Creditworthiness is something more than the income earned during the year, says ITAT

IN THE INCOME TAX APPELLATE TRIBUNAL
DELHI BENCH ‘E’ NEW DLEHI

BEFORE SHRI PRASHANT MAHARISHI, ACCOUNTANT MEMBER
AND
SHRI K. NARASIMHA CHARY, JUDICIAL MEMBER

 ITA No. 7624/Del/2017
Assessment Year: 2014-15

Modern Overseas Pvt. Ltd., 
11027-A, Motia Khan,
New Delhi
PAN : AAACM8982G
(Appellant)

vs. 

Income-tax Officer,
Ward 17(1), New Delhi.
(Respondent)

 Appellant by : Sh. M.P. Rastogi, Adv.
 Respondent by: Sh. Ramesh Kumar, Sr. DR

 Date of hearing: 05/07/2021
 Date of order : 23 /07/2021

ORDER

PER K. NARASIMHA CHARY, J.M.

Aggrieved by the order dated 16/10/2017 passed by the learned Commissioner of Income Tax (Appeals)-6, New Delhi ("Ld. CIT(A)") for theassessment year 2014-15, Modern Overseas Pvt. Ltd. (“the assessee”) filed this appeal.

2. Brief facts of the case necessary for disposal of this appeal are that the assessee company is engaged in trading of animal husbandry, producing livestock, meat, hide and skin. For the assessment year 2014- 15, it has filed its return of income on 29.11.2014 declaring income ofRs.14,53,310/-. During the assessment proceedings, ld. Assessing Officer  noticed from the balance sheet that the assessee company tad taken unsecured loans from its directors to the tune of Rs.7,06,82,500/-. When called upon, the assessee explained that all the directors are directors in group companies, namely, M/s. Modern Overseas Pvt. Ltd. (assessee), M/s. Modsal Frozen Foods Pvt. Ltd. and M/s. Modern Enterprises, all of them having an inter-banking account with these three concerns. From time to time, they were depositing and withdrawing the amounts from these entities depending upon their business expediency; the amounts were flown from one concern to another through one director or the other; and there is no unaccounted or tainted money in these transactions. As such, the identity of the depositors, their capacity to advance such amounts and the genuineness of the transactions are beyond doubt.

3. Assessing Officer, however, did not agree with the submissions of the assessee and recoded that in so far as Mohd. Sayed is concerned, his total income is only Rs.9,64,940/- and the material placed by the assessee establishes that a sum of Rs.2,42,40,000/- was flown from assessee to Modsal Frozen Foods Pvt. Ltd. and from there to one AbdulWahid from whom this Mohd Sayed borrowed the same to deposit a sum of Rs.2.46 crores with the assessee. Likewise, in case of Mohd. Naeem, the amounts were flown through different entities in the group of familyconcerns. Mohd. Naeem deposited a sum of Rs.1,65,20,750/- whereas hisincome is only Rs.9,69,420/-. In respect of Mohd. Saleem, Assessing Officer observed that his income was only Rs.9,09,008/- whereas thedeposit was to the tune of Rs.5.55 lacs and since the bank statement of Mohd. Saleem reflects some cash deposits prior to loan given to the assessee, an amount of Rs.1,48,400/- was disallowed. 

To know more in details find the attachment file