GOPAL CHANDAK,SURAT vs. ITO, WARD-1(2)(2), SURAT

The Assessing Officer made addition of Rs.18,20,675/- which was confirmed by the Ld.CIT(A). The assessee has received an amount of Rs.18,20,675/- from the five person as per table below:

It was submitted that all the loans have been repaid except the loan of Rs.3,00,000 received from Ms. Mamta Soni. The issue of repayment and addition thereof stands adjudicated in the case of Principal Commissioner of Income Tax 1 v. Merrygold Gems Pvt. Ltd. (Tax Appeal No. 811 of 2023), the Gujarat High Court delivered a judgment on June 11, 2024. Dismissing the Revenue’s appeal the Hon’ble Court held that additions under Section 68 of the Income Tax Act cannot be sustained if loans or advances are repaid within the same financial year.

Hence, the appeal of the assessee with regard to remaining four parties is allowed.

With regard to the loan given by the party, namely Ms. Mamta Soni, we find that the funds were originally lent by her on 30.03.2011 to Ratanpriya Dyeing and Printing Mills Pvt. Ltd. wherein the assessee is the Director and upon receipt of the said monies on 26.08.2011, the same were advanced to the assessee on 27.08.2011. Thus, the amounts given as loan by the Ms. Mamta Soni, has always been with the assessee for the last 15 years and no repayment has been made which doesn’t add to any reasonable credential of the loan transaction. Hence, we affirmed the order of the AO on this account.

The Assessing Officer disallowed 10% of the indirect expenses. The Ld. AR submitted that, provided an opportunity, all relevant details and supporting evidences would be placed before the Revenue authorities. Accordingly, the matter is restored to the file of the Jurisdictional Assessing Officer for examination of the expenses and verification of the supporting documents.