ITAT Mumbai Upholds Section 68 Additions in Share Capital and Loan Transactions; Dismisses Appeals for Non-Compliance

The Mumbai “D” Bench of the Income Tax Appellate Tribunal has dismissed a batch of appeals filed by Ritebane Agritech Solution and R.B. Global Agri Trading Pvt. Ltd., upholding additions made under Section 68 of the Income Tax Act, 1961, for Assessment Years 2013–14 and 2014–15.

Findings on Share Capital and Share Premium Additions

In the case of Ritebane Agritech Solution, the Assessing Officer had made an addition of ₹2.10 crore under Section 68 on account of share capital and share premium received from M/s Vijeta Trading Pvt. Ltd. The addition was based on findings that the assessee failed to establish the identity, creditworthiness, and genuineness of the investor. The Tribunal noted that the share valuation was premised on so-called “confirmed projects,” most of which had not commenced. Several entities involved were found to be related parties, operating from common premises, and engaging in circular fund movements. The Assessing Officer also observed that interest-free loans from group concerns were routed through the investor entity before being infused as share capital—indicative of accommodation entries. Despite multiple opportunities, the assessee neither appeared nor furnished any documentary evidence to rebut these findings. The Tribunal held that mere submission of a valuation report, without substantiating underlying business realities, does not discharge the statutory onus under Section 68.

Interest-Free Loan Transaction Also Disbelieved

In the connected appeal relating to R.B. Global Agri Trading Pvt. Ltd., the addition pertained to an interest-free loan of ₹1.40 crore allegedly received from M/s Lipid System Engineers Pvt. Ltd. The Tribunal noted glaring inconsistencies, including submission of financial statements of a different entity, non-filing of returns by the lender for several years, unserved summons, and immediate transfer of funds to the director of the assessee company. In the absence of any credible evidence establishing the lender’s existence and financial capacity, the Tribunal upheld the addition under Section 68. Dismissing all appeals, the ITAT held that the assessees’ habitual non-compliance and failure to discharge the primary onus under law left no infirmity in the orders of the lower authorities.