ITAT Admits Additional Evidence, Remands Rs. 17 Lakh Unsecured Loan Case to AO for Fresh Assessment [Read Order]

The Surat Bench of the Income Tax Appellate Tribunal (ITAT),  set aside an appeal order and remanded the case back to the Assessing Officer (AO) for fresh assessment, admitting additional evidence related to an unsecured loan of Rs. 17 lakh.

Coming to the facts of the case, the assessee, Takhatsinh F. Dodia, a resident of Surat, declared an agricultural income of Rs. 31.25 lakhs in his return for the Assessment Year (AY) 2017-18. But later on, the assessee claimed that it was a clerical error and the correct figure was Rs. 3.12 lakh. 

The AO, during limited scrutiny under CASS, questioned the agricultural income declared by the assessee. The AO sought details such as ledger accounts, proof of agricultural holdings, sale bills, and expenditure records, but the assessee failed to provide them.

The AO disallowed Rs. 28.12 lakh, which was the difference between the declared and claimed income, and treated it as undisclosed income under Section 69A of the Income Tax Act, 1961. The assessee argued that the discrepancy arose due to an extra zero added by his tax consultant while filing the return. 

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The assessee appealed to the Commissioner of Income Tax (Appeals) [CIT(A)], and the latter upheld the AO’s decision, noting that the assessee had not filed a revised return to correct the error and had claimed no expenditure against the agricultural income. The CIT(A) also observed that Dodia’s bank statements indicated a shortage of funds, raising suspicions of undisclosed income. 

The assessee, who was aggrieved by the decision of the CIT(A), appealed before the ITAT for relief.

The assessee’s counsel submitted additional evidence such as confirmations, identity proofs, and income details of two individuals, Chhatrasinh Jaysinh Thakor and Digvijay Fatehsinh Dodia, who had provided unsecured loans totalling Rs. 17 lahks. The counsel argued that the AO and CIT(A) had overlooked these credit entries in the assessee’s bank statements and that the mistake in declaring agricultural income was genuine. 

The ITAT admitted the additional evidence under Rule 29 of the ITAT Rules, 1963, noting the need for substantial justice. The bench set aside the CIT(A)’s order and directed the AO to re-examine the case, considering the new evidence and providing the assessee a fair opportunity to present his case. The ITAT directed the assessee to cooperate fully with the AO and avoid unnecessary adjournments. 

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The ITAT, comprising Pawan Singh ( Judicial Member ) and Bijayananda Pruthesh (Technical Member), allowed the assessee’s appeal for statistical purposes.

To Read the full text of the Order CLICK HERE

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