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2026 Supreme(Online)(ITAT) 11201
IN THE INCOME TAX APPELLATE TRIBUNAL, NAGPUR BENCH
BEFORE SHRI PAWAN SINGH, JUDICIAL MEMBER AND SHRI KHETTRA MOHAN ROY, ACCOUNTANT MEMBER
ITA No. 312/Nag/2023 (AY: 2013-2014)
(Physical hearing)
Income Tax Officer,
Room No. 12, RTTC Building,
Seminary Hills, Nagpur,
Maharashtra- 440006
Vs
Ramsons Steel Pvt Ltd
1st Floor, Agrawal Complex, Loha Oli,
Itwari, Nagpur- 440002
PAN- AAACR8418G
Appellant / Revenue Respondent / Assessee
C.O. No. 01/Nag/2024 in ITA No. 312/NAG/2023 (AY: 2013-14)
Ramsons Steel Pvt Ltd
1st Floor, Agrawal Complex, Loha Oli,
Itwari, Nagpur- 440002
PAN- AAACR8418G
Vs
Income Tax Officer
Room No. 12 RTTC Building,
Seminary Hills, Nagpur,
Maharashtra- 440006
Appellant / Assessee Respondent / Revenue
Assessee by Shri K.P. Dewani, Advocate
Revenue by Shri Pankaj Kumar, CIT DR
Date of hearing 16.02.2026
Date of pronouncement 24.04.2026
For the Appellants/Petitioners: Pankaj Kumar
For the Respondents: K.P. Dewani
Once an assessee discharges the primary burden of proof under Section 68 by providing evidence of identity, creditworthiness, and genuineness of credits, the revenue must conduct independent verification to establish the transaction as sham. Furthermore, if no addition is made regarding the original reasons for reopening, no other additions are permissible.
Headnote:(A) Income Tax Act, 1961 - Section 68 - Cash credits - Unexplained credit entries - Nature of onus - Once the assessee discharges the primary onus by providing identity, genuineness, and creditworthiness of the creditors, the burden shifts to the assessing authority to investigate further - Mere suspicion or presumptions of layering or accommodation entries without independent inquiry or evidence does not constitute a valid basis for addition. (Paras 30, 31)
(B) Income Tax Act, 1961 - Section 147/148 - Reopening of assessment - Validity of notice - If no addition is made in respect of the reasons recorded for reopening, the assessing authority cannot independently assess or add other income that comes to light during proceedings - Reopening based on vague information without live link or nexus between belief and escapement of income is invalid. (Paras 33)
Facts of the case:
The assessing authority initiated reopening of the assessment based on third-party information alleging that certain cash deposits were transferred to the assessee as accommodation entries. During the reassessment, the assessing authority ignored the assessee's documentary evidence—including confirmations, bank statements, and tax documents—and relied on presumptions regarding the nature of credit entries and the status of certain entities as shell companies. Additions were made under Section 68 for alleged unexplained credit entries.
Findings of Court:
The Appellate Tribunal found that the assessee had fully discharged its primary onus by providing exhaustive documentary evidence, including confirmations from creditors, their addresses, tax details, and proof of banking transactions. It was observed that these transactions were part of regular business activities, including the refund of opening balances, and that the appellate authority was justified in deleting the additions because the assessing authority’s conclusions were based on mere conjectures and not on legal evidence.
Issues: Whether the assessing authority was justified in making additions under Section 68 based on presumptive grounds without countering the evidence provided by the assessee, and whether the reopening of assessment was valid when the specific reason for reopening did not lead to any addition.
Ratio Decidendi: The court held that Section 68 requires the assessee to prove the identity, creditworthiness, and genuineness of the transaction, which is satisfied by filing documentary evidence; once discharged, the onus is on the revenue to bring evidence to suggest the transactions are sham. Furthermore, the court reiterated that if the reason for reopening the assessment does not lead to an addition, it is not permissible for the assessing authority to bring other income to tax.
Result: Appeal of the revenue is dismissed; Cross Objection of the assessee is allowed.
Order under section 254(1) of Income Tax Act
PER PAWAN SINGH, JUDICIAL MEMBER:
1. This appealby revenue and Cross Objection (C.O.) therein by assessee are directed against the order of Ld. CIT(A) dated 16.07.2023 for AY 2013-14. In ITA No. 312/NAG/2023for AY 2013-14, the revenue has raised following grounds of appeal;-
i. On the facts and circumstances of the case whether the Ld.CIT(A), NFAC was correct in deleting the addition of Rs. 2,35,50,000/- made by AO u/s. 68 of I.T. Act, 1961 even though the assessee failed to explain the credit entry in bank account of assessee made by M/s. Shubhbijay Properties Advisory Pvt. Ltd.
ii. On the facts and circumstances of the case whether the Ld.CIT(A), NFAC was correct in deleting the addition of Rs. 192,67,37,950/- made by AO u/s. 68 of I.T. Act, 1961 even though the assessee failed to establish the identity and the creditworthiness of the persons from whom loans/deposits were received.
iii. On the facts and circumstances of the case whether the Ld.CIT(A), NFAC has erred in accepting the transaction with M/s. Shubhbijay Properties Advisory Pvt. Ltd. as genuine transaction inspite of the fact that the said company is a shell entity and transactions of shell entity have been held to be non-genuine transaction. Reliance is placed on the decision of ITAT, Mumbai Bench, Mumbai ITA No. 1313/Mum/20 in the case of DCIT, Circle 15(1)(2) Mumbai Vs. Leena Power Tech Engineer Pvt. Ltd.
2. On receipt of notice of appeal by revenue, the assessee has filed its cross objection (C.O.) by raising following grounds;-
i. Notice is issued u/s 148 of I.T. Act 1961 is illegal, invalid and bad in law. Consequent reassessment framed is liable to be cancelled.
ii. The learned CIT(A) erred in holding that notice issued u/s 148 is in accordance with law.
iii. The learned CIT(A) ought to have held on the facts and evidence on record that notice issued u/s 148 is bad in law and consequent reassessment framed is liable to be cancelled.
iv. Reassessment framed without providing complete reasons recorded for issue of notice u/s 148 inspite of specific request made is bad in law and liable to be cancelled.
v. Reason to believe for escapement of income on the basis of information received from Investigation Wing without making independent inquiry is no valid belief of escapement and consequent notice issued u/s 148 is bad in law.
3. Brief facts of the case are that the assessee is a company engaged in the business of trading in Iron and Steel and investment in share and securities. The assessee filed its return of income for AY 2013-14 declaring income of Rs. 1980/-. Initially, scrutiny assessment was completed under section 143(3) on 24.03.2015. Subsequently, the case of assessee was reopened under Section 147 on the basis of information that DDIT (Inv) Unit 4(2) Kolkata that they conducted inquiry in respect of bank account of Raj Kumar Singh in IndusInd Bank. As per information of DDIT (Inv) Unit 4(2) Kolkata, there was high value of cash deposits in the bank account of RajKumarSingh, which were immediately transferred or withdrawn. Credit entry mainly by cash deposits and were transferred to several entity including to Shubhbijay Properties Advisory P Limited. The assessee company is one of the beneficiaries of fund transferred from the bank account of Raj Kumar Singh of Rs. 45.00 Lakhs during financial year 2012-13 relevant to assessment year under consideration. On the basis of such information, the Assessing Officer (in short ‘AO’) formed his opinion that the income to the extent of Rs. 45.00 Lakhs had escaped assessment. Notice under Section 148 dated 31.03.2021 was issued to assessee after obtaining prior approval from competent authority. In response to notice under Section 148, the assessee filed its return of income on 13.04.2021. The AO after serving reasons recorded proceeded for reassessment. The AO asked the assessee to furnish detail of statement of bank account, financial statement and audit report alo
