YESMAN INFIN PRIVATE LIMITED,MUMBAI vs. DCIT 8(3)(4), MUMBAI

आयकरअपीलीयअिधकरण�ायपीठमुंबईम�। IN THE INCOME TAX APPELLATE TRIBUNAL “J (SMC)” BENCH, MUMBAI BEFORE SHRINARENDER KUMAR CHOUDHRY, JM & SHRI ARUN KHODPIA, AM I.T.A. No.8565/Mum/2025 (Assessment Year: 2008-09) M/s. Yesman Infin Private DCIT, Circle 8(3)(4) Limited Aayakar Bhavan, Maharshi Karve Office No.20, 2nd floor, 59, Vs. Road, Mumbai-400020 Nakoda Street, Tamba Kanta, Mumbai-400003 PAN: AAACY1384Q Assessee- अपीलाथ� / Appellant Revenue-��थ�/ Respondent :

Assesseeby : Shri Vimal Punmiya : Shri Pankaj Kumar (CIT-DR)/ Revenueby Shri Aditya Rai (SR. DR) : 20.04.2026 Date of Hearing Date of Pronouncement : 13.07.2026

O R D E R Per Arun Khodpia, AM: The captioned appeal is preferred by the assessee, against the order of the Commissioner of Income Tax Appeals, ADDL/JCIT(A), Panaji [in short, “the Ld. CIT(A)”], dated 16.10.2025 for the Assessment Year (AY) 2008-09, arises from the assessment order under section 143(3) r.w.s. 147 of the Income Tax Act, 1961 [in short, “the Act”] dated 23.03.2016, passed byIncome Tax Officer Ward 8(3)(4), Mumbai [in short, “the Ld.AO”]. The grounds of appeal raised by the assessee are as under:

ITA No. 8565/Mum/2025 Yesman Infin Private Limited “Reopening of Assessment Bad in Law i. On the facts and in the circumstances of the case and in law, the learned. Commissioner of Income Tax (Appeals) has erred in upholding the validity of re-assessment proceedings initiated under Section 147 of the Income-tax Act, 1961, without any fresh tangible material and based merely on borrowed satisfaction, rendering the reassessment proceedings bad in law, void ab initio, and without jurisdiction. Non-application of mind by Assessing Officer ii. On the facts and in the circumstances of the case and in law, the learned Commissioner of Income Tax (Appeal) failed to appreciate that the reasons recorded by the assessing officer did not establish any live-link between the material and the belief of escapement of income nor did the assessing officer apply his own independent mind as required by law. Addition u/s. 68-unjustified iii. On the facts and in the circumstances of the case and in law, The learned Commissioner of Income Tax (Appeal) erred in confirming the addition of Rs. 33,49,500 u/s 68 of the Income-tax Act, 1961 without appreciating that the appellant had fully discharged the onus by establishing the identity, creditworthiness and genuineness of all the investor companies through complete documentary evidences placed on record. Ignoring evidence of creditworthiness iv. On the facts and in the circumstances of the case and in law, the learned Commissioner of Income Tax (Appeal) erred in ignoring the audited financial statements, bank statements, confirmations, PAN, ITR acknowledgements and ROC records of all investor companies, all of which conclusively establish their creditworthiness far in excess of the sums invested. Ignoring compliance by investor companies v. On the facts and in the circumstances of the case and in law, The learned Commissioner of Income Tax (Appeal) erred in ignoring the fact that all investor companies duly complied with notices issued u/s 133(6) and confirmed the investments, thereby independently establishing genuineness of the transactions. No link with Shri Pravin Kumar Jain vi. On the facts and in the circumstances of the case and in law, The learned Commissioner of Income (Appeal) erred in sustaining the addition by incorrectly assuming that the investors were controlled by Shri Pravin Kumar Jain, even though he was neither a director nor a shareholder in any of the investor companies during the relevant period when the investments were made.

ITA No. 8565/Mum/2025 Yesman Infin Private Limited Non-grant of Cross-Examination and Violation of Natural Justice vii. On the facts and in the circumstances of the case and in law, the learned Commissioner of Income Tax (Appeal) erred in confirming the additions made by the Assessing Officer without ensuring that the appellant was granted the opportunity to cross-examine Shri Pravin Kumar Jain or any other third party whose statementswere relied upon thereby violating the principles of natural justice. Reliance on retracted statement viii. On the facts and in the circumstances of the case and in law, the learned Commissioner of Income Tax (Appeal) erred in relying on the alleged statement of Shri Pravin Kumar Jain, even though the said statement had been retracted, and no independent investigation was conducted to corroborate the earlier statement. Failure to conduct enquiry ix. On the facts and in the circumstances of the case and in law, the learned Commissioner of Income Tax (Appeal) failed to appreciate that the assessing officer did not conduct any independent enquiry, did not disprove the evidences filed by the appellant and made the addition solely on unverified Investigation Wing information and assumptions. No adverse material confronted x. On the facts and in the circumstances of the case and in law, the learned Commissioner of Income Tax (Appeal) erred in confirming the addition despite the fact that no adverse material, document or statement relied upon by the assessing officer was ever confronted to the appellant. Perverse and unsustainable findings xi. On the facts and in the circumstances of the case and in law, the findings of the learned commissioner of Income Tax (Appeal) are perverse, contrary to facts on record, contrary to binding judicial precedents and deserve to be set aside. xii. The appellant craves to add, amend or alter the grounds of appeal at the time of or before the hearing of appeal.” 2. Briefly stated, the case of assessee was re-opened u/s 147 on the basis of information from investigation wing that the assessee entered into bogus purchase/sales transactions with the entities, wherein the assessee is the beneficiary of bogus purchase/sales provided by concerns managed by Shri

ITA No. 8565/Mum/2025 ITA No. Yesman Infin Private Limited Infin Private Limited Praveen Kumar Jain, a hawala dealer involved in the business of providing a hawala dealer involved in the business of providing a hawala dealer involved in the business of providing accommodation entries to various beneficiaries. During the year under accommodation entries to various beneficiaries. During the yea accommodation entries to various beneficiaries. During the yea consideration, the assessee is one of the beneficiaries having received share consideration, the assessee is one of the beneficiaries having received consideration, the assessee is one of the beneficiaries having received application money from following concerns: application money from following concerns:

ITA No. 8565/Mum/2025 Yesman Infin Private Limited it is requested to issue fresh notices u/s 133(6) of the Act. The Ld. AO, then issue fresh notices u/s 133(6) to the aforesaid two concerns, where there is a difference in postal address, responded by the two entities and also by the third entity who had not responded earlier. The Ld. AO, then examined the documents furnished by the concerned investors, have discussed the modus operandi in terms of accommodation entries obtained by the assessee, had produced the statements of Shri Praveen Kumar Jain and accordingly was of the opinion that the explanations furnished by the assessee are not satisfactory and had concluded as under: “To conclude the matter with reference to assessee's case:  Entire money into the company was introduced through fictitious entities and improper means.  The assessee is the ultimate beneficiary of the funds routed to it,  Therefore the transactions reflected in assessee's books are artificial, fictitious and sham.”

ITA No. 8565/Mum/2025 Yesman Infin Private Limited “7.0 There are seven (07) grounds of appeal raised by the appellant which are adjudicated on the basis of merit of the case, facts, written submission filed by the appellant and information available on record as under: 7.1 Ground no.01 raised by the appellant is related with the issue of alleged violation of natural justice and non-speaking order which is adjudicated on the basis of facts of the case, merit and impugned assessment order as under: Upon careful perusal of impugned assessment order and information available or record it is seen that the appellant has contended that the order dated 23.03.2016 passed under section 143(3) r.w.s. 147 is non-speaking and contrary to the principles of natural justice, as the Assessing Officer allegedly ignored the written submissionsand failed to state reasons for rejecting the same. On a careful perusal of the assessment order, it is observed that the Assessing Officer has recorded a detailed narration of the information received from the Investigation Wing, the reasons for reopening, the issue of notices under sections 142(1) and 133(6), and the consideration of replies received from the alleged investor companies. The order also sets out the factual matrix and reasoning for holding the share-application money to be unexplained. Thus, the order cannot be characterized as non-speaking merely because it does not accept the appellant's explanation. The Hon'ble Bombay High Court in CIT v. Premkumar Arjundas Luthra (HUF) [2016] 240 Taxman 133 (Bom) held that an order cannot be termed non-speaking if it discusses the relevant material and applies its mind, even though it may not deal with each contention separately. Similarly, in ITO v. M. Pirai Choodi [2011] 334 ITR 262 (SC), the Hon'ble Supreme Court held that once reasonable opportunity is given and the assessee fails to furnish satisfactory evidence, the order cannot be vitiated for violation of natural justice. In the present case, multiple opportunities were granted. The notices were duly served, and the appellant filed letters dated 04.01.2016 and 08.03.2016, which were considered. The AO analysed the information but found the evidence inadequate. Therefore, the allegation of denial of natural justice is baseless. The principle of audi alteram partem was fully complied with. Accordingly, ground no.01 raised by the appellant being devoid of merit is dismissed herewith. 7.2 Ground no.02 to 06raised by the appellant are related with the issue of addition of Rs.33,49,500/- being share application money which are adjudicated on the basis of facts of the case, merit and impugned assessment order as under: Upon careful perusal of impugned assessment order and information available or record it is seen that these grounds are interconnected and are, therefore, adjudicated together. The issue is whether the addition of Rs.33,49,500/- received as share- application money from the following companies was justified: S. Name of Investor Amount No. 1 Kush Hindustan Enterprises Ltd. 9,57,000 2 Nakshatra Business Pvt. Ltd. (Hema Trading Co. 9,57,000 Pvt. Ltd.) 6

ITA No. 8565/Mum/2025 Yesman Infin Private Limited 3 Olive Overseas Pvt. Ltd. (Realgold Trading Co. 4,87,500 Pvt. Ltd.) 4 Olive Overseas Pvt. Ltd. (Realgold Trading Co. 9,57,000 Pvt. Ltd.) 33,49,500 Total The appellant claimed that these amounts represented genuine share-application money received through banking channels, supported by confirmations and PANs, and that notices issued under section 133(6) were duly replied to. (a) Onus under Section 68 Section 68 casts a statutory obligation on the assessee to prove: 1. the identity of the creditor/investor, 2. the creditworthiness of the investor, and 3. the genuineness of the transaction The initial burden lies squarely on the assessee. Only after the assessee furnishes satisfactory proof on all three parameters does the burden shift to the department. (b) Findings on Facts The Investigation Wing unearthed that the above companies were controlled by Shri Pravin Kumar Jain, a well-known accommodation-entry operator, providing bogus share-capital entries through a web of shell entities. The AO issued independent notices under section 133(6) to verify the transactions. The responses received were perfunctory and merely confirmed the transactions without furnishing any corroborative evidence such as audited financial statements, income-tax returns, bank statements evidencing fund flow, or details of source of funds. The appellant did not produce any of the directors or principal officers of these entities for examination. No proof was furnished to show any business relationship, correspondence, or negotiation preceding the alleged investment. The pattern of multiple entries of identical amounts routed through common intermediaries strongly supports the inference that the impugned credits were arranged entries lackingcommercial substance. (c) Legal Position and Judicial Precedents The Supreme Court in CIT v. P. Mohankala 120071 291 ITR 278 (SC) held that when the explanation offered by the assessee about the nature and source of credit is not CIT [19951 214 ITR 801 (SC), the Court laid down the test of human probabilities. satisfactory, such credits are rightly treated as income. Likewise, in Sumati Dayal v. observing that the apparent must be considered in light of surrounding circumstances. The Delhi High Court in CIT v. Nova Promoters &Finlease (P) Ltd. [2012] 342 ITR 169 (Del) and CIT v. NR Portfolio (P) Ltd. [2014] 42 taxmann.com 339 (Del) held that 7

ITA No. 8565/Mum/2025 Yesman Infin Private Limited filing of confirmatory letters or PANs is not sufficient where surrounding evidence suggests the entities are mere name-lenders. The genuineness must be proved by demonstrating real financial capacity and actual movement of funds. Further, in CIT v. Nipun Builders & Developers (P) Ltd. [2013] 350 ITR 407 (Del), it was held that the AO is justified in making addition under section 68 when the assessee fails to establish the creditworthiness of the share-applicants and the genuineness of the transaction, It is pertinent that the Investigation Wing's findings have been upheld in numerous cases involving Shri Pravin Kumar Jain group, such as M/s. Nandini BuildconPvt. Ltd. (ITAT Mumbai) and M/s. Kamdhenu Infrastructure Ltd. (ITAT Delhi), where similar nuine. share-application transactions were held to be non-genuine. (d) Distinguishing the Case Relied Upon by the Appellant The appellant has relied upon ITO v. Deep Darshan Properties Pvt. Ltd. (ITAT Mumbai). However, in that case, the assessee had produced the bank statements and audited financials of investors which established their identity and financial capacity. In contrast, in the present case, the investors are proven shell entities lacking independent business existence. Therefore, the cited decision is factually distinguishable and offers no assistance to the appellant. (e) Principle of Human Probabilities Considering the quantum of share-application money, the complete absence of investor verification, and the lack of evidence regarding any due diligence by the appellant before accepting such investments, the transaction defies normal commercial behaviour. Applying the test of human probabilities as propounded inSumati Dayal v. CIT (supra) and CIT v. Durga Prasad More [1971] 82 ITR 540 (SC). the AO's conclusion that the amounts represent accommodation entries merits acceptance. In light of the foregoing analysis, it is concluded that: The identity of the share-applicants remains doubtful. Their creditworthiness is unproved. The genuineness of the transaction is not established. The appellant has thus failed to discharge the onus under section 68 of the Act. The Assessing Officer was justified in treating the entire sum of Rs.33,49,500/- as unexplained cash credit. Accordingly, Grounds Nos. 02 to 06 being devoid of merit are dismissed herewith. 8.0 In the result, the appeal filed by the appellant for the AY 2008-09 is dismissed herewith.”

ITA No. 8565/Mum/2025 Yesman Infin Private Limited 7. Being aggrieved with the aforesaid decision of Ld. CIT(A), the assessee is in appeal before us.

ITA No. 8565/Mum/2025 Yesman Infin Private Limited order are perverse and unsustainable in the eyes of law. It is further submitted that the investments made by the respective shareholders are as per their capabilities as they have invested only a small percentage of their net worth in the assessee company. Based on aforesaid submissions, it was the prayer that the addition made u/s 68 of the Act by the Ld. AO and confirmed by the Ld. CIT(A) was arbitrary finding, perverse in nature and therefore liable to be deleted.

ITA No. 8565/Mum/2025 Yesman Infin Private Limited rebuttal. The addition was made entirely on the basis of statements of third party which were also retracted by the said party, therefore, the addition made on the basis of reliance on the third-party statement is bad in law and liable to be deleted. The Ld. AR submitted that the shareholders have sufficient net worth to make investment in the assessee-company, on the other hand the Ld. AO noted that the shareholder companies have received certain amount on a day and on the same day such amounts were transferred to the assessee-company, which is in accordance with the modus operandi described by the Ld. AO in the assessment order and, therefore, it is well established that such transactions are bogus and accommodation entries only.

ITA No. 8565/Mum/2025 Yesman Infin Private Limited directed to substantiate its contentions in the set aside proceedings by way of corroborative evidence and by producing the investor entities, if so necessitates.

ITA No. 8565/Mum/2025 Yesman Infin Private Limited latter doctrine is known as audi alteram partem. It is on this principle that natural justice ensures that both sides should be heard fairly and reasonably. A part of this principle is that if any reliance is plated on evidence or record against a person then that evidenceor record must be placed before him for his information, comment and criticism. That is all that is meant by the doctrine of audi alteram partem, that no party should be condemned unheard. No natural justice requires that there should be examination is procedural justice. It is governed by rules of evidence. It is the kind of a formal cross-examination. Formal cross-creation of Courts and not a part of natural justice but of legal and statutory justice. Natural justice certainly includes that any statement of a person before it is accepted against somebody else, that somebody else should have an opportunity of meeting it whether it (sic), by way of interrogation or by way of comment does not matter. So long as the party charged has a fair and reasonable opportunity to see, comment and criticise the evidence, statement or record on which the charge is being made against him the demands and the test of natural justice are satisfied. Cross-examination in that sense is not the technical cross- examination in a Court of law in the witness-box." ITAT has further held that, "As regards the dictum 'audi alteram partem' the assessee's basic contention was that the statements of witnesses and materials which were relied upon by the Assessing Officer in the assessment order to reach the conclusions and findings which were adverse to the assessee should have been disclosed to the assessee and the witnesses should have been offered for cross-examination. The right to cross- examine the witness who made adverse report is not an invariable attribute of the requirement of the said dictum. The principles of natural justice do not require formal cross- examination. Formal cross-examination is a part of procedural justice. It is governed by the rules of evidence, and is the creation of Court. It is part of legal and statutory justice, and not a part of natural justice, therefore, of law that the revenue could not rely on any evidence which had not been subjected to cross-examination. However, if a witness has given directly incriminating statement and the addition in the assessment is based solely or mainly on such statement, in that eventuality it is incumbent on the Assessing Officer to allow cross- examination. Adverse evidence and material, relied upon in the order, to reach the finality, should be disclosed to the assessee. But this rule is not applicable where the material or evidence used is of collateral nature." 6.3 In the case of ITO v. M. Pirai Choodi 334 ITR 262where the High Court had set aside the order of assessment, it was held by the hon'ble Supreme Court that the High Court should not have set aside the entire ground that no opportunity to cross-examine wasgranted, as sought by the assessee and the High Court should have directed the Assessing Officer to grant an opportunity to the assessee to cross-examine the concerned witness. 6.4 Further, the CIT(A) who has co-terminus powers with the AO cannot delete the addition on the ground that opportunity of cross-examination was not given to the assessee, rather he should give this opportunity to the assessee even at appellate stage, if it is crucial to decide the appeal and there is no other material evidence with the Assessing Officer other than the statement of the witness. Rules of evidence do not govern the income-tax proceedings strictly, as the proceedings under the Income Tax Act are not judicial proceedings in the sense in which the phrase "judicial proceedings" is ordinarily used. The AO is not fettered or bound by technical rules of evidence contained in the Indian Evidence Act, and he is entitled to act on material 13

ITA No. 8565/Mum/2025 Yesman Infin Private Limited which may or may not be accepted as evidence in a court of law. However, the principles of natural justice need to be applied by the authorities during assessment and appellate proceedings. The hon'ble Supreme Court in the case of Andaman Timber Industries v Commissioner of Central Excise, Civil Appeal No. 4228 of 2006 has considered that if there was no material with the Department on the basis of whichit could justify its action, and if the statement of the two witnesses who were unknown to the appellant was the only basis of issuing the Show Cause Notice, right to cross- examination has to be given. 7. Considering the aforesaid judgments and also in view of the specific request of the assessee to remand the whole issue and also for cross examination of the witnesses of the Revenue, we are of the view that the AO remained under a statutory obligation to facilitate a cross-examination. The assessee could have dispelled the material that the AO acted upon to disprove the authenticity of the impugned transaction only if it was provided an opportunity to cross-examine. Accordingly, we set aside the appellate order and restore the entire issue involving merits with a direction to the AO to allow cross examination to the assessee of the above named person/witnesses and frame the assessment de novo after allowing sufficient opportunity of hearing to the assessee.. 7.1 We may make it clear that remanding the matter should not be in any manner construed to deciding the issue on merits. The AO would be at liberty to decide the issue after affording adequate opportunity of hearing to the assessee in this regard.8. In so far as the other grounds of appeal are concerned, we do not deem it necessary to delve into them since the entire assessment order is required to be framed de novo by the AO. The assessee would be at liberty to make fresh submissions or file additional evidences as deemed necessary in this regard. 8. In so far as the other grounds of appeal are concerned, we do not deem it necessary to delve into them since the entire assessment order is required to be framed de novo by the AO. The assessee would be at liberty to make fresh submissions or file additional evidences as deemed necessary in this regard. 9. In the result, appeal of the assessee is allowed for statistical purposes.”

ITA No. 8565/Mum/2025 Yesman Infin Private Limited 17. In result, the appeal of assessee is allowed for statistical purposes, in above terms.

Order pronounced in the open court on 13-07-2026.

Sd/- Sd/- (ARUN KHODPIA) (NARENDER KUMAR CHOUDHRY) JUDICIAL MEMBER ACCOUNTANT MEMBER

Mumbai, Dated : 13-07-2026. Ankit K., Sr. PS Copy of the Order forwarded to : 1. The Appellant 2. The Respondent 3. DR, ITAT, Mumbai 4. Guard File 5. CIT

BY ORDER,

(Dy./Asstt. Registrar) ITAT, Mumbai