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ITAT confirms the AO’s order that the assessee failed to provide evidence of the unsecured loan claim

ITAT - Order - AO - Assessee - Submit supporting documents - Claim - Unsecured Loans - Taxscan

The Income Tax Appellate Tribunal (ITAT), Delhi, composed of Anil Chaturvedi, Accountant Member, and Kul Bharat, Judicial Member, upheld AO’s order in which the assessee had failed to provide evidence supporting the claim for unsecured loans.

The assessee, Vijay Gupta, filed an income statement stating an income of Rs. 5,18,781/- after the assessee claimed a deduction. The same was processed under Section 143(1) of the Income Tax Act 1961. The case was then selected for consideration under CASS and a Section 143(2) Notice was issued and served on the assessee. In response to the issued notices, the adjudicant attended the adjudication procedures from time to time along with Shri Ganesh Bhardwaj (lawyer). The Assessing Officer (AO), after reviewing the Assess’s submissions, took an additional Rs. 93,50,014/- due to Short Term Capital Gains (“STCG”) and Rs. 74,00,000/- for Unresolved Unsecured Loan and Rs. 30,897/- for non-admission of the Deduction claimed under US 80C & 80D of the Act. Therefore, AO valued the income at Rs. 1,72,99,692/- compared to the income of Rs. 5,18,781/- declared by the beneficiary. Angered by the order, the Assesse chose to appeal to the Commissioner of Income Tax (CIT), who, after examining the Assesse’s submissions, upheld the addition made by AO. Offended by the CIT’s order, the complainant preferred to lodge a complaint with the ITAT.

The Respondent’s Counsel, Umesh Takyar, submitted that AO was entitled to calculate the capital gain since the transfer of ownership was complete and all the conditions for STCG’s taxation were met.

The court said: “The assessee had to prove the identity of the creditors, the authenticity of the transaction and the creditworthiness of the creditors. The appraiser grossly failed to do this. Therefore, in the absence of supporting evidence for the unsecured loan claim, we see no weakness in the authorities’ finding below.”

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Vijay Gupta vs ITO

Respondent’s Attorney: Shri Umesh Takyar


Richard Dement

The author Richard Dement