MPG Business Information Systems Pvt. Ltd. Vs DCIT (ITAT Delhi)
The appeal before the Income Tax Appellate Tribunal, Delhi Bench, arose from the order of the Commissioner of Income Tax (Appeals) dated 29.03.2019 for Assessment Year 2013-14. The assessee challenged, among other issues, the addition of ₹2,21,50,000 under Section 68 of the Income-tax Act, 1961, the enhancement made by the CIT(A), and the denial of set-off of losses.
The assessee, engaged in software design and development, had disclosed unsecured borrowings of ₹5,73,80,000 as on 31.03.2013. During scrutiny, the Assessing Officer examined confirmations relating to unsecured loans. Although confirmations were filed, the Assessing Officer found that all confirmations bore the same date and followed a similar format. Summons were issued to verify the transactions. While several lenders appeared and confirmed their transactions, the dispute remained confined to the unsecured loan of ₹2,21,50,000 shown in the name of Virender Kumar Gupta (VKG).
The Assessing Officer found discrepancies after issuing notice under Section 133(6) to VKG’s auditor. The audited balance sheet supplied by the auditor did not reflect any amount receivable from the assessee. Similar information obtained from VKG’s Assessing Officer and the audited balance sheet uploaded by VKG also did not disclose any receivable from the assessee. VKG did not appear in response to a notice issued under Section 131 to explain the discrepancies. Although the assessee maintained that the transaction had been carried out through banking channels and relied upon VKG’s confirmation, the Assessing Officer concluded that the liability was not genuine and added ₹2,21,50,000 under Section 68. The CIT(A) confirmed the addition.
