In a major relief for a Mumbai-based real estate trader, the Income Tax Appellate Tribunal (ITAT), Mumbai Bench has deleted an addition of Rs. 4.27 crore made under Section 68 of the Income Tax Act, 1961, in respect of an unsecured loan allegedly received from the assessee’s daughter-in-law.

The bench comprising Sandeep Singh Karhail (Judicial Member) and Padmavathy S  (Accountant Member) has observed that there is no allegation by the lower authorities regarding any circular trading of unaccounted money between related parties. Further, no evidence has been brought on record contrary to the claim of the assessee of the transaction with Aamby Valey Ltd. in respect of the plot of land in Aamby Valey City. 

The appellant, Gopaal Bhagwandas Ahuja, proprietor of M/s Ahuja Traders, who had declared an income of ₹47.45 lakh for the assessment year 2014–15. The return was picked up for scrutiny on account of a “large increase in unsecured loans” and “large squared-up loans” during the year.

During the assessment proceedings, the Assessing Officer (AO) noted that the assessee had taken and repaid loans from related parties, including his wife, his daughter-in-law Mrs. Prerna Ahuja, and M/s Komal Exotic Spices Pvt. Ltd., a company where both women were directors.

The AO found that Mrs. Prerna Ahuja’s declared income was only ₹3,434 for the relevant year and questioned her ability to extend a loan exceeding ₹4.27 crore. When the assessee could not produce evidence of actual banking transactions between himself and Mrs. Prerna Ahuja, the AO concluded the loan was not genuine and added the amount to the assessee’s taxable income under Section 68.

The Commissioner of Income Tax (Appeals) [CIT(A)] upheld the addition, citing the lack of a clear link between transactions involving M/s Komal Exotic Spices Pvt. Ltd., Mrs. Prerna Ahuja, and the assessee, and pointing out the auditor’s certification that the unsecured loan was received by cheque.

However, before the ITAT, the assessee argued that no actual loan was taken from Mrs. Prerna Ahuja. Instead, funds originally received from M/s Komal Exotic Spices Pvt. Ltd. were temporarily recorded in her name through journal entries as part of an escrow arrangement related to a lease and property assignment deal in Aamby Valley City, which later fell through.

The ITAT observed that the money was received from M/s Komal Exotic Spices Pvt. Ltd., not directly from Mrs. Prerna Ahuja. The transactions were duly reflected in ledger accounts and substantiated by bank statements. There was no evidence of unaccounted money or circular trading between related parties.

Finding that the assessee had adequately explained the nature of the transaction and that no real loan was taken from Mrs. Prerna Ahuja, the Tribunal held that the conditions for invoking Section 68 were not met.

Case Details

Case Title: Gopaal Bhagwandas Ahuja Versus ACIT

Case No.: ITA No.925/MUM/2025

Date:  29/07/2025

Counsel For Appellant: Tanzil R. Padvekar, Advocate

Counsel For Respondent: Swapnil Choudhary, Sr.DR

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