IN THE INCOME TAX APPELLATE TRIBUNAL
DELHI BENCH ‘SMC’: NEW DELHI

SMT. DIVA SINGH, JUDICIAL MEMBER

I.T.A No. 8280/Del/2019

(ASSESSMENT YEAR: 2015-16)

Kiran Sales Private Limited INCOME TAX OFFICER

12/42, Rajauri Garden, Ward 14(3)

New Delhi. Vs. New Delhi.

PAN No. AABCK6413F

(Appellant) (Respondent)

Appellant By None
Respondent by Shri Sanjiv Mahajan, Sr. DR

Date of Hearing 18.10.2021
Date of Pronouncement 22.10.2021

Hearing conducted via Webex

ORDER

The present appeal has been filed by the assessee, wherein the
correctness of the order dated 22.03.2019 of CIT(Appeals), New Delhi
pertaining to 2015-16 assessment year is assailed.

2. At the time of hearing, no one was present on behalf of the
assessee. The appeal was passed over. In the next round also the
assessee remained unrepresented. A perusal of the record shows that
on each of the dates the appeal came up for hearing before the ITAT i.e.
20.02.2021; 18.05.2021; 22.07.2021 and now on 18.10.2021 the
assessee has repeatedly remained unrepresented However, considering
the material on record it was submitted by the Ld. Sr. DR that the
appeal of the assessee could be decided on the basis of material
available on record.

3. Accordingly the appeal of the assessee was taken up for hearing.

In the present proceedings the assessee has raised the following

grounds before the ITAT which read as under:

1. “That the judgment is against the facts and law of the case.
2. That the Ld. CIT has erred in confirming the addition of Rs. 29,00,000/- by

the Assessing Officer u/s 68 of Loan Taken whereas all the details and
documents were produced before the Ld. AO as well as before the CIT(A).
ITA No.8280/Del/2019

3. That the appellant prays to leave, add or otherwise amend any or all grounds
of appeal before or after the hearing of the appeal.

4. That the appellant prays to delete the additions as per the order of the ld. AO
which is based on unjustified and baseless grounds.”

4. Ld. Sr. DR addressing the grounds and the facts on record
submitted that the additions sustained by the CIT(Appeals) on merits
may be confirmed. Referring to the impugned order it was his
submission that whatever relief maintainable to the assessee has
already been granted by the CIT(A). Addressing para 5.2 of the order it
was submitted considering the addition of Rs. 10 lakhs made by the AO
the Ld. CIT(A) accepting the evidences filed ultimately deleted the
addition. Thus, the addition of Rs. 29 lakhs, it was submitted
considering the facts had to be confirmed as only general arguments
were raised and no supporting facts for deleting the addition could be
filed. The addition it was his prayer on facts may be confirmed on
merits. Relying upon the case law, as canvassed by the assessee
extracted in the submissions recorded by the CIT(Appeals) it was his
submission that only identity of the party stood proved. The
creditworthiness and the genuineness of the transaction consistently
could not be proved by the assessee. Referring to the impugned order it
was his submission that fresh evidences relying upon Rule 46A of the IT
Rules as desired by the assessee were entertained by the Commissioner
(Appeals) and wherein only affidavit of Shri Suraj Pal Bhatia explaining
the deposits of Rs. 10 lakhs stood made available which was considered.
However, qua Shri Balaji timber and Plywood aka M/s Sai Kirpa no
evidences were made available. Thus, the principles of law as held
applicable in the case of Nova Promoters and Finlease Pvt. Ltd. and the
other decisions cited were fully applicable. It was his submission that
this decision has been referred to in para 5.7 by the Commissioner
(Appeals) and hence it was his prayer that the addition sustained may
be upheld.

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ITA No.8280/Del/2019

5. I have heard the submissions and perused the material available

on record. A perusal of the record shows that the assessee declared a

loss of Rs. 3,88,440/- in the year under consideration. The assessee as

per record was stated to be engaged in the business of manufacturing of

plastic injection moulding components and steel components. The

addition of Rs. 39 lakhs was made on account of the assessee’s claim

that unsecured loans of Rs. 39 lakhs received from Mr. Suraj Pal Bhatia

(Rs. 10 lakhs); and Shri Balaji timber and Plywood aka M/s Sai Kirpa

(29 lakhs) despite opportunity could not be explained.

6. The additions made were challenged before the First Appellate

Authority claiming that these were business loans. It is seen that on

considering the following submissions part relief was granted by the

CIT(A) to the assessee:

“4.2 On going through the above submission, it is observed that
there is no additional ground of appeal but just an elaboration of the
ground of appeal taken earlier with regard to the addition of Rs.
39,00,000/- as unexplained cash credit u/s 68 of the Act. The
appellant relied upon the various case laws to further substantiate its
arguments towards grounds of appeal, especially towards ground no.
2. Since no additional ground or new ground has been preferred, this
submission is considered while deciding the issue involved.
4.3 The appellant vide letter dated 27.02.2019 submitted
additional evidence as per Rule 46A of the I.T. Rules as follows:

“Most respectfully it is submitted that the assessee was assessed u/s
143(3) by the Ld. AO Ward 14(3) by making an addition to the income
u/s 68 of Rs. 39,00,000/- on account of non confirmation of advances
received. These confirmation and other documents were not available
at the time of assessment due to some personal dispute between the
lender and the appellant assessee.
Now at present the confirmation on affidavit along with bank
statement and other details are available and are being submitted for
rs. 10,00,000/- from Sh. Suraj Pal Bhatia and the balance
confirmation for Rs. 29,00,000/- shall be available in due course.
That these documents could not be submitted before the Ld. AO for
the reason as explained above and therefore, prevented with a
sufficient cause to submit the same at the time of assessment.”

4.4 Since this additional evidence was submittd during appal
where Rs. 10,00,000/- given by Mr. Suraj Pal Bhatia has been
confirmed on affidavit and its source is stated to be out of reitrement
benefits received by him, therefore, the same was sent to the AO for his
comments. The AO i.e. ITO Ward 14(3) New Delhi replied that: -

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ITA No.8280/Del/2019

“It is submitted that in the affidavit of Sh. Suraj Pal Bhatia R/o
2E/138, NIT, Faridabad, Haryana it has been undertaken by him
that he has given loan to M/s Kiran Sales P. Ltd. as he received
retirement benefits from Escorts Limited. In the statement of financial
company “Finacle” it is shown that the received employees provident
fund on 11.12.2014 and on 11.12.2014 he has given Rs. 10,00,000/-
to Kiran Sales P. Ltd. which he received back on 26.05.2015 as per
the statement. Hence it is submittd that this transaction of advance
given by Sh. Suraj Pal Bhatia is satisfactory.”

4.5 The appellant was provided a copy of the report of AO and it
was submitted by the appellant vide letter dated 14.03.2019 that: -

“With respect to remand report (copy enclosed) submit vide letter
F.No.ITO-W-14(3)/Report/2018-19/760 dated 27.02.2019 with you by
the Ld. Assessing Officer of Ward 14(3).
The Ld. AO has accepted the transaction of Rs. 10,00,000/- (Ten Lakh
Only) as satisfactory loan from Sh. Suraj Pal Bhatia in the herein
above mentioned appeal. Thereby we pray that the demand of Rs.
10,00,000/- may be deleted.”

7. Consequently the part relief was granted holding as under: -

“5. Findings & determination: -

5.1 I have considered the assessment order, submissions and the

details provided by the appellant, the additional evidence provided and

report of the AO. This additional evidence is considered, looking to the

AO’s report and also the same goes to the root cause of this addition

and to follow the principle of natural justice. Ground No. 1 is general in

nature and subsumes with the specific grounds for addition therefore no

separate findings are required.

5.2 In ground no. 2, the appellant challenged the total additions of

Rs. 39,00,000/- as loans received from two parties were not

satisfactorily explained by the appellant. The addition of Rs.

10,00,000/- was made u/s 68 of the Act due to the reasons that

appellant has shown this amount as loan received from Mr. Suraj Pal

Bhatia (In assessment order this appears to have been wrongly

mentioned as 29,00,000/-) but could not established the identity,

creditworthiness and genuineness of transactions. No due confirmation

has been received to the satisfaction of AO to prove this as genuine.”

8. The additions sustained under challenge were confirmed in view

of the following facts and reasoning: -

“5.3 As evident from above, during appellate proceedings, in
response to the additional evidence regarding loans received from Sh.
Suraj Pal Bhatia of Rs. 10,00,000/- has been found satisfactory by the
AO, therefore, this additional evidence is considered and looking to the
facts and circumstances of this case, considering the evidence filed and
the report of the AO, the source of funds received from Mr. Suraj Pal
Bhatia was found genuine and his capacity is also substantiate,
therefore, this addition of Rs. 10,00,000/- is not warranted and directed
to be deleted.

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ITA No.8280/Del/2019

5.4 With regard to the addition of Rs. 29,00,000/- for the loan
received from Sh. Balaji Timber and Plywood aka M/s Sai Kripa, it is
seen that genuineness and correctness of transaction and their
creditworthiness is not duly explained and hence this addition was
made.
5.5 It is contended by the appellant, as reproduced above, that
payments have been received through banking channels and the amount
was returned back subsequently. Therefore, upon relying various
decisions by different jurisdictions, it is stated that the said
loan/advance received is duly explained.
5.6 It is observed from the assessment order as well as submissions
during appellate proceedings that appellant failed to provide the
confirmation from the said party and no proof for such payment received
has been brought on record. It is only stated that the payment has been
received and repaid through account payee cheques. Here it is pertinent
to mention that the amount received and repaid subsequently will not
effect the applicability of section 68 of the Act. As per the provisions of
section 68, if any sum is found credited in the books of appellant and the
identity, creditworthiness of the lender and genuineness of transaction is
not proved, the sum so credited is liable to be taxed as income of
appellant for the year under consideration. Therefore, this being a
deeming provisions, related to the credit of the amount and hence the
repayment is not material. The credits are to be taxed, irrespective of
any subsequent payment or not.
5.7. Further, the transactions are routed through banking channels is
not itself substantiation to prove that this loan is genuine. Support is
drawn from the decision by Hon’ble Delhi High Court in the case of Nova
Promoters and Finlease Pvt. Ltd. ITA No. 342 of 2011 and various other
cases wherein it is held that even if transaction are through banking
channels, that cannot be considered sufficient to prove the
creditworthiness or genuineness of transaction. The appellant has
neither provided the source of the lender or the source of source, which is
envisaged as per the provisions of section 68 of the Act. No confirmation
or any evidence has been provided.
5.8 It is also observed that no interest in these loans have been
given by the appellant. Any prudent person, not known or related to the
appellant will not lend his hard earn money, without any consideration
of interest. Further, it will not abstain from giving confirmation regarding
having given such money to the appellant.
5.9 Therefore, looking to the facts and circumstances of this case
and in law, and considering that neither any confirmation nor the source
of funds have been provided, as discussed in the foregoing paragraphs,
there is no reason to interfere in the findings of AO towards this addition.
Thus, this addition of Rs. 29,00,000/- is confirmed. Ground no. 2 is
partly allowed.”

9. Considering the submissions advanced by the Ld. Sr. DR who at

great length highlighted the relevant and applicable facts and relied on

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ITA No.8280/Del/2019

the judicial position as applicable there to I find that the addition
sustained on facts deserves to be confirmed. I have taken into
consideration the position of law as referred to in para 5.7 of the
impugned order and specifically highlighted by the Ld. Sr. DR and on
consideration of facts on record I am of the view that the decision is fully
applicable on all facts. It is seen that as per record more than adequate
opportunity had been made available to the assessee before the
Assessing Officer and similarly even before the Ld. CIT(A) there was
adequate opportunity and now even before the ITAT the assessee has
been given more than adequate opportunity and still no evidence has
been placed by the assessee to assail let alone effectively assail the
findings arrived at. Accordingly, considering the facts as available and
the position of law I am of the view that no interference in the impugned
order is warranted. The grounds raised are dismissed.

10. Said order was pronounced in the open court at the time of
hearing itself.

11. In the result, the appeal of assessee is dismissed.

Order pronounced in the open court on 22/10/2021

Sd/-

(DIVA SINGH)
JUDICIAL MEMBER

*Kavita Arora, SPS
Copy to
1. The appellant
2. The respondent
3. CIT(A) concerned
4. CIT concerned
5. D.R. ITAT concerned Bench, Delhi
6. Guard File.

// BY Order //

Assistant Registrar, ITAT Delhi Benches:
Delhi.

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