DCIT CENTRAL CIRCLE- 7(1), MUMBAI, MUMBAI vs. HELMET TRADERZ LIMITED, MUMBAI

आदेश / ORDER PER GIRISH AGRAWAL, ACCOUNTANT MEMBER:

These appeal and the cross objection filed by the Department and assessee are against the order of ld. CIT Appeal vide DIN: ITBA/APL/S/250/2025- 26/1080158845(1) dated 29.08.2025 passed against the assessment order by Asst. Commissioner of Income-Tax, Central Circle-7(1), Mumbai u/s 153A rws 143(3) of the Income-tax Act (hereinafter referred to as the “Act”), dated 30.09.2021 for the Assessment Year 2017-18.

3.1. Cross objection filed by the assessee deals with the jurisdictional issues challenging the validity of search and seizure and the search warrant issued in the name of the assessee on the pretext of search action being actually conducted on Asuti Trading Pvt. Ltd., with which, according to the assessee, it had no relationship. Assessee also challenged the assessment made by issuing notice u/s. 153A when the addition has been made in absence of any incriminating documents in the seized material.

Sr. No. Nature of additions/disallowances Amount (Rs.) 1. Disallowance u/s. 14A 1,61,591/- 2. Addition on Income 33,370/- 3. Disallowance of Indirect Expenses 35,618/- 4. Addition of Unsecured Loans 7,15,00,000/- 4.1. It was submitted by the ld. Counsel of the assessee that identical additions were made in the case of group concerns such as Makalu trading Ltd, Dilshad Trading Co Ltd, M/s. Shubhkaran and Sons, AP Trading Pvt Ltd, etc. Assessee had challenged the said additions in the first appeal, wherein it had raised identical grounds followed by identical submissions in support of the grounds of appeal. Ld. CIT(A) provided partial relief on most of the grounds raised. Revenue took up the matter before the Tribunal in these group concerns wherein relief granted by the ld. CIT(A) was upheld. There is a long line of judicial pronouncements in the case of group concerns dealt by the Coordinate Benches are listed below, whose observations and findings have a direct bearing on the present appeal and cross objection before us:

i. DCIT vs. Supreme Holdings & Hospitality (I) Ltd. - ITA No 1437/MUM/2024 and CO No /68/Mum/2024 for Assessment Year 2017-18, dated 07.01.2025 ii. DCIT vs. A.P. Trading Co. - ITA No. 1434/MUM/2024 and CO No/67/Mum/2024, for Assessment Year 2018-19, dated 23.12.2024 iii. Shrilekha Trading Pvt Ltd. vs. DCIT - ITA No 3044/MUM/2025 and others for Assessment Years 2013-14 to 2019-20, dated 10.10.2025 iv. Subhkaran & Sons vs. DCIT - ITA No 2906/MUM/ 2025 and others for AY 2013-14 to AY 2017-18, dated 06.01.2026 v. DCIT vs. Yardley Investment & Trading Co. Pvt Ltd - ITA No 4725/MUM/2025 and CO. No. 223/MUM/2025 for AY 2013-14, dated 02.01.2024 vi. Shyam Mahabir Prasad Jatia vs. DCIT - ITA No 399-401/MUM/2024 for Assessment Year 2013-14, 2015-16 and 2016-17, dated 03.10.2024 vii. Duli Trade & Commodities Pvt. Ltd vs. DCIT - ITA No. 2139/MUM/2025 and others for Assessment Year 2013-14 to 2019-20, dated 22.08.2025 viii. Insco Steel Pvt. Ltd vs. DCIT - ITA No. 2340/MUM/2025 and others for Assessment Year Assessment Year 2013-14 to 2019-20, dated 22.08.2025 ix. DCIT vs. Elecmec Engineering & Projects Private Limited - ITA No 3055/MUM/2024, CO No.194/Mum/2025 and others for AY 2016-17 to AY 2018-19, dated 8.10.2025 x. Lloyds Metals and Energy Ltd vs. DCIT - ITA No. 2640/MUM/2025 and others for AY 2013-14 to AY 2019-20, dated 27.11.2025 xi. Lloyds Enterprises (formerly known as Shree Global Tradefin Ltd) vs. DCIT - ITA No. 2855/Mum/2025 and others for AY 2013-14 and AY 2015-16, dated 27.11.2025 xii. DCIT vs. Lloyds Engineering Works Ltd (Earlier known as Lloyds Steel Industries Ltd.) - ITA No 3997/MUM/2025 and CO. No. 164/MUM/2025 and others as held in Lloyds Engineering Works Ltd for AY 2015-16 and 2018- 19, dated 8.12.2025

5.1. He noted that as far as LC funding facility is concerned, assessee would have earned for providing the additional facility or feature of LC to various parties. Assessee did not receive any guarantee or LC from the parties to whom goods were allegedly sold by it. Vinod Jatia group family members and group entities used their goodwill and asset base to obtain LC facility from bank in the name of entities. This funding was passed on to Uttam / Topworth / Lloyds entities. By providing this facility to the creditors who in turn passed on this funding to their group companies, the risk was borne by the Vinod Jatia group.

5.2. After considering the overall facts and circumstances as well as submissions made by the assessee, ld. Assessing Officer computed additional income @ 7% on the total sale turnover. He noted that assessee has reported bogus sales turnover of Rs.4,76,408/-. Thus, Rs.33,370/- was added to the total income of the assessee.

5.3. Aggrieved by the said addition, assessee filed the first appeal. After considering the overall facts of the case, ld. CIT(A) while partly allowing the appeal, estimated the additional income at 0.5% of the sales as against 7% adopted by the ld. Assessing Officer.

5.4. We note that ld. CIT(A), while restricting the additional income to 0.5% of the sales turnover, observed that identical additions were made in the case of group concerns. He applied decisions of the group concerns and thus, gave partial relief. In this regard, the issue is no longer res integra as it has been dealt by the Coordinate Benches in plethora of judicial pronouncements listed above. We refer to the decision in the case of M/s. Subhkaran & Sons in ITA No 2906/MUM/ 2025 and others (supra) wherein the Coordinate Bench has elaborately dealt with the issue by taking note of observations and findings of the ld. CIT (A) as well as ld. AO in that case by first analyzing the modus operandi of the transactions which are alleged to be in the nature of circular trading. In this judicial pronouncement, the Coordinate Bench took note of the decision in another group concern in the case of Duli Trades Commodities Pvt. Ltd. (Supra), to deal with the issue wherein ld. CIT(A) had adopted the rate of 0.50% for profit estimation. In this decision, the very basis adopted by the ld. CIT(A) for resorting to estimation of additional income by applying rate of 0.50% was meritoriously dislodged. Based on the findings in this judicial pronouncement, the Coordinate Bench in the case of M/s Subhkaran & Sons (Supra) deleted the addition sustained by the ld. CIT(A) which was restricted by adopting 0.50% for estimation of additional income. Relevant extracts from the decision in the case of M/s. Subhkaran & Sons (supra) are extracted below for ready reference in this regard:

“5.5. It is pertinent to note that ld. CIT(A) has adopted the rate of 0.50% for profit estimation from the case of Duli Trade Commodities Pvt Ltd. This case travelled before the Coordinate Bench of ITAT Mumbai in ITA nos. 3063 to 3069 and 2340 to 2346/Mum/2025, order dated 22.08.2025 wherein on similar estimation with similar factual position, the addition sustained by the ld. CIT(A) was deleted. Relevant paragraphs from this order are reproduced for ready reference: “17. Now considering the above facts in detail, we proceed to decide the merits of the additions. In this regard, it was submitted that the assessee had not entered into any bogus/circular transactions as held by the AO. As per Ld. AR the assessee is engaged in the business of wholesale trading of metals and metal ores having a turnover of more than Rs. 2,000 crores. Considering the nature of the goods traded, which are heavy and bulky in size, there is typically no physical movement of such goods at the time of sale. Instead, the goods are stored at designated warehouses, and symbolic delivery is effected by way of transfer of title documents or delivery orders, which is an accepted and recognized commercial practice in the line of business. Such operational model is standard across the industry and does not, in any manner, indicate the presence of sham transactions. Thus the transactions are genuine. 18. Alternatively, it was also submitted that even if it is to be assumed that the assessee has entered into circular transaction, there is no evidence nor any findings arising out from the search proceedings to suggest that the assessee has earned extra cash which is in excess of amounts/profits already reflected in the books of accounts. On the contrary, the statements recorded of various individuals at the time of search indicate that the assessee has earned commission as its profits for providing the service of generating alleged non-genuine invoices. In this regard out attention was drawn to the statement of Shri Narsingh Vijay Dhawale, accountant of Mr. Vinod Jatia which is at paper book page No. 56 & 57, (Q. No. 13 and 14). Further, statement of Shri Riyaz Shaikh, CFO of Lloyds Metal and Energy Limited (group company of the assessee) which is at paper book page No. 71, (Q. no. 32). Thus, in this way we have noticed that the statements itself indicate that the transactions were executed in an auto mode with a pre-determined commission structured as profits. Most importantly, there is no mention of any cash consideration or compensation being paid for availing the alleged bogus invoices in any of the search statements including confessional statements. 19. We noticed from the record that not only there are no seized documents supporting the findings of the AO, absolutely there is no deposition made by anybody indicating any cash receipts by the assessee. It is important to mention here that in a case where there would have been such statements during the course of search alleging such cash receipts, the assessee would have an opportunity to cross examine the deponent. However, as per the facts of the present case, the assessee is in a worst situation in as much as the AO and Ld. CIT(A) has merely presumed and inferred cash consideration and thus the assessee had no such opportunity. 20. We further noticed that the additions made by the AO for all the six years is of approximately Rs. 250 crores. However, it is impossible and against the prudence that such substantial amounts have been paid to the assessee without leaving behind any documentary evidence such as notings, diaries or any cash trail. The complete absence of such evidence, in spite of extreme action of search and seizure, strongly suggest that no cash income was actually received by the assessee. Thus the absence of any evidence in itself is a positive evidence to suggest absence of cash transactions. On this proposition reliance is being placed upon the decision of the Coordinate Bench of the Mumbai of the Hon'ble Tribunal in the case of DCIT v. Supreme Holdings and Hospitality (India) wherein, with respect to the same search proceedings of Mr. Vinod Jatia and his companies, the Coordinate Bench of the Tribunal held that there is no involvement of any cash transaction nor there is any cash trail found in the search proceedings. 21. Furthermore, neither the AO nor the Ld. CIT(A) has referred to or relied upon any specific finding or tangible evidence to demonstrate that the assessee had actually received any cash. In our view, at the time of making the addition, the AO has merely proceeded on a presumptive basis by stating that the assessee might have received cash, without bringing any concrete, corroborative or even circumstantial evidence on record to substantiate such an assumption. Such reasoning of the revenue authorities is based purely on conjectures was also accepted by the Ld. CIT(A). In our considered view, such conjectural reasoning cannot form the basis for a sustainable addition under the Act. On this proposition, reliance is being placed up on the decision of the Hon'ble Supreme Court in the case of Dhakeshwari Cotton Mills Ltd. v. CIT (26 ITR 775) (PBP 144), wherein, it was held that although, the AO is not restricted by the strict and technical rules of the evidence and pleadings, he cannot proceed to make an addition purely on a guess work without any reference to material or tangible evidence. 22. After evaluating the entire records, we also found that the payer of the alleged amount has not been identified throughout the assessment proceedings. It is strange that the AO has alleged that the receipt of excess consideration to the extent of 5% of the turnover, which aggregates to approximately Rs. 250 crores for all the years under consideration but at the same time had not identified the person who had paid such a huge amount to the assessee. The revenue has also not made any addition in the hands of any counter party in respect of such huge amount allegedly paid to the assessee. Thus in our view, if the assessee had received the cash consideration outside the books of accounts, then in that eventuality, there has to be some entity who has paid such amount and such entity ought to have been identified and taxed by the Income-tax Department. 23. Even otherwise, the additions sustained by the Ld. CIT(A) is excessive. As in this regard, it was submitted that as per prevailing industry practice, the profit margin earned in case of a genuine wholesale trading is between 0.17% and 0.63%. (This fact has been accepted by the Ld. CIT(A) on Pg. 86). Therefore, in our view, even assuming that the transaction entered by the assessee are circular in nature and non-genuine, then in that eventuality the findings of the Ld. CIT(A) that the assessee must have earned 0.5% commission is contrary to commercial logic. No prudent businessman would pay such a high commission to a mere entry provider, especially when the commission exceeds or equals the profit margins earned in legitimate trading activity. Hence, the commission earned by the assessee has to be much lower than the industry's average net profit margin. 24. Even otherwise, the profit margin disclosed by the assessee on alleged circular transactions comes to 0.27% for the year under consideration (chart showing profit margin for the all the years is enclosed in the file). Therefore, in our view, considering the thin margin in this line of business, it is held that the profits disclosed by the assessee in its audited books of account includes commission income earned, therefore, in our considered opinion, no further addition is warranted on this account. Reliance is being placed on the decision of the Rajkot Bench of the Hon'ble Tribunal in the case of Kamlesh Deoraj Jain v. ITO (PBP 154), Chandigarh Bench of the Hon'ble Tribunal in the case of Seo Lehenga House v. DCIT (PBP 173) and Nagpur Bench of the Hon'ble Tribunal in the case of ACIT v. Solaries Holdings Put Ltd. (PBP 197), wherein it has been held that in case of a circular transaction, the profit declared in the books of accounts covers the commission portion and that no further addition is warranted especially in absence of any evidence of cash payments.

6.1. Considering the factual matrix and the judicial precedents in the entities forming part of the same search exercise conducted by the Department, ground no. 6 raised by the assessee in its appeal for Assessment Year 2013-14 is allowed whereby addition sustained by the ld. CIT(A) adopting 0.50% for estimation of additional income is deleted. Also, since the appeal of the assessee is allowed on the merits of the case, jurisdictional issues raised are left open. Since we have deleted the additions upheld by Ld. CIT(A) in assessee’s appeal, consequently, the grounds raised by the revenue in its appeal stands dismissed.”

5.5. Considering the factual matrix and the judicial precedents, when there is no material change and the issue arising from the same search exercise conducted by the Department, ground raised by the Revenue in this regard is dismissed.

6.1. On similar factual matrix, Coordinate Bench in the case of Supreme Holdings and Hospitality India Ltd. (Supra) had dealt with the issue wherein the loan of Rs.12 crores was obtained. The Coordinate Bench had taken note of the fact that assessment of LSIL was completed by DCIT, CC-7(1), Mumbai which is the same Assessing Officer who had completed the assessment of the said appellant, i.e., Supreme Holdings and Hospitality India Ltd. We find that transaction with LSIL has been held to be genuine and the addition made in this regard have been deleted. Relevant extracts in this regard are reproduced below from the judicial pronouncement in Supreme Holdings and Hospitality India Ltd. (Supra):

“7. The assessee during the course of the assessment proceedings had filed copy of ledger accounts, balance confirmation, their income tax returns, audited financial statements and copy of their bank statements. However, nowhere the ld. AO has examined these documents in the course of assessment proceedings. 8. The ld. CIT(A) after noting down the various allegations and observations of the ld. AO, has dealt each and every party; and one very important fact which has been brought on record that in all the cases of the above entities, the assessment order u/s.143(3) or u/s.153A has been passed wherein the source of the funds have been accepted after deep scrutiny including the loan given by these entities to the assessee. The additions in these cases were made by rejecting the books of accounts and applying the profit rate on the sales. The relevant observation and the finding of the ld. CIT (A) qua all these parties are as under:- “18. I have considered me assessment and submissions of the appellant and facts available on record. The details are discussed as under- 18.2 Duli Trade & Commodities Private Limited - 18.2.1 Before me, the appellant has furnished the ledger account of this party in its books of account, statements of bank accounts of the appellant and Duli Trade & Commodities Private Limited, copies of audit report and income tax returns of Duli Trade & Commodities Private Limited. From the perusal of ledger account, following transactions are found Opening Loan taken Loan repaid Closing balance as on during the year during the year Balance as on 01-04-2016 31-03- 2017

NIL 14,90,00,000/- 14,90,00,000/- NIL It can be seen that the appellant has taken loan of Rs. 14.9 crores during the assessment year under consideration and the same has been repaid in the assessment year under consideration itself. The closing balance as on 31.03.2017 is nil. 18.2.2 Further, it is seen that the assessment u/s 143(3) in case of Duli Trade & Commodities Pvt. Ltd for A.Y 2017-18 has been completed on 30.03.2022 wherein the A.O has made addition of Rs. 38.16 crores. On Page no. 87 of this assessment order, the A.O has discussed the issue of rejection of books of accounts u/s 145 of the I.T. Act. After rejecting the books of accounts, the income is computed @ 5% of sales of Rs. 581.59 crores. In the subsequent para, the A.O has given following findings: "The searched entities of Vinod Jatia Group of companies used their goodwill and mortgaged their, assets& properties with banks to obtain LC facility from the banks, This funding was passed on to Uttam/Topworth/Lloyds group entities By providing this LC facility to his creditors who in tum passed on this funding to their group companies the searched entities of Vinod Jatia Group took burden of lot of risk on themselves. They did not receive any guarantee or LC from the parties to whom goods were allegedly sold. Therefore, the searched entities of Vinod Jatia Group would have eamed additicinal commission for providing additional facility of LC to various parties. In the case of searched entities where documents are on record-regarding mortgaging properties for LC facility, the income is estimated at rate of 7% of turnover However, the assessee company was not bearing risks of mortgaging properties, hence income is estimated at lower rate in the case of the assessee company Considering the market practices, facts in other similar cases and overall facts & circumstances of the case, the income on such turnover is estimated at 5% This estimated 5% income includes commission on accommodation entries of purchases and sales made/passed on to further the entries obtained from searched entities and other unaccounted incomes like Bill Discounting income, interest received, Discounts, income on account of suppression of GP etc. Further no adjustment on account of existing gross profit is being given to the assessee company since the assessee company has suppressed GP to very miniscule and meagre level and no specific GP information as per the books of the assessee on account of transactions in question is available. Therefore, the estimated additional income in the case of the assessee company is 5% of Rs 581,59,79,082/- which comes to Rs 29,07,98,954/. Therefore, Rs. 29,07,98,954/- is added to the total income of the assessee company" 18.2.3 From the above findings of the A.O, it can be seen that the source of funds in case of M/s. Duli Trade & Commodities Pvt. Ltd is from banks. The assessment in case of appellant has been completed by the DCIT-CC 7(1), Mumbai on 30.09.2021, wherein the A.O held that the unsecured loan received of Rs.14.9 crores from Duli Trade & Commodities Pvt. Ltd is unexplained. The same AO, i.e. DCIT-CC -7(1), Mumbai, has subsequently completed the assessment in case of Duli Trade & Commodities Pvt. Ltd. for the same A.Y. 2017-18, wherein he has not made any addition on account of sources of funds received by Duli Trade & Commodities Pvt. Ltd. In fact, he has given a finding that the source of funds is from the bank. As the source of loan advanced to the appellant has been accepted by the same A.O, no addition in the hands of the appellant can be made u/s. 68 of the I.T. Act. 18.3 Elecmec Engineering and Projects Private Limited - 18.3.1 Before me, the appellant has furnished the ledger account of this party in its books of account, statements of bank accounts of the appellant and Elecmec Engineering and Projects Private Limited, copies of audit report and income tax returns of Elecmec Engineering and Projects Private limited. From the perusal of ledger account following transactions are found to have taken place between the appellant and the above party. Opening Loan taken Loan repaid during Closing Balance balance as on during the the year as on 31-03- 01-04-2016 year 2017

NIL 14,90,00,00 NIL 14,90,00,000/- 0/- Opening Loan taken Loan repaid during Closing Balance balance as on during the the year as 2018 on 31- 01-04-2017 year 03-2018

14,90,00,000/- NIL 14,90,00,000/- NIL

It can be seen from the above that the appellant has taken loan of Rs. 14.9 crores in the financial year 2016-17 and the same has been repaid in the next financial year 2017-18. The closing balance as on 31.03.2018 is shown as nil 18.3.2 Further, the scrutiny assessment in case of Elecmec Engineering Pvt. Ltd for the A.Y 2017-18 has been completed u/s 153C rws 143(3) of the I.T. Act on 30.03.2022. On page No. 88 of the assessment order, the A.O has discussed the issue of rejection of books of accounts u/s 145(3) of the I.T. Act. After rejecting the books of accounts, the income is estimated at the rate of 5% on purchase of Rs. 460.95 crores. The A.O has not made any addition on account of funds received by this party. The A.O has further mentioned in the assessment order are as under "The searched entities of Vinod Jatia Group of companies used their goodwill and mortgaged their assets& properties with banks to obtain LC facility from the banks. This funding was passed on to Uttam/Topworth/Lloyds group entities By providing this LC facility to his creditors who in turn passed on this funding to their group companies, the searched entities of Vinod Jatia Group took burden of lot of risk on themselves. They did not receive any guarantee or LC from the parties to whom goods were allegedly sold Therefore, the searched entities of Vinod Jatia Group would have earned additional commission for providing additional facility of LC to various parties. In the case of searched entities, where documents are on record regarding mortgaging properties for LC facility, the income is estimated at rate of 7% of turnover However, the assessee comp company was not bearing risks of mortgaging properties hence income is estimated at lower rate in the case of the assessee company Considering the market practices, facts in other similar cases and overall facts & circumstances of the case, the income on such turnover is estimated at 5%. This estimated 5% income includes commission on accommodation entries of purchases and sales made/passed on to further the entries obtained from searched entities; and other unaccounted incomes like Bill Discounting incorne Interest received, Discounts, income on account of suppression of GPetc Further no adjustment on account of existing gross profit is being given to the assessee company since the assessee company has suppressed GP to very miniscule and meagre level, and no specific GP information as per the books of the assessee on account of transactions in question is available. Therefore, the estimated additional Income in the case of the assessee company is 5% of Rs 460,95 89,290/- which comes to Rs 23,04,79,464/- Therefore, Rs. 23,04,79 464/- is added to the total income of the assessee company" 18.3.3 The A.O has made addition of Rs 14 9 crores in the case of the appellant on account of unsecured loan received from this party. The assessment of Elecmec Engineering & Projects Pvt. Ltd has been completed by the A.O, DCIT- CC-7(1), Mumbai, which is the same A.O who has completed the assessment of appellant. On one hand, the A.O makes addition u/s 68 on account of loan received from this party, whereas on the other hand, the A. O accepts the source of funds in the case of this party as from the bank. No addition in this regard has been made in the hands of Elecmec Engineering & Projects Pvt. Ltd. In fact, the source of funds as mentioned in the assessment order is from the Banks. Under the circumstances, no addition can be made u/s. 68 of the Act in the case of the appellant on account of unsecured loan received from this party 18.4 Lloyds Steels Industries Limited - 18.4.1 Before me, the appellant has furnished the ledger account of this party in its books of account, statement of bank accounts of the appellant and Lloyds Steels Industries Limited, copies of audit report and income tax returns of Lloyds Steels Industries Limited. It is seen that the following transactions are appearing in the ledger account Opening balance Loan taken Loan repaid Closing as on during the during the year Balance as on 01-04-2016 year 31-03-2017

9,20,17,029 12,00,00,000/ NIL 21,00,00,000/-

Opening balance Loan taken Loan repaid Closing on during the during the year Balance as on 01-04-2017 year 31-03-2018 21,00,00,000/- NIL 21,00,00,000/- NIL

It can be seen that the appellant has taken loan of Rs. 12 crores during the year under consideration. The opening balance of loan as on 01.04.2016 was of Rs. 9,20,17,029/- Thus, the closing balance as on 31.03.2017 was Rs. 21 crores. This entire loan has been repaid in the next financial year and the closing balance as on 31.03.2018 is shown as nil. 18.4.2 Further, the scrutiny assessment u/s 153C of the I.T. Act has been completed for A.Y 2017-18 on 31.03.2022 in case of Lloyds Steels Industries Limited, wherein, the A. O has accepted the returned income filed. The A.O has not made any addition on account of the sources of loan given to the appellant company. This assessment order has been completed by DCIT- CC-7(1), Mumbai, which is the same A.O who has completed the assessment of the appellant. On the one hand, the A.O makes the addition u/s 68 in the case of the appellant on account of unsecured loan received from Lloyds Steels Industries Ltd. and on other hand, the A.O accepts the sources of these loans in the case of the lender Accordingly considering these facts and circumstances, I am of the view that no addition u/s 68 of the Act is warranted in the case of the appellant on account of unsecured loan received from this party. 18.5 Asuti Trading Private Limited- 18.5.1 Before me, the appellant has furnished the ledger account of this party in its books of account, statement of bank accounts of the appellant and Asuti Trading Private Limited, copies of audit report and income tax returns of Asuti Trading Private Limited. From the perusal of ledger account following transactions are found

Opening Loan taken Loan repaid Closing balance as on during the year during the year Balance as on 01-04-2016 31-03- 2017 14,78,04,461/- 2,10,00,200/- 16,25,30,647/- NIL

It can be seen that the appellant has taken loan of Rs. 2.1 crores during the assessment year under consideration and the entire loan including opening balance has been repaid in the same assessment year. The closing balance as on 31.03.2017 is shown as nil 18.5.2 Further, the assessment in the case of Asuti Trading Pvt. Ltd has been completed u/s 153A rws 144 on 13,07/2021, wherein after rejecting the books of accounts the income is estimated @ of 5% on total sales turnover. The A.O has not made any addition on account of funds received by these companies. This assessment has been completed by the DCIT-CC- 7(1), Mumbai, who is the same A.O who has completed the assessment of appellant. On one hand, the A.O makes addition u/s 68 in the case of the appellant on account of loans received from this party and on the other hand, the A. O accepts the sources of the loan in the case of the lender. Considering the facts and circumstances discussed above, I am of the view that no addition u/s. 68 of the Act can be made in the case of the appellant on account of unsecured loan received from this party 19. From the above discussion, It can be seen that the loans have been accepted through banking channels and the repayments have also been made through the banking channels. There are several judicial decisions wherein it is held that in case of repayment of loan through the banks, addition cannot be made u/s.68 of the I.T. Act. 9. Thereafter, ld. CIT (A) after referring to various judgments, finally deleted the addition after observing as under:- 20 In the appellant's case the loans were re received through banking channels and the repayments were also made through banking channels, Further, there were sufficient funds in the bank accounts of these parties and no cash was deposited immediately before advancing the loans to the appellant. The appellant has submitted loan confirmations from these parties and also submitted the copies of their Income tax returns, audit report etc. All these 4 parties are assessed with the same A.O as of appellant. Thus, the A.O was having the financial details of these four parties with him 21. Further, the A.O. who has completed the assessment in the case of appellant has also completed the assessment in cases of these four parties and in these assessment orders, he has not doubted the sources of the loans advanced to the appellant by these parties. The A.O has not made any additions regarding the sources of funds for advancing loans. The AO in the assessment order of the appellant has discussed the modus operandi of misusing the LC facility by these parties and held that the loan entries are accommodation entries, however, in their respective assessments, no addition on this issue has been made. 22. In view of the facts and judicial pronouncements as discussed above, the addition of Rs. 43,90,00,000/- made by the AO u/s 68 of the IT Act is deleted. Accordingly, this ground of appeal is ALLOWED. 10. We have heard both the parties at length and perused the voluminous documents filed before us and the relevant material referred at the time of hearing. The main case of the Revenue before us is that, all these entities from whom assessee has taken loan were found to be dubious entities without carrying out any actual business. Once they have been admitted to be a shell company, therefore, the entire transaction of loan cannot be treated genuine. Ld. DR further submitted that even if assessee may not be linked directly with these companies but the fact of the matter is that assessee has taken huge loans of several Crores from these dubious entities of Jatia group, Lloyds group and other groups who were covered under the search. Once these group and entities were found to be doing fraudulent practice to de-fraud the bank and did not have any actual business, then how the transaction of giving loan to the assessee can be accepted to be genuine. Thus, the order of the ld. AO should be confirmed. 11. On the other hand ld. Counsel for the assessee strongly referred and relied upon the order of the ld. CIT(A) and pointed out that, this case all these companies assessee had shown their creditworthiness from their audited accounts and profit and loss account and their balance sheet reflected that they had huge surplus funds and also have disclosed the loans given to the assessee. Their revenue from operations have been in hundreds of crores and were duly assessed to tax and therefore, it cannot be held that these companies were dubious. He further submitted that none of these parties who have given the statement were either confronted or put to cross examination and merely relying upon the statement wherein there is no reference of the assessee, no adverse inference can be drawn, when assessee had filed all the documents and especially in case of all these lender companies their creditworthiness and sources of funds have been examined under scrutiny by the same Assessing Officer in their regular assessments. Thus, the loans cannot be treated as non-genuine and assessee had discharged the entire onus cast upon it. 12. From the perusal of the records, we find that identity of all the four companies are not in doubt, because Asuti Trading Pvt. Ltd is one of the company forming part of Topworth Group of companies which is a very big group having turnover of several 100 Crores and are assessed to tax under the same Assessing Officer as that of the assessee. Similarly, Duli Trading & Commodities Pvt. Ltd. was forming part of Uttam Value Group, regularly assessed to tax and for these years has been assessed with the same Assessing Officer and they have disclosed the transaction in their financials. In the case of Elecmec Engineering Projects Pvt. Ltd. which is farming part of the Lloyds group, is also a big group and was carrying out huge volume of business which is evident from the profit and loss account Lloyds Steel Industry Ltd., which was also part of Lloyds group was also regularly assessed to the tax with the same Assessing Officer and were having substantial business. Thus, identity cannot be doubted.

cannot be tinkered with. Accordingly, the additions made u/s.68 is deleted and the order of the ld. CIT (A) is confirmed and the grounds raised by the Revenue are dismissed.” 6.2. Considering the above judicial precedent and there being no change in material facts, in the present case before us, in respect of similar transaction undertaken by the assessee with LSIL, by respectfully following the detailed findings of the Coordinate Bench, ground raised by the Revenue in this regard is dismissed.

7.1. We have perused the material on record and gone through the observations of ld. CIT(A) as well as of ld. AO. Taking the judicial precedent and the factual matrix of the present case before us in juxtaposition, we do not find any reason to interfere with the findings of the ld. CIT(A). Accordingly, ground raised by the Revenue in this regard is dismissed.

Order pronounced in the open court on 07 May, 2026 Sd/- Sd/- (Amit Shukla) (Girish Agrawal) Judicial Member Accountant Member

Dated: 07 May, 2026 MP, Sr.P.S.

Copy to: DCIT CENTRAL CIRCLE- 7(1), MUMBAI, ROOM NO.653, 6TH FLOOR, AAYAKAR BHAWAN, MAHARSHI KARVE ROAD, 1 MUMBAI, MUMBAI-400020, MAHARASHTRA HELMET TRADERZ LIMITED, 1, PEARL MANISON NORTH, 91 M KARVE 2 ROAD, MUMBAI, MUMBAI-400020, MAHARASHTRA 3 THE PCIT / CIT, 4 THE D.R., ITAT, MUMBAI BENCH 5 GUARD FILE