ITAT Upholds Deletion of Protective Additions u/s 68 Where Substantive Addition Made in Absence of Beneficial Ownership [Read Order]
The ITAT reiterates that protective additions cannot survive where substantive additions exist and beneficial ownership remains unproven.
![ITAT Upholds Deletion of Protective Additions u/s 68 Where Substantive Addition Made in Absence of Beneficial Ownership [Read Order]](https://images.taxscan.in/h-upload/2026/03/27/2130443-itat-upholds-deletion-of-protective-additions-u-s-68-where-substantive-addition-made-in-absence-of-beneficial-ownership-site-imagejpg.webp "ITAT Upholds Deletion of Protective Additions u/s 68 Where Substantive Addition Made in Absence of Beneficial Ownership [Read Order]")
The Income Tax Appellate Tribunal (ITAT),Delhi Bench, has upheld the deletion of the protective additions made under Section 68 of the Income Tax Act, 1961, on the grounds of the lack of established beneficial ownership and the presence of substantive additions on the same issue in the hands of another entity. The Assessing Officer (AO), in the case, had made additions of ₹7.35...
The Income Tax Appellate Tribunal (ITAT),Delhi Bench, has upheld the deletion of the protective additions made under Section 68 of the Income Tax Act, 1961, on the grounds of the lack of established beneficial ownership and the presence of substantive additions on the same issue in the hands of another entity.
The Assessing Officer (AO), in the case, had made additions of ₹7.35 Crore and ₹27.06 Crore for Assessment Years 2015-16 and 2016-17 under Section 68 of the Act. The Assessing Officer had done so by treating the cash credits as unexplained. This was done on a protective basis by alleging that the assessee Ambarnuj Finance and Investments Pvt. Ltd which was a part of the accommodation entry pool operated by the Jain Brothers group.
The Revenue argued that the assessee was providing accommodation entries and that the cash credits should be assessed in its hands. Further,the assessee contended that it was not the beneficiary and that it was not the actual owner of the cash credits. It further argued that no addition should be made in its hands, especially when significant additions have already been made in the hands of the alleged entry operators.
The Tribunal noted that the CIT(A) had correctly concluded that unless the assessee was found to be the beneficial owner of the cash credits, no addition under Section 68 can be sustained. Further, the Tribunal noted that substantial additions had already been made by the Revenue in the hands of M/s Jain Brothers.
Therefore,the Bench comprising Satbeer Singh Godara (Judicial Member) and Manish Agarwal (Accountant Member) has rejected the appeals filed by the Revenue and has upheld the order passed by the Commissioner of Income Tax (Appeals) [CIT(A)] on the grounds that the protective additions made under Section 68 of the IT Act, 1961, cannot be sustained when the substantive additions on the same issue are already made in the hands of another entity, and the ownership of the assessee on the credits has not been established.
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