DCIT CENTRAL CIRCLE-8(1), MUMBAI, MUMBAI V. FLORENTIA RENEWABLE ENERGY PVT LTD, PUNE

ITA 3946/MUM/2025

AI Insights

The case involves an appeal by the revenue against the order of the CIT(A) which pertained to the assessment year 2021-22. The revenue challenged the deletion of an addition of Rs. 77,40,922 made by the Assessing Officer (AO) as unexplained cash credit under section 68 of the Income-tax Act, 1961. This addition was based on findings during a search action on the assessee's group of cases. The CIT(A) had deleted the addition after the assessee provided documentary evidence including invoices and bank statements, and after a retraction of a statement by Shri Prashant Tekale, which was initially relied upon by the AO. The Tribunal agreed with the CIT(A)'s decision, noting that the assessee had adequately explained the credit entry in question with supporting evidence.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 714488 (ITAT-MUMBAI)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-08-2025
• Appeal Filed By: Department
• Order Result: Dismissed
• Assessment Year: 2021-2022
• Laws Referred To: Income-tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: KAVITHA P. KAUSHIK; DR
• Assessee Lawyers: NEELKANTH KHANDELWAL; AR; ENTERING INTO BUSINESS AGREEMENT
• Keywords: Business income; Additional evidence; Corroborative evidences; Unexplained cash credit; Retraction

Judgement Text

" | आयकर अपीलीय अिधकरण ा यपीठ, मुंबई | IN THE INCOME TAX APPELLATE TRIBUNAL “F” BENCH, MUMBAI BEFORE SHRI SAKTIJIT DEY, HON’BLE VICE PRESIDENT & SHRI NARENDRA KUMAR BILLAIYA, HON’BLE ACCOUNTANT MEMBER I.T.A. No. 3946/Mum/2025 Assessment Year: 2021-22 DCIT, Central Circle-8(1), Mumbai Vs Florentia Renewable Energy Pvt. Ltd. S.No. 10/1B, Ganga Nagar Near Makan Hospital Sangavi Pune - 411027 [PAN: AAQFV8305B] अपीला थ\u0016/ (Appellant) \u0017\u0018 यथ\u0016/ (Respondent) Assessee by : Shri Neelkanth Khandelwal, A/R Revenue by : Ms. Kavitha P. Kaushik, Sr. D/R सुनवाई की तारीख/Date of Hearing : 31/07/2025 घोषणा की तारीख /Date of Pronouncement: 05/08/2025 आदेश/O R D E R PER NARENDRA KUMAR BILLAIYA, AM: This appeal by the revenue is preferred against the order of the ld. CIT(A)-50, Mumbai [hereinafter the ‘ld. CIT(A)’] dated 13/03/2025 pertaining to AY 2021-22. 2. The grievance of the revenue reads as under:- “1. Whether on the facts and circumstances of the case and in law, the Ld CIT(1) erred in deleting the addition made us 68 of the Income-tax Act, 1961 (herein under referred to as 'the Act') to Rs. 77,40,922/- which was made by the Assessing Officer on the basis of the findings during the search action on the assessee 's group of cases: 2. Whether on the facts and circumstances of the case and in law, the let CIT(A) erred in not forwarding the additional evidences, if any, filed before it to the Assessing Officer for verification, calling for a Remand Report in the matter; Printed from counselvise.com I.T.A. No. 3946/Mum/2025 2 3. Whether on the facts and circumstances of the case and in law, the Ld CIT(A) erred in considering the retraction of Shri Prashant Tekale to be valid even though the same had been made after a lapse of almost 430 days; 4. Whether on the facts and circumstances of the case and in law, the Ld CITM) erred in considering the statement of Shri Prashant Tekale given during the cross- examination to be valid even though it had been admitted during the course of the search action that actually no work was done by the assessee company and that Shri Prashant Tekale had been directed by the assessee to raise a certain amount of invoice; 5. Whether on the facts and circumstances of the case and in law, the Ld CIT(A) erred in not considering the fact the assessee was unable to produce any documentary evidences as appearing the agreement entered into with Magarpatta Township Development and Construction Co Lid to substantiate the work claimed to be done by it honouring the terms of the agreement alongwith corroborating evidences in support of the same; 6. Whether on the facts and circumstances of the case and in low, the Ld CIT(A) erred in not appreciating the conclusion of the Assessing Officer that in rejecting the Profit and loss Account of the assessee in view of the fact that the receipts shown therein were unexplained cash credits as revealed during the search action; 7. The appellant craves leave to add to, alter, amend, modify and / or delete any or all of the above said grounds of appeal. the appellant reserves its right to file further submissions in the appeal.\" 3. Briefly stated the facts of the case are that a search/survey action u/s 132/133A of the Act were conducted on M/s. DB Realty Group, Dynamix Group and other related entities on 07/10/2021. Statement of Shri Prashant Tekale was recorded u/s 132(4) of the Act during which he narrated certain incriminating facts in the case of the assessee. Accordingly, statutory notices were issued and served upon the assessee. The assessee electronically filed his return of income on 24/12/2022 declaring total income at Rs. 18,55,230/-. The return was selected for scrutiny assessment. During the course of the scrutiny assessment proceedings, it came to the notice of the AO that Magarpatta Township Development & Construction Company Ltd. constructed a township known as ‘Magarpatta City’. Magarpatta company engaged Printed from counselvise.com I.T.A. No. 3946/Mum/2025 3 the services of the assessee by entering into business agreement, for rendering consultancy and operative services for carrying out the contract of power distribution. The AO further noticed that in the profit and loss account of the assessee only one entry on credit side is appearing amounting to Rs. 77,40,922/- under the head ‘Income - Revenue from operations’. The assessee claimed that this amount has been received from Magarpatta Township Development & Construction Company Ltd.. 3.1. On the basis of the statement of Shri Prashant Tekale, the AO came to the conclusion that the said credit entry is unexplained and accordingly made addition of Rs. 77,40,922/- as unexplained cash credit u/s 68 of the Act. 3.2. The assessee agitated the matter before the ld. CIT(A) and strongly contended that the AO grossly erred in treating the business income declared by the assessee as unexplained cash credit. It was brought to the notice of the ld. CIT(A) that the impugned amount was received from a body corporate and, therefore, there is no question of disbelieving the identity of Magarpatta Township Development & Construction Company Ltd.. It was further explained that the entire transactions were done through banking channels supported by the agreement between the assessee and Magarpatta Township Development & Construction Company Ltd.. It was brought to the notice of the ld. CIT(A) that the statement of Shri Prashant Tekale, which was strongly relied upon by the AO for making the impugned addition was retracted on oath by way of an affidavit dated 12/12/2022. Before the ld. CIT(A), the assessee submitted copy of invoices raised by the Printed from counselvise.com I.T.A. No. 3946/Mum/2025 4 assessee to Magarpatta Township Development & Construction Company Ltd. along with copies of invoices raised by persons on the assessee for providing various services and the statement of bank account. These documents were also furnished before the AO during the assessment proceedings. 3.2.1. The assessee also drew attention of the ld. CIT(A) to cross- examination of Shri Prashant Tekale, done during the appellate proceedings in the case of Magarpatta Township Development & Construction Company Ltd., wherein Shri Prashant Tekale specifically mentioned that the statement given during the search was retracted. After considering the facts and the submissions, the ld. CIT(A) was convinced that the assessee has furnished enough documentary evidence to prove that it has rendered services to Magarpatta Township Development & Construction Company Ltd., and against this it has received an amount of Rs. 77,40,922/- from Magarpatta Township Development & Construction Company Ltd. and the AO has not disregarded these documents. This amount has been offered as revenue from operations in the profit and loss account. Therefore, these receipts again cannot be taxed u/s 68 of the Act and deleted the addition. 4. Before us, the ld. D/R strongly relied upon the assessment order and read the operative part. The ld. Counsel for the assessee reiterated what has been stated before the lower authorities. 5. We have given a thoughtful consideration to the orders of the authorities below. The undisputed fact is that there was a contract between the assessee and the Magarpatta Township Development & Construction Company Ltd., availed service from the assessee. This is Printed from counselvise.com I.T.A. No. 3946/Mum/2025 5 supported by the tax invoice raised by both the parties. It is also not in dispute that the receipt from Magarpatta Township Development & Construction Company Ltd., has been shown as revenue from operations in the profit and loss account by the assessee. In our considered opinion, the assessee has discharged its liability in explaining the credit of Rs. 77,40,922/- in his books of accounts with supporting evidence. Therefore, we do not find any error or infirmity in the findings of the ld. CIT(A). 6. In the result, appeal of the revenue is dismissed. Order pronounced in the Court on 5th August, 2025 at Mumbai. Sd/- Sd/- (SAKTIJIT DEY) (NARENDRA KUMAR BILLAIYA) VICE PRESIDENT ACCOUNTANT MEMBER Mumbai, Dated 05/08/2025 *SC SrPs *SC SrPs *SC SrPs *SC SrPs आदेश की \u0015ितिलिप अ\u001aेिषत/Copy of the Order forwarded to : 1. अपीलाथ / The Appellant 2. \u0015 थ / The Respondent 3. संबंिधत आयकर आयु\" / Concerned Pr. CIT 4. आयकर आयु\" ) अपील ( / The CIT(A)- 5. िवभागीय \u0015ितिनिध ,आयकर अपीलीय अिधकरण, मुंबई /DR,ITAT, Mumbai, 6. गाड& फाई/ Guard file. आदेशानुसार/ BY ORDER TRUE COPY Assistant Registrar आयकर अपीलीय अिधकरण ITAT, Mumbai Printed from counselvise.com "