Loading judgment…
Facts
The assessee filed its return for AY 2018-19, which was selected for scrutiny. During assessment, an unsecured loan of ₹5,43,50,000 and underreported income of ₹2,500 were identified, leading to an addition under Section 68 and an assessment of ₹5,50,21,470 under Section 143(3). The Ld. CIT(A) dismissed the assessee's appeal, upholding the addition due to insufficient evidence regarding the identity, creditworthiness, and genuineness of the lender.
Held
The Tribunal found that the Ld. CIT(A) did not adequately examine the assessee's claim regarding the dissolution of the lending entity and failed to grant a proper opportunity to furnish supporting documents. Consequently, the Tribunal restored the matter to the file of the Ld. CIT(A) for de novo adjudication, directing the assessee to provide all necessary evidence and the Ld. CIT(A) to verify the loan transactions afresh.
Key Issues
Whether the CIT(A) erred in not providing sufficient opportunity to the assessee to substantiate the genuineness of unsecured loans and the dissolution of the lending entity before confirming the addition under Section 68.
Sections Cited
250, 143(2), 143(3), 68
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, ‘A” BENCH KOLKATA
Before: Shri Sonjoy Sarma & Shri Rakesh Mishra
Assessment Year: 2018-19 Deesha Trade Endeavours Pvt. Ltd….…………………....Appellant Dhruvatara, Opp BSNL Residential Complex, Sukanta Sarani, New Milan Pally, Siliguri-734005. [PAN: AABCD8122A] vs. ITO, Ward-1(3), Siliguri…………..…..…..………………….…..... Respondent Appearances by: Shri Sujit Basu, Adv., Rajib Mukherjee, Adv., appeared on behalf of the appellant. Shri Manas Mondal, Addl. CIT-Sr. DR, appeared on behalf of the Respondent. Date of concluding the hearing : July 24, 2025 Date of pronouncing the order : July 24, 2025 आदेश / ORDER
Per Sonjoy Sarma, Judicial Member:
This appeal by the assessee is directed against the order dated 26.03.2025 passed by the National Faceless Appeal Centre [in short CIT(A)] under section 250 of the Income-tax Act, 1961.
Brief Facts of the Case are that the assessee filed its return of income for the Assessment Year 2018–19 declaring total income of ₹6,68,970. The case was selected for scrutiny under CASS, and accordingly, notice under Section 143(2) was issued. During the course of assessment, it was noticed that the assessee had received unsecured loan aggregating ₹5,43,50,000 in its books of accounts and there was also underreporting of income to the extent of ₹2,500. Considering the lack of satisfactory explanation, the AO completed the assessment under Section 143(3) of the Act on 23.04.2021, assessing the total Deesha Trade Endeavours Pvt. Ltd income of the assessee at ₹5,50,21,470 by making an addition of ₹5,43,50,000 under Section 68 and ₹2,500 for underreported income.
Aggrieved by the assessment, the assessee preferred an appeal before the Ld. CIT(A), which was dismissed. The CIT(A), after examining the records, noted that there were discrepancies in the unsecured loan transactions as per details submitted by the assessee. Based on the above, and the assessee’s failure to submit adequate evidence regarding the identity, creditworthiness, and genuineness of the lender, the CIT(A) upheld the addition and dismissed the appeal.
Dissatisfied with the above order assessee is in appeal before this tribunal at the time of hearing before the Tribunal, the assessee’s representative contended that the ld. CIT(A) did not properly consider the submissions made regarding the dissolution of Darjeeling Tea Supply Company and the CIT(A) summarily rejected the submission without granting sufficient opportunity to furnish supporting documents and he prayed that the assessee may now be granted one more opportunity to substantiate the claim with relevant documents including proof of loan document, details of the successor entity and the flow of funds.
On the other hand, the Ld. DR the order of the ld. CIT(A) and submitted that the assessee had failed to discharge the onus under Section 68 despite sufficient opportunities.
We have considered the rival submissions and perused the material available on record. It is observed that the assessee did not furnish necessary documents to establish that M/s Darjeeling Tea Supply Company was dissolved and its assets were taken by any other incumbent and continued operation of the bank account in the name of Deesha Trade Endeavours Pvt. Ltd the original entity, and absence of any business transfer documentation, raises serious doubts. However, it also appears that the ld. CIT(A) did not fully examine the claim made by the assessee regarding the change of entity and failed to provide one final opportunity to substantiate the same. In the interest of justice and fair play, we are of the considered view that the matter requires re- examination. The issue is therefore restored to the file of the ld. CIT(A) with the following directions the assessee shall furnish all necessary documentary evidence in support of its claim, including proof of dissolution of M/s Darjeeling Tea Supply Company, documentary trail of business transfer or asset/liability takeover by any other incumbent, Updated bank statements and confirmation from lender(s).The CIT(A) shall verify the identity, creditworthiness, and genuineness of the loan transactions afresh, doing so the ld. CIT(A) is at liberty to obtain a remand report from the AO, if required, and shall pass a speaking and reasoned order after giving due opportunity to the assessee. In view of the above the appeal of the assessee is allowed for statistical purposes, the matter is restored to the file of the CIT(A) for de novo adjudication in accordance with law.
In the result, the appeal of the assessee is allowed for statistical purposes. Kolkata, the 24th July, 2025.