VIKAS OIL MILL,KHAIRTHAL V. ITO WARD 1(5), ALWAR, ALWAR

ITA 721/JPR/2025

AI Insights

The case involves M/s Vikas Oil Mill appealing against the order of the National Faceless Appeal Centre (CIT(A)), which sustained additions made by the Income Tax Officer (ITO), Ward 1(5), Alwar, under sections 143(3) and 263 of the Income Tax Act, 1961. The additions pertained to unsecured loans and capital introduced by partners, which the ITO deemed unexplained. The Tribunal, after reviewing the evidence and submissions, found that the assessee had adequately demonstrated the legitimacy of the loans and the source of the capital introduced by the partners, leading to the allowance of the appeal.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 775195 (ITAT-JAIPUR)
• Duration Of Justice: 4 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-09-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2011-2012
• Appeal Filed On: 01-05-2025
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: GAUTAM SINGH CHOUDHARY
• Assessee Lawyers: P.C. PARWAL
• Keywords: Set aside; Additional evidence; TDS; Source of fund; Revision of order
• Section: 143(3); 263

Judgement Text

"vk;dj vihyh; vf/kdj.k] t;iqj U;k;ihB] t;iqj IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES,”SMC” JAIPUR Jh jkBkSM+ deys'k t;UrHkkbZ] ys[kk lnL; ,o Jh ujsUnz dqekj] U;kf;d lnL; ds le{k BEFORE: SHRI RATHOD KAMLESH JAYANTBHAI, AM & SHRI NARINDER KUMAR, JM vk;dj vihy la-@ITA No. 721/JP/2025 fu/kZkj.k o\"kZ@Assessment Year : 2011-12 M/s Vikas Oil Mill G-26/27, Ind. Area, Khairthal, 301404, Alwar cuke Vs. ITO, Ward 1(5), Alwar LFkk;h ys[kk la-@thvkbZvkj la-@PAN/GIR No.: AABFV2322F vihykFkhZ@Appellant izR;FkhZ@Respondent fu/kZkfjrh dh vksj ls@ Assessee by : Sh. P. C. Parwal, CA jktLo dh vksj ls@ Revenue by : Sh. Gautam Singh Choudhary, JCIT lquokbZ dh rkjh[k@ Date of Hearing : 20/08/2025 mn?kks\"k.kk dh rkjh[k@Date of Pronouncement: 01/09/2025 vkns'k@ ORDER PER: RATHOD KAMLESH JAYANTBHAI, AM By way of present appeal, the assessee – appellant challenges the order of the National Faceless Appeal Centre, Delhi [for short CIT(A)] dated 19/03/2025 which relates to the assessment year 2011-12. The said order of the ld. CIT(A) arises because the assessee has challenged the assessment order dated 30.12.2016 passed under section (set-aside/263) 143(3) of the Income Tax Act, 1961 [ for short “Act”] by Income-tax Officer- 1(5), Alwar [ for short AO]. Printed from counselvise.com 2 ITA No. 721/JP/2025 Vikas Oil Mill vs. ITO 2. The assessee challenges that order on the following grounds: - “1. The Ld. Assessing officer has erred in law as well as on the facts and circumstances of the case in making a disallowance of unsecured loan received from M/s Har Dayal & Company, Khairthal of Rs.7,00,000/- and from Shri Lokmanya son of Badri Prasad, Khairthal Rs.3,00,000/- which are illegal and against the facts on without providing any opportunity to the assessee before making the addition and the Ld. CIT(A) NFAC has erred in sustaining the same . 2. The Ld. Assessing officer has erred in law as well as on the facts and circumstances of the case in disallowing a sum of Rs.4,00,000/- being capital introduced by the partners of the firm without providing opportunity to the assessee more so when the assessee is having every source of introduction of such capital, which was withdrawn by the partners from the firm in the earlier year and the necessary evidences were submitted before the AO during the course of assessment proceedings and the Ld. CIT(A) NFAC has erred in sustaining the same . 3. The assessee reserves its right to addition, alter, modify, delete or amend all or any of the grounds of appeal before or at the time of hearing of appeal. 3. Succinctly, the fact as culled out from the record is that the assessee filed the return of income on 19.09.2011 declaring total income of Rs. 10,66,290/-. After that the case of the assessee was selected for scrutiny and the assessment u/s 143(3) of the Act was made on a total income of Rs.11,42,520/- after making the additions/disallowances by the ITO, Ward- 1(1), Alwar. On culmination of that assessment proceedings, the case records were called for by the Pr. Commissioner of Income Tax, Alwar. In that action, ld. PCIT as per the power vested upon him set-aside that order vide order passed u/s 263 dated 14.03.2016. Printed from counselvise.com 3 ITA No. 721/JP/2025 Vikas Oil Mill vs. ITO In accordance with that ld. PCIT set aside proceeding and the ld. AO made the assessment and accordingly determined the income by making the following addition / disallowance to the returned income ; Total Income as per return of Income Rs. 10,96,290/- Add : Additions /Disallowance 1. Trading addition Rs. 16,98,023/- 2. Addition on account of Unsecured Loans Rs. 10,00,000/- 3. Disallowance on account of addition to the Partners capital Rs. 4,00,000/- ------------------- Rs.41,64,313/- 4. Aggrieved by the above order of assessment made by the ITO, Ward1(5), Alwar the assessee preferred the appeal before the ld. CIT(A), who, after considering the overall facts presented before him directed to delete the trading addition of Rs. 16,98,023/- but sustained the other two additions made. The relevant finding of the ld. CIT(A) reads as follows: “Decision: I have carefully gone through the records, Hon'ble ITAT order & other relevant orders. I found the AO was correct is his observation that \"A\" did not furnished complete address, copy of bank account, copy of ITR and source of fund of the following persons i.e. Shri Jagdish Prasad Gupta, Sh. Trilok Chand Gupta, Mrs. Printed from counselvise.com 4 ITA No. 721/JP/2025 Vikas Oil Mill vs. ITO Rukmani Devi and Mrs. Vijay Laxmi. Vide show cause notice dated 28.12.2016. assessee was required to furnish the above details of partners who has made the addition in capital but assessee has failed to furnish the required details of the above said partners. He has submitted only copy of ledger account and ITR which is not sufficient for proper verification. Again a reasonable opportunity, appellant was requested to establish his case but again the evidence to rebut the AO's findings was produced. I found incomplete bank statement (No earlier entry of disputed entry, bank holder's name not showing etc.). Respectfully following the observation of Hon'ble ITAT regarding fall of GP, the appellant is hereby granted relief for the addition of Rs. 16,98,023/- under the head of \"trading additions\". In view of the above observations & remand reports, the additions made under the heads of unsecured loans & to partners' capital account is hereby confirmed in absence of any rebuttal/evidence from appellant side 6. In result, the appeal is PARTLY ALLOWED.” 5. Feeling dissatisfied with the finding on the sustained additions, the assessee preferred present appeal before this tribunal. The ld. AR of the assessee in support of the grounds raised, filed the following written submission; Ground no.1 The Ld. Assessing officer has erred in law as well as on the facts and circumstances of the case in making a disallowance of unsecured loan received from M/s Har Dayal & Company, Khairthal of Rs.7,00,000/- and from Shri Lokmanya son of Badri Prasad, Khairthal Rs.3,00,000/- which are illegal and against the facts on without providing any opportunity to the assessee before making the addition and the Ld. CIT(A) NFAC has erred in sustaining the same . Facts and Submission: - Printed from counselvise.com 5 ITA No. 721/JP/2025 Vikas Oil Mill vs. ITO 1. The assessee is engaged in the business of manufacturing and trading of oil and oil cake. The original assessment was completed u/s 143(3) at total income of Rs.11,42,520/-. The said order was set aside by PCIT, Alwar vide order u/s 263 dt.14.03.2016. In pursuance to this order AO passed the assessment order on 30.12.2016 by making trading addition of Rs.16,98,023/-, addition on account of unsecured loan Rs.10,00,000/- and addition on account of capital introduced by the partners Rs.4,00,000/-. Out of these additions CIT(A) deleted trading addition. 2. The AO at page 10 of the assessment order (annexure 11) treated the unsecured loan of Rs.7,00,000/- taken from Hardayal & Co. and Rs.3,00,000/- taken from Lokmanya as unexplained for the reason that assessee has not submitted the complete details i.e., confirmation letter, PAN, bank account, identity, genuinity and creditworthiness of these creditors. The Ld. CIT(A) at para 5 of the order confirmed the addition without any discussion on the documents furnished before him. 3. It is submitted that assessee took a loan of Rs.7,00,000/- from M/s Hardayal & Co. on 16.04.2010. The assessee has earlier taken loan of Rs.5,00,000/- from this party which is shown as opening balance on 01.04.2010. The loan of Rs.7,00,000/- was repaid on 28.04.2010 and 29.04.2010 along with interest for Rs.7,04,200/-. M/s Hardayal & Co is regularly filing the return of income (Annexure 14a). On the interest paid, assessee has deducted tax at source and credit of such TDS has been claimed by Hardayal & Co. in the return of income. From the bank statement of Hardayal & Co. it can be noted that in its bank account there was a balance of Rs.21,30,812/- out of which advance was given by the party. Copy of ledger account of assessee in the books of Hardayal & Co. was also filed. Thus, the confirmation, PAN, bank account, identity, genuineness and creditworthiness of Hardayal & Co. was filed and therefore the addition made by AO and confirmed by CIT(A) be deleted. 4. In case of Lokmanya Gupta, assessee took loan of Rs.3,00,000/- on 02.04.2010. On this loan interest of Rs.43,200/- was paid on which tax is deducted at source. From the bank account it can be noted that she has an opening balance of Rs.10,33,001/- on 31.03.2010, out of which Rs.3,00,000/- were advanced on 02.04.2010. The interest on such loan is duly declared by her in the return of income and TDS deducted is claimed in the return filed by her (PB 14b). Thus, the PAN, bank account, identity, genuineness and creditworthiness of Lokmanya Gupta was filed and therefore the addition made by AO and confirmed by CIT(A) be deleted. Printed from counselvise.com 6 ITA No. 721/JP/2025 Vikas Oil Mill vs. ITO Ground No.2 The Ld. Assessing officer has erred in law as well as on the facts and circumstances of the case in disallowing a sum of Rs.4,00,000/- being capital introduced by the partners of the firm without providing opportunity to the assessee more so when the assessee is having every source of introduction of such capital, which was withdrawn by the partners from the firm in the earlier year and the necessary evidences were submitted before the AO during the course of assessment proceedings and the Ld. CIT(A) NFAC has erred in sustaining the same . Facts and Submission: - 1. During the year under consideration the following four partners of the assessee introduced capital of Rs.1,00,000/- each for which the source was explained as under - Name of Partner Capital introduced Explanation Smt. Rukmani Devi 1,00,000 Introduced on 26.06.2010 out of drawing of Rs.1,00,000 made on 22.03.2010 Smt. Vijay Laxmi 1,00,000 Introduced on 07.04.2010 out of drawing of Rs.1,00,000 made on 18.12.2009 Trilok chand Gupta 1,00,000 Introduced on 26.06.2010 out of drawing of Rs.1,00,000 made on 16.03.2010 Jagdish Prakash Gupta 1,00,000 Introduced on 03.04.2010 out of drawing of Rs.1,00,000 made on 29.03.2010 In support of the same copy of cash book of March 2010 showing withdrawal of Rs.1,00,000/- each by each of the above partner and cash book of April 2010 and June 2010 showing deposit of Rs.1,00,000/- each by each of the partner along with the copy of return and capital account of each of the partner in the books of the assessee was filed (Annexure 15 & 16). The AO at page 12 of the order made the addition stating that assessee has not furnished complete address, copy of bank account, copy of ITR and source of fund of these persons and the Ld. CIT(A) at para 5 of the order confirmed the addition without any discussion on the documents furnished before him. 2. It is submitted that both the lower authorities are incorrect in holding that assessee only submitted copy of ledger account and ITR which is not sufficient Printed from counselvise.com 7 ITA No. 721/JP/2025 Vikas Oil Mill vs. ITO for the verification. In holding so it is ignored that the amount withdrawn by these partners from the assessee was deposited back, in support of which cash book of the assessee was filed. These transactions are not through the bank account of the assessee and therefore the same is not relevant. Thus, the source of credit in the capital account of these partners is fully explained and therefore the addition made by AO and confirmed by CIT(A) be deleted. 6. In support of the above written submission, the ld. AR of the assessee filed a paper book containing following evidence / record and decisions; S. No. Particulars Pg No. Filed before AO/CIT(A) 1. Copy of acknowledgement of income tax return along with computation of income for AY 2011-12 of Har Dayal & Co. 1-4 Both 2. Copy of bank statement of Har Dayal & Co. 5 Both 3. Copy of ledger account of assessee in books of Har Dayal & Co. and vice versa 6-7 Both 4. Copy of acknowledgement of income tax return along with computation of income for AY 2011-12 of Lok Manya Gupta 8-9 Both 5. Copy of bank statement of Lok Manya Gupta 10 Both 6. Copy of ledger account of Lok Manya Gupta in the books of the assessee 11 Both 7. Copy of cash book of assessee from 18.03.2010 to 29.03.2010 for withdrawal made by partners of the firm 12 Both 8. Copy of relevant extract of cash book of assessee for the month of April 2010 and June 2010 for deposit made by partners of the firm 13-14 Both 9. Copy of ITR along with computation of income and capital account of Jagdish Prasad Gupta in the books of the assessee 15-19 Both 10. Copy of ITR along with computation of income and capital account of Trilok Chand in the books of the assessee 20-23 Both 11. Copy of ITR and capital account of Vijaya Laxmi in the books of the assessee 24-26 Both 12. Copy of ITR along with computation of income and capital account of Rukmani Devi in the books of the assessee 27-31 Both 13. Copy of ITAT order dt.02.01.2017 in assessee's own case for AY 2011- 12 against the order passed by PCIT Alwar u/s 263 of the Act 32-53 Both 7. The ld. AR of the assessee in addition to the above written submission so filed vehemently argued that the finding of the ld. AO are itself Printed from counselvise.com 8 ITA No. 721/JP/2025 Vikas Oil Mill vs. ITO contradictory. To support this, he referred to page 9 of the ld. AO wherein the following table is given [reproduced for sake of convenience ] As is evident from the above table that the assessee has submitted confirmation and ITR at page 9. On the other hand, at page 10, while making the addition, he observed as under : Further on perusal of details of unsecured loan furnished by AR of the assessee, it is seen that the assessee has not submitted the complete details i.e. confirmation letter, PAN No., copy of bank account, identity, genuinity and credit worthiness (whether squared up or not) of the following persons i.e. Hardayal & Company and Lokmanya who have given the unsecured loan to the assessee. In absence of these details the un-secured load cannot be verified. Therefore I make an addition of Rs. 10,00,000/-(Rs. 7,00,000/- + 3,00,000/-) treated as un- explained unsecured loan and added to the total income of the assessee of Rs. 10,00,000/-. As is evident finding given at page 9 is contrary to the facts available at page 10 and thereby the addition is required to be deleted for the unsecured loans. On the other hand, the amount added Printed from counselvise.com 9 ITA No. 721/JP/2025 Vikas Oil Mill vs. ITO on account of partners’ capital account source is very well explained as per the submission filed. 8. Per contra, ld. DR relied upon the orders of the lower authorities. He vehemently argued that the ld. CIT(A) called for the remand report and in that proceeding, assessee has not submitted additional evidence and thereby the orders of the lower authority is required to be confirmed. 9. We have heard the rival contentions and perused the material placed on record. In the present appeal, the assessee challenges the two additions one for the unsecured loans and other in the addition is for the addition in the partner’s capital account. Vide ground no. 1, the assessee challenges the finding of the ld. CIT(A) sustaining the addition of unsecured loan received from M/s Har Dayal & Company, Khairthal of Rs.7,00,000/- and from Shri Lokmanya son of Badri Prasad, Khairthal Rs.3,00,000/- . The ld. CIT(A) noted that the assessee has not rebutted the finding of the ld. AO. Therefore, he has confirmed the addition. The bench noted from the order of the assessing officer vide which at page no. 9 he noted that in case of the disputed unsecured loan creditors the assessee has submitted the following details; Printed from counselvise.com 10 ITA No. 721/JP/2025 Vikas Oil Mill vs. ITO ….. The fact recorded in the order of the assessment has not been controverted by the ld. DR while arguing the present appeal. Thus, there is no dispute that the assessee filed the confirmation and ITR. The bench noted from the computation of income at page 3 and ITR wherein the interest received from the assessee is duly accounted and offered for tax and since that facts placed on record wherein the name, address and PAN details is already placed on record. Thus, once in ITR the interest income received from the assessee is duly offered for tax and the assessee has deducted the TDS on the said interest income shown by the depositor, how that depositor could be considered as unexplained unsecure loan by the assessee and therefore, we see no reason to sustain that addition of Rs. 7,00,000/- in the hands of the assessee, and thereby direct to delete the same. Printed from counselvise.com 11 ITA No. 721/JP/2025 Vikas Oil Mill vs. ITO Now coming to the deposit of Rs. 3,00,000/- received from Lok Manya. For this also as is evident from the record before the ld. AO the ld. AO confirmed that the assessee had filed the confirmation and ITR. The computation of income along with the ITR [ page 8 & 9 of the paper book ] shows that the said unsecured loan depositor had offered the income of interest received from the assessee. The bench noted from the computation of income at page 9 and ITR wherein the interest received from the assessee is duly accounted and offered for tax, and since that facts placed on record wherein the name, address and PAN details is already placed on record. Thus, once in ITR the interest income received from the assessee is duly offered to tax and the assessee has deducted the TDS on the said interest income shown by the depositor how that depositor could be considered as unexplained unsecured loan by the assessee and therefore, we see no reason to sustain that addition of Rs. 3,00,000/- in the hands of the assessee, and thereby direct to delete the same. In the result ground no 1 raised by the assessee is allowed. 10. Now coming to the ground no. 2 where by the assessee challenges the finding of the ld. CIT(A) in sustaining the addition of Rs.4,00,000/- being capital introduced by the partners of the firm without providing opportunity Printed from counselvise.com 12 ITA No. 721/JP/2025 Vikas Oil Mill vs. ITO to the assessee more so when the assessee is having every source of introduction of such capital, which was withdrawn by the partners from the firm in the earlier year and the necessary evidences were submitted before the AO during the course of assessment proceedings and the Ld. CIT(A) NFAC has erred in sustaining the same. On this issue, the bench noted from the order of the assessment that the assessee has for the impugned addition has furnished the following details [ page 11 of the assessment order ]; As is evident from the above explanation furnished by the assessee that the assessee already given the details of the source of the capital introduced by the partners submitting that the same has been reproduced Printed from counselvise.com 13 ITA No. 721/JP/2025 Vikas Oil Mill vs. ITO from the earlier withdrawal made by the partners. The assessee in support of the contention has furnished the following details to the ld. AO. As is evident from the table given by the ld. AO at page no 12 of the order which reads as under: As is evident from the above details, the assessee contended that the source of deposit was from the withdrawal made from the firm and for that enclosed the copy of the partner’s capital account for earlier year and also filed the copy of the account, ITR and Bank statement. The ld. AO has not spelt out what further details he wanted to explain the source of capital introduced having source from the earlier withdrawals. When the matter was carried before the ld. CIT(A), he has not given any reasons, and simply confirmed the view of the ld. AO. Looking to the facts already available on record when the assessee submitted all the details of the Printed from counselvise.com 14 ITA No. 721/JP/2025 Vikas Oil Mill vs. ITO capital introduced along with the source of the money and the onus shifted to the revenue to explain as to why the explanation, so furnished by the assessee which is supported by the evidence, cannot be believed. In terms of these observation, ground no. 2 raised by the assessee is allowed. Ground no. 3 being general does not require our finding. In the result, the appeal of the assessee is allowed. Order pronounced in the open court on 01/09/2025. Sd/- Sd/- ¼ujsUnz dqekj½ ¼jkBkSM+ deys'k t;UrHkkbZ½ (NARINDER KUMAR) (RATHOD KAMLESH JAYANTBHAI) U;kf;d lnL;@Judicial Member ys[kk lnL; @Accountant Member Tk;iqj@Jaipur fnukad@Dated:-01/09/2025 *Ganesh Kumar, Sr. PS vkns'k dh izfrfyfi vxzsf’kr@Copy of the order forwarded to: 1. The Appellant- M/s Vikas Oil Mill, Khairthal 2. izR;FkhZ@ The Respondent- ITO, Ward 1(5), Alwar 3. vk;dj vk;qDr@ The ld CIT 4. vk;dj vk;qDr¼vihy½@The ld CIT(A) 5. foHkkxh; izfrfuf/k] vk;dj vihyh; vf/kdj.k] t;iqj@DR, ITAT, Jaipur 6. xkMZ QkbZy@ Guard File (ITA No. 721/JP/2025) vkns'kkuqlkj@ By order, lgk;d iathdkj@Asst. Registrar Printed from counselvise.com "