In a landmark tribunal case, Capital Infra Projects Pvt. Ltd., based in Delhi, contested findings by the Deputy Commissioner of Income Tax (DCIT), Central Circle, Noida, regarding unexplained cash credits for the assessment year 2014-15. The case, filed on February 6, 2019, and concluded on September 4, 2020, revolved around a substantial financial transaction deemed questionable by the tax authorities.
The appellant, Capital Infra Projects Pvt. Ltd., challenged the order passed by the CIT(A) – 4, Kanpur on November 30, 2018, pertaining to the assessment years 2013-14 and 2014-15. The primary dispute was over a loan of Rs. 3 crores received from M/s Pabla Leasing and Finance Pvt. Ltd., which the Assessing Officer treated as an unexplained cash credit, leading to additions under section 68 of the IT Act.
During the tribunal hearings, detailed arguments were presented, and extensive records were examined. Both parties cited numerous judicial precedents to bolster their positions. The central issue was whether the transactions with M/s Pabla Leasing and Finance Pvt. Ltd. were genuine and whether the company was merely an ‘accommodation entry provider’ as suggested by an investigation report from the Income Tax Department’s Investigation Unit in Kolkata.
The tribunal noted that a similar case involving Nimbus India Ltd, related to investments made by Pabla Leasing and Finance Pvt. Ltd., had been decided in favor of the taxpayer. The tribunal in that case had accepted the identity, genuineness of the transaction, and the creditworthiness of Pabla Leasing. Drawing parallels, the tribunal found that the loan had been repaid well before the search date, and the directors of Pabla Leasing had substantiated the source of funds used for the loan.
Furthermore, the tribunal was persuaded by the evidence showing that the loans were repaid and by the testimony of the Managing Director of Pabla Leasing and Finance Pvt. Ltd. These factors led to the conclusion that the transactions were genuine, and the company was not merely providing accommodation entries.
The tribunal’s decision to allow the appeal of Capital Infra Projects Pvt. Ltd. underscored the importance of substantiating transactions and demonstrating the legitimacy of financial activities in the face of tax scrutiny. This case serves as a significant reference for similar cases involving allegations of unexplained cash credits.
The decision was pronounced in the open court, bringing relief to Capital Infra Projects Pvt. Ltd. and setting a precedent for how related cases might be viewed in the future.
ITA 928/DEL/2019: Capital Infra Projects Pvt. Ltd. vs. DCIT – Unexplained Cash Credits
Manage the increasing number of hearings effortlessly by leveraging the legal AI revolution We are India's Leading revolutionary AI-powered legal platform where you can get enough insights into top cases and judgements.
Research Platform