VITAL CARE PRIVATE LIMITED,VADODARA V. THE DY. CIT, CIRCLE-2(1)(1), VADODARA

ITA 527/AHD/2025

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Vital Care Pvt. Ltd. appealed against the order of the National Faceless Appeal Centre (NFAC), which had upheld the additions made by the Assessing Officer under section 68 of the Income Tax Act. The additions pertained to Rs. 42,00,000 received as unsecured loans, which were treated as unexplained cash credits, and Rs. 8,17,535 disallowed as interest on these loans. The Tribunal examined the evidence provided by the assessee, including confirmations, bank statements, and tax returns of the depositors, and found them satisfactory to establish the creditworthiness and genuineness of the transactions. The Tribunal's decision was influenced by a similar case involving the same parties in the previous assessment year, where the Tribunal had ruled in favor of the assessee.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 707119 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-07-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2014-2015
• Appeal Filed On: 10-03-2025
• Other Referred Cases: ITA No. 381/Ahd/2023
• Laws Referred To: Income Tax Act
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SURESH CHAND MEENA
• Assessee Lawyers: RANGOLI GADA
• Keywords: Proportionate interest; Unexplained cash credit
• Section: 142(1); 68

Judgement Text

"THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD “SMC” BENCH Before Dr. BRR Kumar, Vice President And Ms. Suchitra Kamble, Judicial Member Vital Care Pvt. Ltd. 3rd Floor, 304-305 Dwarkesh Complex Sunpharma, Old Padre Road, Vadodara PAN: AAACV6209P (Appellant) Vs The Dy. CIT, Circle- 2(1)(1), Vadodara (Respondent) Assessee by: Ms. Rangoli Gada, C.A. Revenue by: Shri Suresh Chand Meena, Sr. D.R. Date of hearing : 02-07-2025 Date of pronouncement : 08-07-2025 आदेश/ORDER Per Suchitra Kamble, Judicial Member: This is an appeal filed against the order dated 24-02- 2025 passed by National Faceless Appeal Centre (NFAC), Delhi for assessment year 2014-15. 2. The grounds of appeal are as under:- “1) The assessing officer treated the amount of Rs. 42,00,000/- received from creditors as unexplained cash credits and added to the total income u/s 68 of the IT Act. The assessing officer believed that the assessee has failed to prove the identity, credit worthiness and genuineness of the transaction and could not substantiate the source of source of such transaction. The ITA No. 527/Ahd/2025 Assessment Year 2014-15 I.T.A No. 527/Ahd/2025 Vital Care Pvt. Ltd., A.Y. 2014-15 2 assessing officer treated the same as unexplained cash credits and added to the total income u/s 68 of the IT Act. Your Appellant submits the same is not justified and therefore be deleted. 2) The asseessing officer has further disallowed Rs. 8,17,535/- as proportionate interest on unsecured loan of Rs. 42,00,000/- stating that the assessee has paid interest on unexplained cash credits. Your Appellant submits the same is not justified and therefore be deleted. Your Appellant craves leave to add to, alter, to amend or to delete any or all the grounds of appeal.” 3. The assessee company is engaged in the business of manufacturing and selling of products like Ayurvedic products like tablets, capsules, oil, syrup and ointment. The assessee filed return of income on 28-11-2024 declaring total loss at Rs. (- ) 38,59,306/-. The assessee’s case was selected for scrutiny and notice u/s. 143(2) of the Act was issued on 28-08-2015. Subsequently, notice u/s. 142(1) was issued on 06-05-2016 and 30-08-2016 along with his annexure calling for specific details. In response to the said notices, the chartered accountant of the assessee i.e. A.R. of the assessee company attended the proceedings and furnished the details. During the year under consideration, the Assessing Officer observed that the assessee has shown gross turnover of Rs. 6,83,92,522/- as compared to last year’s gross turnover of Rs. 5,90,43,560/-. Profit before tax was shown at (-) Rs. 27,41,750/- as against profit of (-) Rs. 25,29,220/- shown in the immediately preceding year. The Assessing Officer further observed that in the assessment order for assessment year 2013-14 dated 23-03-2016, it was held that the assessee company failed to prove creditworthiness of Aaheli Projects Pvt. Ltd. (Rs. 40,00,000/-) and Berhampore Finance & Leasing Pvt. Ltd. (Rs. 20,00,000/-) which are the depositors. I.T.A No. 527/Ahd/2025 Vital Care Pvt. Ltd., A.Y. 2014-15 3 After verifying the assessee’s details, the Assessing Officer held that Berhampore Leasing & Finance Pvt. Ltd. has no creditworthiness to lend a huge sum of Rs. 42,00,000/- and thus the said amount received as unsecured loan was treated as unexplained cash credit u/s. 68 of the Act. The Assessing Officer further added Rs. 8,17,535/- thereby disallowing interest paid to Aaheli Projects Pvt. Ltd. and Berhampore Finance & Leasing Pvt. Ltd. The Assessing Officer also made addition of Rs. 20,810/- on account of late payment of employee’s contribution to provident fund. 4. Being aggrieved by the assessment order, the assessee filed appeal before the CIT(A). The CIT(A) dismissed the appeal of the assessee. 5. The ld. A.R. submitted that the identical issue has been decided by the Tribunal in assessee’s own case for assessment year 2013-14 being ITA No. 381/Ahd/2023 order dated 20-12- 2023 wherein the said depositor parties i.e. Aaheli Projects Pvt. Ltd and Berhampore Finance & Leasing Pvt. Ltd. have been taken into account. 6. The ld. D.R. relied upon the assessment order and the order of the CIT(A). 7. We have heard both the parties and perused all the relevant material available on record. The Assessing Officer as well as CIT(A) has relied upon the finding of the assessment year 2013-14 passed by the Assessing Officer in that relevant year in respect of Berhampore Finance and Leasing Pvt. Ltd. and Aaheli Projects Pvt. Ltd. The assessee has given the details related to I.T.A No. 527/Ahd/2025 Vital Care Pvt. Ltd., A.Y. 2014-15 4 confirmation of accounts, copy of bank statement, copy of ITR, acknowledgment, copy of ledger account of both the parties has also explained the genuineness and identity as well as creditworthiness in the assessment year 2013-14 as well as 2014-15. Thus, the addition made u/s. 68 does not sustain as the assessee has explained the unsecured loans before the Assessing Officer. Besides this, the assessee has paid the interest to the said parties has also explained and hence the same cannot be disallowed. The appeal of the assessee is allowed in the light of the decision of the Tribunal in assessee’s own case for assessment year 2013-14. 8. In the result, the appeal of the assessee is allowed. Order pronounced in the open court on 08-07-2025 Sd/- Sd/- (Dr. BRR Kumar) (Suchitra Kamble) Vice President Judicial Member Ahmedabad : Dated 08/07/2025 आदेश क\u0006 \u0007\bत ल प अ\u000fे षत / Copy of Order Forwarded to:- 1. Assessee 2. Revenue 3. Concerned CIT 4. CIT (A) 5. DR, ITAT, Ahmedabad 6. Guard file. By order/आदेश से, उप/सहायक पंजीकार आयकर अपील\u0012य अ\u0013धकरण, अहमदाबाद "