SHREE BABA TOWERS PVT. LTD.,NORTH DINAJPUR vs. D.C.I.T., CIRCLE - 7(1), KOLKATA

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ITA 2430/KOL/2025Status: DisposedITAT Kolkata30 October 2026AY 2018-20196 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 made by the AO and sustained by the CIT(A) was in disregard of the facts on record. The Tribunal observed from the assessee's bank statement that money was advanced to Mega Associates on 27.04.2017, out of FDR maturity proceeds, and was received back on 21st November of the same year in the same bank account. Therefore, the Tribunal concluded that the assessee was not a beneficiary of any transaction from Mega Associates as observed by the lower authorities. The amount received back was not a cash credit but a refund of money advanced by the assessee. Consequently, the Tribunal set aside the order of the CIT(A) and directed the AO to delete the addition.

What were the facts?

The assessee, Shree Baba Towers Pvt. Ltd., is in appeal against the order of the National Faceless Appeal Centre, Delhi, dated 19.09.2025, for Assessment Year 2018-19. The Assessing Officer (AO) reopened the case under Section 147, alleging the receipt of accommodation entries totaling ₹65 lacs from a paper company, M/s Megha Associates Limited. The assessee contended that ₹80 lacs was paid to Mega Associates Pvt. Ltd. and subsequently received back, providing bank statements, audited accounts, and ledger accounts as evidence. The AO's attempts to verify with Mega Associates via Section 133(6) notice failed, and a verification report indicated the company never existed at the given address. Consequently, the AO treated the ₹80 lacs received as an unexplained cash credit under Section 68 and added it to the assessee's income.

What were the issues?

1. Whether the amount of ₹80,00,000 received by the assessee from M/s Mega Associates Pvt. Ltd. constitutes an unexplained cash credit under Section 68 of the Income Tax Act, 1961, warranting addition to the assessee's income? (Question of law and fact) Assessee's Contention: The assessee argued that the amount received was not a cash credit but a refund of money previously advanced by the assessee to Mega Associates Pvt. Ltd. They submitted bank statements, audited accounts, and ledger accounts to substantiate their claim that the money was received back within the same financial year out of the maturity proceeds of FDRs. Revenue's Contention: The revenue, through the AO and sustained by the CIT(A), treated the receipt as an unexplained cash credit, relying on the verification report that M/s Mega Associates Limited never existed at the given address, suggesting it was an accommodation entry.

Which sections of the Income-tax Act were involved?

Section 68,Section 147,Section 148A(d),Section 148,Section 148A(b),Section 143(2),Section 142(1),Section 133(6),Section 147/144B

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, “D” BENCH, KOLKATA

For Appellant: Shri Soumitra Choudhury
For Respondent: Shri Praveen Das Chowdhury
Hearing: 01.10.2026Pronounced: 30.10.2026

Per Rajesh Kumar, AM:

This is an appeal preferred by the assessee against the order of the National Faceless Appeal Centre, Delhi (hereinafter referred to as the “Ld. CIT(A)”] dated 19.09.2025 for the AY 2018-19.

2.

The first ground is general in nature and need no adjudication.

3.

The second ground raised by the assessee is against the order of Ld. CIT (A) confirming the addition of ₹ 80.00 lacs as made by the Ld. AO in respect of money received by treating the same as unexplained cash credit u/s 68 of the Act.

ITA No. 2430/KOL/2025 Shree Baba Towers Pvt. Ltd; A.Y. 2018-19 4. The facts in brief are that the assessee filed the return of income declaring total income of ₹1,49,480/-. Thereafter, the case of the assessee was reopened u/s 147 of the Act by issuing notice u/s 148 on 28.03.2022, after passing the order u/s 148A(d) of the Act by taking into account the reply furnished by the assessee to the show cause notice issued u/s 148A(b) of the Act. Thereafter, the assessee filed the same return of income as filed originally. Thereafter, notices u/s 143(2) and 142(1) of the Act along with questionnaire which were duly served upon the assessee. The case of the assessee was reopened for the reason that the assessee has received accommodation entry of ₹65 lacs from paper company M/S Megha Associates limited. The assessee replied before the Ld. AO that ₹80.00 lacs was paid to Mega Associates Pvt. Ltd was received back. The assessee also furnished the bank statement, audited accounts and ledger account of Mega Associates to corroborate his averments. The Ld. AO in order to verify the transactions, also issued notice u/s 133(6) of the Act to Mega Associates Limited. However, there was no response from the said company. The Ld. AO also referred the matter for verification to the verification unit of the department and the verification report showed that Mega Associates never existed on the given address. Finally, the Ld. AO treated the said amount received from the said concern as unexplained cash credit and added the same to the income of the assessee u/s 68 of the Act in the assessment framed u/s 147/ 144B of the Act dated 27.03.2023.

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ITA No. 2430/KOL/2025 Shree Baba Towers Pvt. Ltd; A.Y. 2018-19 5. The Ld. CIT (A) affirmed the order of the Ld. AO by ignoring the facts on record i.e. bank statement as well as the evidences filed by the assessee which clearly demonstrated that money was advanced by the assessee earlier was returned back from Mega Associates Pvt. Ltd.

6.

After hearing the rival contentions and perusing the materials available on record, we find from the bank statement of HDFC Bank account No. 50200023340830 that the assessee has advanced money to the said concern on 27.04.2017 and the money was advanced out of maturity proceeds of the FDRs. The said money was received back by the assessee on 21st November in the same bank account within the same year. Therefore, the assessee is not beneficiary of the transactions from the said party as observed by the lower authorities and the findings of the Ld. AO as well as the Ld. CIT (A) are contrary on the facts on record. The money received back is not in fact any cash credit but money advanced by the assessee to the said party was refunded to the assessee. The copy of the ledger account of the assessee is extracted below:-

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ITA No. 2430/KOL/2025 Shree Baba Towers Pvt. Ltd; A.Y. 2018-19

7.

We also extracted the bank account of the assessee which was filed at pageno. 38 and 39.

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ITA No. 2430/KOL/2025 Shree Baba Towers Pvt. Ltd; A.Y. 2018-19

8.

Considering the facts of the case and rival contentions of the parties, we are of the view that the addition made by the Ld. AO is in blatant disregard on the facts on record and same has wrongly been sustained by the Ld. CIT (A). Consequently, we set aside the order of Ld. CIT (A) and direct the Ld. AO to delete the addition. Page 5 of 6

ITA No. 2430/KOL/2025 Shree Baba Towers Pvt. Ltd; A.Y. 2018-19 9. In the result, the appeal of the assessee is allowed. Order pronounced on 30.10.2026.

Sd/- Sd/- (PRADIP KUMAR CHOUBEY) (RAJESH KUMAR) (JUDICIAL MEMBER) (ACCOUNTANT MEMBER) Kolkata, Dated: 30.10.2026 Sudip Sarkar, Sr.PS Copy of the Order forwarded to: Sudip Digitally signed 1. The Appellant by Sudip Sarkar 2. The Respondent Date: Sarkar 3. CIT 2026.10.30 09:29:23 +05'30' DR, ITAT, 4. 5. Guard file. BY ORDER, True Copy//

Dy. Registrar Income Tax Appellate Tribunal, Kolkata

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