Question 1

What are the key legal issues in DCIT, Central Circle 32 vs. M/s. Constructo Cast Private Limited?

Accepted Answer

1. Whether the Commissioner of Income Tax (Appeals) erred in deleting the addition of Rs.65,00,000/- made by the Assessing Officer under section 68 of the Income-tax Act, 1961. 2. Whether the disallowance of interest u/s 36(1)(iii) of Rs.3,08,672/- was justified.

Question 2

What are the facts of DCIT, Central Circle 32 vs. M/s. Constructo Cast Private Limited?

Accepted Answer

The assessee, M/s. Constructo Cast Private Limited, had its assessment reopened for the Assessment Year 2020-21 based on High Risk CRIU/VRU information received from a search conducted on Galaxy Group and entry providers. The search revealed that the assessee received accommodation entries amounting to Rs.65,00,000/- from M/s Sirsa Deposits and Advances Ltd., controlled by Shri Himanshu Verma. The Assessing Officer issued a notice under section 148 of the Income-tax Act, 1961, and subsequently, notices under sections 143(2) and 142(1) were issued. The assessee claimed that it had received an unsecured loan from M/s Sirsa Deposits and Advances Ltd. and repaid it. The Assessing Officer concluded that the genuineness of the transaction was not proved and made additions to the assessee's income. The assessee appealed to the Commissioner of Income Tax (Appeals) and subsequently to the Income Tax Appellate Tribunal (ITAT).

DCIT, Central Circle 32 vs. M/s. Constructo Cast Private Limited

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