AJOOBA WATER WORLD PRIVATE LIMITED,. V. ITO WARD -1(1), FBD, .

ITA 1292/DEL/2024

AI Insights

The case involves Ajooba Water World Pvt. Ltd, which appealed against the orders of the National Faceless Appeal Centre (NFAC) confirming additions made by the AO under section 68 of the Income-tax Act, 1961, for the assessment years 2016-17 and 2017-18. The additions pertained to share capital and share premium received by the company, which were treated as unexplained cash credits. The Tribunal found that the NFAC did not consider additional evidences submitted by the assessee under Rule 46A of the Income Tax Rules, which necessitated a de novo adjudication by the AO.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 772429 (ITAT-DELHI)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-08-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Assessment Year: 2016-2017
• Laws Referred To: Income-tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: AJAY KUMAR ARORA
• Assessee Lawyers: RAJEEV SAXENA
• Keywords: Opportunity of being heard; Additional evidence; Unexplained cash credit; Valuation report
• Section: 144; 143(3); 68; 133(6)

Judgement Text

"Page | 1 INCOME TAX APPELLATE TRIBUNAL DELHI BENCH “A”: NEW DELHI BEFORE SHRI M. BALAGANESH, ACCOUNTANT MEMBER AND SHRI SUDHIR KUMAR, JUDICIAL MEMBER ITA No. 1292 & 1293/Del/2024 (Assessment Years: 2016-17 & 2017-18) Ajooba Water World Pvt. Ltd, H. 35, 1st Floor, Jangpura Extension, New Delhi Vs. ITO, Ward-1(1), Faridabad (Appellant) (Respondent) PAN: AALCA0774D Assessee by : Shri Rajeev Saxena, Adv Ms. Sumangla Saxena, Adv Shry Shyam Sunder, Adv Revenue by: Shri Ajay Kumar Arora, Sr. DR Date of Hearing 22/07/2025 Date of pronouncement 27/08/2025 O R D E R PER M. BALAGANESH, A. M.: 1. The appeal in ITA Nos. 1292 and 1293/Del/2024 for AYs 2016-17 and 2017-18 arise out of the order of the National Faceless Appeal Centre (NFAC), Delhi [hereinafter referred to as ‘ld. CIT(A)’, in short] in dated 27.02.2024 against the order of assessment passed u/s 143(3) of the Income-tax Act, 1961 (hereinafter referred to as ‘the Act’) dated 28.12.2018 by the Assessing Officer, ITO, Ward-1(1), Faridabad for AY 2016-17 and u/s 144 dated 19.11.2019 by ITO, Ward-1(1), Faridabad for AY 2017-18 (hereinafter referred to as ‘ld. AO’). ITA No. 1292/Del/2024 for AY 2016-17 2. Though the assessee has raised several grounds before us, the only effective issue to be decided in this appeal is as to whether the ld NFAC was Printed from counselvise.com ITA No. 1292 & 1293/Del/2024 Ajooba Water World Pvt. Ltd Page | 2 justified in confirming the addition made in the sum of ₹92,30,000/- made on account of share capital and share premium received by the assessee as unexplained cash credit u/s 68 of the Act in the facts and circumstances of the instant case. 3. We have heard the rival submissions and perused the materials available on record. The company had received share capital and share premium from the following parties:- Name PAN Address No. of Shares Share Capital Share Premium Remarks Balgopal Builders Pvt.Ltd. AACCB7793C H-69, Grounds fl oor, DDA flats, Phase- 1, Ashok Vi har Del hi-110052 7000 70,000/- 2,80,000/- Rs. 3.50 Iacs was the opening balance. Bal gopal Transports Pvt. Ltd. AAECB4658E H.No. 10715, Ground Floor, Gal i No. 11, Muqal Pratap Nagar 110007 40000 4,00,000/- 16,00,000/- Rs. 20 lacs was received during the year . Chanchala Transports Pvt.Ltd. AAECC3211E H.No. 10715, Ground Floor, Gali No. 11, Mugal Pratap Nagar - 110007 50000 5,00,000/- 20,00, 000/- Rs. 25 lacs was received during the year . Beta Nirman Pvt. Ltd AACCB7790B 341 /36A, 2“° floor, Manqal Sain BuiIding, Bagh Kare Khan, Kishan Ganj Delhi-110007 14000 1,40,000/- 5,60,000/- Rs. 7 lacs was the opening balance. Omshi vam Contractors Pvt.Ltd. AAAC07993F H-54, Top floor, DDA flats, Phase- 1, Ashok Vihar Deli -110052 5200 52,000/- 2,08,000/- Rs. 12.60 I acs was the opening balance and Rs. 10 lacs were returned. Rishi Credit & industries Ltd. AABCR2777B H.No. 10715, Ground Floor, Gal i No. 11, Mugal Pratap Nagar - 110007 68400 6,84,000/- 27,36,000/- Rs. 34.20 1acs was recei ved during the year . TOTAL 184600 18,46,000/- 73,84,000/- Printed from counselvise.com ITA No. 1292 & 1293/Del/2024 Ajooba Water World Pvt. Ltd Page | 3 4. The assessee furnished the following documents of various investors: – A. Certificate of Incorporation along with Memorandum and Article of Association B. Audited financial statements for the year ended 31-3-2016 C. Income tax return acknowledgement D. Share application form E. Confirmation of accounts F. Bank statement of investor companies. 5. These documents are enclosed from pages 91 to 337 of the Paper Book. The share capital portion was received for face value of ₹10 per share and share premium portion was ₹40 per share. The assessee used Net Asset Value method (NAV), which is one of the prescribed methods in Rule 11UA of Income Tax Rules in valuation of unquoted shares. The said valuation report is enclosed in pages 377 to 379 of the paper book. The ld AO issued notice u/s 133(6) of the Act to all the 6 parties asking them to furnish relevant information and confirmation of the investment made for the subscription of shares in the assessee company. It is pertinent to note that out of aforesaid 6 parties, no monies towards share capital and share premium were received from 3 parties namely M/s. Balgopal Builders Pvt. Ltd, M/s. Beta Nirman Pvt Ltd and Omshivam Contractors Pvt Ltd. These 3 parties did not respond to the notice issued u/s 133(6) of the Act before the ld AO, as there were no transactions during the year under consideration and there was only opening balance. The remaining 3 parties with whom transactions were carried out during the year duly responded directly before the ld AO to the notice u/s 133(6) of the Act by furnishing relevant documents and confirming the fact of investment being made in the shares Printed from counselvise.com ITA No. 1292 & 1293/Del/2024 Ajooba Water World Pvt. Ltd Page | 4 of the assessee company with share premium. The ld AO completely ignored the documents submitted both by the assessee as well as by the investors directly in response to notice u/s 133(6) of the Act and proceeded to treat the entire sum of receipt of share capital and share premium from all the six parties totaling to ₹92,30,000/- as unexplained cash credit u/s 68 of the Act by raising doubt over the credibility and identity of the investors and genuineness of the transactions. The basis of the addition was the alleged failure of the assessee to furnish the requisite documents before the ld AO as well as during the appellate proceedings to substantiate the identity and creditworthiness of the investors company and genuineness of the impugned transactions, which eventually lead to confirmation of the additions u/s 68 of the Act by the ld CIT(A). 6. The ld AR in his written submissions submitted that the assessee company could not furnish all the requisite documents through e-filing portal due to certain technical glitches and constraint of the portal before the ld AO. Hence, left with no other option, the assessee furnished all those documents and evidences as additional evidences before the NFAC under Rule 46A of the Income Tax Rules by a detailed paper book together with the valuation report using NAV method in terms of Rule 11UA of the Income Tax Rules enclosed in Pages 377 to 379 of the Paper Book. We find on perusal of the order of NFAC, there is no mentioning of assessee filing the complete details in the form of detailed paperwork as additional evidences under Rule 46A of the Income Tax Rules. The assessee indeed vide letter dated 18.06.2022, had made a request before the ld NFAC to admit the additional evidences under Rule 46A of the Income Tax Rules containing all the relevant documents in respect of the investors and also narrating the reasons for filing the same as additional evidences. The said letter dated 18.06.2022 is enclosed in pages 338 to 342 of the paper book. But since Printed from counselvise.com ITA No. 1292 & 1293/Del/2024 Ajooba Water World Pvt. Ltd Page | 5 these additional evidences were not considered by the ld NFAC and ultimately these evidences require factual verification by the ld AO, we deem it fit and appropriate in the interest of justice and fairplay, to restore this issue to the file of ld AO for de novo adjudication in accordance with law to decide in the light of the evidences placed on record by the assessee. The assessee is also given liberty to furnish fresh evidences if any, in support of its contentions. Needless to mention that the assessee be given reasonable opportunity of being heard. Accordingly grounds raised by the assessee are allowed for statistical purposes for assessment year 2016-17 in the above mentioned terms. ITA No. 1293/Del/2024 for Assessment Year 2017-18. 7. Dispute involved in AY 2017-18 is identical to dispute for Assessment Year 2016-17. In AY 2017-18, an amount of Rs. 45 lakhs was received from 1 party i.e. Zenic Traders Pvt. Ltd on 29.06.2016. The assessment was framed u/s 144 of the Act by the ld AO and additional evidences were filed by the assessee before the ld NFAC furnishing the complete details of the investor. The request to admit the additional evidences are enclosed in pages 140 to 144 of the paper book. Ld NFAC as was done in AY 2016-17 had not mentioned about these additional evidences, even in AY 2017-18. Hence we find that these evidences require factual verification by the ld AO and accordingly, we deem it fit and appropriate to restore this issue to the file of the ld AO for de novo adjudication in accordance with law. The assessee is at liberty to furnish fresh evidences, if any, in support of its contentions. Needless to mention that the assessee be given reasonable opportunity of being heard. Accordingly grounds raised by the assessee for Printed from counselvise.com ITA No. 1292 & 1293/Del/2024 Ajooba Water World Pvt. Ltd Page | 6 assessment year 2017-18 are allowed for statistical purposes in the above mentioned terms. 8. In the result, both the appeals of the assessee are allowed for statistical purposes. Order pronounced in the open court on 27/08/2025. -Sd/- -Sd/- (SUDHIR KUMAR) (M. BALAGANESH) JUDICIAL MEMBER ACCOUNTANT MEMBER Dated: 27/08/2025 A K Keot Copy forwarded to 1. Applicant 2. Respondent 3. CIT 4. CIT (A) 5. DR:ITAT ASSISTANT REGISTRAR ITAT, New Delhi Printed from counselvise.com "