27, New Delhi, along with copy of bank statement of Shri R.K. Kathuria at PB pages 209-212. From the paper book, we also note that the assessee has also filed ITA No.8650/Del/2019 16 copies of ITR, balance sheet and ledger account of the credit Mrs. Sonia Arora along with relevant part of bank statements at PB pages 155-186 and confirmation of loan from Mrs. Sonia Arora at PB pages 191 to 193. The assessee also submitted copy of bank statement of Sanjeev Arora for AY 2013-14 at PB pages 187-190 and confirmation of loan at pages 194-195. From the remand report of the AO, we observe that in the remand report dated 10.12.2018, the AO objected to the admission of additional evidence and, thereafter, the AO was directed by the JCIT, Range-55 to complete the verification and send the report on merits. Under the said directions, the AO submitted remand report dated 26.03.2019 wherein, after submitting the factual position on ITR, P&L Account and balance sheet, the AO submitted that the loan creditor had made debit and credit transaction in their books of account and treated them as loan taken from different parties and given to other parties. This conclusion is not tenable as the law did not prevent anybody to take loan and provide loan within the permissible framework of provisions of the Act. The AO also noted that the documents provided by the creditors are not sufficient to prove credit worthiness and genuineness of the transaction of the loan taken by the assessee. The AO has not made any adverse comment and has not raised any doubt regarding documentary evidence filed by the assessee in the form of copies of the ITR, P&L Account and balance sheet supported by confirmations provided by all three creditors and concluded that the AO had made additions after taking into account the documents furnished by the assessee. This conclusion is also contrary to the ITA No.8650/Del/2019 17 facts and circumstances of the case as, at the cost of repetition, we may pointed out that undisputedly rather admittedly, the assessee filed additional evidence before the ld.CIT(A) which was admitted under Rule 46A of the Rules by following prescribed procedure of calling for report from the AO and also taking rejoinder from the assessee. 15. In view of the foregoing, we are inclined to hold that the basis taken by the assessee in the assessment as well as the first appellate order to make the addition in the hands of the assessee is not a sustainable and valid conclusion. Per contra, the AO, in the remand report and the ld. Sr. DR could not point out any tenable defect or deficiency in the findings arrived at by the ld.CIT(A). Even in the remand report, the AO has not raised any substantial findings or even doubt regarding voluminous documentary evidence filed by the assessee in support f his claim to substantiate the genuineness of the transaction and credit worthiness of the loan creditors. Therefore, we are unable to see any valid reason to interfere with the findings arrived at by the ld.CIT(A) on this issue. Our conclusion also gets strong support from the judgement of the Hon’ble jurisdictional High Court of Delhi in the case of CIT vs. Rajokari Farms Pvt. Ltd. in ITA No.1194 of 2007 and 1410 of 2008 as vehemently relied by the ld. AR. Therefore, in view of the foregoing, we are unable to see any ambiguity, perversity or any other valid reasons to interfere with the findings recorded by the ld.CIT(A). Thus, we uphold the same. Accordingly, ground No.1 of the Revenue is dismissed. ITA No.8650/Del/2019 18 Ground No.2. 16. Regarding ground No.2, the ld. Sr. DR supported the assessment order. The ld. AR submitted that the AO was right in restricting the disallowance to Rs.25,000/- by holding that the payment of Rs.73,500/- has been made directly by the appellant. The ld. Counsel, supporting the conclusion drawn by the ld.CIT(A), submitted that the ld.CIT(A) rightly restricted the disallowance to Rs.25,000/- on account of payment of wages and labour expenses. On a careful consideration of above submissions, we are of the view that the ld. Sr. DR could not point out any defects or discrepancies in the findings arrived at by the ld.CIT(A) that the appellant has filed TDS certificates showing that only an amount of Rs.73,500/- has been paid directly and he was also right in restricting the disallowance to Rs.25,000/-. There is no ambiguity, perversity or any other valid reasons to interfere with the findings arrived at by the ld. First appellate authority. Thus, we uphold the same. Accordingly, ground No.2 raised by the Revenue is also dismissed. 17. In the result, the appeal filed by the Revenue is dismissed. Order pronounced in the open court on 12.10.2022. Sd/- Sd/- (PRADIP KUMAR KEDIA) (C.M. GARG) ACCOUNTANT MEMBER JUDICIAL MEMBER Dated: 12 th October, 2022. ITA No.8650/Del/2019 19 dk Copy forwarded to 1. Appellant 2. Respondent 3. CIT 4. CIT(A) 5. DR Asstt. Registrar, ITAT, New Delhi