TaxTMI 
TaxTMI 
TaxTMI 
2025 (11) TMI 1053
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....ng the appeal by the Department which has been explained by the CIT (DR), as consequence of procedural delay to internal administrative exigency. The Learned Authorized Representative for the assessee has no objection to the said delay in filing the appeal by the department. Accordingly, the aforesaid delay of 158 days is condoned, and the appeal was admitted on merits. From the record, it is noted that the department has challenged the deletion of the addition of Rs. 8,09,95,988/- by the CIT (A) without appreciating the merits of the case ignoring that huge credit contribution received to the personal capital shown in assessment year 2011-12 (under consideration) claimed to be received through multiple opportunity to the department. Accordingly, the registry is directed to fix the appeal for hearing before regular Bench on the date available on board under notice to both the parties." 3. Brief facts of the case are that assessee is engaged in the business of trading in property and Government securities and bonds besides having income from director's remuneration and rental income. The return of income was originally filed u/s 139(1) on 29.09.2011, declaring total inco....
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....lated parties to the assessee and he is controlling and managing the affairs of these entities. Further, on perusal of these documents, it is noticed that most of the entities are not doing any business activities and not shown substantial income from business and profession during the year which shows that these are shell entities which have been used for rotation of funds. 3. The Ld. CIT (A) erred in law and on facts in deleting the addition of Rs. 8,09,95,988/- by not appreciating the fact that the persons/ entities from whom the assessee has received funds had deposited cash in their account before transferring the funds to the assessee and these entities were controlled and managed by the assessee himself. CIT (A) has erred on fact by accepting that the cash deposits are explained by the cash withdrawals of the counter parties, but failed to bring on record the rationale for these cash withdrawals and their use, or the source of cash deposited. CIT (A) also did not bring the timing of cash deposit and cash withdrawal and erred on facts in taking the correct conclusion. 4. The Ld. CIT(A) erred in law and on facts in deleting the addition of Rs. 49,54,036/- wit....
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....he case the learned CIT(A) has erred in upholding the reopening of assessment ignoring the fact that the same has been reopened by the AO merely on the basis of doubt and suspicion. 7. On the facts and circumstances of the case, learned CIT(A) has erred both on facts and in law in confirming the reopening despite the fact that the same has been made by the AO on the basis of information received from the investigation wing without independent application of his own mind. 8. On the facts and circumstances of the case, the learned CIT(A) has erred, both on facts and in law, in rejecting the contention of the assessee that the notice issued under section 148 of the Act is bad and liable to be quashed as the same is barred by limitation having being issued beyond the four years from the end of relevant assessment year. 9. On the facts and circumstances of the case, the CIT(A) has erred both on facts and in law, in rejecting the contention of the assessee that reopening of assessment is bad without there being any whisper in the reasons recorded by the AO that the income has escaped assessment on account of failure on part of the assessee to disclose fully and....
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....y and creditworthiness of the transactions. He further submits that since the transactions were carried out through banking channels, genuineness cannot be doubted. He further submits that the assessee is having his own capital of more than the amounts involved in the addition and therefore, no addition is required to be made. Ld.AR further submits that in the remand proceedings, AO has verified all these facts and no doubts with respect to the details filed were raised except stating that the additional evidences should not be admitted. Ld.AR thus, submits that the additions made were rightly deleted by Ld. CIT(A) which order deserves to be upheld. 10. Heard the contentions of both parties and perused the material available on record. In the instant case, reassessment proceedings were initiated for the reason that there were heavy transactions in the bank account of the assessee which include credit as well as cash transactions totaling to INR 102,94,13,424/-. The AO after considering the facts that there were credit as well as debit entries made the addition of the peak credit of INR 8,09,95,988/- being the highest balance available at a particular point in the said bank accou....
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.... disallowance made by AO of INR 49,54,036/- out of the interest paid by holding that the interest bearing funds were utilized for making interest free advances. 16. Heard the contentions of both parties and perused the material available on record. Before us, Ld. Sr. DR failed to controvert the findings of Ld. CIT(A) as given in para 4.2.5 to 4.2.9 which reads as under:- 4.2.5 "As per the assessment order, the Assessing Officer observed that appellant was paying interest on loans availed by him to the extent of Rs. 49,54,036/-. However, the appellant has provided interest free loans to various companies. The Assessing Officer observed that the appellant has borrowed an amount of around Rs. 30 Crores and extended loans of around Rs. 41 Crores and therefore, the appellant could have avoided payment of interest on loans as loans given were more than loans availed. The Assessing Officer therefore disallowed the payment of interest mentioning that the appellant has utilized interest bearing loans for non business purposes disallowing an amount of Rs. 49,54,036/-. 4.2.6 The appellant is maintaining a personal capital of around Rs. 72-74 Crores in the year under consi....
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....common ground, is governed by the decision of this Court in Plastiblends India Limited Vs. Additional Commissioner of Income Tax, Mumbai and Another (2017) 9 SCC 685." 2. [2009] 178 Taxman 135 (Bombay) High Court Of Bombay Commissioner of Income-tax v. Reliance Utilities & Power Ltd. "9. Apart from that we have noted earlier that both in the order of the CIT (Appeals) as also the Appellate Tribunal, a clear finding is recorded that the assessee had interest-free funds of its own which had been generated in the course of the year commencing from 1-4-1999. Apart from that in terms of the balance sheet there was a further availability of Rs. 398.19 crores including Rs. 180 crores of share capital. In this context, in our opinion, the finding of fact recorded by CIT (Appeals) and ITAT as to availability of interest-free funds really cannot be faulted. 10. If there be interest-free funds available to an assessee sufficient to meet its investments and at the same time the assessee had raised a loan it can be presumed that the investments were from the interest-free funds available. In our opinion the Supreme Court in East India Pharmaceutical Works Ltd.'s c....
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....s been the consistent view of the Supreme Court. [Para 20] The High Court in the impugned judgment as well as the Tribunal and the income-tax authorities had approached the matter from an erroneous angle. In the instant case, the assessee borrowed the fund from the bank and lent part of it to its sister concern (a subsidiary) as interest-free loan. The test in such a case was really whether this was done as a measure of commercial expediency. [Para 21] The decisions relating to section 37 will also be applicable to section 36(1)(iii) because in section 37 also the expression used is 'for the purpose of business'. It has been consistently held in decisions relating to section 37 that the expression 'for the purpose of business' includes expenditure voluntarily incurred for commercial expediency, and it is immaterial if a third party also benefits thereby. [Para 22] In Atherton v. British Insulated & Helsby Cables Ltd. [1925] 10 TC 155, it was held by the House of Lords that in order to claim a deduction, it is enough to show that the money is expended, not of necessity and with a view to direct and immediate benefit, but voluntarily and on ....
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....ncern for commercial expediency in many other circumstances. Where holding company, has a deep interest in its subsidiary, and the holding company advances borrowed money to a subsidiary and the same is used by the subsidiary for some business purposes, the holding company would ordinarily be entitled to deduction of interest on its borrowed loans. [Para 35] In view of the above, the appeals were to be allowed and the impugned judgments of the High Court, the Tribunals and other authorities were to be set aside and the matter was to be remanded to the Tribunal for afresh decision, in accordance with law and in the light of the observations made above. 4.2.8 The appellant argued that he is a director of the concerned relating companies and whenever any need arises for the funds, the appellant give loans to such companies. These loans were fully utilized by the respective concerns in the business and were duly returned back by the related concerns. He had argued that there exists a commercial expediency for extending such interest free loans. 4.2.9 In this case, as on 31.03.2011 the appellant was having a capital of around Rs. 74 Cr.. Interest bearing borro....
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....peal of the Revenue in ITA No. 1654/Del/2023 and C.O. filed by the assessee in C.O. No. 134/Del/2023 for AY 2011-12, both are dismissed. Order pronounced in the open Court on 15.10.2025. ============= Document 1 SI.No. Name Particulars 1. Express Marketing Pvt. Ltd. 1. Copy of confirmation of accounts 2. Copy of bank statement 3. Copy of acknowledgment of return 4. Copy of audited financial statements 2. Breeeze Real Estates Pvt. Ltd. 1. Copy of confirmation of accounts 2. Copy of bank statement 3. Copy of acknowledgment of return 4. Copy of audited financial statements 5. Copy of cash book 3. Shakti Investcap Pvt. Ltd. 1. Copy of confirmation of accounts 2. Copy of bank statement 3. Copy of acknowledgment of return 4. Copy of audited financial statements 4 Ardor Medical Institute Pvt. Ltd. 1. Copy of confirmation of accounts 2. Copy of bank statement 3. Copy of acknowledgment of return 4. Copy of audited financial statements 5. Glare Estates Pvt. Ltd. of Income 1. Copy of confirmation of accounts 2. Copy of bank statement 3. Copy of acknowledgment of return 4. Copy of Jurisdictional Details Commissione Pa....
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.... Copy of cash book 13. Gopala Agri Farms Pvt. Ltd. 1. Copy of confirmation of accounts 2. Copy of bank statement 3. Copy of acknowledgment of return 4. Copy of audited financial statements 5. Copy of cash book 14. Swift Infrabuild Pvt. Ltd. 1. Copy of confirmation of accounts 2. Copy of bank statement 3. Copy of audited financial statements 4. Copy of cash book 15. Shakti Finbiz Pvt. Ltd. 1. Copy of confirmation of accounts 2. Copy of bank statement 3. Copy of acknowledgment of return 4. Copy of Jurisdictional details 5. Copy of tax audit report 6. Copy of audited financial statements 7. Copy of computation of income 16. Brijmohan Infrastructure Pvt. Ltd. 1. Copy of confirmation of accounts 2. Copy of bank statement of the party 3. Copy of acknowledgment of return Copy of audited financial statements 4. 17. Ganpati Buildprop Pvt. Ltd. 1. Copy of confirmation of accounts 2. Copy of bank statement 3. Copy of acknowledgment of return 4. Copy of audited financial statements 18. Bharat Buildtech Pvt. Ltd. 1. Copy of confirmation of accounts 2. Copy of bank statement of the party 3. Copy of acknowledgment o....
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....these loans extended by the appellant to such companies were also repaid during the year. The appellant was having a capital of around Rs. 72-74 Crores during the year and therefore, he was capable of extending the loans to his companies and others. App Page 63 of 74 New De Sh. Parveen Kumar Jolly 4.1.16 The Assessing Officer alleged that the genuineness of the credit entries has not been Appeal No. CIT(A), Delhi- 35/10036/2019-20 proved by the assessee. In support of this, he identified the 9 parties, who have deposited some amount of cash in their books of accounts before transferring the funds to the assessee. On the perusal of the assessment order, it can be noted that the Assessing Officer himself accepted that the appellant provided the details of credit received in his bank account from 24 parties and provided copy of confirmation of accounts, copy of bank statement of parties, copy of acknowledgment of income tax return of the party, copy of audited financial statements as supporting documents. Further, the appellant provided the confirmation of account, bank statement, acknowledgment of income tax return and audited financial statements of the parties, which....
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....dit of Rs. 102,94, 13,424/- cannot be presumed to be unexplained. 4.1.18 Further, the Assessing Officer was very much in possession of copy of bank statement and/or cash book of these 9 parties where the cash was deposited in parties bank account. The Assessing Officer did not verify the fact that the cash deposited in these parties bank account is out of the cash withdrawn from those very bank accounts. No adverse observations regarding the Page 64 of 74 Sh. Parveen Kumar Jolly same have been mentioned by the Assessing Officer during the assessment proceedings and Appeal No. CIT(A), Delhi- 35/10036/2019-20 subsequently during the appellate proceedings. The appellant had provided the source of cash deposited during the course of assessment proceedings and subsequently during the course of appellate proceedings but at both these stages the Assessing Officer did not verify the same. Further, the Assessing Officer did not inform the appellant before passing the assessment order that he is considering the cash deposits adversely and never gave an opportunity to the appellant to provide for his counter arguments. On prima facie perusal of the bank accounts in which the cash has....
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....e account/s, prior to the dates of deposition. Gopala Agri Farms Pvt. Ltd. 25,90,000 25,00,000 Out of the cash withdrawals of Rs 29,70,000 from the same account/s, prior to the dates of deposition. Swift Infrabuild Pvt. Ltd. 8,63,750 9,00,000 Out of the cash withdrawals of Rs 9,90,000 from the same account/s, prior to the dates of deposition. Bharat Buildtech Pvt. Ltd. 8,50,000 16,50,000 Out of the cash withdrawals of Rs. 19,80,000 from the same account/s, prior to the dates of deposition. No. CIT(A), Delhi- 35/10036/2019-20 withdrawals of Rs. 49,50,000 from the same account/s, prior to the dates of deposition. On the basis of the table above it is clear that the cash deposited in the bank accounts of the companies mentioned above has been prima facie sourced from the cash withdrawals out of the same bank accounts. Therefore, as per the bank statement and/or cash books of these parties, the cash deposits have been duly explained and are out of the cash withdrawn out of the bank account and therefore the same cannot be stated as unexplained money of the appellant being deposited in the bank accounts of the parties for subsequent transfer to the appellant. Therefore....