ITO, WARD-5(1), KOLKATA vs. M/S FAIRDEAL DEALCOM (P) LTD., KOLKATA

PDF · subscribers
ITA 49/KOL/2022Status: DisposedITAT Kolkata04 August 2026AY 2012-134 pages
AI SummaryDismissed

What did the Tribunal hold?

The Tribunal held that Section 68 is attracted only for unexplained cash credits, not for cashless barter transactions. Since the transactions were on a barter basis without any cash involvement, the CIT(A)'s order was upheld.

What were the facts?

The Assessing Officer (AO) added Rs. 5,00,20,000/- to the assessee's income as unexplained cash credit under Section 68 for issuing equity shares at a premium. The CIT(A) partly allowed the appeal, restricting the addition to Rs. 14,00,000/-, finding the transactions to be cashless barter except for that amount.

What were the issues?

Whether Section 68 of the Income Tax Act, 1961, is applicable to cashless barter transactions where shares are issued in lieu of shares purchased, and not cash is received.

Which sections of the Income-tax Act were involved?

Section 68

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, “A” BENCH: KOLKATA

Before: Shri Duvvuru RL Reddy&Shri Rajesh Kumar]

आयकर अपीलीय अधिकरण, कोलकाता पीठ “ए’’, कोलकाता IN THE INCOME TAX APPELLATE TRIBUNAL “A” BENCH: KOLKATA श्री डुव्वुरु आर.एल. रेड्डी,न्याययक सदस्यएवंश्रीराजेशकुमार, लेखा सटस्य के समक्ष [Before Shri Duvvuru RL Reddy, Judicial Member&Shri Rajesh Kumar, Accountant Member] I.T.A. No. 49/Kol/2022 Assessment Year: 2012-13 ITO, Ward-5(1), Kolkata Vs. Fairdeal Dealcom Pvt. Ltd.

(PAN: AAACF 3720 F) ) अपीलार्थी ( Respondent / प्रत्यर्थी Appellant / Date of Hearing / सुनवाई 11.06.2026 की यिथर्थ Date of Pronouncement/ 04.08.2026 आदेश उद्घोषणा की यिथर्थ For the Appellant/ Shri Deep Agarwal, Advocate यनर्ााररिी की ओर से For the Respondent/ Shri Pradeep Dung Dung, Sr. DR राजस्व की ओर से

ORDER / आदेश Per Rajesh Kumar, AM: This is an appeal preferred by the revenue against the order of the Ld. Commissioner of Income Tax (Appeals)-7, Kolkata (hereinafter referred to as the “Ld. CIT(A)”] dated 19.02.2020 for the AY 2012-13. 2. At the outset, we observe from the appeal folder that there is a delay of 615 days in filing the appeal by the department in support of which a condonation petition was filed. The ld. AR, on the other hand, did not oppose the condonation of delay.

2 I.T.A. No.49/Kol/2022 Assessment Year: 2012-13 Fairdeal Dealcom Pvt. Ltd. Considering the reasons cited before us, we are inclined to condone the delay and admit the appeal for hearing.

3.

The only issue raised by the revenue is against the deletion of addition of Rs. 4,86,20,000/- by the Ld. CIT(A) as against the total addition of Rs. 5,00,20,000/- by the AO u/s 68 as unexplained cash credit.

4.

Facts in brief are that the assessee filed return of income on 12.03.2013 showing total income of Rs. 27,337/- which was processed u/s 143(1) of the Act. The case of the assessee was selected for scrutiny and statutory notices along with questionnaire were issued and duly served upon to the assessee. The assessee complied with the same by filing various details, books of account which were test checked by the AO. The AO observed from the perusal of the balance sheet, that the assessee has issued 50,020 equity shares at face value of Rs. 10/- each at a premium of Rs. 999/- per share, thereby receiving Rs. 5,00,20,000/-including premium of Rs. 4,95,19,800/-. Accordingly, the AO issued summon u/s 131 to the directors of the share holder companies to verify the transactions. However, none appeared and thereafter the AO added the same to the income of the assessee as unexplained cash credit u/s 68 of the Act.

5.

In the appellate proceedings, the Ld. CIT(A) partly allowed the appeal of the assessee after taking into account the contention and submission of the assessee. The ld. CIT(A) recorded a finding a fact that there was no cash involvement in the said transactions and are only barter transactions as the assessee has issued shares in lieu of shares purchased by the assessee. The Ld. CIT(A) noted that this is a cash less transaction. The relevant finding of the Ld. CIT(A) is extracted below:

4.2. I have considered the submission of the Ld. AR of the appellant in the backdrop of the assessment order . I have also considered the materials on record in deciding the issue at hand. The brief facts of the case are that share capital introduced in the account of the appellant during the year under consideration amounting to Rs. 5,00,20,000/- by list of share subscribers were treated as unexplained cash credit by the AO u/s 68 of the Act. The reasons for this was because (a) none of the director of the subscriber companies appeared before the AO u/s 131 of the Act with the required details/documents and (b) the assessee could not offer any explanation as to why the said share application money should not be treated as

3 I.T.A. No.49/Kol/2022 Assessment Year: 2012-13 Fairdeal Dealcom Pvt. Ltd. bogus and unexplained cash credit in its books as per the provisions of Section 68 of the Act. Reliance was placed on various case laws to justify his action (supra). On the other hand, the AR has drawn any attention to the fact that the transfer of the impugned shares were not based on any cash transactions but by way of barter transactions except for transaction of Rs. 14,00,000/- which was received by the appellant through banking channels as elucidated in the written submission (supra). Since this is a case of cashless transaction, section 68 of the Act cannot be applied in any manner which the AO failed to comprehend.. The provisions of Section 68 of the Act refers to cash credit in the accounts of an assessee which is not explained or remains unexplained before the concerned AO. The instant case is not on this ground inasmuch as there was no cash credit but only book adjustments except for transactions of Rs. 14,00,000/-. The case of the appellant is well covered by various judicial decisions in its favour as mentioned in the submission of the AR (supra). However, the appellant failed to provide creditworthiness of the share subscribers of Rs. 14,00,000/- from whom the amount was received through banking channels. Thus, in view of the foregoing, the AO is directed to restrict the impugned amount of Rs. 5,00,20,000/- added u/s 68 of the Act to Rs. 14,00,000/-. This ground is partly allowed.” 6. We have heard rival contentions and perused the material on record. We find that the assessee has issued 50,200 equity shares at face value of Rs. 10/- each at premium of Rs. 999/- per share in lieu of assessee receiving shares of some other companies. Therefore, there was no involvement of payment in the said transactions. In our opinion, the provision of Section 68 are attracted only if any payment is received by the assessee which is credited in the books of account and not otherwise. In the case of assessee as we have noted above that there is no involvement of any money and the transactions were done on barter basis. Therefore, we are inclined to uphold the order of Ld. CIT(A) by dismissing the appeal of the revenue.

7.

In the result, the appeal of the assessee is allowed.

Order is pronounced in the open court on 4th August, 2026

Sd/- Sd/-

(Duvvuru RL Reddy /डुव्वुरु आर.एल. रेड्डी) (Rajesh Kumar/राजेश कुमार) Judicial Member/न्याययक सदस्य Accountant Member/लेखा सदस्य Dated: 4th August, 2026 SM, Sr. PS Copy of the order forwarded to:

4 I.T.A. No.49/Kol/2022 Assessment Year: 2012-13 Fairdeal Dealcom Pvt. Ltd.

1.

Appellant- ITO, Ward-5(1), Kolkata 2. Respondent – M/s Fairdeal Dealcom Pvt. Ltd., 6A, Clive Row, 2nd Floor, R. No. 54, Kolkata-700001 3. Ld. CIT(A)- 7, Kolkata 4. Ld. Pr. CIT- , Kolkata 5. DR, Kolkata Benches, Kolkata

More judgments on Section 68

All 29,931 judgments and leading authorities on Section 68 →

Recent GST High Court judgments

Search GST case law →