Krishna Associates vs ITO, WARD-3(3)(1), Ahmedabad

Parties Involved

Facts Summary

The Assessee filed return of income for the Assessment Year 2011-12 declaring 'Nil' income. Reassessment proceedings under Section 147 of the Act were initiated based on information received from survey action under Section 133A in the case of M/s. Veer Corporation and M/s. Vatsal Enterprise, Surat, indicating that the Assessee was a beneficiary of bogus unsecured loans from M/s. Dhawal Gems. Notice under Section 148 of the Act was issued and served upon the Assessee on 30/03/2018. In response, the Assessee filed its return of income on 30/08/2018 declaring 'Nil' income. Assessment under Section 143(3) read with Section 147 of the Act was framed vide Assessment Order, dated 11/12/2018, after making the following additions: (a) Addition of INR.1,82,30,823/- under Section 68 of the Act in respect of unproved and undisclosed unsecured loans (comprising unproved loans of INR 1,72,13,558/- and undisclosed loan difference of INR 10,17,265/- in respect of Dhawal Gems). (b) Addition of INR.6,05,205/- under Section 68 of the Act on account of disallowance of interest paid on the aforesaid unsecured loans. The appeal preferred by the Assessee against the Assessment Order, dated 11/12/2018, was dismissed by the Ld. CIT(A) vide Order, dated 10/02/2025. Being aggrieved by the above order passed by the CIT(A), the Assessee has preferred the present appeal on the grounds reproduced in paragraph 2 above.…

Legal Issues

• 1. Admission of additional evidence under Rule 46A of the Income Tax Rules, 1962 and the order of the Learned CIT(A) confirming the addition of INR.1,82,30,823/- made by the Assessing Officer under Section 68 of the Act in respect of unsecured loans.
• 2. Challenge against the validity of the assessment order on the ground that no notice under Section 143(2) of the Act was issued/served upon the Assessee.
• 3. Disallowance of interest expenditure of INR.6,05,205/- paid on unsecured loans.

Judgment Outcome

Decided in favour of Assessee.

Precedents Relied Upon

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