DCIT Vs Hotel Surbhi Palace India Private Limited (ITAT Delhi)
Suspicion is not Evidence – Old Loans can’t be Taxed as Fresh Income – ITAT deletes ₹10.75 Cr Loan Addition
Dehradun ITAT dealt with Revenue’s appeal against deletion of addition of ₹10.75 crore made on account of unsecured loans
Assessee, engaged in hotel, restaurant & hospitality business, filed return declaring NIL income with business loss of ₹4.24 crore. AO completed assessment u/s 143(3) r.w.s. 144B assessing income at ₹11.17 crore. This included disallowance of ₹41.77 lakh u/s 35D, ₹34,070/- towards interest on delayed service tax & TDS, & addition of ₹10.75 crore treating unsecured loans from five companies as bogus. The loans were recorded from: Ice Globe Promoters Pvt. Ltd. – ₹6.77 crore, Ignace Infrastructure Pvt. Ltd. – ₹1.10 crore, S.W. Consultant Pvt. Ltd. – ₹1.00 crore, Trade Link Trading Pvt. Ltd. – ₹84 lakh & Vibhu International Pvt. Ltd. – ₹1.04 crore. AO alleged these were “Jama-Kharchi” companies & treated loans as benefit/perquisite taxable u/s 28(iv). CIT(A) deleted the addition.
Tribunal noted that AO had observed that the said lenders are nothing but Jama-Kharchi companies from whom certain loans were taken in Assessment Year 2017-18 and neither the loans were repaid nor any interest were paid on such loan. Therefore, AO by doubting the loan transactions, added u/s 28(iv) . Before CIT(A), Assessee contended that there had been no benefit or perquisite of any kind, which was received in monetary terms, arising from the business of ssessee, which can be equated with the receipt of unsecured loans from these parties. Assessee emphatically stated that there is absolutely no basis or material or evidence on the basis of which the impugned amounts can be said to be the income or benefit or perquisite to Assessee. Moreover, Assessee also stated that all these loans are standing in credit of the balance sheet of assessee since many past years & during the year, Assessee has not received any fresh loan from the said companies, whose credit worthiness are doubted by AO. CIT(A) after considering the submissions of the parties opined that in case of doubt regarding credit-worthiness of the said lenders, AO should have reopened the assessment of the Assessment Year in which such loans were received &no action could be taken after three years of receipt of such fund by assessee from those lenders. It is found that except observing that the lenders have no creditworthiness, AO has failed to bring any evidential proof. Nothing has been brought on record by AO to conclude that such loans are bogus & no investigation has been carried out by AO on the credential of the lenders. CIT(A) has specifically observed that, all the Companies status are active in the website of MCA. Thus observation of AO that those Companies are having suspicious relation with Kolkata based Jama-Kharchi Companies, no material has been brought on record to prove the same. CIT(A) has also observed that those lenders are registered with ROC, Delhi & the names of those Companies do not appear in the list of apparent shell companies as prepared by the Investigation Wing at Kolkata, accordingly, deleted the addition. Tribunal ruled that it requires no interference in the absence of any contrary material or facts brought on record by the Dept & dismissed Appeal of Revenue.
