INCOME TAX OFFICER, WD-6(2), KOL, KOLKATA vs. M/S. LINTON DEALERS PVT. LTD., KOLKATA

IN THE INCOME TAX APPELLATE TRIBUNAL KOLKATA ‘B’ BENCH, KOLKATA BEFORE SHRI RAJESH KUMAR, ACCOUNTANT MEMBER AND SHRI PRADIP KUMAR CHOUBEY, JUDICIAL MEMBER I.T.A. No.32/KOL/2026 Assessment Year: (2010-11) ITO, M/s Linton Dealers Pvt. Ltd., 1st Floor, 2 Lal Bazar Street, Ward - 6(2), Vs. Kolkata Kolkata – 700001, West Bengal [PAN: AABCL5820B] (Appellant) .. (Respondent) Appellant by : Ms Sucheta Chattopadhyay Roy, CIT- DR Respondent by: Shri Vinod Jain, FCA Date of Hearing 29.06.2026 Date of Pronouncement 01.09.2026 O R D E R PER RAJESH KUMAR, ACCOUNTANT MEMBER:

This appeal preferred by the revenue is against the order of the Learned Commissioner of Income Tax (Appeals),National Faceless Appeal Centre, Delhi(hereinafter referred to as the “Ld.CIT(A)”], dated 07.10.2025 for Assessment Year (AY) 2010-11.

ITA No.2607/Kol/2025/AY 2017-18 Anita Basak vs. ACIT appeal is hereby condoned and we proceed to dispose of the appeal on merits.

ITA No.2607/Kol/2025/AY 2017-18 Anita Basak vs. ACIT But there was no compliance and finally the AO added the sum of investments in share capital/share premium u/s 69 of the Act as unexplained investment besides, adding of Rs.2,40,000/- towards commission @ 0.25% of the said investment.

“8. Decision: 8.1. The assessment order, grounds of appeal, the statement of facts, submission of the appellant, remand report, documents submitted along with law in this regard is considered. A reference to the section 69 was also considered given below- "Where in the financial year immediately preceding the assessment year the assessee has made investments WHICH ARE NOT RECORDED IN THE BOOKS OF ACCOUNT, if any, maintained by him for any source of income, AND the assessee offers no explanation about the nature and source of theinvestments or the explanation offered by him is not, in the opinion of the Assessing Officer, satisfactory, the value of the investments may be deemed to be the income of the assessee of such financial year." There are two conditions for the section to be applied, as the conjunctive word "and" has been used in the section. First condition is that investments made in the current year are not recorded in the books of accounts. Secondly, the assessee fails to explain the nature and source of the investments. 8.2. The appellant, during the year had made investments of Rs. 8,99,00,000 in equity shares of other body corporates. Further the investments made by the assessee were recorded in books with name and address of the investee company, type of investment, number of shares, cost and mode of acquisition paid. The investment was disclosed in return of income too. Thus, the condition first fails on the facts of the case. The appellant also explained details of sources of such investments that during the year funds were raised by issuing their own equity shares at premium to specified investors. The name, address and PAN of all such share subscribers were submitted. The documents of share subscribers such as balance sheet, ITR, bank statement, declaration of their source, details of source of their source were provided. Even the AO conducted independent verification and enquiry by sending notices u/s 133(6) and found the transactions as true with no

ITA No.2607/Kol/2025/AY 2017-18 Anita Basak vs. ACIT adverse finding. The Ld. CIT gave direction to AO to examine the circumstances of changes in directorship. It is apparent from records that there are no changes in directorship. The Provisions of section 69 of the Act thus on both counts failed to be attracted on the transactions in 8.3. It is to be noticed that once the assessee discharges its burden, the onus shifts on the department to disprove the evidences filed. Reliance was placed on:  CIT v. Lovely Exports (P) Ltd. (216 CTR 195, SC) - if share application money is received from alleged bogus shareholders, whose names and details are given, the Department is free to proceed against such shareholders but the amount cannot be taxed in the hands of the company.  Shree Barkha Synthetics Ltd. v. ACIT (155 Taxman 289, Raj.) once the existence of the investor is proved, the burden shifts on the Revenue.  Nemi Chand Kothari v. CIT (136 Taxman 213, Gauhati) obliged to prove source of source. assessee not obliged to prove source of source.  CIT v. Kamdhenu Steel and Alloys Ltd. (361 ITR 220, Del) - no addition u/s 68/69 once identity and confirmations of shareholders are on record. It was also argued that the AO has not brought any adverse material to show that the money emanated from the coffers of the assessee. Mere suspicion cannot replace evidence 8.4. On careful consideration, I find that the appellant discharged its onus by furnishing documentary evidences proving identity, genuineness, and creditworthiness of the shareholders. All transactions have been received through account-payee cheques, routed via normal banking channels. Once identity and financial capacity of the shareholders are proved, no addition can be made in the hands of the company, as held by the Hon'ble Supreme Court in Lovely Exports (P) Ltd. (supra). Audited annual accounts, ITR, bank statements, share application forms and share allotment advice of investors reveal adequate reserves and funds to justify the investments. The net worth of each shareholder far exceeds the investment made in the appellant company. Thus, their financial capacity is demonstrated. The AO has not brought any material to show that the funds actually emanated from the assessee. The appellant also filed the assessment orders of 21 share subscribers out of 23 share subscribers and in none of the assessment orders there were adverse findings by the AOs. The Apex Court in Lovely Exports (P) Ltd. (supra) in the context to the pre-amended Section 68 of the Act has also held that where the Revenue urges that the amount of share application money has been received from bogus shareholders then it is for the Income Tax Officer to proceed by reopening the assessment of such shareholders and assessing them to tax in accordance with law. It does not entitle the Revenue to add the same to the assessee's income as unexplained cash credit. The reliance was also placed on case laws mentioned below-

ITA No.2607/Kol/2025/AY 2017-18 Anita Basak vs. ACIT 1. "Where the matter concerns money receipts by way of share application from investors through banking channel, the assessee has to prove the existence of the person in whose name the share application is received, Once the existence of the investor is proved, it is not further the burden of the assessee to prove whether that person itself has invested the said money or some other person has made investment in the name of that person. The burden then shifts on to the revenue to establish that such investment has come from the assessee company itself. Once the receipt of the confirmation letter from the creditor is proved and the identity and the existence of the investor has not been disputed, no addition on account of share application money in the name of such investor can be made in the assessee's hands" - Synthetics Ltd. v. Asstt. CIT [2006] 155 Taxman 289 (Raj). 2. The Hon'ble High Court of Calcutta in case of CIT-Kol III vs Dataware Private Limited has opined that in case the AO is furnished with details of transactions, the transactions are by account payee cheques through proper banking channels and creditors are income tax assessee than the Assessing officer cannot treat the transactions as bogus. 3. "The onus is on the assessee to discharge the onus that the cash creditor is a man of means to allow the cash credit. There should be identification of the creditor and he should be a person of means. When the cash creditor is an income-tax assessee, it cannot be said that he is not a man of means"--Kamal motors v. CIT [2003]131 Taxman 155(Raj). 8.5. Hence, the three essential tests while confirming the pre-proviso Section 68 or Section 69 of the Act laid down by the Courts namely the genuineness of the transaction, identity and the capacity of the investor have all been examined by this office. Regarding the credit worthiness of investors, such investors are having net worth much more than the amount invested by them in the appellant company. The Assessing Officer has disregarded the documentary evidences adduced by the assessee such as balance sheet, ITR, bank statement, declaration of their source, details of source of their source etc. The audited annual accounts of such investors are ample proof of their high net worth. The respective source of investments made by them with the assessee company were also furnished. The share subscribers companies are the reputed bodies of established business entities with substantial net worth, robust investments and regular tax paying ones which are verifiable from his submissions. 8.6. In light of submissions, evidences placed on record, remand report, and the legal position discussed hereinabove, the investments in question stand duly recorded in the audited books of account, and the appellant has satisfactorily explained the nature and source thereof through comprehensive documentary evidences establishing the identity, genuineness, and creditworthiness of the share subscribers. It is deducted that the appellant has satisfactorily discharged the onus of proving the share application money and share premium. Accordingly, the addition of Rs. 8,99,00,000 made under section 69 is found to be unsustainable in law and on facts and is, therefore, directed to be deleted.

ITA No.2607/Kol/2025/AY 2017-18 Anita Basak vs. ACIT Hence, Ground of appeal no. 2 is allowed.” 6. We have heard rival submissions and perused the materials available on record. We note that the assessee during the year has purchased investment Rs.8.99 crore in equity shares of other body corporates. Before the AO, the assessee furnished names, addresses and PANs in respect of these companies in which the investments were made. The assessee also furnished ITRs, bank statements, sources of investment and even the notices issued u/s 133(6) were replied by the said companies. We note that the ld. CIT(A) after relying upon the ratio laid down by the Hon’ble Apex Court in case of CIT vs. Lovely Exports Pvt. Ltd., 216 CTR 195 (SC) and also relied upon other decisions of various High Courts. The finding of the ld. CIT(A) is that the assessee has proved the genuineness of the transactions, identity of the investee companies and the assessee has discharged the burden caste upon him by furnishing all the evidences as called for. Considering the facts and the ratio laid down by the Hon'ble Apex Court, we are inclined to uphold the order of ld. CIT(A) by dismissing the appeal of the revenue.

The order is pronounced in the open Court on 01/09/2026.

Sd/- Sd/- (Pradip Kumar Choubey) (Rajesh Kumar) JUDICIAL MEMBER ACCOUTANT MEMBER Kolkata, Dated: 01/09/2026 SAMANTA आदेश �ȧ ĤǓ�ͧ �ͪ �\ Ē ȯͪ��/Copy of the Order forwardedto: \ �Ȣ�ȡ�ȸ/ The Appellant 1. 2. Ĥ×��ȸ/ The Respondent. 3. Ȳ�Ȳͬ��आयकर] �ǕÈ�/ Concerned CIT

ITA No.2607/Kol/2025/AY 2017-18 Anita Basak vs. ACIT 4. आयकर] �ǕÈ�(अपील) / The CIT(A)- 5. ��ȡ�Ȣ�ĤǓ�Ǔ�ͬ �, आयकर\ �Ȣ�ȣ�\ͬ ����,/ DR, ITAT, Kolkata 6. �ȡ�[ फाईल/ Guard file.

BY ORDER, // TRUE COPY // Deputy Registrar, ITAT, Kolkata