Loan Addition Sent Back to AO as Repayment Documents Required Verification

Saroj Agarwal Vs ACIT (ITAT Delhi)

The appeal arose from the order dated 25.11.2025 passed under Section 250 of the Income Tax Act, 1961 by the Addl./JCIT(Appeals)-2, Surat. The dispute related to loans amounting to Rs.41,00,000 received by the assessee from five persons.

During assessment proceedings, the Assessing Officer examined the documents and accepted the loans received from Abdul Rahuf and Shubham Agarwal. However, loan amounts received from Faeem Ahmad, Firojali, and Waseem aggregating to Rs.24,00,000 were added under Section 68 of the Act.

The assessee challenged the addition before the Addl./JCIT(Appeals). The appellate authority granted partial relief by accepting the loans from Faeem Ahmad and Firojali. However, the loan received from Waseem continued to be treated as unverified on the grounds that it was interest-free, no tax had been deducted at source, and details regarding repayment of the loan had not been furnished.

Aggrieved by the partial relief, the assessee approached the Income Tax Appellate Tribunal. Before the Tribunal, the assessee submitted that the loan obtained from Waseem had in fact been repaid on 04.01.2020. In support of this contention, bank documents were produced and placed in the paper book. The assessee argued that although these documents were not before the Assessing Officer, they directly addressed the issue of repayment and were relevant for determining whether the addition under Section 68 should be sustained.

The Departmental Representative relied upon the orders of the lower authorities and pointed out that the repayment documents could not have been before the Assessing Officer because they were obtained after the assessment order.

After considering the submissions and examining the record, the Tribunal observed that the bank statement indicated repayment of the loan. It also noted that the repayment evidence constituted a new document and could have relevance in determining whether the loan amount should be subjected to the provisions of Section 68.

Accordingly, the Tribunal set aside the impugned order on the limited issue relating to the loan received from Waseem and remanded the matter to the Assessing Officer. The Assessing Officer was directed to examine the documents relating to the loan and repayment and thereafter pass a speaking order on merits concerning that loan transaction. The appeal was allowed for statistical purposes.

FULL TEXT OF THE ORDER OF ITAT DELHI

This appeal arises from order dated 25.11.2025, passed u/s 250 of the Income Tax Act, 1961 (hereafter as “the Act”), by Addl./JCIT(Appeals)-2, Surat. In this case, the main issue pertains to loans taken by the assesseee from five persons amounting to Rs.41,00,000/-. The Ld. AO, after verification and examination of documents, allowed the loans from one Abdul Rahuf and Shubham Agarwal. However, he added the loan amounts pertaining to Faeem Ahmad, Firojali and Waseem amounting to Rs.24 lakhs. This amount has been added u/s 68 of the Act.

1.1 The assessee approached the Addl./JCIT(Appeals) where he could succeed in part, pertaining to loans taken from Faeem Ahmad and Firojali, but the loan amount from Mr. Waseem was held to be unverified on the ground that it was interest free, without TDS and the repayment details were not provided.

1.2 Further aggrieved, the assessee has approached the ITAT with grounds challenging the findings given in the impugned order.

2. Before us the Ld. AR stated that the loan obtained from Mr. Waseem was actually repaid on 04.01.2020 and in support of this claim certain bank documents have been filed at page 63 of the paper book. It was argued that even though this document was not before the Ld. AO but if repayment of loan was the deciding factor, then this document would clinch the issue in favour of the assessee.

2.1 The Ld. DR relied on the orders of the authorities below and mentioned that the documents pertaining to repayment of loan could not have been before the Ld. AO since they were obtained after the date of the assessment order.

3. We have considered the rival submissions and have gone through the records. It is seen that the assessee has repaid the loan as is visible from the bank statement placed before us. However, for all intents and purposes, this is a new document and would have some value in determining whether the impugned amount deserves to be visited with the rigors of section 68 of the Act or not. Accordingly, we deem it fit to set aside the impugned order on the limited issue of the loan amount pertaining to Mr. Waseem and remanding this matter back to the file of Ld. AO for examination of the documents available pertaining to Mr. Waseem and thereafter passing a speaking order on merits regarding the loan from Mr. Waseem. On this limited issue this matter is remanded to the file of the Ld. AO.

4. In the result, this appeal is allowed for statistical purpose.

Order pronounced in the open court on 22.04.2026