Dharmanandan Developers Vs ITO (ITAT Ahmedabad)
Summary: The appeal by Dharmanandan Developers was directed against the order dated 06.11.2024 passed by the Commissioner of Income Tax (Appeals), National Faceless Appeal Centre, Delhi for A.Y. 2018-19. The Income Tax Appellate Tribunal, Ahmedabad Bench, considered two additions: Rs. 25,00,000/- relating to an unsecured loan from Shri Sanjivkumar Kiritkumar Patel and Rs. 29,87,770/- relating to M/s Sai Trading Company. The appeal was ultimately allowed in full.
Unsecured loan of Rs. 25,00,000/-
During assessment proceedings, the Assessing Officer noted that the assessee had taken unsecured loans aggregating to Rs. 3,66,89,137/- from various parties. In respect of Shri Sanjivkumar Kiritkumar Patel, the Assessing Officer recorded that no response had been received to a notice issued under Section 133(6) and, therefore, treated Rs. 25,00,000/- as unexplained under Section 68. The CIT(A) accepted the identity and genuineness of the creditor but considered creditworthiness unproved.
Before the Tribunal, the assessee contended that the lender had actually responded to the notice before the assessment order and had furnished a written submission, bank statement with Vijay Co. Op. Bank Ltd. and the ledger account. The assessee also relied on the lender’s return of income showing income of Rs. 25,38,990/-. The Tribunal found that the lender had specifically responded to the notice, furnished the bank statement from which the loan was given and supplied the ledger account. It further noted the return of income declaring Rs. 25,38,990/-, which established creditworthiness. The Tribunal held that the addition had been made without reasonable basis and that the CIT(A) had not identified any specific lacuna or shortfall in the supporting evidence. Accordingly, the Rs. 25,00,000/- addition was deleted and Ground No. 1 was allowed.
