MATRIX ARCH TECHNOLOGIES PRIVATE LIMITED,MUMBAI vs. WARD 12(3)(1), MUMBAI, MUMBAI

The brief facts of the case are that the assessee is a private limited company engaged in the business of providing architectural models and allied services. For the Assessment Year 2009–10, the assessee filed its return of income on 27.09.2009 declaring total income of Rs.6,49,992/-. Subsequently, the case was reopened under section 147 of the the Act and notice under section 148 was issued on 25.03.2015. The reassessment was ultimately completed under section 144 r.w.s. 147 of the Act.

During the reassessment proceedings, the Ld. AO proceeded on the basis of information received from the Investigation Wing arising out of search/survey proceedings conducted in the case of Shri Pravin Kumar Jain and his group concerns. According to the Ld. AO, the assessee had received accommodation entries in the nature of share application money/unsecured loans from entities allegedly controlled or managed by the said group. Consequently, the Ld. AO made an addition of Rs.50,00,000/- under section 68 of the Act and further disallowed depreciation of Rs.1,33,408/-.

Being aggrieved, the assessee carried the matter before the Ld. CIT(A). During the appellate proceedings, the assessee furnished, inter alia, Form 20B filed with the Registrar of Companies, share application forms, Board resolutions of the subscriber companies, their PAN details, income-tax returns, audited financial statements and bank statements. The assessee contended that the actual share capital received during the relevant year was only Rs.30,00,000/-, comprising Rs.10,00,000/- each from Anchal Properties Pvt. Ltd., Capetown Mercantile Co. Pvt. Ltd. and Realgold Trading Co. Pvt. Ltd. The matter was also subjected to remand proceedings. On verification of Form 20B, it was accepted that no transaction had taken place with two of the parties originally referred to by the Ld. AO and, accordingly, the addition to the extent of Rs.20,00,000/- did not survive. However, the balance addition of Rs.30,00,000/- was sustained primarily with reference to the Investigation Wing material and the statement of Shri Pravin Kumar Jain. The Ld. CIT(A), therefore, deleted Rs.20,00,000/- but confirmed the addition of Rs.30,00,000/- under section 68. The issue of depreciation of Rs.1,33,408/- was restored to the Ld. AO for verification. Aggrieved by the sustenance of the addition, the assessee is in appeal before us.

The Ld. AR argued and filed a paper book comprising pages 1 to 520 which has been placed on record. The Ld. AR submitted that the assessee had discharged the initial onus cast upon it under section 68 of the Act by furnishing complete documentary evidence relating to the three subscriber companies. The share application money of Rs.30,00,000/- was received through regular banking channels and the assessee had furnished the share application forms, Board resolutions, PAN details, income-tax returns, audited financial statements and bank statements of the subscribers. It was further submitted that the transactions were duly reflected in the statutory records filed before the ROC.

The Ld. AR further contended that the addition was substantially founded upon the statement of Shri Pravin Kumar Jain recorded during the search proceedings, whereas the said statement was subsequently retracted by him by an affidavit dated 15.05.2014. According to the Ld. AR, no independent incriminating material was brought on record establishing that the funds received by the assessee represented its own unaccounted money routed through the subscriber companies. The assessee had specifically contended that no independent enquiry under section 133(6) was carried out and no adverse material directly connecting the assessee with any alleged cash accommodation-entry mechanism was brought on record.

The Ld. AR further placed reliance upon the order of the Coordinate Bench in M/s. Lalwani Estates & Realtors Pvt. Ltd. v. ITO, ITA No.3370/Mum/2023, order dated 08.03.2024, and submitted that the said case also arose from information relating to Shri Pravin Kumar Jain group and involved addition under section 68 in respect of share application money. In that case also, the Coordinate Bench considered documentary evidence including PAN, bank statements, confirmations and ROC records.

The Ld. AR has filed list of events during the hearing before us. The said list of event is reproduced as below:-

The Ld. DR strongly relied upon the orders of the revenue authorities. The Ld. DR submitted that the Investigation Wing had identified the concerned entities as being connected with Shri Pravin Kumar Jain group, which was engaged in providing accommodation entries. Therefore, mere production of PAN, income-tax returns, confirmations and bank statements would not, by itself, establish the genuineness of the transactions. The Ld. DR further submitted that the surrounding circumstances and financial profile of the investor companies were required to be considered and that the Ld. CIT(A) had rightly held that the assessee failed to satisfactorily explain the nature and source of the credit of Rs.30,00,000/-. Accordingly, the Ld. DR prayed for sustaining the impugned appellate order.

We have heard the rival submissions and perused the material available on record. The limited dispute surviving before us relates to the addition of Rs.30,00,000/- under section 68 of the Act. It is an admitted position emerging from the appellate as well as remand proceedings that, as against the original addition of Rs.50,00,000/-, actual share capital credited in the books of the assessee was only Rs.30,00,000/-. Consequently, the Ld. CIT(A) himself deleted the balance amount of Rs.20,00,000/-.

We find that the assessee had furnished substantial documentary evidence in support of the three subscriber companies, including their share application forms, Board resolutions, PAN particulars, income-tax returns, audited financial statements and bank statements. The transactions were routed through banking channels. The assessee had also furnished Form 20B and other ROC records evidencing the subscription/allotment of shares. The Ld. CIT(A) nevertheless sustained the addition essentially on the premise that the subscriber entities had been identified by the Investigation Wing as entities providing accommodation entries and that the documentary evidence furnished by the assessee was insufficient to rebut such adverse material.

At this juncture, we find it relevant to consider the order of the Coordinate Bench in M/s. Lalwani Estates & Realtors Pvt. Ltd. (supra). In that case also, the reassessment had originated from information concerning accommodation entries allegedly provided by Shri Pravin Kumar Jain group. The Coordinate Bench observed that the assessee therein had furnished PAN, bank statements, confirmations and other financial statements of the investors and that the existence of the investor companies was not disputed. It further observed that availability of sufficient funds with the investors was relevant for examining their capacity to make the investment.

On comparison of the factual matrix, we find the ratio of the aforesaid Coordinate Bench decision applicable to the issue before us. In the present case also, the assessee has placed documentary evidence relating to the identity of the subscribers, their financial particulars and the banking transactions. The share subscription is supported by the statutory corporate records. Significantly, the addition sustained by the Ld. CIT(A) continues to rest 8 substantially upon the Investigation Wing findings relating to Shri Pravin Kumar Jain group, whereas no specific material has been brought on record demonstrating that the amount of Rs.30,00,000/- originated from the coffers of the assessee or that any corresponding cash was paid by the assessee for obtaining the alleged accommodation entries.

The documentary evidences furnished by the assessee cannot be discarded merely on the basis of general findings recorded in the case of a third party without bringing on record cogent material establishing a nexus between such adverse material and the particular transactions undertaken by the assessee. Once the assessee has furnished primary evidence relating to the identity and financial capacity of the subscribers and the genuineness of the transactions, the same is required to be rebutted by relevant material relating to the specific transactions.

Accordingly, respectfully following the ratio of the Coordinate Bench in M/s. Lalwani Estates & Realtors Pvt. Ltd. (supra) and considering the documentary evidence available on record, we are unable to sustain the addition of Rs.30,00,000/- under section 68 of the Act. The addition sustained by the Ld. CIT(A) is, therefore, deleted and the relevant grounds raised by the assessee are allowed. 9 As regards the legal grounds challenging the validity of reassessment, in view of our finding on merits whereby the impugned addition under section 68 stands deleted, adjudication thereof is rendered academic and the same is therefore left open.

In the result, the appeal of the assessee bearing ITA No.4116/Mum/2026 is allowed. Order pronounced in the open court on 03rd day of September 2026 Sd/- Sd/- (ARUN KHODPIA) (ANIKESH BANERJEE) ACCOUNTANT MEMBER JUDICIAL MEMBER Mumbai,िदनांक/Dated: 03/09/2026 SAUMYA Sr.PS Copy of the Order forwarded to: 1. अपीलाथ�/The Appellant , 2. �ितवादी/ The Respondent. 3. आयकरआयु� CIT 4. िवभागीय�ितिनिध, आय.अपी.अिध., मुंबई/DR, ITAT, Mumbai 5. गाड�फाइल/Guard file. BY ORDER, //True Copy// (Asstt. Registrar), ITAT, MUMBAI