DCIT Central Circle-I, Noida vs M/s Bright Buildtech Pvt. Ltd.

PER ANUBHAV SHARMA, JM:

These are appeals preferred by the revenue against the orders of the Ld. Commissioner of Income-tax (Appeals)-3, Noida (hereinafter referred to as the First Appellate Authority or ‘the ld. FAA’ for short) in appeals filed before him against the orders of the ld. Assessing Officer (hereinafter referred to as the Ld. AO, for short) passed u/s 147 r.w.s. 143(3⁾ of the Income-tax Act, 1961 (hereafter referred to as ‘the Act’). Further details of the orders of the lower authorities are as under:-

The appeals were heard together as they involved common questions of law, arising out of additions made on the basis of unsecured loan and interest their upon received from same set of parties.

The background to the issues are that, a search and seizure action was carried out on ACE and Kurele Group of Companies and allegedly, during the course of search, incriminating documents pertaining to the assessee were also seized, and the proceedings against the assessee were initiated under Section 148 of the Act.

During the course of assessment proceedings, the assessee was asked to furnish details of loans received from different sources, and based upon the response of the assessee, and the documents filed in the form of confirmation, ITR and bank statement of the lender, the Assessing Officer found that the transactions were non-genuine and had made additions of unsecured loan of Rs.8 crores from M/s Dhankalash Distributors Private Limited, Rs.1 crore from M/s Sundrm Consultant Private Limited in AY 2020-21 and interest on unsecured loan paid to M/s Dhankalash Distributors Private Limited and M/s Hallow Securities Pvt. Ltd. in AY 2022-23 were added to the income of the assessee, and the same have been deleted by the Ld. CIT(A) for which the department is in appeal. We consider it beneficial, to discuss the issues on the basis of parties involved.

Addition of Rs.8 crore on account of unsecured loan from M/s Dhankalash Distributors Private Limited was made in AY 2020-21, and we find that to establish the identity, genuineness and creditworthiness of the parties and the transaction, all the primary documents were furnished before the Learned Tax Authorities below. The assessee had demonstratedthat in the audited balance sheet for AY 2020-21, this company had reflected shareholders’ funds of Rs.64 crores and above, and investments amounting to Rs.124 crores and above. Assessee had substantial investments in listed entities like Vipul Limited of Rs.2.37 crores and in quoted debentures of Vodafone Idea Limited of Rs.95.30 crores. It also brought on the record that M/s Teesta Retails Pvt. Ltd., which is part of the Reliance Group had invested Rs.400 crores in this company in the form of Compulsory Convertible Debentures in FY 2019-20, 2020-21 and 2021-22. Ld. Counsel has pointed out that in the case of M/s Allure Developers Pvt. Ltd. which is group concern, the Assessing Officer had accepted loans received from M/s Dhankalash Distributors Pvt. Ltd. in AY 2020-21, and similarly in case of Ajay Realcon Pvt. Ltd. (ACE Group entity) in AY 2020-21, the unsecured loans routed through M/s Hallow Securities Pvt. Ltd. from M/s Dhankalash Distributors Pvt. Ltd. have been accepted. In fact, in the present Financial Year 2019-20, no fresh loan was received, but merely journal entry was made. All these aspects have been duly appreciated by Ld. CIT(A).

We also find that in case of this assessee, in AY 2021-22, ITA No. 4106/Del/2024, a coordinate Bench, on which both of us were on the Bench, had examined addition of Rs.25 lakhs made in the hands of the present assessee as received from M/s Dhankalash Distributors Private Limited, and the addition was deleted by the Ld. CIT(A) and confirmed by the Bench.

Ld. DR has primarily contended that, the Assessing Officer was not given the opportunity to respond to the additional evidences, and there was a violation of Rule 46A. However, we find that no additional evidence, was furnished by the assessee before the Ld. CIT(A) and Ld. CIT(A), exercising powers u/s 250 (4) of the Act, had called for response by notices u/s 133(6) of the Act, thus there can be no violation of Rule 46A.

Further, we are of the considered view that as there was no burden on assessee to prove the “source of source”, the evidence filed and the background of the investor did not warrant doubting the transaction and Ld. CIT(A) had duly benefited the assessee. The corresponding ground, with regard to, additions of unsecured loan or the interest on unsecured loan, have no substance.

Addition of Rs.1 crore was made in AY 2020-21, on account of unsecured loan received from M/s Sundrm Consultants Pvt. Ltd. and we find that Ld. CIT(A) had appreciated the fact that, the assessee had not received any loan or credit in FY 2019-20, and there was merely a journal entry reflecting the transfer of credit balance from previous transactions. It is also appreciable, Assessing Officer had not objected to the receipt of Rs.32 crores in AY 2019-20, and now the same transaction is being questioned when the amount was returned by the assessee. The repayments being duly recorded in the regular books of accounts, in fact, negate all the allegations made.

Thus, we are of considered view that, the conclusions drawn by Ld. CIT(A), in regard to, addition of Rs.1 crore received from M/s Sundrm Consultants Pvt. Ltd requires no interference corresponding ground has no substance.

Coming to the addition of Rs.55,68,601/- made in AY 2022-23, on account of interest on unsecured loan to M/s Hallow Securities Pvt. Ltd, we find that a co-ordinate Bench in the case of assessee for AY 2021-22, has examined the issue of receipt of Rs.9,60,00,000/- from M/s Hallow Securities Pvt. Ltd., and the Department's appeal was dismissed. The Bench have taken into consideration the fact, in case of M/s Allure Developers Pvt. Ltd, the Revenue's appeal in ITA No.3559/Del/2025 for AY 2020-21, order sufficiently discusses the credentials of this Company and found that the transaction are genuine. The allegations made by the AO are similar in the case of M/s Allure Developers Pvt. Ltd and the findings of Ld. CIT(A), therefore, requires no interference. In the light of the aforesaid, the corresponding grounds have no substance.

As a consequence of aforesaid discussion, the appeals of department are dismissed.