Case Law Details
HPC Infotech Private Limited Vs ITO (ITAT Delhi)
In HPC Infotech Private Limited Vs ITO (ITAT Delhi), the appeal was filed against the order of the Commissioner of Income Tax (Appeals) dated 07.11.2025 for Assessment Year 2019–20. The assessee, engaged in import, distribution, and trading of UHF RFID tags and readers, had made foreign remittances amounting to Rs. 23,26,982/- during the relevant financial year to suppliers in China and the USA for procurement of inventory. These remittances were made through authorized banking channels and were not disputed in terms of business nature or purpose.
The Assessing Officer, however, made an addition of Rs. 23,13,542/- questioning the source of these remittances. The assessee explained that the funds were sourced through unsecured loans taken by its Directors from a lender, and furnished multiple supporting documents, including lender confirmations, income tax returns, bank statements, company financials, import documents, and remittance records. It was contended that both the Assessing Officer and the CIT(A) failed to examine these documents despite their availability on record.
The Tribunal observed that while the CIT(A) stated that documents were considered, there was no discussion or analysis of the nature of such documents or findings based on them. The core issue before the Tribunal was whether the assessee had substantiated the source of funds for the foreign remittances. It noted that the assessee had placed relevant documentary evidence on record to support the genuineness of the unsecured loans used for the remittances.
Considering the absence of proper examination of these documents by the lower authorities, the Tribunal held that the matter required fresh evaluation. Accordingly, the impugned order was set aside, and the issue was remanded to the Assessing Officer for de novo examination of the evidence. The Assessing Officer was directed to provide a reasonable opportunity to the assessee before passing a fresh order in accordance with law.
The appeal was thus allowed for statistical purposes.
FULL TEXT OF THE ORDER OF ITAT DELHI
This appeal by the assessee is directed against the order of Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi (hereinafter referred to as ‘the CIT(A)’) dated 07.11.2025, for AY 2019-20.
2. Shri Sanjay Rohilla, appearing on behalf of the assessee submits that the assessee is engaged in import, distribution and trading of Ultra High Frequency (UHF) RFID tags and readers. During Financial Year 2018-19 i.e. period relevant to AY 2019-20, the assessee company was in critical start-up phase and was making substantial investments for establishing global supply chains with specialized manufactures based in China and United States. The assessee had entered into commercial agreements with two overseas suppliers, namely Zhejiang Laxcen Information Technology Inc. Ltd., China, and Novanta Distribution, USA. Pursuant to the aforesaid supplier arrangement, the assessee made foreign remittances aggregating to Rs.23,26,982/- though authorized banking channel. Out of the aforesaid remittances Rs.21,86,570/- were remitted to the Chinese entity and Rs.1,40,412/- was remitted to the US entity. These remittances where towards advance payments for procurement of RFID equipment, which constitutes core business inventory of the assessee company. The foreign remittances were made in accordance with FEMA guidelines through banking channel.
3. The ld. Counsel stated that the Assessing Officer (AO) and the CIT(A) have not raised any doubt with regard to the assessee’s nature of business or remittance made by the assessee for procurement of stock of RFID equipment. The addition of Rs.23,13,542/- has been made by the AO raising doubt over the source of foreign remittances. The assessee had explained before the AO and the CIT(A) that for funding foreign remittances, the Directors of the Company had taken unsecured loan from Shri Pradeep Kumar. In order to substantiate genuineness of the loan transaction from Shri Pradeep Kumar, the assessee had furnished following documents before the AO on 13.11.2023:-
i. Lender declaration letter;
ii. Lender ITR for FY 2018-19;
iii. Lender bank statement for FY 2018-19;
iv. Statement of fund infused in FY 2018-19 by Directors of the company (borrowed money);
v. Company bank statement for FY 2018-19;
vi. Directors Bank statement;
vii. Bill of entry;
viii. Balance sheet for FY 2018-19;
ix. Bank Swift Copies (four nos) for each remittances; &
x. Proforma invoice of all four import shipments.
Neither the AO, nor the CIT(A) have examined the aforesaid documents before passing assessment order and the impugned order, respectively. The ld. Counsel further referred to confirmations given by Shri Pradeep Kumar dated 03.01.2026 at pages 14 and 16 of the paper book. The ld. Counsel for the assessee asserted that the impugned orders passed without considering relevant documents already available on record renders the order invalid and prayed for quashing the same.
4. Per contra, Shri Manoj Kumar, representing the department vehemently defending the impugned order prayed for dismissing appeal of the assessee. The ld. DR pointed that the CIT(A) in para 4.4 of the impugned order has specifically recorded that written submissions of the appellant and the documents placed on record considered. The CIT(A) has passed the well-reasoned order after considering submission and documents on record filed by the assessee.
5. Both sides heard, orders of the authorities below examined. The issue for consideration before the Bench falls within narrow encompass i.e. whether the assessee has been able to substantiate source of funds for foreign remittances. The assessee is engaged in trading of UHF RFID tags and readers. The nature of assessee’s business is not doubted by the lower authorities. The assessee for import of RFID readers had made foreign remittance aggregating to Rs.23,13,542/-. The AO questioned the source of aforesaid remittances, the assessee explained that the remittances were made from the funds sourced as unsecured loans by Directors of the assessee company from Shri Pradeep Kumar. In order to substantiate unsecured loans taken by the Directors of the company from Shri Pradeep Kumar, the assessee has placed on record confirmation from Shri Pradeep Kumar, copy of his return of income for AY 2018-19 & 2019-20, bank statement of Shri Pradeep Kumar, copy of invoices, copy of bank statement of directors i.e. Ms. Kaushal and Shri Amit Kumar. The ld. Counsel for the assessee to substantiate that these documents were furnished before the AO referred to e-Proceedings Response acknowledgement at page 39 to 42 of the appeal set. I find that the CIT(A) the impugned order at para 4.4 has although mentioned that the documents placed on record by the assessee has been considered but there is no reference to the nature of documents considered by the CIT(A) and findings of the CIT(A) on the documents examined. Considering entire facts of the case, I deem it appropriate to restore the matter back to the AO for denovo examination of the documents furnished by the assessee to substantiate unsecured loans taken by the Directors of the company for funding of foreign remittances during AY 2019-20.
6. Needless to say, that the AO shall grant reasonable opportunity of making submissions to the assessee before passing the order, in accordance with law.
7. In the result, impugned order is set aside and appeal of the assessee is allowed for statistical purpose.
Order pronounced in the open court on Wednesday the 08th day of April, 2026.
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