Case Law Details
Mahadev Dairy Pvt. Ltd. Vs ITO (ITAT Delhi)
In case of Mahadev Dairy Pvt. Ltd. vs. ITO (ITAT Delhi), the Income Tax Appellate Tribunal (ITAT) Delhi ruled in favor of the assessee by deleting an addition of ₹25 lakh made under Section 68 of the Income-tax Act, 1961, as unexplained cash credit. The dispute arose during the assessment year 2014-15, where the Assessing Officer (AO) had added the amount, citing the assessee’s failure to prove the genuineness and creditworthiness of an unsecured loan received from Sh. Kuldeep Nagar. The Commissioner of Income Tax (Appeals) [CIT(A)] upheld this addition, stating that cash deposits were made into Nagar’s bank account before the loan was extended. However, ITAT found that Nagar was a promoter of Mahadev Dairy Pvt. Ltd. and was assessed under the same jurisdiction.
Upon review, the ITAT Delhi bench observed that the lower authorities had not thoroughly examined the creditworthiness of Sh. Kuldeep Nagar by considering his available cash-in-hand records. Since the assessee successfully established the identity, genuineness, and creditworthiness of the transaction, ITAT ruled in its favor. The tribunal concluded that the loan from the promoter could not be treated as an unexplained cash credit, leading to the deletion of the ₹25 lakh addition. The appeal was allowed on December 5, 2024. This decision reinforces the importance of assessing cash credit transactions holistically, particularly when funds originate from promoters.
FULL TEXT OF THE ORDER OF ITAT DELHI
This assessee’s appeal for assessment year 2014-15, arises against the Commissioner of Income Tax (Appeals)-6 [in short, the “CIT(A)”], Delhi’s order dated 30.09.2019 passed in case No. CIT(A) Delhi-6/10163/2019-20 involving proceedings under section 143(3) of the Income-tax Act, 1961 (hereinafter referred to as ‘the Act’).
2. Case called twice. None appears at the assessee’s behest. We accordingly proceeded ex-parte against the assessee.
3. Learned Departmental Representative vehemently submits during the course of hearing that both the lower authorities have rightly invoked section 68 unexplained cash credits addition of Rs.28 lakhs representing unsecured loans from Sh. Kuldeep Nagar. Our attention is further invited to the Assessing Officer’s assessment discussion dated 07.12.2016 that the assessee has failed to prove the genuineness/creditworthiness of the said credits coming to its books in the relevant previous year. And also, that Sh. Kuldeep Nagar’s bank account has witnessed cash deposits followed by the corresponding loans given to the assessee.
4. We have given our thoughtful consideration to the assessee’s foregoing sole substantive grievance as well as both the lower authorities’ respective discussions making the impugned addition. We find no reason to disagree with the assesee’s instant sole substantive grievance as the impugned unsecured loan has come from none other than its promoters as evident from CIT(A)’s lower appellate discussion in paragraph 4.2 and the fact that he is also assessed in the same jurisdiction. It is further noticed that both the learned lower authorities have nowhere examined Sh. Nagar’s creditworthiness in light of the cash in hand available in his books as well so as to question his capacity to advance such loans to his own company. We accordingly see merit in the assessee’s sole substantive grievance once it has discharged all the three aspects of identity, genuineness and creditworthiness of impugned unsecured loan amount of Rs.25 lakhs for being subject matter of adjudication before us. The assessee succeeds in this instant sole substantive grievance therefore.
5. This assessee’s appeal is allowed in above terms.
Order pronounced in the open court on 5th December, 2024
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