Facts of the Case

The assessee, Meenakshi Gupta, filed an appeal under Section 260A of the Income-tax Act, 1961 challenging the order dated 06.01.2025 passed by the Income Tax Appellate Tribunal for Assessment Year 2012–13. The Tribunal had dismissed the assessee’s appeal against an assessment order dated 23.12.2019 passed under Section 143(3) read with Section 147 of the Act.

The assessment was reopened pursuant to a notice dated 30.03.2019 issued under Section 148 based on information received from the Investigation Wing. The information indicated that the assessee had received ₹25,00,000 as an interest-free unsecured loan from M/s Oxygen Projects Pvt. Ltd. during FY 2011–12. Investigations revealed that substantial amounts had passed through the bank account of the said company despite it reporting nil operational revenue over multiple years, indicating that it was a paper entity used for providing accommodation entries.

Issues Involved

Whether the addition of ₹25,00,000 as unexplained credit under Section 68 was justified, whether the reopening of assessment under Section 147 was valid, whether the assessee had discharged the onus of establishing identity, genuineness, and creditworthiness of the lender, and whether any substantial question of law arose from the Tribunal’s order.

Petitioner’s Arguments

The assessee contended that the Tribunal’s order was without application of mind and was premised on an incorrect assumption that M/s Oxygen Projects Pvt. Ltd. had been found to be an accommodation entry provider pursuant to a search and statements of its authorised person, whereas no such search or statement was reflected on record. It was argued that the loan amount had been repaid within seven months and confirmations were furnished, and therefore the addition under Section 68 was unjustified. The assessee also challenged the validity of the reopening proceedings.

Respondent’s Arguments

The Revenue argued that irrespective of whether there was a search, the material on record clearly demonstrated that M/s Oxygen Projects Pvt. Ltd. was not carrying on any genuine business activity. Notices issued under Section 133(6) were returned unserved, the assessee failed to produce any authorised person of the lender, and no explanation was offered as to why an interest-free unsecured loan was advanced. The Revenue contended that the assessee failed to establish the creditworthiness of the lender and the genuineness of the transaction, justifying the addition.

Court Order / Findings

The Delhi High Court observed that although the Tribunal’s observation regarding a search and statement of the authorised person was not borne out from the record, this did not warrant interference with the Tribunal’s conclusion. The Court held that the core facts were undisputed: the lender had no real business operations, was not found operating from its stated address, notices under Section 133(6) were returned unserved, and the assessee failed to establish who controlled the lender entity.

The Court held that mere repayment of the loan within a short period does not discharge the onus under Section 68. In absence of any credible explanation as to the identity of persons controlling the lender, its creditworthiness, and the rationale for granting an interest-free loan, the finding of the Assessing Officer that the transaction was not genuine could not be faulted. The Court held that no substantial question of law arose from the Tribunal’s order.

Important Clarification

The Court clarified that even if certain peripheral observations of the Tribunal are not fully supported by record, the High Court will not interfere where the ultimate conclusion is supported by undisputed facts and evidence demonstrating failure to satisfy the requirements of Section 68.

Final Outcome

The appeal was dismissed. The Delhi High Court upheld the order of the Income Tax Appellate Tribunal and the addition of ₹25,00,000 as unexplained credit under Section 68 for Assessment Year 2012–13. It was held that no substantial question of law arose for consideration, and the decision was rendered in favour of the Revenue and against the assessee.

 

Link to Download Order- https://www.mytaxexpert.co.in/uploads/1769594851_MEENAKSHIGUPTAVsINCOMETAXOFFICERWARD356NEWDELHI.pdf

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