INCOME TAX OFFICER, MUMBAI V. BLUE MOON HOUSING 7 DEVELOPMENT PVT LTD, MUMBAI

ITA 4849/MUM/2024

AI Insights

The case involves an appeal by the Revenue against the decision of the Commissioner of Income Tax (Appeals), which had deleted certain additions made by the Assessing Officer under sections 68 and 69 of the Income Tax Act, 1961. The additions pertained to unexplained cash credits and unexplained investments linked to bogus loans and transactions involving entities controlled by Mr. Vipul Vidur Bhatt, an alleged entry operator. The Tribunal examined the validity of the re-assessment proceedings initiated under section 147 and the merits of the additions under sections 68 and 69. The Tribunal concluded that the re-assessment was valid based on new and tangible material from the Investigation Wing, and the assessee failed to substantiate the genuineness and creditworthiness of the transactions in question.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 473937 (ITAT-MUMBAI)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-03-2025
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2013-2014
• Other Referred Cases: CIT v/s Dr. N.Thippa Shetty, ACIT v/s Rajesh Jhaveri Stock Brokers (P.) Ltd., Manoj Aggarwal v/s DCIT
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: MONIKA H. PANDE
• Assessee Lawyers: JAY BHANSALI
• Keywords: Reassessment proceedings; Unexplained cash credit; Depreciation; Search and seizure; Accommodation entries; Reason to believe; Bogus loan; Tangible material; Bogus
• Section: 147; 148; 143(3); 250; 143(1); 132; 68; 69; 133(6); 113; 13

Judgement Text

" IN THE INCOME TAX APPELLATE TRIBUNAL “B” BENCH, MUMBAI BEFORE AMARJIT SINGH, ACCOUNTANT MEMBER AND SHRI SANDEEP SINGH KARHAIL, JUDICIAL MEMBER ITA No.4849/Mum./2024 (Assessment Year: 2013–14) Income Tax Officer, Room No.129, 1ST Floor, Aayakar Bhawan, Mumbai – 400020. ……………. Appellant v/s Blue Moon Housing & Development Pvt Ltd. Building No.44/220, Gandhi Nagar, Bandra East 400056 PAN- AABCB7943F ……………. Respondent CO No.232/Mum./2024 (Arising Out of ITA 4849/Mum./2024) (Assessment Year: 2013–14) Blue Moon Housing & Development Pvt Ltd. Building No.44/220, Gandhi Nagar, Bandra East 400056 PAN- AABCB7943F ……………. Cross Objector (Original Respondent) v/s Income Tax Officer, Room No.129, 1ST Floor, Aayakar Bhawan, Mumbai – 400020. ……………. Respondent (Original Appellant) Assessee by : Shri Jay Bhansali Revenue by : Ms. Monika H. Pande, Sr. AR. Date of Hearing – 06/02/2025 Date of Order – 21/03/2025 Blue Moon Housing & Development Pvt Ltd. Page | 2 O R D E R PER SANDEEP SINGH KARHAIL, J.M. The present appeal by the Revenue and cross objection by the assessee has been filed against the impugned order dated 26/07/2024, passed under section 250 of the Income Tax Act, 1961 (“the Act”) by the learned Commissioner of Income Tax (Appeals), National Faceless Appeal Centre, Delhi, [“learned CIT(A)”], for the assessment year 2013-14. 2. In its appeal, the Revenue has raised the following grounds: – “1. Whether on the facts and in the circumstances of the case and in law, the Hon'ble CIT(A) was justified in deleting the addition u/s.68 on account of bogus loan added by the Assessing Officer without appreciating the fact that the assessee is one of the beneficiaries of the bogus loan from M/s. P. Saji Textiles Pvt. Ltd and Dolex Commercial Pvt. Ltd, run by Shri Vipul Vidur Bhatt, who were indulged in providing accommodation entry to parties without any actual transactions.\" 2. Whether on the facts and in the circumstances of the case and in law, the Hon'ble CIT(A) was justified in deleting the addition u/s.69 on account of bogus Investment added by the Assessing Officer without appreciating the fact that the assessee is one of the beneficiaries of the bogus loan from M/s. P. Saji Textiles Pvt. Ltd and M/s. Jagvi Developers. run by Shri Vipul Vidur Bhatt, who were indulged in providing accommodation entry to parties without any actual transactions.\" 3. While the assessee has raised the following grounds in its cross objection: – “1. The Commissioner of Income-tax (Appeals) (hereinafter referred to as \"the CIT(A)) erred in upholding the action of the Assessing Officer in reopening the case of the assessee vide notice dated 15.03.2018 under section 148 of the Income-tax Act, 1961 (hereinafter referred to as \"the Act\") although the same is bad in law. The reasons given are wrong, contrary to facts of the case and against the provision of law; 2. The Respondent craves leave to add to, alter, amend and/or delete all or any of the above grounds of appeal.” Blue Moon Housing & Development Pvt Ltd. Page | 3 4. In its appeal, the Revenue has raised the ground challenging the relief granted by the learned CIT(A) on merits. On the other hand, the assessee has filed the cross objection challenging the initiation of re-assessment proceedings under section 147 of the Act. As the issues raised by the assessee vide its cross objection are jurisdictional issues, which go to the root of the matter, therefore, we are considering the same at the outset. 5. As far as the issue relating to the validity of re-opening under section 147 of the Act, the brief facts are that the assessee is engaged in the business of housing and development. For the year under consideration, the assessee filed its return of income on 02/08/2013, declaring a total income of INR Nil. The return filed by the assessee was processed under section 143(1) of the Act. Subsequently, on the basis of the information received from the DDIT (Investigation), Unit-7 (4), Mumbai, pertaining to search and seizure action carried out in the case of Mr. Vipul Vidur Bhatt and his other related entities, during which it was found that Mr. Vipul Vidur Bhatt is an entry operator and provider of various bogus accommodation entries to various beneficiaries through 347 bogus entities and the assessee is one such beneficiary, notice under section 148 of the Act was issued to the assessee on 15/03/2018 and proceedings under section 147 of the Act were initiated. The Assessing Officer (“AO”), vide order dated 29/12/2018 passed under section 143(3) read with section 147 of the Act, after considering the submissions of the assessee made an addition under section 68 of the Act in respect of the unsecured loan received by the assessee from P.Saji Textiles Ltd, which was managed, controlled and operated by Mr. Vipul Vidur Bhatt, and also made an addition Blue Moon Housing & Development Pvt Ltd. Page | 4 under section 69 of the Act in respect of loan repaid to P.Saji Textiles Ltd and money advanced to Jagvi Developers. Accordingly, the AO assessed the total income of the assessee at INR 2,04,00,000. 6. The learned CIT(A), vide impugned order, upheld the initiation of re- assessment proceedings under section 147 of the Act, however, granted relief to the assessee on merits and deleted the additions made under section 68 and section 69 of the Act. Being aggrieved, the Revenue is in appeal before us, while the assessee has filed the cross objection raising ground challenging the initiation of re-assessment proceedings under section 147 of the Act. 7. During the hearing, the learned Authorised Representative (“learned AR”) submitted that the AO reopened the assessment of the assessee on the basis that the assessee has taken accommodation entries from the entity, which is controlled by Mr. Vipul Vidur Bhatt, who has admitted in the course of the search that he is an accommodation entry provider. The learned AR submitted that the loan was taken from P.Saji Textiles Ltd during the period September 2012 - October 2012 and was repaid in January 2013, however, Mr. Vipul Vidur Bhatt became the director of P.Saji Textiles Ltd w.e.f. 20/02/2013, i.e., after the transaction was closed, and accordingly the observation of the AO that the assessee has dealt with Mr. Vipul Vidur Bhatt controlled entity is erroneous. The learned AR further submitted that the statement by Mr. Vipul Vidur Bhatt was subsequently retracted, and therefore, the same cannot form the basis for making any addition in the hands of the assessee. Blue Moon Housing & Development Pvt Ltd. Page | 5 8. On the other hand, the learned Departmental Representative (“learned DR”) submitted that the re-assessment proceedings under section 147 of the Act were initiated in the present case on the basis of the information received from the office of Investigation Wing regarding the search and seizure action conducted under section 132 of the Act in the case of Mr. Vipul Vidur Bhatt. Accordingly, the learned DR submitted that the information received from the Investigation Wing constitutes new and tangible material for initiating the re- assessment proceedings in the case of the assessee. 9. We have considered the submissions of both sides and perused the material available on record. In the present case, on the basis of the information received from the Investigation Wing, Mumbai regarding the search and survey action carried out in the case of Mr. Vipul Vidur Bhatt, proceedings under section 147 of the Act were initiated in the case of the assessee, as it was found that the assessee has taken accommodation entries during the year under consideration from the entity, which is managed, controlled and operated by Mr. Vipul Vidur Bhatt. The reasons recorded by the AO while re-opening the assessment are reproduced as follows: – “In this case, the return of income for A.Y. 2013-14 was filed on 02.08.2013 declaring total income of Rs. NIL. No scrutiny assessment was completed in this case. In this case, Information was received from office of Dy. DIT (Investigation), Unit -7(4), Mumbai alongwith the details of accommodation entries provided by Mr. VipulVidur Bhatt through various companies. A Search & Seizure action u/s 132 of the I T Act, 1961 was carried out in the case of Mr. VipulVidur Bhatt and his other related entities. During the course of search action, Mr.VipulVidur Bhatt had accepted that he is an entry operator and providing various bogus accommodation entries to the various beneficiaries for commission through his347 bogus entities. Blue Moon Housing & Development Pvt Ltd. Page | 6 On perusal of the details, it is found that M/s Blue Moon Housing & Development Pvt. Ltd had taken accommodation entries during the F.Y.2012- 13 ( relevant to A.Y2013-14) from the following parties, which are part of the above mentioned 347 entities, which are managed, controlled and operated by Mr. VipulVidur Bhatt: S. No. Name of the Bogus Entity F.Y. Debit Entries Credit Entries 1 P. Saji Textiles Limited 2012-13 60,00,000 85,00,000 2 Dolex Commercial Pvt. Ltd 2012-13 25,00,000 0 3 Jagvi Developers 2012-13 0 34,00,000 TOTAL 85,00,000 1,19,00,000 In view of the above, I have reason to believe that the income chargeable to tax has escaped assessment in the hands of M/s. Blue Moon Housing & Development Pat Ltd for the A.Y. 2013-14 within the meaning of section 147 of the Income Tax Act, 1961 and hence, the case of the assessee needs to be reopened by issue of notice u/s 148 of the Income Tax Act, 1961.” 10. From the perusal of the aforesaid reasons recorded by the AO while re- opening the assessment, we find that the proceedings under section 147 of the Act were initiated on the basis of the information along with the details received from the Investigation Wing, Mumbai, regarding accommodation entries provided by Mr. Vipul Vidur Bhatt through various companies. On the perusal of the details, it was noticed that the assessee has taken accommodation entries from parties, which Mr. Vipul Vidur Bhatt admitted in his statement to be managed, controlled and operated by him. Therefore, it is evident that the statement of Mr. Vipul Vidur Bhatt only corroborated the evidence and details found during the search and seizure action under section 132 of the Act that he was providing accommodation entries through various companies and the statement of Mr. Vipul Vidur Bhatt was not the sole basis for initiating the re-assessment proceedings in the present case. Thus, the mere fact that Mr. Vipul Vidur Bhatt subsequently retracted from his Blue Moon Housing & Development Pvt Ltd. Page | 7 statement made during the search and seizure action does not render the entire re-assessment proceedings null and void, since the same was based on the information along with the details received from the Investigation Wing, Mumbai. Accordingly, we do not find any merits in the reliance placed by the learned AR on the decision of the Hon’ble Karnataka High Court in CIT v/s Dr. N.Thippa Shetty, reported in [2010] 322 ITR 525 (Karn.), wherein the re- assessment proceedings were held to be illegal and absolutely without jurisdiction, since the very basis for re-opening the assessment, i.e. the statement recorded under section 132(4) of the Act, was subsequently withdrawn. Accordingly, we are of the considered view that the decision of the Hon’ble Karnataka High Court has been rendered in a different set of facts, and thus, it is not applicable to the present case. 11. As regards the other contention of the learned AR that Mr. Vipul Vidur Bhatt became the director of P.Saji Textiles Ltd w.e.f. 20/02/2013, i.e., after the transaction was closed, we are of the considered view that the information received from the Investigation Wing, Mumbai constitutes new and tangible material for initiating the reassessment proceedings in the case of the assessee. In ACIT v/s Rajesh Jhaveri Stock Brokers (P.) Ltd., reported in [2007] 291 ITR 500 (SC), the Hon’ble Supreme Court held that if there is relevant material on the basis of which a reasonable person can form a requisite belief that income chargeable to tax has escaped assessment, then proceedings under section 147 of the Act can be validly initiated. Further, it is also well settled that the sufficiency or correctness of the material is not a thing to be considered at the stage of recording the reasons. As a result, we Blue Moon Housing & Development Pvt Ltd. Page | 8 find no infirmity in the re-assessment proceedings initiated by the AO under section 147 of the Act and the same are upheld. Accordingly, the grounds raised by the assessee in its cross objection are dismissed. 12. As far as the issue pertaining to the addition made under section 68 and section 69 of the Act, the brief facts of the case are that during the re- assessment proceedings, in order to prove the identity and creditworthiness of the loan lender and genuineness of the transaction, the assessee furnished the copy of the confirmation of loans received/paid along with copies of the balance sheet, profit and loss account, and acknowledgement of the return of income and bank statement highlighting the transactions. The AO, vide order passed under section 143(3) section 147 of the Act, held that the financial status of the assessee as per the bank statement is not sound enough to lend money and the assessee during the year paid a sum of INR 34,00,000 to Jagvi Developers. The AO further noted that there was no sufficient balance in the assessee’s bank account, and the funds were received through RTGS on the same date they were transferred to Jagvi Developers. Accordingly, the AO held that the assessee’s statement that the money was advanced to further the business is not justifiable and bona fide. As regards the bank statement of P.Saji Textiles Ltd, the AO held that whenever there is a fund transfer to the assessee from this party there were credit entries in the bank account of the accommodator to that extent, and therefore, the bank statements furnished in support of the creditworthiness cannot have much credibility. As regards the funds received from Dolex Commercial Private Limited, the AO held that the assessee has failed to prove the creditworthiness of the paying Blue Moon Housing & Development Pvt Ltd. Page | 9 party. Accordingly, the AO held that the assessee has not proved the three ingredients, i.e., identity, genuineness and creditworthiness of P.Saji Textiles Ltd and Dolex Commercial Private Ltd., and the facts clearly show that the assessee has indulged in non-genuine transactions. The AO noted that the bank account of the assessee shows huge fund transactions to the tune of INR 2.93 crore, whereas the assessee had no business activities in the current and past years. Therefore, the AO held that the huge fund transactions are also not justified and reasonable as compared to the Nil purchase and sale. The AO further held that the assessee has failed to controvert the findings of the Investigation Wing that P.Saji Textiles Ltd and Dolex Commercial Private Ltd. are bogus entry-providing companies and the assessee is one of the beneficiaries as funds were found to have been transferred to its accounts through P.Saji Textiles Ltd and Dolex Commercial Private Ltd. Therefore, the sum of INR 85 lakh was treated as unexplained cash credits in the books of the assessee and added to the total income of the assessee under section 68 of the Act. Similarly, the loan advanced to Jagvi Developers amounting to INR 34,00,000 was added to the total income of the assessee as an unexplained investment in the absence of creditworthiness of the assessee company since the payment was made out of funds received through RTGS on the same date. The AO also disallowed the amount of INR 85 lakh paid by the assessee to P.Saji Textiles Ltd under section 69 of the Act. 13. The learned CIT(A), vide impugned order, allowed the appeal filed by the assessee on merits and deleted the additions made under section 68 of the Act, by observing as follows: – Blue Moon Housing & Development Pvt Ltd. Page | 10 “6.4. The assessee had submitted a copy of income tax return of P. Saji Textiles Pvt. Ltd to establish its identity. The return shows that PAN and address of the party. Further, the assessee has submitted a copy of the financials of the said party. On analyzing, the financial statement for year ended 31st March 2013, it can be seen that P. Saji Textiles Pvt. Ltd has own funds of Rs. 3,37,12,209/- and accordingly, the creditworthiness of the party is proved. The appellant has also provided a copy of bank statements and ledger confirmation from P. Saji Textiles Pvt. Ltd. Therefore, the Vassessee has even established the genuineness of the transaction. The AO has issued notice under section 133(6) of the Act to the said party. The said party has confirmed the transaction before the AO. The AO has not reported any incriminating observation subsequent to such enquiry. From the above documents, it is seen that the assessee has explained the nature and source of the unsecured loan received by establishing the identity of the lender, creditworthiness of the lender and genuineness of the transaction. The appellant has discharged the primary onus casted upon it.” 14. Further, the learned CIT(A) also deleted the addition made under section 69 of the Act in respect of the amount paid to P.Saji Textiles Ltd and Jagvi Developers on the basis that the assessee has submitted the necessary documents in order to show the nature and source of the transaction. Being aggrieved, the Revenue is in appeal before us. 15. We have considered the submissions of both sides and perused the material available on record. During the year under consideration, the assessee received payments total amounting to INR 60 lakh from P.Saji Textiles Ltd. The assessee claimed that the said money was received from P.Saji Textiles Ltd as the said company was exploring the possibilities of business in the real estate sector and accordingly advanced a sum to the assessee. The assessee further submitted that it received a sum of INR 25 lakh from Dolex Commercial Private Ltd on behalf of P.Saji Textiles Ltd. Thus, the assessee claimed that from P.Saji Textiles Ltd it received a total sum of INR 85 lakh, which was in the nature of a loan, and the said amount was repaid to P.Saji textiles Ltd during the year itself. Blue Moon Housing & Development Pvt Ltd. Page | 11 16. To prove the identity and creditworthiness of P.Saji Textiles Ltd, the assessee has placed on record the income tax return along with the computation of the total income of P.Saji Textiles Ltd for the assessment year 2013-14. From the perusal of the return of income for the year under consideration, forming part of the paper book from pages 35-36, we find that P.Saji Textiles Ltd declared a total income of INR 39,90,230. Further, the assessee has also placed on record a copy of the financial statement for the financial year 2012-13 of P.Saji Textiles Ltd, which forms part of the paper book from pages 37-64. Accordingly, it is the plea of the assessee that P.Saji Textiles Ltd had a total net worth of INR 3,37,12,209 for the year ending 31/03/2013, and thus, had sufficient creditworthiness for advancing the loan to the assessee. From the perusal of the financial statement of P.Saji Textiles Ltd, we find that the company earned its revenue from share trading, sale of fabrics and interest. The company has declared the revenue from the sale of fabrics at INR 70,81,33,823 and has shown an inventory of fabrics at INR 27,86,23,153 at the end of the year. Further, as fixed assets, P.Saji Textiles Ltd has declared computers and printers amounting to INR 1,15,000, in Note 10 of the financial statement, as its only tangible assets, which we found were also acquired only during the year. Further, we find that no rental expenditure was incurred by the company. Thus, from the perusal of the financial statements of P.Saji Textiles Ltd., it is evident that for a company which claims itself to have earned revenue of INR 70,81,33,823 from the sale of fabrics, it neither has any shop or warehouse as its fixed asset nor has paid any rental in respect of the same. Therefore, we are of the considered view that the Blue Moon Housing & Development Pvt Ltd. Page | 12 declarations made by P.Saji Textiles Ltd in its financial statements are not corroborated with other details provided therein, and thus, raise doubt on the veracity of the declaration made in the financial statement. Therefore, we are of the considered view that the net worth declared by P.Saji Textiles Ltd in its financial statement cannot form the basis for determining the creditworthiness for lending the loan to the assessee. Further, the company has shown an amount of INR 24,74,66,136 as unsecured loans and advances in the assets side of its balance sheet, which is quite peculiar to the entities which provide accommodation entry. Further, from the bank statement of P.Saji Textiles Ltd, forming part of the paper book from pages 28-24, we find that immediately on the date of transfer of funds to the assessee, i.e. on 13/09/2012, 10/10/2012, 20/10/2012, and 27/10/2012, there are credit entries. Further, from the bank statement of the assessee, forming part of the paper book from pages 24-27, we find that as soon as the amounts were received from P.Saji Textiles Ltd, the same were transferred by the assessee to another entity, namely, Parasrampuria Plantation Ltd. It is further pertinent to note that when on 01/01/2013 the assessee repaid the amount of INR 85 lakhs to P.Saji Textiles Ltd, on the very same date the assessee received the same amount from Parasrampuria Plantation Ltd. As regards the contention of the learned AR that Mr. Vipul Vidur Bhat was appointed as director of P.Saji Textiles Ltd w.e.f. 20/02/2013, i.e. much after the transaction with the assessee, it is pertinent to note that the company in its declaration regarding key management personnel and relatives, on page 60 of the paper book, mentions the name of Mr. Deepak Raval, who was alleged to be the dummy director of Blue Moon Housing & Development Pvt Ltd. Page | 13 Mr. Vipul Vidur Bhat by the Revenue in the decision of the coordinate bench of the Tribunal in Arjun Manoj Purohit v/s ITO, in ITA No. 3654 and 3655/Mum./2023, dated 02/05/2024, relied upon by the learned AR. Thus, we are of the considered view that the mere fact that Mr. Vipul Vidur Bhat became director of P.Saji Textiles Ltd only w.e.f. 20/02/2013 does not in any way lead to the conclusion that prior to the said date Mr. Vipul Vidur Bhat was not having any control over the affairs of P.Saji Textiles Ltd. Therefore, in view of the facts and circumstances as noted above, we are of the considered view that the creditworthiness of the loan lender and genuineness of the transaction is not proved in the present case qua the loan received by the assessee from P.Saji Textiles Ltd. The fact that the company, i.e. P.Saji Textiles Ltd, signed a confirmation of loan to the assessee also does not support the plea of the assessee in light of the facts and circumstances as noted above. 17. Further, as regards the sum of INR 25 lakh received from Dolex Commercial Private Ltd, the assessee has only placed on record the confirmation from the said entity and from P.Saji Textiles Ltd that the sum of INR 25 lakh was paid to the assessee on behalf of P.Saji Textiles Ltd. However, we find that apart from the aforesaid confirmations, which form part of the paper book on pages 65 and 66, the assessee has not produced any evidence to show the financial capacity of Dolex Commercial Private Ltd to pay a sum of INR 25 lakh to the assessee. Blue Moon Housing & Development Pvt Ltd. Page | 14 18. Further, apart from merely stating that the sum of INR 85 lakh was advanced to the assessee with the intention to start some business with respect to real estate development, the assessee has not brought on record any documentary evidence to support the aforesaid claim. As regards the various decisions relied upon by the learned AR in support of its claim that the amount received as a loan from entities controlled by Mr. Vipul Vidur Bhat have been found to be genuine, we find from the perusal of these decisions that same have been rendered in their own facts and each case needs to be examined qua the facts involved. Accordingly, we are of the considered view that all the decisions relied upon by the learned AR do not apply to the facts of the present case, as, in the present case, the assessee has failed to prove the creditworthiness of the loan lender and genuineness of the transaction. 19. Therefore, we are of the considered view that the assessee has failed to prove the creditworthiness of P.Saji Textiles Ltd and Dolex Commercial Private Ltd from whom the assessee received the loan amount during the year under consideration. Consequently, we are of the considered view that the payment made by the assessee to P.Saji Textiles Ltd claimed to be the repayment of a loan also has no basis. Thus, we do not find any merits in the findings of the learned CIT(A) in holding that the assessee has discharged its primary onus of proving the nature and source of the sum credited in its books of account. Accordingly, the addition made by the AO under section 68 of the Act in respect of the sum received from P.Saji Textiles Ltd and Dolex Commercial Private Ltd is sustained. Further, since the assessee failed to satisfactorily Blue Moon Housing & Development Pvt Ltd. Page | 15 prove the nature and source of the sum credited in its books of account, therefore, we do not find any basis in the payment made by the assessee to P.Saji Textiles Ltd. Accordingly, the addition made by the AO amounting to INR 85 lakh concerning the amount paid by the assessee to P.Saji Textiles Ltd is upheld. 20. Further, as regards the payment of INR 34,00,000 to Jagvi Developers Ltd by the assessee, it is the claim of the assessee that it has advanced the loan to the aforesaid entity out of the money received from Parasrampuria Plantation Ltd. and Gokuldhma & Yashodham Dev. Pvt. Ltd. In this regard, the assessee placed reliance upon its bank statement and the confirmation received from Jagvi Developers Ltd. From the perusal of the loan confirmation received from Jagvi Developers Ltd, forming part of the paper book on page 67, we find that the same has only been signed by the authorised signatory of the assessee and signatures on behalf of Jagvi Developers Ltd are missing. Further, it is the plea of the assessee that under section 69 of the Act an addition can only be made in respect of an investment which is not recorded in the books of account. However, in the present case, the aforesaid transaction is not only reflected in its bank statement but also is reflected in its financial statements for the year ending 31/03/2013. However, from the perusal of the financial statements of the assessee, forming part of the paper book from pages 3-18, we find that for the year under consideration as well as in the preceding year, the assessee earned Nil revenue from operations. It is further pertinent to note that the only expenditure incurred by the assessee pertains to depreciation on fixed assets, which are nothing but air conditioner, Blue Moon Housing & Development Pvt Ltd. Page | 16 furniture and fixtures, filing fees, bank charges, statutory auditor fees and tax audit fees. Further, the total net worth declared by the assessee is only INR 1,99,709. As already noted elsewhere, from the perusal of the bank statement of the assessee, it is evident that as soon as the assessee received any amount from any entity the same was transferred to another entity, and there is no sufficient balance in the bank account of the assessee. Therefore, we agree with the findings of the AO that the assessee had no sufficient balance in its bank account to advance the fund to Jagvi Developers Ltd. Thus, we are of the considered view that merely because the AO has invoked the provisions of section 69 of the Act for making the addition amounting to INR 34,00,000 been paid by the assessee to Jagvi Developers Ltd, however, the same does not absolve the assessee from explaining the amount shown as loan to Jagvi Developers Ltd., since the amount transferred to Jagvi Developers Ltd is not supported by the financial capacity of the assessee, more so in the absence of duly signed loan confirmation from Jagvi Developers Ltd. In this regard, we placed reliance upon the decision of the special bench of the Tribunal in Manoj Aggarwal v/s DCIT: [2008] 113 ITD 377 (Delhi). We are of the considered view that mere recording of the transaction in the books of account without any financial capacity is just an empty formality to overcome the rigours of section 69 of the Act. Therefore, the mere fact that the transaction was through banking channel does not render the same to be genuine. Accordingly, we sustained the addition of INR 34,00,000 made by the AO with respect to Jagvi Developers Ltd. Blue Moon Housing & Development Pvt Ltd. Page | 17 21. Accordingly, in view of the facts and circumstances of the present case, the impugned order passed by the learned CIT(A) is quashed and the additions made by the AO in the hands of the assessee are sustained. As a result, the grounds raised by the Revenue are allowed. 22. In the result, the appeal by the Revenue is allowed, while the cross objection by the assessee is dismissed. Order pronounced in the open Court on 21/03/2025 Sd/-d/- -AMARJIT SINGH ACCOUNTANT MEMBER S Sd/- SANDEEP SINGH KARHAIL JUDICIAL MEMBER MUMBAI, DATED: 21/03/2025 Divya R. Nandgaonkar (stenographer) Copy of the order forwarded to: (1) The Assessee; (2) The Revenue; (3) The PCIT / CIT (Judicial); (4) The DR, ITAT, Mumbai; and (5) Guard file. True Copy By Order Assistant Registrar ITAT, Mumbai "