DCIT CC 5.2, MUMBAI vs. AGV CONSULTANTS, MUMBAI

IN THE INCOME-TAX APPELLATE TRIBUNAL, MUMBAI “A” BENCH, MUMBAI BEFORE SHRI ANIKESH BANERJEE, JUDICIAL MEMBER AND SHRI BIJAYANANDA PRUSETH, ACCOUNTANT MEMBER ITA No.9516/MUM/2025 (AY: 2019-20) DCIT CC 5(2) vs. AGV Consultants Room No. 427 4th Floor Kautilya Unit 1002/10th Floor Landmark Bhawan BKC Mumbai-400051. Paltinum Bldg, Bandra, Mumbai- 400050. PAN/GIR No: AAZFA0780A (Appellant) (Respondent) Assessee by Neelkanth Khandelwal, Advocate (Virtually appear ) Revenue by Shri Manoj Kumar (CIT-DR) Date of Hearing 15.07.2026 Date of Pronouncement 17.08.2026 O R D E R PER BIJYANANDA PRUSETH, AM:

This appeal filed by the revenue emanates from the order passed u/s250

of the Income-tax Act, 1961 (in short, ‘Act’) by the Commissioner of Income Tax,

Appeal-53, Mumbai [in short, ‘CIT(A)’], dated 15.10.2025 for the assessment year

(AY) 2019-20.

“1. Whether, on the facts and circumstances of the case and in law, the ld. CIT(A) erred in deleting the addition of Rs. 97,87,88,465/ made by the AO u/s68 read with section 115BBE of the Income-tax Act, 1961, on account of unexplained and unsubstantiated credits/receipts, ignoring the fact that the assessee firm failed to furnish the names of persons from several entities with whom it was interacting, which is mandatory in the consultation process?

ITA No.9516/MUM/2025 AGV Consultants details and supporting documents to prove that services were actually rendered in respect of which consultancy income was claimed to have been received?"

ITA No.9516/MUM/2025 AGV Consultants that section 68 was inapplicable to business receipts. Holding that the assessee had failed to establish the genuineness of the consultancy and commission receipts, the AO treated the aggregate receipts of Rs.97,87,88,465/- as unexplained cash credits u/s 68 r.w.s. 115BBE of the Act and completed the assessment u/s143(3) r.w.s. 147 of the Act by determining total income at Rs.97,99,79,180/-. 4. Aggrieved by the order of AO, the assessee filed appeal before the CIT(A). The CIT(A) dismissed the grounds relating to reopening u/s 147 of the Act. He, however, following the orders passed in the assessee's own case for A.Ys. 2016- 17, 2017-18, 2018-19, 2020-21 and 2021-22 by the Tribunal in ITA Nos.4872, 4878, 4866 & 4865/Mum/2023 dated 27.05.2025, deleted the additions for the above years and allowed the appeals. He held that although the partner could not furnish complete details during the survey, he had consistently maintained that consultancy services were actually rendered. The CIT(A) noted that the assessee had subsequently furnished service agreements, invoices and confirmed ledger accounts before the Investigation Wing as well as during the assessment proceedings. Since identical additions made under section 68 in the assessee's own case for the earlier and subsequent assessment years had already been deleted by the appellate authorities and affirmed by the Tribunal, the CIT(A) deleted the addition of Rs.97,87,88,465/- made u/s 68 of the Act. 5. Aggrieved by the order of CIT(A), the revenue filed appeal before the

Tribunal. The Ld. DR filed written submissions contending that the earlier

consolidated order of the Tribunal in the assessee's own case cannot be

ITA No.9516/MUM/2025 AGV Consultants mechanically applied to the entire addition for A.Y. 2019-20. It was submitted

that as per the party-wise statement furnished by the assessee, only 77% of the

receipts relate to recurring parties, whereas 23% of the receipts amounting to

Rs.22,46,40,000/- pertain to parties not appearing in any AY covered by the

earlier Tribunal order and, therefore, require independent examination. The Ld.

DR further submitted that mere recurrence of a party's name does not establish

identity of transactions, as the assessee has not demonstrated that the nature of

services, agreements, projects, or supporting evidence are identical to those

considered in the earlier years. It was also pointed out that the comparative

statement includes AY 2022-23, which was not covered by the earlier

consolidated order. Further, the statement is not supported by documentary

evidence such as agreements, correspondence, deliverables or client

confirmations, and there is also a difference of Rs.1,010/- between the receipts

reflected in the statement and the disputed addition, which requires

reconciliation. Accordingly, the revenue submitted that the benefit of the earlier

Tribunal order should be restricted only to transactions whose factual identity is

established. Without prejudice, it was requested that the matter be restored to

the file of the AO for the limited purpose of verification.

ITA No.9516/MUM/2025 AGV Consultants Nos.4872, 4878, 4866 & 4865/Mum/2023 dated 27.05.2025. He submitted that merely because the entire receipt is not from the same parties, the same cannot be the ground for making the addition. He submitted that 77% of the receipt is from recurring parties which itself establishes the claim of the assessee. He submitted that the nature and scope of the services were identical to those of the preceding and succeeding two years each. Hence, the addition made by the AO was not correct, which has been rightly deleted by the CIT(A). 7. We have heard both sides and perused the materials on record. We find that this is recurring issue and it had come up for consideration before the Tribunal in assessee’s own case for two preceding AYs i.e. 2017-18 and 2018-19 as well as two succeeding AYs i.e. 2020-21 and 2021-22. In all these years, the CIT(A) had deleted the additions made by the AO u/s 68 r.w.s 115BE of the Act. During the proceedings before the Tribunal, both parties had filed written submissions which were extracted in the order of the Tribunal. After considering the submissions of both parties, the Tribunal decided the issue in favour of the assessee by observing as under: “5. We have heard the counsels for both the parties, perused the material placed on record, judgement cited before us, and also the orders passed by the revenue authorities. 6. From the records, we noticed that a survey action in the case of assessee was carried out. It was noticed that during the survey, statements of one Shri Vincent Albuquerque partner of M/s AGV Consultant was recorded u/s 131 of the Act along with the statement of other partners. Wherein, it was submitted that they have earned business income from consultancy services. In this regard assessee has provided on record a list of entities to whom consultancy services were provided. However, AO was of the view that assessee could not provide other details regarding the nature of specific services, contract, agreements or details

ITA No.9516/MUM/2025 AGV Consultants of communications. Therefore, the income of the assessee was taxed as ‘unexplained credit’ u/s 68 of the Act. 7. We have also perused the statement of Shri Vincent Albuquerque, the managing partner who has always been consistent in his statement that the assessee had been providing consultancy service, and the said facts were reiterated before the survey team as well as before the investigation wing. The specific replies made by the partners is reproduced here in below: "Q.37 Ongoing through the above statement and the facts of the case, it is evident that you have not been speaking the truth. In this regard, may I again bring to your notice that your statement has been recorded under the provisions of section 131, wherein you are oath bound to speak truth. I am providing one more opportunity to you and giving you 15 minutes to think and go through the statement and speak truth. Ans. Ok sir Q.38 On-going through the above statement, it is evident that you have put up concocted story to make believe arrangement. You are asked to explain as to why your statements made hereinabove may not be treated as false. You are further asked to explain as to why the entire payment received by your firm should not be considered as un-explained receipt and treated as unexplained credits into you books of accounts u/s 68 of IT Act and taxed @ 60% because the genuineness of the transaction is not established. Ans. Sir, even though I couldn't not provide valid explanation against the receipts received byM/s AGV Consultants, I would like to state that we have been genuinely rendering services to our clients. Furthermore, I have been speaking truth and have not put up any concocted story. Regarding, Income tax Act and its implication, I am not aware of any consequences. My CA would be rather equipped to answer regarding such provisions in Income Tax Act." 8. Admittedly, in the course of survey no ‘incriminating material’ was found, which is clear from the fact that the AO could not make any reference of incriminating material in the assessment order. Whereas evenSection 68 basically applies to unexplained “Cash credit” like loans, deposits and advances, share capital, etc and the core condition for applicability of deeming provisions of section 68 is “Where any sum is found credited in the books of an assessee……” has to be satisfied and the word “sum” means “amount of money” whereas in the case of the assessee it is “amount of income” (Gross income) which has been duly considered as income while determining total income on which tax has already been paid while filing the return of income and as such the same cannot be considered as “any sum” found credited in the books. Therefore in the absence of core condition being satisfied, the deemed provision of section 68 cannot be invoked in the case of the assessee. Thus in our view the income which has been credited in the books of account on which tax has already been paid, cannot be considered as “sum” found credited in the books. Even otherwise the books of account do not include Balance sheet and Profit and loss account as held in the case of J. K. Industries Ltd. V/s. Union of India 80 SCL 283 (SC).

ITA No.9516/MUM/2025 AGV Consultants 9. Further in our view, each and every credit in the books of an assessee does not fall within the ambit of section 68. Once there are sums credited in the books of an assessee they will reflect in the Balance sheet. It is automatic if there are credits reflected in the Balance sheet prepared on the basis of books. Once the credits are offered as income, therefore there is no basis and reasons to believe the same to be as ‘unexplained credit’ or ‘deemed income’. As the deemed provisions of section 68 are introduced to find ‘unexplained cash credit’ and not the disclosed income in the return of income which are duly considered in determining total income subject to income tax. 10. In our view, Section 115BBE deals with tax in certain special case and comes into play only and only where the assessed total income of an assessee includes any income reflected to in section 68 and other deeming sections. For the sake of better understanding, let us now ponder on the applicability of section 115BBE with reference to the provisions of section 68 dealing with unexplained cash credit. Section 68 provides inter alia that if any sum is found credited in the books of a tax payer and he either does not offer any explanation about the nature and source of such sum, or the explanation offered by him is not satisfactory in the opinion of Assessing officer, then such sum can be taxed as his income. 11. Now the question arises as to whether it means that the AO is vested with unfettered powers to reject any explanation, being not to his satisfaction. In fact, the Assessing officer is required to act ‘reasonable and just’ while framing any opinion surrounding the explanation offered by the tax payer. At the same time the taxpayer is nevertheless saddled with primary obligation to demonstrate the nature and source of any sum credited in the books. In our view, Section 115BBE is a machinery provision to levy tax on income and it should not enlarge the ambit of section 68 to create a deeming fiction to tax any income already credited/offered as income. Such recourse is unwarranted, keeping in view the objective of introducing section 115BBE more particularly when all the transactions are routed through normal banking channel. Even otherwise also, in the present case, in the post survey proceedings, the assessee had produced sufficient materials in order to establish prime facie the nature and source of consultancy income as discussed hereinabove and the same had been cross examined by the Investigation Wing calling information directly from the clients of the assessee. 12. It is quite important to mention here that the income has already been declared in the nature of ‘business income’ and as such the same in our view cannot be taxed under the deemed provision of section 68. Reliance in this regard is being placed upon the decision of ACT Central Circle-13 Mumbai v. Rahil Agencies, order dated 23 November, 2016, wherein the Tribunal held that section 115BBE does not apply to business receipts/business turnover and the operative portion of the order of the Tribunal is reproduced herein below:

ITA No.9516/MUM/2025 AGV Consultants “19. We have considered rival contentions and found that by applying provisions of section 115BBE the AO has declined set off of business loss against income declared during the course of survey/search. The provisions of section 115BE are applicable on the income taxable under section 68, 69, 69A, 69B, 69C or 69D of the Act. The income declared by the assessee is unrecorded stock of diamond found during the course of search. The assessee is in the business of diamond trade and such stock was part of the business affair of the company. Therefore, since income declared is in the nature of business income, the same is not taxable under any of the section referred above and accordingly section 115BBE has no application in case.” 13. In the case of Abdul Hamid v/s. ITO (117 taxmann.com 986 – Gauhati) the ITAT has held that section 115BBE does not apply to business receipts/business turnover. 14. Even during the investigation, the documents in the shape of service agreements with respective vendors, copies of sales invoices raised by the assessee on the respective vendors, copy of ledger account duly confirmed by the respective vendors were also placed on record. We also noticed that the same details were also furnished by the assessee during the course of assessment proceedings vide letter dated 29.10.2022. 15. A perusal of the details furnished by the assessee shows that consultancy income has been booked in respect of four parties namely Aura Designs, Balaji Symphony, Shankeshwar Infra Projects and S R Energy Consultants for the period relevant to AY 2016-17. The details furnished shows that service tax has been paid as per such invoices and TDS has been deducted on such remittances. Although the relevant details were not furnished by the assessee at the time of the survey, nothing bars the assessee from submitting the same subsequently. Unless there are evidences to show that such documents are doctored with or that the documents are not genuine in nature, they cannot be discarded, particularly when they are in relation to books of account already finalised and the transactions reflected therein correspond with the bank accounts. 16. Even as per facts, in this case, survey took place on 07.12.2020. However, the assessee had offered consultancy income over a period of time starting from AY 2016-17, the brief details of which are as under:- A.Y Return Consultancy Expenses Date of filing Income income claimed of return 2016-17 7,12,03,950 7,86,57,895 78,93,310 03.10.2016 2017-18 7,45,35,880 6,66,11,633 53,41,229 23.10.2017 2018-19 92,25,30,540 92,45,13,221 27,39,224 26.10.2018 2020-21 76,31,17,380 77,50,29,918 1,19,27,684 30.01.2021 2021-22 64,17,46,330 65,36,68,410 1,19,50,794 05.03.2022

ITA No.9516/MUM/2025 AGV Consultants 17. In the case of ACIT vs Grasim Industries Ltd in ITA No.1519/Mum/2002 for AY 1992-93 dated 17.11.2006, the Hon'ble ITAT held that "The task of the Tribunal would, therefore, be to analyse the materials relied on by both the sides and evaluate the relative merits and reliability. It is sometimes in the nature of a comparative exercise to measure the degree of reliability between the materials relied on by the revenue and the materials relied on by the assessee. This degree of reliability seems to be the crucial test in the present case in applying the principles of preponderance of probability. We think that this is the way to proceed to find a balance of convenience on which alone it might be possible for us to come to a fair decision.". Eventually, the Hon'ble Tribunal held that balance of convenience was apparently tilting in favour of the assessee and ruled as such. 18. Applying the above ratio, in the given set of facts before us, we are of the view that balance of convenience lies in favour of the assessee. Even if one were to assume that the appellant overcharged the recipients for the services rendered but that alone may not suffice to change the taxability of such receipts from business income to unexplained cash credits. The onus of proving that conditions of S. 37(1) were adequately fulfilled would continue to remain on such service recipients but as far as the appellant is concerned, the only onus is to show that these were business receipts and received in lieu of providing services. The assessee has been able to reasonably demonstrate its case in view of its submission referred to in the letter dt. 22.02.2021 before the DDIT and also the submissions made before the AO vide its various letters including the one dt. 14.02.2022. The invoices, confirmation, TDS records, agreement, etc. do establish the case of the appellant that such income is liable to be taxed as business/professional income and not u/s 68 of the Act. 19. As far as the expenses are concerned, they are in the range of upto 2% of gross receipts and are reflected in audited books. No specific discrepancy that they have not actually been spent for the business has been brought out. As regards the high profitability of the assessee, in the case of CIT vs Vesesh Infotechnics Ltd, 210 Taxman 522, the Hon'ble Karnataka HC has held that ‘it is perfectly possible for a software enterprise to establish a new unit at an investment of Rs.2.06 lakhs, make a sale of Rs.72.32 lakhs in 18 days and have profitability of 94.8%’. The Hon'ble HC has thus held that Revenue could not doubt the claim of the assessee. Under these circumstances, we are also of the view that the action of the AO in not allowing the expenses of the appellant cannot be sustained. 20. Even the AO being the investigator and adjudicator, could not bring on record any notices issued to the vendors who are flagship concerns of their fields, to verify the payments made by them on account of availing consultancy services. No statement of vendor or the persons who availed the consultancy of the assessee were called for or recorded and no reasonable explanation has been furnished by the revenue authorities before us. Even nothing has been

ITA No.9516/MUM/2025 AGV Consultants brought on record to prove that assessee was not doing any consultancy services and it is a case of unexplained credit. 21. No new facts or material has been brought on record before us during the appellate proceedings by the department in order to controvert or rebut the findings so recorded by Ld.CIT(A). Therefore, we find no reasons to interfere into or deviate from the lawful findings so recorded by Ld.CIT(A). Hence the grounds raised by the department stands dismissed.”

7.1 The facts of the present appeal are similar to the facts of the above cases

of the appellant for AYs 2017-18, 2018-19, 2020-21 and 2021-22. The addition in

those appeals were also made u/s 68 r.w.s. 115BBE of the Act. The CIT(A) has

relied on the decision of the Tribunal cited supra. The Ld. CIT-DR has not been able

to distinguish the above case on fact or in law. Hence, we do not find any infirmity

in the order of CIT(A), which we confirm. Accordingly, the grounds raised by the

revenue are dismissed.

Order is pronounced on 17.08.2026.

Sd/- Sd/- (ANIKESH BANERJEE) (BIJYANANDA PRUSETH) JUDICIAL MEMBER ACCOUNTANT MEMBER *Aniket Chand; Sr. PS MUMBAI Date: 17.08.2026 Copy of the Order forwarded to: 1. The Assessee 2. The Respondent 3. The CIT(A) 4. CIT 5. DR/AR, ITAT, MUMBAI 6. Guard File By Order

Assistant Registrar ITAT, MUMBAI 10