JCIT Vs Starcity Real Estates Pvt. Ltd. (ITAT Delhi)
Summary: The ITAT Delhi dismissed the Revenue’s appeal against the order dated 16.01.2026 of the CIT(A)-3, Noida, concerning AY 2020-21. The assessee had filed a return declaring loss of Rs.35,55,78,301. During scrutiny assessment, the Assessing Officer examined unsecured loans received from Hallow Securities Pvt. Ltd., Sundram Consultant Pvt. Ltd. and NV Ruchi Barter Pvt. Ltd. and, being dissatisfied with the assessee’s explanation, made additions aggregating Rs.12,42,25,000 under Section 68 of the Income Tax Act, 1961. The returned loss was consequently assessed at Rs.23,13,53,300. The CIT(A) deleted the additions primarily after finding that the assessee had discharged the evidentiary onus concerning the lenders. In relation to Hallow Securities Pvt. Ltd., the appellate material showed that the lender was a registered NBFC having share capital and reserves exceeding Rs.98 crore, revenue of Rs.7.52 crore and MAT income of Rs.1.41 crore, besides fixed deposits and CCD funding. The CIT(A) also relied upon findings concerning loans from the same lender in a sister concern, where the jurisdictional ITAT had accepted the supporting evidence and held that identity, creditworthiness and genuineness stood established. For Sundram Consultant Pvt. Ltd., the Tribunal noted that the identity, credibility and genuineness of the transaction had been considered in the case of the assessee’s group concern, Ace Infracity Development Pvt. Ltd., and the Department’s appeal had been dismissed by a Coordinate Bench. NV Ruchi Barter Pvt. Ltd. was also stated to be a registered NBFC, with share capital and reserves of Rs.2.30 crore and total revenue of Rs.7.16 crore for the year ended 31.03.2020. The Tribunal observed that the AO had essentially drawn adverse inferences from the low income reported by the lender companies, absence of loan agreements and doubts as to why substantial loans would be advanced when the assessee’s project was at an initial stage. It held that additions could not be sustained merely because lenders reported low income when their overall financial position and supporting material demonstrated their capacity. Once the First Appellate Authority had examined the issue in the context of Section 68, the Revenue was required to bring material capable of countering the CIT(A)’s conclusions, which it failed to do. The Revenue’s grounds were therefore held to have no substance and its appeal was dismissed.
