ACIT 15(1)(1), MUMBAI, MUMBAI vs. APOLLO LOGISOLUTIONS LIMITED, MUMBAI

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ITA 6993/MUM/2025Status: DisposedITAT Mumbai22 May 2026AY 2020-217 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 appeal as filed was not maintainable because the grounds of appeal in Form 36 did not match the authorization memo. The authorization was for Section 14A, but the grounds in Form 36 were for Section 68, and vice versa.

What were the facts?

The Revenue appealed an order deleting additions made by the Assessing Officer (AO) regarding an interest-free loan under Section 68 and a disallowance under Section 14A. The CIT(A) deleted both additions, finding sufficient documentation for the loan and no exempt income for the Section 14A disallowance.

What were the issues?

Whether the appeal is maintainable when the grounds of appeal in Form 36 do not align with the authorization memo. The merits of the additions were not examined.

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, MUMBAI BENCHES “A”, MUMBAI

Before: JUSTICE (RETD.) C V BHADANG & SHRI GIRISH AGRAWAL

For Appellant: Shri Dharmesh Shah &, Ms. Saiyami Shah
For Respondent: Shri Annavaran Kosuri, Sr.DR
Hearing: 17.04.2026Pronounced: 22.05.2026

PER JUSTICE (RETD.) C V BHADANG :

By this appeal, Revenue is challenging the order dated 29.08.2025 passed by the National Faceless Appeal Centre (NFAC), Delhi (‘CIT(A)’ for short), which in turn arose out of the order dated 29.09.2023 passed by the Assistant Commissioner of Income Tax (‘AO’ for short) for Assessment Year 2020-21.

2.

The respondent assessee is a company engaged in business of transport, logistic services, cargo handling, storage, warehousing etc. The respondent filed its return of income for the relevant assessment year

2 ITA No.6993/Mum/2025 Apollo Logisolutions Ltd. declaring loss of Rs.11,58,29,611/-. The case was selected for scrutiny through CASS. The ld. AO completed the assessment under section 143(3) of the Act, by an order dated 29.09.2023 making addition on two counts. Firstly, the ld. AO made an addition of Rs.13 Crores as the ld. AO found that the assessee had received interest free unsecured loan of Rs.13 Crores from Shri Raaja Kanwar, Chairman and Managing Director of the assessee during F.Y.2018-19. Although the assessee produced the loan agreement, Board resolution and the ITR acknowledgement of the lender, alongwith ledger account etc., the ld. AO refused to accept the same on the ground that the capital account of the promoter / lender was not furnished, as a result of which the amount of the unsecured loan was added as unexplained cash credit under section 68 of the Act. Secondly, the ld. AO found that the assessee had made investment of Rs.297.39 Crores in unlisted equity shares, preference shares and debentures of its subsidiary companies. The ld. AO made a disallowance of Rs.2,97,39,470/- under section 14A r.w.r 8D of the Income Tax Rules, 1962 (‘Rules’ for short). It is necessary to note that in this regard it was claimed by the respondent assessee that the investment in the subsidiary was made purely for strategic purpose and to hold a controlling stake in the group concerns and it did not earn any exempt income out of these investments. The ld. AO however, placed reliance on the decision of the Amritsar Bench of the Tribunal in Lally Motors India Private Limited vs. DCIT, 93 taxman.com 39 and proceeded to make the disallowance as aforesaid.

3.

The respondent assessee challenged both these additions before the ld. CIT(A). The ld. CIT(A) by impugned order has found that the documents produced in respect of unsecured loans were sufficient to discharge the onus placed on the assessee and impugned addition could not have been made

3 ITA No.6993/Mum/2025 Apollo Logisolutions Ltd. only on the ground that the capital account of the promoter / lender was not produced. In so far as the disallowance under section 14A of the Act is concerned, the ld. CIT(A) placed reliance on the decision of the Madras High Court in CIT vs. Chettinad Logistics Private Limited (2017) 80 taxman.com 221(Madras) holding that in case where assessee has not received any exempt income, no disallowance under Section 14A could be made. The ld. CIT(A) has noticed that the SLP filed by the revenue challenging the said decision has been dismissed by the Supreme Court as reported in (2018) 95 taxman.com 250 (SC).

4.

Feeling aggrieved, the Revenue is in appeal.

5.

We have heard parties. Perused record.

6.

At the outset it is necessary to note that as per the Authorisation Memo dated 16.10.2025 by the Pr. Commissioner of Income Tax-6, Mumbai, the order of the ld. CIT(A) was proposed to be challenged only on the ground of the disallowance made under section 14A of the Act. The grounds on which the order was proposed to be challenged as per the authorisation Memo may be set out as under:-

“1. Whether, on the facts and in the circumstances of the case and in law, the Ld. CIT(A)(NFAC) erred in deleting the disallowance of 12,97,39,470/- made by the Assessing Officer under Section 14A read with Rule &D of the Income-tax Rules, 1962, on the erroneous premise that no exempt income was earned by the Assessee during the relevant previous year.

2.

Whether, on the facts and in the circumstances of the case and in law, the Ld. CIT(A) failed to appreciate that the Assessee had made

4 ITA No.6993/Mum/2025 Apollo Logisolutions Ltd. substantial investments in shares and debentures of group concerns, which are capable of yielding exempt dividend income, and therefore, expenditure incurred in relation to such investments is subject to disallowance under Section 14A, irrespective of the fact whether exempt income was actually received during the year or not.

3.

Whether, on the facts and in the circumstances of the case und in law, the Ld. CITIA) erred by relying on a judgment that was contrary to the binding principles laid down by the Hon'ble Supreme Court in the case of Maxopp Investment Ltd. us. CIT (2018) 91 taxmann.com 154 (SC), wherein it was held that Section 14A is applicable even if the dominant purpose of the investment is to gain a controlling interest and that the expenditure relatable to investments capable of yielding exempt income is liable for disallowance.

4.

Whether, on the facts and in the circumstances of the case and in law, the Ld. CIT(A) failed to appreciate the ratio of the Hon'ble Supreme Court in the case of CIT vs. Rajendra Prasad Moody (115 ITR 519), which affirmed the principle that expenditure incurred for earning income is deductible, establishing the converse principle under Section 14A-that expenditure incurred in relation to income which does not form part of the total income cannot be allowed as a deduction, and the application of Section 14A does not hinge on the actual earning of tux-exempt income."

5.

Whether, on the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in ignoring the mandatory clarification provided by the CBDT Circular No. 5/2014 dated 11.02.2014, which unambiguously states that the disallowance under Section 14A read with Rule 8D is required to be made even in cases where no exempt income has been earned during the relevant year, as the expenditure is incurred in relation to income which does not form part of the total income.

6.

Whether, on the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in holding that the computation under Rule 8D was not warranted, as the Assessee had substantial investments and failed to furnish a suo motu computation of disallowance, or the computation furnished was incorrect, the Assessing Officer was legally

5 ITA No.6993/Mum/2025 Apollo Logisolutions Ltd. bound to resort to the method prescribed under Rule 8D for computing the disallowance.

7.

Whether, in the facts and in the circumstances of the one and law, the order of the ld. CIT(A) is contrary to the facts and law and is liable to be set aside, and the order of the Assessing Officer restoring the disallowance of Rs.2,97,39,470/- made under section 14A read with Rule 8D ought to be confirmed.

7.

On the contrary, the appeal is filed solely on the ground of the addition made under section 68 of the Act which could be seen from the grounds, reproduced as under:-

“1. Whether, on the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in deleting the addition of Rs. 3,05,00,000/- made u/s 68 of the 1.T. Act, 1961, without appreciating that the "Creditworthiness" of the lender companies (M/s PNR Exim Pvt. Ltd and M/s Blow Agency Pvt. Ltd.) was not established, as these entities had negligible profits and lacked the financial capacity to advance such huge sums, mere payment through banking channels notwithstanding.

2.

Whether, on the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in holding that the repayment of loans/share application money establishes the genuineness of the transaction, failing to appreciate the modus operandi of accommodation entries where funds are often layered, rotated, and "repaid" to give a colour of genuineness to non-genuine transactions.

3.

Whether, on the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in ignoring the direct and specific evidence in the form of the sworn statement of Shri Narendra Kumar Jain (Entry Operator), who categorically admitted to managing the affairs of the lender companies solely for providing accommodation entries, thereby proving that the transactions lacked "Genuineness" as required u/s 68.

4.

Whether, on the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in deleting the addition by relying on judicial precedents regarding repayment, while failing to apply the test of "Human

6 ITA No.6993/Mum/2025 Apollo Logisolutions Ltd. Probabilities" as laid down by the Hon'ble Supreme Court in Sumati Dayal vs. CIT and CIT vs. Durga Prasad More, considering the lenders were proven shell entities with no real business activities.

5.

Whether, on the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in shifting the burden of proof entirely onto the Assessing Officer to conduct further independent enquiries, ignoring that the primary onus u/s 68 lies on the assessee to explain the nature and source of credit to the satisfaction of the AO, which the assessee failed to discharge beyond filing confirmation letters.”

8.

It can thus be seen that there is an apparent discrepancy / variance in the Authorisation Memo and the grounds of appeal as set out before this Tribunal. A specific query was made with ld. DR however, there is no satisfactory explanation forthcoming.

9.

Ld. AR for the respondent submitted that the appeal as framed and filed is not maintainable inasmuch as the grounds on which the appeal was authorised to be filed are not made out in Form no. 36.

10.

We have considered the submissions. We are faced with a situation where the grounds on which the appeal was authorised to be filed challenging the disallowance made under Section 14A of the Act is not a ground made out in Form no. 36. On the contrary, the grounds made out in Form no. 36 are limited to the challenge of the impugned addition made under Section 68 of the Act in respect of which there is no authorisation. This appeal was fixed for clarification on 17.04.2026, however, there is no explanation forthcoming neither any steps are being taken. In such circumstances, the appeal as framed and filed cannot be entertained. The appeal is accordingly disposed of with a liberty to the Revenue to file appropriately constituted appeal, if so

7 ITA No.6993/Mum/2025 Apollo Logisolutions Ltd. advised within one month from the receipt of this order. Needless to mention that we have not examined the merits of the additions made.

Order pronounced in the open court on 22.05.2026.

Sd/- Sd/- [GIRISH AGRAWAL] [JUSTICE (RETD.) C V BHADANG] ACCOUNTANT MEMBER PRESIDENT

Mumbai, Dated : 22 May, 2026 Karuna, Sr.PS Copy of the Order forwarded to : 1. The Appellant 2. The Respondent 3. The PCIT, Mumbai 4. The CIT 5. The DR, ‘A’ Bench, ITAT, Mumbai

//True Copy// BY ORDER

(Assistant Registrar) Income Tax Appellate Tribunal, Mumbai

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