Anirudh Bhimjibhai Dudhat Vs ITO (ITAT Mumbai)
Section 68 Addition Cannot Be Sustained Without Proper Evaluation — ITAT Remands Case to CIT(A)
The Mumbai Bench of the Income Tax Appellate Tribunal allowed the assessee’s appeal for AY 2014-15 and set aside the order of the CIT(A) for failure to adjudicate the issue of unsecured loans under section 68 in a reasoned and judicial manner.
The Assessing Officer had made an ex-parte addition of ₹38.67 lakh under section 68 in respect of unsecured loans from five parties, citing non-compliance during assessment proceedings. In appellate proceedings, the assessee furnished complete additional evidence—including confirmations, ITRs, balance sheets, capital accounts, and bank statements of the lenders—which was duly admitted by the CIT(A) and forwarded to the AO for a remand report.
During remand, the AO issued notices under section 133(6) to the creditors, all of whom responded and confirmed the loan transactions. Despite this, the AO merely reiterated the original assessment findings without pointing out any defect in the evidence. More critically, the CIT(A) failed to independently examine or analyse the admitted evidence and mechanically upheld the addition, even confirming an incorrect amount, reflecting clear non-application of mind.
The Tribunal held that once additional evidence is admitted, the CIT(A) is duty-bound to examine it on merits and pass a speaking order. Since this statutory obligation was not discharged, the ITAT restored the matter to the file of the CIT(A) with directions to re-adjudicate the issue afresh, after considering the evidences and responses under section 133(6) and after granting due opportunity of hearing.
FULL TEXT OF THE ORDER OF ITAT MUMBAI
