M/S. KALPTARU COTTON INDUSTRIES,MEHSANA vs. THE ITO, WARD-5 NOW WARD-1, PATAN

This appeal has been filed by the assessee against the order dated 10.06.2025 passed by the Ld. Commissioner of Income-tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi (“Ld. CIT(A)” for short), under Section 250 of the Income-tax Act, 1961 (“the Act” for short) for Assessment Year 2014-15.

The sole ground raised by the assessee reads as under:-

When the appeal was called for hearing, none appeared on behalf of the assessee. An adjournment application was filed. Considering that the assessee had already filed a Statement of Facts-cum-Synopsis and the issue could be decided on the basis of material available on record, the adjournment application was rejected and the appeal was taken up for disposal on merits after hearing the Ld. DR.

The brief facts of the case are that the assessee is a partnership firm engaged in the business of manufacturing of cotton, ginning and pressing. The assessee maintained regular books of account which were duly audited under section 44AB of the Act. The assessee filed its return of income for the year under consideration on 05.11.2014 declaring a loss of (-) Rs.7,81,324/-. The case was selected for scrutiny and notice u/s 143(2) of the Act was issued on 21.09.2015. The assessment was completed u/s 143(3) of the Act on 28.12.2016 determining total income at Rs.65,05,745/-. While framing the assessment, the Assessing Officer made an addition of Rs.60,00,000/- u/s 68 of the Act on account of unsecured loan received from M/s Billeshwar Auto Agency. Other additions on account of VAT interest and low gross profit were also made.

On appeal, the Ld. CIT(A) deleted the additions relating to VAT interest and low gross profit but sustained the addition of Rs.60,00,000/- made u/s 68 of the Act.

Aggrieved by the order of the Ld. CIT(A), the assessee is now in appeal before the Tribunal.

As per the “Statement of Facts-cum-Synopsis” filed, it was noted that the assessee received unsecured loan of Rs.60,00,000/- from M/s Billeshwar Auto Agency on 28.10.2013 through banking channels. The entire loan amount was repaid on 25.03.2015 through banking channels. During the assessment as well as appellate proceedings, the assessee furnished ledger account of the lender in the assessee’s books, copy of bank statement of the lender maintained with Kukarwada Nagrik Sahkari Bank Ltd, PAN of the lender and the bank statement of the assessee evidencing receipt and repayment. It was also submitted that the lender is a proprietary concern of Shri Patel Anilkumar Prahladbhai, having PAN AHVPP6440J, who had filed return of income for A.Y. 2014-15 declaring business income and substantial turnover. According to the Kalptaru Cotton Industries Vs. ITO Asst. Year : 2014-15 - 3– assessee, identity, genuineness of the transaction and creditworthiness of the lender stood fully established and the addition was made merely on surmises.

The Ld. DR relied upon the orders of the Assessing Officer and the Ld. CIT(A) and submitted that the assessee failed to satisfactorily prove the creditworthiness of the lender and therefore the addition u/s 68 was rightly sustained.

We have carefully considered the orders of the Assessing Officer and the Ld. CIT(A), the Statement of Facts-cum-Synopsis filed by the assessee, and the material available on record. We note that though the assessee did not produce any fresh documentary evidence before the Tribunal, the documents relied upon by the assessee were admittedly furnished during the assessment as well as appellate proceedings and have been examined and discussed by the authorities below. Therefore, the appeal is decided on the basis of material already on record.

In the result, the appeal of the assessee is allowed.