DHCUBE INDUSTRIES PVT. LTD.,AHMEDABAD vs. THE ITO, WARD-1(1)(1), AHMEDABAD

ITA 382/AHD/2026Status: DisposedITAT Ahmedabad30 September 2026AY 2023-243 pages
AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that the approach of the lower authorities in making and sustaining the addition of Rs.4,60,415/- is unsustainable. The Assessing Officer applied a 5% estimation to fresh unsecured loans without any specific material to show that these borrowings represented unexplained income. The Ld. CIT(A) mechanically upheld this addition. The Tribunal reasoned that an addition cannot be sustained merely on an ad hoc percentage; the revenue must demonstrate with specific facts and material why and to what extent any part of the loan is unexplained income. There is no statutory presumption that 5% of a loan transaction is income. Thus, the addition of Rs.4,60,415/- was deleted. Regarding the disallowance of expenses, the Tribunal found that all evidences like bills and vouchers were on record, and the Assessing Officer provided no tangible reason for the ad-hoc disallowance. Therefore, no addition was called for on this ground. The appeal of the assessee was allowed.

What were the facts?

The assessee, DHCUBE Industries Pvt. Ltd., filed an appeal against the order of the Ld. CIT(A), NFAC, Delhi, for Assessment Year 2023-24. The Assessing Officer made an addition of Rs.4,60,415/-, representing 5% of fresh unsecured loans of Rs.2.30 crore received during the year. The Ld. CIT(A) upheld this addition. The Assessing Officer also disallowed 20% of the assessee's expenses, citing low profit despite substantial turnover and significant expenses under various heads. The Ld. CIT(A) confirmed this disallowance. The total unsecured loans for the year were Rs.6.43 crore, comprising an opening balance of Rs.4.13 crore and fresh loans of Rs.2.30 crore.

What were the issues?

1. Whether the addition of Rs.4,60,415/-, being 5% of fresh unsecured loans, is sustainable in law and on facts, particularly when no specific material was brought on record to establish that these borrowings represented unexplained income? (Question of law and fact, concerning Section 68 of the Income Tax Act, 1961). Assessee's contention: The addition is unsustainable as it is based on an ad hoc percentage without any specific material to prove that the borrowings represent unexplained income. The burden lies on the revenue to demonstrate this with specific facts and material. Revenue's contention: Not recorded in the judgment. 2. Whether the disallowance of 20% of expenses is justified, given that all evidence like bills and vouchers are on record and no tangible reason was provided by the Assessing Officer for the disallowance? (Question of law and fact, concerning disallowance of expenses). Assessee's contention: The disallowance is not justified as all evidences are on record and no tangible reason was given by the Assessing Officer. Revenue's contention: Not recorded in the judgment.

Which sections of the Income-tax Act were involved?

Section 250,Section 68

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, “SMC” BENCH, AHMEDABAD

Before: DR. B.R.R. KUMAR, VICE-SHRI RAHUL CHAUDHARY

For Appellant: Shri Jimi Patel, AR
For Respondent: Shri Drop Singh Meena, Sr. DR
Hearing: 08.07.2026Pronounced: 30.09.2026

PER DR. B.R.R. KUMAR, VICE-PRESIDENT:

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The captioned appeal has been filed by the assessee against the order passed by the Ld. Commissioner of Income Tax (Appeals) (hereinafter referred to as “Ld. CIT(A)”), National Faceless Appeal Centre (NFAC), Delhi vide order dated 19.12.2025, under section 250 of the Income-Tax Act, 1961 (hereinafter referred to as “the Act”) for the AY 2023-24. Ground No. 1 - Addition of Rs.4,60,415/-

2.

The facts on record reveal that the assessee had total unsecured loans of Rs.6.43 crore, comprising an opening balance of Rs.4.13 crore and fresh unsecured loans of Rs.2.30 crore received during the year und

The order continues below.

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