DCIT CC-8(2),MUMBAI, MUMBAI vs. MENTOR CAPITAL LIMITED, MUMBAI

IN THE INCOME TAX APPELLATE TRIBUNAL “B” BENCH, MUMBAI BEFORE SHRI SANDEEP GOSAIN, (JUDICIAL MEMBER) & SHRI JAGADISH, ACCOUNTANT MEMBER I.T.A. No. 5312/Mum/2025 A.Y: 2015-16

DCIT CC 8 (2) Mumbai Vs Mentor Capital Limited Room No. 658 Aayakar 713, Raheja Centre, Free Bhavan M.K. Road, Press Journal, Road, Nariman Point Nariman Point Mumbai - 400020 Mumbai - 400021 PAN: AACCP7995G (Appellant) (Respondent) With CO. No. 102/Mum/2026 A.Y: 2015-16 Mentor Capital Limited Vs DCIT CC 8 (2) Mumbai 713, Raheja Centre, Free Room No. 658 Aayakar Press Journal, Road, Bhavan M.K. Road, Nariman Point Mumbai - 400020 Mumbai - 400021 PAN: AACCP7995G (Appellant) (Respondent)

Appellant by Shri N.R. Suresh, CA Respondent by Shri Shri Mahendra Bishnoi, (CIT DR )

Date of Hearing 17.03.2026 Date of Pronouncement 24.04.2026

ORDER PER SANDEEP GOSAIN:

Mentor Capital Ltd. Mumbai The present appeal has been filed by the Revenue and cross objection by the assessee challenging the impugned order dt. 12.06.2025 passed under section 250 of the Income Tax Act, 1961 (‘the Act’), by the National Faceless Appeal Centre (NFAC) / CIT(A) for the assessment year 2015-16. 2. Since all the issues involved in this appeal and cross objection are common and identical and belongs to one assessee therefore, they have been clubbed, heard together and consolidated order is being passed. Firstly, we shall take ITA No. 5312/Mum/2025, A.Y 2015- 16 as lead case and facts narrated therein. The Revenue has raised the following grounds of appeal: 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.7,79,62,550/- made by the Assessing Officer as unexplained income u/s 68 arising from non-genuine profits through pre- arranged reversal trades in illiquid stock options, ignoring detailed findings of the AO based on Project Falcon data, broker statements, and trade pattern analysis? 2. Whether on the facts and in the circumstances of the case and in law, the Ld. CIT(A) failed to appreciate that mere inclusion of an amount in the Profit & Loss account does not establish the genuineness of the transaction; the source and nature of the income must be satisfactorily explained to the AO's satisfaction, failing which it is liable to be taxed as deemed income u/s 68? 3. Whether on the facts and in the circumstances of the case and in law, the Ld. CIT(A) was justified in deleting the addition of Rs. 19,49,064/-made u/s 69C of the IT Act, 1961 as unexplained commission expenditure, solely on the ground that the primary addition of Rs. 7,79,62,550/- was deleted, without

Mentor Capital Ltd. Mumbai independently examining the evidence and basis for the commission payment?" 4. Whether on the facts and in the circumstances of the case and in law, the Ld. CIT(A) was justified in deleting the addition of Rs. 75,00,000/- u/s 68 of the Income Tax Act, 1961, solely on the basis of bank statements, confirmations, and repayment of the amount, without independent verification of the identity, creditworthiness, and genuineness of the lender, especially when the Investigation Wing has indicated that the lender is part of a network of entities engaged in accommodation entries? 5. The appellant craves leave to add, alter, amend or withdraw any of the above grounds at the time of hearing. " 3. Ground Nos. 1 and 2 raised by the Revenue are interrelated and interconnected and relates to challenging the order of the Ld. CIT(A) in deleting the addition of Rs. 7,79,62,550/- made by the AO under Section 68 of the Act. Therefore, we have decided to adjudicate these grounds through the present consolidated order.

Mentor Capital Ltd. Mumbai 5. On the other hand, the Ld. AR, while relying on the order of the Ld. CIT(A), also relied upon the written submissions filed before us and the same is reproduced herein below:

The grounds taken up by the Department are not sustainable as CIT (A) has examined the facts and has made clear findings supported by legal decisions.

Submission

During the course of proceedings before the AO, the transaction details were provided and trade confirmation from broker which were provided and linked with the Department Information.

With respect to the allegation that the Assessee company was trading in highly illiquid derivatives, each of the observations have been explained to be as incorrect and is available in Page 8 of the CIT (A) Order.

In Paragraph 5.4.5, the CIT (A) has based on sound reasoning held that the findings of the AO based on Project Falcon data, broker statements and trade pattern are not applicable to the Appellant's case and has not made independent enquiry.

5.4.5 The AO has referred to the precedence in Project Falcon in making the addition. Although the conditions as in Project Falcon are not applicable to the facts of the case since the trade done by the appellant is not in zero age illiquid options, it is relevant to state that additions done after enquiries in the Project Falcon have been subject matter of appeal at different forums and the present judicial precedents and legal position is as under: 4

Mentor Capital Ltd. Mumbai (i) Prima Facie Data Insufficiency: Courts and Tribunals have consistently held that mere reliance on Project Falcon data or statements recorded during investigations is insufficient to confirm tax evasion or unexplained income. There must be a direct, cogent linkage between the assessee's transactions and the alleged manipulative trades. (ii) Requirement of Evidentiary Support: Adverse conclusions cannot be drawn solely on suspicion or presumptions arising from Project Falcon data. Assessees must be given the opportunity to explain and substantiate the genuineness of their transactions. Mere invocation of "shell companies" or "accommodation entries without substantive proof is impermissible. (iii) Double Taxation and Inclusion in Profit & Loss Account: Where the assessee has declared profits arising from such trading activities in its financial statements and returned income accordingly, subsequent additions based on Project Falcon findings constitute double taxation and are legally unsustainable. (iv) Various judicial forum including the Delhi ITAT in Saarthak Vanijya India Pvt Ltd vs DCIT, Mumbai ITAT in Gokul Fuelchem Private Limited, Mumbai vs National Faceless Assessment Centre etc. The Courts have been consistently holding that Project Falcon findings should be treated as a trigger for detailed inquiry rather than conclusive evidence. Any addition based purely on such data, without corroborative proof and in presence of declared income, is liable to be quashed by the appellate authorities. In the instant case the entire case of the AO is based on the general findings in the Project Falcon report without any corroborative or specific finding in the case of the appellant. As already stated in detailed above, the general findings of Project Falcon are not applicable in the case of the appellant. Thus, the CIT (A) based on the facts and settled position of law has allowed this case.

Mentor Capital Ltd. Mumbai Submission

In Paragraphs 5.4.3 and 5.4.4, the CIT(A) has upheld the genuineness of the profits by his observations.

5.4.3 As regards the observation of the AO that the profit of Rs.7,79,62,500/- is a bogus profit as the appellant has always earned profit in trades that have been executed and which is highly unlikely without premeditated intention of booking losses for the counterparties, the fact remains that the appellant has booked profits and not losses that may lead to any undue benefit. In the instant year, there is no difference in tax rates between business income and unexplained cash credit and by offering this amount as business income as against the AO treating it as unexplained cash credit, the appellant is not benefitted in any manner. Thus, this is not a case wherein premeditated trades have resulted in losses leading to setting off of taxable income. This is also not a case wherein business profit in Futures & Options have been disguised as short term capital gains.

5.4.4 The AO has also observed that the all the trades executed by the appellant are zero trade age and that the appellant is trading in highly illiquid derivatives in which no major players were available for trading in those scrips on those days. I find that these observations of the AO are not factually correct and are not borne out of examination of records. Even the finding of the AO that the appellant has always made profit is not correct as would be apparent from the trade sheet of the appellant wherein the trades executed through the brokers, M/s SPS Share Brokers Pvt Ltd and M/s Ashika Stock Broking Ltd have resulted in both gains and losses. Further these trades have varying age from 1 day to 30, 60 and 90 days and hence even this observation of the AO that the appellant has always executed zero trade age is not factually correct. As regards the finding of the AO that the appellant has indulged in illiquid trades when no other major players were there, I find that the same is also not factually correct. Upon perusal of the trade data of the appellant in the identified trades, the appellant's contribution to the total volume of trade ranges from 0.06% to a maximum of 14.33% and hence the appellant's volume was a minor proportion of total market volume in each trade scrip.

Mentor Capital Ltd. Mumbai Therefore, this finding of the AO that the appellant has indulged in illiquid trade and there were no other players enabling the appellant to manage the outcome of the trade is not supported by trade data. 6. We have heard the counsel for both parties, perused the material placed on record, and considered the judgments cited before us, as well as the orders passed by the Revenue authorities. From the records, we noticed that, based on information flagged through Project Falcon and the sworn statements of broker Sanjay Kumar Periwal and Harshvardhan Kayan, the assessee was alleged to have engaged in premeditated reversal trades in illiquid stock options on the Bombay Stock Exchange during the year under consideration, with the purpose of generating artificial profits through accommodation entries. The AO further observed that the assessee executed 77 trades, which resulted in bogus losses for seven entities and a profit of Rs. 10.20 crores for the assessee. A specific finding was recorded that although the assessee earned a profit of Rs. 7,79,62,500/- on account of these trades, the same had not been shown in the Profit & Loss account. The AO based these findings on the statements of Mr. Sanjay Kumar Periwal and Mr. Harshvardhan Kayan, who admitted that reversal trades in illiquid options were prevalent and that such manipulative practices were used to generate bogus losses or gains by companies.

Mentor Capital Ltd. Mumbai Profit & Loss account, as evident from Note 18, “Revenue from Operations,” in the financial statements. It was further observed that the factual finding of the AO was incorrect, as the assessee had already offered the said amount as income from operations.

Mentor Capital Ltd. Mumbai 10. As regards the finding of the AO that the assessee indulged in illiquid trades when no other major players were present, the same is also not factually correct. Upon perusal of the trade data of the assessee in the identified transactions, the assessee’s contribution to the total volume of trade ranges from 0.04% to a maximum of 7.14%, and hence the assessee’s volume was only a minor proportion of the total market volume in each scrip. Therefore, the finding of the AO that the assessee indulged in illiquid trades and that there were no other players enabling the assessee to manage the outcome of the trade is not supported by the trade data.

Mentor Capital Ltd. Mumbai courts and tribunals that mere reliance on Project Falcon data or statements recorded during investigation is not sufficient to confirm tax evasion or unexplained income. There must be a direct and cogent link between the assessee’s transactions and the alleged manipulated trades.

5.4.4 The AO has also observed that the all the trades executed by the appellant are zero trade age and that the appellant is trading in highly illiquid derivatives in which no major players were available for trading in those scrips on those days. I find that these observations of the AO are not factually correct and are not borne out of examination of records. Even the finding of the AO that the appellant has always made profit is not correct as would be apparent from the trade sheet of the appellant wherein the trades executed through the brokers, M/s SPS Share Brokers Pvt Ltd and M/s

Mentor Capital Ltd. Mumbai Ashika Stock Broking Ltd have resulted in both gains and losses. Further these trades have varying age from 1 day to 30, 60 and 90 days and hence even this observation of the AO that the appellant has always executed zero trade age is not factually correct. "As regards the finding of the AO that the appellant has indulged in illiquid trades when no other major players were there, I find that the same is also not factually correct. Upon perusal of the trade data of the appellant in the identified trades, the appellant's contribution to the total volume of trade ranges from 0.04% to a maximum of 7.14% and hence the appellant's volume was a minor proportion of total market volume in each trade scrip. Therefore, this finding of the AO that the appellant has indulged in illiquid trade and there were no other players enabling the appellant to manage the outcome of the trade is not supported by trade data.

5.4.5 The AO has referred to the precedence in Project Falcon in making the addition. Although the conditions as in Project Falcon are not applicable to the facts of the case since the trade done by the appellant is not in zero age illiquid options, it is relevant to state that additions done after enquiries in the Project Falcon have been subject matter of appeal at different forums and the present judicial precedents and legal position is as under.

(1) Prima Facie Data Insufficiency.

Courts and Tribunals have consistently held that mere reliance on Project Falcon data or statements recorded during investigations is insufficient to confirm tax evasion or unexplained income. There must be a direct, cogent linkage between the assessee's transactions and the alleged manipulative trades.

(ii) Requirement of Evidentiary Support:

Adverse conclusions cannot be drawn solely on suspicion or presumptions arising from Project Falcon data. Assessees must be given the opportunity to explain and substantiate the genuineness of their transactions. Mere invocation of "shell companies" or "accommodation entries" without substantive proof is impermissible. 11

Mentor Capital Ltd. Mumbai (iii) Double Taxation and Inclusion in Profit & Loss Account:

Where the assessee has declared profits arising from such trading activities in its financial statements and returned income accordingly, subsequent additions based on Project Falcon findings constitute double taxation and are legally unsustainable.

Various judicial forum including the Delhi ITAT in Saarthak Vanijya India Pvt Ltd vs DCIT, Mumbai ITAT in Gokul Fuelchem Private Limited, Mumbai vs National Faceless Assessment Centre etc. (iv)

The Courts have been consistently holding that Project Falcon findings should be treated as a trigger for detailed inquiry rather than conclusive evidence. Any addition based purely on such data, without corroborative proof and in presence of declared income, is liable to be quashed by the appellate authorities. In the instant case the entire case of the AO is based on the general findings in the Project Falcon report without any corroborative or specific finding in the case of the appellant. As already stated in detailed above, the general findings of Project Falcon are not applicable in the case of the appellant.

5.4.6 In view of the above, I find that both the findings of the AO that the appellant has not disclosed the profit of Rs. 7,79,62,500/- in the profit and loss account and has traded in illiquid options with a premeditated result in not correct. The general findings related to Project Falcon entities are not applicable in the instant case, more so as the appellant has not booked losses to derive any undue benefit but has infact booked profit that has been duly offered for tax by it as business income. Adding the said profit of Rs.7,79,62,500/- in the course of assessment proceeding has resulted in double taxation. This addition of Rs.7,79,62,500/- done by the AO is therefore deleted and the grounds of appeal are allowed.

Mentor Capital Ltd. Mumbai addition being consequential is also deleted. This ground of appeal is allowed.

Mentor Capital Ltd. Mumbai 20. In this regard, the Ld. DR appearing on behalf of the Revenue, while relying upon the assessment order, submitted that the addition under Section 68 of the Act was wrongly deleted by the Ld. CIT(A) solely on the basis of bank statements, confirmations, and repayment of the amount, without independent verification of the identity, creditworthiness, and genuineness of the lender, especially when the Investigation Wing had indicated that the lender was part of a network of entities engaged in providing accommodation entries.

7.4.2 From the sequence of events narrated by the AO relying on the report of the Investigation wing it appears that the so called layering has happened through cash deposit in the bank account of Shiv Shakti Trading to bank transfer to one of the 5 companies to bank transfer to another shell entity to bank transfer to Bluemotion Exports Pvt Ltd to

Mentor Capital Ltd. Mumbai bank transfer to the appellant. Transfer of funds to the appellant from Shiv Shakti Trading has therefore happened after 4 layers and the appellant is the 5th in line to receive funds from the bank account in which cash deposit has been done. Even this 5th level of layering is a general observation and there is no direct linkage of cash deposit and the funds ultimately received by the appellant. There is also no basis or reason for which the appellant has been treated as the ultimate beneficiary. There is no material on record in support of the finding of the AO that the nature of transaction upto the receipt of funds by the appellant has been in the nature of accommodation entries. In my considered view, the deposit of cash in the 5th layer and its extension to the appellant to hold that the sources of fund has not been explained is stretching the findings in the case of Shiv Shakti Trading to beyond reasonable limits. There is no direct linking of the appellant with the cash deposits in the bank account of Shiv Shakti Trading and to hold that the appellant has brought in its own funds through round tripping. The findings in the case of Shiv Shakti Trading will therefore have no bearing to the transaction between Bluemotion Export Pvt Ltd and the appellant and I shall restrict my decision to the finding of the AO that Bluemotion Export Pvt Ltd is a shell entity.

7.4.3 The appellant on the other hand has submitted that the amount of Rs.75,00,000/- was received by account payee cheque and was duly repaid in the same year. It is also stated that the transaction was reflected in the books of account and that the relevant confirmations and bank statements were filed. The AO has neither disproved these documents nor established that the transaction was a sham by issuing summons to the lender or conducting any further inquiry. It is further noted that no statement of any director of M/s. Bluemotion Exports Pvt. Ltd. has been placed on record, nor is there any other direct evidence linking the appellant to the broader network of entities alleged to be shell companies. The allegation that the lender lacks creditworthiness, by itself, cannot be the sole basis for making the addition unless the assessee's explanation is found to be false or lacking in documentary support. In the present case, there is no finding that the documentation furnished by the appellant was false or fabricated.

Mentor Capital Ltd. Mumbai 7.4.4 The appellant has also furnished the copy of reply dated 07.01.2023 filed before the AO in which details of Bluemotion Export Pvt Ltd was made available to her. Upon perusal of the bank statement, I find that the unsecured loan was received on 01.07.2014 and repaid on 27.01.2015 and finally squared off on 20.03.2015. The financial statement of Bluemotion Export Pvt Ltd reveal that the company has a revenue of Rs.1,75,88,207/-primarily on account of interest from ICDs and its net worth in the relevant year is in excess of 17 crores. It is therefore apparent that Bluemotion Exports Pvt Ltd is an investment company and is in the business of giving ICDs and earning interest. Further the report of the investigation wing itself reveals that there is no cash deposit in the bank account of Bluemotion Export Pvt Ltd and in fact cash has been found to be deposited 3 layers before Bluemotion Export Pvt Ltd. All these facts clearly reveal that the finding of the AO that Bluemotion Export Pvt Ltd is a shell entity is not borne by financial statements and documents on record. The identity and creditworthiness of the lender therefore stands proved and in view of the fact that there's no cash deposit in the account of Bluemotion Export Pvt Ltd, the genuinety of the transaction also stands proved. The appellant has therefore discharged its onus of proving the 3 essentials in order to rule out round tripping of one's own fund and therefore the addition of Rs.75,00,000/- done by the AO U/s 68 is deleted and the ground of appeal is allowed.

The issue is squarely covered on the following decisions:-

1) (2022) 140 taxmann.com 370 (Surat Tribunal) in the case of Rajhans Constructions (P) Ltd. 2) (2022) 145 taxmann.com 27 (Gujarat High Court) in the case of Prinicipal Commissioner of Income-tax Vs. Ambe Tradecorp (P.) Ltd. 3) (2023) 156 taxmann.com 75 (Gujarat High Court) in the case of Prinicipal Commissioner of Income-tax Vs. Ojas Tarmake (P.) Ltd. 4) (2024) 164 taxmann.com 764 (Gujarat High Court) in the case of Prinicipal Commissioner of Income-tax Vs. Merrygold Gems (P) Ltd.

Mentor Capital Ltd. Mumbai 22. We have heard the counsels for both parties, perused the material placed on record, the judgments cited before us, and the orders passed by the Revenue Authorities. From the records, we noticed that the AO had made the addition under Section 68 of the Act on the allegation that the amount received by the assessee from M/s Bluemotion Exports Pvt. Ltd. was a bogus accommodation entry. It is observed that the said addition was made primarily based on a report of the Investigation Wing alleging that M/s Bluemotion Exports Pvt. Ltd. is a shell company involved in providing accommodation entries and that its funds were layered through various entities before reaching the assessee.

Mentor Capital Ltd. Mumbai layer and its extension to the assessee so as to hold that the sources of funds have not been explained, is, in our view, an unreasonable stretching of the findings in the case of Shiv Shakti Trading. It is a factual position that there is no direct linkage between the assessee and the cash deposits made in the bank account of Shiv Shakti Trading. Therefore, the allegation that the assessee introduced its own funds through round- tripping is not substantiated. Consequently, the findings in the case of Shiv Shakti Trading, in our view, have no bearing on the transactions between Blue Motion Exports Pvt. Ltd. and the assessee.

Mentor Capital Ltd. Mumbai 27. The allegation that the lender lacks creditworthiness, by itself, cannot be the sole basis for making additions unless the explanation furnished by the assessee is found to be false or lacking in documentary evidence. The learned CIT(A) has dealt with this issue in detail in paragraphs 7.4 to 7.4.4 of the order and the same is reproduced herein below:

7.4 Decision

7.4.1 The appellant has challenged the addition of Rs. 75,00,000/- made by the AO under Section 68 of the Income Tax Act, 1961, on the allegation that the amount received from M/s. Bluemotion Exports Pvt. Ltd. was a bogus accommodation entry. Upon careful consideration of the facts and material on record, it is observed that the addition has been made primarily based on a report of the Investigation Wing alleging that M/s. Bluemotion Exports Pvt. Ltd. is a shell company involved in accommodation entries and that its funds were layered through various entities before reaching the appellant. The Investigation wing conducted enquiries in the case of M/s Shiv Shakti Trading and observed that the entity has frequent cash deposit in its bank account.

The investigation wing also found that there were various inward transactions in the said bank account from entities like Shree Ganesh Traders, Salasar Trading Co. Raghav Impex and frequent outward transactions to entities like M/s Lakhdatar Vinimay Pvt Ltd, Avlokan Vintrade Pvt Ltd, Diagram Dealers Pvt Ltd, Sonu Vanijay Pvt Ltd & Foreshore Distributions Pvt Ltd. The report also states that the present status of all these 5 companies with which Shiv Shakti Trading had outward transactions was "strike off. Enquiries in the case of Shiv Shakti Trading revealed that the entity does not exist at its address and the transactions in excess of Rs.37 crores in the bank account of Shiv Shakti Trading remained unexplained. The investigation report further found out that the 5 companies to whom Shiv Shakti Trading was transferring funds did not do any real business and did not have any credit worthiness. Analysis of the bank statement of these 5 companies revealed that these companies have further transferred funds to different bank accounts belonging to entities having no balance or minimal

Mentor Capital Ltd. Mumbai balance in their accounts. Further tracing of fund movement revealed that multiple layering has been done and ultimately the appellant has received funds from M/s Bluemotion Export Pvt Ltd, which is a shell entity and does not have the credit worthiness for giving this amount of Rs. 75,00,000/- to the appellant. The AO therefore held that since M/s Bluemotion Export Pvt Ltd is a shell entity and does not have the credit worthiness, the receipt of Rs. 75,00,000/- by the appellant from Bluemotion Exports is an accommodation entry. The AO therefor treated the unsecured loan as unexplained cash credit.

7.4.2 From the sequence of events narrated by the AO relying on the report of the Investigation wing it appears that the so called layering has happened through cash deposit in the bank account of Shiv Shakti Trading to bank transfer to one of the 5 companies to bank transfer to another shell entity to bank transfer to Bluemotion Exports Pvt Ltd to bank transfer to the appellant. Transfer of funds to the appellant from Shiv Shakti Trading has therefore happened after 4 layers and the appellant is the 5th in line to receive funds from the bank account in which cash deposit has been done. Even this 5th level of layering is a general observation and there is no direct linkage of cash deposit and the funds ultimately received by the appellant. There is also no basis or reason for which the appellant has been treated as the ultimate beneficiary. There is no material on record in support of the finding of the AO that the nature of transaction upto the receipt of funds by the appellant has been in the nature of accommodation entries. In my considered view, the deposit of cash in the 5th layer and its extension to the appellant to hold that the sources of fund has not been explained is stretching the findings in the case of Shiv Shakti Trading to beyond reasonable limits. There is no direct linking of the appellant with the cash deposits in the bank account of Shiv Shakti Trading and to hold that the appellant has brought-in its own funds through round tripping. The findings in the case of Shiv Shakti Trading will therefore have no bearing to the transaction between Bluemotion Export Pvt Ltd and the appellant and I shall restrict my decision to the finding of the AO that Bluemotion Export Pvt Ltd is a shell entity.

7.4.3 The appellant on the other hand has submitted that the amount of Rs.75,00,000/- was received by account payee cheque and was duly repaid in the same year. It is also stated that the transaction was reflected in the

Mentor Capital Ltd. Mumbai books of account and that the relevant confirmations and bank statements were filed. The AO has neither disproved these documents nor established that the transaction was a sham by issuing summons to the lender or conducting any further inquiry. It is further noted that no statement of any director of M/s. Bluemotion Exports Pvt. Ltd. has been placed on record, nor is there any other direct evidence linking the appellant to the broader network of entities alleged to be shell companies. The allegation that the lender lacks creditworthiness, by itself, cannot be the sole basis for making the addition unless the assessee's explanation is found to be false or lacking in documentary support. In the present case, there is no finding that the documentation furnished by the appellant was false or fabricated.

7.4.4 The appellant has also furnished the copy of reply dated 07.01.2023 filed before the AO in which details of Bluemotion Export Pvt Ltd was made available to her. Upon perusal of the bank statement, I find that the unsecured loan was received on 01.07.2014 and repaid on 27.01.2015 and finally squared off on 20.03.2015. The financial statement of Bluemotion Export Pvt Ltd-reveal that the company has a revenue of Rs.1,75,88,207/- primarily on account of interest from ICDs and its net worth in the relevant year is in excess of 17 crores. It is therefore apparent that Bluemotion Exports Pvt Ltd is an investment company and is in the business of giving ICDs and earning interest Further the report of the investigation wing itself reveals that there is no cash deposit in the bank account of Bluemotion Export Pvt Ltd and infact cash has been found to be deposited 3 layers before Bluemotion Export Pvt Ltd. All these facts clearly reveal that the finding of the AO that Bluemotion Export Pvt Ltd is a shell entity is not borne by financial statements and documents on record: The identity and creditworthiness of the lender therefore stands proved and in view of the fact that there's no cash deposit in the account of Bluemotion Export Pvt Ltd, the genuinety of the transaction also stands proved. The appellant has therefore discharged its onus of proving the 3 essentials in order to rule out round tripping of one's own fund and therefore the addition of Rs. 75,00,000/- done by the AO U/s 68 is deleted and the ground of appeal is allowed.

Mentor Capital Ltd. Mumbai 28. After considering the entire facts, particularly the financial statements of Blue Motion Exports Pvt. Ltd., it is observed that the company has reported revenue of Rs.1,75,88,207, primarily from interest on inter-corporate deposits (ICDs), and its net worth during the relevant year exceeds Rs.17 crores. This clearly indicates that M/s Blue Motion Exports Pvt. Ltd. is an investment company engaged in the business of providing ICDs and earning interest therefrom.

Mentor Capital Ltd. Mumbai CO. No. 102/Mum/2026 (A.Y: 2015-16) 32. Since we have already dismissed the grounds raised by the Revenue and rejected the appeal in ITA No. 5312/Mum/2025 (AY: 2015-16), in the result, the CO filed by the assessee becomes infructuous and therefore does not require any adjudication.

Order pronounced in the open court on 24/04/2026

Sd/- Sd/-

(JAGADISH) (SANDEEP GOSAIN) ACCOUNTANT MEMBER JUDICIAL MEMBER

Mumbai: Dated: 24/04/2026 RY, Sr. PS

Copy of the order forwarded to: (1)The Assessee (2) The Respondent (3) The CIT (4) The CIT (Appeals) (5) The DR, I.T.A.T. True Copy By order

(Asstt. Registrar) ITAT, Mumbai