Lords Freight (India) Private Limited Vs ACIT (ITAT Mumbai)
The Income Tax Appellate Tribunal Mumbai adjudicated an appeal concerning an addition of ₹23,00,000 made under Section 68 of the Income-tax Act on account of alleged unexplained cash credit. The assessee, engaged in freight services and clearing and forwarding operations, had filed its return declaring nil income under normal provisions and book profits under Section 115JB. During scrutiny, the Assessing Officer observed an increase in unsecured loans from related parties from ₹33,50,000 in the previous year to ₹56,50,000 in the relevant year and treated the difference as fresh borrowing. Due to non-submission of confirmations and supporting documents during assessment proceedings, the amount was added as unexplained cash credit.
The CIT(A) upheld the addition. Before the Tribunal, the assessee contended that no fresh loan had been received and that the increase represented a reclassification of an existing loan of ₹23,00,000 from “other parties” to “related parties.” It was also admitted that certain supporting documents and loan confirmations were being produced for the first time before the Tribunal as additional evidence.
Upon examining the record, the Tribunal noted that the addition was based on the perceived increase in related party loans. It found that the explanation of reclassification appeared plausible, as the same loan existed in the earlier year under a different classification. However, since the supporting documents and confirmations were not examined by the lower authorities and were produced for the first time before the Tribunal, proper verification was required.
