RAFFLES SUPPLY CHAIN SOLUTIONS (P) LTD,TUTICORIN vs. INCOME TAX OFFICER, WARD TWO, TUTICORIN

ITA 580/CHNY/2026Status: DisposedITAT Chennai08 September 2026AY 2018-194 pages

AI SummaryRemanded

What did the Tribunal hold?

The Tribunal admitted additional evidence submitted by the assessee, which pertained to SARFAESI proceedings and loan interest. Considering the interest of justice and fair play, the Tribunal decided to give the assessee another opportunity.

What were the facts?

The assessee company declared nil income, which was initially accepted. However, during scrutiny, the AO added a significant amount representing the difference in long-term borrowings as unexplained credit due to the assessee's non-response to notices. The CIT(A) upheld this addition, citing the assessee's failure to prove creditworthiness and genuineness.

What were the issues?

Whether the addition made by the AO on account of unexplained credit in long-term borrowings is justified, especially when the assessee claims the movement is due to interest and SARFAESI proceedings prevented submission of details.

Which sections of the Income-tax Act were involved?

Section 143(1),Section 250

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, ‘C’ BENCH: CHENNAI

Before: MS. PADMAVATHY.S & SHRI MANU KUMAR GIRI

For Respondent: Ms. P.Sunanda, Sr. DR

आदेश / O R D E R

PER PADMAVATHY.S, A.M:

This appeal by the assessee is against the order of the Commissioner of Income Tax (Appeals)/National Faceless Appeal Centre (NFAC), Delhi, (in short "CIT(A)") passed u/s. 250 of the Income Tax Act, 1961 (in short "the Act") dated 21.11.2025 for Assessment Year (AY) 2018-19.

The assessee is a company and filed the return of income for AY 2018- 19 on 14.11.2018 declaring nil income. The return was processed u/s. 143(1)

ITA No.580/Chny/2026 Raffles Supply Chain Solutions (P) Ltd. :- 2 -: of the Act accepting the income returned by the assessee. The case was selected for scrutiny and the statutory notices were duly served on the assessee. The assessee did not respond to the various notices issued by the A.O. The A.O therefore treated the difference between the opening and closing balance of long-term borrowings as unexplained credit to make an addition of Rs.2,37,78,521/-. Aggrieved, the assessee filed further appeal before the CIT(A). Before the CIT(A), the assessee filed some partial details and the CIT(A) after considering the submissions of the assessee upheld the addition made by the AO on the ground that the assessee failed to discharge the onus proving the creditworthiness and genuineness. The assessee is in appeal before the Tribunal against the order of the CIT(A).

The Ld. Authorized Representative (AR) of the assessee submitted that the increase in the loan balance during the year under consideration is attributable to the interest credited in the bank account and that the assessee has not borrowed any fresh loans during the year under consideration. The Ld. AR in this regard drew our attention to the affidavit filed by the Director of the assessee. The Ld. AR further submitted that in assessee’s case the lenders have invoked the provisions of SARFAESI and the matter is at present pending before the Hon’ble DRT, Madurai. The Ld. AR also submitted that the CIT(A) has rejected the submissions of the assessee for the reason that the assessee could not file the details with regard to initiation of proceedings under SARFAESI. The Ld. AR therefore submitted a paper book containing 181 pages along with petition for admission of additional evidence before us. The Ld. AR accordingly prayed that the additional evidence may be admitted and the impugned issue may be remitted back for consideration on merits.

ITA No.580/Chny/2026 Raffles Supply Chain Solutions (P) Ltd. :- 3 -: 4. The Ld. Departmental Representative (DR), on the other hand, relied on the orders of the lower authorities.

We have heard the parties and perused the material available on record. The contentions of the assessee with regard to the impugned addition are that the movement in the loan account is attributable only to interest and that there is no new borrowing during the year under consideration. Further, the assessee submitted before the CIT(A) that proceedings under SARFAESI have been initiated against the assessee due to which the required documents could not be furnished. The additional evidence now submitted by the assessee is listed as under:

In our considered view, the above documents now submitted by the assessee goes to the route of the issue and therefore in the interest of justice, the additional evidence now submitted is admitted. As already stated, the lower authorities have not examined the issues on merits since the assessee could not produce the required details as called for. Considering overall facts and circumstances of the case, we are of the considered view that the assessee be given one more opportunity in interest of natural justice and fair play.

ITA No.580/Chny/2026 Raffles Supply Chain Solutions (P) Ltd. :- 4 -: Accordingly, we remit the appeal back to the CIT(A) for considering the impugned issue based on the additional evidence now submitted by the assessee and to call for any other details as may be required to decide the issue in accordance with law. The assessee is directed to furnish the details as may be called for and cooperate with the proceedings. It is ordered accordingly.

In the result, the appeal of the assessee is allowed for statistical purposes. Order pronounced on 08th day of September, 2026 at Chennai.

Sd/- Sd/- (मनु कुमार िग!र) (पदमावती यस) (Manu Kumar Giri) (Padmavathy.S) �या�यक सद�य / Judicial Member लेखा सद�य /Accountant Member चे�नई/Chennai, �दनांक/Dated: 08th September, 2026. EDN, Sr. P.S Digitally signed by EJTADA DURGA आदेश क� ��त�ल�प अ�े�षत/Copy to: EJTADA DURGA NARESH NARESH Date: 2026.09.15 1. अपीलाथ�/Appellant 11:59:47 +05'30' 2. ��थ�/Respondent 3. आयकर आयु!/CIT, Chennai/Madurai/Coimbatore/Salem 4. िवभागीय �ितिनिध/DR 5. गाड� फाईल/GF

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