DY. COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE -3(3), MUMBAI, MUMBAI vs. AVAADA VENTURES PRIVATE LIMITED, MUMBAI

PDF · subscribers
ITA 4931/MUM/2026Status: DisposedITAT Mumbai10 July 2026AY 2011-123 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 assessee had discharged its initial burden by furnishing documentary evidence of the immediate creditor's identity, creditworthiness, and genuineness of the transaction. The assessee cannot be expected to explain the source of funds of upstream entities with whom it had no direct relationship.

What were the facts?

The Assessing Officer made an addition of Rs. 14,70,000/- treating it as an unexplained cash credit from M/s. Gangabase Waters Pvt. Ltd. This was based on information about alleged accommodation entries routed through multiple entities.

What were the issues?

Whether the assessee is required to explain the source of funds of entities in the upstream layers of a transaction when the immediate creditor's identity and genuineness are established.

Which sections of the Income-tax Act were involved?

Section 68

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, MUMBAI BENCH “J (SMC

Before: SHRI NARENDER KUMAR CHOUDHRY & SHRI MAKARAND VASANT MAHADEOKAR

For Appellant: Ms. Khushali Desai, CA
For Respondent: Ms. Jayshree Thakur, SR. D.R
Hearing: 10.07.2026Pronounced: 10.07.2026

IN THE INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCH “J (SMC)”, MUMBAI

BEFORE SHRI NARENDER KUMAR CHOUDHRY, JUDICIAL MEMBER And SHRI MAKARAND VASANT MAHADEOKAR, ACCOUNTANT MEMBER

ITA No.4931/M/2026 Assessment Year: 2011-12

DY. COMMISSIONER OF AVAADA VENTURES INCOME TAX, CENTRAL PRIVATE LIMITED, CIRCLE -3(3), MUMBAI, 406, 4TH FLOOR, 406 4TH FLOOR, KAUTILYA HUBTOWN SOLARIS, N S Vs. BHAWAN, BANDRA KURLA PHADKE MARG, ANDHERI COMPLEX, BANDRA (E), EAST WEST FLYOVER MUMBAI-400051, MUMBAI-400069, MAHARASHTRA MAHARASHTRA PAN – AAKCS9700L (Appellant) (Respondent) Present for: Assessee by : Ms. Khushali Desai, CA Revenue by : Ms. Jayshree Thakur, SR. D.R.

Date of Hearing : 10.07.2026 Date of Pronouncement : 10.07.2026

O R D E R Per : Narender Kumar Choudhry, Judicial Member: This appeal has been preferred by the Assessee against the order dated 26.02.2026, impugned herein, passed by the Ld. Commissioner of Income Tax (Appeals) 51, Mumbai (in short Ld. Commissioner) u/s 250 of the Income Tax Act, 1961 (in short ‘the Act’) for the A.Y. 2011-12.

2 ITA No.4931/M/2026 AVAADA VENTURES PRIVATE LIMITED 2. In the instant case, the Assessing Officer made an addition of Rs. 14,70,000/- under section 68 of the Act, by treating the amount received from M/s. Gangabase Waters Pvt. Ltd. as unexplained cash credit, primarily on the basis of information received from the Investigation Wing, Kolkata, regarding alleged accommodation entries routed through multiple layers of entities.

3.

According to the Assessing Officer, cash was initially deposited in the bank account of the first-layer entity, thereafter, transferred through successive entities, and, ultimately, reached M/s. Gangabase Waters Pvt. Ltd., which, in turn, advanced the amount to the Assessee.

4.

We observe from the impugned order that the Assessee had furnished complete documentary evidence establishing the identity and creditworthiness of the immediate creditor, the genuineness of the transaction, confirmations, and one-to-one correlation of the funds received. Thus, the Assessee duly discharged the initial burden cast upon it under section 68 of the Act.

5.

The Ld. Commissioner, on consideration of the aforesaid facts and documentary evidence, rightly held that, in the absence of any direct nexus between the Assessee and the entities constituting the earlier layers of the alleged transactions, the Assessee could not be expected to explain the source of funds of the entities with whom it had no direct relationship or proximity. Once the Assessee had satisfactorily established the identity and creditworthiness of the immediate creditor, and the genuineness of the transaction, no further burden could be imposed upon it to explain the upstream movement of funds.

3 ITA No.4931/M/2026 AVAADA VENTURES PRIVATE LIMITED

6.

Thus, considering the peculiar facts and circumstances in totality, we find ourselves in agreement with the aforesaid findings of the Ld. Commissioner, and see no reason to interfere therewith. Accordingly, the Revenue’s appeal is dismissed.

7.

In the result, the appeal filed by the Revenue is dismissed. Order pronounced in the open court on 10.07.2026.

Sd/- Sd/- (MAKARAND VASANT MAHADEOKAR) (NARENDER KUMAR CHOUDHRY) ACCOUNTANT MEMBER JUDICIAL MEMBER (ANKIT SWARNKAR) Private Secretary Copy to: The Appellant The Respondent The CIT, Concerned, Mumbai The DR Concerned Bench

//True Copy// By Order

Dy/Asstt. Registrar, ITAT, Mumbai.

More judgments on Section 68

All 29,931 judgments and leading authorities on Section 68 →

Recent GST High Court judgments

Search GST case law →