A K CONSTRUCTIONS PVT. LTD.,,KOLKATA vs. ITO, WARD 4(3), KOLKATA,, 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.1818/KOL/2026 Assessment Year:(2012-13) M/s A. K. Constructions Pvt. Ltd., ITO, 32, Ezra Street, 4th Floor, Kolkata – Vs. Ward – 4(3), 700001, West Bengal Kolkata [PAN:AACCA2817L] (Appellant) .. (Respondent) Appellant by : Shri Sushil Surana, AR Respondent by: Shri Raman Garg, CIT-DR Date of Hearing 29.09.2026 Date of Pronouncement 29.10.2026 O R D E R PER RAJESH KUMAR, ACCOUNTANT MEMBER: This appeal preferred by the assessee 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 16.03.2026 for Assessment Year (AY) 2012-13.

ITA No.1818/Kol/2026/A.Y.2012-13 A.K. Constructions Pvt. Ltd. vs. ITO scrutiny under CASS and statutory notices u/s 143(2) and 142(1) of the Act(s) along with questionnaire were issued and served upon the assessee. During the assessment, the assessee claimed to have received huge share premium of Rs.6,95,97,000/-. The assessee complied before the AO by filing details and evidences in respect of 20 subscribers of shares comprising their ITRs confirmations from the subscribers, bank statements, audited financial statements and MCA datas and in some cases assessment orders were passed u/s 143(3) of the Act were also filed. The AO, in order to independently verify the transactions of shares also issued summons u/s 131 of the Act to the share subscribers. However, no one turned up for examination in compliance. The AO noted that the subscribers have very low income and the source of investment was only share premium. Finally, the AO treated the share capital / share premium, as unexplained cash credit and added to the total income of the assessee u/s 143(3) of the Act.

“6.1 The appellant has contended that out of the total amount treated as unexplained cash credit by the Assessing Officer, a substantial portion amounting to Rs.5,97,97,000/- was received in earlier years and only Rs.98,00,000/- was received during the year and the balance amount pertained to earlier yearsreceived in earlier years cannot be added in the year under consideration. 6.2 I have carefully considered this contention. It is a settled principle that an addition u/s 68 can be made only in the year in which the credit appears in the books of account of the assessee. If any portion of the share application money had been received in earlier years and was duly recorded in the books in those years, the same cannot ordinarily be brought to tax again in the year under consideration. However, the burden lies on the assessee to substantiate this claim with proper documentary evidence demonstrating that the said amounts were in fact credited in the books in earlier years and had not been introduced during the relevant previous year. From the assessment order it

ITA No.1818/Kol/2026/A.Y.2012-13 A.K. Constructions Pvt. Ltd. vs. ITO appears that the Assessing Officer has treated the entire amount of Rs.6.95,97,000/- as unexplained without separately verifying the year-wise receipt of share application money. 6.3 The appellant has filed certain details indicating that only Rs.98,00,000/- was received during the relevant previous year from four parties namely Maheshwari Merchants Pvt. Ltd., Bhikshu Barter Pvt. Ltd., Stardox Vinimay Pvt. Ltd. and Ushita Trade and Agencies Ltd., while the balance amount pertained to earlier years. However, even in respect of these parties, the fundamental requirement of establishing the identity, creditworthiness and genuineness of the transactions has not been satisfactorily demonstrated. 6.4 Therefore, even if the contention regarding year-wise receipt is considered, the assessee has not been able to discharge the primary onus cast upon it u/s 68 in respect of the share capital transactions. In view of the deficiencies pointed out by the Assessing Officer and the failure of the investors to appear for examination, the explanation offered by the assessee cannot be accepted. Accordingly, the addition of Rs.6,95,97,000/- made by the Assessing Officer under section 68 is confirmed and Grounds No. 2 and 3 are dismissed. 7. Ground No. 7: This ground relates to initiation of penalty proceedings u/s 271(1)(c) of the Act. Since this ground is merely against the initiation of penalty and not against the levy of penalty itself, the same is premature at this stage. Therefore, this ground does not call for any adjudication. 8. Ground No. 8: This ground relates to levy of interest u/s 234A and 234B of the Income-tax Act. The levy of interest under these sections is mandatory and consequential in nature and has been correctly charged by the Assessing Officer as per law. The Assessing Officer is, however, directed to recompute the interest, if required, while giving effect to this order. 9. Ground No.9: In this ground, the appellant craves leave to add, alter or withdrawand ground/s of appeal on or before hearing of the appeal. However, no such option has been exercised during the course of appellate proceedings. Accordingly. Ground No.9 is dismissed. 10. In the result, the appeal is dismissed.” 5. We have heard rival submissions and perused the materials available on record. We find that in this case the assessee has received share premium from 20 subscribers. The assessee, during the course of assessment proceedings has furnished all the evidences qua the share subscribers as

ITA No.1818/Kol/2026/A.Y.2012-13 A.K. Constructions Pvt. Ltd. vs. ITO stated hereinabove, which are available in the paper book from pages 23 to 488. We note that the assessee even filed details and documents in the form of assessment orders passed u/s 143(3) of the Act in some cases. We note that AO has not carried out any enquiry or investigation into the evidences filed by the assessee and mainly harped on the fact that there was non- compliances to the summons issued u/s 131 of the Act by the subscribers. Therefore, share capital / share premium could not be verified and thus, treated the same as unexplained cash credit and also added to the total income of the assessee. The ld. CIT(A) simply confirmed the order of AO. In our opinion, no addition can be made merely on the ground that non- compliance in respect of summons made u/s 131 of the Act. The assessee filed all evidences/details qua the subscribes. Moreover, no addition can be made in the hands of the assessee that subscribers have low income and investment was made out of the share premium calculated when there was sufficient net worth available to the investment. The case is squarely covered by a series of decisions as discussed below:

 The Hon’ble Calcutta High Court in the case of PCIT vs. Omkar Parivahan Finance Pvt Ltd (ITAT No. 227 of 2024) dated 01.01.2025 has held that, the fact that the networth is much higher than the investments made by the share subscribers, their creditworthiness stands established. The share subscribers are found to have also furnished their bank statements, evidencing the source of payments along with a separate explanation regarding the same. It is observed that none of the lower authorities were able to point out any specific falsity therein. We thus note that the assessee was able to discharge its initial onus of establishing the genuineness of the transactions as well. It is thus noted that the three ingredients laid down in Section 68 of the Act was met by the assessee. 6. It is observed that the ld. AO had laid much emphasis on the non- compliance of summons by the share subscribers to the enquiry being

ITA No.1818/Kol/2026/A.Y.2012-13 A.K. Constructions Pvt. Ltd. vs. ITO conducted after more than seven (7) years from the date of transactions. The ld. AR has rightly relied on the decision of the Hon’ble Calcutta High Court in the case of PCIT vs. Jealous Commercial Private Limited (308 taxman 80) wherein on similar facts, it was held that mere non-appearance of directors before the AO cannot prompt the AO to render a finding that no satisfactory explanation u/s 68 was offered by the assessee. The relevant findings are as follows:

“18. In the facts and circumstances of the present case, the shareholders who applied for the shares in the assessee stands identified. The source of funds stands satisfied. The assessee reflected the entire issue and allotment of shares at a premium in its books of accounts and submitted the same contemporaneously to the statutory authority, namely, Ministry of Corporate Affairs. 19. Before the Assessing Officer, the assessee produced all such relevant materials with regard to the transaction in question. The absence/non- appearance of theDirectors of the assessee before the Assessing Officer would not prompt the Assessing Officer, to render a finding that no explanation within the meaning of Section 68 of the Act of 1961 was offered by the assessee particularly in the factual matrix of the present case. 20. In such circumstances, we do not find any substantial question of law involved for the purpose of consideration by this Court as contended on behalf of the appellant.” 7. We also rely on the decision of the Hon’ble jurisdictional High Court in the case of PCIT vs. Balaka Vinimay Pvt Ltd (GA No. 2 of 2025) dated 21.07.2025. In this case also, the assessee and the share subscribers had furnished all the relevant details in support of the share application monies before the AO. The AO however disbelieved the explanation since there was non-compliance of summons u/s 131 by the directors of the share subscribers. Taking note of the practical difficulty that the assessee cannot be called upon

ITA No.1818/Kol/2026/A.Y.2012-13 A.K. Constructions Pvt. Ltd. vs. ITO to produce the share subscribers after a gap of 10 to 12 years, and having regard to the documents placed on record, the Hon’ble High Court dismissed the Revenue’s appeal and upheld the order of this Tribunal deleting the addition u/s 68 by observing as under:

“…..It is not in dispute that the assessee had filed complete details of each of the shares to prove the identity and creditworthiness of the shareholders and the genuineness of the transactions was proved by producing copies of the confirmation letters, bank statements, audited financial statements, identity proofs, source of funds, investments by the share subscribers in the assessee company, replies which were given to the notice issued under Section 133(6) of the Act and various other details to show that most of the share subscribers have also passed through scrutiny proceedings. These details were placed before the learned Tribunal by way of paper books in three volumes. The learned Tribunal has in extenso referred to the details which have been furnished. Furthermore, the shareholders have responded to the notice under Section 133(6) of the Act directly to the Assessing Officer and their respective assessment orders framed under Sections 147/143(3) of the Act were also placed before the Assessing Officer as well as before the learned Tribunal. Thus, it is evident that the assessee has produced all the documents before the Assessing Officer not once but twice and the authority except indicating a theory of routine entries of paper companies/shell companies, no discrepancies had been pointed out in the financials of the alleged cash creditors. Furthermore, all the share subscribers are private limited companies duly registered with the Ministry of Corporate Affairs and have been furnishing the audited financial statements in the portal of the Ministry. That apart, the share subscribers have also demonstrated that there was immediate source of funds available in the bank accounts which had been applied for making investments in the equity shares of the assessee company. One more particular important factor which was lost sight of is, that the matter pertains to the financial year 2007-08 and the scrutiny assessment was completed on 27.09.2021. After a gap of 13/14 years, after actual transactions had taken place and final assessment orders had been passed, proceedings was initiated. Thus, the predicament faced by the assessee was taken note by the learned Tribunal and it had observed that it is practically difficult that after a gap of

ITA No.1818/Kol/2026/A.Y.2012-13 A.K. Constructions Pvt. Ltd. vs. ITO 10 to 12 years, the assessee can call for the share subscribers who invested long time before and there is every possibility that the shareholders would have sold their equities and new shareholders would have taken their place. The learned Tribunal referred to the decision of the co-ordinate Bench in the case of True- Man Consultants Pvt. Ltd. vs. ITO in ITA No.1158/Kol/2023, wherein almost identical issue of unexplained share capital from various share subscribers came up for adjudication and after considering the factual aspect and following the judicial pronouncements, the appeal filed by the assessee was allowed by the Tribunal. The revenue preferred an appeal before this Court in ITAT/203/2024 and by order dated 25th April, 2025, the appeal filed by the revenue was dismissed. Thus, we find that the factual issues have been thoroughly adjudicated by the Tribunal apart from noting that the assessee had been put to multiple levels of scrutiny and the assessee was able to bring on record documents in support of their claim. Therefore, we are of the view that the addition made under Section 68 of the Act was rightly ordered to be deleted. For the above reasons, we find no ground to interfere with the order passed by the learned Tribunal. Accordingly, the appeal fails and the same is dismissed. The substantial questions of law are answered against the revenue.” 8. The case of the assessee is also supported by the decision of the Hon’ble Calcutta High Court in the case of PCIT vs. Bright Commodeal Pvt Ltd (ITAT No. 162 of 2025) dated 28.08.2025, wherein, it was held as under:

“We have perused the reasons assigned by the learned Tribunal for allowing the assessee's appeal. It is seen that the assessing officer issued notice under Section 133 (6) of the Act to the investing companies and both the parties have complied with the said notice and furnished the requisite details. Summons under Section 131 of the Act was issued to the Director of the assessee company to be personally present and also to produce the Directors of the investing company for examination of genuineness of the transaction, identity and creditworthiness of the lenders. The Tribunal noted that the Directors appeared pursuant to the summons but the assessing officer wrongly recorded that the Directors of the assessee company failed to appear in

ITA No.1818/Kol/2026/A.Y.2012-13 A.K. Constructions Pvt. Ltd. vs. ITO response to the summons issued under 131 of the Act. Furthermore, the Tribunal examined the factual position and noted that the assessee has filed evidences as called for by the assessing officer in respect of the assessee as well as the investing companies. The evidences filed comprised of income tax returns, audited balance sheet, profit and loss account, audited report, bank statement and master data in respect of each of the subscribers. Furthermore, both the parties have submitted their reply pursuant to the notice issued under Section 133(6) of the Act. After noting these facts, the Learned Tribunal held that the assessing officer as well as the CIT(A) did not cause any verification or conduct any enquiry into the evidences which were filed by the assessee and merely harped on non- compliance of the summons issued under Section 131 of the Act, which is factually incorrect. Learned Tribunal placed reliance on the decision of the Hon'ble Supreme Court in CIT -Vs- Orissa Corporation Ltd. (1986) 159 ITR 78 (SC) as well as the decision of this Court in Crystal Networks Pvt. Ltd. -Vs- CIT, (353) ITR 171 (Cal). The Tribunal also noted the decision of the Co-ordinate Bench in the case of ITO -Vs- M/S Cygnus Developers India Pvt. Ltd. (ITA/282/Kol/2012) wherein the factual position was also similar to that of the case of the assessee. Thus, we find that the facts have been examined by the Tribunal and the conclusion has been arrived at and therefore, no question of law, much less substantial questions of law, arises for consideration in this appeal.” 9. In so far as the analysis of the assessee’s return of income undertaken by the ld. AO is concerned, we are of the view that the same was of no relevance to ascertain the identity, creditworthiness and genuineness of the investors. In the instant case before us, the assessee has furnished all the evidences proving identity and creditworthiness of the investors and genuineness of the transactions but ld. AO has not commented on these evidences filed by the assessee. Besides the investors have also furnished complete details/evidences before the ld. AO which proved the identity, creditworthiness of investors and genuineness of the transactions. The case of the assessee is found to be supported by a series of decisions of Hon'ble

ITA No.1818/Kol/2026/A.Y.2012-13 A.K. Constructions Pvt. Ltd. vs. ITO Calcutta High Court namely, PCIT v. Ambe Tex Fab (India) (P.) Ltd (173 taxmann.com 392), PCIT v. Delta Dealers (P.) Ltd (173 taxmann.com 911), PCIT v. Goodview Marketing Pvt Ltd (ITAT No. 114 of 2024), PCIT v. Rajshree Integrated Cold Chain Pvt Ltd (ITAT No. 286 of 2024), PCIT v. True Man Consultants Pvt Ltd (ITAT No. 203 of 2024), PCIT v. Hirak Vyapaar Pvt Ltd (ITAT No. 242 of 2023), PCIT v. One Point Commercial (P.) Ltd (478 ITR 183) and PCIT v. Mainak Suppliers Pvt Ltd (ITAT No. 253 of 2023).

The order is pronounced on 29/10/2026.

Sd/- Sd/- (Pradip Kumar Choubey) (Rajesh Kumar) JUDICIAL MEMBER ACCOUTANT MEMBER Kolkata, Dated: 29/10/2026 SAMANTA आदेश �ȧ ĤǓ�ͧ �ͪ �\ Ē ȯͪ��/Copy of the Order forwardedto: 1. \ �Ȣ�ȡ�ȸ/ The Appellant 2. Ĥ×��ȸ/ The Respondent. Ȳ�Ȳͬ��आयकर] �ǕÈ�/ Concerned CIT 3. 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 // MANISH Digitally signed by MANISH KUMAR BHOI KUMAR BHOI Date: 2026.11.02 12:16:27 +05'30' Deputy Registrar, ITAT, Kolkata