TaxTMI 
TaxTMI 
2026 (8) TMI 1766
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....al] 2020-21 19.02.2026 22.05.2024 143(3) r.w.s 144C(3) of the IT Act. 2. IT(TP)A No. 259/Del/2026 [Assessee's appeal] 2020-21 19.02.2026 22.05.2024 -Do- 3. ITA No. 5367/Del/2026 [Revenue's appeal] 2021-22 24.03.2026 20.02.2025 -Do- 4. IT(TP)A No. 260/Del/2026 [Assessee's appeal] 2021-22 -Do- -Do- -Do- 5. IT(TP)A No. 280/Del/2026 [Assessee's appeal] 2022-23 21.04.2026 22.05.2025 -Do- 3. Before us, both the parties have stated that most of the issues involved in all these appeals are common, therefore, they are taken together and decided by a common order. 4. First we take appeal of the assessee in IT(TP) No. 259/Del/2026 of the assessee and IT(TP)A No. 272/Del/2026 of the Revenue for Assessment Year 2020-21. IT(TP) No.259/Del/2026 [Assessee's appeal] & IT(TP)A No. 272/Del/2026 [Revenue's appeal] [Assessment Year 2020-21] 5. Brief facts of the case are that the return of income was filed on 03.02.2021, declaring total income of INR 1,01,55,90,800/- which includes income from business or profession of INR 1,10,78,12,302/- and income from other sources of INR 3,....
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....ers and plant, confectionery, consumer goods, and food and beverage sectors. 9. The case of the assessee was selected for scrutiny under CASS and since assessee has carried out specified domestic transactions and well as international transactions with its AE's, the matter was referred for determination of the Arm's Length Price ("ALP") of international and domestic specified transactions to the TPO. The TPO in terms of the order passed u/s 92CA(3) dated 16.02.2022 has made following two adjustments :- (i) Interest on delayed receivables from AE's of INR 33,04,951; and (ii) Corporate guarantee fee of INR 6,78,72,478/-. 10. Thereafter, the AO passed the draft assessment order on 26.03.2024 wherein the AO has incorporated the adjustments made by the TPO. A search and seizure action u/s 132 of the act was carried out at the business premises of the assessee, its business associates, group companies and residence of their directors were also covered. The AO considered the material found and seized during the course of search and after considering all the facts, in terms of paras 8.11 & 8.12 of the order has concluded that assessee has received unsecu....
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.... after considering the submissions and the facts of the case and the Remand Report submitted by the AO, has confirmed the addition of INR 15,94,78,532/- and deleted the remaining additions made by the AO. 12. The necessary chart of the additions made by the AO and deleted by ld. CIT(A) is tabulated as under: S. No. Particulars AY 2020-21 Addition By AO Sustained by CIT(A) Deleted by CIT(A) 1. Addition u/s 68 Unexplained unsecured loans 34,75,00,000 15,50,00,000 19,25,00,000 2. Addition u/s 69C --- Estimated commission 69,50,000 31,00,000 38,50,000 3. Disallowance of deduction u/s 80IB 58,97,071 NIL 58,97,071 4. Disallowance of rent expense 2,40,00,000 NIL 2,40,00,000 5. Disallowance u/s 14A r.w.r. 8D 7,04,621 7,04,621 NIL 6. Addition of unexplained cash receipts u/s 69A 84,00,00,000 NIL 84,00,00,000 7. Enhancement on account of Arm's Length Price determined by TPO on Corporate Guarantee Commission 6,78,72,478 6,73,911 6,71,98,567 8. Enhancement on account of Arm's Length Price determined by TPO on Interest on receivables ....
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....ition of Rs. 15,50,00,000/- under Section 68 on account of unsecured loans received from Bhangbhumi Traders Put. Ltd. (1,00,00,000), Carillion VP Estates Put. Ltd. (1,00,00,000), First Agri Tech Put. Ltd. (Rs. 1,00,00,000), Hapline Commodities Put. Ltd. (1,50,00,000), Manali Tradecom Put. Ltd. (50,00,000), Mayur India Pvt. Ltd. (Rs. 50,00,000), Premnarayan Mercantile Put. Ltd. (*1,00,00,000), Target Vincom Put. Ltd. (*50,00,000), Pravesh Credit and Securities Ltd. Rs. 4,00,00,000), Radha Fincom Ltd. (1,00,00,000), and Supriya Fincom Put. Ltd. (3,50,00,000), on the alleged ground of lack of creditworthiness. That the CIT(A) failed to appreciate that the appellant has duly discharged the onus u/s 68 by submitting necessary documents. 7. That the Ld. CIT(A) erred, both on facts and in law, in sustaining the addition under Section 68 in respect of alleged credits from Pravesh Credit and Securities Ltd. (4,00,00,000), Radha Fincom Ltd. (1,00,00,000), and Supriya Fincom Put. Ltd. Rs. 3,50,00,000), by solely relying on uncorroborated statements of third parties who were not directors during the year under consideration. That the CIT(A) erred in relying on such statements, ignorin....
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....ntary evidence such as PAN, confirmations, Income tax returns and bank statements, without appreciating that such documents, in the presence of adverse investigation findings and surrounding circumstances, are not sufficient to establish the identity, creditworthiness and genuineness of the lenders. 3. Whether on the facts and in the circumstances of the case and in law, the CIT APPEAL has erred in deleting the addition of Rs. 84,00,00,000 made under section 69A of the Income tax Act, 1961 on account of unexplained cash, without properly appreciating the statements recorded during the course of search proceedings and the material gathered during investigation, which indicated the existence of unaccounted cash transactions linked with the assessee. 4. Whether on the facts and in the circumstances of the case and in law, the CIT APPEAL has erred in deleting the transfer pricing adjustment of Rs. 33,04,951 made on account of interest on delayed receivables from associated enterprises, without appreciating that outstanding receivables from associated enterprises constitute a separate international transaction requiring independent benchmarking under the provisions of ....
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....u/s 148 of the Act. 15. As observed above, a search and seizure operation was carried out on the assessee u/s 132 of the Act on 21.02.2023 alongwith search at the business premises of MEPL, a group concern. Prior to that, the return of income for the year under appeal was filed on 03.02.2021. The claim of the assessee was that the assessment for the year under appeal was completed u/s 143(3) of the Act however, when a search action was taken u/s 132 of the Act in the case of the assessee, therefore, in terms of Explanation 2 sub clause (i) to Section 148, the assessment proceedings should have been initiated u/s 148 of the Act and thus the order passed u/s 143(3) of the Act was invalid. For this reliance is placed on the judgement of the coordinate bench in the case of Montage Enterprises Pvt. Ltd. in ITA No. 5458/Del/2025 dt. 29.12.2025 who followed the judgement of Co-ordinate Bench of Chandigarh Tribunal in the case of Homelife Buildcon (P.) Ltd. Vs. DCIT, reported in (2025) 176 taxmann.com 614 (Chandigarh - Trib.) and further relied on the judgement in the case of Jamna Das Nikkamal Jain Saraf Put. Ltd. Vs DCIT in ITA No. 403/Chd./2025 dt. 04.11.2025. He prayed accordingly. ....
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....on, jewellery or other valuable article or thing or books of account or documents are seized or requisitioned in case of any other person. 18. From the plain reading of the above explanation, it is conferred that the assessment ought to have been made under Section 148 of the Act where a search was conducted on or after 01.04.2021. Despite the search being conducted in the case of the assessee and the AO being fully aware of this fact, he had proceeded to conclude the assessment proceedings initiated by issued the notice u/s 143(2) on 29.06.2021. Thus, under these circumstances, proper course of action would be to drop the proceedings already initiated and proceeded to initiate the proceedings u/s 148 as outlined in Explanation 2(i) to section 148 of the Act as there was deemed escapement of income. Failure to comply the statutory procedure as provided under the Act constitutes a jurisdictional defect. The Hon'ble Apex Court in the case of Babu Varghessee Vs Bar Council of Kerala reported in (1999) 3 SCC 422, wherein at paragraph 31 and 32, it is held as follows: "31. It is the basic principal of law long settled that if the manner of doing a particular act is presc....
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....t for the sole reason that the same ought to have been framed under section 148 with approval under section 148B of the Act in light of Homelife Buildcon (P.) Ltd. Vs. DCIT, (2025) 176 taxmann.com 614 (Chandigarh - Trib.) as relied in Jamna Das Nikkamal Jain Saraf Put. Ltd. Vs DCIT (ITA No. 403/Chd./2025) decided on 04.11.2025, adjudicating the very issue against the department as under: "11.4 In conclusion, it was submitted that since the year under appeal formed part of the three assessment years immediately preceding the year in which search was conducted, the assessment ought to have been framed under section 148 with approval u/s 148B. The framing of the assessment u/s 143(3) and approval taken only for the purposes of section 143(3) was thus asserted to be fundamentally defective, non- compliant with statutory mandate, and consequently void ab initio. On these grounds, following the ratio in Homelife Buildcon Put. Ltd., it was prayed that the impugned assessment be quashed. 12. The Ld. CIT-DR Shri Manav Bansal opposed the contention, stating that the return for A.Y. 2022-23 was filed prior to the date of search, and validly selected for scrutiny under CASS. ....
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....nd materials are found indicating possible escapement of income, the statute envisages a different route for carrying out assessment or reassessment under section 147 read with section 148, which is the special mechanism for bringing to tax the income discovered in consequence of a search. 13.5 Although section 148 (inserted w.e.f. 01.04.2021) does not begin with a non-obstante clause similar to the erstwhile section 153A, its context and Explanation 2 make it clear that where a search is initiated, the jurisdiction thereafter must flow through this special channel, subject to prior satisfaction and approval of the Principal Commissioner or Commissioner. The legislative intent is to ensure that when a search is carried out, the assessment is framed under the specific provisions meant for such cases and not under the general provision of section 143(3). Further we may mention that no notice under section 143(2) could have been issued after 3 months from the end of the financial year in which the return is furnished. In the present case the original return of income was filled on 4/11/2022 for the assessment year 202223 and 143 (2) was issued on 21/6/2023, therefore also the....
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.... pre-search and post search materials. 13.8 The rationale is further reinforced by the well-settled principle of generalia specialibus non derogant -- the special provision overrides the general. Section 148 (as a special provision triggered by search information) must prevail over section 143 (the general provision for regular scrutiny). Allowing the Assessing Officer to continue and conclude proceedings under section 143(3) after a search would defeat this legislative scheme and render the safeguards, such as prior approval of the Principal Commissioner, redundant. 13.9 Accordingly, we hold that once a search is initiated under section 132 and material is found relating to the assessee, the pending assessment under section 143(3) cannot validly continue, as the time for issuing the 143(2) in response to original return of income had already expired, therefore the Assessing Officer must necessarily proceed in accordance with the special provisions contained in section 148 of the Act." 4. Learned CIT(DR) representing the Revenue vehemently supports the impugned assessment that the Assessing Officer had rightly finalized the same under the normal provision....
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....Ground of appeal No.4 of the assessee is allowed for statistical purposes. 27. In respect of Ground of appeal No.5 of the assessee, no effective submission was made by the assessee. As per this Ground of appeal, assessee has challenged the adjustment made in the book profit. 28. As per the assessee, the AO has not provided the details of adjustment of INR 9,18,34,804/- made in the book profit, therefore, AO is directed to provide the necessary working details to the assessee so that the necessary action could be taken at the end of the assessee. With these directions, Ground of appeal No.5 of the assessee is allowed for statistical purposes. 29. The Assessee in Grounds of appeal Nos. 6 to 9 has challenged the addition sustained by ld. CIT(A) whereas the revenue in Grounds of appeal Nos. 1 & 2 has challenged the first appellate order on the amount of addition deleted by ld. CIT(A). 30. Brief facts leading to this issue are that the assessee has received unsecured loans from 38 different lender parties totaling to INR 74.00 crores out of which loans taken from 27 lender parties amounting to INR 34.75 crores were held as unexplained credits u/s 68 of the Act. The AO has ma....
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....tary evidence i. 2026 (4) TMI 1188 - ITAT DELHI DCIT, ARTO Complex, Noida Versus ACE Infracity Developers Pvt. Ltd. And (Vice-Versa) (Refer page no. 649-655 of the case law PB). ii. 2025 (7) TMI 1285 - ITAT DELHI ACIT, ARA Centre, DCIT, New Delhi Versus Filatax India Limited And (Vice-Versa) (Refer page no. 656-698 of the case law PB). iii. 2025 (10) TMI 1091 - ITAT AGRA Income Tax Officer-1 Morena, (M.P.) Versus Shri Agrasen Logistics (Refer page no. 699-727 of the case law PB). iv. 2026 (4) TMI 1470 - ITAT DELHI DCIT, Circle-9(1), Delhi Versus Paramount Propbuild Pvt. Ltd., Delhi (Refer page no. 728-738 of the case law PB). v. 2026 (1) TMI 1567 - ITAT DELHI Vidur Chharia; Rakesh Chharia & Pole-Ads Advertising Pvt. Ltd. Versus DCIT/ACIT, Central Circle, Ghaziabad (Refer page no. 739-753 of the case law PB). vi. 2026 (1) TMI 470 - ITAT DELHI Passion Realtech Pvt. Ltd. Versus Asstt. Commissioner of Income Tax, CC-II, Haryana (Refer page no. 754-761 of the case law PB). vii. Principal Commissioner of Income-tax (Central) vs. Mukul Kakar [2026] 182 taxmann.com 372 (SC) [07-01-2026] and Rajnandani Projects (P.) Ltd. vs. Pri....
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....swara Papers Ltd., Allahabad HC (Refer page no. 845-847 of the case law PB). viii. [2019] 111 taxmann.com 89 (Delhi - Trib.) - Prime Comfort Products (P.) Ltd. v. ACIT, ITAT Delhi (Refer page no. 1512-1522 of the case law PB). ix. [2014] 45 taxmann.com 203 (Rajasthan) / [2014] 224 Taxman 87 / 366 ITR 217 / 267 CTR 396 (Rajasthan) - CIT, Ajmer v. Jai Kumar Bakliwal, Rajasthan HC, 06-02-2014 (Refer page no. 848-854 of the case law PB). 5.4. No Addition Warranted Where Loans Repaid It is respectfully submitted that the CIT(A) and department has failed to consider that all lenders have fully repaid the loans over time, and in light of settled law, where repayments are made and no incriminating material is found during search, no addition can be warranted. Your honors will appreciate that repayment was made within the prescribed period as mentioned in the loan agreement and in major cases the repayment has been made before the search dated 21.02.2023. 33. Ld.AR stated that the assessee has discharged the burden casted upon it of proving the identity and creditworthiness of the lenders and further established the genuineness of transactions and ther....
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....eir present whereabouts. However, without making any further inquiries solely based on the fact that notices issued u/s 133(6) of the Act were returned unserved, the AO alleged that these parties were not in existence and the loans taken by the assessee are mere accommodation entries and made the addition. Under these circumstances, ld.AR humbly prayed that the entire addition made by the AO and sustained by ld. CIT(A) be deleted. 34. On the other hand, ld. CIT DR for the Revenue vehemently supported the orders of the lower authorities and submits that the AO has made every possible inquiry in order to examine the genuineness of the transactions and creditworthiness of the lenders. He placed reliance on the chart given by the AO at pages 53 to 101 of the assessment order wherein AO discussed each and every loan creditor and further referred the outcome of the inquiries conducted by issuing summons u/s 133(6) of the Act or by examining their financial statements stated to have been filed by the assessee. Ld. CIT DR for the Revenue drew our attention to the observations of AO wherein AO stated that he has not only examined their financials and further observed that they do not hav....
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....ther submitted that the loans were raised through banking channel therefore, genuineness cannot be doubted. Ld.AR submits that loans were repaid in the year under appeal or during subsequent period and necessary details have already been filed with respect to such repayment and therefore, no addition should be made by holding that the loans has taken accommodation entries of unsecured loans. 36. Heard the contentions of both the parties at length and perused the material on record. The facts leading to this issue as described by ld. CIT(A) in its order are as under :- 4. "As per the AO, the assessment proceedings for Assessment Year 2020-21 were completed under section 143(3) read with section 144C(3) of the Income-tax Act, 1961, since the assessee did not file any objections before the Dispute Resolution Panel against the Draft Assessment Order dated 26.03.2024, and therefore the draft order became final and binding under the provisions of law. The AO stated that the case of the assessee was initially selected for scrutiny through Computer Assisted Scrutiny Selection (CASS) on account of transfer pricing risk parameters, and accordingly a reference was made to the Tran....
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....ith remarks such as "no such company", "address not found" or "left without instructions", which clearly established that these entities were non-existent at their registered addresses and were merely paper companies. As per the AO, statements recorded under oath during other search and survey proceedings of entry operators such as Shri Ashish Begwani, Shri Vikas Kumar Agrawal, Shri Ramesh Poddar and Shri Sandeep Kumar Singhi show that they were engaged in the business of providing accommodation entries in the form of bogus unsecured loans in exchange for cash and commission. The AO stated that these entry operators specifically admitted that funds routed through shell companies were used to provide unsecured loans to beneficiaries, including group concerns of the assessee, and that the so-called loans were nothing but a method to convert unaccounted cash into accounted money. The AO mentioned that it was further established that certain lender entities such as Radha Fincom Limited and Pravesh Credit and Securities Limited were directly controlled by entry operators who had confessed to providing accommodation entries, and therefore the loans received fro....
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.... that where the sum so credited consists of loan or borrowing or any such amount, by whatever name called, any explanation offered by such assessee shall be deemed to be not satisfactory, unless,- (a) the person in whose name such credit is recorded in the books of such assessee also offers an explanation about the nature and source of such sum so credited; and (b) such explanation in the opinion of the Assessing Officer aforesaid has been found to be satisfactory: Provided further that where the assessee is a company (not being a company in which the public are substantially interested), and the sum so credited consists of share application money, share capital, share premium or any such amount by whatever name called, any explanation offered by such assessee-company shall be deemed to be not satisfactory, unless- (a) the person, being a resident in whose name such credit is recorded in the books of such company also offers an explanation about the nature and source of such sum so credited; and (b) such explanation in the opinion of the Assessing Officer aforesaid has been found to be satisfactory: Provided also that nothing co....
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....expenditure. The assessee further claimed that in case of M/s Radha Fincom Ltd. and M/s Parvesh Credit and Securities Ltd., the AO placed heavy reliance on the statements of one Shri Sandeep Singhi who was Director of these companies in 2016 and not in the year under appeal and therefore, his statements cannot be made sole basis to hold that the loans taken from these two companies were accommodation entry. Moreover, no opportunity was provided to the assessee to cross- examine Shri Sandeep Singhi though he was the witness of the department and as stated above, his statements were made the basis for holding the loans taken from M/s Radha Fincom Ltd. and M/s Parvesh Credit and Securities Ltd. as accommodation entry. It was further claimed by the assessee that the notice issued u/s 133(6) of the Act were duly complied with by many of the lender companies. Once the transactions were carried out through banking channel and all the plausible evidences were filed thus, without bringing on record the contrary material nor linking the loans taken with the incriminating material, if any, found and seized during the course of search, it cannot be said that the lenders were not in existence o....
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....y RBI which are placed at pages 55 to 57, 63, 115, 107 to 109 of the Paper Book. Further, both the lender companies had filed replies in response to notice issued u/s 133(6) of the Act. The assessee also filed copy of the MCA records, loans Agreements and Form No.16A for both the companies. From the perusal of the financial statements, it is observed that M/s. Parvesh Credit & Securities Ltd. has Share Capital including Reserves and Surplus of INR 91.97 crores and having total turnover of INR 8.39 crores and not of INR 83.85 crores as observed by ld. CIT(A). The assessee has further demonstrated from the copy of their bank statements that sufficient funds were available with them to advance loans to the assessee. It is further observed that loans taken were repaid in subsequent Assessment years and the date of repayment were incidentally be fallen much prior to the date of survey in their own cases and search in the case of the assessee. Further, confirmations were filed and reliance was placed solely on the statements of Director, Shri Sandeep Singhi that the company was engaged in providing accommodation entries. The assessee filed the necessary evidences placed at page 102 to 10....
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....t to all these companies, assessee has filed every plausible evidence / details to establish the identity comprising of its ITRs, MCA records, loans Agreements, Form No.16A, to prove the genuineness of the transactions, bank statements of the assessee as well as of the lender companies and to establish the creditworthiness, their financial records were submitted. All these evidences so filed are placed in Paper Book and is tabulated by the assessee in its written submissions which is reproduced herein above. 47. Further from the perusal of Table (c) reproduced herein above, it is observed that all the companies having sufficient net worth to advance the loans to the assessee and most of the companies have filed replies in response to the notices issued u/s 133(6) of the Act. It is further observed that in none of the case, contrary statements of any person were available nor their names were ever appearing in the so-called statements of any of the entry operators available with the department. It is also a matter of fact that the loans taken have been repaid prior to the commencement of search in the case of the assessee. The additions were sustained by ld. CIT(A) for the reason....
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....lpur Finance Ltd. 50,00,000 Maharaj Ji Agro Products Pvt. Ltd. 2,75,00,000 Neelam Securities Marketing Pvt. Ltd. 50,00,000 Paritosh Electricals Pvt. Ltd. 25,00,000 Perfect Business Advisory Services Pvt. Ltd. 1,00,00,000 Prachur Traders Pvt. Ltd. 50,00,000 Ricon Traders Pvt. Ltd. 50,00,000 Shyamnagar Packaging Works Pvt. Ltd. 1,00,00,000 Unity Merchandise Pvt. Ltd. 50,00,000 Zigma Electricals Pvt. Ltd. 50,00,000 51. From the perusal of the order of ld. CIT(A), it is observed that ld. CIT(A) has deleted the additions appreciating the fact that these companies are not appearing in any of the statements of entry operator relied upon by the AO. Further, they all have submitted replies in response to the notices issued u/s 133(6) of the Act which are placed in the Paper Book. From the perusal of Table D reproduced herein above forming part of the written submission, it is observed that all these companies are having sufficient net worth to advance loans to the assessee which facts has been discussed elaborately by ld. CIT(A). All these companies are having regular business activities and positive income was declared in their IT....
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....disregarding the creditworthiness of the lender. In absence of any adverse evidence with respect to identity, credibility and genuineness of the said lender and detailed observations regarding the sound financials of the lender as already discussed above, the addition made by the AO is deleted." 52. Likewise in the case of Maharaj Ji Agro Products Pvt. Ltd. from whom unsecured loan of INR 2.75 crore was received, while deleting the addition, the ld. CIT(A) has made following observations :- "The submissions of the appellant reveals that the said entity is not named in any of the statements of the entry operators relied upon by the AO in the assessment order. The AO has also not made any specific allegation in his observations in the assessment order with respect to naming of the said company in the statements of the entry operators. The AO has made specific observations about receipt of reply to notice u/s 133(6) but has stated that the commercial expediency of the loan has not been explained. The AO has further stated that notice u/s 133(6) could not be delivered to the said entity which is in-contradiction to the above observations of the AO at page 75 of the assessme....
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....mitted on e-portal of the AO by the said lender and copy of the reply has also been submitted as filed before the AO. It is further seen that the AO in the assessment order on page 57 has stated that commercial expediency has not been explained by the company in its reply in response to notice u/s 133(6) and on the same page, the AO has stated that the notice issued u/s 133(6) was returned undelivered making the observations of the AO as self-contradictory. Further, the observation of the AO that the directors of the company did not file ITR for the year under consideration is inconsequential as the credibility of the lender entity is under question and not the directors of the said entity. The AO has stated that the said entity has declared Rs. 17.23 lacs as income and the fixed assets are of very meager value. Perusal of the financials of the said entity reveals that a sum of Rs. 1 crore has been received from the said concern. Moreover, the ITR, confirmation, bank account statement, loan agreement, audited balance sheet have been filed before the AO in support of the genuineness and creditworthiness of the transaction. Apart from this, the lender has share capital of Rs. 7.02 cr....
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.... the lender companies for the relevant financial years; * Acknowledged copies of Income Tax Returns of the lender companies; * Bank statements reflecting adequate balances prior to the transfer of funds. 55. By filing all the relevant details of the loan creditors before the AO as listed above, assessee has discharged the onus lies upon it. It is also a matter of fact that the AO has failed to point out any defects in the same and made general observations more particularly harped upon the justification for commercial expediency. Therefore, there is nothing left on the part of the assessee to prove further. It is also a matter of fact that in many cases notices issued u/s 133(6) of the Act were duly replied as could be seen from the chart reproduced herein above. 56. Hon'ble Supreme Court of India in case of Commissioner of Income-tax v. Lovely Exports (P.) Ltd. reported in [2008] 216 CTR 195 (SC) held: "2. Can the amount of share money be regarded as undisclosed income under section 68 of IT Act, 1961 ?. We find no merit in this Special Leave Petition for the simple reason that if the share application money is received by the assessee company ....
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.... for the AO to make further necessary inquiries which are completely missing. 29. We are, thus, of the view that no question of law much less substantial question of law arises. This appeal is dismissed." 60. The SLP filed by the revenue against the aforesaid of hon'ble Delhi High Court was dismissed by the Hon'ble Supreme Court in SLP (CC) no. 15640 of 2012. 61. The Hon'ble Jurisdictional High Court in the case of Pr. CIT-5 v. Laxman Industrial Resources Ltd. reported in [2017] 397 ITR 106 (Delhi) has held as under: "This Court notices that the assessee had provided several documents that could have showed light into whether truly the transactions were genuine. It was not a case where the share applicants are merely provided confirmation letters. They had provided their particulars, PAN details, assessment particulars, mode of payment for share application money, i.e. through banks, bank statements, cheque numbers in question, copies of minutes of resolutions authorizing the applications, copies of balance sheets, profit and loss accounts for the year under consideration and even bank statements showing the source of payments made by the compani....
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....the genuineness of the transaction. Based on this the ITAT construed the intentions of the Assessee as being mala Ride. In our view the ITAT ought to have analyzed the material rather than be burdened by the fact that some of the creditors had chosen not to make a personal appearance before the A.O. If the A.O. had any doubt about the material placed on record, which was largely bank statements or the creditors and their income tax returns, it could gather the necessary information from the sources to which the said information was attributable to. No such exercise had been conducted by the A.O. In any event what both the A.O. and the ITAT lost track of was that it was dealing with the assessment of the company, i.e., the recipient of the loan and not that its directors and shareholders or that of the sub-creditors. If it had any doubts with regard to their credit worthiness, the revenue could always bring it to tax in the hands of the creditors and/ or sub-creditors. [See CIT v. Divine Leasing & Finance Etd (20092-229-178.268 (Delhi) and CIT v. Lovely Exports (P.) Ltd. 2006) 215 CTR 495 (SC) .* " 64. The Hon'ble Delhi High Court in the case of CIT vs. Vrindavan Farms Put. L....
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....nt was returned to loan party during year itself and all transactions were carried out through banking channels, impugned addition was to be deleted." 67. The Hon'ble Jurisdictional High Court in the case of Pr. Commissioner of Income Tax-12, Delhi vs. Jagmag Builders in ITA No. 325/2024 has held as under: 2. "The issue itself pertains to additions under Sections 68 and 37 of the Income Tax Act, 1961 ['Act'] which were made by the Assessing Officer ['AO'] on account of unexplained unsecured loans and disallowance of interest expenses. We note that the Tribunal while affirming the conclusions which were arrived at by Commissioner of Income Tax (Appeals) has observed as follows :- "6. From the evidences furnished by the assessee before the departmental authorities, it is established that the entire loan, which is subject matter of addition, as unexplained cash credit has been repaid either in the year under consideration or subsequent assessment years. The entire transaction relating to availing of and repayment of loan has been done through banking channel. All details relating to loan availed and repayments made have been furnished before th....
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....ein above of the hon'ble Supreme court and various high courts including the jurisdictional high court, the entire addition of INR 34.75 crores made by the AO towards unsecured loans treating the same as unexplained credit u/s 68 of the Act is hereby, deleted. Accordingly, the Grounds of appeal Nos. 6 to 9 raised by the assessee are allowed and Ground of appeal Nos. 1 & 2 raised by the Revenue are dismissed. 70. Ground of appeal No.10 of the assessee is with respect to the deletion of addition of INR 69.50 Lakhs made u/s 69C of the Act being alleged commission paid for obtaining the accommodation entries of unsecured loans held as unexplained which according to the assessee was not adjudicated by the ld. CIT(A). 71. Heard the contentions of both the parties at length and perused the material on record. The addition was made by holding that the assessee had paid commission @ 2% on the accommodation entries of unsecured loans of INR 34.75 crores for which separate addition u/s 68 of the Act was made by the AO. Since we have already, deleted the additions made u/s 68 of the Act towards unsecured loans, therefore, there is no question of any such payment of commission. Accord....
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....ld. CIT(A). 76. Briefly stated facts are that the appellant has extended corporate guarantee in favour of financial institutions on behalf of its AEs namely Flex Africa, Flex Egypt & Flex USA to avail credit facilities from foreign banks. The assessee has charged guarantee commission @ 0.40% on such corporate guarantee. It was the claim of the assessee that corporate guarantee issued by parent company cannot be equated with the bank guarantee provided by the commercial bank where the regulatory requirement involves capital, independent credit etc. The assessee further claimed that in the case of Flex Egypt & Flex USA, no fresh guarantee was given during the year under appeal and the guarantee was extended in preceding years and guarantee commission @ 0.40% was charged which stood accepted by AO/TPO and adjustment was made. As there was no change in the circumstances, the commission charged @0.40% by the assessee on such guarantee deserves to be upheld as a principal of consistency. With respect to the fresh guarantee given for fresh finances taken by its AE Flex Africa, it had benchmarked the guarantee commission by adopting "interest saving approach" according to which total be....
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.... in deleting the adjustment made towards corporate guarantee provided to Flex Egypt and Flex USA. 80. Regarding fresh guarantee extended during the year under consideration to Flex Africa, ld. CIT(A) has confirmed the rate of 0.50% for the corporate guarantee given. From the order of ld. CIT(A), it is observed that the application @ 0.50% on corporate guarantee is based on the judgment of Co-ordinate Bench of Chennai in the case of ACIT v. Bahwan Cybertek (P.) Ltd. reported in [2025] 181 taxmann.com 231 (Chennai - Trib.) and the decision of Kolkata Tribunal in the case of Electrosteel Castings Ltd. in ITA No. 2303 & 2304/Kol/2019 vide order dated 17.05.2022 (Kolkata ITAT) and further in the case of DCIT vs Ashok Leyland Ltd. reported in 177 taxmann.com 785 (Chennai. Trib.). 81. Considering the overall facts and circumstances of the case and further keeping in mind that in respect to the corporate guarantee extended to other Two AE's namely, Flex USA and Flex Egypt, commission charged @ 0.40% was accepted by the Revenue in preceding assessment years and also in the year before us, we have held the same as reasonable, therefore, solely for the reason that in some judicial p....
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.... of AO and submits that during the course of search carried out at the premises of MEPL, various note pads were found and seized which were marked as Annexure D-1 to D-39 containing details of unaccounted cash sales made by MEPL to various parties. Ld. CIT DR submits that in the statements recorded of Shri Manoj Kandpal, he categorically stated that cash of INR 7.00 crores was given to the assessee on monthly basis. Since MEPL is one of the group company and cash was given by it to the assessee company who enjoyed the said cash and thus become the beneficial owner of such cash. Ld. CIT DR further submits that this cash was not found recorded in the books of the assessee. As per ld. CIT DR, assessee has sold the goods to the MEPL and therefore, cash so received was against unrecorded /under billing sales made by the assessee and therefore, the AO has rightly made the addition in the hands of the assessee company as its undisclosed income and requested to restore the addition deleted by ld. CIT(A). 87. On the other hand, ld. AR vehemently supported the order of ld. CIT(A) and submits that no incriminating material whatsoever, was found/seized from the possession of the assessee co....
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....ontained unaccounted cash sales made by MEPL In his statement, Shri Manoj Kandpal stated that out of the cash collection recorded in the said diaries, a sum of INR 7.00 crores was given by him to Shri Arvind Gupta, director of MEPL who has handed over the said cash to Shri Rajiv Jain of the assessee company. Accordingly, AO was of the opinion that this monthly cash of INR 7.00 crores was received by the assessee company from MEPL and thus is unexplained money sources of which is out of undisclosed sales. Therefore, addition was made u/s 69A of the Act as unexplained money. Ld. CIT(A) after considering the facts, the arguments of the parties and the statements of various employees of the assessee as well as of MEPL and the issue of cross-examination and by placing reliance on various judicial pronouncements has deleted the addition made, by making following observations :- The assessment order, the submissions of the Authorized Representative, the statements relied upon by the Assessing Officer, and the material available on record have been examined. The AO has made the addition on the basis of incriminating material seized during the course of search carried out in FY 202....
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.... be discussed in brief in the coming paragraphs. It needs to be highlighted here that for the year under appeal, the AO has relied only upon the statement of Sh. Manoj Kandpal, whereas, it is seen from the assessment order of the assessee for AY 2021-22 & AY 2022-23 that the AO has discussed some other statements as well. Similarly, the appellant has brought on record some statements which have not been discussed in the assessment order by the AO. It shall be in the interest of justice to bring on record in brief the relevant context of all statements as contended by the appellant and the AO which have been produced before this office. Issue of Statement Recorded The impugned addition has been made primarily on the basis of statement of Sh. Manoj Kandpal recorded during search proceedings and material seized pertaining to AY 2022-23 & AY 2023-24, without any corroborative incriminating material unearthed for the year under consideration. On careful consideration of the material available on record, it is observed that the Assessing Officer has primarily relied upon the statement of Sh. Manoj Kandpal recorded during the course of search proceedings to support the i....
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....equent statement dated 24.02.2023, he stated that cash was received on various occasions and further claimed that such cash was passed on to Shri Vipin Agarwal and Shri Rajesh Bhatia. Finally, as per appellant, it appears from above that the statement of Sh. Rajiv Jain dated 24.02.2023 is at complete variance with the statements recorded from 21.02.2023 to 23.02.2023. Statement of Sh. Ajay Krishna (Employee of U Flex Limited) The AO has stated that as per Ajay Krishna, Sh. Rajiv Jain was responsible for receiving the cash and management of the same. Statement of Sh. Ashok Kumar Chaturvedi (CMD) It is further seen that the Director of the company Sh. Ashok Kumar Chaturvedi in his statement recorded on 27.02.2023 on being confronted with the statement of Sh. Rajiv Jain in response to question no. 219 stated that he did not know about the said transactions and Sh. Vipin Agarwal, Taxation Head and Sh. Rajesh Bhatia CFO of the U Flex Group can explain about the same. Statements of Sh. Vipin Agarwal (Taxation Head) and Rajesh Bhatia (CFO) It was pointed out by the appellant that Shri Rajesh Bhatia, in response to Question No. 13, has ....
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....f Shri Manoj Kandpal was specifically requested during the assessment proceedings as well as during appellate proceedings. An email was sent to the AO vide this office email dated 23.10.2024 wherein, it was stated as under: "During the course of appellate proceedings in the above-mentioned case, the AR has filed submissions. The copy of the same is attached for ready reference. It is directed to offer your comments on para 3.1 to para 5 of the submissions. It is further directed to give a factual report regarding the entities from whom replies u/s 133(6) were received during the assessment proceedings either on ITBA or in physical mode. Relevant evidence in the form of copy of ITBA screen or the receipt of 133(6) reply, if received, may be furnished along with. Hard copy of the 133(6) replies along with the mode in which they were submitted before the AO as claimed by the appellant are being handed over in physical mode being voluminous. It has further been submitted by the appellant that opportunity of cross examination of Sh. Manoj Kandpal has not been provided to the appellant during the assessment proceedings with respect to the addition made regarding receipt....
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....lant or in the case of MEPL. Therefore, drawing adverse inferences for the year under consideration based on alleged practices of other years, without any direct documentary linkage, is not sustainable in law. Standalone Statements On the issue of standalone statements, the Hon'ble Supreme Court of India in the case of Commissioner of Income-tax vs. Mantri Share Brokers (P.) Ltd. reported at [2018] 96 taxmann.com 280 (SC) has held as under: No section 69B addition in hands of assessee where except statement of director of assessee-company, offering additional income there was no other material either in form of cash, bullion, jewellery or document in any other form to justify said additional income: SLP dismissed Further, the Hon'ble High Court of Allahabad in the case of Commissioner of Income-tax vs. Dilbagh Rai Arora reported at [2019] 104 taxmann.com 371 (Allahabad) has held as under: As per appellant, no opportunity to cross examine Sh. Manoj Kandpal was afforded to the assessee, though a date was initially indicated but no fresh date was ever intimated. From the reading of the above statements, it is clear that the....
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....missed Further, the Hon'ble High Court of Allahabad in the case of Commissioner of Income-tax vs. Dilbagh Rai Arora reported at [2019] 104 taxmann.com 371 (Allahabad) has held as under: Section 69, read with section 143, of the Income-tax Act, 1961 - Unexplained investment (Search & seizure) - Assessment year 2006-07 - Whether where a person can explain exclusively with supportive evidence/material or otherwise that true state of affairs was different from that he presented in his statement of admission, tax liability should be fixed on basis of correct and true affairs as ascertained from material on record - Held, yes - During search operation, assessee, in his statement, surrendered Rs. 18 crores on account of investment made in purchase of jewellery, precious stones and Rs. 6 crores as cash in hand duly shown in books of account - Rs. 7 crores were surrendered in stipulation that details of same would be given in due course of time - However, no incriminating materials or documents had been brought on record for said amount of Rs. 7 crores - No assets of Rs. 7 crores were found by authorities, nor such assets were identified or declared by assessee - Wheth....
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.... in IT (SS) A No. 22/Chd/2007 order dated 28.11.2008. In this order the Tribunal has held that no addition in block assessment can be solely made on the basis of statement recorded during the search. Such a statement cannot be treated as incriminating material found in the course of search. The Id. counsel has also brought on record case laws decided by the Hon'ble Supreme Court of India in the case of 'CIT vs. Mantri Share Brokers (P.) Ltd." [2018] 96 taxmann.com 280 (SC) dated 3.7.2018. In this case, the Hon'ble Supreme Court has held as under: " .... High Court in the impugned order held that where except statement of director of Assessee company offering additional income during survey in his premises, there was no other material either in form of cash, bullion, jewellery or document in any other form to justify said statement, addition made on the said income in hands of Assessee under section 69B was to be deleted - Whether SLP against said decision was dismissed -Held, yes". 8. We have considered the findings of the Id. CIT(A) on this issue and we have also considered the written submissions and arguments made by the Id. Counsel of the Assessee ....
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....or the year under appeal, either in the hands of the appellant or in the hands of Montage Enterprises Private Limited. The Assessing Officer has attempted to extrapolate findings allegedly emerging in later years and has concluded that the same pattern or modus operandi prevailed during the year under consideration based only on the statements of Sh. Manoj Kandpal and Sh. Rajiv Jain. As already discussed above, the statements of other authorities of both MEPL and the assessee company namely Sh. AK Chaturvedi, Sh. Vipin Agarwal, Sh. Rajesh Bhatia and affidavit of Sh. Arvind Gupta contradicting the statements of Sh. Manoj Kandpal, Sh. Rajiv Jain, Sh. Ajay Krishna and Sh. Harvinder Singh Matharu with respect to cash exchange have not been discussed in the assessment order. It is also important to emphasize here that no documentary material has been brought on record to show continuity of such alleged activities for the relevant year. In the absence of any seized material or documentary evidence for the relevant year, the Assessing Officer could not have legally imported conclusions of later years to justify an addition for the present year. On the issue of extrapolation of in....
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....s made by assessee - On basis of materials seized relating to assessment year 2004-05, Assessing Officer assumed suppressed sales for earlier assessment years also, and, therefore, estimated same on basis of consumption of electricity and made additions" Further, the Ld. ITAT HYDERABAD BENCH `A' in the case of Dr. S. Surendranath Reddy vs. Assistant Commissioner of Income-tax reported at [2000] 72 ITD 205 (HYD.) has held as under: "Whether, therefore, where there is no material at all in relation to a particular previous year even though falling within block, no undisclosed income can be determined for that year - Held, yes" Further, in the judgment of Ld. ITAT Pune Bench in the case of HOTEL VRINDAVAN vs. ASSISTANT COMMISSIONER OF INCOME-TAX reported at [2000] 67 TTJ 139 (PUNE), it has been held as under: "Where the addition had been made on the presumption that if the assessee was suppressing the sales and expenses for the subsequent years, he must have suppressed the sales and expenses for the earlier years also, such addition could not be confirmed as the same could not be said to be supported by cogent material and evidence." Fu....
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....rchasers in assessee's project and despite such enquiries, Assessing Officer did not find any statement/material or transaction which would in any manner suggest let alone prove that other flat purchasers had paid any part of consideration in cash/on-monies over and above declared sale consideration - Whether in absence of any such material Commissioner (Appeals) rightly deleted addition made on ground that extrapolation made by Assessing Officer was per se arbitrary and un- reasonable - Held, yes[Para 38] [In favour of assessee]" The Ld. ITAT Chandigarh Bench in the case of Gurdip Cycle Industries vs. Deputy Commissioner of Income-tax reported at [2024] 165 taxmann.com 299 (Chandigarh - Trib.) has held as under: "Where statement of accountant of assessee was recorded on basis of WhatsApp chat wherein he admitted to suppression of sales in case of a party, however, AO extrapolated entire turnover of assessee and made addition with respect to under invoicing, since it was a case of sales made outside books of account, addition could be confirmed only on sales made outside books made to parties whose names figures were found in WhatsApp chat" Further, t....
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....nsideration of the facts and on perusal of the order of ld. CIT(A), it is observed that ld. CIT(A) has held that no opportunity of cross examination was allowed to the assessee and except Shri Manoj Kandpal, none of the other employee of the assessee or MEPL had ever admitted receiving of any cash from MEPL. Further, the documents found and seized during the course of search at the business premises of MEPL conducted simultaneously, certain diaries were found and seized which were marked as Annexure D-1 to D-39. The said diaries contained entries pertaining to FY 2022-23 and it is an admitted fact that no entry was found noted in any of the diary relating to the year under appeal. The hon'ble Apex Court in the case of PCIT Vs. Abhisar Buildwell Put. Ltd. in Civil Appeal No. 6580 of 2021 dated 24.04.2023 (reported in 150 Taxmann.com 257 (SC) (2023) has laid down the scope of assessment u/s. 153A r.w.s 153C and held the pre-condition of making an addition during assessment proceedings u/s 153A/153C for a particular year is the existence of seized material/incriminating material in that year. ld. CIT(A) by following the order of Abhisar Buildwell Pvt.Ltd. (supra) of Hon'ble Ap....
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....ain raised plea of cross- examination granted to assessee and materials not based upon which the submissions have been made has not been provided for examination. Even then opportunity was not granted to assessee, though Ld. CIT (A) had coterminous powers as that of Ld. AO. 14. In our view this amounts to gross violation of principles of natural Justice. We draw our support from the decision of Hon'ble Supreme Court in the case of Andaman Timber Industries versus CCE reported in (2015) 62 Taxmann.com 3, wherein Hon'ble court observed as under: "According to us, not allowing the assessee to cross-examine the witnesses by the Adjudicating Authority though the statements of those witnesses were made the basis of the impugned order is a serious flaw which makes the order nullity inasmuch as it amounted to violation of principles of natural justice because of which the assessee was adversely affected. It is to be borne in mind that the order of the Commissioner was based upon the statements given by the aforesaid two witnesses. Even when the assessee disputed the correctness of the statements and wanted to cross-examine, the Adjudicating Authority did not grant....
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....question of law arises from the impugned order of the ITAT. 5. In these circumstances, the Review Petitions are dismissed." 92. Thus, not providing the opportunity of cross examination of the person whose statements are relied upon for making the additions is not acceptable in the facts of the case. The entire case of the revenue hinges upon the presumption that the cash was received by the assessee from MEPL. However, this presumption or suspicion how strong it may appear to be true but needs to be corroborated by some evidence to establish a link. It is quite a trite law that suspicion howsoever strong may be but cannot be the basis of addition except for some material evidence on record. The theory of 'preponderance of probability' is applied to weigh the evidences of either side and draw a conclusion in favour of a party which has more favourable factors in his side. The conclusions must be drawn on the basis of certain admitted facts and materials and not on the basis of presumption of facts that might go against assessee. Once nothing has been proved against the assessee with aid of any direct material especially when various rounds of investigation have b....
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....h Garg that the income sought to be added fell within the description of Section 68." 94. The Hon'ble Delhi High court in the case of PCIT (Central)-3 vs. Anand Kumar Jain (HUF), ITA No. 23/2021 [Delhi High Court - 12.02.2021] has held as under: "8. Next, we find that, the assessment has been framed under section 153A, consequent to the search action. The scope and ambit of section 153A is well defined. This court, in CIT v. Kabul Chawla, 1 concerning the scope of assessment under Section 153A, has laid out and summarized the legal position after taking into account the earlier decisions of this court as well as the decisions of other High Courts and Tribunals. In the said case, it was held that the existence of incriminating material found during the course of the search is a sine qua non for making additions pursuant to a search and seizure operation. In the event no incriminating material is found during search, no addition could be made in respect of the assessments that had become final. Revenue's case is hinged on the statement of Mr. Jindal, which according to them is the incriminating material discovered during the search action. This statement certainly....
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.... under Section 132(4) of the Income Tax Act, 1961, alone should not be the basis, for arriving at any adverse decision against the assessee. If the authorities under the Income Tax Act, 1961, have to be conferred with the power, to be exercised, solely on the basis of a statement, then it may lead to an arbitrary exercise of such power. An order of assessment entails civil consequences. Therefore, under judicial review, courts have to exercise due care and caution that no man is condemned, due to erroneous or arbitrary exercise of authority conferred .... " " ... If the assessee makes a statement under Section 132(4) of the Act, and if there are any incriminating documents found in his possession, then the case is different. On the contra, if mere statement made under Section 132(4) of the Act, without any corroborative material, has to be given credence, than it would lead to disastrous results. Considering the nature of the order of assessment, in the instant case characterized as undisclosed and on the facts and circumstances of the case, we are of the view that mere statement without there being any corroborative evidence should not be treated as conclusive evidence ag....
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....d between the invoices date and date of receipt of payment. Ld. CIT(A) appreciated the fact that assessee has already factored the cost incurred on delayed payment by charging high margin which was included in the sales price of the material sold to its AE's as compared to the sale price charged from non-AEs. The assessee has demonstrated that it had claimed 30% high rates from the AE's as compared to sales made to non-AE thus, delayed payment has already been considered in the sale price charged. Ld. CIT(A) further observed that no adjustment was made on this account in preceding assessment years where the assessments were completed u/s 143(3) of the Act. The observations of ld. CIT(A) while deleting the additions made are as under :- Conclusion regarding Interest on delayed receivables The assessment order, the transfer pricing order, and the detailed submissions of the Authorized Representative (AR), along with the judicial precedents relied upon have been carefully considered. The Assessing Officer/TPO has made an adjustment of Rs. 33,04,951 on account of alleged interest on delayed realization of receivables from Associated Enterprises (AEs). The TPO ....
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....Hence, as per AR, the reliance on the said circular is clearly misplaced and unjustified. The AR further submitted that the same issue had arisen in earlier assessment years and was consistently decided in favour of the assessee by the CIT(A). No distinguishing facts have been brought on record by the AO to deviate from the settled position, and therefore, the principle of consistency also supports the assessee's case. The assessee also placed reliance on several judicial precedents, including the decision of Technip Energies India Limited, (formerly known as Technip India Limited) Versus Additional Commissioner of Income Tax, Special Range-9, New Delhi reported in 2025 (9) TMI 1189 - ITAT DELHI and the judgment of 2017 (4) TMI 1254 - DELHI HIGH COURT Pr. Commissioner of Income Tax-V Versus Kusum Health Care Pvt. Ltd. wherein it was held that once working capital adjustment is factored into the pricing of international transactions, no separate adjustment for interest on receivables is warranted. As per AR, the Delhi High Court further held that merely because receivables remain outstanding beyond a particular period, it does not automatically give rise to an ....
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....bles for the supplies made to an AE, the arrangement reflects an international transaction intended to benefit the AE in some way. Para 11 The Court finds that the entire focus of the AO was on just one AY and the figure of receivables in relation to that AY can hardly reflect a pattern that would justify a TPO concluding that the figure of receivables beyond 180 days constitutes an international transaction by itself. With the Assessee having already factored in the impact of the receivables on the working capital and thereby on its pricing/profitability vis-à-vis that of its comparable, any further adjustment only on the basis of the outstanding receivables would have distorted the picture and re- characterized the transaction. This was clearly impermissible in law as explained by this Court in CIT v. EKL Appliances Ltd. (2012) 345 ITR 241 (Delhi).\ Consequently, the Court is unable to find any error in the impugned order of the ITAT giving rise to any substantial question of law for determination. The appeal is, accordingly, dismissed." 6.2 In the instant case, it is seen that the appellant has already factored in the interest components as the ....
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.... separate international transaction and imputed interest on same - Tribunal held that outstanding receivables was not a separate international transaction - It was noted that in case similar to assessee, High Court held that since assessee was undisputedly a debt free company and it was not case of TPO that borrowed funds had been appropriated enabling AE to make delayed payment on receivables, outstanding receivables was not a separate international transaction and delay in realization of sale proceeds was incidental to transaction of sale and, thus, no notional interest could be levied by treating same as unsecured loan - Whether thus, following aforesaid view there was no justification to interfere with view taken by Tribunal - Held, yes [Para 3] [In favour of assessee]" Further, the Hon'ble High Court of Delhi in the case of Principal Commissioner of Income Tax vs. Kusum Health Care (P) Ltd. reported at [2018] 98 taxmann.com 431 (Delhi), has held as under: "The inclusion in the Explanation to section 92B of the expression 'receivables' does not mean that de hors the context every item of 'receivables' appearing in the accounts of an entity,....
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....at it had already charged margin of more than 30% from its AE's as against the sales made to non-AE's thus, has already factored the working capital adjustment on account of delayed payment of receivables. This being so, we find no error in the order of ld. CIT(A) in deleting the adjustment made on account of delayed payment of receivables. Accordingly, Ground No.4 raised by the Revenue is dismissed. 101. Ground of appeal No.6 of the Revenue is with respect to the deletion of addition of INR 2.40 crores made towards rent paid on farm house taken by the assessee and used as its guest house. 102. Brief facts leading to this ground of appeal are that disallowance of INR 2.40 crores was made by the AO being rent paid to Smt. Rashmi Chaturvedi, wife of the Chairman of the assessee company, Shri Ashok Chaturvedi. The AO observed that this house was utilized for the purpose of personal residence cum office of the Chairman and has no relationship with the business of the assessee company and therefore, rent paid is not for the purpose of business and he made the disallowance which was deleted by ld. CIT(A). 103. Before us, ld. CIT DR for the Revenue vehemently supported th....
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....mhouse [12:44, 20/08/2026] AMIT KUMAR: was taken on lease by the appellant company and was primarily used as a camp office for business purposes. It was explained by the AR that only a limited portion of the farm house was used as residential accommodation by the Chairman, while the major portion was utilized for official purposes such as business meetings and hosting of clients. It was further submitted by the AR that the portion used for residential purposes, comprising only two bedrooms and a kitchen, was separately identified, and the perquisite value of the same was duly taxed in the hands of Shri Ashok Chaturvedi. As per AR, the Chairman was paid salary and house rent allowance amounting to 72 lakhs, and the corresponding residential use had already been offered to tax as part of his salary income. Thus, as per AR, there was no revenue loss to the Department. The AR also pointed out that the appellant is a large multinational company with a consolidated turnover of approximately 7,685 crores, operating across various locations in India, outside India and having subsidiaries in several foreign countries. As per AR, considering the scale and nature of business, frequen....
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....situated at Jammu identified as "Unit-3". The AO has not disputed the eligible unit however, disallowed the claim to the extent of INR 58,97,071/- being 30% of the other receipts which according to AO, were not earned from the eligible unit. The claim of the assessee was that other receipts comprising of insurance claim, remission write back of liabilities, scrap sales, purchase discounts and other incidental receipts which are directly related to manufacturing activity and therefore, are eligible for the deduction u/s 80IB of the Act. It is observed that deduction u/s 80IB was claimed since Unit-3 had started commercial production and income generated was offered for tax. The AO had made the disallowance by making similar allegation with respect to other income and the Co-ordinate Bench of Delhi Tribunal has allowed the same vide its order for AY 2011-12 and such order has been accepted by the Revenue. Thereafter, the deduction claimed on such other income was never doubted. Thus, following the principal of consistency, deduction as claimed should be allowed. Ld. CIT(A) has appreciated these facts and deleted this disallowance by making following observations :- (b) Disal....
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....ounts are embedded in the manufacturing cost structure and do not constitute independent income. As per AR, merely because these receipts are presented separately in the accounts does not alter their character as business income. As per AR, identical receipts were allowed in earlier assessment years, including Assessment Year 2013-14, and the principle of consistency requires the same treatment to be followed in the year under consideration. As per AR, insurance claims received on account of damage to raw materials represent compensation for business losses incurred in the ordinary course of manufacturing operations. As per AR, such receipts substitute trading losses and are taxable as business income under section 28 or section 41(1). As per AR, the direct nexus between the insurance claim and the manufacturing activity is undisputed, and the levy of GST on such receipts further reinforces their business character. As per AR, these receipts have also been allowed as eligible for deduction in earlier years and confirmed by the Ld. ITAT. As per AR, the write-back of liabilities amounting to 1,20,465/- pertains to liabilities originally incurred for the import of ra....
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.... 1299-1301 of the case law PB). iv. [2023] 151 taxmann.com 246 (Gujarat) High Court of Gujarat, Principal Commissioner of Income-tax v. Reckitt Benckiser Healthcare India Ltd. v. [2014] 48 taxmann.com 90 (Delhi) High Court of Delhi, Commissioner of Income-tax (C)-III v. Flakes-N-Flavourz, New Delhi (Refer page no. 1315-1319 of the case law PB). vi. Deputy Commissioner of Income-tax vs. Reckitt Benckiser Healthcare India P. Ltd. [2025] 176 taxmann.com 573 (Ahmedabad - Trib.) [16-07- 2025] (Refer page no. 1302-1310 of the case law PB). vii. 2024 (11) TMI 818 - ITAT MUMBAI M/s. Hindustan Unilever Limited Versus Dy. CIT-1(1)(2), Mumbai and vice versa (Refer page no. 1320-1337 of the case law PB). 2. Other Misc. Income (Discount on Purchase of Raw Materials) viii. High Court of Gujarat, Commissioner of Income-tax-II vs. Metrochem Industries Ltd. [2017] 79 taxmann.com 440 (Gujarat) / [2016] 389 ITR 181 (Gujarat) [19-07-2016] (Refer page no. 1338-1353 of the case law PB). ix. High Court of Punjab and Haryana, Commissioner of Income-tax, Ludhiana vs. Metalman Auto (P.) Ltd. [2011] 11 taxmann.com 51 (Punjab & Haryana) /[2011] 199 Taxman 149 (Punjab & Haryana) (Mag.) ....
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....i. [2010] 189 Taxman 39 (JP.) (Mag.) ITAT Jaipur Bench 'B', Assistant Commissioner of Income-tax, Circle-1, Jaipur v. Poddar Associates (Refer page no. 1402-1404 of the case law PB). xix. Suzlon Energy Ltd. vs. Deputy Commissioner of Income-tax [2013] 32 taxmann.com 349 (Ahmedabad Trib.) / [2012] 20 ITR(T) 391 (Ahmedabad Trib.) / [2013] 57 SOT 54 (Ahmedabad Trib.) (URO) [21-09-2012) (Refer page no. 1405-1425 of the case law PB). 111. Considering the facts that the other income was generated from the regular manufacturing activity of and Revenue has failed to bring on record any material to hold that such income was not derived from the eligible undertaking therefore, we find no reason to interfere in the order of ld. CIT(A) allowing deduction u/s 80IB on such other income who has followed the orders of the coordinate bench in assessee's own case in the first year of the claim of deduction u/s 80IB of the Act. Accordingly, Ground of appeal No.7 raised by the Revenue is dismissed. 112. Ground of appeal Nos.8 to 10 raised by the Revenue are general in nature hence, not adjudicated. 113. In the result, appeal of the assessee is partly allowed and appeal of the R....
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.... quashed the assessment order passed u/s 143(3) dt. 20.02.2025 however, in the interest of justice, the other grounds of appeal taken on the merits of the additions made/ deleted are decided as under: 119. Ground of appeal Nos. 2 to 8 of the assessee are with respect to the confirmation of the additions of INR 4.00 crores on account of unsecured loans treating the same as unexplained credit u/s 68 of the Act out of total addition of INR 25.25 crores made by the AO. The Revenue is also in appeal against the deletion of the addition of INR 21.25 crores in Ground of appeal No.1 & 2. 120. During the year under appeal, the assessee has taken total unsecured loans of INR 65.00 crores from 24 parties out of which the loans taken from 10 parties, totaling to INR 25.25 crores were alleged as unexplained credit and addition was made u/s 68 of the Act and further addition of INR 50.50 Lakhs was made u/s 69C as alleged commission paid on such accommodation entries of unsecured loans. 121. In first appeal, ld. CIT(A) has confirmed the addition to the extent of INR 04.00 crores of the loans taken from three lender companies namely, Pravesh Credit & Securities Ltd. of INR 1.50 crores; Ra....
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....sand M/s Dhankalash Distributors Pvt. Ltd of INR 10.00 crores which were deleted by ld. CIT(A). Loans taken from these companies are decided as under :- 126. Before us, ld. CIT DR for the Revenue vehemently supported the orders of the AO and submits that the AO has observed that the company M/s Hallow Securities Private Limited was identified as a shell company and its whereabout and other particulars have been discussed at length by the AO in para 8.12 to 8.18 wherein a reference was made to the statements of its Directors and further observed that the registered office is not available at the given address and other particulars were also discussed. Ld. CIT DR drew our attention to the assessment order para 8.1.4 which is the survey report given by the Assessing Unit wherein it is observed that no actual business was carried out by this company. Ld. CIT DR further referred the statement of Shri Ashish Begwani wherein he specifically admitted that the accommodation entries of loans were provided to Uflex Ltd. owned by Shri Ashok Chaturvedi and accordingly, ld. CIT DR requested for the confirmation of the loan taken from Hallow Securities as the same was established as bogus acco....
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....ice had conducted an inquiry with Hallow Securities Pvt. Ltd. in the case of Allure Developers Pvt. Ltd. in Appeal No. CIT (Appeal), Noida-3/10037/2018-19 for AY 2019-20 and as per the information received, it is noticed that Hallow Securities Pvt. Ltd. has regularly filed its statutory returns with the ROC and RBI. Further, inquiries were also made with SFIO under section 250(4) in the case of Allure Developers Pvt. Ltd. in Appeal No. CIT (Appeal), Noida-3/10037/2018-19 for AY 2019-20 and as per the response received from SFIO, no investigation is pending or has been disposed of against Hallow Securities Pvt. Ltd. It is further noticed that during the year under consideration, the lender company had received Rs. 195 crore from M/s Teesta Retails Pvt. Ltd. an entity connected to Reliance Group, and the said transaction has been considered as genuine by the AO during the assessment proceedings in the ACE Group of companies. The AO has relied upon the statement of Ashish Begwani recorded in the year 2017 to support his contentions regarding the loan received from Hallow Securities Pvt. Ltd. by the assessee. Further, the AO has delved into the financials of Hallow Securities Pvt. Ltd.....
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....xation. The Hon'ble High Court of Delhi in the case of Principal Commissioner of Income-tax-Central-1 vs. Surya Agrotech Infrastructure Ltd. reported at [2023] 154 taxmann.com 156 (Delhi) has held as under: Where assessees were part of 'P' group of companies, which was subject to search operations, during which director of flagship company admitted that group of companies earned unaccounted income which was routed as bogus share capital, since such undisclosed income had already been surrendered to tax by flagship company and settled by order of Income-tax Settlement Commission, it could not again be subjected to tax in hands of assessee companies in form of application of said income as their share capital Further, the Hon'ble High Court of Delhi in the case of Principal Commissioner of Income-tax (Central)-2 vs. Heritage Beverages (P.) Ltd. reported at [2024] 166 taxmann.com 217 (Delhi) has held as under: Section 68 of the Income-tax Act, 1961 - Cash Credits - Assessment years 2009-10 and 2011-12 - Assessing Officer made addition under section 68 for unexplained share capital and share premium - Assessee contended that unexplain....
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....in the case of Mahaveer Kumar Jain (supra) wherein the Hon'ble Court has held as under: "It is a fundamental rule of law of taxation that, unless otherwise expressly provided, income cannot be taxed twice. Furthermore, a taxing Statute should not be interpreted in such a manner that its effect will be to cast a burden twice over for the payment of tax on the taxpayer unless the language of the Statute is so compelling that the court has no alternative than to accept it. In a case of reasonable doubt, the construction most beneficial to the taxpayer is to be adopted. So, it is clear enough that the income in the present case is taxable only under one law. By virtue of clause (k) to Article 371 F of the Constitution which starts with a nonobstante clause, it would be clear that only the Sikkim Regulations on Income-tax would be applicable in the present case. Therefore, the income cannot be brought to tax any further by applying the rates of the IT Act." 19. Considering the ratio laid down by the Hon'ble Apex Court and on finding that the alleged share applicants have been subjected to substantial addition, we find merit in the second fold of argument of the....
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....ther submitted that the assessment order of Hallow Securities Pvt. Ltd. for AY 2021-22 has already been passed and no adverse finding has been recorded in the hands of Hallow Securities Pvt. Ltd. in respect of receipt of funds from Dhankalash Distributors Pvt. Ltd. Therefore, as per AR, branding Dhankalash Distributors Pvt. Ltd. as a pass-through entity without any substantive addition or conclusive finding is not sustainable. It is further observed that the appellant has duly shown the identity of the lender, genuineness of the transaction and creditworthiness of the lender by furnishing documentary evidences such as copy of audited financial statements, bank statements, MCA records and other supporting documents. The AR also submitted that the appellant had initially raised the loan in the year 2020 and the same has subsequently been repaid, and the copy of the ledger account reflecting the said repayment has also been placed on record in the paper book. The AR further clarified that Dhankalash Distributors Pvt. Ltd. is engaged in issuing inter-corporate deposits (ICDs) and possesses sufficient financial strength. It has been shown that the company has share cap....
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....e relevant part of the order of the Ld. ITAT Bench is reproduced below for ready reference: "10. Ground of appeal No.3 raised by the Revenue is with respect to deletion of loan of INR 25,00,000/- taken from M/s. Dhankalash Distributors Pvt. Ltd. which was made by the AO by holding the same as bogus unsecured loan. 11. We have heard the rival contentions and perused the material available on record. AO has made the addition by doubting the creditworthiness of the lender company and further observed that source of source is not established. AO observed that company has low income as compared to the loan given to the assessee. Accordingly, the AO has made the addition by holding the same as bogus accommodation entries. The claim of the assessee is that during the course of assessment proceedings, it had submitted copy of ITR, bank statement and confirmation of lender. Regarding the source of source, it was the submission of the Ld.AR that the amendment in the Act with respect to examination of source of source was inserted w.e.f. 01.04.2022 and applicable from AY 2023- 24. 12. Ld. CIT(A) in page 169 of the appellate order, observed that M/s Dhankalash Distri....
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....ained. 131. It is also a matter of fact that by making similar allegations, loans taken from various parties including certain parties from whom loans were taken in this year also, additions were made u/s 68 of the Act in immediately preceding assessment year i.e. in AY 2020-21 where the additions so made stood deleted by us, while deciding the appeal of the assessee herein above, in IT(TP)A No. 259/Del/2026 and of the revenue in IT(TP)A No. 272/Del/2026 which observations are Mutatis Mutandis applicable to the facts of the present case. Accordingly, by following the same, we hereby deleted the total additions made of INR 25.25 crores u/s 68 of the Act which includes the additions sustained by the ld. CIT(A). Accordingly, Grounds of appeal Nos. 2 to 8 of the assessee are allowed and Grounds of appeal Nos. 1 & 2 of the Revenue are dismissed. 132. Ground of appeal No.9 of the assessee is with respect to the confirmation of addition of INR 50.50 Lakhs made u/s 69C of the Act by alleging the said as commission paid on the alleged accommodation entries on unsecured loans. 133. Heard the contentions of both the parties at length and perused the material on record. At the outset,....
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....adjustment of INR 1,60,92,66,164/- made by the AO in the book profit u/s 115JB of the Act. 138. Heard the contentions of both the parties at length and perused the material on record. It is observed that AO has not provided computation sheet based on which adjustment was made in the book profit therefore, AO is directed to provide the same to the assessee so as to enable the assessee to take the necessary action in this matter. 139. Now coming to remaining grounds of in Revenue appeal in ITA No. 5367/Del/2026 for Assessment Year 2021-22. 140. Ground of appeal Nos.3 & 4 raised by the Revenue is with respect to the deletion of addition of INR 84.00 crores made on account of unexplained cash credit u/s 69A of the Act. 141. Heard the contentions of both the parties at length and perused the material on record. At the outset, both the parties have fairly admitted that the issue under appeal is identical with the issue involved in AY 2020-21 in revenue's appeal in IT(TP)A No. 272/Del/2026 wherein we have confirmed the order of ld. CIT(A) deleting the addition made by the AO and the observations made therein are Mutatis Mutandis applicable to the facts of the present case.....
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....of insurance claims, remission or write back of liabilities, scrap sales, purchase discounts and other miscellaneous receipts. 147. Heard the contentions of both the parties at length and perused the material on record. At the outset, it is observed that this issue has been considered and decided by us in afore-mentioned paras while disposing the appeal of the Revenue in ITA No. 272/Del/2026 for AY 2020-21. This fact is fairly admitted by both the parties. Thus, by following the observations as made in ITA No. 272/Del/2026 for AY 2020-21 which are Mutatis Mutandis applicable to the facts of present case also, the order of ld. CIT(A) deleting the disallowance is hereby confirmed. Accordingly, Ground of appeal No.8 raised by the Revenue are dismissed. 148. Ground of appeal Nos. 9 & 10 raised by the Revenue are general in nature hence, not adjudicated. 149. In the result appeal of the assessee in IT(TP)A 260/Del/2026 is allowed and appeal of the revenue in ITA No. 5367/Del/2026 is dismissed. 150. Now we take assessee's appeal in ITA No. 280/Del/2026 for Assessment Year 2022-23. IT(TP)A No. 280/Del/2026 [Assessment Year 2022-23] [Assessee's appeal] 151. The....
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....u/s 68 of the Act on account of loan taken from Pravesh Credit and Securities Ltd. of INR 3.50 crores; Radha Fincom Ltd. of INR 1.00 crore; Supriya Fincom Ltd. of INR 3.50 crores; Premnarayan Mercantile Pvt.Ltd. of INR 50.00 Lakhs and First Agri-Tech Pvt. Ltd. of INR 2,00 crores. 156. Heard the contentions of both the parties at length and perused the material on record. Before us, both the parties have fairly admitted that additions of identical nature on account of loan taken from these parties were made in AYrs 2020-21 & 2021-22 wherein while deciding the appeal of both the parties for AY 2020-21 in ITA No. 259/Del/2026 [Assessee's appeal] and in ITA No. 272/Del/2026 [Revenue's appeal], detailed discussion on the facts and argument made by both the parties were considered and after considering the same, additions sustained by ld. CIT(A) were deleted and further action of ld. CIT(A) in deleting the addition with respect to the loans taken was also confirmed, resulting into the deletion of the entire additions made by the AO. Thus, by respectfully following the observations as made in captioned appeals for AY 2020-21 which are Mutatis Mutandis applicable to the facts of....
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....al Nos. 11 & 12 assessee has challenged the additions on merits. 163. Brief facts of the case are leading to this issue are that a search and seizure action u/s 132 was carried out in the case of Montage Enterprises on 21.02.2023. During the course of search, certain incriminating material in the shape of diaries marked as Annexure D-1 to D-39 was found and seized. The AO based on the entries found noted in the said diaries and further relying upon the statement of one Shri Manoj Kandpal, an employee of MEPL, alleged that the assessee company has received cash of INR 84.00 crores (INR 7.00 crores monthly) and made the addition for the same by treating the same as undisclosed income of the assessee. IN first appeal the same was confirmed by ld. CIT(A). 164. Before us, it is submitted by the ld. AR that the impugned addition was made in the order passed u/s 143(3) of the Act though the material relied upon was found from the possession from the third party and further search u/s 132 of the Act was also carried out in its own case on 21.02.2023 therefore, no addition could be made for the documents found from the possession of third person during the course of search in the case....
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....as under :- "Explanation 2 .- For the purposes of this section, where,- (i) a search is initiated under section 132 or books of account, other documents or any assets are requisitioned under section 132A, on or after the 1st day of April, 2021, in the case of the assessee; or (ii) a survey is conducted under section 133A, other than under sub- section (2A) or sub-section (5) of that section, on or after the 1st day of April, 2021, in the case of the assessee; or (iii) the Assessing Officer is satisfied, with the prior approval of the Principal Commissioner or Commissioner, that any money, bullion, jewellery or other valuable article or thing, seized or requisitioned under section 132 or section 132A in case of any other person on or after the Ist day of April, 2021, belongs to the assessee; or (iv) the Assessing Officer is satisfied, with the prior approval of Principal Commission Commissioner, that any books of account or documents, seized or requisitioned under section 132 or section 132A in case of any other person on or after the Ist day of April, 2021, pertains or pertain to, or any information contained therein, relate to, the asse....
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....and the Assessing Officer was well aware of the information and material including, the material found and seized from the third parties namely Sh. Ajay Prabhakar and Sh. Ravi Kapoor and further to that, we have carefully gone through explanation -2 to section 147 as amended by Finance Act 2021 as 'cited supra', which clearly lays down the mandatory procedure to be followed in search assessment and which apparently has not been followed in the present case. 21. The core question before the Bench is whether, in the facts and circumstances of the case, the assessment ought to have been framed under section 143(3) or under section 147 of the Income-tax Act, 1961. From the plain reading of the statutory provisions and in light of Explanation 2 to section 148, it becomes abundantly clear that the legislature has widened the scope of reassessment, particularly through the Finance Act, 2021, which introduced significant changes to the reassessment regime. These amendments explicitly include instances involving third-party search material and make it incumbent upon the Assessing Officer (AO) to follow the procedure under section 148, including obtaining prior approval from....
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.... not to bypass the statutory framework by proceeding under section 143(3). Granting such unfettered powers to the AO to rely on third-party material without adhering to the safeguards under section 147 would defeat the very purpose of the amendment and open the floodgates to arbitrary assessments. 26. The relevant extract Memorandum explaining the finance bill is reproduced as under :- '(ii) Assessments or reassessments or in re-computation in cases where search is initiated under section 132 or requisition is made under 132A, after 31st March 2021, shall be under the new procedure. (VI) Further, in search, survey or requisition cases initiated or made or conducted, on or after 1st April, 2021, it shall be deemed that the Assessing officer has information which suggests that the income chargeable to tax has escaped assessment in the case of the assessee for the three assessment years immediately preceding the assessment year relevant to the previous year, in which, the search is initiated or requisition is made or any material is seized or requisitioned or survey is conducted." 27. The notice issued under section 143(2) was also produced by t....
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....assessment year to which clause (i) or clause (ii) or clause (iii) or clause (iv) of Explanation 2 to section 148 apply except with the prior approval of the Additional Commissioner or Additional Director or Joint Commissioner or Joint Director. 30. A comparison of the requirement of approval under section 153D and section 148B is drawn, from which it is evident that approval under section 153D was earlier required only in cases where assessments were completed under section 153A/ 153C and also for search year. However, under the amended provisions, approval under section 148B is now required in all cases where proceedings are initiated pursuant to a search, requisition, or survey, or where asset/material/ documents found during such search pertain to or relate to another person. In such cases, the Assessing Officer must take the approval under section 148B from the specified higher authority. 31. This requirement has also been explicitly discussed in the Explanatory Memorandum to the Finance Bill, 2022, which emphasizes the need to protect taxpayer rights by ensuring that no reassessment is carried out without proper sanction and due process. It is further seen t....
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....cedural requirement. This procedural lapse is further compounded by the judgment of the Hon'ble Supreme Court in Serajuddin and Co. case, [2024] 163 taxmann.com 118 (SC) wherein it was held that in search cases, strict adherence to the approval protocol as laid down in the departmental Manual of Office Procedure in February 2003 and law is essential to uphold the validity of the assessment. 34. Thus, from the above, it is quite evident from the approval granted by the Addl.CIT(Central), there is no mention or consideration of the seized material sourced from the third party, namely Sh. Ajay Prabhakar and Sh. Ravi Kapoor, though, we find that in the assessment order and in the order of CIT(A), both the authorities have heavily relied upon on such seized material and it only states that the appraisal report have been considered without any reference to any original documents seized for statutory procedure outlined u/s 148. Thus, in view of above, the assessment as framed by Assessing Officer vide order dated 24.08.2023 is quashed." 171. As observed above, in the instant case, the AO has not followed the procedure as provided in clause (iv) of Explanation 2 to section ....
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....e final result, captioned three appeals of the assessee in IT(TP)A No. 259/Del/2026 [Assessment Year 2020-21]; IT(TP)A No. 260/Del/2026 [Assessment Year 2021-22]; & IT(TP)A No. 280/Del/2026 [Assessment Year 2022-23] and both captioned appeals of the Revenue in IT(TP)A No. 272/Del/2026 [Assessment Year 2020-21] and ITA No. 5367/Del/2026 [Assessment Year 2021- 22] are dismissed. Order pronounced in the open Court on 21.08.2026. ============= Document 1 1. That this present submission being filed in a consolidated manner in the case of UFLEX Limited for AY's 2020-21, 2021-22 and 2022-23. That the caseswere selected for scrutiny under CAS on acount of TP risk parameters and reference under section 92CA was made to the Ld. TPO. Subsequently, search proceedings under section 132(1) were conducted in the case of Ufer Ltd. on 21. 02.2023;however, no incriminating material forming the basis of the impugned additions was found or seized during the search. 2. That the additions made by the AO were chalenged before CITA) and the summary of additions sustained by the Ld. CITA) is summarized as folows: Nature of addition 2020-21 2021-22 2022-23 AO Pg no. of order CTIAI....
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.... preferred the present appeal by fling Form 36 and raising appropriate grounds of appeal. The ground wise submission of the same are as under> 5. Submissions on Ground Nos. 6-9 (AY 2020-21), Ground Nos. 5-8 (AY/ 2021-22) & Ground Nos. 4-7 (AY 2022-23) filed by appelant: Discharge of Onus under Section 68 - Loans Accepted in Earlier Years, Repayments Duly Made, and Survey Statement Cannot Form the Sole Basis for Addition Submissions on Ground Nos. 1-2 (AY 2020-21 and 2021-22) and Ground No. 4 for AY 2021-22 filed by department: Discharge of Onus under Section 68 - Deletion of Addition under Section 68 Despite Alleged Lack of Creditworthiness, Genuineness,and Reliance on Documentary Evidence 5.1. Unwarranted Section 68 Addition on Properly Documented Loans Document 3 It is respectfuly submitted that the CIT[A] erred in sustaining the additions made in respect of unsecured loans raised by the Appelant during the relevant assessment years AY 2020-21, 2021-22 and 2022-23, and that the Department equaly enred in challenging the deletions granted by the CIT(A) for AY 2020- 21 and 2021-22, failing to appreciate that the said loans were duly supported by loan agreements and tha....
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.... castings Pvt 414 2020-21 1208 1200 No alegation 1246 1240-1245 1238-1239 NA Ayala Strels Put ind 2000-21 1254 1249 1247-1248 1283 1277-1282 1275-1276 NA APM Finvest Lad 2020-21 1257 1290-1292 1285-1290 1872-1376 1957-4371 1995-1956 NA Greencrest Financial Services ₼ 2020-21 1389 1378 1377,1379-2382 1437 1429-2406 1413-1428 NA GSR Tradefin Pvt. Ind. 2020-21 1478 1440 1438-3439,2443- 1442 1493 1483-1482 1479-1482 NA Kanalpar France Land. 2020-21 1512 N/A 1494-2497 1548-1549 1588-1545 1530-1587 NA Maharaj Ji Agro Products Pvt. und 2020-21 1578 N/A 2 + 1550 2553 2624-3625 1566-2573 1562 2565 1599-2609 | PSSA], 1600 |[ GST Reg-06) Netam Securities Marketing Pvt lad 2020-21 06.36 06:30 0627-26-29 2679-2680 1662-06-78 1658-2662 NA Partesh Electrical: Pvt Ltd 2020-21 1890 1655 3683-0684 1717-4738 1709-1726 1705-1708 NA Perfect Business Advisory Services Pvt ind 2020-21 1747 NA 1715-1722 1750 1748-1752,1757-1759 1753-1756 KA Prochur Traders Pvt Ltd 2020-21 1773 1763 1761-1762,1764- 1799-2813 1790-1798 1788-1788 NA LITLA 158 251 260 210 162 262 813 264 869-06 216 867 967 Document 5 175 CT Ricon Merchants Pvt Ltd 2020-21 1822 NA 1814-1817 1....
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....romissory Note and Post Dated Cheque, Form 16A, Bank Statement of the Lender Entity, Bank Statement Evidencing Repayment, Audited Financial Statements. 50-54 139-140 TABLE C :>GENUINENESS AND CREDITWORTHINESS OF LENDERS > Appeal by Appelant -Addition sustained by CIT[Alfar AY 2020-21,2021-22 & 2022-23 Leder Ercities AK Unsecured Banking Dante's capital IncÆ°á»ng renes Non-Curent investments/Trade Reczivables,Fand Short term leurs & Advances Cash & Canh Equivalents Total Revenue Page no ef Franduls - al lender Income dedared in I/ Polt as per PS L Page PB harsh Quất and Securities Limited 2021 4,00,00,000 8L97 comes 5.96,06,20(TR) 86.67,44,250 90 4.32.345 1.35,04,207 64-74 58-40 22.44,779 0 21-22 1.50,00,000 92.13 comes 18.41.24,06 7(2) 77.94.41.935 12.64,134 1.834,700 743-753 745-740 19.21,402 742 22-23 1.50,00.000 92.27 comes 14,50,53,23Q[K] 1767 comm 10,99. 580 6,80.96,690 929-940 8-902 402,632MAT 528 Rada Facon Limited -5 1,00.00,000 30.27 urones 12,42,91.278.34(78) -3471.33 14,34,783 88 1968,1384 106-125 112-113 11,37,452 135 21-22 1,00,00,000 95.45 cores 17,17,49 342 30[18] 84.86,05,299 50 1.50.85.952 24,34,50 480 770-783 767-768 24,26,585 799 22-23....
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....1200 Anjula Souris Pvt Ltd 1,00,00,000 9.90.99,182.37 5.82.05.000 INC| 1,00,30,000 01.41.99.380.37 1.12.67,495 1255-1274 1252 26.95.590 1254 APM Fievest ud 7,00,00,000 70.84,99.000 58,43,54,000 NOI 95,31,000 7%) 20,45,47,000 62.01,000 1,68,87,000 1298-1354 1234 1,77,41,780 PER 1297 Greencrest Financial Services - 1.00.00.000 50.34.20.239 90.00.000 NON 18.59.966(TR) 1,24,717/54] 42.23.50.829 純然排 10,64.64.640 1390-1412 1343-1364 60,26.30% 1389 GSR Tradelin Pvc. Ind. 75,00,000 3,00,29,306 2.06.82.992(NC) 30 540 (TH) 21,48,27,694 5,48,297 1,3463,732 1454-2477 1445-0448 22,06,960 1478 Kamalpur Finance Und. 50,000,000 10,22,99,292 6 1,74,41 01QUE A) 34.13,240(78) 1,21,46, 440 87/00 6.72.80,379 173517:55 97,96,013.21 1513-1529 1500-1549 18.04.910 1512 Maharaj J Agra Products Pvt. IM 2,75,00,000 2,58,29.316 300.26 428FAJ 1,86,49,305 (TR) 1.96.24.538 1.54,48,357 21,78.60,770 1579-1598 555-2561,157 1575 20,44.876 1578 Nelam Securities Marketing Pt LMd 50,00.000 5.66.58,876 2.30,29,2900NC] 136.61,239 4,21,728 79,79.508 1637-2657 3632-0638 LAL.000 10% Document 8Partoch Electrica's Pvt Ltd 25,00,000 14,53,26,065 104,200 NO 1,39,857 004 22.89.917 1,55,96,204 1691-1....
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....0-21,2021-22 & 2022-23 Lender Entities A.Y. Date of Repayment of loan Page No. of ledger Page No. of appellant bank Pravesh Credit and Securities Limited 2020-21 28.09.2020 549-551 61-62 2021-22 31.03.2021 758 2022-23 25.10.2021 923 Radha Fincom Limited 2020-21 28.09.2020 555-556 114 2021-22 31.03.2021 786 2022-23 25.10.2021 987 Ii. Principal Commissioner of Income-tax |Central) w. Dharmesh Bangbhumi Traders Pvt. Lad. 2020-21 31.03.2023 530-531 146 Carrilion VP Estates Pvt. Ltd. 2020-21 03.10.2022 532-535 189-290 First Agri-Tech Pvt. Ltd. 2020-21 21.12.2020 536-539 234-235 2022-23 20 08 2022 2534 Mapline Commodities Pvt. Ltd. 2020-21 31.03.2023 540-543 285-286 Manali Tradecom Pvt. Ltd. 2020-21 17.02.2023 544-546 327-328 Judicial Pronouncements Supporting the Proposition that No Addition under Section 68 is Warranted Where Repayment of Loans Has Been Duly Made L Income Tax Oficer w. Kayachwal Estate (P.] und. - [2022] 139 taxmann.com 317 (SC) (Refer page no. 1506-1511 of the case law PB). I. Principal Commissioner of income tax w. Bairagra Builders [P] Lad. - [2024] 264 taxmann.com 162 |Bombay HC] [Refer page no. 1780-1782 of the case law PB). Pa....
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.... Order Shyamnagar Packaging Works Pvt Ltd 2020-21 26.11.2019 1998-1999 1861 Unity Merchandise Pvt Ltd 2020-21 03.01.2022 2009-2001 1905 Zipma Electricals Pvt Ltd 2020-21 30.09.2019 2002-2003 1938 M/s Halow Securities Private Limited 2021-22 21.11.2020 20 of CIT(A) Order 20 of CITIA) Order M/s Dhankalash Distributors Pvt. Ltd 2021-22 01.02.2023 24 of CIT(A) Order 24 of CITJA) Order Document 11 5.5. Confirmation of Loans Received The loans raised by the appellant have been duly confirmed by the lenders under section 133(6) of the Income-tax Act. These confirmations establish the genuineness, identity, and creditworthiness of the parties concerned. TABLE G :> Confirmation of Loans Received against Notices u/s 133(6)- Appeal by Appellant - Addition sustained by CIT(A)for AY 2020-21,2021-22 & 2022-23 Name of the Lender A.Y Reply u/s 133(6) Confirmation of Loan Pravesh Credit and Securities Limited 2020-21 No allegation 58 2021-22 739 2022-23 900,911 Radha Fincom Ltd. 2020-21 No allegation (106) 110 2021-22 No allegation 766 2022-23 No reply u/s 133(6) 941 Bangbhumi Traders Pvt. Ltd. 2020-21 Allegation but reply submitted 138-139 140 Carrilion VP Estates Pvt....
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....rrect, and, in any event, statements recorded during surveys of other persons cannot form the basis for such additions. Pravesh Credit and Securities Limited-Addition sustained by CIT[A]for AY 2020-21,2021-22 & 2022-23 § No. Allegations of AO/CIT(A) for AY 2020-21 Rebuttal to Allegations :- That the submissions filed for A.Y. 2020-21 may kindly be read and considered mutatis mutandis for A.Ys. 2021-22 and 2022-23, as the facts, issues involved, and grounds raised are identical/similar in nature. Document 14 1. AO- Absence of Fixed Assets[Page No. 52 of the AO Order) for AY 2020-21 CITIA]- No adverse comments have been pointed out (Pg 257-258 of CIT(A) order)for AY 2020-21 The AD's allegation is incorrect; as an RBI-registered NBFC with no manufacturing activity, ownership of fixed assets is neither required nor relevant for evaluating it's creditworthiness. Refer Page no. 55-57 of PB. 2. The company's operational address does not match its registered address. (Page No. 52 of the AD Order) CIT[A]- No adverse comments have been pointed out (Pg 257-258 of CIT(A) order) The AO's allegation of address mismatch is factually incorre....
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.... on 28.06.2022. 6.Erroneous Addition Without Assessing Creditworthiness Document 15 That the CIT[A] erred in making the addition without commenting anything adversely on the creditworthiness. Moreover, the assertion of the CIT(A) for share capital and share premium cannot be taken as base for questioning the creditworthiness. 7.Acceptance of Lender in Earlier Years - No Comment in Appeal It is respectfuly submitted that the appeal does not address that the same lender has been treated as genuine by the Assessing Oficer in earlier years. The summary of the same is as under :- S No. Name of Lender FY Amount of Page No. of PB loan 1. Pravesh CreditsAnd Securities Ltd. 17-18 3,00,00,000 610-612|Confirmation) 601-609(AO Order) 8. AO-Lack of Commercial Expediency - The company did not explain the commercial rationale for advancing the loan in response to the notice under section 133(6). (Page No. 53 of the AO Order) CIT[A]- No adverse comments have been pointed out (Pg 257-258of CIT[A] order) It is respectfuly submitted that the AO's observation regarding the commercial expediency of the loan is misconceived. The commercial expediency is fully eviden....
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....ement was never provided. 3.Shri Sanjay Kumar Singhi Not a Director - Statement Cannot Be Relied Upon Without prejudice to above, It is further submitted that the statement as relied upon by department is wholly irrelevant, as Shri Sanjay Kumar Singhi was not a director of the lender company during the relevant assessment years. This is substantiated by the enclosed MCA Director Master database, which clearly shows that he held no directorship. It is also submitted that Shri Sandeep Kumar Singhi ceased to hold ofice w.e.f. 16.11.2016 (Ref. Pg. no. 102-104 of PB). 4. Survey Statement and Incriminating Material - No Evidentiary Value It is respectfully submitted that the AO relied upon the statement recorded during survey u/s 133A dated 28.06.2022 to impugn the genuineness of the loan. The Ld. AO erred in failing to appreciate that such statements carry no evidentiary value and that no incriminating material was found either during the search of the appelant or in the survey of Shri Sandeep Kumar Singhi's ofice. 5, Loans Fully Repaid Prior to Survey - No Addition Warranted It is respectfuly submitted that the AO failed to appreciate that the loans for the respe....
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.... AD's observation regarding the commercial expediency of the loan is misconceived. The commercial expediency is fully evident as the lender is a duly registered NBFC, and advancing funds to eam interest is a legitimate business activity for such an entity. That commercial expediency is also proved from ICD agreement submitted by the appellant. Ref Pg. no.129-135 of PB) Document 18 5. AO-Unverifiable Creditworthiness - The lender's creditworthiness and the genuineness of the transaction cannot be verified. (Page No. 54 of the AO Order) OT[A]- Majority of Funds Reflected as Share Capital Including Share Premium Identical Observations of CITIA) for AY's 2021-22 and 2022-23(Pg 258 of CITIA) order) Erroneous Addition Without Assessing Creditworthiness That the CIT(A) erred in making the addition without commenting anything adversely on the creditworthiness. Moreover, the assertion of the CIT(A) for share capital and share premium cannot be taken as base for questioning the creditworthiness. Moreover, creditworthiness is explained in above paras. 6. AO-Agreement not notarized nor witnessed, rendering it non-credible. (AY 2022-23| (Page No. 64 of the AO O....
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....cal Observations of CIT[A] for AY's 2021-22 and 2022-23(Pg 269-270 of CIT(A) order) Absence or minimal fixed assets is immaterial to the creditworthiness of an NBFC, which advances loans from its liquid financial assets and not fixed assets.Refer Page No. 455 of PB. 4. AO-Disproportionate Income - Total declared income is disproportionate to the funds transferred to the assessee.(Pg 92 of AO order) CIT(A)- No adverse comments have been pointed out (Pg 269-270 of CIT(A) order) The lender's declared income is not determinative of creditworthiness, which must be assessed on the basis of overall financial strength, net worth. Even otherwise company has filed the ITR at & 18,81,330(MAT) (for AY 2020-21).Refer Page No. of 462 of PB. 5. AO-Defective Agreement - The loan agreement was neither notarized nor witnessed, rendering it non-credible.(Pg 92 of AO order) CIT[A]- No adverse comments have been pointed out (Pg 269-270 of CIT(A) order) The loan agreement, duly executed on non-judicial stamp paper and signed by both parties, cannot be invalidated merely for absence of witness signature, especialy when the transaction is fully substantiated by surrounding circ....
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....entical Observations of CIT[A] for AYs 2021-22 and 2022- 23.(Pg 269-270 of CIT(A) order) Erroneous Addition Without Assessing Creditworthiness That the CIT[A] erred in making the addition without commenting anything adversely on the creditworthiness. Moreover, the assertion of the CIT[A] for share capital and share premium cannot be taken as base for questioning the creditworthiness. Moreover, creditworthiness is explained in above paras. Document 21 Rebuttal to CIT (A) allegation confirming the additions on the common allegation that the financials of the lender do not inspire confidence regarding the credibility of the said entity. That no other defects were pointed out. S.No. Name of lender PR.no. of CIT[A] order Appellant's remarks AY 20-21 AY 21-22 AY 22-23 Judicial pronouncements 2 Creditworthiness Cannot Be Disputed Merely on the Basis of Minuscule Income 1 Bangbhumi Traders Pvt. Ltd. 260- 261 NA NA 2 Carrillion VP Estates Pvt. Ltd. 261 NA NA 3. First Agri-Tech Pvt. Ltd. 261- 262 NA 136- 137 4. Hapline Commodities Pvt. Ltd. 263 NA NA 6. Mayur India Private Limited 265 NA NA ....
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....00,000 324(Ledger) No Adverse Findings under Section 148A in AY 2019-20 f) Low Income Not Determinative - It is settled law that nominal income or operational revenue alone cannot impugn creditworthiness when sufficient evidence of capital, funds, and banking transactions exists; creditworthiness must be assessed holisticaly. Lucknow [2012] 23 taxmann.com 374 (Refer page no. 54-72 of the case law PBJ. ix. ITO vs. Mega Collections (P.) Ltd. [2023] 151 taxmann.com 403 (Refer page no. 73-85 of the case law PB). X. Rohit Kumar Jindal (HUF) vs. ITO, Chandigarh [2020] 208 TTJ (Chd) 754 (Refer page no. 471-491 of the case law PB). xi. Naveen Infradevelopers & Engineers (P.) Ltd. vs. DCIT, Delhi (2021] 213 TTJ (Del) 344 (Refer page no. 492-506 of the case law PB). xi. Psychotropics Leasing & Finance (P.) Ltd. vs. ITO, Delhi (2018] 196 TTJ (Del) 877 (Refer page no. 507-525 of the case law PB). (il. Anjani Associates vs. ITO, Raipur [2019] 197 TTJ (Raipur) 44 (Refer page no. 526-536 of the case law PB). Document 23 5.7. Judicial pronouncements Consistency :- The assessments for the respective years Le. from FY 2015-16 to FY 2017-18 were completed after due scrutin....
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....- ITAT) (Refer page no. 169-180 of the case law PB). Document 24 Icici Bank 0 WWW.481800_14.154.204.52_20230120123954] Your Deals With the MIS HALLOW SECURITIES PVT LTD LSC. MASJO MOTHMASID MOTH, GREATER KAILASH PART -2 NEW DELHI OFIMI - INDIA - 110048 Digbysar-Bank 1800 1080 Ne Au bord: +/AULA///4-20-414 Summary of Account as on 22-09-2020 VICE 4.00184:1236 TOTAL Giacatersent of transactions in Current account number: 022505006192 in INR For the period 22-09-2020 To 22-09-2020 Fettcom - - --- - Legends for transa ctions in your account statement VATALATAFS - Cash withdrawalat ocher Bank ATME's CBA - Transaction an ICICI direct VPSAPS - Debit card transaction TOP - Mobile recha ige INF - Internet fund transfer in Inked accounts DIL - Internet Bal payment or funds transfer to Third party Document 25Aspect Section 153D Section 148B (with Explanation 2 to Section 148) Applicable Period Search initiated between 01.06.2003 to 31.03.2021 Search/survey initiated on or after 01.04.2021 but before 01.09.24 Context Search assessment under Section 153A/153C All cases where assessment/reassessment is based in respect of an assess....