Source-of-Source Amendment Not Retrospective: Tribunal Spares Company from₹4.5 Cr Share Application  Addition-

ITO Vs Sourabh Logistics Pvt.Ltd. (ITAT Delhi)

Source-of-Source Amendment Not Retrospective: Tribunal Spares Company from₹4.5 Cr Share Application  Addition-

Background

• AO’s Assessment (30.03.2016 u/s 143(3)):

Added ₹6.15 Cr u/s 68 (share application money, unsecured loans & cash deposits).

Disallowed expenses ₹2.90 Lakh.

Assessed income: ₹6.23 Cr vs returned ₹4.8 Lakh.

• CIT(A) (10.02.2023, NFAC Delhi):

Deleted ₹4.50 Cr (share application money).

Deleted ₹1.50 Cr (unsecured loans).

Part relief granted.

• Revenue’s Appeal before ITAT: Challenged both deletions.

Tribunal’s Findings

1. Share Application Money (₹4.50 Cr)

AO’s case:

• Investors: Shri Ramesh Chander (₹2.32 Cr) & Shri Mahender Pal Khanna (₹2.17 Cr).
• Only confirmations & ITRs filed; no bank statements during assessment.
• Notices u/s 133(6) not complied; bank credits just before cheque issue suggested accommodation entries.
• Identity/creditworthiness/genuineness not proved.

CIT(A):

• Accepted additional evidence (bank statements, confirmations, ITRs).
• Applicants appeared in remand, confirmed investments & refunds.
• Funds later refunded; transactions genuine.

ITAT:

• Found CIT(A)’s findings supported- identity, creditworthiness & genuineness proved.
• Refund of money corroborated.
• Amendment to s.68 (source of source, effective AY 2023-24) not applicable.
• Held: Deletion upheld.

2. Unsecured Loans (₹1.50 Cr)

Loans from M/s Sabee Finanz Pvt. Ltd. (₹1 Cr) & M/s Jas Logistics Pvt. Ltd. (₹50 Lakh).

AO’s objection:

• Cash deposited just before loans given; unexplained cash routed.
• CIT(A): Accepted assessee’s explanation (advances for land purchase refunded in cash; mutual fund redemption), deleted additions.

ITAT’s view:

• Jas Logistics (₹50 Lakh): Agreements with villagers produced, but AO not given chance to verify. Matter remanded to AO.

Sabee Finanz (₹1 Cr):

• ₹50 Lakh out of earlier withdrawals-no cogent proof; addition upheld.
• ₹50 Lakh claimed from mutual fund redemption-no details filed; remanded to AO.
• Held: Part relief.

Decision

• Share application money deletion upheld (₹4.50 Cr).
• Unsecured loan issue partly restored / partly confirmed:
• ₹50 Lakh addition confirmed.
• Balance ₹1 Cr (₹50 Lakh + ₹50 Lakh) remanded to AO for verification.
• Result: Appeal of Revenue partly allowed

FULL TEXT OF THE ORDER OF ITAT DELHI