Inthehighcourtofdelhiatnewdelhi+Ita 712/2019The Pr. Commissioner Of Income Tax -3 v. Dalmia Housing Finance Ltd

$~101 *INTHEHIGHCOURTOFDELHIATNEWDELHI+ITA 712/2019THE PR. COMMISSIONER OF INCOME TAX -3.....Appellant Versus DALMIA HOUSING FINANCE LTD. .....RespondentThrough:Ms.RanoJain,Mr.VenketeshChaurasia & Mr. Saksh Rustagi, Advs. CORAM:HON'BLE MR. JUSTICE VIBHU BAKHRUHON'BLE MR. JUSTICE TEJAS KARIAO R D E R05.05.2025 % 1.The Revenue has filed the present appeal under Section 260A of theIncome Tax Act, 1961 [Act] impugning an order dated 15.11.2018[impugned order] passed by the Income Tax Appellate Tribunal inITA No.2258/Del/2017 in respect of Assessment year 2012-13. 2.The Assessee had filed its return of income for AY 2012-13 on28.09.2012 declaring a loss of ₹1,66,73,547/-. The Assessee’s return was picked up for scrutiny and the Assessing Officer framed an assessmentorder dated 03.02.2015 under Section 143(3) of the Act determining theAssessee’s total income chargeable to tax for AY 2012-13 at ₹29,18,08,480/. The additions made to the Assessee’s declared income included the followingadditions: (a) Addition of ₹12,08,25,003/- on account of discrepancy in trade payable to M/s India Bulls Financials Services Ltd. ;and, This is a digitally signed order.The authenticity of the order can be re-verified from Delhi High Court Order Portal by scanning the QR code shown above.The Order is downloaded from the DHC Server on 15/05/2025 at 12:38:36 (b) Addition of ₹17,07,05,885/- on account of unexplained payment made to IBFSL. 3.The Assessee preferred an appeal against the assessment order beforethe learned Commissioner of Income Tax (Appeals) [CIT(A)].However,the Assessee was unsuccessful. The learned CIT(A) passed an order dated28.02.2017 dismissing the Assessee’s challenge to the aforementionedadditions on the ground that it had been unable to substantiate the same. 4.It is the Assessee’s contention that the fact that the IBFSL did notreflect the amounts payable by the Assessee was on account of the fact thatits group companies had discharged the liability towards IBFSL. However,there was no remission of liability and the Assessee would require todischarge the liability towards its group companies that had made paymentsto IBFSL 5.The Assessee filed further appeal against the appellate order dated28.02.2017 before the learned ITAT, which was allowed by the impugnedorder. 6.The relevant extract of the ITAT’s impugned order is set out below: “11.We have heard both the parties and perused all the relevantmaterial available on record. During the assessment proceedings theassessee filed the details of sundry creditors, vide letter dated01.12.2014 giving therein the name, address, amount due, nature ofliability and other remarks. In response to notices issued u/s 133 toIndiabulls Financial Services Ltd. and India Bull Services Ltd., thesaid parties replied that nothing was receivable by them from theassessee. The copy of the account was filed by Indiabulls FinancialServices Ltd. during the assessment proceedings. The assessee repliedvide letter dated 15.12.2014 that it was just a case of restructuring ofliability and does not tantamount to any evasion of tax. Ignoring theexplanation and evidences filed by the assessee, the Assessing Officermade the addition.From the records which were produced before the This is a digitally signed order. The authenticity of the order can be re-verified from Delhi High Court Order Portal by scanning the QR code shown above.The Order is downloaded from the DHC Server on 15/05/2025 at 12:38:36 This is a digitally signed order. The authenticity of the order can be re-verified from Delhi High Court Order Portal by scanning the QR code shown above.The Order is downloaded from the DHC Server on 15/05/2025 at 12:38:36 Revenue authorities it can be seen that since a number of groupentities were indebted to Indiabulls Securities, on the basis of asettlement agreement, the payments were made by the other groupcompanies on behalf of the assessee company. But the group was notaware of this fact that by which entity, these amounts paid, were beingcredited by the Indiabulls, and therefore, the assessee company didnot close lndiabull’s account in its books. As a result of payment madeby group companies on behalf of the assessee and appropriated byIndiabulls, the outstanding amount in the books of Indiabulls reducedto NIL. But the assessee company has to repay its sister companieswho have made the payments and therefore, the name of sistercompany was reflected in the books of the assessee. The detailedevidences in this regard were filed before the Assessing Officer aswell as the CIT(A).The details of payments made on behalf of theassessee by sister concerns were also reflected in the documents filedby the assessee company before the Revenue authorities. Thus, theassessee has disclosed all the details in respect of the loans taken fromIndia Bulls. Therefore, the Assessing Officer was not correct inmaking this addition. The CIT(A) also ignored the same. Therefore,we set aside the order of the CIT(A). Ground No.3 is allowed. 12.As regards to Ground No.4 relating to addition on account ofpayment to India Bulls Rs.17,07,05,885/-, the Ld. AR submitted thatthis addition was made by the Assessing Officer stating that since anamount of Rs.17,07,05,885/- is appearing in the books of Indiabullsas having been received from the assessee, the assessee has made thepayment out of its undisclosed income and hence added the same. TheLd. AR submitted that as explained in the ground No.3, the paymentswere made by the sister companies and documentary evidences in thisregard were filed before the Assessing Officer as well as before theCIT(A).The Ld. AR further submitted that once having made theaddition on account of the same creditor, again making the additionon account of payment to the same creditor also tantamount to doubleaddition. 13.The Ld. DR relied upon the order of the CIT(A) as well as theAssessment order.The Ld. DR submitted that the Assessing Officerhas rightly made addition on account of payment to India Bullsamounting to Rs.17,07,05,885/ -. The Ld. DR submitted that since anamount of Rs.17,07,05,885/- is appearing in the books of Indiabullsas having been received from the assessee, the assessee has made thepayment out of its undisclosed income and hence added the same. This is a digitally signed order.The authenticity of the order can be re-verified from Delhi High Court Order Portal by scanning the QR code shown above.The Order is downloaded from the DHC Server on 15/05/2025 at 12:38:36 14.We have heard both the parties and perused all the relevantmaterial available on record. The addition made in respect ofRs.12,08,25,003/- and addition of Rs.17,07,05,885/-, both theaddition emerged from the same transaction thereby leading to doubleaddition on the same ground. Since we have given our finding inrespect of Ground No.3, the same reasoning is applicable in respect ofthis ground as well. Ground No.4 is allowed.” This is a digitally signed order.The authenticity of the order can be re-verified from Delhi High Court Order Portal by scanning the QR code shown above.The Order is downloaded from the DHC Server on 15/05/2025 at 12:38:36 14.We have heard both the parties and perused all the relevantmaterial available on record. The addition made in respect ofRs.12,08,25,003/- and addition of Rs.17,07,05,885/-, both theaddition emerged from the same transaction thereby leading to doubleaddition on the same ground. Since we have given our finding inrespect of Ground No.3, the same reasoning is applicable in respect ofthis ground as well. Ground No.4 is allowed.” 7.As is apparent from the above, it is the Assessee’s case that a settlementwas arrived at group level with IBFSL and the amounts payable to IBFSL bythe Assessee had been discharged by the Assessee’s group companies bymaking payments to IBFSL. However, the Assessee had not passed thenecessary entry in its books to reflect the outstanding as payable to its sisterconcern instead of IBFSL. Thus, in other words, it is the Assessee’s case thatalthough the books of IBFSL did not reflect the amount receivable from theAssessee, the same was on account of the liability being discharged by otherentities. Therefore, the Assessee would now require to reflect the amountsthat were owed to IBFSL as owed to its group company(ies) that haddischarged the said liability. 8.The AO had proceeded on the basis that the liability towards IBFSLhad been repaid by the Assessee from undisclosed sources therefore the creditoutstanding was required to be added to its returned income. It is clear fromthe above that the question whether the aforesaid additions could be sustainedturns on a factual controversy whether in fact the group companies of theAssessee had discharged the liability towards IBFSL and the Assessee is nowrequired to reflect the amount owed to IBFSL to its group companies. Clearlyif the factual findings as set out by the learned ITAT in the impugned orderare correct, no substantial question of law would arise for consideration of This is a digitally signed order.The authenticity of the order can be re-verified from Delhi High Court Order Portal by scanning the QR code shown above.The Order is downloaded from the DHC Server on 15/05/2025 at 12:38:36 this court. 9.Mr. Agarwal, learned counsel appearing for the Revenue submits thatthe authorities below have not examined the question whether there was anyremission of liabilities by virtue of the settlement arrived at by the groupcompanies with IBFSL. 10.He submits that the fact that the settlement had been arrived as has beennoted and if the amount paid to IBFSL at a group level was less than whatwas reflected in the books, then an addition is required to be made on accountof remission of liability and this aspect has not been considered by the AO. 11.The learned counsel for the Assessee submits that there has been noremission of liability and the entire amount as reflected in the books of theAssessee was repaid to IBFSL. Since this aspect has not been examined, weconsider it apposite to remand the matter to AO for examining the questionthat there was any remission of liability by virtue of the settlement arrived atbetween the Assessee’s group companies and IBFSL and if so, whether theamount of remission is required to be added to the Assessee’s income. 12.The matter is remanded to the AO for the aforesaid limited enquiry.The AO shall examine the aforesaid aspect and pass an appropriate order.13.The petition is disposed of in the aforesaid terms.14.This order is passed with the consent of the learned counsel for theparties. VIBHU BAKHRU, J TEJAS KARIA, J MAY 5, 2025‘gsr’Click here to check corrigendum, if any This is a digitally signed order.The authenticity of the order can be re-verified from Delhi High Court Order Portal by scanning the QR code shown above.The Order is downloaded from the DHC Server on 15/05/2025 at 12:38:36 12.The matter is remanded to the AO for the aforesaid limited enquiry.The AO shall examine the aforesaid aspect and pass an appropriate order.13.The petition is disposed of in the aforesaid terms.14.This order is passed with the consent of the learned counsel for theparties. VIBHU BAKHRU, J TEJAS KARIA, J MAY 5, 2025‘gsr’Click here to check corrigendum, if any This is a digitally signed order.The authenticity of the order can be re-verified from Delhi High Court Order Portal by scanning the QR code shown above.The Order is downloaded from the DHC Server on 15/05/2025 at 12:38:36 This is a digitally signed order.The authenticity of the order can be re-verified from Delhi High Court Order Portal by scanning the QR code shown above.The Order is downloaded from the DHC Server on 15/05/2025 at 12:38:36