ROYAL INFRASTRUCTURE,VAPI V. ACIT, VAPI, CIRCLE, VAPI

SA 6/SRT/2026

AI Insights

The case involves Royal Infrastructure, a partnership firm engaged in various businesses, which filed stay applications for the assessment years 2015-16 to 2018-19 against the Income Tax Officer, Ward-7, Vapi. The firm contested additions made under section 68 of the Income Tax Act, 1961, regarding unsecured loans treated as unexplained, and interest accrued on such loans. The firm argued that it had provided sufficient evidence to establish the identity, genuineness, and creditworthiness of the lenders, which was disregarded by the Assessing Officer and the CIT(A). The Tribunal considered the financial hardship faced by the firm due to the lien marked on its bank accounts and the substantial payments already made towards the demand, leading to the decision to grant a stay on the recovery of the outstanding demand.

• Counselvise Citation: [2026] 140 COUNSELVISE.COM (IT) 845723 (ITAT-SURAT)
• Duration Of Justice: 7 day(s)
• Appeal Type: Stay Application
• Pronouncement Date: 27-03-2026
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: Surat
• Assessment Year: 2017-2018
• Appeal Filed On: 20-03-2026
• Other Referred Cases: ITO vs. M.K. Mohammed Kunhi (1969) 71 ITR 815 (SC)
• Laws Referred To: Income-tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: AJAY UKE
• Assessee Lawyers: HARDIK VORA
• Keywords: Right to appeal; Application of stay
• Section: 143(3); 68

Judgement Text

" IN THE INCOME TAX APPELLATE TRIBUNAL SURAT BENCH, SURAT BEFORE SMT. ANNAPURNA GUPTA, ACCOUNTANT MEMBER & SHRI SIDDHARTHA NAUTIYAL, JUDICIAL MEMBER S.A. Nos. 4 to 7/SRT/2026 (in ITA No. 218 to 221/Srt/2026) (Assessment Years: 2015-16 to 2018-19) Royal Infrastructure, 1st Floor, Parijat Building, Royal Gardens, Damn Road, Vapi-396191 Vs. Income Tax Officer, Ward-7, Vapi [PAN No.AANFR3611D] (Appellant) .. (Respondent) Appellant by : Shri Hardik Vora, A.R. Respondent by: Shri Ajay Uke, Sr. DR Date of Hearing 27.03.2026 Date of Pronouncement 27.03.2026 O R D E R PER SIDDHARTHA NAUTIYAL - JUDICIAL MEMBER: These are Stay Applications filed by the assessee for A.Ys. 2015- 16, 2016-17, 2017-18 and 2018-19. The facts and issues for consideration are largely similar for all the years under consideration before us and accordingly, the present Stay Applications are being disposed by way of common order. We shall first take up the facts and issues consideration for Stay Application filed by the assessee for A.Y. 2015-16, and our observations will apply for the balance years before us, as well. Stay Application 04/Srt/2026 arising out of ITA No. 218/Srt/2026 for A.Y. 2015-16. Printed from counselvise.com SA Nos.4to7/Srt/2026 (in ITA Nos. 218 to 221/Srt/2026) Royal Infrastructure vs. ITO Asst. Years –2015-16 to 2018-19 - 2– 2. The brief facts of the case are that the assessee, a partnership firm engaged in the business of builder, developer, civil contractor and estate agent, filed its return of income for the year under consideration on 22.09.2015 declaring total income of Rs. 2,18,87,110/-. The case was selected for scrutiny and during the course of assessment proceedings, the assessee furnished certain details including income tax returns, bank statements, tax audit report, balance sheet, profit and loss account, details of sundry creditors and unsecured loans. It is the contention of the assessee that through these documents it had duly established the identity, genuineness and creditworthiness of the lenders from whom unsecured loans were obtained and had thus discharged the onus cast upon it under section 68 of the Act. However, the Assessing Officer disregarded the evidences placed on record and made an addition of Rs. 2,13,50,000/- on account of unsecured loans treated as unexplained. 3. Aggrieved by the assessment order, the assessee preferred an appeal before the CIT(A) on 23.01.2018. The CIT(A), vide order dated 12.01.2026, dismissed the appeal of the assessee and further enhanced the income by Rs. 11,30,235/- on account of interest accrued on such loans. Against the said appellate order, the assessee has preferred an appeal before the Tribunal on 23.02.2026, which is pending adjudication. 4. In the meanwhile, the assessee has filed the present stay petition before the Tribunal seeking stay of recovery of the outstanding demand. It has been submitted that against the total demand of Rs. 21,04,21,444/- Printed from counselvise.com SA Nos.4to7/Srt/2026 (in ITA Nos. 218 to 221/Srt/2026) Royal Infrastructure vs. ITO Asst. Years –2015-16 to 2018-19 - 3– comprising tax and interest, the assessee has already paid a sum of Rs. 2,20,84,500/-, which constitutes approximately 27% of the total demand. The assessee has further submitted that despite having made substantial payment and intimating the Assessing Officer regarding the same, the Department has proceeded to mark lien on various bank accounts of the assessee maintained with State Bank of India and HDFC Bank for recovery of the entire outstanding demand. 5. It is contended that due to such lien, the assessee has been deprived of access to its own funds and is facing severe financial hardship, thereby affecting its day-to-day business operations and liquidity position. The assessee submits that it is unable to meet its regular financial commitments and that coercive recovery at this stage would cause irreparable injury and render the statutory right of appeal meaningless. 6. On merits, the assessee has submitted that it has a strong prima facie case in its favour inasmuch as the addition under section 68 has been made merely on presumptions without properly appreciating the evidences on record. It is submitted that the assessee had furnished confirmations, copies of income tax returns and bank statements of the lenders, thereby establishing identity, creditworthiness and genuineness of the transactions. It is also pointed out that the loans have been repaid through banking channels and therefore the addition as well as the enhancement made by the CIT(A) are unsustainable in law. Printed from counselvise.com SA Nos.4to7/Srt/2026 (in ITA Nos. 218 to 221/Srt/2026) Royal Infrastructure vs. ITO Asst. Years –2015-16 to 2018-19 - 4– 7. The assessee has further contended that the balance of convenience is in its favour in view of the substantial payment already made and the financial hardship being faced. It has also expressed its willingness to cooperate in early disposal of the appeal and has prayed that the appeal may be heard on priority basis. 8. In view of the above submissions, the assessee has prayed that recovery of the outstanding demand for the year under consideration be stayed till the disposal of the appeal pending before the Tribunal. 9. We have heard the rival submissions and perused the material available on record. The assessee has sought stay of recovery of the outstanding demand arising out of the assessment framed under section 143(3) of the Act and confirmed/enhanced by the CIT(A). It is observed that the assessee has already discharged a substantial portion of the demand to the extent of Rs. 2,20,84,500/-which is approximately 25% of the total demand. 10. On a prima facie consideration of the facts, we find that the assessee has raised arguable grounds in appeal, particularly with regard to addition made under section 68 of the Act and enhancement made by the CIT(A). We also find merit in the contention of the assessee regarding financial hardship, as the attachment of bank accounts has resulted in serious disruption of its business activities. Further, the balance of convenience is in favour of the assessee considering the fact that substantial payment (approximately 25% of demand) has already been made by the assessee. It Printed from counselvise.com SA Nos.4to7/Srt/2026 (in ITA Nos. 218 to 221/Srt/2026) Royal Infrastructure vs. ITO Asst. Years –2015-16 to 2018-19 - 5– is a settled legal position that while considering a stay petition, the factors of prima facie case, balance of convenience and financial hardship are required to be examined. In this regard, reliance is placed on the judgment of the Hon’ble Supreme Court in the case of ITO vs. M.K. Mohammed Kunhi (1969) 71 ITR 815 (SC), wherein it has been held that the Tribunal has inherent power to grant stay of demand in appropriate cases in order to make the appellate jurisdiction effective. 11. Considering the entirety of the facts and circumstances of the case, and in exercise of powers conferred under section 254(1) of the Income- tax Act, 1961 read with Rule 35A of the Income Tax (Appellate Tribunal) Rules, 1963, we deem it fit and proper to grant stay of recovery of the outstanding demand for a period of six months from the date of this order or till the disposal of the appeal, whichever is earlier. 12. The Assessing Officer is directed not to take any coercive action for recovery of the outstanding demand during the currency of this stay. The assessee is also directed not to seek unnecessary adjournments and to fully cooperate for expeditious disposal of the appeal. It is further directed that the Registry shall fix the appeal for hearing on priority basis. 13. In the result, the stay petition filed by the assessee is allowed. 14. Since the facts are largely similar for balance years as well, in which the Counsel for the assessee has submitted that the has already paid approximately 22% of the tax demand, in the interest of justice, and in light Printed from counselvise.com SA Nos.4to7/Srt/2026 (in ITA Nos. 218 to 221/Srt/2026) Royal Infrastructure vs. ITO Asst. Years –2015-16 to 2018-19 - 6– of our observations in the preceding paragraphs relating to Stay Application for A.Y. 2015-16, we hereby grant stay to the assessee for the balance years as well for a period of six months from the date of this order or till the dispose of the appeal, whichever is earlier. 15. In the combined result, all Stay Applications filed by the assessee are allowed. Order pronounced under proviso to Rule 34 of ITAT Rules, 1963 on 27/03/2026 Sd/- Sd/- (ANNAPURNA GUPTA) (SIDDHARTHA NAUTIYAL) ACCOUNTANT MEMBER JUDICIAL MEMBER Ahmedabad; Dated 27/03/2025 TANMAY, Sr. PS TRUE COPY आदेश की Ůितिलिप अŤेिषत/Copy of the Order forwarded to : 1. अपीलाथŎ / The Appellant 2. ŮȑथŎ / The Respondent. 3. संबंिधत आयकर आयुƅ / Concerned CIT 4. आयकर आयुƅ(अपील) / The CIT(A)- 5. िवभागीय Ůितिनिध, आयकर अपीलीय अिधकरण, सूरत / DR, ITAT, Surat 6. गाडŊ फाईल / Guard file. आदेशानुसार/ BY ORDER, उप/सहायक पंजीकार (Dy./Asstt.Registrar) आयकर अपीलीय अिधकरण, सूरत/ ITAT, Surat 1. Date of dictation 27.03.2026 2. Date on which the typed draft is placed before the Dictating Member 27.03.2026 3. Other Member………………… 4. Date on which the approved draft comes to the Sr.P.S./P.S 27.03.2026 5. Date on which the fair order is placed before the Dictating Member for pronouncement 27.03.2026 6. Date on which the fair order comes back to the Sr.P.S./P.S 27.03.2026 7. Date on which the file goes to the Bench Clerk 27.03.2026 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 "