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Facts
The CIT(A) upheld additions regarding an alleged unsecured loan under section 68 and disallowance of interest under section 36(1)(iii) of the Income Tax Act, due to the assessee's non-submission of financial statements from the lender parties. The assessee subsequently filed an application for admission of additional evidence (financial statements of lenders) before the Tribunal, contending that these were not previously requested by the tax authorities.
Held
The Tribunal allowed the assessee's application for the admission of additional evidence, recognizing its importance for a just decision. Consequently, the Tribunal set aside the CIT(A)'s order and restored the case to the Assessing Officer for a de novo assessment, directing the AO to provide the assessee with a proper opportunity to furnish the necessary details and evidence.
Key Issues
Admissibility of additional evidence (financial statements of lender parties) for determining the validity of additions under section 68 and disallowance under section 36(1)(iii) of the Income Tax Act.
Sections Cited
Section 250 of the Income Tax Act, 1961, Section 68 of the Income Tax Act, 1961, Section 36(1)(iii) of the Income Tax Act, 1961
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Income Tax Appellate Tribunal, “D” BENCH, AHMEDABAD
Before: Shri Sanjay Garg & Shri Narendra Prasad Sinha
Year : 2016-17 Rajvi Enterprise Private The ITO बनाम/ Limited Ward-3(1)(3) v/s. UL 11 & 12, Suryarath Bldg Ahmedabad – 380 015 Panchwati, C G Road Ahmedabad- 380 006 "थायी लेखा सं./PAN: AADCR 9138 C (अपीलाथ(/ Appellant) (") यथ(/ Respondent) Assessee by : Shri Narpat Parihar, CA Revenue by : Ms. Urvashi Mandhan, Sr.DR सुनवाई की तारीख/Date of Hearing : 08/12/2025 घोषणा की तारीख /Date of Pronouncement: 26/02/2026 आदेश/O R D E R Per Sanjay Garg, Judicial Member:
The present appeal has been preferred by the assessee against the order of the Learned Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi [hereinafter referred to as ‘CIT(A)’] dated 09/12/2024 passed u/s.250 of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’) for the Assessment Year (AY) 2016-17. Rajvi Enterprise Pvt.Ltd. vs. ITO Asst. Year : 2016-17 2
The assessee, in this appeal, has taken the following grounds of appeal:
“1. In law and in the facts and circumstances of the appellant's case, the Honourable CIT(A) has erred in upholding the addition of alleged unsecured loan of Rs. 4,11,35,925/- under section 68 of the Act 1.1. The Honourable CIT(A) has erred in law and in the facts by making addition under section 68 inclusive of Interest amount, thereby leading to double disallowance of Interest Expense to extent of Rs. 11,35,925 This amount already forms part of the disallowance under section 36(1)(iii) amounting to Rs. 12,62,2025. 1.2. The Honourable CIT(A) erred in not appreciating the fact that appellant has repaid the amount borrowed during the year itself and certain part in immediate succeeding years, thereby the appellant does not derive any benefit from the same.
2. The Honourable CIT(A) erred in law and in the facts of the case by not appreciating that the Interest amount paid is towards furtherance of business and therefore the same shall not be disallowed u/s 36(1)(iii).
The Ld. CIT(A) has erred in law and on facts in not properly appreciating and considering various submissions, evidences and supporting placed on record during the course of the assessment proceedings and not properly appreciating various facts and law in its proper perspective.
4. The appellant craves leave to add, alter, amend and/or withdraw any of the grounds or ground either before or at the time of appeal hearing.”
3. At the outset, the Ld. Counsel for the assessee has submitted that the Ld. CIT(A) has confirmed the impugned additions due to absence of Financial Statements (balance-sheet, etc.) of the lender parties. The Ld. Counsel has moved an application for admission of additional evidence before us, wherein, it has been pleaded that neither the Assessing Officer (AO) nor the Ld. CIT(A) called for such financial statements from the assessee. The Ld. Counsel has submitted that the assessee has obtained and wants to furnish the relevant financial statements of majority of the lender entities which includes (Independent Audit Reports, Audited Balance Sheets, Profit & Loss Accounts, and Cash Flow Statements) for the financial year 2015- 16 of Divyank Cotton Textiles Private Limited, Goldleaf Enterprise Rajvi Enterprise Pvt.Ltd. vs. ITO Asst. Year : 2016-17 3 Private Limited, SHK Corporation Private Limited. He, therefore, has prayed for admission of the additional evidence.
We note that the evidences furnished by the assessee as additional evidences are very much necessary for the just and proper decision of the case. We, therefore, allow the application of the assessee for furnishing of additional evidences, set aside the impugned order of the Ld. CIT(A) and restore the matter to the file of the AO for de novo assessment. The AO will give proper and adequate opportunity to the assessee to furnish the necessary details and evidences
In the result, appeal of the assessee is treated as allowed for statistical purposes.