M/S MICHIGAN TRADERS PRIVATE LIMITED ,MUMBAI vs. ITO-WARD 2(1), THANE

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ITA 1081/MUM/2026Status: DisposedITAT Mumbai09 June 2026AY 2011-125 pages

In favour of the assessee: the assessee's appeal was allowed. From the AI summary of this appeal.

AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that the addition was not justified as the loans and advances appeared on the asset side of the assessee's balance sheet, and the source of funds was explained by the liability side. The Tribunal followed a coordinate bench's decision in the assessee's own case.

What were the facts?

The assessee challenged an addition of Rs. 10,03,300 made by the AO on account of loans and advances given to another company. The assessee argued that this amount was already taxed in the hands of the recipient company, leading to double taxation.

What were the issues?

Whether an addition can be made under Section 68 for loans and advances given by the assessee when the same amount was already taxed in the hands of the recipient company, leading to double taxation.

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 BENCHES, MUMBAI

Before: HON’BLE SANDEEP GOSAIN & HON’BLE BIJAYANANDA PRUSETH

For Respondent: Shri Aditya Rai ( SR. DR.)

आदेश / ORDER

PER SANDEEP GOSAIN, JUDICIAL MEMBER:

This appeal is filed by the Assessee against the order of Ld. NATIONAL FACELESS APPEAL CENTRE vide DIN: ITBA/APL/S/250/2025-26/1082843198(1) dated 21-Nov-2025 for the Assessment Year 2011-12. The Assessee has raised the following grounds of appeal:

Ground No. 1:

On the facts and in the circumstances of the case and in law, the Hon'ble CIT(A)/National Faceless Appeal Centre has erred in upholding the decision of the Ld. AO adding Rs. 10,03,300/ on account of loan and advances given to Nina Concrete System Pvt. Ltd. The appellant company prays that the said additions may please be deleted.

Ground No. 2:

Pursuant to the above-mentioned facts, the Hon'ble CIT(A)/National Faceless Appeal Centre has erred in upholding the decision of the Ld. AO adding Rs. 10,03,300/-without considering the facts that the same amount has already been treated as income and taxed in the hands of M/s Nina Concrete System Pvt Ltd, resulting in double taxation of the same income, which is bad in law. The appellant company prays that the said addition may please be deleted.

Ground No. 3:

On the facts and circumstances of the case the Hon'ble CIT(A)/National Faceless Appeal Centre has erred in upholding the decision of the Ld. AO in initiating penalty proceedings sec 271(1)(c) of the income Tax Act, 1961. The appellant company prays that the said proceeding may please be deleted.

The appellate craves the leave to add, amend or alter all or any of the grounds of appeal.

2.

Ground Nos. 1 and 2 raised by the assessee are interrelated and interconnected and relates to challenging the order of the Ld. CIT(A) in upholding the addition made by the AO of Rs. 10,03,300/-.

3.

At the very outset, the Ld. AR appearing on behalf of the assessee submitted that the addition in the present case was made by the AO on account of the loan/advance of Rs. 10,03,300/- made by the assessee to M/s Nina Concrete System Pvt. Ltd. The said addition is squarely covered 2 by the decision of the Coordinate Bench of the ITAT in the assessee's own case, wherein identical additions made by the AO were deleted by the Coordinate Bench of the ITAT.

4.

After hearing both the parties, we find that the issue in question is squarely covered by the decision of the Coordinate Bench of the ITAT in ITA No. 4690/Mum/2023, ITO vs. Michigan Traders Pvt. Ltd., and the operative portion of the same is contained in Para No. 5 and the same is reproduced herein below:

5.

We find that in this case the assessee has advanced unsecured loans to M/s. Nina Concrete System Pvt. Ltd. and M/s. Mekaul Construction Technology Pvt. Ltd. and not taken credit from those parties and therefore no addition could have been made as unexplained cash credit u/s. 68 of the Act. Under s. 68 of the Act any credit received by the assessee may be added for any failure on the part of the assessee in satisfactorily explaining the nature and source of the said credit. But in the instant case the assessee has advanced the sums of Rs.2,52,17,376/- and Rs.37,500,000/- to the two parties. It is also to be noted that in the cases of those two parties, the corresponding sums received have already been added u/s. 68 of the Act. In our opinion no addition could have been made in the hands of the assessee u/s. 68 of the Act in respect of loans advanced. These two amounts are appearing as loans and advances on asset side of balance sheet of the assessee at year end. It is settled principle that the source of funds of asset stands explained by the liability side of the balance sheet, therefore, if at all, the AO was having any doubt in respect of the source of those two amounts, then he should have examined the liability side of balance sheet of assessee. It is not the case of the AO that these loans/advances were not appearing in the balance sheet and in that cases those loan/advance could be considered as unexplained u/s 69 of the Act if the assessee offers no explanation about the nature and source of investment in said loan/advances. In the facts and circumstances of the case, the AO is not justified in making addition for the advances given by the assessee u/s. 68 of the Act. Accordingly, we do not find any infirmity in the order of the ld. CIT(A) on the

issue in dispute and we uphold the same. The grounds of appeal of the Revenue are accordingly dismissed.

5.

Therefore, considering the totality of the facts and circumstances discussed above and keeping in view the decision of the Coordinate Bench of the ITAT in the assessee's own case, and also following the doctrine of binding precedents and maintaining judicial consistency, we set aside and quash the order passed by the Ld. CIT(A) and direct the AO to delete the addition. Accordingly, these grounds raised by the assessee are allowed.

6.

In view of our findings with regard to Ground Nos. 1 and 2, Ground No. 3 becomes infructuous and, therefore, does not require separate adjudication.

7.

In the result, the appeal filed by the assessee stands partly allowed.

Order pronounced in the open court on 09.06.2026.

Sd/- Sd/- BIJAYANANDA PRUSETH SANDEEP GOSAIN ACCOUNTANT MEMBER JUDICIAL MEMBER Mumbai Dated: 09.06.2026 Copy to: M/S MICHIGAN TRADERS PRIVATE LIMITED , SHOP NO. 003, BLDG NO. 2 CHS, GROUND 1 FLOOR, POOJA NAGAR, CABIN CROSS ROAD, BHAYANDAR EAST, THANE-401107, MAHARASHTRA ITO-WARD 2(1), ASHAR IT PARK, 6TH FLOOR, ROAD NO 2 16 Z, WAGLE INDUSTRIAL ESTATE, THANE WEST., THANE-400604, MAHARASHTRA 3 THE PCIT / CIT, 4 THE D.R., ITAT, MUMBAI BENCH 5 GUARD FILE

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