A proposed tax addition of ₹5 crore was recently set aside by the Income Tax Department (ITD) during the faceless appeal process, offering a significant relief to the taxpayer. The case revolved around an alleged unexplained unsecured loan under Section 68 of the Income Tax Act for the Assessment Year (AY) 2014–15.
The initial proceedings had questioned the source of the loan amounting to ₹5 crore, suspecting it to be unexplained income. If upheld, the addition would have resulted in a substantial financial liability on the assessee, including income tax, interest, and penalties. However, after a detailed review by the appellate authority under the Faceless Appeal Scheme, the proposal to add the amount was dismissed.
CA Pradeep Goyal Demonstrates Credibility of Loan Transaction
Chartered Accountant Pradeep Goyal, who represented the assessee, announced the development on X (formerly Twitter), celebrating it as a milestone for India’s faceless and transparent tax regime. Goyal shared that the case was handled via written submissions followed by a virtual oral hearing.
The crux of the ITD’s concern centered on the source and genuineness of the unsecured loan, which had been extended by Campbell Advertising Pvt. Ltd. Funds for this loan were sourced from Chandra Prabhu International Ltd. (CPIL). Authorities initially suspected the creditworthiness and financial trail, intending to treat the amount as unexplained under Section 68.
CA Goyal submitted comprehensive documentation to establish the identity of CPIL, its financial capacity, and the legitimacy of the fund flow. The appellate unit accepted the explanation, concluding that the assessee had satisfactorily proven the loan’s authenticity, including the lender’s creditworthiness and the genuineness of the transaction.
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Victory for Faceless Appeal Scheme and Transparent Governance
The order marks another success story under India’s Faceless Appeal Scheme, a government initiative aimed at eliminating human interface, corruption, and subjectivity in tax administration. The scheme allows assessments and appeals to be conducted digitally, offering taxpayers a fair and transparent platform.
Expressing gratitude to the Income Tax Department and government leadership, CA Goyal credited Finance Minister Nirmala Sitharaman and Prime Minister Narendra Modi for implementing a corruption-free and hassle-free tax framework.
“This appeal was for AY 2014-15 and if not allowed, it was supposed to have serious consequences on the business of the assessee due to tax, interest & penalties,” he stated in his post.
The decision has been seen as a benchmark in reinforcing taxpayer confidence in India’s evolving tax reforms and reflects the judiciary’s faith in digital, document-backed representation.