DEPUTY COMMISIONER OF INCOME TAX CIRCLE 3(1)(1) AHMEDABAD, AHMEBABAD V. TECHNO INDUSTRIES, AHMEDABAD

ITA 660/AHD/2025

AI Insights

The case involves the Deputy Commissioner of Income-tax, Circle 3(1)(1), Ahmedabad as the appellant and Techno Industries as the respondent. The appeal was against the order of the Commissioner of Income-Tax (Appeals), National Faceless Appeal Centre, Delhi, which had deleted several additions and disallowances made by the Assessing Officer in the assessment for the year 2017-18. The main issues revolved around the additions made under Section 68 for unsecured loans, disallowance of interest on unsecured loans, and disallowance of late payment contributions to the Employees Provident Fund. The Tribunal examined the evidences and arguments presented by both parties, including the documents submitted during the appellate proceedings.

• Counselvise Citation: [2026] 140 COUNSELVISE.COM (IT) 834136 (ITAT-AHMEDABAD)
• Duration Of Justice: 10 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 03-02-2026
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: B
• Assessment Year: 2017-2018
• Appeal Filed On: 29-03-2025
• Other Referred Cases: Checkmate Services (P) Ltd. v. CIT
• Laws Referred To: Income-tax Act, 1961
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Assessee Lawyers: BANDISH SOPARKAR; ABHIJIT
• Keywords: Set aside; Additional evidence; Corroborative evidences; TDS
• Section: 143(3); 68; 2

Judgement Text

" IN THE INCOME TAX APPELLATE TRIBUNAL “B” BENCH, AHMEDABAD BEFORE DR. B.R.R. KUMAR, VICE-PRESIDENT SHRI SIDDHARTHA NAUTIYAL, JUDICIAL MEMBER ITA No.660/Ahd/2025 (Assessment Year: 2017-18) Deputy Commissioner of Income-tax, Circle 3(1)(1), Ahmedabad Vs. Techno Industries, Plot No. 613, Phase IV, GIDC, Vatva, Ahmedabad-382 245 [PAN : AACFT 1503 D] (Appellant) .. (Respondent) Assessee by : Shri Bandish Soparkar, AR Respondent by: Shri Abhijit, Sr DR Date of Hearing 27.11.2025 Date of Pronouncement 03.02.2026 O R D E R PER DR. B.R.R. KUMAR, VICE-PRESIDENT:- This appeal has been filed by the Revenue against the order dated 22.01.2025 passed by the Ld. Commissioner of Income-Tax (Appeals), National Faceless Appeal Centre, Delhi (“Ld. CIT(A)” for short), under Section 250 of the Income-tax Act, 1961 (“the Act” for short), relating to the Assessment Year 2017- 18. 2. The Revenue has raised following grounds of appeal :- “(1) The Ld. CIT(A) has erred in law and on facts in deleting the addition of Rs 1,03,00,000/- made by AO on account of unsecured loan received from various lenders u/s. 68 of IT Act, despite the fact that the assessee had not corroborative evidences identity genuineness/creditworthiness of the lenders during assessment establish the proceedings. (2) The Ld. CIT(A) has erred in law and on facts in admitting the additional evidences during appellate proceedings, without giving the opportunity to the AO as required by Rule 46A.. (3) The Ld. CITA) has erred in law and on facts in deleting the addition of Rs.1,66,037/- made by AO on account of disallowance of interest on unsecured loans paid to lenders, despite the fact that the assessee had not Printed from counselvise.com ITA No. 660/Ahd/2025 DCIT Vs. Techno Industries Asst. Year : 2017-18 - 2– submitted establish corroborative evidences to the identity / genuineness / creditworthiness of the lenders during assessment proceedings. (4) The Ld. CIT(A) has erred in law and on facts in deleting the addition of Rs. 3,27,846/- made by AO on account of disallowance of late payment Contribution of Employees Provident Fund u/s. 36(1)(va) r.w.s. 2(24)(x) of IT Act, despite the fact that Explanation 2 to Section 36(1)(va) is clarificatory in nature and hence it is applicable to A.Y. 2017-18.” 3. The assessee is a firm engaged in the business of manufacturing of hoists and cranes. It filed its return of income for A.Y. 2017-18 declaring total income of Rs.64,27,990/-. The assessment was completed u/s 143(3) on 25.12.2019 determining total income at Rs.1,93,22,803/- after making, the following additions/disallowances:- i. Unsecured loans Rs.1,03,00,000/- u/s 68 ii. Disallowance of interest of Rs.1,66,037/- iii. Disallowance of employees’ PF contribution of Rs.3,27,846/- 4. Aggrieved by the assessment order, the assessee preferred appeal before the Ld. CIT(A), who deleted the above additions. Against the said relief, the Revenue is in appeal before us. Ground No. 1 & 2 – Addition u/s 68 and Rule 46A 5. The Assessing Officer made an addition of Rs.1,03,00,000/- u/s 68 in respect of unsecured loans received from five parties, holding that the assessee failed to establish identity, creditworthiness and genuineness. The Ld. CIT(A), after considering confirmations, PAN details, bank statements, income-tax returns of the lenders, and evidence of transactions through banking channels with deduction of TDS on interest, held that the assessee had discharged the onus cast upon it under section 68 and deleted the addition. 5.1 Before us, the Ld. DR relied upon the assessment order. Printed from counselvise.com ITA No. 660/Ahd/2025 DCIT Vs. Techno Industries Asst. Year : 2017-18 - 3– 5.2 The Ld. AR, on the other hand, submitted that all evidences were filed during appellate proceedings and were duly examined. 5.3 We have carefully considered the rival submissions and perused the material on record on this issue. From the records, we find that the Assessing Officer made an addition of Rs.1,03,00,000/- u/s 68 in respect of unsecured loans received from following five parties: - Amount Remarks 1 Jagdishchandra M. Taparia 6,00,000 Businessman 2 Shreys V. Pandya HUF 60,00,000 Loan Repaid 3 Lavnyaben A. Choksi 6,00,000 Wife of Partner 4 Urviben N. Choksi 6,00,000 Wife of Partner 5 Shah Corporation Prop. Surendra M. Shah 25,00,000 Businessman Total 1,30,00,000 We find that the Ld. CIT(A) has recorded a categorical finding that the identity of all lenders was established through PAN and ITRs, creditworthiness was proved by income declarations and bank statements and the genuineness was supported by transactions through banking channels and payment of interest after TDS. Before us also, the assessee has submitted the following documents :- a. Jagdishchandra M. Taparia - Confirmation, Bank Statement, ITR acknowledgment with statement of total income, Copy of aadhar card and PAN card b. Shreyas V. Pandya (HUF) - Confirmation, Bank Statement, ITR acknowledgment, Copy of electricity bill and PAN card c. Lavanyaben A Chokshi - Confirmation, Bank Statement, ITR acknowledgment, Copy of PAN card d. Urviben N. Chokshi - Confirmation, Bank Statement, ITR acknowledgment, Copy of aadhar card and PAN card c. Shah Corporation - Confirmation, Bank Statement, ITR acknowledgment, Copy of aadhaar card Printed from counselvise.com ITA No. 660/Ahd/2025 DCIT Vs. Techno Industries Asst. Year : 2017-18 - 4– No adverse material has been brought on record by the Revenue to controvert these factual findings. 5.4 In view of the settled law that once identity, creditworthiness and genuineness are established, no addition u/s 68 can be sustained and we, therefore, find no infirmity in the order of the Ld. CIT(A). Accordingly, Ground Nos. 1 and 2 raised by the Revenue are dismissed. Ground No. 3 – Disallowance of Interest 6. The Assessing Officer disallowed interest expenditure of Rs.1,66,037/- on the ground that borrowed funds were not used wholly and exclusively for business purposes. The Ld. CIT(A) deleted the disallowance holding that the Assessing Officer failed to establish any nexus between borrowed funds and non- business use and that the assessee had sufficient business activity and funds deployed in the business. Before us also, the Revenue could not bring any material on record to rebut the findings of the Ld. CIT(A). In view of the above, this ground of appeal raised by the Revenue is also dismissed. Ground No. 4 – Employees’ Contribution to PF 7. The Assessing Officer disallowed Rs.3,27,846/- being employees’ contribution to PF paid beyond the due date prescribed under the Act/law. The Ld. CIT(A) deleted the disallowance holding that the contribution was paid before the due date of filing of return of income u/s 139(1) and that the amendment introduced by the Finance Act, 2021 was prospective. 7.1 We have carefully considered the rival submissions and perused the material on record. The issue is squarely covered by the judgment of the Hon’ble Supreme Court in the case of Checkmate Services (P) Ltd. v. CIT, (2022) 448 ITR 518 (SC), wherein it has been categorically held that employees’ contribution to PF/ESI is governed by section 36(1)(va) of the Act and is allowable as deduction Printed from counselvise.com ITA No. 660/Ahd/2025 DCIT Vs. Techno Industries Asst. Year : 2017-18 - 5– only if the same is deposited within the due date prescribed under the relevant Act. In view of the above, we set aside the order of the Ld. CIT(A) on this issue and restore the disallowance made by the Assessing Officer. Ground No. 4 raised by the Revenue is allowed. 8. In the result, the appeal filed by the Revenue is partly allowed. The order is pronounced in the open Court on 03.02.2026 Sd/- Sd/- (SIDDHARTHA NAUTIYAL) (DR. B.R.R. KUMAR) JUDICIAL MEMBER VICE-PRESIDENT Ahmedabad; Dated …03.02.2026 *btk आदेश की \u0007ितिलिप अ ेिषत/Copy of the Order forwarded to : 1. अपीलाथ\u0007 / The Assessee 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 the Hon’ble VP on his PC on …02.02.2026.. 2. Date on which the typed draft is placed before the Dictating Member …….02.02.2026.. 3. Other Member …..02.02.2026…. 4. Date on which the approved draft comes to the Sr.P.S./P.S ……..02.02.2026.. 5. Date on which the fair order is placed before the Dictating Member for pronouncement… 03.02.26 6. Date on which the fair order comes back to the Sr.P.S./P.S ……03.02.2026 7. Date on which the file goes to the Bench Clerk …….03.02.2026 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 "