THE PR. COMMISSIONER OF INCOME TAX -2- AGRA  Vs MADHUR MITTAL -Judgment by Delhi High Court

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* IN THE HIGH COURT OF DELHI AT NEW DELHI
+ ITA 129/2022, C.M.Nos.20129/22 & 20130/2022
THE PR. COMMISSIONER OF INCOME TAX -2- AGRA
….. Appellant
Through: Mr.Ruchir Bhatia, Advocate
versus
MADHUR MITTAL ….. Respondent
Through:
% Date of Decision: 27th April, 2022
CORAM:
HON’BLE MR. JUSTICE MANMOHAN
HON’BLE MR. JUSTICE DINESH KUMAR SHARMA
J U D G M E N T
DINESH KUMAR SHARMA, J. (Oral)

1. The present appeal has been filed challenging the order dated
10.01.2019 passed by Income Tax Appellate Tribunal (ITAT), Bench
“E” New Delhi in ITA No.6126/DEL/2014 and Co No.165/DEL/2015
in ITA No.6126/DEL/2014 for Assessment Year 2008-09.
2. The appellant has stated that the assessee has filed return of income for
assessment year 2008-09 declaring an income of Rs.2,82,271/- under
Section 139 (1) of the Income Tax Act, 1961 (hereinafter referred to as
„the Act‟)
3. On 28.09.2010, search and seizure operation under Section 132 of the
Act was carried out in Triveni Group and a search warrant under
Section 132 (1) of the Act was issued and executed in the name of the

assessee as well. The assessee belongs to the Triveni Group. A notice
under Section 153A of the Act was also issued to the assessee.
4. Pursuant to the notices issued under Section 142 (1) of the Act to the
assessee on 12.09.2012 and 26.09.2012, the assessee filed return of
income for the concerned year declaring an income of Rs.7,26,490/-.
5. The Assessing Officer found cash amounting to Rs.5,05,90,000/-
credited in assessee‟s bank account bearing no.049010100313087 in
Axis Bank Limited. The cash flow statement filed by the assessee was
not accepted by the Assessing Officer except to the extent of
Rs.4,00,000/- and this sum was allowed by the AO being withdrawal
made by the assessee on 19.09.2007. The assessing officer added a
sum of Rs.5,01,90,000/- as unexplained cash in the income of the
assessee under Section 68 of the Act.
6. In regard to the another addition of Rs.5,01,90,000/-, the CIT (A)
transmitted the documents submitted by the assessee to the Assessing
officer called upon him to submit the report. However, the Assessing
officer did not respond. CIT (A) in order to ascertain the authenticity of
the return of income, identity and creditworthiness of each of the
partners addressed a letter to the Directorate of Income Tax (Systems)
and obtained a report. The CIT (A) partly allowed the appeal of the
assessee on the issue of addition of Rs.5,01,90,000/- . The CIT (A) has
held that the source of credit to the extent of Rs.43,62,500/- comprising
of sums received from Mittal Tin container (Rs.41,00,000/-) and Vivek
Commodities (Rs.2,62,500/-) was confirmed and the source of balance
of Rs.4,58,27,500/- was considered to have been explained.

7. The revenue preferred an appeal before the ITAT against the order of
the CIT (A). The ITAT confirmed the order of the CIT (A) and the
appeal of the department was dismissed.
8. The department in the present appeal has only challenged the order of
ITAT deleting the addition of Rs.4,63,18,300/- (on account of
unexplained cash credit and income from undisclosed sources).
9. The department has challenged the order of the ITAT on the ground
that the Tribunal has failed to appreciate that the assessee had deposited
Rs.5,01,90,000/- in cash on different dates in his bank account
maintained with Axis Bank. The assessee submitted his cash flow
wherein it was noticed that the money has been received from M/s
Triveni Infrastructure Development Company Ltd. (TIDCO), M/s
Triveni Motors, M/s Vivek Commodities and Ms.Mittal Infrastructure
Tin Containers Ltd. However, the assessee did not give any evidence
to substantiate such receipt and therefore the same was rightly treated
as unexplained credit in terms of Section 68 of the Act. The appellant
stated that the assessee did not produce enough material to prove the
genuineness of the transactions. It was stated that the assessee was
under a legal obligation to prove the receipt of money to the
satisfaction of the Assessing officer.
10. The department has also assailed the finding of the ITAT on the ground
that a blind reliance on the Cash Flow Statement and Report of DIT
(System) has wrongly been made and the same has to be corroborated
by the other substantial evidence.
11. Mr.Ruchir Bhatia, learned senior counsel appearing for the appellant
has stated that the order of the ITAT is liable to be set aside as it

miserably failed to appreciate that the assessee had been disbelieved by
the Assessing officer after establishing infirmity or fallacy in the
documents produced by him.
12. Mr.Bhatia has submitted that the assessee could not produce any formal
corroborative evidence of having received respective amounts to
corroborate the cash flow statement. Mr.Bhatia further stated that
ITAT has wrongly relied upon the cash flow statement and report of
DIT (systems).
13. It has further been stated that the CIT (A) could not have partaken the
role of the Assessing officer and satisfy itself regarding the genuineness
and creditworthiness of the parties. Mr.Bhatia has further stated that the
ITAT has also failed to appreciate the real intent of Section 68 of the
Act.
14. We have considered the submissions of Mr.Ruchir Bhatia.
15. The scope of jurisdiction in Section 260A is very well settled. It is a
settled proposition that ITAT is the final arbiter of the facts. High
Court can interfere in the order of the ITAT only if there is substantial
question of law or there is manifest illegality or it suffers from
perversity. The general rule is that High Court should be slow in
interfering into the findings of ITAT, unless it suffers from any of the
grounds mentioned hereinabove.
16. It is pertinent to mention here that the tribunal had also dismissed the
cross objections of the assessee in regard to confirmation of certain
addition made by the CIT (A). It is a matter of record that the assessee
had not challenged the dismissal of the cross objections.

17. The ITAT in his impugned order has examined the issue raised by the
appellant thread bear.
18. The tribunal had gone into the findings of the Assessing Officer and the
CIT (A). The ITAT has dealt with the challenge of the department in
regard to the issue raised as follows:

9. Now coming to the addition u/S 68 of the Act, learned AO recorded
that in the bank account of the assesee, an amount of Rs.5,05,90,000/-
was found credited and that the assessee had filed the cash flow
statement for the year under consideration and also for earlier years,
Since no proof in support of various cash receipts was filed, such cash
flow statements remain self serving document and no reliance could
be placed. On this premise, learned AO proceeded to make the
addition.
10. In appellant proceedings, learned CIT (A) looked into the
contentions of the assessee and also found that besides the opening
cash in hand, the assessee received Rs.2.05 crores from M/s Vivek
Commodities, Rs.2.65 crores from M/s Mittal Tin Container Industry,
Rs.1,30,500/- from M/s Triveni Infrastructure Development Company
Ltd. (TIDCO) and Rs.75 lacs from M/s Triveni Motors. Out of the
four entities, the assessee is the promoter director of TIDCO and
Triveni Motors, which entities are assessed by the very same AO
having PAN AACCT3870A and AACFT0256B. Further, learned CIT
(A) on a perusal of the financial accounts of TIDCO and Triveni
Motors noticed that the TIDCO had shareholders fund of Rs.46.57
crores and loan funds to the tune of Rs.47.04 crore and Triveni
Motors had a capital of Rs.2.89 crores and loan funds of Rs.5.35
crores. He, therefore, held that the identity, creditworthiness and
genuineness of M/s TIDCO and M/s Triveni Motors is above any
suspicion.

11. In respect of the other two entities, namely, M/s Vivek
Commodities and M/s Mittal Infrastructure Tin Containers Ltd.,
learned CIT (A) perused the copies of the income-tax return, balance
sheet and profit and loss account, confirmation of accounts etc. It
was submitted before the learned CIT (A) that the amounts from these
two entities were received on account of pledging some of the shares
of TIDCO, which were owned by the assessee pursuant to the share

purchase agreement entered with those entities in view of the fact that
the TIDCO was likely to come up with an IPO at a price band higher
than the 20% of the present value agreed upon. Basing on this,
learned CIT (A) accepted the genuineness of the transaction with
these two entities.
12. Besides this, learned CIT (A) had taken pains to scruitinize the
income-tax returns and profit and loss account of these two entities,
namely, M/s Vivek Commodities and M/s Mittal Infrastructure Tin
Containers Ltd. and found that both the partnership firms had shown
nil income and there has been no actitivity worthwhile undertaken by
them to show any profit earning apparatus. He further found that M/s
Vivek Commodities with 17 partners and the capital of Rs.2.625
crores raised during the relevant previous year out of which they have
paid a sum of Rs.2.05 crores to the assessee for purchasing the shares
of TIDCO. Similarly, M/s Mittal Infrastructure Tin Containers Ltd.
with 20 partners raised a capital of Rs.2.64 crores during the year
and paid a sum of Rs.2.65 crores to the assessee for purchase of
shares. On this, learned CIT (A) directed the assessee to prove the
identity and creditworthiness of all the partners of these entities, in
response to which the assessee submitted copies of return of income,
computation sheet and balance sheet for each of the partners. Since
these documents were submitted before the learned CIT (A) and were
not available before the learned AO, learned CIT (A) transmitted the
documents to the learned AO calling upon him to submit the report.
Learned CIT (A) recorded that in spite of three reminders, there was
no response from the learned AO. In those circumstances, learned
CIT (A) in order to ascertain the authenticity of the return of income,
identity and creditworthiness of each of the partners addressed and
a letter to the Directorate of Income Tax (systems) and obtained the
report. On analysis of the return and documents, learned CIT (A)
found that out of the 17 partners of M/s Vivek Commodites, the
creditworthiness of one Harveer Singh was doubtful, as such the
learned CIT (A) confirmed his contribution to an extent of
Rs.2,62,500/-

13. Similarly, out of 20 partners of M/s Mittal Infrastructure Tin
Containers Ltd, learned CIT (A) found the creditworthiness of three
partners doubtful, namely, Gopal Dass Mangal, Sunder Gupta and
one Rajni Mangal, who contributed a sum of Rs.41 lacs, as such, this

amount was confirmed by the learned CIT (A) while deleting the rest
of the amount.

19. The perusal of the abovesaid would indicate that the tribunal has
minutely examined the case and marshaled the facts well. It may be
noted that the ITAT is final arbiter of the facts and appeal can be
entertained by the High court only if there is a substantial question of
law.
20. We consider that there is no substantial question of law in the present
case. We also do not find any perversity in the order passed by the
tribunal.
21. The appeal is accordingly, dismissed.

DINESH KUMAR SHARMA, J
MANMOHAN, J
APRIL 27, 2022/rb