Pace Iron and Steel Pvt. Ltd. Vs ITO (ITAT Mumbai)
The ITAT Mumbai allowed the assessee’s appeal against the order of the CIT(A), NFAC, Delhi, dated 9 December 2025 concerning AY 2017-18. The assessee had filed its return under Section 139(1) declaring total income of Rs. 2,28,964, and the original scrutiny assessment under Section 143(3) was completed on 10 June 2019 accepting the returned income. Subsequently, based on a search conducted on 17 November 2021 in the Galaxy Group and connected persons, the Assessing Officer received information that the assessee had allegedly obtained accommodation entries of Rs. 50 lakh from M/s. Vandam Technologies Pvt. Ltd. and Rs. 1.50 crore from M/s. Evalina Powertec Systems Pvt. Ltd. The AO recorded reasons under Explanation 2(iv) to Section 148 and, after obtaining approval, issued notice under Section 148 on 29 March 2024. During reassessment, the assessee explained that the Rs. 2 crore represented consideration received through banking channels for sale of shares of M/s. Delight Resorts Pvt. Ltd. It submitted that the shares had been purchased on 24 March 2012, transactions were recorded in the books, relevant Registrar of Companies filings were made, and confirmations, tax returns and audited financial statements of the purchaser entities were furnished. The AO rejected the explanation and treated Rs. 2 crore as unexplained cash credit under Section 68 read with Section 115BBE, holding the transactions to be accommodation entries. The CIT(A) dismissed the assessee’s appeal.
