ITAT Remands Section 68 Unsecured Loan Addition to CIT(A) for Fresh Adjudication

ITAT Agra remanded the Unsecured Loan Addition case to CIT(A) for fresh adjudication, ruling that additional evidence on unsecured loans under Section 68 required factual verification. The taxpayer was allowed to furnish documents again and directed to cooperate with CIT(A).

The appeal was filed by Om Parkash Banwani in the Income Tax Appellate Tribunal (ITAT), Agra, challenging an order passed by the National Faceless Appeal Centre (NFAC), Delhi, on March 29, 2025. The final decision of the case was made on September 16, 2025.

Om had filed his return for assessment year 2013-14, declaring total income at Rs. 11,12,500. He is the owner of a company named M/s. Pawan Kumar Budhamal is involved in the business of manufacturing hulled seame seeds. During scrutiny of the return, the tax officer noted that Om had received unsecured loans totalling Rs. 25.50 lakh and Rs. 24.70 lakh from 4 and 12 parties, respectively. Om did not mention this in his return. During assessment proceedings, Om could not prove the genuineness of the transaction and the creditworthiness of the lenders and had not produced the parties for verification. Resulting from the findings, the tax officer treated the said amount as an unexplained cash credit under section 68 of the Act and made an addition of the same to Om’s income.

The aggrieved Om approached CIT(A); however, CIT(A) dismissed the appeal of Om. Thereafter, he filed an appeal before ITAT Agra. The tribunal noted that the additional evidence furnished by Om before CIT(A) was significant in the context of additional adjudication on grounds of unsecured loans under section 68 of the Income Tax Act. However, the submitted documents require factual verification to prove the genuineness of the transaction and the creditworthiness of the lenders as per the tribunal.

Hence, in conclusion to the aforesaid findings and considering fairness, the tribunal restores Om’s appeal for de novo adjudication. Remand the case to CIT(A) for fresh consideration and allow Om to furnish all further relevant documents before CIT(A). Additionally, directed Om not to take unwarranted adjournments except due to exceptional or bona fide circumstances and to cooperate with CIT(A).