ACIT Vs HK Ispat Pvt. Ltd. (ITAT Ahmedabad)
The Income Tax Appellate Tribunal (ITAT), Ahmedabad, disposed of a batch of cross appeals filed by the Revenue and the assessee for Assessment Years 2014-15 to 2021-22, arising from a common search action and orders of the Commissioner of Income Tax (Appeals) dated 28 March 2025. Since the issues were common, the Tribunal treated AY 2015-16 as the lead case, with its findings applying to the remaining appeals.
The Assessing Officer (AO) had made an addition of Rs. 2,98,14,000 under Section 68 on account of unsecured loans received from seven parties, treating them as unexplained cash credits based primarily on affidavits found during the search and findings of the Investigation Wing. A further addition of Rs. 5,00,000 under Section 69C was made as unexplained expenditure based on entries in a seized Excel file. The CIT(A) deleted both additions, leading to the Revenue’s appeals.
The Tribunal observed that the assessee had furnished confirmations, PAN details, income-tax returns, bank statements, ledger accounts and other supporting documents for all lenders. The loans were received through banking channels, the lenders had confirmed the transactions, and no cash deposits were found immediately before the loans were advanced. In some cases, assessments of the lenders arising from the same search had been completed without any adverse findings regarding their capacity to lend.
