AAKASH PROJECTS & INFRASTRUCTURE PRIVATE LIMITED,MUMBAI vs. DCIT-8(3), MUMBAI

The brief facts of the case are that the assessee is a company engaged in the business of real estate infrastructure investment and rental activities. In the impugned assessment year, the assessee filed its return declaring a total income of Rs. 80,180/-. The assessee's case was selected for scrutiny under section 143(3) and duly completed with an addition amounting to Rs. 25 Lakh u/s. 68 related to unsecured loan received from M/s Nicco Securities Pvt. Ltd. (in short, NSPL). Subsequently, the assessment was reopened under section 147 and reassessment was completed by making a further addition of Rs. 25 Lakhs under section 68 in respect of M/s Olympus Visions Pvt. Ltd. [now known as M/s Navlakha Agrex Pvt. Ltd., (in short, NAPL)], resulting in total addition of Rs. 50 Lakhs. The aggrieved assessee duly travelled to ITAT after rejection of appeal by the Ld. CIT(A). The coordinate bench of ITAT Mumbai, by order dated 25/10/2017 and dated 13/5/2021, restored the matter to the file of Ld. AO. The Ld. AO had passed a combined order and confirmed additions of Rs. 50 Lakhs related to both the loans received by the assessee. The assessee further contended that both the loans had duly converted to share capital and the assessee had issued the share to the parties accordingly. But the Ld. AO, without considering the assessee's prayer and the evidence, the addition was confirmed u/s. 68 of the Act. The aggrieved assessee filed an appeal before the Ld. CIT(A). The Ld. CIT(A) upheld the addition made by the Ld. AO. Being aggrieved, the assessee filed an appeal before us.

The Ld. AR filed two paper books, which have been taken on record. He submitted that, despite furnishing all the relevant documents during the assessment proceedings, the Ld. AO made an addition under section 68 of the Act on the following grounds:

The Ld. AR further contended that, in so far as NAPL is concerned, the notice issued under section 133(6) could not be duly served; however, all the relevant documentary evidence was furnished before the revenue authorities. He further submitted that the Coordinate Bench of the ITAT had restored the matter to the file of the Ld. AO in view of the fact that the unsecured loan had subsequently been converted into share capital. In support of the said transaction, copies of the counterfoils of the share certificates, the scheme of amalgamation, financial statements, minutes book and statutory registers were duly placed on record. He invited our attention to APB pages 56 to 61 containing a copy of Form No. 2 under the Companies Act, 1956, evidencing the allotment of 20,000 equity shares each to both the lender companies. It was, therefore, contended that the identity of the investor companies stood established, the genuineness of the transactions was evidenced through banking channels, and the creditworthiness of the investors was duly proved from their audited financial statements. Accordingly, it was submitted that the addition made under section 68 of the Act was unsustainable.

The Ld. AR further submitted that, in so far as the investment received from NAPL is concerned, the issue is squarely covered by the decision of the Coordinate Bench of the ITAT, Mumbai in DCIT v. Bluestock Investments Pvt. Ltd., ITA Nos. 3987/Mum/2017 & 2090/Mum/2018, order dated 10.01.2019. It was contended that the Coordinate Bench, while following its earlier decision in Bluestock Investments Pvt. Ltd. v. DCIT, ITA 2090/Mum/2018 for AY 2008- 09 deleted the addition made under section 68 of the Act in respect of share application money allegedly received through accommodation entry providers connected with the Pravin Kumar Jain Group. The Tribunal held that where the assessee had furnished documentary evidence such as PAN details, confirmations, bank statements, income-tax returns, ROC records, share allotment documents and audited financial statements of the investor companies, the addition could not be sustained merely on the basis of the general statement of Shri Pravin Kumar Jain in the absence of any independent incriminating material brought on record against the assessee. The Ld. AR further submitted that an identical view was taken by the Coordinate Bench in the case of ACIT v. Achieve Reality Developers Ltd., ITA Nos. 6104 & 6105/Mum/2012, order dated 18.11.2016, in respect of NSPL. The Ld. AR argued that the Ld. AO observed that during allotment of share the valuation report is duly absent. So, the NAV was not duly calculated by the assessee. A fair reading of Section 56 the valuation report for transfer of share is duly enacted from Finance Act, 2010 w.e.f. 01.06.2010. So, this valuation of share is not applicable in impugned assessment year.

The Ld. DR relied upon and supported the orders of the revenue authorities. He contended that the assessee had initially obtained loans from the two entities, which were subsequently converted into share application money and shares were allotted accordingly. According to the Ld. DR, the 5 principal objection of the Ld. AO was that no valuation report had been furnished in support of the allotment of shares and that the notice issued under section 133(6) of the Act had been duly complied with only by one of the entities. Accordingly, the Ld. DR submitted that the addition made by the Ld. AO was justified and deserved to be sustained.

We have heard the rival submissions and carefully considered the material available on record. The addition under section 68 of the Act pertains to the unsecured loans received from M/s Nicco Securities Pvt. Ltd. (NSPL) and M/s Olympus Visions Pvt. Ltd. (now known as M/s Navlakha Agrex Pvt. Ltd. - NAPL), which were subsequently converted into share capital by way of allotment of equity shares. It is an undisputed fact that the Coordinate Bench of the Tribunal had earlier restored the matter to the file of the Ld. AO for fresh adjudication. Pursuant thereto, the assessee furnished copies of share certificates, Form No. 2 filed under the Companies Act, 1956, the scheme of amalgamation, confirmations, bank statements, audited financial statements, statutory registers, minutes book and other documentary evidence in support of the transactions. On examination of the material placed before us, we find that the identity of the investor companies stands duly established through their PAN, ROC records and income-tax particulars. The genuineness of the transactions is evidenced by the banking channels through which the amounts were received and by the subsequent allotment of shares duly reflected in the statutory records. The creditworthiness of the investor companies is also supported by their audited financial statements placed on record. The revenue has not brought any cogent or independent material to rebut the documentary evidence furnished by the assessee or to establish that the impugned transactions were sham or accommodation entries. The principal objection of the Ld. AO regarding the absence of a valuation report for the allotment of 6 shares, in our considered view, cannot by itself justify an addition under section 68 of the Act, particularly when the impugned assessment year precedes the statutory provisions requiring valuation in the manner relied upon by the revenue. Likewise, the mere fact that the notice issued under section 133(6) could not be served upon one of the entities is not sufficient to disregard the otherwise overwhelming documentary evidence available on record. We further find merit in the contention of the Ld. AR that the issue is squarely covered by the decisions of the Coordinate Benches in Bluestock Investments Pvt. Ltd.(supra) and Achieve Reality Developers Ltd. (supra), wherein, on similar facts, additions made under section 68 of the Act were deleted after holding that once the assessee had discharged the initial burden by producing documentary evidence establishing the identity, creditworthiness and genuineness of the transactions, the addition could not be sustained merely on the basis of general allegations or statements in the absence of any independent incriminating material.

In the present case also, the revenue has failed to bring any adverse material on record to discredit the evidence furnished by the assessee. Accordingly, we hold that the assessee has duly discharged the onus cast upon it under section 68 of the Act, and the additions sustained by the Ld. CIT(A) are not legally sustainable. We, therefore, set aside the impugned order of the Ld. CIT(A) and direct the Ld. AO to delete the addition of Rs.50,00,000/- made under section 68 of the Act. Consequently, the grounds raised by the assessee are allowed.

In the result, the appeal of the assessee bearing ITA No.1558/Mum/2026 is allowed. Order pronounced in the open court on 29th day of July 2026. Sd/- Sd/- (BIJAYANANDA PRUSETH) (ANIKESH BANERJEE) ACCOUNTANT MEMBER JUDICIAL MEMBER Mumbai,िदनांक/Dated: 29/07/2026 Soumili Das,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