KBN INFRASTRUCTURE PRIVATE LIMITED,MUMBAI vs. INCOME TAX OFFICER WARD 3(2)(3), MUMBAI
IN THE INCOME-TAX APPELLATE TRIBUNAL “E” BENCH,
MUMBAI
BEFORE SHRI SAKTIJIT DEY, VICE PRESIDENT
&
SHRI PRABHASH SHANKAR, ACCOUNTANT MEMBER
KBN Infrastructure Private
Limited
B-426, NBC Complex, Plot No.
43, Sector-11, CBD Belapur,
Navi
Mumbai
-
400
614,
Maharashtra v/s.
बनाम
Income Tax Officer, Ward –
3(2)(3), Room No. 673A, 6th
Floor,
Aayakar
Bhavan,
Mumbai
–
400020,
Maharashtra
स्थायी लेखा सं./जीआइआर सं./PAN/GIR No: AADCK3271B
Appellant/अपीलार्थी
..
Respondent/प्रतिवादी
Appellant by :
Shri Ashwani Kumar and Ms. Deepali Aggarwal,ARs
Respondent by: Shri Ritesh Misra, (CIT-DR)
Date of Hearing
17.07.2025
Date of Pronouncement
19.09.2025
आदेश / O R D E R
PER PRABHASH SHANKAR [A.M.] :-
The instant appeal emanating from the appellate order u/s 250 of the Act dated 07.01.2025 is filed by the assessee against the order passed by the Learned Commissioner of Income-tax (Appeals)/National
Faceless Appeal Centre, Delhi [hereinafter referred to as “CIT(A)”]
pertaining to assessment order passed u/s. 143(3) of the Income-tax Act,
1961 [hereinafter referred to as “Act”] dated 17.09.2021 for the Assessment Year [A.Y.] 2018-19. P a g e | 2
A.Y. 2018-19
KBN Infrastructure Private Limited
The grounds of appeal are as under: 1. That the order dated 07.01.2025 passed u/s 250 of the Income-tax Act, 1961 (hereinafter called "the Act") by the Ld. Assessing Officer, National-e- Assessment Centre, Delhi is against law and facts on the file in as much as he was not justified to uphold the action of the Learned Assessing Officer, Assessment Unit, Income Tax Department in framing the assessment by ignoring the basic principles of natural justice and without disposing of the adjournment request made and the reply uploaded on 17th September 2021 on behalf of the Appellant Company. 2. That the order dated 07.01.2025 passed u/s 250 of the Act by the Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC) is against law and facts on the file in as much as he was not justified to uphold the action of the Learned Assessing Officer, Assessment Unit, Income Tax Department in making an addition of Rs. 1,66,50,000/- received by the Appellant Company by way of sale of shares in lieu of loans and advances u/s 69 of the Act. 3. That the order dated 07.01.2025 passed u/s 250 of the Act by the Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC) is against law and facts on the file in as much as he was not justified to uphold the action of the Learned Assessing Officer, Assessment Unit, Income Tax Department in adding back a sum of Rs.1,99,00,000/- given by the Appellant Company to Smt Ritu Singal as an alleged unexplained money/investment u/s 69A of the Act. 4. That the order dated 07.01.2025 passed u/s 250 of the Act by the Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC) is against law and facts on the file in as much as he was not justified to uphold the action of the Learned Assessing Officer, Assessment Unit, Income Tax Department in adding back a sum of Rs. 14,70,61,000/- received by the Appellant Company on account of sale of shares of unlisted companies as an, alleged, unexplained cash credit u/s 68 of the Act. 5. That the order dated 07.01.2025 passed u/s 250 of the Act by the Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC) is against law and facts on the file in as much as he was not justified to uphold the action of the Learned Assessing Officer, Assessment Unit, Income Tax Department in invoking the provisions of section 115BBE of the Act in respect of addition amounting to Rs. 18,36,11,000/- made as per Assessment Order. 6. That the order dated 07.01.2025 passed u/s 250 of the Act by the Commissioner of Income Tax (Appeals), National Faceless Appeal Centre
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KBN Infrastructure Private Limited
(NFAC) is against law and facts on the file in as much as he was not justified to uphold the action of the Learned Assessing Officer, Assessment
Unit, Income Tax Department in initiating penalty proceedings u/s 271AAC and u/s 271D of the Act on the ground that the taxable income of the Appellant company is determined referring to the income in section 68
of the Act.
3. Ground no. 1 being general in nature, has not been pressed before us and is therefore dismissed.
4. Ground no. 2 pertains to the addition of Rs. 1,66,50,000/- being the amount was received by the assessee by way of sale of shares in lieu of loans and advances u/s 69 of the Act. Ground no.3 relates to the addition of Rs 1,99,00,000/- given by the assessee to Smt. Ritu
Singal, as an unexplained money/investment u/s 69A of the Act while
Ground no.4 pertains to addition of Rs 14,70,61,000/-,being amount received by the assessee on account of sale of shares of unlisted companies treated as unexplained cash credit u/s 68 of the Act.
4. Brief facts of the case are that in the year under consideration the assessee was engaged in providing loans to various companies which had been adjusted/repaid back against purchase of shares by them.
During the assessment proceedings, it was notice by the AO that the assessee claimed having received shares amounting to Rs.1,66,50,000/- in lieu of short term loans and advances given by it to various parties in earlier years as they were not in a position to repay them. The assessee
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A.Y. 2018-19
KBN Infrastructure Private Limited was required to provide certain details which were stated to have not been filed.
Therefore, the impugned amount was considered unexplained and added u/s 69 of the Act. It was further noticed by the AO that during the assessment year, the assessee had advanced loan amounting to Rs.1,99,00,000/- to one Ms. Ritu Singal.In order to examine the genuineness of this transaction, he called for various details which are stated to be partly complied. Accordingly, the amount was added back to the income of the assessee u/s 69A of the Act. Similarly, it was found that assessee had sold unlisted shares for Rs. 14,70,61,000/- during the relevant year which was not declared as resultant capital gain/loss. The AO opined that the issue required examination in the light of section 56(2)(viib) of the Act and Rule 11UA to examine the correct and actual Fair Market Value of shares claimed to be sold. The assessee stated that shares of various companies were sold/transferred to several companies/persons. The AO observed that the assessee failed to justify and substantiate the claim. It had also not given complete details of the transactions.
Accordingly, the amount of Rs.14,70,61,000/- was added u/s 68 of the Act.
In the subsequent appeal before the ld.CIT(A), the assessee made a written submission and also furnished further details in respect of the additions made. With regard to the addition of Rs 1,66,50,000/-,it P a g e | 5 A.Y. 2018-19
KBN Infrastructure Private Limited contented that it had given short term loans and advances aggregating to Rs. 1,66,50,000/- to various parties during the relevant assessment year and in earlier years. The said loans were duly recorded in the books of accounts and were also reflected in its financial statements. The loans had been given after an appraisal of the underlying facts including possibility of recovery. However, subsequently the financial conditions of the said parties deteriorated and resultantly, the parties to whom the said short term loans and advances had been given were not in a position to repay them. Hence, the assessee took/acquired various shares of unlisted companies of value of Rs. 1,66,50,000/- from the said parties in lieu of loans and advances given to them. It was also claimed that complete details of the said transactions including the loans and advances granted and their adjustment by purchase of shares were duly filed during assessment proceedings. Similarly explanations alongwith details were furnished in respect of other two additions also.
5.1 The ld.CIT(A) called for Remand report from the AO who requisitioned further details in support of the grounds of appeal which was duly complied. The assessee submitted charts of stock/scrips purchased and sold along with bank statement, Valuation Report of Chartered Accountant in respect of stock/scrips sold at cost since the selling price was more than the fair market value claiming that P a g e | 6
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KBN Infrastructure Private Limited provisions of section 56(2)(x) and section 56(2)(viib) were not attracted.
However, the ld.CIT(A) still found shortcomings in the reply inter alia holding that from perusal of the impugned order, the submission of the appellant and the remand report ,he concurred with the view taken by the AO that the submission made did not adequately explained these transactions. The associated limbs of creditworthiness and genuineness of the transactions were not satisfactorily found proved. From the financials of the appellant for the year under consideration as well as in preceding years, he noted that there was no business activity incidental to the MOA/AOA of the company and sale purchase of the unlisted shares of certain entities made was devoid of any business rationale behind these transactions. The values associated with these unlisted shares were not found proved to be commensurate with the business in these companies. Therefore, he concluded that there was no reason to interfere with the action of the AO in charging the relevant anti-abuse provisions of the act upon these unexplained investments, unexplained borrowing and unexplained cash credits. Additions were confirmed and accordingly, appeal was dismissed.
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KBN Infrastructure Private Limited
Before us, the ld.DR has supported the orders of the authorities below while the ld.AR has vehemently agitated the action of the ld.CIT(A) by claiming that the assessee made due compliances before the AO and furnished all the details requisitioned from time to time. He has also submitted two Paper books containing as many as 260 pages incorporating various correspondences made during assessment and appellate proceedings i.e written submissions dated 27.03.2024(1-25 pages),copy of audited accounts, show cause notice dated 17.09.2021 and response made, queries made by the AO during of remand proceeding and replies submitted dated 13.08.2024,details of shares received in lieu of loan/advances, confirmations of parties, bank statements, details of shares received etc. ,in respect of loan of Rs 1.99cr confirmations of persons concerned, ITR copy, Bank statements and details of loan. With regard to the addition of Rs 14.70 cr, it submitted details of companies to whom shares were sold, copy of Valuation report in respect of shares sold and documentary evidences in support of the transaction. It is pleaded that both the lower authorities did not appreciate the contentions of the assessee and evidences submitted and rejected them without any basis, in violation of principles of natural justice.
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KBN Infrastructure Private Limited
We find that while the AO has made all the above three additions on account of incomplete furnishing of relevant details before him by the assessee, the ld.CIT(A) though was fair enough to remand the details submitted during appeal proceedings to the AO, he apparently did not examine the merits therein himself which he is required to do in terms of section 250(6) of the Act. Evidently, he gave more credence to the findings and observations of the AO rather than appreciating the detailed reply given by the assessee before him as also during assessment and remand proceedings.Further, the appellate order is non- speaking as neither the impugned issues have been duly considered as also the contents of the assessment order, submissions of the assessee nor the grounds of appeal have been adjudicated properly.No independent application of mind is discernible from the appellate order as the ld.CIT(A) has completely failed to evaluate the points of consideration so as to give his own decision on objective analysis of all relevant facts and circumstances of the case in utter disregard to the principles of natural justice and fair play. 8.1 It is quite apparent that the assessee submitted various details during assessment and appellate and also in the course of remand proceedings. On perusal of the Paper book submitted before us, it transpires that the assessee has made detailed submissions before both
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KBN Infrastructure Private Limited the authorities below alongwith relevant documents and evidence which however, have been brushed aside. We are also of the opinion that the AO did not examine any of the issues independently though duly empowered under the provisions of Act and kept calling for more and more details without evaluating the details already before him while the ld.CIT(A) on mere general observations upheld the additions. We are of the considered view that the assessee has brought on record sufficient materials to prove the genuineness of all the above transactions. No adverse finding/observation have been recorded by the AO in respect of various details submitted before him and also during remand proceedings.
9. Accordingly, we do not find any merit in the impugned additions dealt with in ground nos. 2,3 and 4 above. We hold that the ld.CIT(A) was not justified in upholding the additions. His order in this regard is accordingly set aside. We direct the AO to delete all the impugned additions. Therefore, above grounds are allowed.
10. Ground no 5 pertaining to invoking the provisions of section 115BBE of the Act in respect of aggregate addition made as per assessment order is consequential and does not require any adjudication since all the additions stand deleted.
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KBN Infrastructure Private Limited
In ground no.6,the assessee has contested initiation of penalty proceedings u/s 271AAC and u/s 271D of the Act. However, the ground is premature at this stage since no penalty order has been passed. Thus, it is dismissed. 12. In the result, the appeal is partly allowed. Order pronounced in the open court on 19.09.2025. SAKTIJIT DEY PRABHASH SHANKAR (उपाध्यक्ष/ VICE PRESIDENT) (लेखाकार सदस्य/ACCOUNTANT MEMBER)
Place: म ुंबई/Mumbai
ददनाुंक /Date 19.09.2025
Lubhna Shaikh / Steno
आदेश की प्रतितलति अग्रेतिि/Copy of the Order forwarded to :
1. अपीलार्थी / The Appellant
2. प्रत्यर्थी / The Respondent.
3. आयकर आयुक्त / CIT
4. विभागीय प्रविविवि, आयकर अपीलीय अविकरण DR, ITAT,
Mumbai
5. गार्ड फाईल / Guard file.
सत्यावपि प्रवि ////
आदेशानुसार/ BY ORDER,
उि/सहायक िंजीकार (Dy./Asstt.