Additions under section 68 read with 115BBE due to alleged illegal offshore investment

Facts:

Assessee a partnership firm with 4 partners were found to have invested in a Singapore related party entity called Eywa Pharma Pte. for USD 1 mio. On investigation it was found that the entire USD 1 mio. came as contribution from one of the partner private discretionary trust called IWell Trust. This IWell Trust with with 38 identified beneficiaries was funded by two trusts called Shriram ownership Trust and Envestor trust. IWell trust did not file any returns as it was a private discretionary trust with known shared beneficiaries the taxation was in the individual 38 beneficiaries. This did not augur well with AO who sustained additions under section 68 read with 115BBE in the hands of the assessee firm for not manifesting source of funding. On appeal CIT(A) dropped the addition. On higher appeal by the revenue -

Held against the revenue that the addition was uncalled for. 

Ed. Note: The layered structuring is worth noting. 

Case: ITO v. IWell Investments 2024 TaxPub(DT) 1720 (Chny-Trib)