KRETEKA INVESTMENTS PRIVATE LIMITED,MUMBAI vs. ITO WARD 12(3)(1), MUMBAI

This appeal filed by the assessee is directed against the order dated 08.12.2025 passed by the learned Commissioner of Income-tax (Appeals) under section 250 of the Income-tax Act, 1961 (“the Act”), arising from the assessment order dated 26.03.2015 passed by the Income Tax Officer, Ward 12(3)(1), Mumbai, under section 143(3) read with section 147 of the Act for the assessment year 2009-10.

The assessee has raised the following grounds of appeal:

Briefly stated, the assessee is a private limited company engaged in investment activities. It filed its return of income on 01.09.2009 declaring total income of Rs.26,312. The return was processed under section 143(1) of the Act. The Assessing Officer thereafter reopened the assessment by issuing notice under section 148 of the Act on the ground that, during the year, the assessee had issued 3,53,580 shares of face value of Rs.10 each at a premium of Rs.90 per share and had received share premium of Rs.3,18,22,200. According to the Assessing Officer, the intrinsic value of the shares did not justify the premium.

During the reassessment proceedings, the Assessing Officer issued notices under section 133(6) of the Act to seven share subscribers for verification of their identity and creditworthiness and the genuineness of the transactions. The notices were returned unserved with the postal remark “unknown”. The assessee informed the Assessing Officer that several subscriber companies had changed their names and/or addresses. The Assessing Officer, however, held that the assessee had not furnished sufficient material such as the financial statements and returns of income of the subscribers and had not established their 3 identity and creditworthiness or the genuineness of the transactions. He consequently treated the share premium of Rs.3,18,22,220 as unexplained cash credit under section 68 of the Act and assessed the total income at Rs.3,18,48,530.

The assessee carried the matter in appeal. In the appellate proceedings, it furnished additional documentary evidence in relation to the share subscribers. The learned CIT(A) called for a remand report from the Assessing Officer. In the course of the remand proceedings, the Assessing Officer called upon the assessee to furnish certain particulars and supporting documents. The assessee claims to have furnished documents including PAN details, returns of income, bank statements, confirmations, affidavits, share application forms, financial statements, share certificates and information relating to the change in names and addresses of the subscriber companies. The learned CIT(A), by the impugned order, confirmed the addition, principally referring to the fact that the notices issued under section 133(6) during the assessment proceedings had remained unserved. Aggrieved, the assessee is in appeal before the Tribunal.

Before us, the learned Authorised Representative submitted that the additional evidence produced before the learned CIT(A) went to the root of the addition and had been forwarded to the Assessing Officer in remand proceedings. The Assessing Officer sought further details during remand and the assessee furnished the documents available with it in support of the identity and creditworthiness of the subscribers and genuineness of the share subscription transactions. It was submitted that the impugned order does not examine these documents and does not deal with the remand proceedings or the report of the Assessing Officer. According to the learned Authorised Representative, the addition was sustained merely because the notices originally issued 4 under section 133(6) were returned unserved, although the assessee had furnished subsequent particulars concerning the changes in the names and addresses of the investor companies. He therefore prayed that the addition be deleted or, alternatively, that the matter be restored for proper examination of the entire evidence.

The learned Departmental Representative relied upon the assessment order and the order of the learned CIT(A). He submitted that the notices issued under section 133(6) had remained unserved and that the assessee was required to establish all the ingredients of section 68. He, however, had no serious objection to restoration of the matter to the learned CIT(A) for examination of the additional evidence and the remand record in accordance with law.

We have heard the rival submissions and perused the material placed before us. The addition under section 68 was made essentially because the notices issued under section 133(6) to the share subscribers during the assessment proceedings were returned unserved and the Assessing Officer considered the evidence then furnished to be insufficient. The material before us, however, shows that the assessee produced additional evidence in the first appellate proceedings. The learned CIT(A) forwarded the matter to the Assessing Officer for remand, and the Assessing Officer called for certain details and documents in the course of such remand proceedings. Therefore, the additional evidence and the verification undertaken in remand proceedings constituted material relevant to the adjudication of the appeal.

On examination of the impugned order, we find that the learned CIT(A) has referred to the non-service of the notices issued under section 133(6) during the original assessment proceedings. There is, 5 however, no discussion of the additional documents furnished by the assessee, the particulars called for by the Assessing Officer in remand proceedings, the assessee’s response thereto, or the observations contained in the remand report. The impugned order also does not record a document-wise or subscriber-wise finding on whether the evidence so produced established the identity and creditworthiness of the share subscribers and the genuineness of the transactions. The mere reiteration that the notices under section 133(6) had earlier remained unserved could not dispense with examination of the material subsequently brought on record and subjected to remand proceedings.

In these circumstances, we are of the considered view that the matter requires fresh adjudication by the learned CIT(A). We accordingly set aside the impugned order and restore the entire appeal to the file of the learned CIT(A) for de novo adjudication in accordance with law. The learned CIT(A) shall examine the additional evidence furnished by the assessee, the details called for by the Assessing Officer during the remand proceedings, the replies and supporting documents furnished in response thereto, and the remand report and any rejoinder available on record. A clear finding shall thereafter be recorded, preferably subscriber-wise, on the identity and creditworthiness of each share subscriber and the genuineness of each transaction. The learned CIT(A) shall also adjudicate the legal ground challenging the validity of the reassessment and all other grounds raised by the assessee by passing a speaking order. If any document or remand material is not presently available on the appellate record, the same may be obtained from the Assessing Officer or called for from the assessee, as the case may be.

Needless to state, the learned CIT(A) shall afford reasonable opportunity of being heard to the assessee as well as the Assessing 6 Officer. The assessee is directed to cooperate in the proceedings and to furnish the requisite evidence within the time allowed. We have not expressed any opinion on the merits of the grounds or on the evidentiary value of any document, and all contentions of both sides are kept open. Accordingly, grounds nos. 1 to 4 are allowed for statistical purposes. Grounds nos. 5 and 6 are consequential and are also restored. Ground no. 7 is general and requires no separate adjudication.

In the result, the appeal filed by the assessee is allowed for statistical purposes.