Dhananjay Tradelink Pvt. Ltd. Vs ITO (ITAT Ahmedabad)
Assessee, a company engaged in trading of fabric, cotton, grains & chemicals, filed its return of income declaring a total income of ₹2,34,770 for A.Y. 2018-19. The return was scrutinised by AO under the e-assessment regime. During assessment proceedings, AO examined the genuineness of unsecured loans & sundry creditors appearing in the books of account.
AO noted that three parties from whom unsecured loans aggregating to ₹6.02 crore were received had meagre income & insufficient capital to advance such huge sums. Similarly, notices issued u/s 133(6) to two major trade creditors-Niyati Chemicals & Megasol Global-remained uncomplied with. In absence of confirmations, ITRs, bank statements & supporting invoices, the AO treated outstanding credits of ₹8.37 crore as unexplained. AO completed assessment u/s 143(3) r.w.s. 144B, determining total income at ₹14.42 crore after adding: ₹6,02,41,420 – Unsecured Loans treated as unexplained u/s 68 & ₹8,37,56,632 – Sundry Creditors treated as non-genuine u/s 68
Aggrieved, Assessee approached the NFAC/CIT(A) contending that all transactions were duly recorded, supported by ledger accounts, confirmations & bank entries, & that sufficient opportunity was not provided. CIT(A), however, dismissed the appeal, observing that the Assessee failed to establish the creditworthiness of lenders & genuineness of creditors, & had not produced any fresh material to dislodge the AO’s findings.
