The case number ITA 742/DEL/2019 involves the appellant, Gyan Chand & Sons (HUF), Proprietor M/s Gian Chand Mohinder Kumar, New Delhi, and the respondent, Commissioner of Income Tax (CIT), Circle-46, New Delhi. This case pertains to the assessment year 2010-11, with the final tribunal order pronounced on November 1, 2021. The appeal was filed on February 1, 2019.
Gyan Chand & Sons (HUF) filed an appeal against the order dated November 26, 2018, passed by the Commissioner of Income Tax (Appeals) [CIT(A)]-16, New Delhi, relating to the assessment year 2010-11. The appeal was heard by the Delhi Bench ‘C’ of the Income Tax Appellate Tribunal (ITAT), comprising Sh. A. D. Jain, Vice President, and Dr. B. R. R. Kumar, Accountant Member.
The primary issue in this appeal was the addition of unaccounted loans allegedly received by Gyan Chand & Sons from Shri Sant Lal Aggarwal. The addition was based on statements recorded during a search operation and ledger accounts showing cash transactions.
A search operation was conducted at Ahmadabad and New Delhi, revealing an unaccounted money lending business involving Shri Asharam Bapu and his associates. Documents found during the search indicated several beneficiaries, including Gyan Chand & Sons. Statements from Shri Devi Das Tikamdas Chattani and Shri Sant Lal Aggarwal highlighted the involvement of various parties in cash loan transactions.
The Assessing Officer (AO) received information from the Investigation Wing about cash loans disbursed by Shri Sant Lal Aggarwal, identifying Gyan Chand & Sons as one of the beneficiaries. Based on this information, the AO assumed jurisdiction under section 148 of the Income Tax Act and issued statutory notices to Gyan Chand & Sons.
The appellant’s counsel relied on a similar case, M/s Shagun Jewellers (P) Ltd. vs ACIT, where the ITAT had ruled in favor of the assessee due to lack of direct evidence. The counsel argued that the addition was based on statements without corroborating evidence of actual cash transactions between Gyan Chand & Sons and Shri Sant Lal Aggarwal.
The Departmental Representative (DR) supported the orders of the lower authorities, emphasizing the findings from the search operation and the statements recorded.
The tribunal noted that the facts and circumstances of the case were similar to the M/s Shagun Jewellers case. The ITAT had previously ruled that additions based solely on statements without corroborative evidence could not be sustained. The tribunal found that the AO had relied on statements without confronting the individuals involved and without direct evidence of cash transactions.
The tribunal referred to the detailed ledger accounts and statements, concluding that the addition was based on surmises and conjectures rather than concrete evidence. The tribunal emphasized the need for direct evidence linking Gyan Chand & Sons to the alleged cash loans.
In conclusion, the tribunal allowed the appeal filed by Gyan Chand & Sons for statistical purposes. The tribunal directed the CIT(A) to reconsider the case, providing a fair opportunity for the appellant to present evidence and substantiate their claims.
The tribunal pronounced the order in the open court on November 1, 2021, directing the CIT(A) to re-evaluate the evidence and statements, ensuring a fair hearing for the appellant.
Sd/- (A. D. Jain) Vice President
Sd/- (Dr. B. R. R. Kumar) Accountant Member
Dated: 01/11/2021
Copy forwarded to:
ASSISTANT REGISTRAR
ITAT, New Delhi
Gyan Chand & Sons vs CIT: Appeal Against Addition of Unaccounted Loans
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