PCIT Vs Ambe Tradecorp Private Limited (Gujarat High Court)
In a recent judgment, the Gujarat High Court upheld the decision of the Income Tax Appellate Tribunal (ITAT), which had deleted an addition of ₹39,05,50,000 made under Section 68 of the Income Tax Act, 1961, against Ambe Tradecorp Private Limited. The court’s ruling affirmed that the assessee had sufficiently discharged its legal burden to prove the identity and creditworthiness of a creditor, as well as the genuineness of the transaction. The case arose from a reassessment initiated following a search operation on the JP Iscon group, to which the assessee company belongs.
The case pertains to the assessment year 2010-2011. The assessee, Ambe Tradecorp Private Limited, had originally filed its income tax return declaring a total income of just over ₹2.82 lakh. Subsequently, the Assessing Officer (AO) reopened the case based on information from the investigating wing regarding credits received from a company named M/s. Rachna Finlease Pvt. Ltd. The AO proceeded to reassess the income, treating the entire amount of ₹39,05,50,000 as unexplained cash credit under Section 68 of the Act, and adding it to the assessee’s total income. The AO’s primary contention was that the assessee had failed to provide a satisfactory explanation to establish the creditworthiness of M/s. Rachna Finlease Pvt. Ltd., despite having established the identity of the creditor.
