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Facts
The assessee received loans totaling Rs. 18,20,675/- from five individuals. The Assessing Officer made an addition of this amount, which was confirmed by the CIT(A). Most of these loans were repaid within the same financial year, except for a loan from Ms. Mamta Soni.
Held
The tribunal held that additions under Section 68 of the Income Tax Act cannot be sustained if loans are repaid within the same financial year, following a Gujarat High Court judgment. However, the loan from Ms. Mamta Soni, which was advanced to the assessee and not repaid, was affirmed.
Key Issues
Validity of additions under Section 68 for loans repaid within the same financial year and genuineness of an unrepaid loan.
Sections Cited
68, 250
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, SURAT BENCH, SURAT
(Assessment Year: 2012-13) Gopal Chandak, The Income Tax Officer, Vs. Shop No.6046, Ward-1(2)(2) Ambaji Market Ring Road, Surat. Near India Market Surat-395002. [PAN : ACVPC2544A] (Appellant) .. (Respondent) Appellant by : Shri Rasesh Shah, AR Respondent by: Shri Ajay Uke, Sr. DR Date of Hearing 19.01.2026 Date of Pronouncement 21.01.2026 O R D E R PER DR. B.R.R. KUMAR, VICE-PRESIDENT:-
This appeal has been filed by the Assessee against the order dated 08.08.2024 passed by the Ld. Commissioner of Income-Tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi (“the CIT(A) in short), under Section 250 of the Income-tax Act, 1961 (“the Act”), relating to the Assessment Year 2012-13.
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:
Sr. Name of the assessee Loan(Rs.) No. 1 Geetadevi T Paliwal 1,00,000 2 Pawan Rathi 1,50,000/- 3 Durgadevi B Paliwal 5,00,000/- 4 Mamta Soni 3,00,000/- 5 Lalit Rathi 7,70,675/- Total 18,20,675
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.