ACIT Vs Citygold Investments Pvt. Ltd. (ITAT Mumbai)
Mumbai ITAT Deletes Section 68 Addition as Investigation Wing Report Alone Cannot Dislodge Documented Share Application Transaction
The Mumbai ITAT upheld the deletion of an addition of ₹2.50 crore under section 68 towards share application money, holding that the Assessing Officer cannot treat a transaction as bogus solely on the basis of a general Investigation Wing report without conducting any independent enquiry. The Tribunal noted that the assessee had discharged its initial onus by furnishing confirmation from the investor, PAN, income-tax return, financial statements and bank statements evidencing receipt through banking channels, thereby establishing the identity, creditworthiness and genuineness of the transaction. It further observed that the Assessing Officer failed to establish any cash trail or nexus between the assessee and the alleged entry operators, and relied exclusively on an investigation report alleging that the investor company was an accommodation entry provider. The Tribunal also took note of the fact that the share application money was subsequently refunded to the investor and that, in a search assessment under section 153A read with section 143(3) for the subsequent assessment year, the Department had itself accepted a similar transaction with the same investor. Finding no infirmity in the CIT(A)’s factual conclusions, the Tribunal dismissed the Revenue’s appeal and confirmed the deletion of the addition under section 68.
FULL TEXT OF THE ORDER OF ITAT MUMBAI
The present appeal of the department arises out of order dated 24.12.2025 of learned Commissioner of Income Tax (Appeals) (‘ld.CIT(A) for short) for the assessment year (A.Y. for short) 2014-15.
2. The only issue agitated by the department relates to deletion of addition of Rs.2,50,00,000/-, representing share application money added u/s.68 of the Income Tax Act, 1961, (‘the Act’ for short).
3. Briefly, the facts relating to the issue in dispute are, the assessee is a resident corporate entity. For the assessment year under dispute, the assesse had originally filed its return of income on 30.11.2014,declaring income of Rs.1,70,58,650/-. Subsequently, the assessee filed revised return of income on 31.03.2016, declaring income of Rs.1,71,43,750/-. Assessee’s case was selected for scrutiny.
4. In course of assessment proceeding, the Assessing Officer (AO for short) inter alia called upon the assessee to prove the genuineness of the share application money of Rs.2,50,00,000/- received from M/s. Apsara Vanjiya Limited. In response to the query raised, the assessee furnished supporting evidences to prove the genuineness of the share application money. The AO, however, was not convinced. He observed that as per the report received from office of Pr.DIT(Inv.), Kolkata, M/s. Apsara Vanjiya Limited is anon-genuine party involved in providing accommodation entry without undertaking any business operations. He further observed that in response to commission issued u/s.131(1)(d) of the Act, the DDIT, Investigation Wing-4(1) Kolkata has reported that M/s. Apsara Vanjiya Limited is managed by well-known entry operators, Shri Arvind Kayan and Shri Vikrant He further reported that they have acknowledged that the company does not have any genuine business operations. Thus, based on the information/report received from the Investigation Wing, Kolkata, the AO ultimately concluded that the so-called share application money received from M/s. Apsara Vanjiya Limited is bogus. Accordingly, he treated the credit entry relating to such transaction in assessee’s books as ‘unexplained cash credit’ u/s.68 of the Act and added to the income of the assessee.
5. The assessee contested the aforesaid addition before learned first appellate After considering the submissions of the assesse, in the context of facts and materials on record, learned first appellate authority, being convinced with assessee’s submissions that the transaction with M/s. Apsara Vanjiya Limited is genuine, deleted the addition.
6. We have considered rival submissions and perused the materials available on A reading of the assessment order clearly reveals that the only evidences relied upon by the AO for making the subject addition are the information/report received from the Investigation Wing of the Department at Kolkata. The assessment order is completely silent regarding any independent inquiry or investigation carried out by the AO to ascertain genuineness of the transaction.
7. On the contrary, before departmental authorities, the assessee had produced various supporting documentary evidences to prove the genuineness of the transaction. The documentary evidences included the bank statement indicating transaction through banking channel, confirmation from the share applicant, return of income, etc. Further, the assessee had refunded back the share application money to the share applicant. After verifying the documentary evidences, learned first appellate authority has recorded the following factual finding:
- The initial burden cast upon by the assessee was discharged by furnishing confirmation, bank statement, PAN and financial statements to prove identity, creditworthiness of the share applicant as also the genuineness of the transaction.
- The AO except heavily relying upon the report of the Investigation Wing Kolkata, which is based on general database inter alia has not conducted in-depth
- No specific finding of cash trial or linkage between the assessee and the entry operator to establish the fund flow.
- The entire share application money was refunded back to the share applicant in the subsequent year.
8. The aforesaid factual finding of learned first appellate authority remains uncontroverted before us. In course of hearing, learned counsel appearing for the assessee has further brought to our notice that the assessee had received second trench of share application money from the very same party in AY 2015-16. Whereas, in a search assessment conducted under section 153A read with section 143(3) of the Act, the AO had accepted the transaction while completing the assessment. A copy of the assessment order has been placed on record.
9. Keeping in view the aforesaid factual position, we do not find it to be a fit case for intervention with the decision of the learned first appellate authority on the issue in Accordingly, ground raised is dismissed.
10. In the result, the appeal is dismissed.
Order pronounced in the open court on 28.07.2026
