Neutral Citation No: 2022/Dhc/003545 v. J U D G M E N T

$~43 *IN THE HIGH COURT OF DELHI AT NEW DELHI +ITA 294/2022 versus CORAM:HON'BLE MR. JUSTICE MANMOHANHON'BLE MS. JUSTICE MANMEET PRITAM SINGH ARORA J U D G M E N T MANMEET PRITAM SINGH ARORA, J (Oral): 1.The present appeal has been filed by the Revenue under Section 260Aof the Income Tax Act, 1961 (‘the Act’) impugning the order dated 13[th]May, 2020 in ITA No. 663/Del/2019 for the Assessment Year (‘AY’) 2012-13 whereby the appeal of the Assessee has been allowed. The Assessee wasthe proprietor of M/s Rhea Distribution Company. 2.In the present appeal, the Revenue is aggrieved by the deletion of theaddition of Rs.24,50,91,663/- which as per the Revenue was an unexplainedaddition made by the Assessee to its capital account. It is stated that theAssessee has failed to discharge the burden regarding the source from which ITA 294/2022 the capital was introduced. 3.It is contended by the Revenue that during the assessment proceedingsinitiated under Section 143 of the Act, the Assessee was asked to furnishdetails regarding the net capital addition to the tune of Rs.24,50,91,663/-with evidence. The learned counsel for the Revenue relied upon the order ofthe Assessing Officer (‘AO’) which records that the Assessee failed toproduce its books of accounts and supporting vouchers before the AO tosubstantiate the aforesaid addition. 4.The aforesaid addition was confirmed by the Commissioner ofIncome Tax (Appeals) (‘CIT(A)’) after referring to the remand reportssubmitted by the AO dated 18[th]May, 2018 and 04[th]December, 2018.However, the Assessee filed an appeal against the order of the CIT (A)before the ITAT and the Tribunal after perusing the evidence on record hasdeleted the said addition. 5.The learned counsel for the Revenue has contended that the ITATerred in deleting the said addition since, the documents produced by theAssessee were belated and remained unverified at the end of the AO. 6.We have considered the submissions of the Appellant. 7.The contention of the Revenue that the documents filed by theAssessee before the CIT (A) could not be verified by the AO is not borneout from the record. The documents filed by the Assessee were verified bythe AO and in this regard remand reports were also filed by the AO on 18[th]April, 2018 and 14[th]December, 2018. 8.The impugned order records that the Assessee had submitted dueinformation with respect to the source of cash as well as the consequentaddition to the capital account. The details of the cash surrendered, cash ITA 294/2022 deposited in bank and total addition made to the capital account as noted inthe impugned order is as follows:- A . Details of Cash SurrenderedTotal Income Surrendered on 17.09.2010 on15,92,00,000/-account of STCGLess: Amount seized out of Locker and70,00,000/-Adjusted in Tax Demand.Balance15,22,00,000/-Less: Amount seized out of Locker and55,70,000/-adjusted in Tax demandBalance of Cash out of Surrendered Income14,66,30,000/-(Total A)B. Details of cash consumed/deposited inbank out of above.During A.Y. 2012-13Cash Deposited in Bank13,11,34,500/-Cash utilized in Rhea Distribution Company38,86,000/-Total Addition in Rhea Distribution Co. (in13,50,20,500/-Capital Account)During A.Y. 2013-14Cash received out of surrendered income1,16,09,500/-Total (B )14,66,30,000/- As a sequitur, it has been explained that, the details of addition to the capital account of Rs.24,50,91,663/- in Assessee's proprietorship concern M/s Rhea Distribution Company was as under:- A. Cash received during A.Y. 2012-13 (OutRs.13,50,20,500/-of income surrendered) (Deposited invariousBankaccountsandthenintroduced in capital account of Rs.of income surrendered) (Deposited invariousBankaccountsandthenintroduced in capital account of Rs. As a sequitur, it has been explained that, the details of addition to the capital account of Rs.24,50,91,663/- in Assessee's proprietorship concern M/s Rhea Distribution Company was as under:- A. Cash received during A.Y. 2012-13 (OutRs.13,50,20,500/-of income surrendered) (Deposited invariousBankaccountsandthenintroduced in capital account of Rs.of income surrendered) (Deposited invariousBankaccountsandthenintroduced in capital account of Rs. 9.TheITAT recorded that the Assessee had surrendered Rs.15.22crores as additional income during the previous AY 2011-2012 and dulypaid tax thereon and this fact was not disputed by the AO. The Assesseestated that though the surrender was made in the previous assessment year, asum of Rs.15 crores was only received in the AY under appeal and the saidamount was thus introduced in the books of accounts in the AY underappeal. To this effect, the ITAT has noted that no adverse inference has beendrawn by the AO in the remand reports with respect to the aforesaid facts asstated by the Assessee. The ITAT therefore concluded that the Assessee hasduly explained the credit of Rs.15 crores in its capital account. In the presentappeal as well, the said fact has not been disputed by the learned counsel forthe Revenue. 10.Further, with respect to the amounts received in the bank account ofRhea Distribution Co. as unsecured loans, the ITAT noted that the Assesseehas produced sufficient documentary evidences on record, i.e., confirmation ITA 294/2022 from the creditors, their balance sheets and their bank statements whichevidence that the creditors had been assessed to tax and have sources forgiving loans and advances to the Assessee. The said loan amounts andadvances were credited to the bank account of the Assessee therefore, onperusal of these documents, the ITAT concluded that the Assessee hasproduced sufficient documentary evidence explaining the source of thedeposits in its bank account and the ITAT specifically noted that no adversecomments on these documentary evidences were made by the AO in itsremand report. Thus, the ITAT concluded that the Assessee has sufficientlyexplained the source of the unsecured loans of Rs.3.98 crores. 11.With respect to the amount of Rs. 9,02,95,000/-, the ITAT noted thatthese amounts are the opening balances from the previous years andtherefore, no addition could be made on account of these amounts in thecurrent year. 12.The ITAT therefore, concluded that the Assessee has duly explainedthe source of cash deposits in its bank account as well as the addition madeto the capital account. The ITAT noted that since the surrender of Rs.15.92crores was made in the previous assessment year and tax was duly paidthereon, the said amount introduced in the accounts in the currentassessment year would not be taxable. The ITAT therefore concluded thatthe Assessee has sufficiently explained the total addition to its capitalaccount of Rs.24,50,91,663/- and deleted the said addition. 13.The learned counsel for the Appellant has not disputed the findings ofthe ITAT that in the remand report there was no adverse inference drawn bythe AO with respect to the documentary evidence furnished by the assesseein respect of the unsecured loans. The learned counsel also does not dispute ITA 294/2022 the finding of the CIT(A) that there was a surrender of income by theAssessee in the previous AY to the tune of Rs. 15.22 crores and tax was dulypaid thereon. There is no challenge to the finding of the ITAT that in case ofaddition of Rs. 9.02 crores, the amounts were opening balances from theearlier years. The ITAT has after perusing the evidences filed by theAssessee and the remand reports received from the AO, concluded that theaddition against the Assessee cannot be sustained. The learned counsel forthe Revenue has not been able to point out any error in the findings of factby the learned ITAT. ITA 294/2022 the finding of the CIT(A) that there was a surrender of income by theAssessee in the previous AY to the tune of Rs. 15.22 crores and tax was dulypaid thereon. There is no challenge to the finding of the ITAT that in case ofaddition of Rs. 9.02 crores, the amounts were opening balances from theearlier years. The ITAT has after perusing the evidences filed by theAssessee and the remand reports received from the AO, concluded that theaddition against the Assessee cannot be sustained. The learned counsel forthe Revenue has not been able to point out any error in the findings of factby the learned ITAT. 14.The learned counsel relied upon the judgment of this Court inCommissioner of Income Tax Vs. Manish Buildwell Pvt. Ltd. reported in2011 SCC OnLine Del 4763 to contend that the conditions provided underRule 46A of the Income Tax Rules, 1962 should be strictly complied withand only when these conditions stated therein are satisfied, would additionalevidence be admitted. However, in the facts of the present case, theadditional evidences were admitted by the CIT (A) and remand reports werecalled for from the AO. There is nothing on record which evidences that theRevenue opposed the admission of additional evidence before the CIT (A).In fact, there was no cross objection filed by Revenue before the ITATchallenging the admission of the additional evidence by the CIT (A). Theimpugned order records that the AO perused the documents and submittedits remand reports which have been considered by the ITAT before decidingthe matter. The learned counsel for the Appellant has not pointed out anyerror in the order of the ITAT in appreciating the remand reports. Theobjection to admission of additional evidence at this stage is belated and noground for interference is made out. ITA 294/2022 15.Since, the grounds of appeal challenge the findings of fact and do notpoint out perversity in the said findings, no substantial question of law arisesin the present appeal and the same is dismissed. MANMEET PRITAM SINGH ARORA, J SEPTEMBER 01, 2022pkv MANMOHAN, J ITA 294/2022