Vikran Engineering Limited received a favorable order from the Income Tax Appellate Tribunal (ITAT), dropping an income tax demand of ₹3.97 crore and reversing an addition of ₹6.80 crore for Assessment Year 2016-17.

The ITAT "F" Bench, Mumbai, passed the order on September 15, 2026, which was received by the company on September 22, 2026. The tribunal accepted the company's submissions regarding unsecured loans availed from four lender entities, holding that the company discharged its onus of proving identity, creditworthiness, and genuineness under Section 68 of the Income Tax Act, 1961.

Background of the Dispute

The dispute originated from a search action conducted under Section 132 of the Income Tax Act on March 24, 2021. Following this, the Assessing Officer framed an assessment under Section 153A for AY 2016-17 and made significant additions to the company's taxable income.

The additions were initially upheld by the Commissioner of Income Tax (Appeals)-11, Pune, in an order dated November 8, 2024. Vikran Engineering subsequently preferred an appeal before the ITAT, which has now allowed the appeal in entirety.

Breakdown of Dropped Additions

The tribunal's order resulted in the deletion of the following amounts previously added to the company's income:

The total demand of ₹3,96,75,696 comprised the tax liability and consequential interest arising from these additions.

Impact on Financial Position

The company stated that it does not foresee any material impact on its financial or operational activities. However, the order leads to the extinguishment of a contingent liability of ₹3.97 crore currently disclosed in its books.

What the Numbers Show

The reversal of the entire addition of ₹6.80 crore highlights the successful defense of the company's capital structure disclosures for AY 2016-17. By proving that the loans, along with interest, stood repaid during the relevant year, the tribunal removed the basis for treating the inflows as unexplained cash credits. This outcome eliminates the associated tax demand and interest, directly improving the company's contingent liability profile without altering historical reported profits.

Vikran Engineering received a show cause notice from the GST department demanding ₹1.89 crore for alleged excess input tax credit availment during FY23. The notice was issued by the Assistant Commissioner in Indore under Section 73 of the CGST Act, 2017.

The company disclosed the receipt of the notice on September 17, 2026, pursuant to Regulation 30 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015. The demand arises from inward supplies liable to reverse charge mechanism.

Notice Details

The show cause notice (Form GST DRC-01), dated September 11, 2026, specifies the following financial demands:

The allegations specifically cite excess availment of input tax credit on account of inward supplies liable to reverse charge during the fiscal year 2022-2023.

Company Response

Vikran Engineering stated that it does not foresee any material impact on its financial, operational, or other activities due to this notice. The company confirmed it will respond to the authority within the specified time period.

What the Numbers Show

The penalty amount of ₹17.12 lakh represents exactly 10% of the principal tax demand of ₹1.71 crore. This fixed percentage penalty structure suggests the department has classified the discrepancy as a standard compliance lapse rather than a willful evasion, which typically attracts higher punitive rates under the CGST Act.