Relief Granted: ITAT Deletes Entire Rs. 11.70 Lakh Addition in Loan Dispute Under Section 68
The present appeal has been filed by Mr Rakesh Jayantibhai Patel (appellant) in the Income Tax Appellate Tribunal (ITAT), Ahmedabad, before the benches comprised Dr B.R.R. Kumar (Vice-President) and Ms Suchitra Kamble (Judicial Member). The case was heard on October 7, 2025, and the final decision was announced on October 10, 2025. The opposite party is the Income Tax Officer of Ward-5(3)(2), Ahmedabad (respondent).
The appeal was filed because the appellant was dissatisfied with an earlier order dated December 13, 2024, issued by the Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi. The order was related to the Assessment Year 2018-19.
What was the issue?
The appellant, Mr Patel, works in the AutoCAD design field and filed his income tax return (ITR) for the Assessment Year 2018-19 on July 11, 2018, showing his total income of Rs. 2,91,400. However, later, the Income Tax Department reopened his case because they received information that he had invested Rs. 20,00,000 in a company called M/s. Cruso Granito Private Limited, and they found that the source of funds for this investment was not completely explained.
The Patel explained his point why this should not be added to his income; the Assessing Officer (AO) partially accepted his explanation but still made an addition of Rs. 11,70,000 to his income, treating it as unexplained cash credit under Section 68 of the Income Tax Act, and taxed it under Section 115BBE, which is a higher tax rate for unexplained income.
What did Mr Patel argue?
Patel found this action by the assessing officer as unfair and so approached the Commissioner of Income Tax (Appeals), arguing that he had received this money from his own savings and loans from family members, specifically Rs. 4,80,000 from his father, Jayantibhai Patel, Rs. 4,40,000 from his sister, Nitaben Patel and Rs. 2,50,000 from another sister, Alpaben Khambalia.
The Assessing Officer did not believe the loan explanation because the lenders did not respond to direct notices from the department under section 133(6). However, Mr Patel had submitted their confirmation letters, bank account statements, PAN cards, and even land sale documents.
What did the Commissioner (Appeals) decide?
The commissioner thoroughly examined the bank accounts and agreed on that:
The loans of two sisters of Rs. 4.4 lakhs and Rs. 2.5 lakhs were honest. Their bank accounts had no suspicious transactions, so they accepted these amounts. However, the Commissioner partly agreed on the loan of Shri Jayantibhai Patel (father of the appellant). He noted that although the father had some agricultural income and had sold land, there were a few cash deposits of Rs. 49,500 each just before giving the loan, which looked suspicious. He accepted Rs. 3.5 lakhs as genuine and treated Rs. 1.3 lakhs as unexplained, so that portion was added to income.
Therefore, overall, from the total amount, only Rs. 11,70,000 was added, and the rest, Rs. 10,40,000, was deleted, and the addition of only Rs. 1,30,000 was confirmed.
Case in ITAT Ahmedabad:
Still not satisfied with the order passed by the learnt Commissioner of Income Tax (Appeals), Mr Patel appealed to the ITAT. In its final decision, ITAT deleted the entire Rs. 11.70 lakhs addition, meaning Mr Patel won the case completely, and no extra tax will be charged under Section 68 or 115BBE.
The order was officially pronounced on October 10, 2025, in open court, and the case was concluded in Mr Patel’s favour.
Citation: Rakesh Jayantibhai Patel Vs Income Tax Officer, Ward-5(3)(2), Ahmedabad (ITAT Ahmedabad); I.T.A. No.1301/Ahd/2025; 10/10/2025; 2018-19
