February 14, 2026 : The Delhi Bench ‘B’ of the Income Tax Appellate Tribunal (ITAT) has quashed reassessment proceedings for Assessment Year (AY) 2016–17 and deleted additions made under Section 68 for both AY 2016–17 and AY 2017–18 in the case of M/s Stance Consumer Electronics Pvt. Ltd. v. DCIT (ITA Nos. 2791 & 2792/Del/2025).

The order, pronounced on February 13, 2026, by the Bench comprising Judicial Member Anubhav Sharma and Accountant Member Manish Agarwal, allowed both appeals filed by the assessee.

Reassessment for AY 2016–17 Held Without Jurisdiction

For AY 2016–17, the assessee had declared a loss of ₹71,684. The assessment was reopened under Section 147 based on information from the Investigation Wing alleging rotation of funds amounting to ₹39,27,750 with M/s Concise Exim Pvt. Ltd., treated as suspected accommodation entries. The reasons recorded for reopening specifically referred to these transactions and stated that income to that extent had escaped assessment, as reflected in the approval note under Section 151 placed on record.

However, in the reassessment order dated March 28, 2022, the Assessing Officer (AO) did not make any addition in respect of the alleged transactions with Concise Exim Pvt. Ltd. Instead, the AO made an addition of ₹1,99,12,000 under Section 68, treating sale consideration received from three entities on transfer of shares of M/s Prominent Agency Pvt. Ltd. as unexplained cash credits.

The Tribunal observed that there was “no whisper” of the transactions with Concise Exim Pvt. Ltd. in the reassessment order and no addition was made on the issue forming the sole basis for reopening. Relying on judicial precedents including Ranbaxy Laboratories Ltd. v. CIT and CIT v. Jet Airways (I) Ltd., the Bench held that although an AO may examine other issues during reassessment, such jurisdiction does not survive when no addition is made on the recorded reasons.

Accordingly, the Tribunal held that the AO had exceeded his jurisdiction and quashed the reassessment order for AY 2016–17 as being without authority of law. The addition of ₹1.99 crore under Section 68 was consequently set aside.

Additions Under Section 68 Deleted for AY 2017–18

For AY 2017–18, the case was selected for scrutiny and additions of ₹12 lakh and ₹1.45 crore were made under Section 68.

On the ₹12 lakh received from M/s Navyuga Consultancy Pvt. Ltd., the Tribunal noted that the assessee had furnished confirmation, bank statements, and the creditor’s income tax return. The creditor had declared income of ₹83,25,176, which was accepted under Section 143(3). The Bench held that the identity, creditworthiness, and genuineness of the transaction were established and deleted the addition.

Regarding the ₹1.45 crore received on sale of shares of M/s Prominent Agency Pvt. Ltd. to M/s Vandam Technologies Pvt. Ltd., the AO had questioned the valuation, alleging that shares were sold at ₹300 per share without a valuation report. The Tribunal noted that the Net Asset Value (NAV) method worked out to ₹38.21 per share and referred to the Explanation to Section 56(2)(viib), which provides that fair market value shall be determined as per prescribed method or as substantiated by the company, “whichever is higher”.

Since the sale price was higher than the NAV-based valuation, no addition could be made under Section 56(2)(viib). The Tribunal further held that once the consideration was admitted to be on sale of shares and the identity of the purchaser was established, the same could not be treated as unexplained cash credit under Section 68.

It was also noted that the Commissioner (Appeals) had deleted the protective addition of ₹1.45 crore as short-term capital gains and the Revenue had not challenged that deletion. Consequently, the addition under Section 68 was deleted.

Final Outcome

The Tribunal allowed both appeals. The reassessment order for AY 2016–17 was quashed for want of jurisdiction, and the additions under Section 68 for both AY 2016–17 and AY 2017–18 were deleted in entirety.

Appearance:
For the Appellant: Ashwani Kumar, CA
For the Respondent: Indu Bala Saini, Sr. DR

Coram: Anubhav Sharma (Judicial Member) and Manish Agarwal (Accountant Member)
Cause Title: M/s Stance Consumer Electronics Pvt. Ltd. v. DCIT