AMI INDUSTRIES,SURENDRANAGAR vs. THE ITO WARD 1, SURENDRANAGAR, SURENDRANAGAR

ITA 148/RJT/2026Status: DisposedITAT Raipur29 September 2026AY 2017-186 pages
AI SummaryAllowed

What were the facts?

The assessee, Ami Industries, engaged in manufacturing cotton bales, cotton seeds, and cotton seed cake, filed its return for Assessment Year 2017-18 declaring an income of Rs. 2,60,970/-. The case was selected for scrutiny, and the Assessing Officer (AO) examined cash deposits during demonetisation, unsecured loans, interest expenditure, and discount expenses. The AO added Rs. 47,00,000/- as unexplained cash credits under Section 68, disallowed Rs. 1,09,393/- as proportionate interest under Section 36(1)(iii), and disallowed Rs. 2,86,119/- for discount expenses. The National Faceless Appeal Centre (NFAC) partly allowed the appeal, restricting the interest disallowance to Rs. 60,166/- and sustaining other additions. The assessee is now appealing to the ITAT.

What did the Tribunal hold?

The Tribunal allowed the appeal in favour of the assessee. Regarding the unsecured loans aggregating to Rs. 47,00,000/-, the Tribunal found that the assessee had provided sufficient documentary evidence. For Maharashtra Trading Co., the Tribunal held that the Rs. 5,00,000/- was an opening balance repaid, not a fresh loan, and thus no addition was called for. For Mumtazben Meghani, considering the movement of funds, opening balance, and substantial repayment within the year, the Tribunal concluded that the amounts were repayments rather than loans received, and no addition was warranted. For Bharatbhai Pansara, the Tribunal noted that the bank statement clearly reflected the movement of funds and the factum of the loan was not disputed, hence no addition was called for. Regarding the discount expenses of Rs. 2,86,119/-, the Tribunal found that the assessee had furnished ledger accounts and explained the nature of discounts in the cotton business. The expenditure was approximately 0.19% of sales and consistent with other assessment years. Therefore, the disallowance was not sustained, and the ground was allowed in favour of the assessee. The operative direction was to delete the additions made by the AO.

What were the issues?

1. Whether the addition of Rs. 47,00,000/- under Section 68 of the Income-tax Act, 1961, as unexplained cash credits from unsecured loans is sustainable, considering the documentary evidence furnished by the assessee? Assessee's Contention: The assessee argued that it had provided confirmations, bank statements, and income tax returns of the creditors. For Ashwinsinh Rana, the loan was through banking channels, and the creditor had sufficient income. For Maharashtra Trading Co., the Rs. 5,00,000/- was an opening balance repaid, not a fresh loan. For Mumtazben Meghani, the transactions were adjustments and repayments, not fresh loans, and the assessee had advanced a larger sum to the creditor. For Bharatbhai Pansara, confirmation and income tax return were provided, and the bank statement showed fund movement. Revenue's Contention: The revenue, through the AO and NFAC, treated the loans as unexplained due to insufficient supporting documents, particularly bank statements of creditors, and lack of creditworthiness verification. 2. Whether the disallowance of Rs. 2,86,119/- as discount expenses is justified, given the nature of the assessee's business and the supporting documents provided? Assessee's Contention: The assessee submitted that the discount expenses were incurred in the normal course of its cotton business due to sample, weight shortage, or quality issues. The amount was a small percentage of sales and consistent with prior and subsequent years. Documentary evidence like ledger accounts was provided. Revenue's Contention: The AO disallowed the expenses for failing to furnish adequate justification and supporting evidence.

Which sections of the Income-tax Act were involved?

Section 68,Section 36(1)(iii),Section 143(3),Section 115BBE,Section 250,Section 143(1),Section 143(2),Section 142(1)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, Rajkot Bench, Rajkot

Before: Dr. BRR Kumar & Shri Sonjoy Sarma

For Appellant: Shri Tej Shah, Ld. AR
For Respondent: Shri Gopi Nath Chaubey, Ld. Sr. DR
Hearing: 28/07/2026Pronounced: 29/09/2026

Per, Shri Sonjoy Sarma, JM: Captioned appeal filed by the assessee, pertaining to Assessment Year (AY) 2017-18, is directed against the order under section 250 of the Income-tax Act, 1961 [hereinafter referred to as ‘the Act’] passed by the National Faceless Appeal Centre [hereinafter referred to as ‘NFAC’], dated 12.11.2025, which in turn arises out of an order passed by assessing officer u/s. 143(3) of the Act, dated 24.12.2019. 02. Brief facts of the case are that the assessee is a firm engaged in the business of manufacturing of cotton b

The order continues below.

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