Assesses Failed To File Affidavit Proving Repayment Of Loans: Orissa High Court Sustains Addition On “Unsecured Loan”

The high court of Orissa passed a judgment on 4 March 2023, and has sustained the addition of unsecured loans under Section 68 of the Income Tax Act, 1961in the case of M/s. Unideep Food Processing (P) Ltd. Versus ITAT ( ITA No.50 of 2020), passed by the division bench of Chief Justice S. Muralidhar and Justice M.S. Raman.

Facts of the case:

The judge noticed that the assessee failed to present any new affidavits from the lender farmers attesting to the repayment of their loans to the assessee. The assessee might have simply completed it to meet the demands of the ITAT’s remand instructions. The question of whether the AO had cause to order the assessee’s addition to their taxable income under the category “unsecured loan” has been brought up by the appellant/assessee.  The AO noted that the assessee had neglected to present the farmers, who could have attested to the assessee’s claim that they had repaid the loan during the financial year 2013–2014. The assessee argued that, in accordance with the ITAT’s direction, the AO should have summoned the concerned farmers to provide evidence. The first round’s ITAT directive stated that the AO was to confirm that the assessee had paid the sum “by phoning all the creditors” before proceeding. As a result, the AO is the one who ought to have sent them a summons.


Court has noted that the first round’s ITAT directive said that the AO was to confirm whether the assessee had repaid the amount “by phoning all the creditors.” As a result, the AO is the one who ought to have sent them a summons. The assessee did not request the issuance of a summons, even though the AO claimed not to have done so.

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