ITAT Ahmedabad Quashes Rs. 1.02 Crore Loan Addition, Validates Business Transaction:

ITAT Ahmedabad Quashes Rs. 1.02 Crore Loan Addition, Validates Business Transaction The present appeal has been filed by a company named Nirbhay Consultants Private Limited (Appellant) against the ITO, Ward-3(1)(1) Ahmedabad (Respondent) in the Income Tax Appellate Tribunal (ITAT) Ahmedabad “D” Bench before Dr Brr Kumar (Vice President) and Ms Suchitra Kamble (Judicial Member). The case was heard on September 04, 2025, and the final decision was made on November 04, 2025. The current appeal had challenged an order dated November 09, 2024, passed by the National Faceless Appeal Centre (NFAC), Delhi, for the assessment year 2011-12. The case was reopened by the tax authorities based on information received from the Investment Wing, Kolkata Unit, that the assessee had received a suspicious loan.

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ITAT Reverses Disallowance of Interest Expense, Rs. 7 Crore Loan Repayment Overlooked

The assessee has received a loan of Rs. 10,215,000 from Fiducia Infrastructure Private Limited. The tax authorities treated this amount as an unexplained cash credit under Section 68 of the Income Tax Act and included it under taxable income, claiming it was not properly explained. The assessee argued that the loan was taken for genuine purposes and was used to repay another company's loan. The lender’s identity and financial capacity were also clear. Assessee dissatisfied with the action of AO, filed an appeal before the CIT(A). However, the appeal was dismissed. Thereafter, the assessee approached the ITAT Ahmedabad.

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ITAT Rejects Bogus LTCG Claim, Upholds Tax Reopening

Ahmedabad noted that the reason given by the assessee behind taking the loan was genuine: that the loan was taken to repay a loan taken from some other company named Nirbhay Capital Services Private Limited. This connection was documented in the ledger and supported the Assessee’s explanation. In its final decision, the tribunal endorsed the arguments served by the assessee and hence deleted the addition of Rs. 1,02,15,000 as unexplained cash credit.