AESHA ASHISHBHAI SHAH LEGAL HEIR AND WIFE OF LATE ASHISH SUMATIBHAI SHAH,AHMEDABAD vs. THE ITO, WARD-1(2)(1) PREVIOUSLY WARD-5(3)(1), AHMEDABAD

The assessee has also raised an additional ground which reads as under:-

Whether on facts and in circumstances of the case and in law, Ld. Assessing Officer has erred in issuing notice u/s 143(2) of the Act?

9.1 The ITAT, in paragraph no.9 of its earlier order dated 29.12.2020, had given the following directions:-

We straight away notice that the fact of repayment of the loan in respect of Rs.12,91,000/- has been duly recorded by the Assessing Officer in the assessment order. The assessee has also furnished additional evidence in the form of bank statement to show that the repayment of remaining amount of Rs.10 lakhs paid to Shri S. Kumar Computers Pvt. Ltd. The Assessing Officer has not examined the fact of repayment. Under the circumstances, we consider it appropriate to set aside and restore the issue back on account of addition respect of such loans of Rs.22,91,000/- to the file of Assessing Officer. The Assessing Officer is directed to verify the factual aspects on claim of re-payment to the party and if found proper, is directed to grant appropriate relief. It shall be open to the Assessing Officer to make appropriate inquiry from the bank to ascertain the fact of re-payment to the lenders, if so considered expedient. Thus, the action of CIT(A) is cancelled and the additions made on account of receipt from aforesaid four parties is remitted back to the file of the Assessing Officer for necessary verification as noted above to enable him to pass a fresh order in accordance with law.

Aesha Ashishbhai Shah LH of late Ashish S Shah Vs. ITO Asst. Year : 2013-14 - 4– In terms of the above directions, the Assessing Officer was required to verify whether the unsecured loan of Rs. 22,91,000/- had in fact been repaid, on the basis of bank records and other documentary evidence. The Ld. CIT(A) accepted the repayment of Rs. 12,91,000/- and deleted the addition to that extent, but sustained the balance of Rs. 10,00,000/- on the ground that no evidence of repayment had been furnished.

9.2 Before us, however, the Ld. AR submitted that the balance unsecured loan of Rs. 10,00,000/- from S. Kumar Computers Pvt. Ltd. was fully repaid in the subsequent year, i.e., A.Y. 2014–15, as reflected at page 4 of the assessee’s paper book (Table–4), reproduced below: Name Date of Loan Amount Repayment Repayment accepted date in AY 5,00,000 12.04.2013 2014-15 S Kumar Computers Pvt Ltd 03.12.2012 27.08.2013 03.12.2012 5,00,000 03.09.2013 2014-15 To substantiate the above, the assessee placed before us the relevant bank statements as well as a certificate issued by the bank confirming the repayments.

9.3 In light of the above documentary evidence, it is clear that the balance unsecured loan of Rs. 10,00,000/- was duly repaid by the assessee in the immediately succeeding assessment year. Accordingly, no addition on this account is warranted.

10.1 In paragraph 5 of its earlier order, the Tribunal issued the following directions: “5. In the backdrop of long line of judicial precedents including judgement of Hon’ble Supreme Court in the case of Hindustan Coco Cola Beverage Ltd. reported at 293 ITR 226 (SC), we consider it expedient to set aside the disallowance and restore the issue to the file of the Assessing Officer. The Aesha Ashishbhai Shah LH of late Ashish S Shah Vs. ITO Asst. Year : 2013-14 - 5– assessee shall be entitled to produce such evidences as may be considered necessary to defend its case for non-deduction of TDS. The Assessing Officer shall be entitled to make such enquiry from the payee (Bajaj Finance Ltd.) as may be considered expedient to ascertain whether there is any loss of Revenue by such non-deduction. Needless to say, the Assessing Officer shall delete the disallowance of amount carried out under s.40(a)(ia) where it is found that the payee concerned has included the receipt obtained from the assessee for the purposes of computation of total income in its return. In other words, disallowance under s.40(a)(ia) of the Act will not survive in the hands of assessee where deductee has also included the corresponding income in its return of income. The issue raised is restored back to the file of the Assessing Officer for fresh determination in accordance with law.”

10.2 The Assessing Officer was thus required to verify whether Bajaj Finance Ltd. had included the corresponding interest income in its return of income. However, in the present case, we find that neither the Assessing Officer nor the Ld. CIT(A) carried out this mandatory verification. The record further shows that the assessee had specifically requested the Assessing Officer to carry out such enquiry, however, no notice was issued to the payee, and the Assessing Officer proceeded to sustain the disallowance merely on the ground that no reply had been filed by the assessee. The Revenue failed to utilize the opportunity given by the earlier order of the Tribunal. Since no enquiry was made from Bajaj Finance Ltd. and the disallowance has been sustained without carrying out the factual verification mandated by the Tribunal as well as by law, the disallowance u/s 40(a)(ia) cannot be upheld.

In the result, the appeal of the assessee is allowed. 11. The order is pronounced in the open Court on 26.11.2025. (SIDDHARTHA NAUTITAL) VICE-PRESIDENT Ahmedabad; Dated 26.11.2025 **btk Aesha Ashishbhai Shah LH of late Ashish S Shah Vs. ITO Asst. Year : 2013-14 - 6–