M.A TRADING PRODUCTS ,MUMBAI vs. ITO WARD 24(2)(1), MUMBAI

आयकरअपीलीयअिधकरण�ायपीठमुंबईम�। IN THE INCOME TAX APPELLATE TRIBUNAL “J (SMC)” BENCH, MUMBAI BEFORE SHRI NARENDER KUMAR CHOUDHRY, JM & SHRI ARUN KHODPIA, AM I.T.A. No.8919/Mum/2025 (Assessment Year: 2018-19) M.A. Trading Products ITO Ward 24(2)(1) 115, 1st floor Hub Town Solaris, Piramal Chambers, Lalbaug, Parel, N S Phadke Marg, Andheri East, Vs. Mumbai-400012 Mumbai-400069 PAN: ABBFM8222A Assessee- अपीलाथ� / Appellant Revenue-��थ�/ Respondent :

Assessee by : Shri Piyush Chaturvedi Revenue by : Shri Aditya Rai – SR. DR. Date of Hearing 30.03.2026 : : 07.05.2026 Date of Pronouncement

O R D E R Per Arun Khodpia, AM: This appeal of the assessee is directed against the order of Commissioner of Income Tax Appeals/ National Faceless Appeal Centre (NFAC), Delhi [“the Ld. CIT(A)] dated 16.12.2025, for the assessment year (AY) 2018-19, arises from assessment order u/s 147 r.w.s. 144B of the Income Tax Act, 1961 (“the Act”) dated 26.03.2024 passed by Assessment Unit, Income Tax Department (“The Ld. AO”). The grounds raised by the assessee are as under: “1. The Ld. CIT(A)-NFAC, erred in sustaining the reopening of the assessment u/s 147 of the Act, and also failed to appreciate that the Ld. JAO erred in the issuance of notice

ITA No. 8919/Mum/2025 M.A. Trading Products u/s 148. Issuance of Notice u/s 148 by the JAO instead of FAO made the reassessment proceedings void ab initio. 2. The Ld. CIT(A)-NFAC erred in sustaining the addition of Rs. 12,50,000/- into the income of the assessee as unexplained expenditure u/s 69C of the Act. 3. The Ld. CIT(A)-NFAC failed to understand the provision of sec. 69C of the Act and also failed to appreciate that when the source of payment is explained, the FAO ought not to have made such an addition. 4. The CIT(A)-NFAC grossly erred in not appreciating that the FAO had not put forward his reservations/objections on the issue during Video Conferencing, when specifically asked by the assessee. So, he has defeated the whole purpose of VC. 5. The appellant craves leave to add, alter, amend, or delete any grounds of appeal either before or during the hearing of the appeal as and when advised.” 2. In this case, the assessee firm has filed its ITR for assessment year 2018-19 on 31.08.2018, declaring total income at Rs.5,84,030/-. On the basis of information received, the Ld. AO come to know that the assessee is beneficiary of bogus invoices/loan from M/s. Lakshin Infradev Pvt. Ltd. in the form of bogus payments amounting to Rs.27,50,000/-. Before the Ld. AO, the assessee submitted that the aforesaid amountwas received as business advance from M/s. Lakshin Infradev Pvt. Ltd in preceding assessment year 2017-18, out of which Rs.15,00,000/- was paid in the same year and the balance payable appearing in the books of assessee at Rs.12,50,000/- has been paid during the relevant year. It is further clarified that the assessee has not made any expenditure at all but it is the repayment of business advances received in earlier years. Therefore, in absence of any claim of expenditure, no addition u/s 69C is called for. Such submissions of assessee do not find favour with the AO. The AO therefore made the addition observing that M/s. Lakshin Infradev Pvt. Ltd. is only a paper entity, who had not filed any ITR after assessment year 2014-15. It is also revealed that 2

ITA No. 8919/Mum/2025 M.A. Trading Products the said company had been struck off and the last AGM of the said company was held on 30.09.2015. Therefore, the payment of Rs.12,50,000/- by the assessee to M/s. Lakshin Infradev Pvt. Ltd. lacks credentials to be treated as genuine. Accordingly, the payment of Rs.12,50,000/- has been considered for variation treating the same as unexplained u/s 69C of the Act. 3. Being aggrieved with the aforesaid addition, assessee preferred an appeal before the Ld. CIT(A), who had dismissed the appeal of assessee with the following observations: “I have carefully considered the assessment order, grounds of appeal, submissions of the appellant and material available on record. The information received from GST authorities clearly indicated that M/s Lakshin Infradev Pvt. Ltd. was a non-existent entity involved in providing accommodation entries. The appellant failed to discharge the onus of establishing the genuineness of the transaction and the identity and creditworthiness of the concerned party. Mere routing of funds through banking channels does not establish the genuineness of the transaction.The Assessing Officer has rightly invoked the provisions of section 69Cof the Act. It is worth mentioning here that the Assessing Officer has confined his additions to the amount paid by the appellant in the concerned previous year only. As regards the challenge to reopening, it is observed that the Assessing Officer had tangible material in the form of specific information from external agencies and has followed due process as laid down under the Act. Therefore, the reopening is held to be valid in law. In view of the above facts and circumstances, the addition of Rs. 12,50,000/- made by the Assessing Officer is confirmed. Accordingly, all the grounds of appeal are dismissed. In the result, the appeal is dismissed.” 4. Being dissatisfied with the order of Ld. CIT(A), the assessee is in appeal before us. 5. At the outset, Ld. Authorized Representative (‘AR’) of the assessee submitted that the addition u/s 69C itself is bad in law, as the provisions of the

ITA No. 8919/Mum/2025 M.A. Trading Products said section cannot be appliedto the transactions under dispute. Ld. AR drew our attention to page no.41 of the paper book furnished therein the ledger amount of M/s. Lakshin Infradev Pvt. Ltd., according to which the assessee has received an amount of Rs.27,50,000/- in its Union Bank of India account on 21.06.2016 that is during the AY 2017-18. It is further noted that out of Rs.27,50,000/- an amount of Rs.10,00,000/- and Rs.5,00,000/- has been repaid by the assessee on 21.03.2017 and 23.03.2017 (within AY 2017-18), the remaining amount of Rs.12,50,000/-, due as on 1st April, 2017 was paid by the assessee on 11.01.2018 through its Indusind Bank account on 11.01.2018 and 12.01.2018. It was the submission that since there was no expenditure incurred or claimed by the assessee, so as to bring the transaction of payment of Rs.12,50,000/-within ambit of section 69C, therefore the addition was in contravention of the provisions of Act. 5. Per contra, Ld. DR representing the revenue reiterated the observations of the AO and submitted that as the transactions were made with a bogus concern which was struck off far back in assessment year 2015-16, its last AGM was on 30.09.2015 only.The said concern had not filed its return after assessment year 2014-15, thus, the payment made by assessee cannot be treated as genuine payments. Therefore, the order of Ld. AO and Ld. CIT(A) deserves to be upheld. 6. We have considered the rival submissions, perused the material available on record. Admittedly, in the present case there was a transaction of receipt of loan from the alleged bogus party M/s. Lakshin Infradev Pvt. Ltd., however, such 4

ITA No. 8919/Mum/2025 M.A. Trading Products loan was received by the assessee in preceding AYi.e., 2017-18, whereas the AO had made the addition on account of unexplained expenditure in the year under consideration that is AY 2018-19 for repayment of Rs.12,50,000/- made to settle the aforesaid unsecured loan. The question before us is whether the addition u/s 69C can be made for repayment of loan, even if the loan was bogus and the assessee is unable to prove genuineness of the same by producing corroborative evidence to establish the identity and creditworthiness of the lender and the genuineness of the transaction. It is an undisputed fact that the amount which is added by the Assessing Officer in the income of assessee, was never claimed by the assessee as expenditure in its P&L account, therefore invocation of section 69C in the present case is found to be on misconceived satisfaction. 7. Further on perusal of the financial statement of the assessee for financial year 2016-17, name of M/s. Lakshin Infradev Pvt. Ltd. is reflecting as current liability for Rs.12,50,000/- in the balance-sheet of the assessee on liability side and as per audited balance-sheet as on 31st March, 2018 which is relevant for the relevant AY, the name of said entity has been disappeared, as the unsecured loan has been repaid.In view of such facts, it cannot be doubted that the assessee has not claimed such expenditure for reducing its taxable income, which the assessee was unable to explain to the satisfaction of the revenue authorities. 8. In backdrop of such factual aspects of the present case, we find that the amount repaid by the assessee cannot be treated as expenditure and, therefore, the same cannot fall within the scope of section 69C of the Act as unexplained 5

ITA No. 8919/Mum/2025 M.A. Trading Products expenditure. Consequently, the findings of ld. AO which are confirmed by the Ld. CIT(A) are found to be against the logicalapplication of law. Therefore, the addition made u/s 69C cannot sustain in the present case. 9. We thus direct the AO to vacate the addition made for Rs.12,50,000/-, made u/s 69C of the Act. Since, we have directed to delete the substantive addition made by the Ld. AO u/s 69C of the Act, any other contention challenging the legality of impugned orders or on merits of the case by the assessee are rendered to be academic only and need not be adjudicated at this stage. 10. In result, the appeal of assessee stands allowed, in terms of our aforesaid observations. Order pronounced in the open court on 07-05-2026.

Sd/- Sd/- (NARENDER KUMAR CHOUDHRY) (ARUN KHODPIA) Judicial Member Accountant Member

Mumbai, Dated :07-05-2026. Ankit, Sr. PS

ITA No. 8919/Mum/2025 M.A. Trading Products

Copy of the Order forwarded to : 1. The Appellant 2. The Respondent 3. DR, ITAT, Mumbai 4. Guard File 5. CIT

BY ORDER,

(Dy./Asstt. Registrar) ITAT, Mumbai