SAMRIDDHI PETRO PRODUCTS PRIVATE LIMITED,HYDERABAD vs. ACIT, CIRCLE-3(1), HYDERABAD, HYDERABAD

ITA 101/HYD/2026Status: DisposedITAT Hyderabad23 September 2026AY 2014-1517 pages
AI SummaryPartly Allowed

What were the facts?

The assessee, Samriddhi Petro Products Private Limited, engaged in Auto LPG Gas trading, filed its return for AY 2014-15 declaring Nil income. The original assessment under Section 143(3) was completed on 12.09.2016. Subsequently, the PCIT-3, Hyderabad, initiated proceedings under Section 263, deeming the original assessment erroneous and prejudicial to revenue due to insufficient examination of share valuation, loans from shareholders/others, and potential violations of Sections 269SS and 269T. The AO, following a Section 263 order, made additions of Rs. 74,50,000 towards share premium and Rs. 4,10,47,326 towards unsecured loans under Section 68. After prior appeals and remands, the AO, in a subsequent assessment order dated 28.02.2024, determined the assessed income at Rs. 4,83,39,926, making additions of Rs. 4,08,89,926 towards unexplained unsecured loans and Rs. 74,50,000 towards unexplained share premium under Section 68. The CIT(Appeals) sustained these additions. The assessee appealed to the ITAT.

What did the Tribunal hold?

The Tribunal decided to set aside the addition of Rs. 4,08,89,926/- made under Section 68 towards unsecured loans to the file of the AO for fresh adjudication. The reasoning was that the CIT(Appeals) had not undertaken a comprehensive lender-wise examination of the substantial documentary evidence provided by the assessee, including confirmations, bank statements, and income-tax particulars of lenders. The Tribunal emphasized the need for a detailed factual exercise for each of the 52 lenders, examining individual confirmations, bank statements, ledger accounts, income-tax particulars, TDS details, and repayment transactions. The AO was directed to consider the evidence furnished by the assessee, including the fact of loan repayments, and not reject explanations merely on generalized observations or solely on the ground of not establishing the source of source. The addition of Rs. 74,50,000/- towards share premium under Section 68 was deleted. The Tribunal found that the PCIT had directed the AO to verify the share valuation under the DCF method, and the assessee had contended it was entitled to use this method. The judgment does not explicitly state the reasoning for deleting the share premium addition, but it is listed as deleted in the final operative part. The ratio for the unsecured loans is that a detailed lender-wise factual verification is mandatory before deeming loans as unexplained, and generalized observations are insufficient. The appeal was partly allowed.

What were the issues?

1. Whether the addition of Rs. 4,08,89,926 made by the Assessing Officer (AO) under Section 68 of the Income Tax Act, 1961 (the Act) towards unexplained unsecured loans is sustainable in law, considering the material furnished by the assessee and the proper examination thereof by the AO and CIT(Appeals)? (Mixed question of law and fact) 2. Whether the addition of Rs. 74,50,000 made by the AO under Section 68 of the Act towards unexplained share premium is sustainable in law? (Mixed question of law and fact) Assessee's Contentions: - The assessee argued that the CIT(Appeals) erred in sustaining the additions, implying a lack of proper examination of the evidence provided. - Regarding share premium, the assessee contended it was entitled to adopt the Discounted Cash Flow (DCF) method for valuation, and the Revenue could not substitute its own method. Revenue's Contentions: - The Revenue, through the PCIT, initially argued that the AO had not properly examined the valuation of shares, the identity, genuineness, and creditworthiness of loan creditors, and potential violations of Sections 269SS and 269T. - The AO, in subsequent proceedings, treated a significant portion of unsecured loans and the entire share premium as unexplained credits under Section 68 due to the assessee not furnishing bank statements and income-tax returns of several lenders.

Which sections of the Income-tax Act were involved?

Section 68,Section 143(3),Section 263,Section 269SS,Section 269T,Section 142(1)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, HYDERABAD BENCHES, HYDERABAD

Before: SHRI RAVISH SOOD, HON’BLE & SHRI MADHUSUDAN SAWDIA, HON’BLE

PER RAVISH SOOD, JM: The present appeal filed by the assessee company is directed against the order passed by the CIT(Appeals), dated 12.11.2025, for the assessment year 2014-15, which in turn arises from the order passed by the Assessing Officer (for short, “AO”) under Section 143(3) r.w.s 263 of the Income Tax Act, 1961 (for short, “Act”) dated 28.02.2024. The assessee company has assailed the impugned order on the following grounds of appeal before us:

ITA 101/HYD/2026 SAMRIDDHI PETRO PRODUCTS PR

The order continues below.

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