DCIT 14.1.1, MUMBAI vs. BLUEBERRY TRADING COMPANY PVT LTD, MUMBAI

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ITA 2283/MUM/2024Status: DisposedITAT Mumbai29 May 2026AY 2014-1510 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 deletion of the addition made by the Assessing Officer. It found that the assessee had provided sufficient documentary evidence to establish the identity, creditworthiness, and genuineness of the loan transactions, and the Assessing Officer failed to bring contrary material on record.

What were the facts?

The assessee received unsecured loans from two companies, Kuber Trexim Pvt. Ltd. and Wall Street Capital Market Pvt. Ltd. The Assessing Officer treated these loans as unexplained cash credits under Section 68, citing that the lender entities were controlled by the same promoters and operated from the same address, with investigations suggesting they provided accommodation entries.

What were the issues?

Whether unsecured loans received by the assessee from entities suspected of providing accommodation entries are genuine, and the correctness of disallowance under Section 14A.

Which sections of the Income-tax Act were involved?

Section 68,Section 14A

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, “B” BENCH, MUMBAI

For Appellant: Shri Nitesh Joshi, Advocate
For Respondent: Shri Swapnil Choudhari (Sr. AR)
Hearing: 06.04.2026Pronounced: 29.05.2026

IN THE INCOME TAX APPELLATE TRIBUNAL “B” BENCH, MUMBAI BEFORE SHRI SAKTIJIT DEY, VICE PRESIDENT AND SHRI PRABHASH SHANKAR, ACCOUNTANT MEMBER ITA No. 2283/Mum/2024 (Assessment Year: 2014-15) DCIT 14.1.1 Blueberry Trading Company Pvt. Room No. 432, 4th Floor, Ltd. Aayakar Bhavan, M. K. Road, Vs. C/62, Vibgyor Tower, Mumbai-400 020 Bandra Kurla Complex, Bandra (E), Mumbai-400 051 PAN/GIR No. (Appellant) : (Respondent) Appellant by : Shri Nitesh Joshi, Advocate Respondent by : Shri Swapnil Choudhari (Sr. AR) Date of Hearing : 06.04.2026 Date of Pronouncement : 29.05.2026 O R D E R Per Saktijit Dey, Vice President: This is an appeal by the Revenue against order dated 20.09.2024 passed by National Faceless Appeal Centre (‘NFAC’ for short), Delhi for the assessment year (A.Y. for short) 2014-15.

2.

In ground no.1, the department has challenged the deletion of addition of Rs.6,14,30,606/- made u/s. 68 of the Income Tax Act, 1961 (‘the Act’ for short).

3.

Briefly the facts are, the assessee is a resident corporate entity stated to be engaged in the business of real estate development and leasing of constructed premises, trading in share equities, future and options.

4.

For the assessment year under dispute, the assessee filed its return of income on 29.11.2014, declaring income of Rs.6,16,03,460/-. The return of income so filed by the assessee was selected for scrutiny.

2 ITA No. 2283/Mum/2024 (A.Y. 2014-15) DCIT vs. Blueberry Trading Company Pvt. Ltd. 5. In course of assessment proceeding, the Assessing Officer (A.O. for short) noticed that during the year under consideration, the assessee had received unsecured loans of Rs.5,63,39,550/- from M/s. Kuber Trexim Pvt. Ltd. and Wall Street Capital Market Pvt. Ltd. On further verification, he found that the assessee has repaid loan amounting to Rs.5,63,39,550/- availed in the earlier assessment year from Wall Street Capital Market Pvt. Ltd. and received fresh loan of the same amount from M/s. Kuber Trexim Pvt. Ltd. The A.O. observed, as per the information availed in official website of Ministry of Corporate Affairs, it was found that both M/s. Kuber Trexim Pvt. Ltd. and Wall Street Capital Market Pvt. Ltd. were having the same address and are controlled and managed by the same promoters/directors. Since, the aforesaid two entities shared a common address and were having common directors/promoters, the A.O. issued a commission to the Investigation Wing at Kolkata to verify the genuineness of the loan transaction. After conducting enquiry, the Investigation Wing, Kolkata furnished a report dated 29.04.2016 stating that no such concern operates from the premises. Further, the A.O. observed that the Investigation Wing, Kolkata over the years had conducted various enquiries in respect of similar entities and has found that they are engaged only in the business of providing accommodation entries of bogus unsecured loans, bogus purchase, bogus LTCG, etc. He observed, the outcome of such enquiry further revealed that the address in which the lender entities operate is a hub for most of such dummy/bogus concerns. He further noticed that search and seizure operation in case of Mehrotra Group was undertaken by the Investigation Wing in course of which enquiries were conducted on Wall Street Capital Market Pvt. Ltd. and M/s. Kuber Trexim Pvt. Ltd. and the financials of the said concerned were gathered and analyzed. He observed, such analysis revealed that both these concerns have given unsecured loans out of share premium received from various other entities,

3 ITA No. 2283/Mum/2024 (A.Y. 2014-15) DCIT vs. Blueberry Trading Company Pvt. Ltd. which had doubtful credentials. After referring to the statement recorded from Shri Rakesh Joshi, stated to be the Accountant of Wall Street Capital Market Pvt. Ltd. and M/s. Kuber Trexim Pvt. Ltd. in course of a survey conducted u/s. 133 of the Act and statement recorded from some other entities, the A.O. finally concluded that the loan transaction entered by the assessee with M/s. Kuber Trexim Pvt. Ltd. and Wall Street Capital Market Pvt. Ltd. are non-genuine as the lender entities had advanced such loans out of share premium received from shell companies. Accordingly, he treated the unsecured loan received by the assessee as unexplained cash credit u/s. 68 of the Act. Further, the interest paid by the assessee on such loan was also disallowed. Accordingly, he added back an amount of Rs.6,14,30,606/- u/s. 68 of the Act.

6.

The assessee contested the aforesaid addition before ld. First appellate authority.

7.

After considering the submissions of the assessee, in the context of the facts and materials on record, learned first appellate authority found that the loan taken by the assessee of the very same amount from Wall Street Capital Market Pvt. Ltd. was repaid and assessee received a fresh loan of the same amount from M/s. Kuber Trexim Pvt. Ltd. He found that in course of assessment proceeding, the assessee h ad furnished all supporting documentary evidences including loan confirmation, bank statement, etc. to prove the identity and creditworthiness of the creditor and genuineness of the loan transaction. He noted that in subsequent assessment years the loan has been repaid. Even, the assessee has paid interest on the loan after deduction of tax. All the transactions were through proper banking channel. He observed, once the assessee has proved the source of the loan transaction through documentary evidences and source is not doubted, the A.O. cannot call upon the assessee to prove source of source. He observed, if the source from

4 ITA No. 2283/Mum/2024 (A.Y. 2014-15) DCIT vs. Blueberry Trading Company Pvt. Ltd. which the lender received the money is in doubt, addition can be made in case of the lender and not at the hands of the assessee, more so, when the lender is an Income tax assessee.

8.

Further, ld. First appellate authority observed, in case of the lender no such addition has been made. Thus, he ultimately, concluded that the loan transaction is genuine. Hence, deleted the addition made u/s. 68 of the Act.

9.

Before us, ld. Departmental Representative (ld. DR for short) submitted that the loan taken earlier by the assessee from one entity was repaid and again received that loan through another entity. He submitted, this circular transaction creates doubt regarding the genuineness of the loan transaction. He submitted, enquiry conducted by the Investigation Wing, clearly reveals that the entities from whom the assessee had availed loan are bogus as they operate from the same address and were having same promoter/director. He submitted, the observation of ld. First appellate authority that the loan transaction has been accepted at the hands of the lender entities is not based on any verifiable material. He submitted, mere advancement of loan through banking channel or repayment of loan subsequently, would not change the character of accommodation entry. Thus, he submitted, the addition made by the A.O. should be restored. In support of such contention, ld. Counsel relied upon the following decisions: 1. CIT vs. Precision Finance (P.) Ltd. [1994] 208 ITR 465 (Cal) 2. Pr.CIT vs. NRA Iron & Steel (P.) Ltd. [2019] 103 taxmann.com 48 (SC) 10. Ld. Counsel appearing for the assessee submitted that to prove the loan transaction, the assessee has to establish the identity and creditworthiness of the creditor and the genuineness of the transaction. He submitted, there cannot be any dispute regarding identity of the creditor, as the A.O. himself has stated that their names are appearing in the

5 ITA No. 2283/Mum/2024 (A.Y. 2014-15) DCIT vs. Blueberry Trading Company Pvt. Ltd. website of Ministry of Corporate Affairs. He submitted, even the lender entities are regular Income tax assessee’s and file their return of income without any default. He submitted, in earlier assessment year, the assessee had taken loan of Rs.5,63,39,550/- from Wall Street Capital Market Pvt. Ltd. and repaid it. Thereafter, the assessee received fresh loan of Rs.5,63,39,550/- from M/s. Kuber Trexim Pvt. Ltd. He submitted, since, the loan transaction with Wall Street Capital Market Pvt. Ltd. was in earlier assessment year, it has no relevance for the assessment year under dispute. As far as the loan availed from M/s. Kuber Trexim Pvt. Ltd., ld. Counsel drew our attention to the balance sheet of the company as at 31.03.2014 and submitted that there is enough fund available with the company to extend the loan to the assessee. He submitted, in course of assessment proceedings, the assessee had submitted every supporting evidence to prove the loan transaction. He submitted, in course of assessment proceeding, Shri Nimesh Sanghvi, Director of M/s. Kuber Trexim Pvt. Ltd. was examined on commission through summons issued u/s. 131 of the Act. In the statement recorded, the Director of M/s. Kuber Trexim Pvt. Ltd. had clearly and categorically confirmed of advancing the loan to the assessee. Further, he also explained the source of source. He submitted, in case of M/s. Kuber Trexim Pvt. Ltd. the loan transaction was accepted. Thus, he submitted, there cannot be any addition u/s. 68 of the Act in case of the assessee.

11.

We have considered rival submissions and perused the materials available on record. We have also applied our mind to the decisions relied upon. Undisputedly, in the year under consideration, the assessee had received loan of Rs.5,63,39,550/- from M/s. Kuber Trexim Pvt. Ltd. In course of assessment proceeding, in response to the query raised

6 ITA No. 2283/Mum/2024 (A.Y. 2014-15) DCIT vs. Blueberry Trading Company Pvt. Ltd. by the A.O., the assessee had furnished the following documentary evidences to prove the loan transaction: a) Copy of ledger and bank statement of M/s. Kuber Trexim Pvt. Ltd. b) Confirmation of loan transaction. c) TDS certificate evidencing deduction of tax at source on interest paid d) Ledger and bank statement of M/s. Kuber Trexim Pvt. Ltd., reflecting the repayment of loans in subsequent years. e) Ledger and confirmation of account of Wall Street Capital Market Pvt. Ltd. f) Bank statement of the assessee showing repayment of loans. g) TDS certificate issued to Wall Street Capital Market Pvt. Ltd. and M/s. Kuber Trexim Pvt. Ltd.

12.

Thus, as could be seen from the aforesaid, all supporting documentary evidences including loan confirmation were furnished before the A.O. to prove the genuineness of the loan transaction. In fact, in response to summons issued u/s. 131 of the Act, the Directors of both Wall Street Capital Market Pvt. Ltd. as well as M/s. Kuber Trexim Pvt. Ltd. had appeared and their statements were recorded, wherein, the director has clearly and categorically state that the company had advanced loan to the assessee. There is no dispute that the availing of loan and repayment of loan were through proper banking channel. It is a fact that the assessee has paid interest on the loan availed after deduction of tax. On perusal of the statement recorded from the Director of M/s. Kuber Trexim Pvt. Ltd., a copy of which is placed at pg. no. 69 of the paper book, it is noticed that the mode and manner of the loan transaction has been explained in detail. It is a fact on record that both Wall Street Capital Market Pvt. Ltd. and M/s. Kuber Trexim Pvt. Ltd. are, income tax assessees

7 ITA No. 2283/Mum/2024 (A.Y. 2014-15) DCIT vs. Blueberry Trading Company Pvt. Ltd. and are filing returns regularly. In fact, in the return of income filed in A.Y. 2014-15, M/s. Kuber Trexim Pvt. Ltd. has shown the loan transaction which has been accepted by the department while processing the return of income u/s. 143(1) of the Act. A copy of the intimation issued u/s. 143(1) is placed at pg. no. 97 of the paper book. No material has been brought on record by the department to demonstrate that post processing of return of income of M/s. Kuber Trexim Pvt. Ltd., any remedial measures were taken by the department to tax the loan advanced to the assessee.

13.

The facts on record clearly reveal that the assessee has not only established the identity and creditworthiness of the creditor, but has also proved the genuineness of the loan transaction. Once the assessee has discharged its onus, it is the duty of the A.O. to prove the contrary by bringing material on record. However, in the facts of the present appeal, the A.O. has failed to do so. In the face of voluminous supporting documentary evidences furnished by assessee, the A.O. without disproving them has made the addition purely on conjecture and surmises by making general observations regarding the modus operandi of the lender entities. This, in our view, is unacceptable. In fact, in course of proceedings before this forum, the bench had directed the department to furnish the status of the loan transaction at the hands of the lender entity in the very same assessment year. However, in the report furnished before the Bench the department has stated that no such record is available with the department. Thus, in absence of any contrary evidence to demonstrate that the loan transaction is non-genuine, we are not in a position to disturb the finding of ld. First appellate authority, which are purely factual. In this context, the following finding of fact by ld. First appellate authority are relevant: 1. The lender, Kuber Trexim Pvt. Ltd., is a regular Income Tax assessee, who filed its Return of Income and was assessable under the Income Tax Act since past several years. The Balance

8 ITA No. 2283/Mum/2024 (A.Y. 2014-15) DCIT vs. Blueberry Trading Company Pvt. Ltd. Sheet of the same is available in the records of Department. (Copy of ITR and balance sheet of lender submitted before me) 2. The unsecured loan has been received in the regular course of business through regular banking channels i.e. account payee cheques, which were duly evidenced through bank statements. The same has been duly accepted and not controverted by the Ld. AO. 3. The loan was interest bearing and TDS was duly deducted and paid on the same. 4. The above unsecured loan raised during the year have been repaid through regular banking channels in the subsequent years. (Copy of ledger of the subsequent year submitted before me) 5. Confirmations from the lender company were duly filed in the course of the assessment proceedings, along with their bank statements and financial statements for the relevant years. (Copy of confirmation submitted before me) 6. The order of the Ld. AO is based only on certain statements recorded and information gathered during pre-search enquiries in Mehrotra group of cases whereas post search no such additions have been made in the hands of the lender companies on account of accommodation entries, which was a verifiable fact. 7. No evidence whatsoever is available on record that the appellant has given any cash for taking such accommodation entries. 8. The appellant is engaged in the business of trading in shares and securities. and thus, even otherwise, there can be no generation of cash so as to take accommodation entries. 9. Statement of the Director of the lender company was duly recorded by the Ld. AO wherein he had confirmed the loan and sources thereof. (Copy of statement is submitted) 10. The source of source in case of borrowings cannot be enquired into during the impugned assessment year, as it was specifically provided through an amendment from AY 2022-23 onwards. 11. At no stage, the Department has proved that the appellant was the ultimate beneficiary of the alleged accommodation entry in the form of unsecured loan, as the same was returned in the subsequent years. 14. Insofar as, the case laws cited by the learned departmental representative, suffice to say, the decisions have been rendered based on their own facts and cannot be applied uniformly to each and every case without verifying the relevant facts. After applying our mind to the decision relied upon, we are of the view that they are factually distinguishable. In view of the aforesaid, we uphold the decision of ld. First appellate authority and dismiss the ground.

9 ITA No. 2283/Mum/2024 (A.Y. 2014-15) DCIT vs. Blueberry Trading Company Pvt. Ltd. 15. In ground no. 2, the department has challenged the direction of the ld. First appellate authority on the issue of disallowance made u/s. 14A of the Act.

16.

Briefly, the facts are, in course of assessment proceeding, the A.O. noticed that the assessee had earned exempt income by way of dividend amounting to Rs.70,693/-. Being of the view that the assessee has not made disallowance u/s. 14A read with Rule 8D against the exempt income earned during the year, the A.O. proceeded to compute disallowance under Rule 8D(2)(iii) by computing 0.5% on the average value of investment of Rs.1,27,09,803/-. Accordingly, he disallowed an amount of Rs.63,00,549/-.

17.

While deciding the issue in appeal, ld. First appellate authority accepting the alternate contention of the assessee that the disallowance under Rule 8D(2)(iii) should be computed on investments which have not yielded income during the year, directed the A.O. to compute the disallowance by considering only those investments which have yielded exempt income during the year.

18.

Having considered rival submissions, we do not find any infirmity in the aforesaid direction of ld. First appellate authority as it is in conformity with the settled judicial position on the issue. Accordingly, we dismiss the ground raised.

19.

In the result, the appeal is dismissed. Order pronounced in the open court on 29.05.2026

Sd/- Sd/- (Prabhash Shankar) (Saktijit Dey) Accountant Member Vice President Mumbai; Dated : 29.05.2026 Roshani, Sr. PS

10 ITA No. 2283/Mum/2024 (A.Y. 2014-15) DCIT vs. Blueberry Trading Company Pvt. Ltd. Copy of the Order forwarded to : 1. The Appellant 2. The Respondent 3. The CIT(A) 4. CIT - concerned 5. DR, ITAT, Mumbai 6. Guard File BY ORDER,

(Dy./Asstt. Registrar) ITAT, Mumbai

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