SUBROS LIMITED,DELHI V. JCIT RANGE 24 NEW DELHI, DELHI

ITA 3577/DEL/2023

AI Insights

Subros Limited appealed against the orders of the Commissioner of Income-tax (Appeals)/National Faceless Appeal Centre for multiple assessment years, challenging disallowances related to employees' contributions towards PF/ESI and Marked to Market losses, among others. The ITAT examined the legal and factual basis of these disallowances, referencing decisions from the Supreme Court and Delhi High Court, which supported the assessee's position on M to M losses as hedging transactions rather than speculative losses. The Tribunal also noted the need for a consistent application of accounting standards and legal provisions in the assessment of such losses. The issue of deduction under section 35(2AB) was remitted back to the Assessing Officer for a detailed examination in light of the DSIR approval received post the filing of the return.

• Counselvise Citation: [2024] 140 COUNSELVISE.COM (IT) 41795 (ITAT-DELHI)
• Duration Of Justice: 9 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-10-2024
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: G
• Next Hearing Date: 08-08-2024
• Assessment Year: 2016-2017
• Appeal Filed On: 11-12-2023
• Other Referred Cases: Checkmate Services Pvt. Ltd. vs. Commissioner of Income-tax, Oil & Natural Gas Corporation Ltd. vs. Commissioner of Income-tax & Anr., Woodward Governor India Pvt. Ltd. vs. Commissioner of Income-tax, PCIT vs. Simon India Ltd., Bechtel India Pvt. Ltd. vs. Commissioner of Income-tax, Vaishnavi Bullion Private Ltd. vs. ACIT & Ors., CIT vs. Genesis Commet (P) Ltd., Faiz Murtza Ali vs. CIT, Jhaveri Bihari Lal & Co. vs. CIT
• Laws Referred To: Income-tax Act, 1961
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: KIRTI SANKRATYAYAN
• Assessee Lawyers: SALIL AGARWAL
• Keywords: Set aside; Speculation loss; Opportunity of being heard
• Section: 142(1); 131; 13; 43(5); 115JB; 37(1)

Judgement Text

" IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH ‘G’: NEW DELHI BEFORE SHRI S.RIFAUR RAHMAN, ACCOUNTANT MEMBER AND SHRI VIMAL KUMAR, JUDICIAL MEMBER ITA No. 3576/Del/2023 (Assessment Year : 2015-16) ITA No. 3577/Del/2023 (Assessment Year : 2016-17) ITA No. 3578/Del/2023 (Assessment Year : 2017-18) ITA No. 3579/Del/2023 (Assessment Year : 2020-21) Subros Limited, vs. Addl.CIT, Range 24, LGF, World Trade Centre, New Delhi. Barakhamba Lane, Connaught Place, New Delhi – 110 001. (PAN : AABCS3910P) (APPELLANT) (RESPONDENT) ASSESSEE BY : Shri Salil Agarwal, Sr. Advocate Shri Shailesh Gupta, Advocate Shri Uma Shankar, Advocate REVENUE BY : Ms. Kirti Sankratyayan, Sr. DR. Date of Hearing : 08.08.2024 Date of Order : 09.10.2024 O R D E R PER S.RIFAUR RAHMAN, AM: 1. These four appeals are filed by the assessee against the separate orders of ld. Commissioner of Income-tax (Appeals)/National Faceless Appeal 2 ITA Nos.3576 to 3579/Del/2023 Centre (NFAC) (hereinafter referred to ‘Ld. CIT (A)’) all dated 13.10.2023 for the Assessment Years 2015-16, 2016-17, 2017-18 & 2020-21. 2. Since the issues are common and appeals are inter-connected, the same are being disposed off by this common order. We are taking ITA No.3576/Del/2023 for Assessment Year 2015-16 as lead case. 3. Brief facts of the case are, assessee filed its original return of income for AY 2015-16 on 30.11.2015 declaring total loss of Rs.(-)35,78,80,223/-. The return of income was revised on 31.03.2017 disclosing total loss of Rs.(-)35,61,69,137/-. The return was revised modifying the claim of deduction u/s 35(2AB) of the Income-tax Act, 1961 (for short ‘the Act’). In both the return of income, the book profit disclosed of Rs.20,l14,60,260/ u/s 115JB of the Act and relevant tax was paid thereon. Subsequently, the case was selected for scrutiny and notices u/s 143(2) & 142(1) of the Act were issued and served on the assessee. In response, ld. AR for the assessee attended and furnished the relevant information as called for. 4. The assessee is engaged in the business of manufacturing and automotive air-conditioning systems and components. 3 ITA Nos.3576 to 3579/Del/2023 5. At the time of hearing, ld. AR for the assessee brought to our h\ otice grounds of appeal raised by the assessee in this appeal and for the sake of brevity, the same is reproduced below :- “1 That the learned Commissioner Income Tax (Appeals) has grossly erred both in law and on facts in sustaining a disallowance of a sum of Rs. 4,715/- on account of employees contribution towards PFI/ESI. 2. That the learned Commissioner Income Tax (Appeals) has grossly erred both in law and on facts in sustaining a disallowance of a sum of Rs.32,38,000/- on account of Mark to Margin Losses (M to M), thereby, holding the same to be a contingent liability as against the actual/accrued liability, as claimed by the assessee - appellant. 2.1 That the learned CIT (A) has grossly erred in sustaining the impugned disallowance with preconceived notions; relying on irrelevant judgments, recording perverse findings and also by arbitrarily brushing aside the detailed / submissions/ evidences/material/judgments placed on record, which were furnished in order to support the fact that the aforesaid losses actually accrued. to assessee. 2.2 That in doing so, the learned CIT (A) has further failed to appreciate the fact that the aforesaid losses/gains on account of M to M have been allowed throughout in the past assessment years and even in the impugned assessment year profits with regards to M to M have been accepted, as such, the aforesaid loss was allowable even going by the principles of consistency. 3. That the learned CIT (A) has erred in law and on facts in sustaining the addition in the hands of assessee, without giving any fair and proper opportunity of being heard to the appellant and further, relying on case laws not applicable to the facts of the assessee – appellant. Thereby, violating the principles of natural justice.” 4 ITA Nos.3576 to 3579/Del/2023 6. With regard to ground no.1, ld. AR for the assessee submitted that the issue involved is disallowance of employees contribution towards PF and ESI and he submitted that the issue under consideration is against the assessee on the basis of decision of Hon’ble Supreme Court in the case of Checkmate Services Pvt. Ltd. (2022) 143 taxmann.com 178. Accordingly, we dismiss the above ground of appeal raised by the assessee. 7. With regard to ground no.2, ld. AR for the assessee brought to our notice findings of the Assessing Officer. During the assessment proceedings, Assessing Officer observed that assessee has claimed net Marked to Market (M to M) loss of Rs.32.38 lakhs (- Rs.177.19 + Rs.144.81) on foreign exchange open (unsettled) contracts. Assessing Officer was of the opinion that assessee is not eligible to claim the losses either under normal provisions of the Act or under 115JB of the Act. When query was raised with the assessee, in response, assessee submitted that the loss due to fall in the value underlying derivative contracts on the reporting date, it is as per mercantile system of accounting and as per accounting standards. Further he relied on the decision of Hon’ble Apex Court in the case of Oil & Natural Gas Corporation Ltd. vs. Commissioner of Income- tax & Anr. 322 ITR 180. After considering the submissions of the assessee, Assessing Officer rejected the same and observed that if there 5 ITA Nos.3576 to 3579/Del/2023 is conflict between accounting policy/accounting standard and provisions of law, the latter will prevail over former and further observed that M to M loss is on account of valuation loss which is contingent in nature. By relying on the decision of Woodward Governor India Pvt. Ltd. 312 ITR 254 and CBDT Instruction No.3/2010 dated 23.03.2010, he observed that M to M loss of foreign exchange contract is to be treated as contingent losses. Accordingly, he dismissed the claim of the assessee under normal provisions as well as profit u/s 115JB of the Act. 8. Ld. AR submitted that against that above order, assessee preferred an appeal before the ld. CIT (A) and filed detailed submissions. Ld. CIT(A) after considering the submissions of the assessee dismissed the ground raised by the assessee and sustained the addition made by the Assessing Officer. 9. At the time of hearing, ld. AR for the assessee submitted that ld. CIT (A) decided the issue of M to M losses against the assessee by relying on the decision of ITAT, Delhi in the case of Bechtel India Pvt. Ltd. 2017 (82) taxmann.com 301 (Delhi-Trib.). He submitted that Hon’ble Delhi High Court has decided the issue in favour of the assessee in the same case and brought to our notice the relevant decision filed in the paper book (ITA 930/2017 dated 15.03.2024). He brought to our notice the relevant 6 ITA Nos.3576 to 3579/Del/2023 findings. Further he relied on the decision of Hon’ble Delhi High Court in the case of PCIT vs. Simon India Ltd. 450 ITR 316. 10. On the other hand, ld. DR for the Revenue relied on the orders of the lower authorities. 11. Considered the rival submissions and material placed on record. We observed that assessee is having exposure of foreign exchange and in order to mitigate the same, assessee has booked forward contracts against the foreign currency fluctuations. Similar issue was considered by Hon’ble Delhi High Court in the case of PCIT vs. Simon India Ltd. (supra) wherein Assessing Officer has considered the loss on forward contract as speculative loss and similar issue was considered by the Hon’ble Court and held as under :- “24. It is material to note that the only specific ground, stated by the Revenue in its appeal in respect of the deletion of loss on Forward Contracts, reads as under: \"(C) Because the losses on account of foreign exchange fluctuations on forward contracts are not allowable under section 37(1) of the Income-tax Act and covered as hedging transactions under section 43(5)(a) of the Act or should be disallowed as speculation losses under section 43(5) of the Act in view of the CBDT Instruction No. 3/2010 dated 23-3-2010.\" 25. Thus, according to the Revenue, the learned CIT(A) and the learned Tribunal had erred in finding that the loss on account of Forward Contracts is allowable under section 37(1) of the Act and is covered as a hedging transaction under section 43(5)(a) of the Act. The Revenue contends that the said loss is required to be disallowed as a speculative loss in terms of the CBDT Instruction no. 3/2010. 7 ITA Nos.3576 to 3579/Del/2023 26. The Revenue’s contention is unmerited. There is no dispute that the Forward Contracts were entered into by the assessee to hedge against foreign exchange fluctuations resulting from inflows/outflows in respect of the underlying contracts for provisions of consultancy and project management. Concededly, the assessee is not dealing in foreign exchange. Clearly, the said transactions were to hedge against the risk of foreign exchange fluctuations and thus, fall within the exceptions of proviso (a) to section 43(5) of the Act. The Forward Contracts were to guard against any loss on account of future exchange fluctuations in respect of inflows and outflows relating to contracts for execution of the works entered into by the assessee.” 12. And further the decision in Bechtel India Pvt. Ltd. (supra), the ld. CIT(A) has relied on the decision of ITAT Bench and the same was considered by Hon’ble Delhi High Court and decided the issue in favour of the assessee and held as under :- “ Having heard learned counsels for parties, we find that the principal question which stands raised appears to be conclusively settled in light of the following binding conclusions rendered by a coordinate Bench of this Court in Pr. Commissioner of Income Tax vs Simon India Ltd. [2022 SCC Online Del 4284]. We deem it apposite to extract the following passages from that decision: \"25. Thus, according to the Revenue, the learned CIT(A) and the learned Tribunal had erred in finding that the loss on account of Forward Contracts is allowable under Section 37(1) of the Act and is covered as a hedging transaction under Section 43(5)(a) of the Act. The Revenue contends that the said loss is required to be disallowed as a speculative loss in terms of the CBDT Instruction no.3/2010. 26. The Revenue's contention is unmerited. There is no dispute that the Forward Contracts were entered into by the Assessee to hedge against foreign exchange fluctuations resulting from inflows/outflows in respect of the underlying contracts for provisions of consultancy and project 8 ITA Nos.3576 to 3579/Del/2023 management. Concededly, the Assessee is not dealing in foreign exchange, Clearly, the said transactions were to hedge against the risk of foreign exchange fluctuations and thus, fall within the exceptions of proviso (a) to Section 43(5) of the Act. The Forward Contracts were to guard against any loss on account of future exchange fluctuations in respect of inflows and outflows relating to contracts for execution of the works entered into by the Assessee. 27. It is material to note that there is no allegation that the Assessee has not been following the system of accounting consistently. In CIT v. Woodword Governor India Pvt. Ltd. (supra), the Supreme Court had 2022/DHC/005364 ITA No.67/2018 Page 11 of 15 referred to AS-11. In terms of AS- 11, the exchange difference arising on foreign currency transactions are necessary to be recognized as income or expense in the period in which they arise, except in cases of exchange differences arising on repayment of liabilities for acquiring fixed assets. 28. In the present case, the Assessee had stated that it was reinstating its debtors and creditors in connection with execution of contracts entered into with foreign entities on the basis of the value of the foreign exchange. Thus, clearly the loss on account of Forward Contracts would require to be recognized as well. 29. It is also relevant to refer to the findings of the learned CIT(A) in this regard. Paragraph no.13 of the appellate order reads as under: \"13. It may be noted that the valuation-loss is reflected on the debit side of the P&L account whereas the corresponding valuation Gains resulting on the valuation of the debtors is reflected on the credit side included as part of sales / exchange Gains and in respect of imports as reduction in the import price on the debit of the Profit & Loss account. In other words, the entire transaction of either realization of debtors in foreign exchange / payment for imports in foreign exchange which are designated in foreign currency and the entering into Forward cover contract are integral part of the same 9 ITA Nos.3576 to 3579/Del/2023 transaction i.e. two sides of the same coin. By considering both sides of the P&L the correct net profit is worked out. Therefore, in order to ascertain the correct taxable profits of the appellant the loss has to be allowed as a business loss because it is due to the business exigency the forward contracts are entered into to 2022/DHC/005364 ITA No.67/2018 Page 12 of 15 protect against any loss that might result due to foreign exchange Currency fluctuation foreign currency fluctuation. 30. Undisputedly, the Forward Contracts, in the present case, are hedging transactions, The Assessee has reinstated its debits and credits from the underlying transactions on the value of the foreign exchange on the due date. The corresponding losses/gains under the Forward Contracts, thus, were also required to be accounted for to arrive at the real profits, It would be anomalous if, on the one hand, debtors and creditors, in respect of current assets, are stated at the current value of foreign exchange and the corresponding loss on the hedging transaction is not accounted for. In essence, the Assessee has stated his income by taking into account the foreign exchange value as it stands on the due date. It is well settled that the CBDT Instructions and circulars which are contrary to law are not binding.\" 3. We additionally take note of the legislative amendments which have been introduced pursuant to the view which was expressed by the Supreme Court in Commissioner of Income Tax vs Woodward Governor India Private Limited [(2009) 13 SCC1] and which has led to the introduction of Section 43AA of the Income Tax Act, 1961l [\"Act\"] with effect from 01 April 2017 and which reads as follows: “Taxation of foreign exchange fluctuation. 43AA.(1) Subject to the provisions of section-43A, any gain or loss arising on account of any change in foreign exchange rates shall be treated as income or loss, as the case may be, and such gain or loss shall be computed in accordance with the income computation and disclosure standards notified under Sub-section (2) of section-145. 10 ITA Nos.3576 to 3579/Del/2023 (2) For the purposes of sub-section (1), gain or loss arising on account of the effects of change in foreign exchange rates shall be in respect of all foreign currency transactions, including those relating to– (i) monetary items and non-monetary items: (ii) translation of financial statements of foreign operations; (iii) forward exchange contracts; (iv) foreign currency translation reserves.\" 4. It is thus manifest that Forward Exchange Contracts were clearly not covered within the ambit of the provisions concerned prior to 01 April 2017. 5. In view of the aforesaid, we answer the questions posited in favour of the appellant. The order of the ITAT dated 29 May 2017 shall consequently stand set aside. The appellant is held entitled to consequential relief.” 13. Respectfully following the above decisions, we are inclined to allow grounds no.2, 2.1 & 2.2 raised by the assessee. 14. Ground No.3 is general in nature and does not require any adjudication. 15. Accordingly, the appeal filed by the assessee being ITA No.3576/Del/2023 for AY 2015-16 is partly allowed. 16. With regard to appeal filed by the assessee for AY 2016-17 being ITA No.3577/Del/2023, the issues involved are exactly similar to the issues raised by the assessee in AY 2015-16. Since the facts in AY 2015-16 are exactly similar, our above findings in AY 2015-16 are applicable mutatis 11 ITA Nos.3576 to 3579/Del/2023 mutandis in AY 2016-17. Accordingly, the appeal being ITA No. 3577/Del/2024 for AY 2016-17 filed by the assessee is also partly allowed. 17. With regard to AY 2017-18, the first ground of appeal along with sub- grounds are relating to the issue of Marked to Market, we have decided the similar issue in AY 2015-16 in favour of the assessee. Accordingly, this ground is also decided in favour of the assessee, hence ground no.1 raised by the assessee is allowed. 18. Coming to ground no.2, the relevant facts are, the AO observed that assessee has deposited Rs.34,04,500/- of SBN (demonetized currency) during the period 09.11.2016 to 30.11.2016. The Assessing Officer has reproduced the comparative chart of monthly cash receipts and deposits in his order at page 7. Based on the above chart, the Assessing Officer observed that assessee has deposited Rs.3,36,000 during the month of November and Rs.30,68,500/- during the month of December 2016. On an enquiry, the assessee submitted that primary source of cash deposit was cash sales/scrap sales and the details of the same were submitted by the assessee before the Assessing Officer. The same is reproduced by the Assessing Officer in his order. After considering the above submissions, Assessing Officer observed that the cash sales from the month of October and November is Rs.98,000/- and Rs.28,000/- respectively. The major 12 ITA Nos.3576 to 3579/Del/2023 source of cash was scrap sales. Therefore, assessee was asked to furnish details of scrap sales. The same was submitted by the assessee before AO and it is reproduced in the assessment order. The Assessing Officer observed that the majority of cash receipts from scrap sales is from three parties and the relevant details were reproduced in the assessment order. The same comes to Rs.21,00,000/- and Assessing Officer observed that assessee sold is between 2nd to 8th November 2016 and that too only from two parties. Further, assessee was asked to furnish confirmation from the parties. In response, the assessee filed confirmation from Rajesh Enterprises and Hindustan Metals. However, the above submissions were rejected by the Assessing Officer and proceeded to make the addition u/s 68 of the Act. 19. Aggrieved with the above order, assessee preferred an appeal before the ld. CIT (A) and ld. CIT (A) after considering the detailed submissions of the assessee observed that whatever submissions made by the assessee before him were also made before the Assessing Officer and Assessing Officer examined the facts and analysed the issue elaborately, therefore, he does not finding a reason to disbelieve the findings of the Assessing Officer and accordingly, he sustained the addition made by the Assessing Officer. 13 ITA Nos.3576 to 3579/Del/2023 20. At the time of hearing, ld. AR for the assessee brought to our notice findings of the Assessing Officer and submitted that the assessee has filed the confirmations from the parties to whom assessee has sold the scrap sales and submitted that the Assessing Officer did not examine the parties who had submitted the confirmations. He submitted that it is a genuine transaction wherein assessee has sold the scrap and in the regular course, assessee has received cash, the same was utilised to deposit the same during the period under consideration. He submitted that even the assessee has submitted the details of parties and the confirmations from them but Assessing Officer failed to cross examine the same. In this regard, he relied on the following decisions :- (i) CIT vs. Genesis Commet (P) Ltd. – 163 Taxman 482; (ii) Faiz Murtza Ali vs. CIT – 334 ITR 370; and (iii) Jhaveri Bihari Lal & Co. vs. CIT – 154 ITR 591. 21. On the other hand, ld. DR for the Revenue brought to our notice para 6.7 of the assessment order and submitted that the Assessing Officer has given clear-cut findings. Therefore, he relied on the findings of the Assessing Officer and submitted that even the assessee has not submitted invoices or bills in support of the sales. In this regard, he relied on the decision of ITAT, Hyderabad Bench in the case of Vaishnavi Bullion Private Ltd. vs. ACIT & Ors. order dated 28.11.2022. 14 ITA Nos.3576 to 3579/Del/2023 22. Considered the rival submissions and material placed on record. We observed from the record that the assessee has deposited SBN during demonetization period and the source for the above was from their cash sales and scrap sales. Assessing Officer observed that assessee has deposited Rs.21,00,000/- during the demonetization period and the source is claimed to be from scrap sales. On an enquiry, assessee has submitted the party-wise details of such scrap sales and also submitted confirmations from these parties. Assessing Officer observed certain discrepancies on the date of deposit regarding of cash sales from two parties i.e. Rajesh Enterprises and Hindustan Metal and he disbelieved the submissions of the assessee and proceeded to make additions. We observed from the record that assessee has submitted the party-wise details and date-wise scrap sales before the Assessing Officer and the Assessing Officer merely observed the information submitted by the assessee and proceeded to make the addition without cross-verifying from the other parties. It is against the standard conventions and in similar cases, the Hon’ble Delhi High Court in the case of CIT vs. Genesis (supra) held as under :- “5. The Tribunal has noted that insofar as M/s. Rajesh Traers is concerned, it had given the names and addresses of the parties whom it had introduced to the assessee as result of which the assessee had made sales to these parties to the extent of Rs.50,62,849/-. M/s. Rajesh Traders confirmed the receipt of commission and gave details of services rendered by it as per its letter dated 11.10.2003 in response to summons 15 ITA Nos.3576 to 3579/Del/2023 issued by the Assessing Officer under section 131 of the Income-tax Act. M/s. Rajesh Traders also appears to have been given a copy of the accounts of the assessee as maintained in its books of account. 6. Insofar as M/s. Jagish Rai Rai Bhagwan is concerned, the assessee furnished a copy of the accounts of this party containing the details of commission paid. The assessee also disclosed the names of the parties from whom business had been procured by the assessee through the said commission agent. M/s. Jagdish Rai Jai Bhagwan also confirmed the receipt of commission. 7. Despite all this material, it appears that the Assessing Officer required the presence of the commission agents for cross-examination. The assessee has pointed out that M/s. Rajesh Traders has sent the information and as regards M/s. Jagdish Rai Jai Bhagwan, there are some differences that the assessee had with that party and, therefore, it was not in a position to produce the said party. 8. However, the Assessing Officer did not take any coercive measures to enforce attendance of any of the parties except issuing summons under section 131 of the Income-tax Act in response to which necessary information was filed. 9. The Tribunal took a view that the fact that the assessee was not in a position to produce the two commission agents is not its fault and the Assessing Officer could have exercised powers available to him to summon and cross-examine these two parties, if, for some reason, he did not accept the statement furnished by these two parties. The Assessing Officer could also have made independent enquiries from the customers of the assessee. However, none of this was done. 10. Therefore, we are of the opinion that the Tribunal has not committed any error in the view that it has taken. The assessee produced all the material that it could possibly produce and if the Assessing Officer was not inclined to believe the material produced, he could have used the coercive powers available to him, which he failed to exercise.” 23. Further, Hon’ble Delhi High Court in the case of Jhaveri Bihari Services vs. ACIT (supra) held as under :- 16 ITA Nos.3576 to 3579/Del/2023 “9. Admittedly, the assessee had produced its books of account did mention the name of the six creditors whose cash credits have not been accepted by the department in spite of the production of certificates from them by the assessee. It was, therefore, incumbent on the ITO to have resorted to the provisions of section 131, at least even once, by issuing summons to those six creditors. As to what would have been the effect of their non-appearance or the non-service of notices on them, is a question with which we are not concerned in this case. We have merely to see as to whether, on the facts and in the circumstances of the case, the onus that lay on the department can be said to have been discharged in spite of the refusal on the part of the ITO to issue summons to those six parties. The answer to our mind is clear. The law enjoins the issuance of summons in case certificates purported to have been granted by such creditors are produced before the assessing authority. We could have at once directed the deletion of the additions made to the tune of Rs.80,354 if the identity of the creditors was well established. But, in the instant case, it cannot be said with any amount of precision that the identity of the creditors was fully established. That can be decided only if, in spite of summons or registered notice to them, they do not or any of them does not respond. Mr. Aggarwal, the leaned counsel for the assessee, placed reliance on some of the decisions in which she additions were directed by the High Court in a reference under Section 256 to be struck down. But in all those cases, the identity of the creditors was fully established since their GIR numbers had been given and they were all assessees under the Act, whose books of account could very well be used for the purpose of verification. That, however, is not the position in the instant case This Court is not in a position, from the materials on record, to say with any amount of exactitude as to whether those persons are genuine or not. On the facts and in the circumstances of the instant case, therefore, the Tribunal should direct the ITO to issue notice to these creditors and only after the return of service these additions should be made or should be deleted as the facts warrant 10. We. accordingly, answer, in the light of the observations made earlier, he question referred to this Court in the supplementary statement of the case in the affirmative and hold that the refusal to summon the persons mentioned under section 131 vitiated the addition of cash credits amounting to Rs.80,354 to the assessee' income as income from other sources. In view of what we have 17 ITA Nos.3576 to 3579/Del/2023 already held earlier, the Tribunal may take appropriate steps by directing the ITO to issue notices to the six creditors in question and, thereafter, to finalize the assessment in relation to the cash credits to the extent aforementioned. On the facts and in the circumstances of the case, however, we shall make no order as to costs.” 24. From the above decisions, we observed that Hon’ble High Court held that the Assessing Officer could have further enquired with the parties and not resorted to reject the documents and information submitted by the assessee in order to claim that the source of the cash deposits were from the parties brought on record by them. Even, in the present case, assessee has submitted the source of cash deposits from the sale of scrap sales and also filed the details of the parties along with confirmations. Assessing Officer rejected the same without making further enquiries. Therefore, we are inclined to follow the decision of Hon’ble Delhi High Court and decide the issue in favour of the assessee. 25. Coming to the submissions of the ld. DR for the Revenue and ld. DR relied on the decision of ITAT, Hyderabad Bench in the case of Vaishnavi Bullion Private Limited (supra), we observed that the decision relied by the ld. DR is distinguishable to the facts of the present case. In the abovesaid decision, the assessee made out two versions of sources for the credits recorded in their books of account i.e. one is received from 2153 persons and the other as received from single person. The Bench observed that assessee failed miserably whether the same belonging to 18 ITA Nos.3576 to 3579/Del/2023 either said 2153 persons or one person with cogent evidence. The facts in the present case are different than the assessee as the assessee has precisely explained the source of cash and also filed the confirmations. Therefore, the above case is distinguishable to the facts of the present case. Accordingly, grounds no.2, 2.1 & 2.2 raised by the assessee are allowed. 26. Ground No.3 is general in nature, hence does not require any adjudication. 27. Accordingly, the appeal filed by the assessee being ITA No.3578/Del/2023 for AY 2017-18 is allowed. 28. With regard to appeal filed by the assessee for AY 2020-21 being ITA No.3579/Del/2023, at the time of hearing, ld. AR submitted that ground no.1 & sub-grounds are relating to the issue of Marked to Market. The issue is already considered by us in AY 2015-16 and similar issue is already decided in favour of the assessee. Since the facts in AY 2015-16 are exactly similar, our above findings in AY 2015-16 are applicable mutatis mutandis in AY 2020-21. Accordingly, ground nos.1 & sub- grounds taken in ITA No. 3579/Del/2024 for AY 2020-21 are allowed. 29. With regard to grounds no.2, 2.1 & 2.2, ld. AR submitted that the assessee has claimed deduction u/s 35(2AB) of the Act. However, the same was rejected by the Assessing Officer and the same amount i.e. 19 ITA Nos.3576 to 3579/Del/2023 Rs.1,42,51,772/- was sustained by the ld. CIT (A). Ld. AR submitted that the approval of the same was received from the DSIR which came after the filing of return of income. The assessee submitted a revised computation before the Assessing Officer during the course of assessment proceedings but the same was rejected. He prayed that this issue may be remitted back to Assessing Officer. In this regard, he submitted that even the issue under consideration is first time claimed before the Assessing Officer and as per the decision of Goetze India Ltd. vs. CIT 284 ITR 323, Hon’ble Supreme Court held that such claims can be entertained by the appellate authorities and Assessing Officer may not have power to entertain the fresh claims. By relying on the above decision, he prayed that the issue may be remitted to Assessing Officer to verify lawful claim of the assessee and allow the same. 30. On the other hand, ld. DR for the Revenue has no specific objections on remitting the issue back to the file of Assessing Officer. 31. Considered the rival submissions and material place don record. We observed that the assessee has claimed the deduction u/s 35(2AB) of the Act first time before the Assessing Officer since the assessee has received the DSIR approval after filing the return of income. This being a deduction which is lawfully available to the assessee, we are inclined to remit this issue back to the file of Assessing Officer to verify the same 20 ITA Nos.3576 to 3579/Del/2023 and allow as per law. Accordingly, this ground is allowed for statistical purposes 32. With regard to ground no.3 & 4, at the time of hearing, ld. AR for the assessee submitted that assessee does not prefer to press these grounds. Accordingly, these grounds are dismissed. 33. Ground No.5 is general in nature, hence the same does not require separate adjudication. 34. In the result, the appeal being ITA No.3579/Del/2023 is partly allowed for statistical purposes. 35. To sum up : ITA Nos.3576 & 3577/Del/2023 for AYs 2015-16 & 2016- 17 respectively are partly allowed, ITA No.3578/Del/2023 for AY 2017- 18 is allowed and the appeal being ITA No.3579/Del/2023 is partly allowed for statistical purposes. Order pronounced in the open court on this 9th day of October 2024. Sd/- sd/- (VIMAL KUMAR) (S.RIFAUR RAHMAN) JUDICIAL MEMBER ACCOUNTANT MEMBER Dated: 09.10.2024 TS 21 ITA Nos.3576 to 3579/Del/2023 Copy forwarded to: 1. Appellant 2. Respondent 3. CIT 4. CIT(Appeals) 5. DR: ITAT ASSISTANT REGISTRAR ITAT, NEW DELHI "