Section 68 Addition Deleted on Property Advance Received & Refunded Through Banking Channels: ITAT Mumbai

By CA Vijayakumar Shetty Income Tax Judiciary August 2, 2026

TaxGuru Citation: 2026 taxguru.in 9935
Case Name: JCIT Vs Aakash Projects & Infrastructure Private Limited (ITAT Mumbai)
Appeal Number: Only available for paid members
Date of Judgement/Order: Only available for paid members
Related Assessment Year: 2013-14
Courts: All ITAT, ITAT Mumbai

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JCIT Vs Aakash Projects & Infrastructure Private Limited (ITAT Mumbai)

Mumbai ITAT: Section 68 Addition Deleted as Property Advance Was Received & Refunded Through Banking Channels

The Mumbai ITAT upheld the deletion of an addition of ₹1.74 crore under section 68, holding that the assessee had satisfactorily explained the nature and source of the credit. The amount represented an advance received under a Memorandum of Understanding (MOU) for the proposed sale of immovable property, which was subsequently cancelled when the purchaser failed to pay the balance consideration. The entire advance was thereafter refunded through banking channels, and the assessee substantiated the transaction with the MOU, cancellation agreement, bank statements, ledger accounts and audited financial statements.

The Tribunal held that once the assessee had established the identity of the payer, its creditworthiness and the genuineness of the transaction through documentary evidence, the burden shifted to the Revenue. Merely relying on an adverse Investigation Wing report or the purchaser’s non-compliance with notices under sections 131 and 133(6) could not justify an addition under section 68, particularly when the Revenue failed to bring any material to disprove the assessee’s evidence.

Following its earlier decision in Akash Films Pvt. Ltd. involving identical allegations against the same party, M/s Fastline Multitrade Pvt. Ltd., the Tribunal held that receipt and subsequent repayment of the advance through banking channels, supported by contemporaneous documentary evidence, established the genuineness of the transaction. Accordingly, the Revenue’s appeal was dismissed.

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