DIAMOND DEALTRADE LIMITED,KOLKATA vs. ITO, WARD-12(1), KOL, KOLKATA

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ITA 457/KOL/2023Status: DisposedITAT Kolkata22 April 2026AY 2018-1916 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 assessee had satisfied the conditions of Section 68 by proving the identity, creditworthiness, and genuineness of the transactions for the share subscribers and their sources. Therefore, the addition made by the AO was not sustainable.

What were the facts?

The assessee company raised ₹81 crores as share capital/premium. The Assessing Officer (AO) treated this as unexplained cash credit under Section 68 and made an addition. The assessee provided evidence of share subscribers being group companies, including ITRs, audited accounts, and bank statements.

What were the issues?

Whether the share capital/premium raised by the assessee constituted unexplained cash credit under Section 68 of the Income Tax Act, 1961, and if the assessee had provided sufficient evidence to prove the identity, creditworthiness, and genuineness of the transactions and their sources.

Which sections of the Income-tax Act were involved?

Section 68

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, “D” BENCH, KOLKATA

For Appellant: Shri Sunil Surana, AR
For Respondent: Shri Sanat Kumar Raha, DR
Hearing: 15.04.2026Pronounced: 22.04.2026

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 13.09.2023 for the AY 2018-19.

2.

The only issue raised by the assessee in ground no.5 to 8 is against the confirmation of addition of ₹81 crores by the Ld. CIT (A) as made by the Ld. AO on account of share capital/ share premium by treating the same as unexplained cash credit u/s 68 of the Act.

4.

In the appellate proceedings, the assessee furnished before the Ld. CIT (A) all the evidences qua six share subscribers, who happen to be Group Companies of the assessee. The assessee furnished before the Ld. CIT (A) the copies of ITRs, copies of master data, audited accounts, tax audited reports, confirmations on source of investments, bank statements, etc. in respect of the subscribers which were duly admitted by the Ld. CIT (A) and remitted to the Ld. AO for doing verification and for submission of the remand report. Thereafter, the Ld. CIT (A) issued several reminders as many as five times however remand report was not submitted by the AO. The Ld. CIT (A) thereafter by referring to the Covid Period , and after considering and also placing reliance on Principle of Natural Justice accepted the plea under rule 46A of the Act and disposed of the appeal of the assessee on merit. The Ld. CIT (A) noted that the assessee is a company related to the Jindal Group of

5.

The Ld. CIT (A) noted that the assessee is engaged in the business of investment in shares, securities and financing activities. The Ld. CIT (A) noted that the assessee has issued 8.10 lacs equity shares to 6 parties for a total consideration of ₹81 lacs. The Ld. CIT (A) noted that the shares were issued at face value. Thereafter, the Ld. CIT (A) in para no. 8.1 noted that the assessee has not replied the show notice dated 16.02.2023 and finally dismissed the appeal by observing and holding as under:-

“9.1 In response to the above notice also, appellant could not make any further submissions giving details of supporting arithmetic workings involving detailed cash flow statements for the entire year as applicable to these parties and as reconcilable to comprehensive bank statements of these parties for the entire period of 01.04.2017 to 31.03.2018 so as to adduce the fund movements as genuine as reflected at the end of F.Y 31.03.2018, of these investing parties/sourcing parties/sub-sourcing parties; as explainable by duly bringing out ultimate source having brought to tax/assessed in such final entity as claimed by the appellant. In fact, instead of giving these finer details as called for as needed, appellant again reiterated the earlier general submissions based on which specific details were called for proper reconciliation of source of these investments of Rs.81crores as brought into appellant's books during this A.Y as explainable as contended by the appellant. Hence, this consistent and repeated failures of appellant in adducing the finer details of evidences as called for in notices dated 16.02.2023 and again in 24.2.2023 clearly establishes that appellant has nothing more to justify of the broad and vague claims made thereby, it proves that appellant has failed in fulfillment of cardinal principles of identity, creditworthiness and genuineness of transactions as indeed explainable collectively and cumulatively as per the provisions of I.T Act in explaining such assessed unexplained cash credit as brought into the books of appellant by the A.O for this A.Y. 10. Hence, appellant's mere repetition of same submissions again and again, in the same analogy without adducing the creditworthiness and genuineness of such sources as available with such ultimate sourcing parties and as transferred through layering by various related concerns of the appellant, that too during the fag end of the year as analysed above, clearly distinguishes the unexplainable character of appellant's submissions without further supporting proofs as needed to explain the same. Considering appellant's consistent failure, originally in submitting the

7.

It is undisputed that the assessee is a group company of Jindal Group which is a very big corporate house. We note that share Capital of ₹ 81 Crores were raised from 6 companies who were sister concerns of the appellant at face value of Rs. 10/- per share. We note that the board resolution is enclosed in paper book at page 44. We also note that there was no premium element involved in the iossuance of shares and details of the allottees are annexed in paper book page 52. We note that complete details as to identity and creditworthiness of the shareholders and genuineness of the transactions were filed before the lower authorities as annexed in paper book which are discussed subscriberwise in the following paras.

8.

We have examined the documents filed by the assessee in respect of M/S Brahmadev Holding & Trading Ltd which subscribed ₹ 8.10 crores.We note the director of the company Radheshyam Gupta is common director in both the appellant company as well as subscriber company as is evident from the company Master data at page 55 of the paper book. The entire shareholding in the company is of Jindal group as is evident from the shareholders list forming part of the balance sheet at page 67 of the paper book. The company is Active Complaint company. The company is having Net worth of more than ₹ 61 crores as is evident from balance sheet vide paper book page no. 61. We note that the entire capital was invested with other group companies as is evident from Schedule 7 of the audited accounts. We note that the source of investment by

9.

As regards the second subscriber M/S Global Jindal Finance & Investment Ltd which subscribed ₹ 8.10 crores as share capital in the assessee company, we note that the entire shareholding in the company is of Jindal group as is evident from the shareholders list forming part of the balance sheet at page no 182 of the paper book. The company is active complaint company as per MCA Master data available at page no. 166 of the paper book. The company is having Net worth of more than ₹ 46 crores as is evident from balance sheet available at paper book page no. 173. The source of investment by the subscriber company in the appellant company has been certified to be out of refund of loan of Rs. 13 crores from Crishpark Vincom (P) Ltd as per document avaialbe at paper book page no.187 corroborated with the bank statement available in paper book at page no. 188. The loan agreement between Global Jindal Finance & Investment Ltd and CrishparkVinmcom Ltd at page no. 189. The loan confirmation is at page no. 191. The company is Active Complaint company as is evident from MCA Master data at page 120. Hence the source of source is proved. Further the third layer source of Crishpark Vincom Ltd was receipt of loan of Rs. 13 crores from Jindal Global Finance & Investment Ltd as is evident from the bank statement of Crishpark Vincom Ltd at page 192. The loan agreement between CrishparkVinmcom Ltd and Jindal Global Finance & Investment Ltd is at page 155 along with loan confirmation at page 157. Further the fourth layer source of Jindal Global Ltd-was-funds received

10.

The third subscriber M/S Jindal Pipes Ltd had subscribed ₹ 8.10 crores. We note that the the directors of the subscriber company and assessee company are common as is evident from the company Master data at page 212. The company returned huge income of more than Rs. 107 crores as is evident from I.T.R acknowledgement at page 198 and paid huge taxes of more than Rs. 38 crores. The company is Active Complaint company. The company is having Net worth of more than ₹ 416 crores as is evident from balance sheet available at paper book page no. 221. Further the source of investment in the appellant company by the subscriber has been certified to be out of receipt of ICD of Rs. 15 crores from Maharashtra Seamless Ltd as is evident from page no. 271. The copy of the relevant page of the bank statement is attached in paper book page 272. The assessment of Jindal Pipes Ltd has been completed u/s 143(3) and the assessment order is at paper book page no. 755. We note that the second layer company i.e Maharashtra Seamless Ltd is again of Jindal Group company. The company returned huge income of more than Rs. 234 crores

11.

The forth subscriber M/S Sudha Apparels Ltd had subscribed ₹8.1 crores. Again this is a group company of Jindal Group as is evident from the company Master data at page no.375. The company returned huge income of more than Rs. 17 crores as is evident from 1.T.R. acknowledgement at page 353 and paid huge taxes of more than Rs. 5 crores. The company is Active Complaint company as per MCA records. The company is having Net worth of more than ₹ 290 crores as is evident from balance sheet vide paper book page 362. The source of investment by the subscriber in the appellant company has been certified by it in paper book page 377 which was out of refund of loan of Rs. 13 crores from Sigma Infrastructure Pvt Ltd. The copy of the relevant page of the bank statement is attached in paper book page 381. The assessment of Sudha Apparels Ltd. has been completed u/s 143(3) and the assessment order is available at paper book page 770. The loan agreement between Sudha Apparels Ltd and Sigma Infrastructure (P) Ltd is at page no. 406. The loan confirmation is at page 408- 409. The second layer company Sigma Infrastructure Pvt Ltd is again of Jindal Group as is evident from the shareholding pattern of

12.

The Fifth subscriber M/S Stable Trading Co Ltd had subscribed ₹ 8.1 crores. : The directors of the company and the assessee are common as is evident from the company Master data at page 459. The company is Active Complaint company as per MCA records. The company is having Net worth of more than ₹ 190 crores as is evident from balance sheet available at paper book page 442. The source of investment in the appellant company has been certified by the subscriber at paper book page no. 461 which was out of receipt of loan of Rs. 11 crores from SparlerkDealcom Ltd. The copy of the relevant page of the bank statement is attached in paper book page 462. The loan agreement between Stable Trading

13.

M/S Darpan Dealcom Ltd is the sixth subscriber which had subscribed ₹ 40.50 crores. The director of the company Nandkishor Toshniwal is common director with the appellant company and the company is of Jindal Group as is evident from the company Master data at page 533 and the shareholder list at page 547. The company is Active Complaint company as per MCA records. The company raised Rs. 40.5 crores as share capital during the year which has been invested in the appellant company as is evident from balance sheet vide paper book page 541. The source of investment in the appellant company has been certified by the subscriber at paper book page 552. The copy of the relevant page

14.

Considering the factual matrix as elaborated and discussed above are of the considered view that the provisions of section 68 of the Act has wrongly been invoked. Consequently, we set aside the appellate order passed by the ld. CIT(A0 and direct the AO to delete the addition.

15.

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

Order pronounced in the open court on 22.04.2026.

Sd/- Sd/- (PRADIP KUMAR CHOUBEY) (RAJESH KUMAR) (JUDICIAL MEMBER) (ACCOUNTANT MEMBER) Kolkata, Dated: 22.04.2026 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//

Asst. Registrar Income Tax Appellate Tribunal, Kolkata

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