Kalptaru Cotton Industries Vs ITO (ITAT Ahmedabad)
The Income Tax Appellate Tribunal, Ahmedabad Bench, allowed the appeal of the assessee against the order dated 10.06.2025 passed by the Commissioner of Income-tax (Appeals), National Faceless Appeal Centre, for Assessment Year 2014-15. The sole issue before the Tribunal was whether the addition of Rs. 60,00,000/- made under Section 68 of the Income-tax Act, 1961 on account of unsecured loan was justified.
The assessee, a partnership firm engaged in manufacturing, ginning and pressing of cotton, had received an unsecured loan of Rs. 60,00,000/- from M/s Billeshwar Auto Agency on 28.10.2013 through banking channels. The entire loan was repaid on 25.03.2015, also through banking channels. During assessment and appellate proceedings, the assessee furnished the lender’s ledger account, bank statement of the lender, PAN details, and its own bank statement evidencing receipt and repayment. It was also stated that the lender was a proprietary concern of Shri Patel Anilkumar Prahladbhai, who had filed his return of income declaring business income and substantial turnover.
The Assessing Officer made the addition under Section 68, which was sustained by the CIT(A) on the ground that the assessee failed to establish the creditworthiness of the lender. However, the CIT(A) accepted the identity of the lender based on PAN and bank details and also did not dispute the genuineness of the transaction, as the loan was received and repaid through banking channels. The addition was sustained primarily because the return of income of the lender was not furnished and because the lender’s bank account reflected an isolated credit of Rs. 60,00,000/- immediately prior to advancing the loan.
