AMRITLAXMI TREXIM PVT. LTD.,KOLKATA vs. ITO, WARD 4(3), KOLKATA

IN THE INCOME TAX APPELLATE TRIBUNAL KOLKATA ‘A’ BENCH, KOLKATA BEFORE SHRI RAJESH KUMAR, ACCOUNTANT MEMBER AND SHRI PRADIP KUMAR CHOUBEY, JUDICIAL MEMBER I.T.A. No.3229/KOL/2025 Assessment Year:(2012-13) Amritlaxmi Trexim Pvt. Ltd., ITO, 14-C, M. D. Road, 4th Floor, Vs. Ward – 4(3), Kolkata – 700007, West Bengal Kolkata [PAN: AAKCA4129P] (Appellant) .. (Respondent) Appellant by : Shri Manoj Kataruka, Advocate Respondent by: Shri Raman Garg, CIT-DR Date of Hearing 07.07.2026 Date of Pronouncement 14.08.2026 O R D E R PER RAJESH KUMAR, ACCOUNTANT MEMBER: This appeal preferred by the assessee against the order of the Learned Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (hereinafter referred to as the “ld. CIT(A)”], dated 25.11.2025 for the Assessment Year (AY) 2012-13.

ITA No.3229/Kol/2025/A.Y. 2012-13 Amritlaxmi Trexim Pvt. Ltd. vs. ITO 3. This is the second round of appeal before the tribunal. The facts of the case in brief are that the assessee filed its return of income for A.Y. 2012-13, declaring total income of Rs.390/-. The assessee-company was formed on 26.03.2012. The said company issued equity shares thereby raising share capital including premium totaling to Rs.9,81,00,000/-. The case was selected under CASS for scrutiny and statutory notices u/s 143(2) and 142(1) of the Income-tax Act, 1961 (In short, ‘the Act’) along with questionnaire were issued and served upon the assessee. There is no compliance to the said notices, accordingly the AO made addition u/s 68 of the Act by treating the same as unexplained cash credit u/s 68 of the Act in the assessment framed u/s 144 r.w.s. 254 of the Act, dated 21.03.2025.Before the ld. CIT(A) also, there was no representation and the order was passed by the ld. CIT(A) ex- parte. The matter was taken to the Tribunal and the tribunal restored the issue the file to AO for fresh adjudication. Accordingly, three opportunities were given to the assessee, i.e., 06.11.2023, 28.02.2025 and 13.03.2025 by the AO. The assessee complied with the direction of the AO by filing written submission before the AO on 28.12.2023 furnishing before the AO details/explanations of such share capital/share premium along with the details of subscribers. The AO finally treated the same as unexplained cash credit and added to the same in the assessment framed u/s 144 r.w.s. 254 of the Act, dated 21.03.2025. 4. In the appellate proceedings, the ld. CIT(A) dismissed the appeal of the assessee. The ld. CIT(A) while dismissing the appeal, took cognizance of the fact that the share capital/share premium were brought into the books only through journal entries without any actual credit or inflow of funds. The ld. CIT(A) noted that there were 11 share applicants. However, the assessee did

ITA No.3229/Kol/2025/A.Y. 2012-13 Amritlaxmi Trexim Pvt. Ltd. vs. ITO not furnish details/evidences to verify the sources of credit, the financial capability of the subscriber companies and the reasons for payment of high premium. The ld. CIT(A) also noted that the appellant has not established the creditworthiness of the share applicants, the genuineness of the transactions, the commercial expediency for the journal-entries. Accordingly , the ld. CIT(A) dismissed the appeal of the assessee by upholding the order of AO.

“According to Shri Bajoria, the whole matter boils down to the fact that though the entries were made in the cash book in the case, there was no passage of cash at any stage. The whole thing was arranged by the entries to show that GB and Co. notionally advanced cash to the assessee-firm though not having cash to pass on. The assessee-firm, in turn, paid as consideration for the shares to the said three companies the same nonexistent cash as the

ITA No.3229/Kol/2025/A.Y. 2012-13 Amritlaxmi Trexim Pvt. Ltd. vs. ITO aggregate purchase value of the shares held by the said companies in the other companies of the group without, however, any passage of cash and the said companies in their turn passing on the said non-existent cash to GB and Co. Shri Bajoriaemphasised that, in the course of assessment proceedings, the Income-tax Officer examined the transactions and found that these are only entries not involving at any stage any cash. He pointed out that the entire transactions were effected between the assessee-firm and the concerns belonging to the Jatia group only for the requirement of complying with the directions of the Reserve Bank of India that cast on the companies a statutory obligation to reduce their borrowing to maintain parity with the loan and capital ratio as prescribed. The assessee-company merely substituted the said three companies as debtors to GB and Co. and received the shares for undertaking the liability. Confronted with the question why the reduction of loan could not be achieved by straightaway transfer of the shares in question by the said three companies to GB and Co. in discharge of the loans, without creating a circuit, Shri Bajoria explained that such a course was not acceptable to all the members of the family as the lender, GB and Co., is the sole concern of Shri J.M. Jatia. To avoid the jeopardy of the other members of the Jatia family this arrangement had to be made, and the assessee-firm had to be created as a device to protect the interest of all members of the group. In any case, it was urged that the transactions as also the creation of the assessee-firm were devices to avoid the mischief of the ceiling imposed by the Reserve Bank of India on the aforesaid three non-financial companies. The assessee-firm stepped into the shoes of the said three companies. The companies ceased to be debtors and, to that extent, the magnitude of its loan fell within the prescribed ratio. It is finally emphasised by learned counsel for the assessee that the ultimate result is that the firm becomes a debtor to GB and Co. and the three non- financial companies of the group got discharged. Learned counsel also emphasised that, at the worst, it can be said that the assessee-firm has received valuable assets being the said shares of the equivalent value of the debt taken over by it from the companies, i.e., Rs. 11.20 lakhs. Therefore, the question of cash credit does not come in, there being no actual passing or receipt of cash. In other words, the transactions are mere book entries. It was contended that the fact that the entries passed through the cash book could not detract from or efface the essential nature of the entries. It was also urged that the entries were passed through the cash book so that the repayment of loans by the said three companies could be established before the Reserve Bank of India. But, according to Shri Bajoria, that does not mean that it amounts to an artifice employed to deceive any authorities, because the transactions showing the amount as received in cash and paid

ITA No.3229/Kol/2025/A.Y. 2012-13 Amritlaxmi Trexim Pvt. Ltd. vs. ITO away spontaneously and simultaneously were not actual but only notional. He, however, stated that, as far as the question of section 68 is concerned, the nature of the transactions and the entries clearly show that no cash, in fact, flowed. It was further stressed that the transactions are above board. No outsider is involved. The entries were made in the books of the concerns of the same group. The shares in question were also of the companies of the group. There was no attempt at hiding the transactions. Nor is it the case of any of the parties to the transaction that there was any passing of cash. Every party unequivocally stated that the transactions were carried into effect merely by way of adjustments of the said loans and the share transfers. Shri A.C. Moitra, the learned advocate for the Revenue, reiterated the grounds on which the Tribunal has affirmed the addition of the amount of Rs. 11.20 lakhs as unexplained cash credit. He particularly emphasised that the assessee's contention that the entries are only adjustment entries is not acceptable, because the adjustment entries are not made through the cash book. It is an accepted principle of accounting that book adjustments and the entries in effecting them are made by journal entries and not cash entries. He urged that the purported motive of the entries being the reduction of loans of the three limited companies does not explain the whole matter, because the entries are cash entries. The fact remains that, at every stage, the parties showed the payments and receipts of cash even when there was no cash available for such entries. This quite justifies the addition as sustained by the Tribunal. We have perused the assessment order carefully. We find that cash did not pass at any stage though entries were made in the cash book showing payments and receipts ; but since the entries made a complete round, no passing of cash was necessary for the purpose of making the entries. That there was no passing of cash is also admitted by the Income-tax Officer himself. We have already extracted the observation of the Income-tax Officer in paragraph 14 of his assessment order. The Income-tax Officer has clearly opined that all the respective parties did not receive cash nor did pay cash as none had any cash for the purpose. The only point in the assessment order is that the entries not involving the passing of cash should not have found a place in the cash book, but in the ledger account through journal entries. There is another self-contradiction in the Income-tax Officer's finding that, if there was no real cash entry on the credit side of the cash book, but merely a notional or fictitious cash entry, as admitted by him, there is no real credit of cash to its cash book ; the question of inclusion of the amount of the entry as unexplained cash credit cannot arise. One of the grounds of the Tribunal for disbelieving the assessee's case is that the adjustment entries were made by notional cash entries with a view to bringing down the debt-and-capital ratio, i.e., that while being discharged of

ITA No.3229/Kol/2025/A.Y. 2012-13 Amritlaxmi Trexim Pvt. Ltd. vs. ITO the debt the said companies also jettisoned their assets, i.e., the shares held by them of equivalent sum without achieving the avowed purpose. Here the Tribunal certainly misdirected itself. The ratio to be reduced is of the loan in relation to the share capital and the reserves. Jettisoning the shares had the desired effect of reducing the borrowed capital. Again, as regards the Tribunal's refusal to take notice of the directions of the Reserve Bank, it is not correct for the Tribunal to hold that the said document was a new evidence in the true sense of the term. The assessee has been consistently pleading before the lower authorities that the entries had to be made in order to bring the companies in conformity with the said direction. Moreover, the direction of the Reserve Bank is a public document within the meaning of section 74 of the Evidence Act, 1872. Documents of a public nature and public authority are generally admissible in evidence subject to the mode of proving them as laid down in sections 76 and 78 of the Evidence Act. In our view, the effect and import of the transactions is that the assessee took over the liability of the aforesaid non-financial companies to GB and Co. in exchange for the shares as aforesaid. In the premises, we answer all the questions, in the affirmative and in favour of the assessee and against the Revenue.” 6. Considering the facts of the case in the light of aforesaid decision, we are inclined to set-aside the order of ld. CIT(A) and direct the AO to delete the addition.

The order is pronounced in the open Court on 14/08/2026.

Sd/- Sd/- (Pradip Kumar Choubey) (Rajesh Kumar) JUDICIAL MEMBER ACCOUNTANT MEMBER Kolkata, Dated: 14/08/2026 SAMANTA आदेश �ȧ ĤǓ�ͧ �ͪ �\ Ē ȯͪ��/Copy of the Order forwarded to: 1. \ �Ȣ�ȡ�ȸ/ The Appellant 2. Ĥ×��ȸ/ The Respondent 3. Ȳ�Ȳͬ��आयकर] �ǕÈ�/ Concerned CIT

ITA No.3229/Kol/2025/A.Y. 2012-13 Amritlaxmi Trexim Pvt. Ltd. vs. ITO 4. आयकर] �ǕÈ�(अपील) / The CIT(A) 5. ��ȡ�Ȣ�ĤǓ�Ǔ�ͬ �, आयकर\ �Ȣ�ȣ�\ͬ ����,/ DR, ITAT, Kolkata �ȡ�[ फाईल/ Guard file. 6.

BY ORDER, // TRUE COPY //

Deputy Registrar, ITAT, Kolkata