ITO Vs Parashar Projects Private Limited (ITAT Mumbai)
The Mumbai ITAT upheld deletion of ₹3.33 crore addition made under section 68 towards alleged bogus share sale transactions, holding that the assessee had fully discharged the onus by producing audited balance sheets, investment schedules, sale notes, PAN details, confirmations, bank statements and income-tax records of purchasers. The Tribunal noted that the investments were reflected in the books since F.Y. 2006-07 and the reduction in investments during the year clearly established actual liquidation of shares.
The Revenue had relied heavily on Investigation Wing reports alleging that the purchaser companies were accommodation entry providers with negligible income and suspicious banking patterns. However, the ITAT observed that the AO failed to conduct any independent enquiry, issue notices under sections 131/133(6), or provide cross-examination of the persons whose statements were relied upon. The Tribunal reiterated that “suspicion, however strong, cannot take the place of legal evidence.”
The Tribunal further noted that the purchaser companies themselves had undergone scrutiny assessments under section 143(3), strengthening their existence and creditworthiness. Relying on the Supreme Court rulings in Odeon Builders Pvt. Ltd. and Omar Salay Mohamed Sait, the ITAT held that additions cannot be sustained merely on third-party information without proper verification or contrary evidence. Accordingly, the deletion of the entire addition of ₹3.33 crore was confirmed and Revenue’s appeal was dismissed.
FULL TEXT OF THE ORDER OF ITAT MUMBAI
The instant appeal of the revenue filed against the order of the NFAC, Delhi [for brevity the “Ld. CIT(A)”], order passed under section 250 of the Income Tax Act 1961 (for brevity ‘the Act’) for Assessment Year 2011-12, date of order 07.10.2025. The impugned order emanated from the order of the Ld. Income Tax Officer Ward-7(3)(2), Mumbai (for brevity the ‘Ld. AO’) order passed under section 143(3) r.w.s. 147 of the Act date of order 27.12.2018.
