BHOLEBABA JUTE PRIVATE LIMITED,KOLKATA vs. ITO, WARD 10(2), KOLKATA

Per Rajesh Kumar, AM:

This is an appeal preferred by the assessee against the order of the National Faceless Appeal Centre, Delhi (hereinafter referred to as the “Ld. CIT(A)”] dated 20.02.2026 for the AY 2009-10.

ITA No. 1415/KOL/2026 Bholebaba Jute Private Limited; A.Y. 2009-10 Income-tax Act, 1961 (the Act) in the assessment framed u/s 143(3)/ 263 of the Act dated 29.09.2021.

ITA No. 1415/KOL/2026 Bholebaba Jute Private Limited; A.Y. 2009-10 share subscribers. The ld. AO also issued notice u/s 133(6) of the Act on 22.09.2021, which were duly served upon the subscribers. The ld. AO noted in Para no.5 that the subscriber companies did not reply the said notices and have not filed any documents in compliance. Therefore, the assessee had received funds from companies which were only existing on papers. The ld. AO also noted that the summons u/s 131 of the Income-tax Act, 1961 (the Act) were also issued in the reassessment proceedings to the directors of the assessee and the directors did not appear before the AO. Finally, the ld. AO noted that the money raised by the assessee by issuing by allotting 2,20,500 equity shares of ₹10 each at a premium of ₹290 receiving thereby a sum of ₹6,61,50,000/- from various parties was nothing but assessee’s own money. The ld. AO noted that the money was deposited into the bank account of the subscribing companies and thereafter the shares were subscribed by the subscribers. The ld. AO finally, after taking into account the reply of the assessee, treated the said share capital/ share premium as unexplained cash credit u/s 68 of the Act and added the same to income of the assessee.

ITA No. 1415/KOL/2026 Bholebaba Jute Private Limited; A.Y. 2009-10 accordingly, by issuing notice u/s 142(1) of the Act called upon the assessee to furnish various details and evidences qua the share subscribers which were duly filed comprising ITRs, PANs addresses, audited financial statements, bank statements etc. We note that the ld. AO in order to independently verify the investments by these companies issued notices u/s 133(6) of the Act to all the subscribers and the same were duly replied by the said subscribers along with all supporting evidences. Therefore, we find merit in the contention of the assessee that the ld. AO has farmed the assessment without application of mind to the records available before him as in Para no.5 as specifically mentioned that the letter issued u/s 133(6) of the Act to various subscribers remained unresponded, whereas as a matter of fact on the basis of records before us, we note that the subscribers have duly responded to the letters issued u/s 133(6) of the Act and filed all the details/evidences as called for by the Assessing Officer. Therefore the observations of the ld. AO are factually incorrect and are against the facts on record. We also note that the ld. AO referred to the notices issued u/s 131 of the Act, to the directors of the assessee company in the re-assessment proceedings in the first round, which the directors of the assessee company did not make any compliance. The ld. AO thereafter by referring to the modus operandi of the shell companies, treated the share capital/ share premium as unexplained cash credit in the hands of the assessee. In our opinion, once the assessee has filed all the evidences/ details/ documents in respect of share subscribers then the assessee has discharged its onus u/s 68 of the Act and the onus is shifted on the Revenue to Page | 4

ITA No. 1415/KOL/2026 Bholebaba Jute Private Limited; A.Y. 2009-10 establish to the contrary. We note that in the present case the Revenue has not carried out any investigation or enquiry into the evidences filed by the assessee. Therefore, the addition made by the ld. AO by recording a wrong observation is factually incorrect that compliances were not made to the letters issued u/s 133(6) of the Act by the share subscribes and therefore addition confirmed by the ld. CIT(A) is wrong and cannot be sustained. We have noted above on the basis records available before us that the share subscribers have responded to the notices issued u/s 133(6) of the Act and filed all the details/ evidences as called for. Under these circumstances, we are not in agreement with the conclusion drawn by the ld. CIT (A) on this issue. We note that the notices issued u/s 133(6) of the Act to all the investors were responded by them which are available from page no.7 to 29 of the paper books. We also note that the documents filed by the assessee before the AO and ld. CIT(A) are available from page no.34 to 221 of the Paper Book. The case of the assessee is squarely covered by the decisions as discussed below.

6.1. We have perused the decision of the Hon’ble Calcutta High Court in the case of PCIT vs. Omkar Parivahan Finance Pvt Ltd (ITAT No. 227 of 2024) dated 01.01.2025 wherein it is held that, the fact that the net worth is much higher than the investments made by the share subscribers, their creditworthiness stands established. The share subscribers are found to have also furnished their bank statements, evidencing the source of payments along with a separate explanation regarding the same. It is observed that none of Page | 5

ITA No. 1415/KOL/2026 Bholebaba Jute Private Limited; A.Y. 2009-10 the lower authorities were able to point out any specific falsity therein. We thus note that the assessee was able to discharge its initial onus of establishing the genuineness of the transactions as well. It is thus noted that the three ingredients laid down in Section 68 of the Act was met by the assessee.

6.2. It is observed that the ld. AO had laid much emphasis on the non-compliance of summons by the share subscribers to the enquiry being conducted after more than seven (7) years from the date of transactions. The ld. AR has rightly relied on the decision of the Hon’ble Calcutta High Court in the case of PCIT vs. Jealous Commercial Private Limited (308 taxman 80) wherein on similar facts, it was held that mere non- appearance of directors before the AO cannot prompt the AO to render a finding that no satisfactory explanation u/s 68 was offered by the assessee. The relevant findings are as follows:

“18. In the facts and circumstances of the present case, the shareholders who applied for the shares in the assessee stands identified. The source of funds stands satisfied. The assessee reflected the entire issue and allotment of shares at a premium in its books of accounts and submitted the same contemporaneously to the statutory authority, namely, Ministry of Corporate Affairs. 19. Before the Assessing Officer, the assessee produced all such relevant materials with regard to the transaction in question. The absence/non- appearance of the Directors of the assessee before the Assessing Officer would not prompt the Assessing Officer, to render a finding that no explanation within the meaning of Section 68 of the Act of 1961 was offered by the assessee particularly in the factual matrix of the present case. 20. In such circumstances, we do not find any substantial question of law involved for the purpose of consideration by this Court as contended on behalf of the appellant.” 6.3. We also rely on the decision of the Hon’ble jurisdictional High Court in the case of PCIT vs. Balaka Vinimay Pvt Ltd (GA No. 2 of 2025) dated 21.07.2025. In this case also, the Page | 6

ITA No. 1415/KOL/2026 Bholebaba Jute Private Limited; A.Y. 2009-10 assessee and the share subscribers had furnished all the relevant details in support of the share application monies before the AO. The AO however disbelieved the explanation since there was non-compliance of summons u/s 131 by the directors of the share subscribers. Taking note of the practical difficulty that the assessee cannot be called upon to produce the share subscribers after a gap of 10 to 12 years, and having regard to the documents placed on record, the Hon’ble High Court dismissed the Revenue’s appeal and upheld the order of this Tribunal deleting the addition u/s 68 by observing as under:

“…..It is not in dispute that the assessee had filed complete details of each of the shares to prove the identity and creditworthiness of the shareholders and the genuineness of the transactions was proved by producing copies of the confirmation letters, bank statements, audited financial statements, identity proofs, source of funds, investments by the share subscribers in the assessee company, replies which were given to the notice issued under Section 133(6) of the Act and various other details to show that most of the share subscribers have also passed through scrutiny proceedings. These details were placed before the learned Tribunal by way of paper books in three volumes. The learned Tribunal has in extenso referred to the details which have been furnished. Furthermore, the shareholders have responded to the notice under Section 133(6) of the Act directly to the Assessing Officer and their respective assessment orders framed under Sections 147/143(3) of the Act were also placed before the Assessing Officer as well as before the learned Tribunal. Thus, it is evident that the assessee has produced all the documents before the Assessing Officer not once but twice and the authority except indicating a theory of routine entries of paper companies/shell companies, no discrepancies had been pointed out in the financials of the alleged cash creditors. Furthermore, all the share subscribers are private limited companies duly registered with the Ministry of Corporate Affairs and have been furnishing the audited financial statements in the portal of the Ministry. That apart, the share subscribers have also demonstrated that there was immediate source of funds available in the bank accounts which had been applied for making investments in the equity shares of the assessee company. One more particular important factor which was lost sight of is, that the matter pertains to the financial year 2007-08 and the scrutiny assessment was completed on 27.09.2021. After a gap of 13/14 years, after actual transactions had taken place and final assessment orders had been passed, proceedings was initiated.

ITA No. 1415/KOL/2026 Bholebaba Jute Private Limited; A.Y. 2009-10 Thus, the predicament faced by the assessee was taken note by the learned Tribunal and it had observed that it is practically difficult that after a gap of 10 to 12 years, the assessee can call for the share subscribers who invested long time before and there is every possibility that the shareholders would have sold their equities and new shareholders would have taken their place. The learned Tribunal referred to the decision of the co-ordinate Bench in the case of True- Man Consultants Pvt. Ltd. vs. ITO in ITA No.1158/Kol/2023, wherein almost identical issue of unexplained share capital from various share subscribers came up for adjudication and after considering the factual aspect and following the judicial pronouncements, the appeal filed by the assessee was allowed by the Tribunal. The revenue preferred an appeal before this Court in ITAT/203/2024 and by order dated 25th April, 2025, the appeal filed by the revenue was dismissed. Thus, we find that the factual issues have been thoroughly adjudicated by the Tribunal apart from noting that the assessee had been put to multiple levels of scrutiny and the assessee was able to bring on record documents in support of their claim. Therefore, we are of the view that the addition made under Section 68 of the Act was rightly ordered to be deleted. For the above reasons, we find no ground to interfere with the order passed by the learned Tribunal. Accordingly, the appeal fails and the same is dismissed. The substantial questions of law are answered against the revenue.” 6.4. The case of the assessee is also supported by the decision of the Hon’ble Calcutta High Court in the case of PCIT vs. Bright Commodeal Pvt Ltd (ITAT No. 162 of 2025) dated 28.08.2025, wherein, it was held as under:

“We have perused the reasons assigned by the learned Tribunal for allowing the assessee's appeal. It is seen that the assessing officer issued notice under Section 133 (6) of the Act to the investing companies and both the parties have complied with the said notice and furnished the requisite details. Summons under Section 131 of the Act was issued to the Director of the assessee company to be personally present and also to produce the Directors of the investing company for examination of genuineness of the transaction, identity and creditworthiness of the lenders. The Tribunal noted that the Directors appeared pursuant to the summons but the assessing officer wrongly recorded that the Directors of the assessee company failed to appear in response to the summons issued under 131 of the Act. Furthermore, the Tribunal examined the factual position and noted that the assessee has filed evidences as called for by the assessing officer in respect of the assessee as well as the investing companies. The evidences filed comprised of income tax returns, audited balance sheet, profit and loss account, audited report, bank statement and master data in respect of each of the subscribers. Furthermore, both the parties have submitted their reply pursuant to the Page | 8

ITA No. 1415/KOL/2026 Bholebaba Jute Private Limited; A.Y. 2009-10 notice issued under Section 133(6) of the Act. After noting these facts, the Learned Tribunal held that the assessing officer as well as the CIT(A) did not cause any verification or conduct any enquiry into the evidences which were filed by the assessee and merely harped on non- compliance of the summons issued under Section 131 of the Act, which is factually incorrect. Learned Tribunal placed reliance on the decision of the Hon'ble Supreme Court in CIT -Vs- Orissa Corporation Ltd. (1986) 159 ITR 78 (SC) as well as the decision of this Court in Crystal Networks Pvt. Ltd. -Vs- CIT, (353) ITR 171 (Cal). The Tribunal also noted the decision of the Co-ordinate Bench in the case of ITO -Vs- M/S Cygnus Developers India Pvt. Ltd. (ITA/282/Kol/2012) wherein the factual position was also similar to that of the case of the assessee. Thus, we find that the facts have been examined by the Tribunal and the conclusion has been arrived at and therefore, no question of law, much less substantial questions of law, arises for consideration in this appeal.” In so far as the analysis of the assessee’s return of income undertaken by the ld. AO is concerned, we are of the view that the same was of no relevance to ascertain the identity, creditworthiness and genuineness of the investors. In the instant case before us, the assessee has furnished all the evidences proving identity and creditworthiness of the investors and genuineness of the transactions but ld. AO has not commented on these evidences filed by the assessee. Besides the investors have also furnished complete details/evidences before the ld. AO which proved the identity, creditworthiness of investors and genuineness of the transactions. The case of the assessee is found to be supported by series of decisions of Hon'ble Calcutta High Court namely, PCIT v. Ambe Tex Fab (India) (P.) Ltd (173 taxmann.com 392), PCIT v. Delta Dealers (P.) Ltd (173 taxmann.com 911), PCIT v. Goodview Marketing Pvt Ltd (ITAT No. 114 of 2024), PCIT v. Rajshree Integrated Cold Chain Pvt Ltd (ITAT No. 286 of 2024), PCIT v. True Man Consultants Pvt Ltd (ITAT No. 203 of 2024), PCIT v. Hirak Vyapaar Pvt Ltd Page | 9

ITA No. 1415/KOL/2026 Bholebaba Jute Private Limited; A.Y. 2009-10 (ITAT No. 242 of 2023), PCIT v. One Point Commercial (P.) Ltd (478 ITR 183) and PCIT v. Mainak Suppliers Pvt Ltd (ITAT No. 253 of 2023).

Order pronounced on 02.09.2026.

Sd/- Sd/- (PRADIP KUMAR CHOUBEY) (RAJESH KUMAR) (JUDICIAL MEMBER) (ACCOUNTANT MEMBER) Kolkata, Dated: 02.09.2026 Sudip Sarkar, Sr.PS Copy of the Order forwarded to: 1. The Appellant 2. The Respondent 3. CIT DR, ITAT, 4. 5. Guard file. BY ORDER, True Copy//

Dy. Registrar Income Tax Appellate Tribunal, Kolkata