IN THE ITAT DELHI BENCH ‘G’
DCIT v. Sports Station (India) (P.) Ltd.
IT Appeal Nos. 2936, 3256 & 3262 (Delhi) of 2011
[Assessment Years 2007-08 & 2008-09]
MARCH 30, 2012
ORDER
A.N. Pahuja, Accountant Member
These three appeals – cross appeals for the AY 2007-08 filed on 3rd June, 2011 by the assessee and on 16th June, 2011 by the Revenue against an order dated 28th February, 2011 of the ld. CIT(A)-XII, New Delhi and appeal filed by the Revenue for the AY 2008-09 against an order dated 9th March, 2011 of the ld. CIT(A)-XII, New Delhi, raise the following grounds:-
I.T.A. No. 3262/D/2011-Revenue [AY 2007-08]
“1(a) On the facts and circumstances of the case, the ld. CIT(A) erred in law and merit of the case in deleting the addition of Rs. 8,35,40,000/- out of total addition of Rs. 9,57,40,000/- made by the Assessing Officer on account of unexplained cash credits.
(b) On the facts and circumstances of the case the ld. CIT(A) erred in law and merit of the cash in deleting the disallowance made by the AO of Rs. 78,37,586/- out of total addition of Rs. 81,80,651/- on account of interest payable.
2. On the facts and circumstances of the case the ld. CIT(A) erred in law and merit of the case in deleting the disallowance of interest amounting to Rs. 5,47,596/- made by the AO u/s 40A(2)(b) of the Income-tax Act, 1961.
3. he appellant craves to amend, modify, alter, add or forgo any ground of appeal at any time before or during the hearing of the appeal.”
I.T.A. No. 2936/D/2011-Assessee [AY 2007-08]
“1. The assessee having furnished confirmations and related documents in respect of such persons and trade creditors from whom it has raised loans aggregating to Rs. 8,52,40,000/-, the CIT(A) erred in not accepting the total confirmations filed and further erred in disallowing confirmations aggregating to Rs. 17,00,000/- and the consequential interest of Rs. 18,559/- in respect thereof.
2. That the CIT(A) erred in rejecting confirmations aggregating to Rs. 17 lacs merely because the related parties failed to mention their respective PAN No. with complete disregard to the fact that the assessee could not be penalized for the default of such persons for their non compliance of provision of sub-section (5A) of section 139A of the Act in respect of which Assessing Officer could have initiated action u/s 272B of the Act.
3. That the order of the authorities below being contrary to the facts and circumstances of the case and in law the appeal be allowed.”
I.T.A. No. 3256/D/2011-Revenue [AY 2008-09]
“1. On the facts and circumstances of the case, the learned CIT(A) erred in law and merit of the case in deleting the addition of Rs. 10,64,461/- made by the Assessing Officer on account of excessive interest payment to persons covered u/s 40A(2)(b) of the Income-tax Act.
2. On the facts and circumstances of the case, the learned CIT(A) erred in law and merit of the case in deleting addition of Rs. 1,27,558/- made by the Assessing Officer on account of depreciation on computer accessories.
3. The appellant craves to amend, modify, alter, add or forgo any ground of appeal at any time before or during the hearing of this appeal.”
2. Adverting first to ground no.1 in the appeal of the Revenue and ground nos. 1 & 2 in the appeal of the assessee for the AY 2007-08, facts, in brief, as per relevant orders are that return declaring loss of Rs. 10,15,51,540/- filed on 14th November, 2007 by the assessee, engaged in the business of trading in Footwear, Apparel, accessories & equipment and skin care products, after being processed on 14.08.2008 u/s 143(1) of the Income-tax Act, 1961 (hereinafter referred to as the Act) was selected for scrutiny with the service of a notice issued u/s 143(2) of the Act. During the course of assessment proceedings, the Assessing Officer (A.O. in short) noticed that the assessee raised substantial unsecured loans during the year. Accordingly, a notice dated 23rd January, 2009 u/s 142(1) of the Act was served upon the assessee by the AO, seeking details of all unsecured loans, confirmations and copies of the bank account of the said creditors. However, the assessee did not respond to this notice. Subsequently, on 10th September, 2009, the assessee was again requested to furnish complete details, evidence and genuineness of transactions in fresh unsecured loans and the case was adjourned to 22nd September, 2009. However, none appeared on the said date. Later, a letter dated 07.10.2009 was filed on 23rd November, 2009, wherein the assessee submitted as under:-
“As regards unsecured loans we enclose statement of unsecured loan account. In respect of unsecured loan from trade deposit and shareholders we enclose confirmation received.”
2.1 On perusal of the details, the AO pointed out that a list showing opening and closing balance in respect of 44 parties was filed whereas confirmations from three parties namely The classic, K.B. Mathur and Meera Mathur were filed from whom no fresh unsecured loans were taken during the year; rather only interest was credited. No confirmation or other document in respect of remaining 41 parties was filed. Since the assessee did not establish genuineness of the credits, the AO again reminded the assessee vide order-sheet entry dated 23.11.2009 and the case was adjourned to 30th November, 2009. Despite seeking further adjournment, the assessee did not establish genuineness of the creditors even until 14th December, 2009 ,when the assessee merely stated as under:-
“1. Detailed statement of unsecured loans is enclosed. As regards loans received from the following person their confirmations are enclosed: Mrs. Roma Khanna (Rs. 25,43,362), Mrs. Neera Sehgal (Rs. 20 lacs). The Classic (Rs. 4,71,677/-), Mr. K.B. Mathur (Rs. 9,43,680/-) and Mrs. Meera Mathur (Rs. 9,43,680/-) are enclosed. The other confirmations are awaited and will be filed in due course.”
2.2 Since sufficient opportunity had already been allowed and the assessee did not establish genuineness of the credits nor even submitted confirmations of all the unsecured creditors, the AO added an amount of Rs. 9,57,40,000/- in respect of the following fresh creditors:-
