The assessee filed an appeal against the order passed by the National Faceless Appeal Centre, Delhi, for Assessment Year 2021–22. The assessment was framed after scrutiny proceedings, wherein the Assessing Officer made multiple additions and disallowances, including additions under section 68 of the Income-tax Act, 1961 in respect of unsecured loans and unexplained creditors.

During the course of assessment, the Assessing Officer invoked section 68 and made an addition of ₹31,50,000 on account of unexplained unsecured loans. Further, an addition of ₹24,75,750 was made on account of unexplained creditors under the same provision. The Assessing Officer also disallowed certain expenses, including a disallowance of ₹1,05,300 under section 40(a)(ia), along with other disallowances relating to tour, travel, and vehicle expenses. Consequently, the total income of the assessee was assessed at ₹1,88,66,880.

Aggrieved, the assessee carried the matter in appeal before the Commissioner of Income Tax (Appeals), NFAC, who sustained the additions and dismissed the appeal. The assessee thereafter approached the Tribunal.

Before the Tribunal, the assessee filed an application under Rule 29 of the Income-tax (Appellate Tribunal) Rules, 1962, seeking admission of additional evidence. It was contended that adequate opportunity had not been afforded at the assessment stage and that the additional evidence, including affidavits and documentary material, substantiated the genuineness of the loan transactions. The assessee submitted that the loans were obtained from known persons, were routed through banking channels, and that the creditors were willing to appear before the tax authorities for verification.

The Tribunal, after examining the additional evidence and the affidavit filed, observed that the documents prima facie established the identity and genuineness of the loan transactions and went to the very root of the additions made under section 68. Considering that substantial additions had been made and that the additional evidence was relevant for proper adjudication, the Tribunal held that the interest of justice warranted restoration of the matter.

Accordingly, the Tribunal set aside the impugned appellate order and restored the assessment to the file of the Assessing Officer for fresh adjudication. The Assessing Officer was directed to frame the assessment afresh after due verification of the additional evidence and after providing reasonable opportunity of being heard to the assessee.
All grounds raised by the assessee were allowed for statistical purposes.

Source Link- https://itat.gov.in/public/files/upload/1767928882-DrdtXm-1-TO.pdf

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