ITAT Mumbai Upholds Additions Against Accommodation Entry Provider Under Sections 68 and 69C

Background

The Mumbai Bench “B” of the Income Tax Appellate Tribunal has allowed the Revenue’s appeal in DCIT v. Mangalkalash Trading Pvt. Ltd. (ITA No. 576/MUM/2019), restoring additions made under Sections 68 and 69C of the Income-tax Act, 1961, for Assessment Year 2012–13. The order was pronounced on 2 February 2026. The case arose from a search conducted under Section 132 in the First Winner Group, wherein statements recorded under Section 132(4) revealed that Mangalkalash Trading Pvt. Ltd. functioned as a conduit entity for routing accommodation entries aggregating to ₹5.90 crore to various beneficiary companies linked to alleged entry operator Pravin Kumar Jain. The Assessing Officer made protective additions of ₹5.90 crore under Section 68 for unexplained investments and ₹14.75 lakh under Section 69C towards estimated commission at 2.5%.

Findings

While the Commissioner (Appeals) deleted the protective additions on the ground that substantive additions had already been confirmed in the hands of beneficiary companies and that the investments were recorded in the assessee’s books, the Tribunal disagreed. Relying on authoritative precedents including PCIT v. NRA Iron & Steel Pvt. Ltd. and the Chhattisgarh High Court decision in Sumit Global Pvt. Ltd., the ITAT held that liability under Section 68 is independent and attaches to the assessee in whose books the unexplained credits appear. The Tribunal emphasized that mere reflection of transactions in books does not discharge the statutory onus of proving identity, creditworthiness, and genuineness. Consequently, the order of the CIT(A) was set aside, and the additions under Sections 68 and 69C were restored in full.