Rani Sati Surajgarhia Infrastructure Ltd Vs DCIT (ITAT Delhi)
The Income Tax Appellate Tribunal (ITAT) Delhi Bench has allowed the appeal filed by Rani Sati Surajgarhia Infrastructure Ltd., setting aside the additions made by the Assessing Officer (AO) and confirmed by the Commissioner of Income Tax (Appeals) [CIT(A)] under Section 68 of the Income-tax Act, 1961. The case involved unsecured loans totaling Rs.1,07,82,932, received from Kamdhenu Buildcon Pvt. Ltd. and Shri Amit Mittal, a director of the assessee company.
Background of the Case
For Assessment Year 2015-16, Rani Sati Surajgarhia Infrastructure Ltd. filed its return of income declaring a total income of Rs.1,78,000. The case was selected for limited scrutiny through the Computer Assisted Scrutiny Selection (CASS) system. The specific issues identified for scrutiny were unsecured loans from persons who had not filed returns of income, discrepancies in Form 3CD, and a mismatch in sales turnover reported in the audit report and ITR.
During the assessment proceedings, the AO observed from the company’s audited financials that the assessee had taken unsecured loans of Rs.1,02,92,932 and Rs.4,90,000. When asked to provide details and justification for these loans, the assessee reportedly did not make a full compliance. Due to this non-compliance, a show-cause notice under Section 144 of the Act was issued. The notice specifically questioned why additions relating to unsecured loans from Kamdhenu Buildcon Pvt. Ltd. (‘Kamdhenu’) and Shri Amit Mittal (Director) should not be disallowed. In response, the assessee submitted only its ITR and financial statements, which the AO found insufficient. Consequently, the AO disallowed both unsecured loans and made a total addition of Rs.1,07,82,932 under Section 68 of the Act, treating them as unexplained cash credits.
