The Ahmedabad Bench of Income Tax Appellate Tribunal ( ITAT ) remanded the case back to the Assessing Officer ( AO ) due to the assessee’s failure to prove the credibility of a loan amounting to Rs. 3.00 crores.
Vallabh Pesticides Limited,the appellant-assessee,was a closely held company engaged in manufacturing pesticides and insecticides. The company filed a return of income for the assessment year 2016-17, indicating no taxable income.
The AO subsequently identified a loan of Rs. 3.00 crores from M/s. Yankee Management Services P. Ltd. (YMSPL) and added this amount to the taxable income. Furthermore, the AO noted unexplained credits totaling Rs. 1,09,22,153 in the company’s bank account and included this in the assessment as well.
The assessee’s counsel argued that the issue regarding the addition of Rs. 1,09,22,153 should be remanded to the AO for further examination, as additional evidence was to be submitted.
The Departmental Representative (DR) concurred, stating that the AO had not provided an opportunity to review the details submitted, and therefore, the matter should be sent back for fresh consideration.
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Concerning the unsecured loan from YMSP, the counsel for the assessee maintained that all relevant evidence had already been presented to the AO, who had made the addition without providing any valid justification.
The Departmental Representative (DR) countered the assessee’s counsel’s arguments by highlighting that the loan payer had very limited resources, and notices from the Assessing Officer (AO) had been returned because the payer was not found at the provided address.
In reply, the assessee’s counsel pointed out that the AO could have obtained the correct address through various documents, including the PAN, Income Tax Return ( ITR ), and MCA details. He also noted that Rs. 80 lakhs of the loan had been repaid in the financial year 2017-18. When questioned about the repayment of the remaining Rs. 2.2 crores by 2024, the counsel admitted he lacked information on that repayment.
Comprehensive Guide of Law and Procedure for Filing of Income Tax Appeals, Click Here
The two member bench comprising Siddhartha Nautiyal(Judicial Member) and Dr.BRR Kumar (Accountant Member) found that the assessee failed to prove the identity, genuineness, and creditworthiness of the loan. The case was remanded to the AO for fresh examination, with directions to give the assessee a fair chance to present all required details for reassessment.
In conclusion, the appeal was allowed with statistical purposes.
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