ACIT-4(3)(1), MUMBAI, MUMBAI V. UNITED FASHION APPARELS PVT LTD, MUMBAI

ITA 6149/MUM/2025

AI Insights

The case involves the Income Tax Department's appeal against the order of the Ld. CIT(A) which favored United Fashion Apparels Pvt. Ltd., a company engaged in textile exports. The dispute centered on the addition of Rs.8,59,06,758 to the company's income, alleged to be unexplained cash credit under section 68 of the Income Tax Act, 1961. The addition was based on information from the Investigation Wing regarding a connection to a known entity involved in providing accommodation entries. However, the CIT(A) found that the payments were legitimate receipts from export transactions, supported by extensive documentation and compliance with regulatory frameworks. The tribunal dismissed the revenue's appeal, aligning with previous decisions in similar cases involving the same assessee.

• Counselvise Citation: [2026] 140 COUNSELVISE.COM (IT) 846023 (ITAT-MUMBAI)
• Duration Of Justice: 5 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-03-2026
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: Mumbai
• Assessment Year: 2015-2016
• Appeal Filed On: 30-09-2025
• Other Referred Cases: ITA No.6147 and 6148/Mum/2025
• Laws Referred To: Income Tax Act 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SURENDRA MOHAN
• Assessee Lawyers: JAINAM SONAIYA; VISHAL D. SHAH
• Keywords: Revised return; Unexplained cash credit; Bogus
• Section: 147; 148; 68

Judgement Text

" IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH “A”, MUMBAI BEFORE SHRI ANIKESH BANERJEE, JUDICIAL MEMBER AND SHRI GIRISH AGRAWAL, ACCOUNTANT MEMBER ITA No.6149/Mum/2025 (Assessment year: 2015-16) ACIT -4(3)(1), Mumbai R.No.649, 6th Floor, Aayakar Bhavan, M.K. Road, Mumbai- 400020 vs United Fashion Apparels Pvt. Ltd. 14-B, Ground Floor, Ghanshyam Indl. Estate, Off Veera Desai Road, Andheri West, Mumbai-400053 PAN: AAACU8973H APPELLANT RESPONDENT Assessee by : Shri Jainam Sonaiya & Shri Vishal D. Shah Revenue by : Shri Surendra Mohan (Sr. DR) Date of hearing : 23/03/2026 Date of pronouncement : 26/03/2026 O R D E R Per: Anikesh Banerjee (JM): The instant appeal of the revenue filed against the order of the NFAC, Delhi [for brevity the “Ld. CIT(A)”], order passed under section 250 of the Income Tax Act 1961 (for brevity ‘the Act’) for Assessment Year 2015-16, date of order 10.07.2025. The impugned order emanated from the order of the Ld. DCIT Circle- 4(3)(1), Mumbai (for brevity the ‘Ld. AO’) order passed under section 147 of the Act date of order 30.03.2024. Printed from counselvise.com 2 ITA No.6149/Mum/2025 United Fashion Apparels P. Ltd. 2. The brief facts of the case are that the assessee is engaged in manufacture of textiles fabrics on a job work basis in India, primarily catering to export markets. The assessee received order from Foreign agent who provided details specification concerning the design and the type of material or fabrics to be utilized in production. In this impugned assessment year the assessee exported goods to Oluaya Ventures NIG Ltd, a foreign customer based in Nigeria. However, due to existing foreign exchange restriction and regulatory constraints prevalent in Nigeria, the buyer was unable to remit export proceeds directly. As a result, the payment was made through an alternate route that is via Everest Metal Nigeria Ltd., a known and registered business entity operating in Nigeria. 3. The export process was remitted through regular and recognized banking channel and was duly supported by the comprehensive documentation. This includes shipping bills, commercial invoices, bank realization certificates and formal payment confirmation. Furthermore, the corresponding export turnover and foreign receipts were accurately recorded in companies books of accounts and were duly offered tax in accordance with applicable provision of the Act. During the impugned assessment year, the assessee filed the return by declaring total income Rs.2,24,57,430/-. Subsequently, the assessee filed a revised return and declaring total income Rs. 2,18,67,030/-. Thereafter the scrutiny assessment was initiated and the assessee’s income was assessed amount toRs.2,18,67,030/-. Finally, the reassessment was initiated u/sec. 148 by information from Investigation Wing, Ranchi pertaining to search conducting at Shri Naresh Kumar Agrawal’s premises on 09.06.2022. Wherein it was alleged that the party had provided entries of loans, bogus expenses and bogus exports after taking cash. During the impugned financial year, the assessee received the foreign currency Printed from counselvise.com 3 ITA No.6149/Mum/2025 United Fashion Apparels P. Ltd. from Everest Metal Nigeria Ltd. of which Mr. Naresh Kumar Agrawal is one of the key person. Finally, the transactions with the said company was taken as bogus and accordingly, the addition was made the receipt of amount of Foreign currencies equivalent to Rs.8,59,06,758/- with the total income of the assessee. The aggrieved assessee filed an appeal before the Ld. CIT(A). The Ld. CIT(A) considering the submission of the assessee allowed the appeal of the assessee and deleted the addition. Being aggrieved the revenue filed an appeal before us. The relevant observations of the Ld. CIT(A) in paragraphs no. 5 and 6 are reproduced as below: “5. From all the above-mentioned facts and statements, it is clearly evident that assessee company is a regular exporter of textiles, showing total turnover of Rs.85,29,26,713/- out of which total exports sales were Rs.677968561/-. Out of these exports sales in respect of which payments were received through M/s. Everest Metal Nigeria Limited constitutes only 12.67%. From this factual matrix is clear that the assessee company is a export trade house regularly engaged in exports sales of textiles. From all the documentary evidences, it is clear that goods are actually shipped and documents were duly verified by two other government agencies and against those shipped goods, payments have been received as per RBI Guidelines through authorized dealer banks. 6. Hence, it is clear that amount of Rs.8,59,06,758/- is not unexplained cash credit but actually receipts against sales of the goods which has been duly offered for tax by the assessee company. Accordingly, AO is directed to delete the addition of Rs.8,59,06,758/-_and give relief to the assessee.” 4. The Ld. AR filed a paper book comprising pages 1 to 325, which has been placed on record. The Ld. AR stated that the identical fact was duly examined and adjudicated by the Coordinate Bench of ITAT Mumbai in assessee’s own case bearing ITA No.6147 and 6148/Mum/2025 for A.Y. 2013-14 and 2014-15 date of Printed from counselvise.com 4 ITA No.6149/Mum/2025 United Fashion Apparels P. Ltd. order 17.02.2026. The relevant observations of the Coordinate Bench of ITAT Mumbai paragraph nos.6 to 9 are reproduced as below: “6. Aggrieved by the order of AO, the assesse filed appeal before the CIT(A). After considering the statement of facts, grounds of appeal, assessment order and the written submissions of the assessee, the CIT(A) allowed the appeal of the assessee. He observed that assessee was engaged in the business of export of textiles to African countries. During the subject year, the export sales was Rs.15,67,05,073/- out of total turnover of Rs.22,20,54,708/-. The export sales include Rs.54,49,85/- to Nigerian party in respect of which the payment was received from third party, namely, M/s Everest Metals Nigeria Ltd. The CIT(A) also considered the details including invoice number and date, party name, invoice value, shipping bill number and date, duty drawback account, bill of lading, airwaybill number, BRC number and date of realization. He also observed that assessee submitted all documentary evidences from Customs and Foreign Trade Department. After considering the details as above, he held that the assessee has undoubtedly exported the goods by air cargo or ship and it was cleared by the customs department. The assessee also received duty drawback, which was approved by the Director General of Foreign Trade (DGFT). All payments were received through RBI and approved by the authorized dealer bank after verification of documents as per RBI Circular. Further, the exports to Nigeria was only 3.4% of the total exports. Since the goods were actually exported and dully verified by two government agencies and the payments were received as per RBI guidelines through authorized dealer banks, the CIT(A) held that the amount received was not unexplained cash credit but was actual receipts against export of goods, which is dully offered for tax by the appellant. Accordingly, he allowed the appeal of the assessee and directed the AO to delete the addition. 7. Further aggrieved by the order of the CIT(A), the revenue has filed the present appeal. The Ld. Sr. AR of revenue supported the order of the AO and submitted that the addition was rightly made by the AO based on the information received from the Investigation Wing, Ranchi and after confronting the assessee on the impugned issue. The assessee was not able to satisfactorily explain thereceipt of Rs 54,49,990/-received in foreign currency from M/s Everest Metal Nigeria Ltd. Printed from counselvise.com 5 ITA No.6149/Mum/2025 United Fashion Apparels P. Ltd. 8. On the other hand, the Ld. AR of the assessee supported the order of the CIT(A). He has filed a paper-book and enclosed copies of the invoices, shipping bills, bank realization certificates, payment conformation from buyer, copy of bank statement, list of the parties to whom exports were made and receipt of payment from Everest Metal Nigeria Ltd., copy of declaration by the appellant and RBI Circulars for third party payments for export/import transactions dated 01.07.2013, 08.11.2013 and 04.02.2014. The Ld. AR submitted that the assessee has exported goods to Qluaya Ventures Nig Ltd., for which payment was received of Rs.54,49,986/- from M/s Everest Metal Pvt. Ltd. The detail of export is at page 62 of the paper book. He submitted that all details to prove export of the goods were submitted to the lower authorities and the CIT(A) has duly appreciated the genuineness of the exports and allowed the realization of the export proceeds. Since the nature and source of the payment has been dully explained, the CIT(A) has rightly deleted the addition u/s 68 of the Act. He requested to upheld the order of CIT(A) and dismissed the appeal of revenue. 9. We have heard both the parties and perused the materials on record. We have also carefully gone through the Circulars issued by the RBI. The appellant has filed various documents such as invoice numbers and dates, party name (M/sOluaya Ventures Nig. Ltd.), invoice value, shipping bill number and date, duty drawback account, bill of lading, airway bill number, BRC number and date of realization of the export proceeds in support of the impugned amount received by it. The said amount was received through banking channel. The Customs Authorities and the Director General of Foreign Trade have verified the details and cleared the export of the goods to M/s Oluaya Ventures Nig. Ltd. The duty drawback was also approved by the DGFT. All the amounts were routed through the RBI and was approved by the authorized dealer banks. The RBI Circular (supra) also allows third party payment for export/import transactions. These facts had not been controverted by the AO by bringing any contrary evidence on record. They were duly considered by the CIT(A) while deciding the appeal filed by the assessee. The appellant has duly satisfied the conditions regarding identity of the party, genuineness of the transaction and creditworthiness of the party to escape the mischief of the provisions of Section 68 of the Act. We do not find any infirmity in the order of CIT(A), which we confirm. Accordingly, the appeal of the revenue is dismissed.” Printed from counselvise.com 6 ITA No.6149/Mum/2025 United Fashion Apparels P. Ltd. 5. The Ld. DR relied upon the orders of the revenue authorities. However, he was unable to rebut the submissions of the Ld. AR by citing any contrary judicial precedent. 6. We have heard the rival submissions and perused the material available on record. In the present case, it is an undisputed fact that the assessee is regularly engaged in the business of export of textile fabrics and has carried out genuine export transactions during the year under consideration. The assessee has furnished comprehensive documentary evidences including invoices, shipping bills, bills of lading, bank realization certificates (BRC), and confirmation of payments received through authorized banking channels, which establish the factum of actual export of goods and realization of export proceeds. The allegation of the revenue is primarily based on information received from the Investigation Wing regarding certain accommodation entry providers. However, no cogent material has been brought on record by the Ld. AO to controvert the documentary evidences furnished by the assessee or to establish that the export transactions were sham or non-genuine. The payments have been received through recognized banking channels in accordance with the guidelines prescribed by the RBI, including permissible third-party payments in export transactions. We further note that the Ld. CIT(A), after detailed examination of facts and evidences, has categorically held that the impugned receipts represent genuine export proceeds and not unexplained cash credits under section 68 of the Act. This finding of the Ld. CIT(A) remains uncontroverted by the revenue by bringing any fresh or contrary material on record. Moreover, we find that the issue involved in the present appeal is squarely covered by the decision of the Printed from counselvise.com 7 ITA No.6149/Mum/2025 United Fashion Apparels P. Ltd. Coordinate Bench of the Tribunal in assessee’s own case (supra) for earlier assessment years, wherein on identical facts, the addition made under section 68 on account of third-party export realization was deleted. In the absence of any distinguishing facts or contrary judicial precedent, we respectfully follow the said decision. In view of the foregoing discussion, we find no infirmity in the order of the Ld. CIT(A) in deleting the addition of Rs.8,59,06,758/-. Accordingly, the order of the Ld. CIT(A) is upheld and the grounds raised by the revenue are dismissed. Hence, the appeal of the revenue stands dismissed. 7. In the result, the appeal of the revenue bearing ITA No.6149/Mum/2025 is dismissed. Order pronounced in the open court on 26th day of March 2026. Sd/- Sd/- (GIRISH AGRAWAL) (ANIKESH BANERJEE) ACCOUNTANT MEMBER JUDICIAL MEMBER Mumbai,िदनांक/Dated: 26/03/2026 SAUMYA Sr.PS Copy of the Order forwarded to: 1. अपीलाथŎ/The Appellant , 2. Ůितवादी/ The Respondent. 3. आयकरआयुƅ CIT 4. िवभागीयŮितिनिध, आय.अपी.अिध., मुंबई/DR, ITAT, Mumbai 5. गाडŊफाइल/Guard file. BY ORDER, //True Copy// (Asstt. Registrar), ITAT, MUMBAI Printed from counselvise.com "