Zippy Finance Private Limited Vs ITO (ITAT, Mumbai)
Paper Trail Beats Entry-Operator Tale: Mumbai ITAT Deletes ₹60-Lakh Addition u/s 68
Relevant Facts
In Zippy Finance Pvt. Ltd. v. ITO, the Mumbai ITAT examined a ₹60 lakh addition u/s 68 for AY 2010–11. The assessee had received share-application money of ₹30 lakh each from Alka Diamond Industries Ltd. & Kush Hindustan Entertainment Ltd. through banking channels. The amounts were recorded in its books & balance sheet.
Based on Investigation Wing information arising from a search on Pravin Kumar Jain, described as an accommodation-entry operator, the AO reopened the assessment u/s 147/148. Statements of Jain & connected persons allegedly revealed a network of shell companies supplying bogus share capital, loans & sales entries through dummy directors. Treating both investors as part of that network, the AO added ₹60 lakh as unexplained cash credit.
The CIT(A) relied on Jain’s statement u/s 132(4), a dummy director’s admission, low balances before issuing cheques, lack of operations & seized digital material. PAN, ITRs & audited accounts could not overcome the test of human probabilities. Jain’s retraction was considered belated & unsupported.
Issues Before the Tribunal
The issue was whether the assessee proved the identity, creditworthiness & genuineness of the applicants. Could an addition rest on general investigation material & third-party statements without independent enquiry, cash trail or cross-examination?
