DCIT CC 8(2),MUMBAI, MUMBAI vs. TURAKHA FERROMET PRIVATE LIMITED, MUMBAI

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ITA 9126/MUM/2025Status: DisposedITAT Mumbai17 July 2026AY 2009-107 pages

In favour of the assessee: the Revenue's appeal was dismissed. From the AI summary of this appeal.

AI SummaryDismissed

What did the Tribunal hold?

The Tribunal held that the AO failed to provide cogent material to demonstrate that the documents submitted by the assessee were false. Crucially, the 'cash trail chart' was not confronted to the assessee, violating natural justice. Furthermore, the alleged entities providing accommodation entries were not shareholders in the assessee company.

What were the facts?

The Revenue appealed against the deletion of an addition of Rs. 1.80 crore made by the Assessing Officer (AO) under Section 68 as unexplained cash credit. The assessee had received this amount as share premium, which the AO alleged to be an accommodation entry based on information from the Investigation Wing.

What were the issues?

Whether the addition under Section 68 for share premium was justified when the AO relied on uncorroborated investigation reports and failed to confront the assessee with adverse material. Whether the reassessment under Section 147 was validly initiated.

Which sections of the Income-tax Act were involved?

Section 68,Section 147,Section 148

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, MUMBAI BENCHES, MUMBAI

Before: HON’BLE SHRI SANDEEP GOSAIN & HON’BLE SHRI GIRISH AGRAWAL

Hearing: 22.04.2026Pronounced: 17.07.2026

INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCHES, MUMBAI BENCH: E BEFORE HON’BLE SHRI SANDEEP GOSAIN, JUDICIAL MEMBER AND HON’BLE SHRI GIRISH AGRAWAL, ACCOUNTANT MEMBER ITA No. 9126/MUM/2025 Assessment Year: 2009-10 Deputy Commissioner of Turakhia Ferromet Private Income Tax, CC - 8(2), Limited Mumbai 414, Nav Vyapar Bhavan, P D Vs. Mello Road, Masjid, Mumbai-400009 (PAN: AAACT1424C) (Assessee) (Respondent) C.O. No. 149/MUM/2026 Assessment Year: 2009-10 Turakhia Ferromet Private Deputy Commissioner of Income Limited Tax, CC - 8(2), 414, Nav Vyapar Bhavan, P D Mumbai Vs. Mello Road, Masjid, Mumbai-400009 (PAN: AAACT1424C) (Assessee) (Respondent) Present for: Assessee : Shri Rakesh Joshi, CA Revenue : Shri Himanshu Joshi, Sr. DR Date of Hearing : 22.04.2026 Date of Pronouncement : 17.07.2026 O R D E R PER GIRISH AGRAWAL, ACCOUNTANT MEMBER: This appeal is filed by the Revenue and cross objection by the assessee against the order of ld. CIT(A)-48, Mumbai, vide order No. ITBA/APL/S/250/2025-26/1082189018(1), dated 31.10.2025, passed against the assessment order by Dy. Commissioner of Income Tax,

ITA No. 9126/Mum/2025 and CO 149/Mum/2026 Turakhia Ferromet Pvt Ltd. Assessment Year 2009-10 Central Circle-8(2), Mumbai, u/s. 143(3) r.w.s. 147 of the Income-tax Act (hereinafter referred to as the “Act”), dated 30.12.2016, for Assessment Year 2009-10.

2.

Grounds taken by the revenue are reproduced as under: 1. Whether on the facts and in the circumstances of the case and in law, the ld.CIT(A) erred in deleting the addition of Rs.1,80,00,000/- made u/s 68 of the I.T Act, 1961 by treating the share premium amount as unexplained cash credit, without appreciating the complete investigative and cash trail evidence demonstrating the accommodation nature of the entries? 2. Whether on the facts and in the circumstances of the case and in law, the ld.CIT(A) failed to properly consider the absence of shareholders, identified as investors, their non-appearance for verification, and the inability of the assessee to prove the creditworthiness and genuineness of the transactions, thereby incorrectly deleting the addition? 3. Whether on the facts and in the circumstances of the case and in law, the ld.CIT(A) erred in holding that the assessee furnished satisfactory documentary evidence (PAN, ITRs, bank statements, board resolutions etc.) without considering the broader context and credible material available with the Assessing Officer?

2.1. Grounds taken by assessee in its cross objection are reproduced as under: 1. On the facts and circumstances of the case as well as in law, the ld. CIT(A) has erred in confirming the action of the ld. Assessing Officer in reopening the assessment u/s.147 of the Income Tax Act, 1961, without considering the facts and circumstances of the case. 2.2. Through its cross objection, assessee has contested the re- opening proceedings and the impugned re-assessment order. Revenue has raised grounds on the merits against the relief granted by the ld. CIT(A).

3.

Registry has taken note of delay of 72 days in filing of cross objection by the assessee for which petition for condonation of delay and affidavit are placed on record which have been perused and the reasons explaining the delay are taken note of. Upon perusal of the same and hearing both sides, we deem it fit to condone the delay on

ITA No. 9126/Mum/2025 and CO 149/Mum/2026 Turakhia Ferromet Pvt Ltd. Assessment Year 2009-10 the ground that there was sufficient cause for the said delay, to take up the matter for adjudication.

4.

Brief facts as culled out from records are that assessee is engaged in the business as importer and dealer in iron and steel. It filed its return of income on 30.09.2009, reporting total income at Rs.2,96,30,318/-. Case of the assessee was selected for scrutiny assessment for which assessment order u/s.143(3) was passed by assessing total income at the returned income.

4.1. Subsequently, ld. Assessing Officer received information from the office of ld. DDIT(Inv.), Unit-4(3), Kolkata, alleging that assessee had taken accommodation entries in the form of share premium amounting to Rs.1,80,00,000/- against payment of cash. Based on this information, ld. Assessing Officer recorded reasons to believe that income chargeable to tax had escaped assessment and issued a notice under section 148, dated 31.03.2016, thereby reopening the assessment. In response to the said notice, assessee intimated vide letter dated 26.05.2016 to treat its return filed on 30.09.2009 as the return filed in pursuance to the said notice issued u/s 148. Assessee asked for the reasons to believe recorded for the impugned reopening which were supplied. Assessee raised its objection for reopening which were disposed off vide order dated 10.11.2016. According to the assessee, the said disposal was without considering the issues raised by it.

4.2. Statutory notices u/s.143(2) and 142(1) were issued. In response to the said notices, assessee furnished the necessary details as required. Ld. Assessing Officer has made an addition of Rs. 1,80,00,000/- u/s.68 by treating the amount received on account of

ITA No. 9126/Mum/2025 and CO 149/Mum/2026 Turakhia Ferromet Pvt Ltd. Assessment Year 2009-10 genuine share capital/premium as alleged unexplained cash credit. According to the assessee, ld. Assessing Officer has failed to appreciate the fact that the said amount was received in earlier year and during the year only shares were allotted to the subscriber. Assessee also filed Bank Statement, PAN, ITR, confirmation, valuation report, financial statement of the investing company, Form 2 for allotment, etc., in order to prove the transaction is genuine. Ld. Assessing Officer ignoring all these details proceeded to make the addition.

4.3. Contention of the assessee is that ld. Assessing Officer reopened the case on the basis of the information received from the office of ld. DDIT (Inv.) Unit 4(3), Kolkata that the assessee is one of the beneficiaries of taking share premium entry in return of cash payment. Notice u/s. 148 was issued merely on the basis of information received from the investigation wing regarding the huge share premium received by the assessee. According to it, ld. Assessing Officer relied on the information and issued the notice without applying his mind. Further, assessee pointed from the reasons recorded that no tangible material was available with the ld. Assessing Officer on the basis of which the reopening was made. According to the assessee, it has not issued shares to any of the companies. It also asserted that no details of parties were provided to it as to from whom the alleged bogus accommodation share premium entries of Rs.1.80 crores were taken. It submitted that it was not confronted with any such "cash trail chart" as stated by the ld. Assessing Officer in the order. It thus, contended that no action can be initiated under section 147 after the expiry of 4 years from the end of the relevant assessment year unless the income chargeable to tax has escaped assessment by reason of the failure on the part of the assessee to disclose fully and truly all material facts necessary for the assessment.

ITA No. 9126/Mum/2025 and CO 149/Mum/2026 Turakhia Ferromet Pvt Ltd. Assessment Year 2009-10

5.

Parties have been heard and material on record perused. Based on the submissions made by the assessee and upon factual appreciation from the material on record, it is noted that ld. Assessing Officer has not brought any cogent material on record to evidently demonstrate that the documents submitted were false or fabricated. Crucially, the "cash trail chart" that forms the basis of the ld. Assessing Officer's suspicion was never confronted to the assessee, which is a gross violation of the principles of natural justice. It is a settled position that an addition cannot be sustained on the basis of material that the assessee has not had an opportunity to rebut. Furthermore, it is noted that ld. Assessing Officer's order lists six entities that were allegedly providing accommodation entries. However, as rightly pointed out by the assessee, none of these six entities are shareholders in the assessee company. Thus, there is no linkage between assessee and alleged parties involved/companies involved in providing bogus entries. It is also borne out from the records that ld. Assessing Officer has accepted other shareholders as genuine to whom shares were issued at same price. Ld. AO resorted to cherry picking these parties which ultimately do not figure in the list of tainted parties given in the impugned order.

5.1. It is also pertinent to note that out of premium of Rs.5.95 crores, only an amount of Rs.1.80 crores have been reported as accommodation entries as verified by the DDIT(Inv.), Kolkata. As per the DDIT, the following concerns are indulged in the activities of providing accommodation entries through various business entities managed / controlled by them: a. Durga Udyog PAN: AIOPD7042D b. Shree Hari Suppliers PAN: BCAPS2941F

ITA No. 9126/Mum/2025 and CO 149/Mum/2026 Turakhia Ferromet Pvt Ltd. Assessment Year 2009-10 c. Karuna Securities PAN: BBXPS5166C c. Akshay Traders PAN: ANBPP1358A d. Ambika Udyog PAN: AIOPD7042D e. Mahendra Suppliers PAN: BCAPS2941F

5.2. As the bank accounts of the above said concerns were found to have huge cash deposits, ld. DDIT procured the Bank Statements and KYC documents of the said bank accounts. Ld. DDIT had noted that none of the persons involved in the matter were found at the given address. Ld. DDIT had conducted further investigations in the matter and the money trail was reached with the assessee being recipient of an amount of Rs.1.80 crores from the alleged parties at the fifth layer of the conduit channel. A further verification of the list of share allottees reveals that three allottees viz Artillegence Bio Innovation Ltd, Bhaskar Fund Management Ltd and Stocknet International Ltd are appearing in the fourth layer of the cash trial chart as provided by the ld. DDIT.

5.3. In this regard, it is noted that ld. Assessing Officer mentions about the 4th layer of the cash trail as provided by ld. DDIT. However, assessee in no way can be said to be concerned with explaining source of source to such an extent, more particularly when no cogent material is placed on record by the ld. Assessing Officer, out of his independent enquiry other than what has been provided by ld. DDIT. Also, in reasons to believe recorded by the ld. Assessing Officer, there is only a general mention about assessee having received share premium of Rs. 5,65,24,000/- out of which an amount of Rs.1.8 crores were taken as accommodation entries against payment of cash. There are no details about which are those parties from whom this amount of Rs.1.8 crores were taken as accommodation entries against cash. Ld. CIT(A) has

ITA No. 9126/Mum/2025 and CO 149/Mum/2026 Turakhia Ferromet Pvt Ltd. Assessment Year 2009-10 rightfully analyzed the submissions made and took note of the discrepancies as alleged by the ld. Assessing Officer. Assessee had pointed out that the six entities are alleged by the ld. Assessing Officer for providing accommodation entries, none of them are shareholders in the assessee company. Considering the fact-based findings arrived at by the ld. CIT(A) and the approach adopted by the ld. Assessing Officer which is generic in nature relying solely on the investigation carried out by the ld. DDIT, Investigation Wing, Kolkatta and assessee placing all the relevant documentary evidences on record, we do not find any reason to interfere with the findings arrived at by the ld. CIT(A). Accordingly, grounds raised by the Revenue are dismissed and that raised by the assessee in its cross objection is allowed.

6.

In the result, appeal filed by the Revenue is dismissed and cross objection filed by the assessee is allowed.

Order is pronounced in the open court on 17 July, 2026

Sd/- Sd/- (Sandeep Gosain) (Girish Agrawal) Judicial Member Accountant Member Dated: 17 July, 2026 MP, Sr.P.S. Copy to: 1 The Assessee 2 The Respondent 3 DR, ITAT, Mumbai 4 Guard File 5 CIT BY ORDER,

(Dy./Asstt.Registrar) ITAT, Mumbai

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