ACIT, DELHI vs. MGM REALTORS PRIVATE LIMITED, DELHI

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ITA 3644/DEL/2024Status: DisposedITAT Delhi15 July 2026AY 2016-1717 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 upheld the order of the CIT(A), dismissing the appeal of the Revenue. The Tribunal was convinced that the assessee had successfully established the identity of the share applicants, their creditworthiness, and the genuineness of the transactions through sufficient evidence and material. The CIT(A) had meticulously examined the record and rightly concluded that the assessee had discharged the onus under Section 68. The Assessing Officer failed to produce any material contrary to the documents and evidence produced by the assessee. The Tribunal agreed with the CIT(A)'s finding that the money was available with the investor companies from previous unimpeachable transactions done in the course of business, constituting the source of the subscribing companies. The Tribunal found no reason to interfere with the well-reasoned order of the CIT(A), concluding that the AO was not justified in treating the share capital and share premium as unexplained cash credits under Section 68. The addition of Rs. 59,53,92,255 was deleted.

What were the facts?

The Revenue appealed against an order of the CIT(A)/NFAC, Delhi, which deleted an addition of Rs. 59,53,92,255 made by the Assessing Officer (AO) under Section 68 of the Income Tax Act, 1961. The assessee, MGM Realtors Pvt. Ltd., engaged in real estate, had received large share premium during Assessment Year 2016-17. The AO initiated scrutiny due to this, issuing notices. The assessee initially failed to respond but later submitted details of share capital/premium, including party confirmations, ITRs, and bank statements. However, documents filed with the Registrar of Companies and share application forms were not provided. The AO noted that notices under Section 133(6) to many investing parties were returned undelivered, and the financials of some investing companies showed negligible income, suggesting they were paper companies providing accommodation entries. Consequently, the AO made the addition.

What were the issues?

1. Whether, on the facts and circumstances, the CIT(A) was justified in deleting the addition of Rs. 59,53,92,255 made by the AO under Section 68 of the Act? 2. Whether, on the facts and circumstances, the CIT(A) was justified in ignoring that notices issued under Section 133(6) to the investor parties had either returned or the parties were found not in existence? 3. Whether, on the facts and circumstances, the CIT(A) was justified in deleting the addition of Rs. 59,53,92,255 made under Section 68 by ignoring that the financials of investing companies showed negligible income, indicating they were not in a financial position to invest such amounts and were providing accommodation entries? Assessee's Contention (implied from CIT(A)'s order and Tribunal's reasoning): The assessee contended that it had furnished sufficient evidence, including bank accounts, annual accounts, ITRs, and confirmations from creditors, proving the identity, creditworthiness, and genuineness of the transactions and the source of funds. The assessee relied on case laws such as CIT vs. Orissa Corporation Pvt. Ltd., Homi Jehagir Gheesta vs. CIT, and CIT vs. Bharat Engineering and Construction Co. to argue that the AO cannot reject evidence without further inquiry and that the initial burden on the assessee was discharged. Revenue's Contention: The Revenue argued that the CIT(A) erred in deleting the addition by ignoring the facts that notices under Section 133(6) to investor parties were returned undelivered or the parties were non-existent, and that the investing companies had negligible income, suggesting they were paper companies providing accommodation entries.

Which sections of the Income-tax Act were involved?

Section 68,Section 250,Section 143(3),Section 133(6),Section 142(1),Section 143(2),Section 246A

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, DELHIBENCH ‘E’, NEW DELHI

Before: Sh. Raj Kumar Chauhan & Smt. Renu Jauhri

Hearing: 03.07.2026Pronounced: 15.07.2026

IN THE INCOME TAX APPELLATE TRIBUNAL DELHIBENCH ‘E’, NEW DELHI Before Sh. Raj Kumar Chauhan, Judicial Member & Smt. Renu Jauhri, Accountant Member ITA No. 3644/Del/2024 : Asstt. Year: 2016-17 ACIT, Vs MGM Realtors Pvt. Ltd. Room No. 419, C. R. Building, 62A, UGF WTC, Behind the Lalit I.P. Estate, New Delhi-110002 Hotel, Babar Road, Connaught Place, New Delhi-110001 (APPELLANT) (RESPONDENT) PAN No. AAFCM6850N Assessee by: Sh. S. Krishnan, Adv. Revenue by: Sh. Tarun Sharda, Sr. DR Date of Hearing: 03.07.2026 Date of Pronouncement: 15.07.2026 ORDER Per Raj Kumar Chauhan, Judicial Member: The appeal of the Revenue is directed against the order dated 10.06.2024 of ld. CIT(A)/NFAC, Delhi passed u/s 250 of the Income Tax Act, 1961 (hereinafter referred to as “the Act”) wherein the addition made u/s 68 of the Act vide assessment order dated 29.12.2018 u/s 143(3) of the Act was deleted and the appeal was partly allowed.

2.

Facts in brief as culled out from the authorities below are that the assessee company is engaged in real estate business and has filed return of income for the concerned year on 18.05.2017. Case of the assessee was selected for limited scrutiny under CASS on the ground of large share premium

2 ITA No. 3644/Del/2024 MGM Realtors Pvt. Ltd. received during the year. Notice u/s 142(1) dated 12.09.2018

was issued to submit various details of share capital issued

during the year. The assessee failed to file reply and another

notice u/s 142(1) of the Act dated 05.10.2018 was issued to

which reply dated 20.10.2018 was filed. Consequently, show-

cause notice dated 09.11.2018 was issued which was replied on

17.11.2018. Finally, on 27.11.2018, the assessee has

submitted details of share capital/premium giving details of

parties to whom shares were allotted alongwith confirmation,

copy of ITR and bank statement of each party from which share

capital was received. The assessee did not submit any

documents filed with Registrar of Companies for allotment of

shares. No share application forms or notice inviting application

for subscription of the shares were submitted. The detail of the

parties who has subscribed the share capital with the assessee

is extracted below as under:

S.No . Na me o f pa rty R OI R etur n o f I nves tme n t A ck now le dgm e nt inc om e in ye ar as ses see c om p a ny 1 G ate wa y Im pex Pv t. L t d. 5,5 5, 9 4 ,7 2 6 1,2 3,1 9 ,9 2 0 2 J uv enile Es t a te De vel op e rs Pv t . L t d. 201 6- 17 8,5 5, 1 5 0 66 ,99 , 9 00 3 N aiv e Con s t ru ct ion s Pv t . L t d. 201 6-17 8,6 2, 5 7 7 66 ,99 ,9 00 4 Sumit ra B uil de rs D e vel ope rs Pv t. 201 6- 17 32 , 54 , 4 80 1,4 3, 9 9 ,9 3 6 Lt d. 5 Vi gil Re al Es t at e P vt. Lt d . 201 6-17 8,4 6, 9 1 6 16 ,99 ,9 10 6 Adoni s Bu il dp rop Pv t . L t d. 201 6- 17 76 , 06 ,0 41 66 , 99 , 9 00 7 Ary a hi B ui ldwe ll Pvt . Ltd . 201 6- 17 4,2 8, 8 0 ,1 7 3 20 ,36 , 9 9,9 08 8 D ol phi n Sp a re Pa rts Pv t. L t d. 201 6-17 N il 2,4 9,9 9 ,9 5 2 9 Fi es ta P ro pbu il d Pv t . Lt d. 201 6-17 1,2 4, 1 2 ,2 7 5 1,5 6,7 3 ,0 5 1 10 Kais e r Bu ildc on Pv t. L t d. 201 6-17 N il 1,9 9,9 9 ,9 6 1 11 Kalinga Steeltech Pvt. Ltd. 2016-17 Nil 1,49,99,971 12 Radhey Shyam Real Estate Pvt. 2016-17 Nil 26,74,99,940 Ltd. Total 59,53,92,255

3 ITA No. 3644/Del/2024 MGM Realtors Pvt. Ltd. 3. The AO observed that the financials of the investing

companies were showing negligible income and as such were

not having a financial position to invest such an amount in the

assessee company. It is further observed that the notice u/s

133(6) were sent to the above parties and majority of the

notices returned undelivered. The detail is extracted below as

under:

S. No. Name & address of party Status if Date of Date of Speed Delivery of issue return post Notice u/s remarks 133(6) 1 The Principal Officer, M/s Gateway Impex Pvt. Ltd., Returned 14.12.2018 26.12.2018 Left 732/1, Lotus Plaza, Sector – 14, Undelivered Old M G Road, Gurgaon, Haryana – 122001 2 The Principal Officer, M/s Juvenile Estate Developers Returned 14.12.2018 26.12.2018 No such Pvt. Ltd., G-15, NDSE, 1st Undelivered firm Floor, South Extn., Part – I (Barista), New Delhi – 110003 3 The Principal Officer, M/s Naive Constructions Pvt. Returned 14.12.2018 26.12.2018 No such Ltd., G-15, NDSE, 1st Floor, Undelivered firm South Extn., Part – I (Barista), New Delhi – 110003 4 The Principal Officer, - M/s Sumitra Builders And Delivered 14.12.2018 26.12.2018 Developers Pvt. Ltd., UGF-62A, World Tr ade Centre, Babur Road, Connaught Place, New Delhi – 110001 5 The Principal Officer, M/s Vigil Re al Estate Pvt. Ltd., Returned 14.12.2018 26.12.2018 No such G-15, NDSE, 1st Floor, South Undelivered firm Extn., Part – I, New Delhi – 110003 6 The Principal Officer, - M/s Adonis Buildprop Pvt. Ltd., Delivered 14.12.2018 26.12.2018 Lotus Tower, Community Centre, New Friends Colony, New Delhi – 110065 7 The Principal Officer, M/s Aryahi Buildwell Pvt. Ltd., Returned 14.12.2018 26.12.2018 No such SF-02, 2nd Floor, Southern Undelivered firm Park, Plot No.D-2, District Centre, Saket, New Delhi – 110017 8 The Principal Officer, M/s Dolpin Spare Parts Pvt. Returned 14.12.2018 26.12.2018 Incomplete Ltd., DTJ-701, DLF Tower, Undelivered address Jasola, New Delhi – 110044

4 ITA No. 3644/Del/2024 MGM Realtors Pvt. Ltd. 9 The Principal Officer, - M/s Fiesta Probuild Pvt. Ltd., Delivered 14.12.2018 26.12.2018 910, Ansal Bhawan, 16, KG Marg, Connaught Place, New Delhi – 110001 10 The Principal Officer, - M/s Kaiser Buildcon Pvt. Ltd., Delivered 14.12.2018 26.12.2018 910, Ansal Bhawan, 16, K.G. Marg, Connaught Place, New Delhi – 110001 11 The Principal Officer, M/s Kalinga Steeltech Pvt. Ltd., Returned 14.12.2018 26.12.2018 Shifted DTJ 724, 7th Floor, Tower-B, Undelivered DLF Tower, Jas ola, New Delhi – 110044 12 The Principal Officer, M/s Radheyshyam Real Estate Returned 14.12.2018 26.12.2018 No such Pvt. Ltd., SF-9, 2nd Floor, Undelivered firm Southern Park, Plot No. D-2, District Centre, Saket, New Delhi -110017

4.

It is further observed that out of 12 parties, notice to 8

parties returned undelivered for various reasons which shows

that the above companies were just paper and bogus companies

and does not have operating business and as such their

creditworthiness was doubtful. The AO has also doubted the

31.03.2016 Board meeting, Extraordinary General Meeting

(EGM) of shareholders to pass a resolution to increase the

share capital. Hence, it was observed that the assessee has

taken share capital from brokers and paper companies in

majority of the cases who were having negligible income and as

such were involved in providing accommodation entries.

Accordingly, the Assessing Officer made addition u/s 68 of

Rs.59,53,92,255/- because the assessee has failed to prove the

genuineness of the transaction and creditworthiness of the

share applicants.

5 ITA No. 3644/Del/2024 MGM Realtors Pvt. Ltd. 5. Aggrieved by the said assessment order, the assessee filed appeal before the ld. CIT(A). The ld. CIT(A) has dismissed the ground pertaining to the issuance of notice dated 15.12.2018 being beyond the purview of inquiry for which jurisdiction was confirmed on the AO for issuing notice u/s 143(2) of the Act. However, the grounds pertaining to the addition of Rs.59,53,92,255/- on account of share capital premium were allowed and appeal was thus partly allowed by observing that, the evidence has been furnished which shows that the money was available with the investor company from previous unimpeachable transactions done in the course of business which constitute the source of the subscribing company. It was further observed that the details/documents filed by the appellant in support of receipt of share application money has sufficiently proved the genuineness of the share applicants and identity and creditworthiness of the said persons concerned was also proved alongwith the genuineness of the transactions.

6.

Aggrieved by the said order of the ld. CIT(A), the Revenue is in appeal before us and has raised the following grounds of appeal: “1) Whether on the facts and circumstances, the Ld. CIT(A) was justified in deleting the addition amounting to Rs. 59,53,92,255/- made by AO u/s 68 of the Act? 2) Whether on the facts and circumstances, the Ld. CIT (A) was justified in ignoring the facts that the

6 ITA No. 3644/Del/2024 MGM Realtors Pvt. Ltd. notices issued u/s 133(6) to the investor parties have either returned back or found not in existence? 3) Whether on the facts and circumstances, the Ld. CIT(A) was justified in deleting the addition of Rs. 59,53,92,255/- made u/s 68 by ignoring the fact that the financials of investing companies submitted by the assessee company had shown negligible income and clearly these companies were not in such a financial position that they could invest such an amount in the assessee company as these companies were only providing accommodation entries for the assessee company? 4) Whether on the fact, circumstances, and law of the case, the Ld. CIT(A) was justified in ignoring the finding of decision Of Hon'ble Apex Court In case of Konark Structural Engineers private limited [2018] 96 taxmann.com 255(SC)/[2018] 257 taxman 262 (SC)? 5) Whether on the fact, circumstances, and law of the case, the Ld. CIT(A) was justified in ignoring the finding of decision Of Hon'ble Delhi High Court in case of CIT vs. Nipun Builders & Developers Pvt. Ltd.?” 7. To summarise the grounds, the question for determination before us whether the ld. CIT(A) was legally and factually justified in deleting the addition made u/s 68 of the Act?

8.

We have heard the ld. DR and the ld. AR. The ld. DR while relying upon the assessment order has vehemently argued that the ld. CIT(A) has decided the appeal without calling a report from the AO on the additional facts/evidence as filed by the assessee/appellant. The ld. DR specially referred to para 3.15 of the assessment order stating that the Assessing Officer has categorically stated that assessee has failed to discharge its onus to prove genuineness of the transactions and also failed to offer any explanation with regard to unexplained share

7 ITA No. 3644/Del/2024 MGM Realtors Pvt. Ltd. capital subscribed during the year of Rs. 59,53,92,255/-. It is argued that the Assessing Officer has rightly made the addition and the impugned order needs to be set aside. It is further argued that all the notices u/s 133(6) in majority of the cases were returned undelivered which shows that the share applicants entities were not having any office and as such were the paper entity only and therefore the genuineness of the transaction and identity of the share applicants is not established by the assessee.

9.

The ld. AR on the other hand stated that all evidences and documents were produced before the AO and no additional evidence was produced before the ld. CIT(A) and as such the argument of the ld. DR is fallacious wherein he has argued that the ld. CIT(A) has deleted the addition without calling a report from the AO. It is further argued that the AO has considered only 4 replies submitted by the share applicants whereas the ld. CIT(A) has considered 7 replies. The ld. AR has referred page 48 of paper book-1 alongwith pages 348, 355, 377, 378 & 379 of paper book-1. The ld. AR further referred page 241 to 247 of paper book-2 and argued that even the source of the source of the share money was also proved by parties and as such the assessee has sufficiently established identity of the party, their creditworthiness and genuineness of the transactions. The ld. AR has also filed written synopsis in

8 ITA No. 3644/Del/2024 MGM Realtors Pvt. Ltd. support of his oral argument alongwith tabulation of party-wise

evidence alongwith findings in the proceedings to prove the

genuineness of the transaction and identity of the party and

their creditworthiness, the same is extracted below as under:

No. PARTY DETAILS AO’s VIEW EVIDENCE 1. Gateway Impex Submission as to rental income PB1-008 – Rebuttal of AO’s findings – (P) Ltd cannot be determined. Gateway’s revenue from operations during Rs. 1,23,19,920/- the year was Rs.21.43 crores, and there was Prior to receipt of Rs.2.16 crores also other income of Rs.2.05 crores. Net from this company, Assessee profit of the company was Rs.10.86 crores, has paid it a sum of Rs.49 lakhs. and it had offered taxable income of Rs.5.56 This shows transactions are crores during AY 2016-17. The company had accommodation entries. own funds of Rs.304 crores. PB1-051 – Confirmation. PB1-052 – ITR acknowledgment. Gross income for AY 2016-17 is Rs.5,55,94,726/-. PB1-053 to 57–Party’s bank statement. PB1-130 to 134 – Documents submitted 18.12.2018, same as above. PB1-377 – Gateway’s response dated 28.12.2018 to 133(6) issued by AO. This contains @ PB1-379 – Detailed note on how payment was funded, @ PB1-381 – Valuation report of shares subscribed, @ PB1-387 – Note on source of funds. PB2-01 – Balance sheet. Company has accumulated reserves of Rs.269.26 crores, revenue from operations of Rs.21.43 crores. It has rental income of Rs.19.16 crores during the year. PB2-04 – Form 26AS. PB2-247–Email dated 28.12.2018 in response to notice u/s.133(6). 2. Juvenile Estate Party has offered income of only PB1-009 – Rebuttal of AO’s findings – The Developers (P) Rs.8.55 lakhs. Nature of income company was co-owner of an immovable Ltd. is not clear as the complete ITR property sold during the year, against which Rs. 66,99,900/- has not been furnished. This it had received an advance of Rs.67 lakhs. company filed ITR belatedly on PB1-060 – Confirmation. 26.03.2018 i.e. almost 1.5 years after due date. Bank account PB1-061 – ITR acknowledgment. from which this money was paid PB1-062 – Bank statement. was opened on 01.12.2015. PB1-348 – Juvenile’s reply dated 22.12.2018 to notice u/s.133(6), containing @ PB1-350 – Details of shares allotted, @ PB1-354 – Details of source of funds. PB2-021 – Balance sheet. Reserves as on 31.03.2016 are 1.57 crores. @PB2-024 – Non-current investments have fallen from 1.54 crores to 0.88 crores. This is on account of sale of immovable property. PB2-031 – Sale deed dated 28.04.2016, of property jointly owned by Juvenile, Naïve, Vigil. They are all group companies. PB2-242- Reply dated 22.12.2018 to 133(6). 3. Naïve Party has taxable income of PB1-009 – Rebuttal of AO’s finding - The Constructions (P) Rs.8.62 lakhs only. Complete company was co-owner of an Ltd. ITR not furnished. immovable property sold during the Rs. 66,99,900/- year, against which it had received an Company filed belated ITR for advance of Rs.67 lakhs.

9 ITA No. 3644/Del/2024 MGM Realtors Pvt. Ltd. AY 2016-17, on 26.03.2018, PB1-065 – Confirmation. after due date. PB1-066 – ITR Acknowledgment. PB1-067 – Bank statement. Bank account opened on PB1-355 – Naïve filed reply dated 01.12.2015, 1st entry of Rs. 67 28.12.2018 to notice u/s.133(6), duly lacs dated 11.03.2016, and explaining source of funds @ PB1-361. same amount was transferred to assessee on 29.03.2016, two PB2-031 – Sale deed dated 28.04.2016, days prior to year end. wherein Naïve, Vigil, & Juvenile have sold jointly owned immovable property. PB2-053 – Balance sheet. Company had reserves of Rs.22.27 crores as on 31.03.2016. PB2-61 – Form 26AS. PB2-242 – Reply dated 22.12.2018 to notice u/s.133(6). 4. Sumitra Party has offered only Rs.32.55 PB1-009 – Rebuttal of AO’s finding – The Developers (P) lakhs as income. Nature of Company had real estate projects in Ltd income is not clear as complete Dharuhera& Panipat. It held land valued Rs. 1,43,99,936/- ITR has not been furnished. The at cost at Rs.48 crores. As per balance ITR by this party for AY 2016-17 sheet submitted before the AO, the was filed belated on 30.03.2018 company had bank balance of Rs.16.77 i.e. almost 1.5 years after due crores, &land as above. date. PB1-070 – Confirmation. No evidence of FDR or closure PB1-071 – ITR acknowledgment. thereof. Source of FDR not PB1-072 – Bank statement. explained. Creditworthiness not PB1-200 – Audited balance sheet – @ PB1- established. 204 Income from projects is Rs.4.72 crores. @ PB1-207 Inventory as on 31.03.2016 is Rs.48.64 crores. Company has FDR’s of Rs.14.48 crores. PB1-395 @ 401 – Sumitra’s reply to notice u/s.133(6), has explained source of investment. PB2-068 – Form 26AS. PB2-244 – Reply dated 22.12.2018 to notice u/s.133(6). 5. Vigil Real Estate Party has offered only Rs.8.49 PB1-009 – Rebuttal of AO’s finding - The (P) Ltd. lakhs as income. Complete ITR company was co-owner of an immovable Rs. 16,99,910/- has not been furnished. property sold during the year, against which ITR filed belated, on 26.03.2018 it had received an advance of Rs.17 lakhs. i.e. almost 1.5 years after due PB1-075 – Confirmation. date. Bank account was opened on 01.12.2015. First entry of PB1-076 – ITR acknowledgment. Property Rs.17 lacs in bank account is on held by this company has fetched rental 11.03.2016, same amount was income till date of sale. transferred to Assessee 29.03.2016. PB1-077 – Bank statement. PB1-388 @ 394 – Vigil’s reply dated 22.12.2018 to notice u/s.133(6), explained source of funds as invested. PB2-031 - Sale deed dated 28.04.2016, wherein Naïve, Vigil, & Juvenile have sold jointly owned immovable property. PB2070 – Balance sheet. @ PB2-076 – Note 7 shows sale of property. PB2077 – Form 26AS. PB2-244 – Email dated 22.12.2018 replying to 133(6). 6. Adonis Buildprop No evidence of sale of property PB1-010 – Rebuttal of AO’s findings – (P) Ltd worth Rs.6.47 crore, since Company had sold immovable property Rs. 66,99,900/- Assessee has not submitted of over Rs.6 crores during the year, as complete ITR. Perusal of Bank may be referred from the balance sheet. Statement does not reveal any Its own share capital & reserves were such fact of sale of property. of Rs.30.82 crores. It had offered income of Rs.47 lakhs for tax.

10 ITA No. 3644/Del/2024 MGM Realtors Pvt. Ltd. PB1-080 – Confirmation. PB1-081 – ITR acknowledgment. PB1-082 – Bank statement. PB1-362 – Adonis’ reply to notice u/s.133(6). @PB1-369 – Source explained. PB2-081 – Balance sheet. @ PB2-081 – Reserves as on 31.03.2016 are Rs.27.99 crores. @ PB2-083 – Note 7 shows decrease in Investment in Real Estate. PB2-084 – Computation. Capital gain computation on sale of immovable property. PB2-086 – Sale deed dated 28.12.2015, for immovable property at Rs.5.13 crores. PB2-097 – Form 26-AS – Discloses property sale. PB2-246 – Adonis’ reply dated 22.12.2018 to notice u/s.133(6). 7. Aryahi Buildwell Submission of FDR closure could PB1-009 – Rebuttal of AO’s findings– (P) Ltd. not be verified. Company had sold its own shares of 6.59 Rs. crores, to invest in the Assessee company. 20,36,99,908/- No documentary evidence has Receipts from sister-concerns were also been produced. explained. The company had its own share capital & premium of Rs.167.78 The bank account of the crores. assessee as furnished before me in which the money received PB1-086 – Confirmation. from this party was credited, PB1-087 – ITR acknowledgment. Company carried Nil balance as on traded in shares, incurred a business loss in 01.12.2015 but on 03.12.2015 & this year. 04.12.2015 an amount of Rs. 50 crore is credited from various PB1-088 – Bank statement. parties and on 04.12.2015 PB1-338 – Aryahi response dt.22.12.2018 to transferred to M/s. AVRO 133(6). @ PB1-347 – Source of investment Commercial Co. Ltd. and explained as encashment of fixed deposits. Balance of the party is made Nil on same date. PB2-101 – Company had reserves of Rs.76.27 crores as on 31.03.2016. There are non-current investments of Rs.88.35 crores. PB2-103 – Form 26AS. PB2-245 – Reply to notice u/s.133(6). 8. Dolphin Spare Party has Nil income and still PB1-009 – Rebuttal of AO’s findings – Parts (P) Ltd. given Rs.2.50 crore to the Company had received advances of Rs. 2,49,99,952/- assessee. The ITR of this Rs.2.50 crores from M/s. Bilt Graphic company filed on 29.03.2017 Paper Products Ltd. Company itself had (belated). Bank statement of full share capital & premium of Rs.36.77 year reveals that there is no crores. transaction except credit of Rs. 2.50 crore and debit of this PB1-095 – Confirmation. complete amount thereof to the PB1-096 – ITR acknowledgment. assessee. Assessee has not PB1-097 – Bank statement. explained nature of amount PB1-317 – Dolphin response dt.20.12.2018 received from M/s. Bilt Graphic to 133(6). Source explained at PB1-323. Paper Products Ltd. The creditworthiness of this company PB2-109 – Balance sheet. Company had cannot be established. reserves of Rs.33.09 crores as on 31.03.2016. Investments as well as liabilities have been increased by identical amount of Rs.2.55 crores. PB2-241 – Reply to notice u/s.133(6). 9. Fiesta Propbuild Party has income of Rs.1.24 PB1-008 – Rebuttal of AO’s findings – The (P) Ltd. crores only. Nature of income is Company had share capital / premium of Rs. 1,56,73,051/- not clear as complete ITR has Rs.25.68 crores, and its revenue from not been furnished. operations during the year was Rs.2.10 crores. Gross rent received by the Company ITR filed belated on during the year was Rs.2.09 crores.

11 ITA No. 3644/Del/2024 MGM Realtors Pvt. Ltd. 18.05.2017.Bank account from which this money was given was PB1-100 – Confirmation. opened on 01.12.2015. 1st PB1-101 – ITR acknowledgment. Rental entries in books of Rs.40.59 lacs Income of Rs.1.24 crores offered for tax each was credited (After deduction of 30%). on10.02.2016, an amount of Rs.77.14 lacs is shown PB1-102 – Bank statement. transferred from other bank PB1-187 – Documents submitted account. There is no other 18.12.2018. transaction in bank account. Claim of rental income could not PB1-370 – Fiesta’sresponse dt.20.12.2018 to be verified. 133(6). @ PB1-376 - Rental income of Rs.2.09 crores and Rs.0.81 crores from sale of property explained as source of investment. PB2-197 – Balance sheet. Company had reserves of Rs.23.45 crores as on 31.03.2016. @ PB2-198 – Company had rental income of Rs.2.09 crores. PB2-200 – Form 26AS. PB2-202 – Sale Deed dated 08.02.2016 for immovable property owned by this company. PB2-215 – Bank statement. PB2-241 – Email dated 22.12.2018 in reply to notice u/s.133(6). 10. Kaiser Buildcom Party has Nil income. PB1-009 – Rebuttal of AO’s findings– (P) Ltd. Company had share capital & premium of its Rs. 1,99,99,961/- ITR filed belatedly on own, at Rs.7.61 crores. Inventory of land 24.08.2017. was Rs.6.49 crores. This land was acquired by HUDA during the year, and Bank account opened on compensation of Rs.10.55 crores was 09.02.2016 with cash of received. Rs.10,000/-.On last day of financial year, an amount of Rs. PB1-105 – Confirmation. 30 crores was credited to the PB1-106 – ITR acknowledgment. bank account of this party and PB1-107 – Bank statement. the same was debited on the PB1-324 – Kaiser’s response dt.22.12.2018 same day to various parties. The to 133(6). @ PB1-330 – Source of funds submission of the assessee that explained as receipt of Rs.10.55 crores from this party had land acquired by HUDA against compulsory acquisition of HUDA and received land. compensation could not be verified, in the absence of any PB2-147 – ITR acknowledgment. documentary evidence. PB2-148 – Bank statement. PB2-158 – Assessment order u/s.143(3) / 154 dated 01.03.2019 contains findings as to Rs.10.54 crores compensation received by the company against compulsory land acquisition. PB2-230 - Details of land acquired. PB2-240 – Bank statement. PB2-245 – Reply to notice u/s.133(6). 11. Kalinga Steeltech Party has Nil income. PB1-010 – Rebuttal of AO’s findings – The (P) Ltd. Company had its own share capital & Rs. 1,49,99,971/- Submission of share capital premium of Rs.50 crores. Its current having been given out of FD assets were Rs.20.57 crores, reduced closure could not be verified in from Rs.42.37 crores in the preceding the absence of any documentary year. This has funded the investment to evidence. the Assessee. PB1-110 – Confirmation. PB1-111 – ITR acknowledgment. PB1-112 – Bank statement. PB1-176 – Documents submitted 18.12.2018. @ PB1-178 – Payment has been funded through maturity of FDR.

12 ITA No. 3644/Del/2024 MGM Realtors Pvt. Ltd. (Also at PB1-336) PB1-242 – Balance sheet. Company had reserves of 48.99 crores as on 31.03.2016. @ PB1-250 – Company has earned Rs.56.61 lakhs as interest on FDR’s during the year. PB1-331 – Kalinga response dt.22.12.2018 to 133(6).Funded through closure of FDR. PB2-116 – Form 26AS. TDS on Interest is substantial. PB2-243 – Reply to notice u/s.133(6). 12. Radhey Shyam The party has Nil income but has PB1-008 – Rebuttal of AO’s findings – Real Estate given Rs.26.75 crore to the Company had its own share capital & Rs.26,74,99,940/- assessee. premium of Rs.8.52 crores. It had inventory of land as on 31.03.2015 at Rs.8.14 crores, ITR was filed on25.08.2017 which was acquired during the year by (belated). HUDA.The Company’s P&L account shows a sum of Rs.10.69 crores Submission as to receipt of received as compensation for land compensation from HUDA for acquisition. The Company also received acquisition of land could not be funds from its sister-concerns, details verified in the absence of any and evidence of which was filed before documentary evidence. Funds AO. These companies also owned land, have been received from which had been acquired by HUDA. Rudraksh, Sanjogita, Aakash & Kaira, appear to be PB1-114 – Confirmation. accommodation entries. PB1-115 – ITR acknowledgment. PB1-116 – Bank statement. PB1-181 – Documents submitted 18.12.2018. @ PB1-185 – Land with book value of Rs.8.13 crores reduced to NIL. @ PB1-186 – Land compensation of Rs.10.68 crores reported in P&L account. PB1-218 – Balance sheet. Schedule 5 & 6 show receipt of funds from sister-concerns. PB1-251 – Papers relating to land acquisition by HUDA. (Legible copy at PB2-136 to 141) PB1-258 – Assessment order u/s.143(3) in the said company’s case for AY 2016-17. PB1-268 – Source of investment by the company explained. PB1-309 – Radhey Shyam’s response dt.22.12.2018 to 133(6). PB2-136 – Details of land acquired from the said company by government. PB2-144 – Bank statement. PB2-243 – Email dated 22.12.2018 in reply to notice u/s.133(6). PB2-146 – Details of source of source in Radhey Shyam’s hands from: Rudraksh – PB2 – 184, 185, 186, 187, 193. Kaiser – PB2 – 147, 148, 150, 151, 158. Sanyogita – PB2 – 195, 196. Aakash – PB2 – 161, 162, 163, 164, 170. Rocky – PB2 – 172, 173, 175, 176, 182. These companies owned substantial land contiguous with Radhey Shyam’s land, and these land tracts were all taken over together. Many of these companies were assessed u/s.143(3), orders are marked.

13 ITA No. 3644/Del/2024 MGM Realtors Pvt. Ltd. 10. We have considered the rival submissions and perused the material on record. In order to appreciate the arguments of the parties, we find it expedient to extract the findings of the ld. CIT(A) on ground Nos. 3, 4 & 5 before him which pertains to the share capital and premium of Rs.59,53,92,255/- from para 4 onwards, is extracted below as under: “4. I have carefully gone through the details available and considered the facts and circumstances of the case, submission of the appellant and perused the assessment order on the issue of share capital received by the appellant during the year from 12 group entities. It was reiterated that all the share applicants pertaining to the same group of companies. I have also gone through the copies of the bank statements of the investor companies, source investor companies and source of source of investor companies. It is seen that the funds have been transferred by way of RTGS through banking channel and there is no deposit of cash in the bank accounts. 4.1 The appellant filed detail, confirmations, copy of PAN, ITR, balance sheet, copies of bank statements etc. of all the share applicants (pp15-85). The appellant has also filed details/ documents in support of ultimate source of source with regard to share application money before AO as well as before me. All the payments of share application money were routed through banking channels. 4.2 In addition to all the facts it is pertinent to mention that the following details have been duly furnished by the appellant before the AO during the course of assessment proceedings. 1. 1. Confirmations 2. Note on Transaction 3. ITR Acknowledgement 4. Bank statement 5. Annual accounts 6. Source of fund 7. Ultimate Source of source fund 8. Replies u/s 133(6) of the investor companies 9. Justification of share premium 10. Land acquisition papers as source is land acquisition

14 ITA No. 3644/Del/2024 MGM Realtors Pvt. Ltd. 11. Sale deed/property documents as source of investor companies came from sale of properties. 4.3 The appellant states that the prima facie onus cast upon it and its shareholders had established the identity, creditworthiness and genuineness of the transaction. The appellant had to prove these ingredients on a prima- facie basis and once this is done, the onus shifts to the A.O. to prove that there are facts available with him to displace the evidence produced by the appellant. The appellant contended that if AO wanted to examine the subscribers, he ought to have pursued his enquiry further by enforcing the notices. However, AO was of the view that the burden lies wholly on the appellant to prove its case to the hilt, which is not correct in law. Thus, the appellant submitted that AO not only erred in coming to wrong conclusion on facts but also erred in law in holding that provisions of section 68 are applicable. 4.4 Appellant stated that The Section 68 states that in case where a sum is found credited in the books of account of an assessee, the initial burden is placed on the assessee to adduce evidence regarding identity of the creditor, his creditworthiness and genuineness of the transaction. The initial burden is only a prima-facie one i.e. where the explanation is prima-facie credible, the burden then shifts to other party. What decides the matter finally is pre-ponderous of probability. Once an explanation is furnished by the assessee it should be considered objectively by the A.O. In the case of Shri Lekha Banerjee vs. CIT 1963 49 ITR 112 (SC), it has been held that the good evidence cannot be converted into no evidence by the A.O. and he cannot act unreasonably to reject the same. In CIT VS Orissa Corporation Pvt. Ltd. (1986) 159 ITR 78 (SC), it has been held that witse the assessee furnished full details regarding the creditors it was up to department to pursue the matter to trace them and examine their credit worthiness. In fact the case law has gone beyond this proposition. In Homi Jehagir Gheesta Vs. CIT 1961 41 ITR (SC) and CIT VS. Bharat Engineering and Construction co (1972) 83 ITR 187 (SC), it has been held that the AO cannot treat an item of credit as income by merely rejecting the explanation put forward by the assessee. Even witse assessee's explanation has been rejected correctly. It does not necessarily or invariably mean in all cases an addition to the appellant's income.

15 ITA No. 3644/Del/2024 MGM Realtors Pvt. Ltd. The points which emerge from these cases are that only initial burden lies on the assessee and if various details are filed to prima-facie discharge this burden, it will be for the assessing officer to make further enquiries which may include gathering further facts, examining the creditors etc. However, without making such enquiries, the good evidence filed by an assessee cannot be converted into NIL evidence. Coming to facts of appellant's case, the credits of capital were proved by filling the evidences from the creditors, consisting of copies of bank accounts, and annual accounts, ITRs and confirmations. The AO had issued Notices to shareholders from whom capital was received. They responded to notices once they came to know about them and filed evidences about their investments, ITRs, Bank Accounts and source of their source. Therefore, sufficient evidence existed on the record of the AO to prove the identity of shareholders, their creditworthiness, genuineness of the transactions and even sources of their money were proved. Thus, the onus cast upon the appellant stood discharged. Assessing Officer has not brought any material on record which in any manner displaces the evidence filed by the appellant, its shareholders and others and therefore, application of section 68 is fundamentally flawed in the light of aforesaid decisions. 4.5 All these facts established that the share capital received by the appellant company is from explained sources and the same has been received from the group companies. The transactions of the share capital are within the group companies and there is no evidence to establish that the appellant company has received any accommodation entry of share capital or any unexplained funds. In the assessment order there is no evidence brought on record by the AO to support its finding about the unexplained share capital. 4.6 It is clear that evidence has been furnished which shows the money was available with the investor- companies from previous unimpeachable transactions done in the course of business, which constitutes the sources of the subscribing companies. No adverse statement exists on record about mere providing of entries. Thus, it is clear that the explanation of the appellant has been rejected without any proper argument or by bringing on record any contradictory evidence. 4.7 On careful perusal of the details/documents filed by the appellant in support of receipt of share application money, I am of the considered view that the appellant has

16 ITA No. 3644/Del/2024 MGM Realtors Pvt. Ltd. proved genuineness of the share applicants by filing the necessary documents/details, thereby, proving identity and credit worthiness of the persons concerned and accordingly the genuineness of the transactions was proved. 4.8 The scrutiny selection guidelines are administrative instructions given by the CBDT to the Assessing Office and it is not an appealable section u/s 246A of the Act. If there is any violation in sending the statutory notice as per law that can be challenged but not the procedure of scrutiny selection which is not made appealable under the Act. 4.9 Thus after considering the entire evidence submitted by the appellant before me I find that the appellant has more than sufficiently discharged its onus as envisaged under the provisions of section 68. 11. We have gone through the finding of the ld. CIT(A) and also examined the factual matrix and the legal precedents referred in the impugned order, we are convinced that the assessee has successfully established through sufficient evidence/material with respect to the identity of the share applicants, their creditworthiness as well as genuineness of the transactions. The ld. CIT(A) has very meticulously examined the entire material on record and has rightly concluded that the assessee has sufficiently discharged the onus envisaged u/s 68 of the Act. The Assessing Officer could not being material contrary to the documents and the evidence produced by the assessee in support of its case.

12.

Having regard to the totality of the facts and circumstances of the case, we are of the considered view that the Assessing Officer was not justified in treating the share

17 ITA No. 3644/Del/2024 MGM Realtors Pvt. Ltd. capital and share premium received by the assessee as unexplained cash credits u/s 68 of the Act. The ld. CIT(A) has passed a well-reasoned and speaking order after appreciating the entire evidence available on record. We, therefore, find no reason to interfere with the well-reasoned order of the ld. CIT(A). Accordingly, the order of the ld. CIT(A) deleting the addition of Rs.59,53,92,255/- made u/s 68 of the Act is hereby upheld, and all the grounds raised by the Revenue are hereby dismissed.

13.

In the result, the appeal of the Revenue is dismissed. Order Pronounced in the Open Court on 15/07/2026. Sd/- Sd/- (Renu Jauhri) (Raj Kumar Chauhan) Accountant Member Judicial Member Dated: 15/07/2026 *Subodh Kumar, Sr. PS* Copy forwarded to: 1. Appellant 2. Respondent 3. CIT 4. CIT(Appeals) 5. DR: ITAT ASSISTANT REGISTRAR

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