SANGANERIYA SPINNING MILLS LTD,GURGAON vs. DCIT,CIRCLE-23(2), DELHI

ITA 2157/DEL/2025Status: DisposedITAT Delhi17 February 2026AY 2017-187 pages
AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that the assessee had furnished the requisite documents to discharge its primary onus under Section 68 of the Act. The Tribunal noted that the basis of the addition by the AO was the action of the Enforcement Directorate (ED) against the director of M/s Arora Fincap Ltd, which led the AO to doubt the genuineness of the transaction. However, when directed to furnish any report or information from the ED or any other source available with the AO that indicated the impugned transactions were found to be non-genuine by the ED, no such information was available. The Tribunal concluded that the initial onus to prove the identity and creditworthiness of the share applicant company and the genuineness of the transaction had been duly discharged by the assessee. In the absence of any further inquiry by the AO to conclude that the impugned transactions were non-genuine, the addition made under Section 68 could not be sustained. Therefore, the addition of Rs. 1,15,00,000/- was deleted. The Tribunal expressly left undecided any issue related to the ED's action itself, focusing solely on whether the AO had sufficient material to make the addition under Section 68.

What were the facts?

The assessee, Sanganeriya Spinning Mills Pvt Ltd, is in appeal against the order dated 17.02.2025 passed by the Commissioner of Income Tax (Appeals)-30, New Delhi. The appeal pertains to Assessment Year 2017-18. The Assessing Officer (AO) had framed the assessment under Section 143(3) of the Income Tax Act, 1961. The assessee had received share application money of Rs. 1,15,00,000/- from M/s Arora Fincap Ltd. The AO treated this amount as an unexplained cash credit under Section 68 of the Act and made the addition. The CIT(A) upheld the addition, finding that while the identity of the investor was proved, its creditworthiness and the genuineness of the transaction were not established. The assessee is aggrieved by this confirmation of the addition.

What were the issues?

1. Whether, on the facts and circumstances of the case, the addition of Rs. 1,15,00,000/- on account of share application money received from M/s Arora Fincap Ltd, treated as unexplained cash credit under Section 68 of the Income Tax Act, 1961, is justified? Assessee's contentions: - The assessee discharged its onus under Section 68 by furnishing various documents, including ledger accounts, bank statements of both parties, audited balance sheet of M/s Arora Fincap Ltd, ROC filings (Form PAS-3), board resolutions, share allotment letters, share certificates, register of members, and list of shareholders. The assessee also provided incorporation details of M/s Arora Fincap Ltd. - The assessee argued that the share applicant's director, Sh. Rajeev Singh Kushwaha, appeared before the AO and confirmed the transaction. - The assessee contended that the AO relied on information from the public domain regarding the Enforcement Directorate's (ED) action against Sh. Rajeev Singh Kushwaha for money laundering, but this information was not confronted to the assessee and was not connected to the assessee company. - The assessee argued that the addition was made without bringing any adverse material on record and in violation of natural justice principles. Revenue's contentions: - The Revenue relied on the orders of the lower authorities. - The Revenue pointed out that the ED's action against M/s Arora Fincap Ltd and its director pertained to the same financial year as the impugned transaction, justifying the AO's doubt about the genuineness of the transaction.

Which sections of the Income-tax Act were involved?

Section 68,Section 143(3),Section 250

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, DELHI BENCH ‘A’, NEW DELHI

Before: SHRI MAHAVIR SINGH, HON’BLE

For Appellant: Ms. Rano Jain, Advocate, Ms. Mansi Jain, Advocate, Shri Ajay Kumar Arora, Sr. DR
For Respondent: Shri Ajay Kumar Arora, Sr. DR
Hearing: 28.01.2026Pronounced: 28.01.2026

PER RENU JAUHRI :

The above captioned appeal is preferred by the assessee against the order

dated 17.02.2025, passed by Commissioner of Income Tax (Appeals)- 30 [for short, Ld. CIT(A)], New Delhi u/s 250 of the Income Tax Act, 1961 [hereinafter

referred to as, “Act”] for A.Y. 2017-18. | Assessment was framed by the Assessing Officer [for short, AO] u/s 143(3) of the Act.

2.

The assessee has raised following grounds of appeal:

2157_DEL_2025_ Sangneriya Spinning Mills Ltd

“1. On the facts and circumstances of t

The order continues below.

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