$~11-17 * IN THE HIGH COURT OF DELHI AT NEW DELHI DECIDED ON: 10.07.2012 + ITA Nos.115, 116, 117, 118, 121, 123 & 124/2012 CIT ..... Appellant in all Appeals Through: Ms. Rashmi Chopra, Advocate for Appellant in all Appeals.

versus RL TRADERS .... Respondent in All Appeals Through: Mr. K.R. Manjani, Advocate for Respondent in all Appeals.

CORAM:

MR. JUSTICE S. RAVINDRA BHAT MR. JUSTICE R.V. EASWAR MR. JUSTICE S.RAVINDRA BHAT (OPEN COURT)

% 1. Admit. The following substantial question of law arises in these batch of appeals i.e. whether the Tribunal’s approach in confirming the CIT’s order which had deleted the addition made on account of unsecured loans by the Assessing Officer, for the concerned assessment years i.e. 2000-01 to 2006-07 and the interest component, is correct, having regard to the facts and circumstances of the case.

2. The brief facts of the case are that the assessee’s premises were searched on 13.12.2005, pursuant to which, a notice was issued under Section-153A on 09.07.2007 for the assessment years, 2000-01 to 2006-07. A detailed questionnaire was issued under Section-142 (1)/143 (2) on 29.10.2007. The assessee filed returns thereafter. The firm claimed to have earned NIL income. One of the claims made by the assessee was in respect of unsecured loans obtained from individuals and firms. The assessee was required to file the details of such loans obtained along with complete particulars. After consideration of these, the assessing officer passed separate orders of assessment. Broadly in all the cases, the assessing officer added back the loans except for two years i.e. 2003-04 and 2005-06. In these years, there were no fresh loans taken by the assessee. Assessing Officer in addition disallowed the interest component for all the years and added back an amount of ‘ 5 Lakh of unexplained cash. This Court is not inclined to go into the other aspect vis-(cid:224)-vis unexplained cash and gross profit addition which have been dealt with by the CIT (Appeals) as well as the Tribunal. The assessee had declared a gross profit depending and based on the peculiar circumstances of each case. With regard to the rate of gross profit and unexplained cash, the decision of the Tribunal is factual and no substantial question of law arises.

3. As far as the addition of the loan amount and the interest component is concerned, the Assessing Officer held as follows: -

“2. Loan Creditors: The assessee was required to file details of loans obtained along with the complete particulars of the persons i.e. their names, addresses, PAN particulars, source, financial capacity etc. Assessee has merely filed names & addresses with PAN particulars in some of the cases. In most of the cases merely GIR No. has been filed. It is a know fact that these days GIR Nos. have no great significance after the introduction of the new series of PAN number. Source of loan and financial capacity of the lenders has not been provided at all, this gives a strong signal that this is the precise mode in which unaccounted money is being rotated by the assessee into his business. Each year assessee obtain loan and squares up next year. In the next to next year again loans are claimed to be obtained. It is also interesting that some person, his wife, father, brother and HUF is giving loans to assessee as is seen from the addresses of the lenders.

As stated above, assessee has failed to establish the credit worthiness of the lenders, hence all these loans obtained in each year will be treated as non-genuine and assessee’s own money generated through under-invoicing etc. which is being pulled in and pulled out at the will of the assessee. On this account addition is made as under:

Assessment Year	Amount (Rs.)
2000-01	19,80,000
2001-02	1,21,75,000
2002-03	19,00,000
2004-05	68,50,000
2006-07	3,75,000

It is further seen that most of the so called loans received are utilized only for partners personal requirement. For example, in A.Y.2001-02, when loans of Rs.

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