SHIVKRIPA MERCANTILE PRIVATE LIMITED ,MUMBAI vs. ACIT CIRCLE 1(3)(1), MUMBAI

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ITA 6519/MUM/2025Status: DisposedITAT Mumbai30 April 2026AY 2016-177 pages

In favour of the assessee: the assessee's appeal was allowed. From the AI summary of this appeal.

AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that the addition under Section 68 was unwarranted as there was no increase in the share capital or share premium account during the relevant assessment year, based on the audited financial statements. The CIT(A) should have considered the merits of the case rather than dismissing the appeal based on the assessee's conduct before the AO.

What were the facts?

The assessee company's assessment for AY 2016-17 included an addition of Rs. 1,38,30,000 under Section 68 for alleged unexplained cash credit in respect of share application money. The assessee argued that this amount represented an opening balance of share premium from earlier years and there was no new receipt or increase in share capital during the assessment year.

What were the issues?

Whether an addition under Section 68 can be made for share premium when there is no increase in the share capital or premium account during the relevant year. Whether the CIT(A) erred by not considering the merits of the case and focusing on the assessee's compliance before the AO.

Which sections of the Income-tax Act were involved?

Section 68,Section 143(3),Section 144,Section 250(6)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, “G” BENCH, MUMBAI

Before: SMT BEENA PILLAI, JM & SHRI ARUN KHODPIA, AM

For Appellant: Shri Shreyansh Shah, Advocate &, Ms. Anjali Sahu
For Respondent: Shri Dr. Raghvendra P
Hearing: 11.02.2026Pronounced: 30.04.2026

आयकरअपीलीयअधिकरणन्यायपीठम ुंबईमें। IN THE INCOME TAX APPELLATE TRIBUNAL “G” BENCH, MUMBAI BEFORE SMT BEENA PILLAI, JM & SHRI ARUN KHODPIA, AM I.T.A. No.6519/Mum/2025 (Assessment Year: 2016-17) Shivkripa Merchantile Private ACIT, Circle 1 (3)(1) Limited 540, Ayakar Bhawan, M.K.Road 28, B-406, Sunrise Lokhandwala Mumbai-400020 Vs. Complex, Andheri(W), Mumbai- 400053 PAN: AALCS0156R Assessee- अपीलार्थी / Appellant Revenue -प्रत्यर्थी/ Respondent :

Assessee by : Shri Shreyansh Shah, Advocate & Ms. Anjali Sahu Revenue by : Shri Dr. Raghvendra P. Chambolkar – Sr. DR Date of Hearing : 11.02.2026 Date of Pronouncement : 30.04.2026

O R D E R Per Arun Khodpia, AM: This appeal of the assessee is directed against the order of Commissioner of Income Tax Appeals/ National Faceless Appeal Centre, Delhi [“the Ld. CIT(A)] dated 10.08.2026 for the assessment year 2016-17, arises from the order u/s 143(3) of the Income Tax Act, 1961 (“the Act”) dated 13.12.2018, passed by Asst. Commissioner of Income Tax – Circle 1(3)(1), Mumbai. The ground of appeal are as under:

ITA No. 4419/Mum/2025 Sameer Magan Bhujbal

1.

That on the facts and circumstances of the case and in law, the Learned Commissioner of Income Tax (Appeals) ("Learned CIT(A)) has erred in confirming the additions of Rs.1,38,30,000/- made under Section 68 of the Income Tax Act 1961 as unexplained cash credit in respect of the alleged share application money without properly appreciating the Written Submissions, evidences, explanations and material placed on the record by the Appellant. 2. That the Learned CIT(A) has erred in confirming the addition of Rs.1,38,30,000/- without appreciating that the Impugned amount represented the opening balance of share premium received in Financial Year 2009-2010 duly reflected in the audited accounts of the Appellant and therefore, no addition under Section 68 of the Act could have been made in the impugned Assessment Year. 3. That the Learned CIT(A) has erred in holding that the Assessment Order made under Section 143(3) of the Act despite the fact that the non- compliance was on account of non-service / non- receipt of the statutory notices allegedly issued to the Appellant Company which deprived the Appellant of a reasonable opportunity of being heard, thereby violating the principles of natural justice. 4. That the Learned CIT(A) has not considered the audited balance sheets available on the records of the department which clearly establish the fact that the share premium was received in the earlier years and duly disclosed to the revenue thereby rendering the addition wholly unjustified. 5. That the Learned CIT(A) has erred in sustaining the additions merely for want of Written Submissions or further evidences ignoring that the onus stood discharged once the audited accounts reflecting the share premium as opening balance were on record 6. That the order of the Learned CIT(A) suffers from non-application of mind, arbitrariness and violation of mandate of Section 250(6) of the Act which requires the CIT Appeal to state the points for determination, decisions thereon and the reasons for the decisions. 7. That the addition sustained by the Learned CIT(A) is wholly unsustainable as it amounts to taxing a capital receipt reflected in the audited annual accounts since Financial Year 2009- 2010 which is impermissible in law. 2

ITA No. 4419/Mum/2025 Sameer Magan Bhujbal 8. The Appellant craves leave to add and/or amend and/or delete and/or modify and/or alter aforesaid grounds of appeal as and when the occasion demands.

2.

Brief Facts: The assessee is a private limited company. Selected for scrutiny assessment for the relevant for the reason of the large share application / capital / premium received. Notices under section 143(2) and 142(1) were issued. Primarily the assessee had submitted certain information and authorized representative of assessee attended the office of ld. AO. Further inquiries made by the AO were not responded to by the assessee, accordingly, the assessment was completed under section 144 of the Act. An audition on Section 68 was made for Rs. 1,38,30,000/- on account of large share money application received by the assessee during the year under consideration.

3.

Aggrieved by the aforesaid addition, assessee preferred an appeal before the Ld. CIT(A), because it's no success, as the appeal of assessee has been dismissed by the Ld. CIT(A).

4.

Being dissatisfied, the assessee is in appeal before this Tribunal in the instant case.

5.

At the outset, learned Authorized Representative of the assessee (Ld. AR), Submitted that the genesis of the aforesaid sole addition itself was factually incorrect, as there was no addition to the share capital of the assessee or the share premium account during the relevant year. It is explained that the opening as well 3

ITA No. 4419/Mum/2025 Sameer Magan Bhujbal as closing balance of both these accounts in the audited final accounts of the assessee were same, therefore the addition made was uncalled for and arbitrary. To establish the afforded contention, ld. AR drew our attention to the audited financials of the assessee for the relevant assessment year as well as earlier assessment years. On perusal of the audited balance sheet of the assessee for year ended 31st March 2016, at note number 2 (page 39 of APB), the security premium was shown at Rs. 1,38,3000/- as at 31st March 2015 as well as 31st March 2016. Further, Ld. AR took us to the audited balance sheets of the assessee for FY 2010- 11(AY 2011-12) (PB Pg 53), showing some increase in the share capital as well as the security premium. However, no increase has been noticed as per audited financials of the assessee in FY 2011-12 (AY 2012-13) and FY 2014-15 (AY 2015- 16) (Pb Pg 72 & 93). It was the submission that since there was no increase in the share capital of the assessee company or Security Premium Account during the year under consideration, no addition under Section 68 or any explanation on behalf of the assessee to explain the reason for increase or the source of such increase was called for, therefore, the addition made was unwarranted and without basis. It was the prayer that on the basis of facts on record, the addition made under section 68 of the Act by the Ld. AO and confirmed by the ld. CIT(A) is liable to be struck down.

ITA No. 4419/Mum/2025 Sameer Magan Bhujbal 6. Per contra, the ld. Sr. DR, representing the revenue, vehemently supported the orders of the revenue authorities and submitted that the necessary information or explanations were not furnished by the assessee before the AO.

7 We have considered the rival submissions, where we reached the material available on record and contentions raised by both the parties before us. Admittedly, in the present case, the addition was made requiring the assessee to establish the nature and source of transaction, along with 3 main ingredients i.e. Identity, creditworthiness of the investors and genuineness of the transaction for the purpose of an addition under section 68 of the Act, which as per AO, the assessee had not properly explained before him. Ld. CIT(A), before whom, the assessee clarified that the genesis of the addition made by the AO, itself is missing, as there was no increase in the share capital account of the assessee during the relevant year, assessee furnished details of share premium for FY 2010-11 to 2015- 16, stating that there was on enhancement in share premium a/c in all these preceding years as well as in the relevant year. However, Ld. CIT dismissed the appeal of assessee, observing about the opportunities granted by the ld. AO, but not complied by the assessee. Ld. CIT(A) without considering the main contention of the assessee that there was no increase in the share premium nor a transaction undertaken, as alleged during the relevant year, then how an addition can be made only on the basis that assessee’s dissatisfactory response before the Ld. AO. We find that such action of ld. CIT(A) was not in accordance of the mandate of law

ITA No. 4419/Mum/2025 Sameer Magan Bhujbal and settled principles. The Ld. CIT(A), ought to have considered the issue on merits instead of deciding it on the conduct of assessee before Ld. AO. Further, since there was no transaction of addition to share capital, receipt of share application money and share premium during the relevant year as emanating from the copies of audited final accounts, the addition on the basis of such misconceived observation, against the facts on record would be liable to be deleted. We, thus, set aside the order of Ld. CIT(A) and direct the AO to delete the addition subject to factual verification of the copies of audited accounts presented before us.

8.

In result the appeal of assessee stands allowed, in terms of our aforesaid observations.

Order pronounced in the open court on 30 -04-2026.

Sd/- Sd/- (BEENA PILLAI) (ARUN KHODPIA) Judicial Member Accountant Member

Mumbai, Dated : 30-04-2026. ZU, PS

Copy of the Order forwarded to : 1. The Appellant 2. The Respondent 3. DR, ITAT, Mumbai 4. Guard File 5. CIT

ITA No. 4419/Mum/2025 Sameer Magan Bhujbal

BY ORDER,

(Dy./Asstt. Registrar) ITAT, Mumbai

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