DCIT vs Mahamaya Pro Mines & Mineral Pvt. Ltd.

PER MANISH AGARWAL, AM :

The present appeal is filed by Revenue against the order dated 28.03.2025 passed by Ld. Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (“NFAC”), Delhi [“Ld. CIT(A)”] in Appeal No. NFAC/2017-18/10005498 passed u/s 250 of the Income Tax Act, 1961 [“the Act”] arising out of assessment order dated 26.03.2021 passed u/s 143(3) r.w.s. 143(3A) & 143(3B) of the Act pertaining to Assessment Year 2018-19.

Brief facts of the case are that the assessee is a company, filed its return of income on 30.10.2018, declaring total income of INR 11,59,320/- under normal provisions of Act and book profit at INR 11,53,466/- u/s 115JB of the Act was declared. The case was selected for scrutiny for the reason i.e. transactions with company whose registration was cancelled by MCA. Thereafter, the AO observed that during the year under appeal, the assessee has taken loans of INR 75 Lakhs from M/s. Fairly Buildcon Pvt. Ltd. and INR 50 Lakhs from Quick Buildcon Pvt. Ltd., the registration of both the companies has been cancelled by MCA and name of both these companies are struck off from the Register of Companies. It was the claim of the assessee company that these companies were in existence and functional when the loans were taken. However, the AO has not accepted this contention of the assessee and alleged that lender companies have no real business and were used to provide bogus funds in lieu of commission and accordingly, made the addition of INR 1.25 crores u/s 68 of the Act and charged the tax at special rate as provided u/s 115BBE of the Act.

Against the said order, assessee filed an appeal before Ld. CIT(A) who vide order dated 28.03.2025, deleted the addition made by AO by observing that the assessee has duly discharged the burden casted upon it u/s 68 of the Act and further observed that both the lender companies were active when the transaction of loan was carried out with the assessee and thus allowed the appeal of the assessee.

Aggrieved by the order of Ld. CIT(A), Revenue is in appeal before the Tribunal by taking various Grounds of appeal mentioned in the appeal memo wherein Ground of appeal No.4 raised by the Revenue is with respect to the deletion of addition made by AO of INR 1.25 crores u/s 68 of the Act by ignoring the fact that these companies were stuck off by the Registrar of companies.

During the course of hearing, Ld.AR for the assessee in terms of letter dated 03.03.2026 raised a legal Ground under Rule 27 of the Income Tax Appellate Tribunal Rules, 1962 wherein the assessee has challenged the assessment order being passed without issue of show cause notice and mandatory draft order thus the same deserves to hold invalid.

In support of the additional ground taken, Ld.AR for the assessee submits that Grounds raised under Rule 27 of the ITAT Rules, 1962 is emanated from the records available before the Tribunal and is purely a legal ground thus deserves to be admitted.

On careful consideration of the facts and after considering the arguments of both the parties, it is observed that assessee raised this ground under Rule 27 of the Appellate Tribunal Rules, 1963 (the Rules). Before going further, we must refer the Rule 27 of the Rules which reads as under:-

As could be observed from the Rule 27 as reproduced above, the respondent can raise the ground under Rule 27 which has been decided against him. In the instant case, the assessee has raised the legal ground under Rule 27 of the Rules that the assessment order was passed without the issue of show cause notice and draft assessment order however, this Ground of appeal was never raised before Ld. CIT(A) as could be evident from the Grounds of appeal taken before the Ld. CIT(A) as reproduced at page 2 of the appellate order wherein the assessee has raised only three grounds of appeal wherein the assessee has challenged the additions made on merits and no legal ground was taken as taken herein above.

Under these circumstances, the ground of appeal now taken under Rule 27 of the Rules is not admitted therefore, the prayer made by the assessee is hereby, dismissed.

Now Coming to the Grounds of appeal raised by the Revenue, it is observed that in all the Grounds of appeal taken, the revenue has challenged the deletion of additions made by the AO towards the loans taken by holding them as accommodation entry, therefore, they are taken together for consideration.

Heard the parties at length and after considering the facts of the case and material available before us, it is observed that in the instant case, during the course of assessment proceedings, assessee has filed following documents/evidences in order to establish the identity and creditworthiness of the lenders and to prove the genuineness of the transactions made:-

All these documents so filed before the AO alongwith letter dated 12.02.2021 are placed at pages 16 and 19 to 41 of the Paper Book. From the perusal of the bank statements of M/s. Quick Buildcon Pvt. Ltd. placed at page 21 of PB, it is observed that the loan was given to the assessee company on 02.08.2017 when it had sufficient funds in its bank accounts. Likewise in the case of M/s. Fairy Buildcon Pvt. Ltd. placed at page 44 of the Paper Book, loan was received by the assessee on 17^th & 18^th August, 2017 and 28.09.2017 of INR 25 Lakhs each and as per bank statement, there were sufficient funds available when the funds were transferred to the assessee company. It is further observed that both the companies were struck off from the Register of companies in terms of the order dated 04.08.2018 of the Registrar of Companies, NCT Delhi and Haryana i.e. almost one year after the receipt of loans by the assessee company. From the aforesaid facts, it is established that both the lender compares have sufficient creditworthiness and have funds when they were transferred to the assessee. Moreover, both the lender companies were in existence when the loans were given to the assessee. Ld. CIT(A) after appreciating these facts, has deleted the addition made by AO.

Before us, the Revenue has failed to controvert the findings of Ld. CIT(A) by placing on record any contrary material so as to establish that both the lender companies were not having creditworthiness and had failed to fulfil the conditions enumerated u/s 68 of the Act. This being so, we find the order of ld. CIT(A) as reasoned order which is hereby upheld. Accordingly, all the Grounds of appeal raised by the Revenue are dismissed.

In the result, the appeal of the Revenue is dismissed.