Ispatam Metals Vs ITO (ITAT Ahmedabad)
Assessee filed appeal with 69 days’ delay, explaining that delay occurred as the partner handling e-communication was seriously ill & later passed away. Tribunal accepted this as a reasonable cause supported by affidavit & condoned the delay following N. Balakrishnan v. M. Krishnamurthy (SC).
On merits, AO had made additions of – (i) ₹2.92 crore as unexplained partners’ capital, (ii) ₹1.85 crore as unexplained unsecured loans, & (iii) ₹67,315 as undisclosed interest income from Leelamani Infra.
Assessee failed to produce bank statements, confirmations, or audited accounts for preceding years, merely relying on unaudited balance sheets not filed earlier with the Department. AO found that partners’ ITRs showed meagre incomes, insufficient to justify capital contribution. Likewise, no evidence was furnished to prove genuineness or source of unsecured loans.
ITAT held that the firm failed to discharge onus u/s 68 to prove identity, creditworthiness, & genuineness of both capital & loans. The unaudited statements were self-serving & unverifiable, hence rightly rejected. As regards interest income, Assessee had already surrendered ₹67,315, which Tribunal upheld. Accordingly, all additions were confirmed & the appeal dismissed in full.
Held: Unaudited & unsubstantiated records cannot explain capital or loans; addition u/s 68 sustained; interest income rightly taxed; appeal dismissed.
