LAGOM LABS PRIVATE LIMITED,MUMBAI vs. INCOME TAX OFFICER, MUMBAI

PER PAWAN SINGH, JUDICIAL MEMBER:

Commissioner of Income Tax (Appeals), Delhi, [for short “CIT(A)”] dated

26.11.2025, for the assessment year 2022-23. The assessee has raised

following grounds ofappeal:-

“(i)On the facts and circumstances of the case and in law, the learned CIT (A) erred in dismissing the appeal and confirming the addition of Rs. 30,567/- being the alleged difference in closing balance of trade payables in respect of M/s Pivotroot Digital Pvt. Ltd., treating the same as unexplained cash credit under section 68 of the Income-tax Act, 1961, without appreciating that the amount represents a reconciliation difference in a running trade account and does not bear the character of a cash credit. 2. On the facts and circumstances of the case and in law, the learned CIT (A) erred in dismissing the appeal and confirming the addition of Rs. 3,53,464/- in respect of the balance appearing in the name of M/s Getvantage Tech Pvt. Ltd. by treating the same as an unexplained cash credit under section 68 of the Income- tax Act, 1961, without appreciating that there was no unexplained credit and that the alleged difference stood fully reconciled.

the business of all kinds of feminine hygiene product, filed its return of

income for the Assessment Year 2022-23 on 17.11.2022 declaring income

of Rs. 40.97 crore. The case was selected for scrutiny. During assessment,

the Assessing Officer (‘AO’) from the details furnished by the assessee

noted that assessee has shown certain “trade payables”. The Assessing

Officer (AO) in order to verify the claim of assessee issued notice under

section 133(6) onrandom basis to three parties namely Pivoroot Digital

Private Limited, Get vantage Tech Private Limited and Google India Pvt.

Ltd. In response to such notice, the creditors filed their reply and confirm

outstanding liability of assessee. The AO on the basis of difference vis-a-vis,

the outstanding liability shown and confirmed by the creditors issued show

cause notice as to why difference in outstanding liability should not be

taxed as unexplained credit under section 68. The assessee furnished its reply and submitted that difference is due to TDS pertaining to provision

booked and transferred to the party ledger in F.Y. 2022-23 in assessees

books, when the invoices were actually recorded. The reply of assessee

was not accepted, the AO made addition of Rs. 30,567/- in respect of Pivot

root Digital Private Limited, Rs. 3,53,464/- in respect of Getvantage Tech

Pvt. Ltd. under section 68. and also made of Rs. 6,56,199/- in respect of

Google India Private Limited under section 69C.

appeal before ld. CIT(A). Before ld. CIT(A), the assessee filed its detail

written submission dated 28.01.2025. the submissions of the assessee are

recorded on page No.16 onwards. Against the addition of Rs.30,557/- on

account of alleged closing balance of Pivot Roots Digital Private Limited, the

assessee stated that the amount of TDS pertaining to provision booked

which has been transferred to party’s ledger in FY 2022-23 in assesses

books of account, when actual invoice was received and thus there is no

closing difference. The assessee more specifically explained that difference

of Rs. 21,387/- pertains to TDS amount of the invoice which is actually

recorded in FY 2022-23, provision of which was created in FY 201-22,

whereas confirming party recorded the said TDS in FY 2021-22, copy of

Form-26 AS was also furnished. For remaining difference of Rs. 8,000/-

pertains to TDS amount which is erroneously recorded extra by the party.

With regard to addition of Rs. 3,53,464/- as balance payables to Get

Vantage Tech Pvt Ltd, the assessee submitted that that there is no difference, the confirming party has not furnished complete details in

response to notice under section 133(6) of the Act.It was explained that

difference of Rs. 3,05,000/- was on account of TDSnot recorded by the

party in their books of accounts, copy of TDS certificate was filed. Further

for both the additions the assessee submitted that provisions of section 68

is not applicable as there is no credits in the books of assessee. Moreover,

the assessee has explained the trade payable, thus closing balance is not

related with the provisions of section 68. With regards to the addition of

unexplained expenditure under section 69C of Rs.6,65,199/-, the assessee

explained that there is no such difference. It was explained that invoice of

Rs. 6,38,569/- (missing invoice No. 4069333509) was not received in FY

2021-22 and hence provision for such amount was made. TDS of Rs.

11,010/- was made and only difference of Rs. 6,620/- was due round of

and others. Missing invoice was provided by Google India Pvt Limited only

on 25.01.2025, copy of which was also furnished by the assessee. It was

contended that provisions of section 69C is not applicable on such

differences.

the action of AO on all three additions by retreating the same view as held

by the AO. Further aggrieved the assessee has filed present appeal before

Tribunal.

AR) of the assessee and learned Senior departmental representative (Sr-DR for the revenue. The ld AR of the assessee submits that there was no basis

of making addition either under section 68 or under section 69C. The

alleged difference of Rs. 30,567/- being closing balance of trade payables in

respect of Pivot root Digital Private Limited was made without appreciating

that the amount represents a reconciliation difference in a running trade

account and does not bear the character of a cash credit. Similarly, the

addition of Rs. 3,53,464/- in respect of the balance appearing in the name

of Get Vantage Tech Private Limited was also made without appreciating

that there was no unexplained credit and that the alleged difference stood

fully reconciled.Against the addition of Rs. 6,56,199/- (on account of

invoice value difference of Rs. 6,49,579/- and miscellaneous difference of

Rs. 6,620/-) pertaining to Google India Private Limited, the ld AR of the

assessee submist that the additions were made by tax authorities despite

the fact that the expenditure was incurred wholly and exclusively for

business purposes and duly recorded in the books of account. It was clearly

explained that the invoice was received later, though it was filed before ld

CIT(A) with proper explanation. The ld AR of the assessee also explained

all the difference while making her submissions. It was argued that the

learned CIT (A) erred in confirming the additions made under sections 68

and 69C, and in consequently upholding taxation under section 115BBE

without establishing the mandatory preconditions for invoking the said

provisions and without granting proper opportunity or recording cogent

reasons and independent findings.

and ld CIT(A)

gone through the entire material placed before us, including the orders of

lower authorities. We have also deliberated on various documentary

evidence filed before us. There is no dispute that additions under section

68 of Rs. 30,567/- in respect of Pivot root Digital Private Limited and other

addition of Rs. 3,53,464/- in respect of the balance payable appearing in

the name of Get Vantage Tech Private Limited, were made by AO and

confirmed by ld CIT(A). such additions under section 68 are not legally

sustainable, as the same does not represent credit in the books of

assessee, moreover, the assessee has explained the differences payables.

Similar view has been taken by Chennai Tribunal in Arusuvai Food

Processors (P.) Ltd Vs ITO (2025) 178 taxmann.com 779 (Chennai - Trib.).

Otherwise, on merit it was demonstrated before us that there was no such

mismatch except a minor difference due to round of figure or not for the

reasons that the confirming party has not taken in to account the TDS

amounts. Hence, the addition of section 68 of Rs. 30,567/- and Rs.

3,53,464/- are deleted. So far as addition under section 69C is concerned,

we find that the assessee has clearly demonstrated before us that invoices

of Rs. 6,38,569/- (invoice No. 4069333509) was received only in

25.01.2025, which was not received in FY 2021-22 and hence provision for

such amount was made. TDS of Rs. 11,010/- was made and only difference of Rs. 6,620/- was due round of and others. We find that nature and

purpose of expenditure was never disputed by lower authorities. Hence,

the expenditure incurred wholly and exclusively is not dispute, the addition

was not justified, thus, the assessee also succeeded against addition under

section 69C of Rs. 6,56,199/-. In the result, the grounds of appeal raised

by the assessee are allowed.

Sd Sd/- /- Sd/- Sd/- OM PRAKASH KANT PAWAN SINGH ACCOUNTANT MEMBER JUDICIAL MEMBER

Mumbai, Dated: 29/06/2026 Self (on system) Self (on system) Self (on Self (on system) system) Copy of the order forwarded to: (1) The Assessee; (2) The Revenue; (3) The PCIT / CIT (Judicial); (4) The DR, ITAT, Nagpur; and (5) Guard file. By Order

Assistant Registrar ITAT, Mumbai