AESHA ASHISHBHAI SHAH LEGAL HEIR AND WIFE OF LATE ASHISH SUMATIBHAI SHAH,AHMEDABAD V. THE ITO, WARD-1(2)(1) PREVIOUSLY WARD-5(3)(1), AHMEDABAD

ITA 1480/AHD/2025

AI Insights

The case involves Aesha Ashishbhai Shah, the legal heir of late Ashish Sumatibhai Shah, who appealed against the order of the Commissioner of Income Tax (Appeals) confirming certain disallowances and additions made by the Income Tax Officer for the Assessment Year 2013-14. The primary issues revolved around the disallowance of interest under section 40(a)(ia), the disallowance of bad debts, and the addition of Rs. 10,00,000 under section 68 as unexplained cash credit. The Tribunal had previously set aside the assessment and restored the issues to the Assessing Officer with specific directions, which were not fully complied with, leading to the current appeal.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 790040 (ITAT-AHMEDABAD)
• Duration Of Justice: 4 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-11-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: misc
• Appeal Filed On: 23-07-2025
• Other Referred Cases: Hindustan Coco Cola Beverage Ltd. vs. CIT
• Laws Referred To: Income-tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ABHIJIT
• Assessee Lawyers: DIVYANG SHAH
• Keywords: Set aside; Additional evidence; Bad and doubtful debts; TDS
• Section: 143(3); 142(1); 68; 244A; 40(a)(ia)

Judgement Text

" IN THE INCOME TAX APPELLATE TRIBUNAL “B” BENCH, AHMEDABAD BEFORE DR. B.R.R. KUMAR, VICE-PRESIDENT SHRI SIDDHARTHA NAUTIYAL, JUDICIAL MEMBER I.T.A. No. 1480/Ahd/2025 (Assessment Year: 2013-14) Aesha Ashishbhai Shah, L/h & Wife of late Ashish Sumatibhai Shah, C/o. Divyang Shah & Co., Chartered Accountants, 201, 2nd Floor, Devashish Complex, Nr. Regenta, Central Antarim Hotel, Off. CG Road, Ahmedabad, Gujarat-380009 [PAN :AHZPS 0503 N] Vs. The Income Tax Officer, Ward 1(2)(1), Previously Ward 5(3)(1), Ahmedabad (Appellant) .. (Respondent) Appellant by : Shri Divyang Shah, AR Respondent by: Shri Abhijit, Sr DR Date of Hearing 17.10.2025 Date of Pronouncement 26.11.2025 O R D E R PER DR. B.R.R. KUMAR, VICE-PRESIDENT:- Delay Condoned. This appeal has been filed by the assessee against the order dated 05.07.2024 passed by the Ld. Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi, [hereinafter referred to as “Ld. CIT(A)” in short], under section 250 of the Income-tax Act, 1961 [hereinafter referred to as “the Act” in short] for the Assessment Year 2013-14. 2. The assessee has raised following grounds of appeal:- “1. Whether, on facts and in circumstances of the case and in law, Ld. CIT(A) has erred in confirming disallowance of interest for Rs.1,71,801/- under section 40(a)(ia) of the Income tax act 1961? Printed from counselvise.com ITA No. 1480/Ahd/2025 Aesha Ashishbhai Shah LH of late Ashish S Shah Vs. ITO Asst. Year : 2013-14 - 2– 2. Whether, on facts and in circumstances of the case and in law, Ld. CIT(A) has erred in confirming disallowance of bad debt for Rs.4,50,000/-? 3. Whether, on facts and in circumstances of the case and in law, Ld. CIT(A) has erred in confirming the addition of Rs.10,00,000/- under section 68 of the income tax act 1961? 4. Whether, on facts and in circumstances of the case and in law, Ld. AO has erred in not following direction given by Hon'ble Tribunal? 3. The assessee has also raised an additional ground which reads as under:- “Whether on facts and in circumstances of the case and in law, Ld. Assessing Officer has erred in issuing notice u/s 143(2) of the Act?” 4. At the time of hearing, the Ld. AR submitted that Ground No. 2 relating to disallowance of bad debts is not pressed. Accordingly, the same is dismissed as not pressed. 5. This is the second round of litigation before us. The brief facts, as culled out from the records, are that the assessee filed return of income for the year under consideration on 01.10.2013 declaring total income of Rs. 34,84,400/-. The case was selected for scrutiny and assessment was completed under section 143(3) on 19.02.2016 determining total income at Rs. 66,15,560/-. Additions were made on account of interest u/s 244A, disallowance u/s 40(a)(ia), disallowance of bad debts and addition u/s 68 of the Act. The assessee’s appeal before the Ld. CIT(A) was dismissed on 24.10.2017. The matter then travelled to the Tribunal. Vide order dated 29.12.2020 in ITA No. 2944/Ahd/2017, the ITAT set aside the assessment and restored the issues to the Assessing Officer with specific directions. Thereafter, the Assessing Officer issued notices u/s 142(1) and completed the assessment u/s 143(3) r.w.s. 254 on 29.09.2021 making the following additions/disallowances :- Printed from counselvise.com ITA No. 1480/Ahd/2025 Aesha Ashishbhai Shah LH of late Ashish S Shah Vs. ITO Asst. Year : 2013-14 - 3– Sr. No. Particulars Amount (Rs.) i. Interest u/s 244A 2,18,358/- ii. Disallowance u/s 40(a)(ia) 1,71,801/- iii. Disallowance of Bad Debts 4,50,000/- iv. Addition u/s 68 22,91,000/- 6. Aggrieved, the assessee filed appeal before the Ld. CIT(A), who confirmed the disallowances u/s 40(a)(ia) and of bad debts, and restricted the addition u/s 68 to Rs. 10,00,000/- 8. Aggrieved by the order of the Ld. CIT(A), the assessee is now in appeal before the Tribunal. 9. Addition u/s 68 on account of Unsecured Loans:- 9.1 The ITAT, in paragraph no.9 of its earlier order dated 29.12.2020, had given the following directions:- “We straight away notice that the fact of repayment of the loan in respect of Rs.12,91,000/- has been duly recorded by the Assessing Officer in the assessment order. The assessee has also furnished additional evidence in the form of bank statement to show that the repayment of remaining amount of Rs.10 lakhs paid to Shri S. Kumar Computers Pvt. Ltd. The Assessing Officer has not examined the fact of repayment. Under the circumstances, we consider it appropriate to set aside and restore the issue back on account of addition respect of such loans of Rs.22,91,000/- to the file of Assessing Officer. The Assessing Officer is directed to verify the factual aspects on claim of re-payment to the party and if found proper, is directed to grant appropriate relief. It shall be open to the Assessing Officer to make appropriate inquiry from the bank to ascertain the fact of re-payment to the lenders, if so considered expedient. Thus, the action of CIT(A) is cancelled and the additions made on account of receipt from aforesaid four parties is remitted back to the file of the Assessing Officer for necessary verification as noted above to enable him to pass a fresh order in accordance with law.” Printed from counselvise.com ITA No. 1480/Ahd/2025 Aesha Ashishbhai Shah LH of late Ashish S Shah Vs. ITO Asst. Year : 2013-14 - 4– In terms of the above directions, the Assessing Officer was required to verify whether the unsecured loan of Rs. 22,91,000/- had in fact been repaid, on the basis of bank records and other documentary evidence. The Ld. CIT(A) accepted the repayment of Rs. 12,91,000/- and deleted the addition to that extent, but sustained the balance of Rs. 10,00,000/- on the ground that no evidence of repayment had been furnished. 9.2 Before us, however, the Ld. AR submitted that the balance unsecured loan of Rs. 10,00,000/- from S. Kumar Computers Pvt. Ltd. was fully repaid in the subsequent year, i.e., A.Y. 2014–15, as reflected at page 4 of the assessee’s paper book (Table–4), reproduced below: Name Date of Loan accepted Amount Repayment date Repayment in AY S Kumar Computers Pvt Ltd 03.12.2012 5,00,000 12.04.2013 2014-15 27.08.2013 03.12.2012 5,00,000 03.09.2013 2014-15 To substantiate the above, the assessee placed before us the relevant bank statements as well as a certificate issued by the bank confirming the repayments. 9.3 In light of the above documentary evidence, it is clear that the balance unsecured loan of Rs. 10,00,000/- was duly repaid by the assessee in the immediately succeeding assessment year. Accordingly, no addition on this account is warranted. 10. Disallowance u/s 40(a)(ia) 10.1 In paragraph 5 of its earlier order, the Tribunal issued the following directions: “5. In the backdrop of long line of judicial precedents including judgement of Hon’ble Supreme Court in the case of Hindustan Coco Cola Beverage Ltd. reported at 293 ITR 226 (SC), we consider it expedient to set aside the disallowance and restore the issue to the file of the Assessing Officer. The Printed from counselvise.com ITA No. 1480/Ahd/2025 Aesha Ashishbhai Shah LH of late Ashish S Shah Vs. ITO Asst. Year : 2013-14 - 5– assessee shall be entitled to produce such evidences as may be considered necessary to defend its case for non-deduction of TDS. The Assessing Officer shall be entitled to make such enquiry from the payee (Bajaj Finance Ltd.) as may be considered expedient to ascertain whether there is any loss of Revenue by such non-deduction. Needless to say, the Assessing Officer shall delete the disallowance of amount carried out under s.40(a)(ia) where it is found that the payee concerned has included the receipt obtained from the assessee for the purposes of computation of total income in its return. In other words, disallowance under s.40(a)(ia) of the Act will not survive in the hands of assessee where deductee has also included the corresponding income in its return of income. The issue raised is restored back to the file of the Assessing Officer for fresh determination in accordance with law.” 10.2 The Assessing Officer was thus required to verify whether Bajaj Finance Ltd. had included the corresponding interest income in its return of income. However, in the present case, we find that neither the Assessing Officer nor the Ld. CIT(A) carried out this mandatory verification. The record further shows that the assessee had specifically requested the Assessing Officer to carry out such enquiry, however, no notice was issued to the payee, and the Assessing Officer proceeded to sustain the disallowance merely on the ground that no reply had been filed by the assessee. The Revenue failed to utilize the opportunity given by the earlier order of the Tribunal. Since no enquiry was made from Bajaj Finance Ltd. and the disallowance has been sustained without carrying out the factual verification mandated by the Tribunal as well as by law, the disallowance u/s 40(a)(ia) cannot be upheld. 11. In the result, the appeal of the assessee is allowed. The order is pronounced in the open Court on 26.11.2025. Sd/- Sd/- (SIDDHARTHA NAUTITAL) (DR. B.R.R. KUMAR) JUDICIAL MEMBER VICE-PRESIDENT Ahmedabad; Dated 26.11.2025 **btk Printed from counselvise.com ITA No. 1480/Ahd/2025 Aesha Ashishbhai Shah LH of late Ashish S Shah Vs. ITO Asst. Year : 2013-14 - 6– आदेश की \u0007ितिलिप अ ेिषत/Copy of the Order forwarded to : 1. अपीलाथ\u0007 / The Appellant 2. \b थ\u0007 / The Respondent. 3. संबंिधत आयकर आयु\u0015 / Concerned CIT 4. आयकर आयु\u0015(अपील) / The CIT(A)- 5. िवभागीय \bितिनिध, आयकर अपीलीय अिधकरण, अहमदाबाद / DR, ITAT, Ahmedabad 6. गाड फाईल / Guard file. आदेशानुसार/ BY ORDER, True Copy सहायक पंजीकार (Dy./Asstt. Registrar) आयकर अपीलीय अिधकरण, , , , अहमदाबाद / ITAT, Ahmedabad 1. Date of dictation words processed by Hon’ble VP on his PC on 24.11.2025 2. Date on which the typed draft is placed before the Dictating Member ….25.11.2025 3. Other Member… …...25.11.2025 4. Date on which the approved draft comes to the Sr.P.S./P.S .. …...25.11.2025 5. Date on which the fair order is placed before the Dictating Member for pronouncement ..26.11.25 6. Date on which the fair order comes back to the Sr.P.S./P.S …...26.11.2025 7. Date on which the file goes to the Bench Clerk .. …...26.11.2025 8. Date on which the file goes to the Head Clerk…………………………………... 9. The date on which the file goes to the Assistant Registrar for signature on the order 10. Date of Dispatch of the Order…………………………………… Printed from counselvise.com "