Case Number: ITA 5809/DEL/2019
Appellant: Ashok Kumar Grover, Ghaziabad
Respondent: ITO Ward-69(4), New Delhi
Assessment Year: 2015-16
Result: Appeal dismissed
Case Filed on: 2019-07-03
Order Type: Final Tribunal Order
Date of Order: 2022-09-23
Pronounced on: 2022-09-23
This appeal by Ashok Kumar Grover pertains to the assessment year 2015-16 and is directed against the order of the Income Tax Officer (ITO), Ward-69(4), New Delhi. The appeal was heard and pronounced on 23rd September 2022 before the Income Tax Appellate Tribunal (ITAT), Delhi “SMC” Bench, comprising Shri Kul Bharat, Judicial Member.
Ashok Kumar Grover filed an appeal against the assessment order for the year 2015-16. The primary issue in this appeal was the addition of Rs. 20,00,000 made by the Assessing Officer (AO) on account of unexplained unsecured loans. The case was selected for limited scrutiny to ascertain the source of investment in property.
The appellant raised several grounds of appeal, primarily contesting the addition of Rs. 20,00,000 made by the AO as unexplained unsecured loans. The appellant argued that the CIT(A) erred in upholding the addition and that the order was based on incorrect understanding of facts and circumstances, and reliance on non-applicable judicial precedents.
At the time of hearing, there was no representation on behalf of the assessee. The tribunal noted that there had been no representation from the assessee since 01.06.2022. Therefore, the appeal was taken up for hearing in the absence of the assessee and was disposed of based on the material available on record.
During the assessment proceedings, the AO carried out an inquiry regarding the unsecured loan of Rs. 20,00,000 obtained from M/s Sumanglam Realtech Pvt. Ltd. The AO concluded that the lender had no creditworthiness and the transaction was not genuine, leading to the addition of Rs. 20,00,000 to the income of the assessee.
Aggrieved by the AO’s order, the assessee appealed before the CIT(A). The CIT(A) upheld the AO’s addition, noting that the lender company lacked creditworthiness and the transaction was not genuine. The CIT(A) observed that the loan was advanced without interest, collateral, or a specified repayment period, raising doubts about the genuineness of the transaction.
The tribunal reviewed the findings of the AO and CIT(A). It noted that the lender company had advanced a significant loan amount to the assessee without any business connection or security, which was not feasible as per normal business practices. The tribunal also observed that the lender company had an interest-bearing liability in the form of a CC limit, but advanced an interest-free loan to the assessee, which was against the principle of business expediency.
The tribunal relied on the Supreme Court decision in the case of S.A. Builders Ltd vs Commissioner of Income Tax, which emphasized the principle of commercial expediency. The tribunal found that the loan in question did not meet the criteria of commercial expediency, as it was advanced without any business links, interest, or collateral for an indefinite period.
The tribunal concluded that the assessee failed to establish the genuineness of the transaction and the creditworthiness of the lender. Therefore, it upheld the addition made by the AO and confirmed by the CIT(A). The appeal was dismissed.
Order Pronounced in Open Court on 23rd September, 2022.
Signed:
Kul Bharat, Judicial Member
Dated: 23rd September, 2022
Date of Hearing: 19.09.2022
Date of Pronouncement: 23.09.2022
Copy Forwarded to:
By Order
Assistant Registrar, ITAT, New Delhi
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