G R C GARMENTS PARTNERSHIP FIRM ,NANDI SAHI, BUXI BAZAR vs. ITO, WARD 1(1), CUTTACK , AAYAKAR BHAWAN, SHELTER CHHAK

Ld. Advocate on behalf of the assessee-firm submitted a letter dated 2nd September, 2025 before the Bench praying to adjourn the appeal fixed on 03.09.2025 and relist the matter after four weeks from the date of listing the appeal. He submitted in the form of letter that non-submission of additional evidence and in absence of which demand arises, which is now required to be filed before the Tribunal in the form of paper book, which could not be prepared and filed earlier. We after perusing the relevant documentary evidence available on record reject the adjournment application filed by the ld. Counsel for the assessee and proceed to dispose of the appeal on merit.

Brief facts of the case are that the assessee-firm filed its return of income in ITR 5 for the AY 2018-19 on 30.09.2018 declaring total income of Rs.58,02,840/-. The case was selected for limited scrutiny through CASS due to large increase in unsecured loan during the year and mismatch in amount paid to an employee as bonus or commission reported in audit report and ITR. Subsequently notice under section 143(2) of the Act was issued to the assessee on 28.09.2016 and duly served upon the assessee. Subsequently notice under section 142(1) was issued to the assessee to submit details on amount of bonus paid to employee as bonus and commission and explained the mismatch in amount of bonus paid to employee as per ITR and audit report. In reply, the assessee submitted that the auditor has wrongly (A.Y. 2018-2019) GRC Garments Partnership Firm mentioned the amount of bonus paid in form 3CD which has been revised by him and uploaded on the Portal stating that there are no employees to whom bonus has been paid, which would otherwise be payable to him as profits or dividends. On examination of the reply submitted, it was observed that the confirmation of loan was received from 13 parties only out of total 28 parties from whom loan taken and Addition to unsecured loan was made during the year. But there were 15 parties from whom confirmation was not received. Subsequently notice under section 133(6) dated 02.02.2021 was issued to the four parties, from which loan confirmation received from three parties, i.e. Shri Ramchander Chhapolia, Shri Dinesh Chhapolia and Lifewood Commodities. One party namely Smt. Manju Devi Jhunjhunwala did not confirm the loan amount given amounting to Rs.22,60,740/-. On examination of the confirmation and copy of ITR received from Shri Ramchander Chhapolia, total amount is Rs.3,82,144/- and the loan given to assessee is only Rs.3,50,000/-. Whereas the addition of loan amounting to Rs.8,96,250/- as declared by the assessee, as per the ledger account of the party, the opening balance of loan amount is not matching to the amount declared by the assessee in Group Summary of unsecured loan. Ld. Assessing Officer added the amount of Rs.8,96,250/- as unsecured loan to the income of the assessee as per the provision of section 68 of the Act. As per reply received from Shri Dinesh Chhapolia, it was observed 4that in the (A.Y. 2018-2019) GRC Garments Partnership Firm bank statement, there is a corresponding credit entry of cash deposit of Rs.6,00,000/- before extending loan to M/s. GRC Garments as reflecting in the screenshot of the bank statement. The ld. Assessing Officer added this amount to the total income of the assessee as unexplained under section 68 of the Act. As no reply on received loan from Avinash Chhapolia for an amount of Rs.1,90,000/- and from Ms. Shardha Chhapolia of Rs.4,00,000/- in response to notice under section 142(1), the ld. Assing Officer added the aggregated amount of Rs.5,90,000/- to the total income of the assessee. Moreover, as the assessee failed to prove the identity, creditworthiness and genuineness of four parties, the loan availed during the year of Rs.20,86,250/- was added back by the ld. Assessing Officer to the total income of the assessee as per the provision of section 68 of the Income Tax Act. The assessee claimed interest on loan paid to various parties, but as the assessee failed to prove the genuineness and creditworthiness of the parties, the ld. Assessing Officer added the amount of interest paid of Rs.41,07,631/- to the total income of the assessee. Thus, the ld. Assessing Officer assessed the total income of the assessee at Rs.1,19,96,721/-. On being aggrieved, the assessee preferred an appeal before the ld. CIT(Appeals).