ITAT Delhi Upholds Deletion of ₹2.89 Crore Additions; Dismisses Revenue Appeal in Lord Shiva Construction Case

Key Facts and Tribunal Findings

The Income Tax Appellate Tribunal (ITAT), Delhi Bench, dismissed the Revenue’s appeal against Lord Shiva Construction Co. Pvt. Ltd. for Assessment Year 2018–19, upholding deletion of multiple additions made under Sections 68 and 56(2)(viib) of the Income Tax Act.

The Assessing Officer had made three principal additions: ₹1.62 crore as unexplained loan under Section 68 from sister concern M/s Vidhata Contractors & Builders Pvt. Ltd., ₹56.66 lakh as unexplained share premium under Section 56(2)(viib), and ₹71 lakh as unexplained cash deposits under Section 68. The CIT(A) deleted all additions after examining documentary evidence furnished by the assessee.

On the issue of unsecured loan, the Tribunal noted that the assessee had established the identity, creditworthiness, and genuineness of the lender through PAN, audited financial statements, bank statements, and confirmation responses under Section 133(6). The Revenue failed to rebut these findings.

Regarding share premium, the Tribunal upheld the CIT(A)’s finding that the valuation report obtained from a Chartered Accountant was valid, as the assessee had adopted the book value method. It held that the requirement of a merchant banker’s report under amended Rule 11UA applies only where the Discounted Cash Flow method is used and was not applicable in the present case.

On cash deposits, the Tribunal observed that the assessee demonstrated a clear nexus between earlier cash withdrawals and subsequent deposits through cash books and bank records. The explanation was consistent with the nature of construction business operations, and no contrary evidence was brought by the Revenue.

Finding no infirmity in the CIT(A)’s order, the Tribunal dismissed the Revenue’s appeal in entirety.