Income Tax Appellate Tribunal - Delhi
Bonanza Promoters P.Ltd,New Delhi vs Ito, Ward-5(1), New Delhi on 29 April, 2026
IN THE INCOME TAX APPELLATE TRIBUNAL
DELHI BENCH 'F', NEW DELHI
Before Sh. S. Rifaur Rahman, Accountant Member
&
Sh. Sudhir Kumar, Judicial Member
ITA No. 8604/Del/2019 : Asstt. Year : 2011-12
BONANZA PROMOTERS PVT. LTD., Vs ITO, WARD 5(1),
6, BABAR LANE, BENGALI MARKET, NEW DELHI
NEW DELHI - 110 001
(PAN: AACCB6284A)
(APPELLANT) (RESPONDENT)
Assessee by : Shri Shree Prakash Sinha, Adv. & Shri Rishab Kumar, Adv.
Revenue by : Ms. Harpreet Kaur Hansra, Sr. DR
Date of Hearing: 07.04.2026 Date of Pronouncement: 29.04.2026
ORDER
Per Sudhir Kumar, Judicial Member:
This appeal filed by the Assessee against the order of the Ld. CIT(A)-2, New Delhi dated 26.8.2019 relating to assessment year 2011-12 on the following grounds:-
1. On the facts and in the circumstances of the case and in law the CIT(A) was incorrect and unjustified in holding that the addition of Rs. 1.75 cr made u/s 68 by the AO was correct and justified.
2. On the facts and in the circumstances of the case and in law the CIT(A) was incorrect and unjustified in holding that assessee had failed to prove the identity, creditworthiness and genuinenes s of the transactions relating to the receipt of money of Rs. 1.75 cr from Khushi Con Build Pvt Ltd. whereas the assessee has proved all the three conditions and even the amount under consideration has been returned back to the creditor sin subsequent years.
3. On the facts and in the circumstances of the case and in law the CIT(A) was incorrect and unjustified in holding that the action u/s. 147 has been rightly and correctly taken by the Assessing Officer.2
4. On the facts and in the circumstances of the case and in law the CIT(A) was incorrect and unjustified in holding that the AO has correctly taken action u/s. 147 by satisfying all the conditions necessary for initiating such action.
5. On the facts and in the circumstances of the case and in law the CIT(A) was incorrect and unjustified in holding that action u/s. 147 was not bad in law, illegal and void abinitio.
2. At the time of hearing, the Assessee has filed an application for admission of additional ground by stating as under:-
"Most respectfully it is submitted that the above captioned Appeal No. ITA 8604 / DEL /2019 (AY 2011-12) filed by the appellant before the Honb'le Tribunal against the order of Ld. CIT(Appeals) u/s 250 of the Income Tax Act,1961. Next date of hearing is fixed for 17.10.2023 (copy of case status from ITAT portal attached herewith for your kind reference.) In this regard, it is most humbly submitted that the Appellant would like to file an application with the permission of Hon'ble Income Tax Appellate Tribunal "A"
Bench, New Delhi requesting your Lordships to be kind enough to permit the appellant and admit the following Legal Grounds without furnishing additional evidences, to the present Appeal for adjudication in addition to the grounds already raised by the appellant in view of the settled decision in the case of National Thermal Power Co. Ltd. v. CIT (1998] 229 1TR 383 (SC) and numerous other judicial pronouncements out of which the appellant places its reliance on the few mentioned below :
a. Jute Corporation of India Ltd. v. CIT (1991) 187 ITR 688/(1990) 53 Taxman 85/88 CTR 66 (SC) b. Ferns 'N' Petals India (P) Ltd DCIT, Central Circle 10 (ITAT-Delhi) c. PCIT Vs Eversafe Securities (Calcutta High Court) Appellant further states that since the issue based on facts already on record, the appellant may be allowed to raise the following additional ground in the interest of natural justice in the light of below stated facts:3
Facts in Brief:
1. Appellant is a company incorporated on 20.05.2005 with a business objective to deal and develop in Real Estate.
2. The case of the appellant for the AY 2011-12 was selected for scrutiny assessment u/s 148 of the Income Tax Act.
3. On 25.04.2018 appellant filed its return of income against 148 notice and requested for providing reasons for believe for opening assessment u/s 147.
4. Upon receipt of reasons recorded by the Ld. AO, the appellant filed its objections vide its letter dated 10.10.2018.
5. Ld. AO did not consider the objections raised by the appellant before concluding the aforesaid assessment proceedings.
6. It is a settled preposition in terms of the law laid down by Honbl'e Supreme Court that when a notice under section-148 of the Act is issued, the proper course of action for the noticee is to file return and if he so desires, to seek reasons for issuing notices: The following points may be noted with respect to supply of copy of reasons:
(i) The Assessing Officer is bound to furnish reasons within a reasonable time;
(ii) On receipt of reason, the noticee is entitled to file objections to issuance of notice;
and
(iii) The Assessing Officer is bound to dispose of the same by passing a speaking order.
(iv) However, during the assessment proceedings, Ld. without disposing of the objections of the appellant against 147/148, vehemently made additions with a pre-set mind.
(v) The Ld. CIT (appeals) erred in law and on the facts of the case in upholding the above assessment which is liable to be set aside.
Additional Ground:
(i) That on the facts and in the circumstances of the case and in law, Ld CIT (Appeals) erred in sustaining the order passed by Ld AO u/s 147/143(3) without appreciating that Hon'ble Supreme Court in the case of GKN Driveshafts India Ltd., Vs. ITO has laid down an elaborate procedure for dealing with objections raised against a notice under section-148 and the Ld. Assessing Office has to take note of these objections and dispose the same before commencing reassessment by passing a "speaking order". Assessment is liable to be set aside where Assessing Officer had acted arbitrarily and in a manner clearly contrary to law in passing an order without disposing of the objections of the Assessee."4
3. We have carefully considered the prayer for admission of additional ground and heard both the counsels on the issue. In our considered opinion in the light of the Hon'ble Apex Court decision in the case of NTPC Ltd. vs. CIT (1998) 229 ITR 0383 (SC), we admit the aforesaid additional ground raised by the assessee as the same is a purely legal ground and goes to the root of the matter.
4. Brief facts of the case are that in this case an information was received from the ADIT(Inv)-Unit 3(1), Kolkata vide letter dated 16.3.2018. As per the said information, one Shri Anand Sharma was running a bogus accommodation entry racket. In order to run his racket, Shri Sharma created / controlled 94 shell / paper entties, which he used for layering of funds. Name of M/s Khushi Conbuild Pvt. Ltd. appeared in the list of 94 paper /shell companies, belongin g to the said bogus accommodation entry racket run by Sh. Anand Sharma. It was intimated that the assessee company had received bogus accommodation entries from M/s Khushi Conbuild Private Limited in the financial year 2010- 11 amounting to Rs. 1,75,00,000/-. The present Directors of Khushi Conbuild Pvt Ltd. are Shri Ram Kishore Aggarwal and Shri Vishal Aggarwal. These two are also the Directors of the assessee company. During the period of the accommodation entry transactions (FY 2010-11), the majority Directors of Khushi Conbuild Pvt. Ltd. were those persons who were part of the accommodation entry racket run by Sh. Anand Sharma. The subsequent change of its directors hip into the hands of the directors of the assessee company also establishes the nexus between Khushi Conbuild Pvt. Ltd. and the assessee company. Based on this information and independent analysis/investigation, the AO recorded his satisfaction for the purpose of initiation of reassessment proceedings u/s. 147 of the Act and a notice u/s. 148 of the Act was issued to the assessee on 30.3.2018, after obtaining the necessary approval of the PCIT- 2, Delhi u/s. 151 of the Act on 30.3.2016. In response to this notice, the assessee filed its return of income for the AY 2011-12 on 09.05.2018 declarin g total loss of Rs. 33,372/- and asked for the reasons for reopening of the case which were duly provided to him. A notice u/s. 142(1) dated 24.8.2018 was issued and served to the assessee. Notice u/s. 143(2) and 142(1) of the Act dated 30.9.2019 was issued and served upon the assessee. The assessee did not comply with the above notices. Final show cause notice u/s. 144 of the Act 5 was sent on 7.12.2018 and in response to the same, the assessee filed its part reply on 10.12.2018 and submitted as under:-
"i) The assessee is engaged in busines s of real estate development since year 2005, an assessee has made an agreement to sale for land acquisition and paid certain percent of total consideration according to agreement of sale. Being a genuine real estate developer assessee also made some collaboration agreement for development of housing society with different entities and M/s Khushi Conbuild (P) Ltd. is one of those entities to develop the housing society. According to collaboration agreement between M/s Khushi Conbuild P Ltd. and assessee clearly state that Rs. 1.75 cr is the advance money to develop the housing society.
ii) Accordingly the clause of collaboration agreement assessee is responsible to get LOI from Government of Haryana and if assessee fails to get LOI then assessee have to repay the advance amount received.
iii) Due to some amendment in land acquisition rule assessee were not able to get LOI is stipulated time and the aforesaid agreement get cancelled by mutual consents following which assessee repaid the advance money received from M/s Khushi Conbuild P Ltd. in later years.
iv) With the view of aforesaid matter we would like to state there is no matter of concealment of income as this is a simple business expansion with an agreement between two entities for a common objects.
v) We also like to state there is no increment in unsecured loan for the relevant AY, only the portion increase is the advance received, which is clearly stated in the balance sheet of the said relevant A.Y."
5. In response to the aforesaid reply, the AO noted that the assessee was asked to show cause vide note sheet entry dated 14.12.2018 that why Rs. 1.75 crore received from M/s Khushi Conbuild Pvt. Ltd. should not be added u/s. 68 of the Act as unexplained cash credit in view of the fact that M/s Khushi Conbuild Pvt. Ltd. just transferred the money received to the assessee company, when it was under management of Sh. Anand Kumar Sharma group of companies. The assessee was also asked to prove the identity, genuineness and creditworthiness of M/s Khushi Conbuild Pvt. Ltd.. In response the assessee submitted financials of M/s Khushi Conbuild P Ltd.. Notice dated 6 11.102018 u/s. 133(6) was sent to M/s Khushi Conbuild Pvt. Ltd. at 23, Vivekanand Road, 3 r d floor, Kolkata which was returned back as undelivered and also sent to Sh. Ram Kishore, c/o Sh. Vishal Aggarwal, Directors in M/s Khushi Conbuild Pvt. Ltd. at 1, Ram Kishore Road, Civil Lines, Delhi of which part reply received and confirmation was found singed on 15.6.2011. Further, a summon dated 18.12.2018 was also issued to the directors of M/s Khushi Conbuild Pvt. Ltd., the Director rejected to receive the summon u/s. 131 of the Act. Confirmations and other documents were found signed on 15.6.2021 as in the case of entries the beneficiaries knows that it would be required further when the case comes into scrutiny or reopened u/s. 147 of the Act. AO noted that financials of M/s Khushi Conbuild P Ltd. has been perused and found to be akin to that of other entry operators companies. M/s Khushi Conbuild P Ltd. has shown huge share capital and premium of Rs. 16,62,50,000/- which was deployed as investment in asset side of balance sheet totaling to Rs. 9,95,00,000/-. No business activities have been shown at all in FY 2010-11 and filed return for showing loss of Rs. 49,903/-. Thus, it is proved that the assessee did not have any self generated fund and it just passing entries under different heads of balance sheet and also inflating its balance sheet so that it could provide entries showing its fake creditworthiness. AO further noted that on perusing the complete pass bank statement of M/s Khushi Conbuild Pvt. Ltd. establish the story of that passing of funds to the companies owned and controlled by Sh. Ram Kishore Aggarwal. He further noted that Investigation Wing Kolkata in its detailed report proved that the assessee company has taken entries from the companies owned by Sh. Anand Kumar Sharma. In view of above, AO noted that assessee has received an accommodation entry of Rs. 1,75,00,000/- from M/s Khushi Conbuild Pvt. Ltd. which was an entity controlled and operated by Shri Anand Sharma. These facts have been brought by the Investigation Wing Kolkata in its report and also examined by the AO in the assessment order. He further noted that Ld. CIT(A) after examining the assessment order and replies of the assessee has found that M/s Khushi Conbuild Pvt. Ltd. is a typical case of a shell company and that the said company has no actual business activity and thus by relying upon the various judgements on this issue, AO held that since the assessee has failed to prove the creditworthiness of its investor as well as genuineness of the transaction, hence, addition of Rs. 1,75,00,000/- was made as unexplained cash credit u/s. 68 of the Act. In appeal, Ld. CIT(A) 7 upheld the addition made by the AO. Aggrieved, assessee is in appeal before us.
6. At the time of hearing, Ld. AR brought to our notice the facts and submitted that the AO vide his assessment order dated 30.12.2018 assessed the income of the assessee at Rs. 1,76,41,628/- for the financial year 2010-2011 on the basis of report dated 16.3.2018 of AIT (Inv.) Unit 3(1), Kolkata. It is the case of the AO that in the financial year 2010-11 the assessee received Rs. 1,75,00,000/- from M/s Khushi Conbuild Pvt. Ltd. which was bogus accommodation entry and therefore, was treated as unexplained cash credit under section 68 of the Act and accordingly was liable to be added to the total income. It was further submitted that the said finding is solely based on the Investigation Report dated 16.3.2018 which was prepared behind the back of the assessee and further there was no independent application of mind and therefore, the entire procedure adopted is vitiated. It was submitted that the assessee was incorporated as Private Limited Company and since then is in the business of real estate development. Over the years the assessee was assessed by the Income Tax Department and the ITRs are regularly filed. Assessee entered into an agreement to sell dated 19.7.2005 with one Ch. Amarjeet Singh of Faridabad vide which a land parcel of 11.26 acres situated within the revenue estate of village - Sihi, Ballabhgarh, Faridabad was agreed to be purchased on as is where is basis for a consideration of Rs. 4,50,40,000/-. The assessee paid an amount of Rs. 45 lacs through cheque. It was submitted that on 02.8.2025 collaboration agreement was entered into between Ch. Amarjeet Singh and the assessee vide which the assessee was given the responsibility to submit license on behalf of the referred vendor for the purpose of obtaining sanctioned layout plan. The rights and liabilities of the parties are well documented. In compliance of the above agreement, the assessee applied for grant of license before the Director, Town and Country Planning Department, Haryana, Chandigarh. The project got delayed due to litigation and in the meantime the assessee entered into a collaboration agreement dated 18.3.2011 qua the above project with M/s KCPL to jointly develop the said land into housing project and share the revenue in the ratio of 76.24. The entire responsibility to obtain the requisite permissions was on the assessee. For the said purpose, M/s KCPL had already advanced Rs. 1,75,00,000/- and the next instalment of Rs. 1 crore was to be paid on obtaining the LOI by the assessee within a period of 24 months. The advance payment of Rs. 1.75 crores was received by the assessee from M/s KCPL on 4.3.2011 (Rs. 60 lacs and Rs. 40 lacs), and on 8.3.2011 Rs. 50 lacs and on on 11.3.2011 Rs. 25 lacs which is apparent from the assessment order dated 30.12.2018. The transaction was well reflected in the ITRs of the assessee as well as M/s KCPL and the same were accepted by the department, thus shows that 8 there is no suppression of any transaction either by the assessee or by KCPL. Later Sh. RK Agarwal and Sh. Vishal Agarwal became Directors of M/s KCPL on 18.2.2013, upon resignation of earlier directors. As the terms and conditions of the collaboration agreement dated 18.3.2011 could not be complied, both the parties executed deed of cancellation dated 3.7.2014 which clearly indicates that M/s KCPL agreed to receive Rs. 1.75 crores as full and final settlement. Accordingly, the assessee refunded the settlement amount of Rs. 1.75 crores to M/s KCPL on 01-02/7/2014 which was reflected in the account statement and the department did not question the assessee when it received Rs. 1.75 crores in its account through banking channel in FY 2010-11 and also not questioned when the said collaboration amount was refund to M/s Khushi Conbuild Pvt. Ltd. in the year 2014, even the same was through banking channel. In view of above, it is submitted that lower authorities were incorrect and unjustified in holding that assessee had failed to prove the identity, creditworthiness, and genuineness of the transactions relating to the receipt of money of Rs. 1.75 crores from Khushi Con Build Pvt. Ltd. whereas the assessee has proved all the three conditions and even the amount under consideration has been returned back to the creditors in subsequent years, hence, the addition in dispute may be deleted.
7. Per contra, Ld. Sr. DR relied upon the orders of the authorities below and filed the following written submission in support of her contention:-
1. In the above mentioned case, the assessee has filed an application for admission of Additional Ground of Appeal on 17.10.2023. In this regard, the details of the facts and objections arising out of the report of the Assessing Officer dated 16.01.2024 are discussed as under:
" Additional Ground: That on the facts and in the circumstances of the case and in law, Ld. CIT (Appeals) erred in sustaining the order passed by Ld. AO u/s 147/143(3) without appreciating that Hon'ble Supreme Court in the case of GKN Driveshafts India Ltd. Vs. ITO has laid down on elaborate procedure for dealing with objections raised against a notice under section 148 and the Ld. Assessing Office has to take note of these objections and dispose the same before commencing reassessment by passing a "speaking order". Assessment is liable to be set aside where Assessing Officer has acted arbitrarily and in a manner clearly contrary to low in passing an order without disposing of the objection of the Assessee."
2. On perusal of the assessment record for A.Y. 2011-12, it is seen that no objection was filed by the assessee during the assessment proceedings. Case noting history is attached herewith. Assessee had filed letter dated 28.08.2018 vide which the 9 assessee had asked for the reasons recorded for re-opening of the assessment proceedings for A.Y. 2011-12. The same was duly provided to assessee on 03.10.2018. Further, the same was again provided to assessee on 17.10.2018. Therefore, contention of the assessee that the assessment u/s 147/143(3) of the Act has been completed by the AO without disposing objection of the assessee by passing speaking order is totally incorrect and false.
3. Assessee had never raised any objection in relation to re-opening of the assessment proceedings during the assessment proceedings. Therefore, no question of disposing off the objections of the assessee arises. It is also evident from case noting history that AR of the assessee appeared before AO on 10.12.2018 & 14.12.2018 and never raised objections regarding this issue. Further, from Form No. 35 also, it is seen that this issue was not raised before CIT(A) during the Appellate proceedings also. Further, assessee did not raise the aforesaid ground of appeal while filing the appeal before Hon'ble ITAT but chooses to file the same via additional grounds of appeal. Thus it is a clearly evident that the aforesaid ground of appeal was not raised at a proper time and place.
4. Thus, in the view of above fact, the additional grounds of appeal deserve to be rejected.
5. Further, submissions on the merits of the additions made by the AO are discussed here under:
In the above case the assessee has received an accommodation entry of Rs. 1,75,00,000/- from M/s Khushi Conbuild Pvt. Ltd. which was an entity controlled and oprated by Shri Anand Sharma. These facts have been found by the Investigation Wing Calcutta in its report and also examined by the Assessing Officer in the Assessment order. Ld. CIT (A) after examining the assessment order and replies of the assessee has found that M/s Khushi Conbuild Pvt. Ltd. is a typical case of a shell company and that the said company has no actual business activity (refer Para 6.1 and 6.2 of CIT(A) order. In this regard it is submitted that the Hon'ble Courts on number of occasions have looked at the characteristics of shell companies/paper companies. The observations made by the Hon'ble Courts on the issue are as under:
a) With regard to identity of shell companies, The Hon'ble ITAT, Ahmedabad in the case of MAP Steels (India) Pvt. Ltd. V/S The Dy. Commissioner of Income Tax OSD-1, Circle- Ahmedabad vide ITA. No: 411/AHD/2015 dated 08.02.2018 has made the following observation:-
"Sadly, there is no clear definition of Shell Company in India. However, Securities Act enacted in the USA has defined Shell Company as follows.:
"Securities Act Rule 405 and Exchange Act 12b-2 define a Shell Company as a 10 company, other than an asset-backed issuer, with no or nominal operations; and either:
• no or nominal assets;
• assets consisting of cash and cash equivalents; or
• assets consisting of any amount ofcash and cash equivalents and nominal other assets."
In India, Shell Companies haven't in law
12. Though, there Is no definition of Shell Company but anything that throws light on this global menace cannot be brushed aside lightly. The financial statements of Gurukul Vinimay Pvt. Ltd. show that it has all the ingredients of a Shell Company. The appellant company has done transaction with this company and the transaction cannot be accepted as genuine by any stretch of imagination."
b) . Income Tax Appellate Tribunal - Mumbai Dy Cit 15(1)(2), Mumbai vs M/S Leena Power Tech Engineers Pvt Ltd., DOJ - 21 September, 2021 "It would thus appear that the learned counsel for the assessee is not really right in approaching the basis as if the onus is on the Assessing Officer to prove the alleged money laundering racket - an onus that may perhaps be relevant only when the money laundering racket is being prosecuted, but that is something we are not really concerned about. As far as we are concerned, we must remain confined to the narrow issue of onus on the assessee to prove 'bonafides' or 'genuineness' of the share application money credited in his books of accounts, and that is the call we have to take in the light of facts before us and the ground realities of the commercial world. As we proceed to deal with the genuineness aspect, it is also important to bear in mind the fact that what is genuine and what is not genuine is a matter of perception based on facts of the case vis-à-vis the ground realities. The facts of the case cannot be considered in isolation from the ground realities. The allegation of the revenue is that the assessee has received share application money through a complex web of shell entities and multiple layering of the transfers from one company to another. It will, therefore, be useful to understand as to how the shell entities, which the share applicants are alleged to be, typically function, and then compare these characteristics with the facts of the case and in the light of well settled legal principles. A shell entity is generally an entity without any significant trading, manufacturing or service activity, or with high volume low margin transactions- to give it colour of a normal business entity, used as a vehicle for various financial manoeuvres. A shell entity, by itself, is not an illegal entity, but it is used as a vehicle for abatement of, and being part of, financial manoeuvring to legitimise illicit monies and evade taxes, that takes it actions beyond what is legally permisssible. These entities have every semblance of a genuine business- its legal ownership by persons in existence, statutory documentation as necessary for a legitimate business and a documentation trail as a legitimate transaction would normally follow. The only thing which sets it apart from a genuine business entity is lack of genuineness in its actual operations. The operations carried out by these entities, are only to facilitate financial manoeuvreing for the benefit of its clients, or, with that predominant underlying objective, to give the colour of genuineness to these entities. These shell entities, which are routinely used to launder unaccounted monies, are a fact 11 of life, and as much a part of the underbelly of the financial world, as many other evils. Even laymen, much less members of this specialized tribunal, responsible public servants like 1RS officers and very well educated and very well informed people like the learned counsel, cannot be oblivious of these ground realities."
c) In the case of our assessee, the Assessing Officer and Ld. CIT (A), after examining the profile of M/s Khushi Conbuild Pvt. Ltd., reached a conclusion that the said company is a paper company without having any real base. In this regard, reference is made to Para 10 to Para 14 of the assessment order and Para 6.1 and 6.2 of Ld. CIT(A) order. Therefore, keeping in view the characteristics of shell companies as discussed above and finding of Ld. CIT (A) regarding this company being a paper/shell company, it is noted that appellant has failed to explain the credits of Rs. 1.75 Crore and therefore the AO was justified to make additions on account of unexplained credits.
6. In this case, Ld CIT (A) has upheld the addition made u/s 68 by the AO.
In this regard it is humbly submitted that the following decisions may kindly be considered with regard to addition made u/s 68 of l.T.Act:
1. PCIT, Central ! Vs NRA Iron & Steel Pvt. Ltd. [2019] 103 taxmann.com 48 (SC)].
The principal that emerges when sums of money are credited as share capital/ premium are:-
(i) Assessee is under a legal obligation to prove the genuineness of the transaction, the identity of the creditors, and creditworthiness of the investors who should have the financial capacity to make the investments in question, to the satisfaction of the Assessing Officer, so as to discharge the primary onus.
(ii) The AO is duty bound to investigate the creditworthiness of the creditors/ subscribers, verify identity of the subscribers and ascertain whether the transaction is genuine or these are bogus entries of name lenders.
(iii) If the enquiries & investigation reveal that the identity of the creditors to be doubtful or dubious or lack creditworthiness, then the genuineness of the transaction would not be established. Then assessee would not have discharged the primary onus contemplated by Section 68.
Based on the above principles, the Assessing Officer has made enquiries in the case of the assessee relating to unaccounted money placed through accommodating entries from the paper entities.
The other case laws that need to be considered are as under: -
122. CIT VS Navodaya Castle Pvt Ltd [2014] 367 ITR 306 (Del) Where Hon'ble Delhi High Court accepted that since the assessee was unable to produce the directors and the principal officers of the six shareholder companies and also that as per the information and details collected by the Assessing Officer from the concerned bank, the Assessing Officer had observed that there were genuine concerns about identity, creditworthiness of shareholders as well as genuineness of the transactions
20. Now, when we go to the order of the Tribunal in the present case, we notice that the Tribunal has merely reproduced the order of the Commissioner of Income- tax (Appeals) and upheld the deletion of the addition. In fact, they substantially relied upon and quoted the decision of its co-ordinate Bench in the case of MAF Academy P. Ltd., a decision which has been overturned by the Delhi High Court, vide its judgment in CIT v. MAF Academy P. Ltd. [2014] 206 DLT 277; [2014] 361 ITR 258 (Delhi)). In the impugned order it is accepted that the assessee was unable to produce directors and principal officers of the six shareholder companies and also the fact that as per the information and details collected by the Assessing Officer from the concerned bank, the Assessing Officer has observed that there were genuine concerns about identity, creditworthiness of shareholders as well as genuineness of the transactions.
21. In view of the aforesaid discussion, we feel that the matter requires an order of remit to the Tribunal for fresh adjudication keeping in view the aforesaid case law."
Navodaya Castle Pvt Ltd Vs CIT (2015-TIOL-314-SC-IT) (Copy Enclosed) SLP of assessee dismissed by Hon'ble Supreme Court issued under section 131, Tribunal was justified in confirming impugned addition
3. CIT VS Nipun Builders & Developers (P.) Ltd (30 taxmann.com 292, 214 Taxman 429, 350 ITR 407, 256 CTR 34) Where Hon'ble Delhi High Court held that where assessee failed to prove identity and capacity of subscriber companies to pay share application money, amount so received was liable to be taxed under section 68. It was held as follows:
"12. A perusal of the order of the Tribunal shows that it has gone on the basis of the documents submitted by the assessee before the AO and has held that in the light of those documents, it can be said that the assessee has established the identity of the parties. It has further been observed that the report of the investigation wing cannot conclusively prove that the assessee's own monies were brought back in the form of share application money.13
As noted in the earlier paragraph, it is not the burden of the AO to prove that connection. There has been no examination by the Tribunal of the assessment proceedings in any detail in order to demonstrate that the assessee has discharged its onus to prove not only the identity of the share applicants, but also their creditworthiness and the genuineness of the transactions. No attempt was made by the Tribunal to scratch the surface and probe the documentary evidence in some depth, in the light of the conduct of the assessee and other surrounding circumstances in order to see whether the assessee has discharged its onus under Section 68. With respect, it appears to us that there has only been a mechanical reference to the case-law on the subject without any serious appraisal of the facts and circumstances of the case.
13. We, therefore, answer the substantial question of law framed by us in the negative, in favour of the revenue and against the assessee. The appeal of the revenue is allowed with no order as to costs."
4. CIT Vs Nova Promoters & Finlease (P) Ltd (18 taxmann.com 217, 206 Taxman 207, 342 ITR 169, 252 CTR 187) Where Hon'ble Delhi High Court held that amount received by assessee from accommodation entry providers in garb of share application money, was to be added to its taxable income under section 68. it was held as follows:
"...There is ample authority for the position that where an assessee fails to prove satisfactorily the source and nature of certain amount of cash received during the accounting year, the Income-tax Officer is entitled to draw the inference that the receipt are of an assessable nature..."
(ref. Para 29) " .... Compliance with statutory norms and requirements is only one aspect, but in the present case a deeper scrutiny was required and the camouflage adopted was the primary aspect that required adjudication."
5. CIT Vs Ultra Modern Exports (P) Ltd (40 taxmann.com 458, 220 Taxman 165) Where Hon'ble Delhi High Court held that where in order to ascertain genuineness of assessee's claim relating to receipt of share application money. Assessing Officer sent notices to share applicants which returned unserved, however, assessee still managed to secure documents such as their income tax returns as well as bank account particulars, in such circumstances, Assessing Officer was justified in drawing adverse inference and adding amount in question to assessee1 s taxable income under section 68. It was held as 14 follows:
"9. As noticed previously, the CIT (A) was of the opinion that the assessee had discharged the basic onus which was cast upon it after considering the ruling in Lovely Exports (P) Ltd.'s case (supra). The matenal and the records in this case show that notice issued to the 5 of the share applicants were returned unserved. The particulars of returns made available by the assessee and taken into consideration in paragraph 3.4 by the AO in this case would show that the said parties/applicants had disclosed very meager income. The AO also noticed that before issuing cheques to the assessee, huge amounts were transferred in the accounts of said share applicants. This discussion itself would reveal that even though the share applicants could not be accessed through notices, the assessee was in a position to obtain documents from them. While there can be no doubt that in Lovely Exports (P) Ltd. (supra), the Court indicated the rule of "shifting onus" i.e. the responsibility of the Revenue to prove that Section 68 could be invoked once the basic burden stood discharged by furnishing relevant and material particulars, at the same time, that judgment cannot be said to limit the inferences that can be logically and legitimately drawn by the Revenue in the natural course of assessment proceedings. The information that assessee furnishes would have to be credible and at the same time verifiable In this case, 5 share applicants could not be served as the notices were returned unserved. In the backdrop of this circumstance, the assessee's ability to secure documents such as income tax returns of the share applicants as well as bank account particulars would itself give rise to t circumstance which the AO in this case proceeded to draw inferences from. Having regans to the totality of the facts, ie, that the assessee commenced its business and immediately sough to infuse share capital at a premium ranging between Rs. 90-190 per share and was able to gamer a colossal amount of Rs. 434 Crores, this Court is of the opinion that the CIT (Appeals) and the ITAT fell into error in holding that AO could not have added back the said amount under Section
68. The question of law consequently is answered in favour of the Revenue and against the assessee."
6. CIT VS N R Portfolio Pvt Ltd [2014] 42 taxmann.com 339 (Delhi)/[2014] 222 Taxman 157 (Delhi)(MAG)/(2014) 264 CTR 258 (Delhi) Where Hon'ble Delhi High Court held that if AO doubts the documents produced by assessee, the onus shifts on assessee to further substantiate the facts or produce the share applicant in proceeding. It was held as follows:
(ref. Para 30) "What we perceive and regard as correct position of law is that the court or tribunal should be convinced about the identity, creditworthiness and genuineness of the transaction. The onus to prove the three factum is on the assessee as the facts are within the assessee's knowledge Mere production of incorporation details, PAN Nos, or the fact that 15 third persons or company had filed income tax details in case of a private limited company may not be sufficient when surrounding and attending facts predicate a cover up. These facts indicate and reflect proper paper work or documentation but genuineness, creditworthiness, identity are deeper and obtrusive Companies no doubt are artificial or juristic persons but they are soulless and are dependent upon the individuals behind them who run and manage the said companies. It is the persons behind the company who take the decisions, controls and manage them."
7. PCIT Vs Bikram Singh [ITA No.55/2017] (Delhi) Where Hon'ble Delhi High Court held that even if a transaction of loan is made through cheque, it cannot be presumed to be genuine in the absence of any agreement, security and interest payment. Mere submission of PAN Card of creditor does not establish the authenticity of a huge loan transaction particularly when the ITR does not inspire such confidence. Mere submission of ID proof and the fact that the loan transactions were through the banking channel, does not establish the genuineness of transactions. Loan entries are generally masked to pump in black money into banking channels and such practices continue to plague Indian economy
8. PCIT-6, New Delhi vs NDR Promoters Pvt. Ltd. ITA 49/2018 (Delhi) Wherein the Hon'ble Delhi High Court has held that;
"13. The second set of cases are those where there was evidence and material to show that the shareholder company was only a paper company having no source of income, but had made substantial and huge investment in the form of share application money. The assessing officer has referred to the bank statement, financial position of the recipient and beneficiary assessee and surrounding circumstances. The primary requirements, which should be satisfied in such cases is, identification of the creditors/shareholder, creditworthiness of creditor/shareholder and genuineness of the transaction. These three requirements have to be tested not superficially but in-depth having regard to the human probabilities and normal course of human conduct."
"14. Certificate of incorporation, PAN no. etc are relevant for purchase of identification, but have their limitation when there is evidence and material to show that the subscriber was a paper company and not a genuine investor."
9.Indus Valley Promoters Ltd. Vs. Commissioner of Income Tax 305 ITR 202 (Delhi) The main plank of the assessed arguments is that the source of the source cannot be examined In the present case, the Revenue has seen through the ploy of the assessed whereby substantial amount have been deposited in cash purportedly in the books of M/s 16 Indwheels stated to be a partnership firm and from where the amounts have been withdrawn and credited to the account of Sh. Sanjay Gupta in the books of the assessed company. It is the case of the Revenue that the same cash deposits could have been made in the books of the assessed company and the method of choosing the circuitous path is only an attempt to circumvent the provisions of Section 68 of Act.
10. Commissioner of Income Tax Vs Precision Finance Pvt, Ltd. (1994) 208 ITR 465 (Cal) It is for the assessee to prove the identity of the creditors, their creditworthiness and the genuineness of the transactions. In our view, on the facts of this case, the Tribunal did not take into account all these ingredients which have to be satisfied by the assessee. Mere furnishing of the particulars is not enough. The enquiry of the Income-tax Officer revealed that either the assessee was not traceable or there was no such file and, accordingly, the first ingredient as to the identity of the creditors had not been established. If the identity of the creditors had not been established, consequently the question of establishment of the genuineness of the transactions or the creditworthiness of the creditors did not and could not arise. The Tribunal did not apply its mind to the facts of this particular case and proceeded on the footing that since the transactions were through the bank account, accordingly, it is to he presumed that the transactions were genuine. It was not for the Income- tax Officer to find out by making investigation from the bank accounts unless the assessee proves the identity of the creditors and their creditworthiness. Mere payment by account payee cheque is not sacrosanct nor can it make a non-genuine transaction genuine. In that view of the matter, the question before us is answered in the negative and in favour of the Revenue."
8. Further, Ld. DR also filed the following written submissions on the reopening of the case:
"In the above case, it is humbly submitted that the following decisions may kindly be considered with regard to reopening of cases u/s 147 of I.T. Act and more particularly relating to cases where the assesses have challenged the re-assessment proceedings as being initiated without any valid "Reason to Belief "; without reference to any fresh tangible material, and without any independent application of mind. In the following decisions, the Hon'ble courts have upheld the validity of re-assessment proceedings:-
A. The reassessment has been held to be validily initiated where the AO has received information from the investigation wing and other agencies.17
1- Experion Developers Pvt. Ltd. Vs. ACIT (Delhi High Court) (422 ITR 355) (115 taxmann.com 338) In para 24 of the judgment the Hon'ble Court has held "In our opinion, the tangible material in the present case is information received by the AO from DIT (l&CI). It would thus be apposite to refer to the said referred report which has been placed to the record." It has been further held in para 30 that "There cannot be any doubt from the reasons recorded, that the petitioner companies are beneficiaries of the funds received from 'Gold Singapore'. If needed, the investing entities do not have any creditworthiness to make such huge investments into the petitioner company, in our view, there would be sufficient cause or justification for the AO to attribute the income to the petitioner. Thus, at this stage, there are sufficient "Reasons to Believe" that such income has escaped assessment and to reopen the assessment proceedings. Since there is relevant material to form reasonable belief in the background of the facts noted above, at this stage of the proceedings, where the AO has yet to finally adjudicate the issues, it is not for this Court to deal with the questions as to whether the reopening of the assessment would ultimately result in creating further demand.
We are therefore of the opinion that the AO had sufficient tangible materials and was justified in issuing notice for assessment."
2. Rajat Export Import India Pvt Ltd. Vs ITO [2012] 341 ITR 135 (Delhi)/ [2012] 252 CTR 307 (Delhi)/ [2012] 206 Taxman 50 (Delhi) "The information contained in the table itself constitutes reasons to believe, prima facie, the income chargeable to tax has escaped assessment in the hands of the petitioner. It must be noticed that the information contained in table was received by the Assessing Officer from DIT (Inv.), who was in charge of the investigation into groups that operate as entry providers or entry operators. The material before the Assessing Officer, in our opinion, is relevant and affords a live link or nexus to the formation of the prima facie belief that income chargeable to tax had escaped assessment in the assessee's hands. We are not at this stage concerned whether the material before the Assessing Officer is sufficient for the formation of the belief. What are we concerned at this stage is whether the material before the Assessing Officer is 18 relevant for forming the prima facie belief that income chargeable to tax has escaped assessment. It is also well settled that at that stage, that is at the stage when reasons are recorded for reopening the assessment, the Assessing Officer is not required to build a fool proof or a fort-like case for making addition to the assessee's income; all that he is required at that stage is to form a prima facie opinion or belief that income has escaped assessment. The relevancy of the material before the Assessing Officer is to be judged only from that perspective and not from the perspective as to whether the material is sufficient or adequate to sustain the addition ultimately. That will be an aspect which the Assessing Officer will examine and decide in the course of the re- assessment proceedings after hearing the assessee in the manner required by law. These propositions are so well settled that they do not require citing of any authority."
3. AGR Investment Ltd. Vs Addl. CIT (333 ITR 146) (Delhi) The Hon'ble High Court upheld the notice u/s 148 and held that there was material on the basis of which notice u/s 148 could be issued as the Assessing Officer had specific information from office of DIT (Inv.) as regards transaction entered into by assessee company with a number of concerns which have made accommodation entries and they were not genuine transactions.
4. Aaspas Multimedia Ltd. Vs DC1T [2017] 83 taxmann.com 82 (Gujarat) Where Hon'ble Gujarat High Court held that where reassessment was made on basis of information received from Principal DIT (Investigation) that assessee was beneficiary of accommodation entries by way of share application provided by a third party, same was justified.
B. It is further submitted that existence of concrete material supported by prima- facie verification by the AO are sufficient reasons for formation of belief u/s 147. This is supported by Supreme Court decision in the cases of:
(i) . The Hon'ble Supreme Court has held in the case of ACIT vs. Rajesh Jhaveri Stock Brokers Pvt. Ltd., [2007] 161 TAXMAN 316 (SC) and 291 ITR 500 (SC) as under: -19
"Section 147 authorises and permits the Assessing Officer to assess or reassess income chargeable to tax if he has reason to believe that income for any assessment year has escaped assessment. The word "reason" in the phrase "reason to believe" would mean cause or justification. If the Assessing Officer has cause or justification to know or suppose that income had escaped assessment, it can be said to have reason to believe that an income had escaped assessment. The expression cannot be read to mean that the Assessing Officer should have finally ascertained the fact by legal evidence or conclusion. The function of the Assessing Officer is to administer the statute with solicitude for the public exchequer with an inbuilt idea of fairness to taxpayers. As observed by the Supreme Court in Central Provinces Manganese Ore Co. Ltd. v. ITO [1991] 191 ITR 662, for initiation of action under section 147(a) (as the provision stood at the relevant time) fulfillment of the two requisite conditions in that regard is essential. At that stage, the final outcome of the proceeding is not relevant. In other words, at the initiation stage, what is required is "reason to believe", but not the established fact of escapement of income. At the stage of issue of notice, the only question is whether there was relevant material on which a reasonable person could have formed a requisite belief. Whether the materials would conclusively prove the escapement is not the concern at that stage. This is so because the formation of belief by the Assessing Officer is within the realm of subjective satisfaction (see ITO vs. Selected Dalurband Coal Co. P. Ltd.[1996] 217 ITR 597 (SC); Raymond Woollen Mills Ltd. v. ITO [1999] 236 ITR 34 (SC).
The scope and effect of section 147 as substituted with effect from April 1, 1989, as also sections 148 to 152 are substantially different from the provisions as they stood prior to such substitution. Under the old provisions of section 147, separate clauses (a) and
(b) laid down the circumstances under which income escaping assessment for the past assessment years could be assessed or reassessed. To confer jurisdiction under section 147(a) two conditions were required to be satisfied: firstly, the Assessing Officer must have reason to believe that income, profits or gains chargeable to income tax have escaped assessment, and secondly, he must also have reason to believe that such escapement has occurred by reason of either omission or failure on the part of the assessee to disclose fully or truly all material facts necessary for his assessment of that 20 year. Both these conditions were conditions precedent to be satisfied before the Assessing Officer could have jurisdiction to issue notice under section 148 read with section 147(a). But under the substituted section 147 existence of only the first condition suffices. In other words, if the Assessing Officer for whatever reason has reason to believe that income has escaped assessment it confers jurisdiction to reopen the assessment. It is, however, to be noted that both the conditions must be fulfilled if the case falls within the ambit of the proviso to section 147. The case at hand is covered by the main provision and not the proviso."
(ii) . Grover Nursing Home 248 ITR 493 P&H An analysis of the aforementioned decisions of the Supreme Court makes it clear that the court can invalidate a notice issued under section 148 of the Act only if it is satisfied that no material was available before the Income-tax Officer on the basis of which he could form a belief that the income chargeable to tax had escaped assessment or that the said belief was not at all bona fide or was based on vague, arbitrary and nonspecific information. However, the court cannot go into the sufficiency of the reasons for forming the belief and sit in appeal over the opinion formed by the competent authority.
(iii) . Jawand Sons Vs. CIT 326 ITR 39 P&H Under section 147 of the Act, after its amendment with effect from April 1, 1989, wide power has been given to the Assessing Officer even to cover cases where the assessee had fully disclosed the material facts. The only condition for action is that the Assessing Officer should have reason to believe that income chargeable to tax had escaped assessment. Such belief can be reached in any manner, and is not qualified by a pre-condition of full and true disclosure of material facts by the assessee as contemplated in the pre-amended section 147(a) of the Act. After initiation of proceedings, the A.O. could conclude on the basis of other information and explanation of the appellant that no income had escaped assessment, yet for acquiring the jurisdiction, the A.O. could still have valid basis on the basis of information available at the time of initiating action u/s I 47/148 of the Act to have prima-facie reason to believe that such income escaped assessment. The information received by the A.O., as mentioned above, could very well make him prima-facie have such reason to believe that income escaped assessment. Further, as the AO has initiated the proceedings on the basis of above-mentioned specific information it could not be said that the action of the A.O. was on the basis of certain surmises or conjectures only. It could also not be said that the material in possession of the A.O. could just make him have reason to suspect and not reason to believe that income escaped assessment. Moreover adequacy 21 of satisfaction of AO is not justice-able as was held by Hon'ble Punjab & Haryana High Court in the case of Gurera Gas Cylinder Pvt. Ltd. Vs. CIT (258 ITR 170) and in case of Swaraj Engine Ltd. vs. ACIT (260 ITR 202) following the judgment of Hon'ble Supreme Court in cash of Phool Chand Bajrang Lal vs. ITO (203 ITR 456)
(iii) ITO vs Lakhmani Mewai Das 1976 AIR 1753(SC)-
"Once there exist reasonable grounds for the Income-tax Officer to form the above belief, that would be sufficient to clothe him with jurisdiction to issue notice. Whether the grounds are adequate or not is not a matter for the court to investigate. The sufficiency of grounds which induce the Income-tax Officer to act is, therefore, not ajusticiadle issue."
On the facts and in view of the above discussed legal positions, in the instant case, reason to belief is based upon concrete material and verification by the AO.
The information collected and verified by the AO, is a sufficient ground for reopening and there is no anomaly in reopening of case u/s 147."
9. Considered the rival submissions and material placed on record. We note that AO noted that assessee has received an accommodation entry of Rs. 1,75,00,000/- from M/s Khushi Conbuild Pvt. Ltd. which was an entity controlled and operated by Shri Anand Sharma. AO further held that since the assessee has failed to prove the creditworthiness of its investor as well as genuineness of the transaction, hence, addition of Rs. 1,75,00,000/- was made as unexplained cash credit u/s. 68 of the Act. These facts have been brought by the Investigation Wing Kolkata in its report and also examined by the AO in the assessment order. We further find that Ld. CIT(A) after examining the assessment order and replies of the assessee has found that M/s Khushi Conbuild Pvt. Ltd. is a typical case of a shell company and that the said company has no actual business activity and thus by relying upon the various judgements on this issue and upheld the addition. We noted that the account statement of M/s. KCPL as quoted in internal page 6-7 of the assessment order dated 30/12/2018 indicates that the Amount of Rs. 1.75 Crores that was received by the assessee from the said entity was account to account transaction. No investigation/enquiry was conducted by the AO to find out the source of money in as much as the account statement does not indicate that any cash was deposited in the account of M/s. KCPL which was later on transferred to the account of the appellant. The entire exercise that is prior to issuance of notice under Section 22 148 of the IT Act or before passing the assessment order was done on presumptions. As regards addition under Section 68 of the IT Act is concerned; it is well settled that addition can be done only when the identity, genuineness and creditworthiness of creditors have not been establishedIt is respectfully submitted that both\he AO as well as the CIT (Appeal) erred into not appreciating that the transaction as referred was not "cash credit" but it arose out of collaboration agreement dated 18/03/2011 (page 54-56 of the paper book) between the assessee and M/s. KCPL. The finding of the AO as in assessment order dated 30/12/2018 clearly indicates that it ignored the reply dated 20/10/2018 of M/s. KCPL wherein, the entire details of its audited account of the relevant years, bank statements, list of directors etc. were mentioned. Both the authorities below not appreciated the requisite three tests for the purpose of Section 68 of IT Act, 1961 i.e. (a) identity, (b) creditworthiness, and (c) genuineness of M/s. KCPL was satisfied by the appellant on the basis of the material on record and thereafter, the onus to prove otherwise shifted upon the department which it failed to discharge. The identity of the referred entity is proved from the certificate of information issued by the Registrar of Companies, Kolkata. The PAN number, statement of accounts, ITRs filed by the said entity was also brought on record. However, ignoring all the documents the authorities below passed the order on the basis of the report dated 16/03/2018 of ADIT, Kolkata which is not sustainable. The transaction was on the basis of collaboration agreement between the two entities and it was not a loan or credit facilities but it was part of a business transaction which is normal practice and the said amount of Rs. 1.75 Crores was returned back to M/s. KCPL in the FY 2014-15 and the said transaction was also not questioned by the department. In view of above, a bare perusal of para 6.2 of the order of the CIT (Appeals) demonstrates that the sole basis for returning finding of fact is the report of ADIT, Kolkata and therefore, is not tenable. The Learned CIT Appeal further observed that in para 6.2 (iv) that the AO had made independent enquiry to verify the existence of M/s. KCPL and there is nothing on record to indicate that any enquiry was done prior to issuance of notice under Section 148 of the IT Act, 1961 or after the objection was filed by the appellant against reasons to believe. The Learned CIT Appeal erred into holding in para 6.4 that no evidence was brought on record regarding payment of interest on return of huge amount of advance on the face of the contents of the collaboration agreement dated 18/03/2011 which clearly postulates that in case the appellant failed to bring LOI within a period; the amount of Rs. 1.75 Crores was to be returned. Even otherwise the finding regarding accommodation entry is on the basis of surmises, conjectures and suspicion which cannot be the substitute for proof. Therefore, in this case, the assessee has submitted all the documents in support of the transaction before the AO and he has merely rejected the same 23 on the basis of information available with him as the same on the basis of suspicion. Therefore, we delete the additions in dispute and allow the grounds raised by the assessee.
10. Since we have deleted the addition in dispute, the legal issue raised vide additional ground, as aforesaid, need not be adjudicated and kept open.
11. In the result, the appeal of the Assessee is allowed.
Order Pronounced in the Open Court on 29/04/2026.
Sd/- Sd/-
(S. Rifaur Rahman) (Sudhir Kumar)
Accountant Member Judicial Member
Dated:29/04/2026
*SR BHATNAGGAR*
Copy forwarded to:
1.Appellant
2.Respondent
3.CIT
4.CIT(Appeals)
5.DR: ITAT
ASSISTANT REGISTRAR