SHREE SALASAR INVESTMENTS LIMITED,NARIMAN POINT, MUMBAI vs. INCOME TAX OFFICER - WARD 3(3)(2), MUMBAI

The assessee has taken the following grounds of appeal:- “1.1 The Commissioner of Income Tax (Appeals), National Faceless Appeal Centre [CIT(A)] erred in confirming the action of the AO in making the addition under section 68 of the Income Tax Act, 1961 (Act) to the extent of Rs. 7,30,000/- being share capital received by the Appellant tabulated below for the reason that the creditworthiness of the parties to the extent of addition confirmed by CIT(A) have not been proved by the Appellant:

2 The CIT(A) erred in confirming the above addition, without appreciating that out of total addition made u/s 68 of the Act for Rs. 63,30,000/- by the AO for the subjected year, an amount of 15,82,500/- has been received in the immediately preceding year (i.e. assessment year 2015-16); hence, shall not be added u/s 68 of the Act for the subjected year.

The brief fact of the case is that the assessee is a public limited company and listed in Bombay Stock Exchange. During the financial year 2014-15 relevant to Assessment Year 2015-16, the assesse had issued 30 lakhs fully convertible warrants to promoters and non-promoters on preferential basis at the issue price of Rs.30/- each. The assessee has received 25% of the share allotment amount at the time of issue of share warrants from the subscribers. In respect of two subscribers, viz Ms. Ritu Bansal and Ms. Parul Bansal Invested Rs. 36 lakh and Rs.27,30,000/- respectively, in AYs, 2015-16 and 2016-17, which was found to be ingenuine by the Ld.AO holding it to be lack of creditworthiness and genuineness; therefore, the total amount of Rs.63,30,000/- was added to the total income of the 3 ITA 3486/Mum/2025 Shree Salasar Investments Limited assessee. The aggrieved assesse filed an appeal before the Ld. CIT(A). The Ld.CIT(A) allowed the assessee a reasonable opportunity of hearing and the assessee submitted the explanation related to the investments by the above two subscribers, Ms. Ritu Bansal and Ms. Parul Bansal. The source of investment was duly explained, and the amount was duly received from Mr. Pawan Bansal, who had sufficient creditworthiness for payment to Ms. Ritu Bansal and Ms. Parul Bansal. Accordingly, the Ld.CIT(A) considered the amount received from Ms. Ritu Bansal and Ms. Parul Bansal as genuine and deleted the addition to the extent of Rs. 35 lakhs in respect of Ms. Ritu Bansal and Rs.21 lakhs in respect of Ms. Parul Bansal and sustained the addition to the extent of Rs.7,30,000/-. The aggrieved assessee filed an appeal before the ITAT by challenging the partial relief granted by the Ld.CIT(A).

The Ld.AR filed a paper book containing pages 1 to 47, which is kept on record and argued that the assessee has issued the preferential warrant just before the impugned assessment year, i.e. financial year 2014-15 relevant to A.Y. 2015-16 and 25% of the share allotment amount was paid by the subscribers in financial year 2014-15 relevant to Assessment Year 2015-16. So, Ms. Ritu Bansal paid Rs.9 lakhs and Ms. Parul Bansal paid Rs.6,82,500/- in the immediately preceding assessment year and not the impugned assessment. But the issue was duly placed before the Ld.CIT(A) and before the Ld.AO. But without considering the proper fact, the Ld.CIT(A) partially retained the addition. The Ld.AR invited our attention to the impugned appellate order. The relevant paragraphs 2 to 4 are extracted below:-

4 The AO erred in charging interest of Rs.5,18,4 96/- u/s 2348 of the Act. 3.5 Act. The AO erred in initiating penalty proceeding u/s 271(1)(c) of the I.T. Act 3.6 That the appellant prays for leave to add, alter, amend and/ or vary the ground(s) of appeal at or before the time of hearing. 4. Appeal was initiated online and notice u/s 250 was issued fixing the date for online filling of submissions. Appellant has filed written submission which has been taken into consideration while deciding the appeal.”

The Ld. DR argued in support of the orders passed by the revenue authorities; however, he also confirmed that the revenue has not preferred any cross-appeal against the impugned appellate order.

We have heard the rival submissions and perused the documents available on record. The Ld. CIT(A), after considering the submissions of the assessee, has partly allowed the appeal by deleting the additions to the extent of Rs.35,00,000/- in respect of Ms. Ritu Bansal and Rs.21,00,000/- in respect of Ms. Parul Bansal, while sustaining the addition of Rs.1,00,000/- in the case of Ms. Ritu Bansal and Rs.6,30,000/- in the case of Ms. Parul Bansal, aggregating to Rs.7,30,000/-. The total investment considered was Rs.36,00,000/- for Ms. Ritu Bansal and Rs.27,30,000/- for Ms. Parul Bansal. The Ld. AR contended that the observations of the appellate authority are not correct. It was submitted that 25% of the share allotment amount was duly paid in the immediately preceding assessment year, and the balance was paid during the assessment year under consideration. Therefore, the amounts paid in the preceding year could not have been added in the year under consideration. The Ld. CIT(A) has otherwise observed that both the subscribers had sufficient sources of 7 ITA 3486/Mum/2025 Shree Salasar Investments Limited funds and that the creditworthiness of Shri Pawan Bansal, who advanced the subscription amounts to Ms. Ritu Bansal and Ms. Parul Bansal, was not in doubt. Thus, the identity and creditworthiness were duly substantiated before the Ld. CIT(A), which has been duly recorded in the appellate order. However, since the related transactions spanned two assessment years, the matter was not correctly appreciated by the revenue authorities despite submissions made by the assessee at both stages. The Ld. AR further submitted that the transactions between the assessee and the alleged subscribers were not properly dealt with by the Ld. CIT(A), resulting in partial confirmation of the addition. In our considered view, the matter requires limited verification. We therefore remit the issue to the file of the Ld. AO for the restricted purpose of verifying the investments pertaining to the immediately preceding assessment year, being Rs.9,00,000/- and Rs.6,82,500/- respectively, i.e., 25% of the share allotment amount at the time of issue of share warrants in respect of Ms. Ritu Bansal and Ms. Parul Bansal. We uphold the deletion already made by the Ld. CIT(A). The Ld. AO is accordingly directed to verify the said transactions between the assessee and the subscribers, and if found in proper order, to accept the assessee’s claim.

In the result, the appeal of the assessee bearing ITA No.3486/Mum/2025 is allowed for statistical purpose. Order pronounced in the open court on 03rd day of September 2025. (NARENDRA KUMAR BILLAIYA) JUDICIAL MEMBER Mumbai, िदनांक/Dated: 03/09/2025 Pavanan

अपीलाथ /The Appellant , 2. ितवादी/ The Respondent. 3. आयकर आयु CIT 4. िवभागीय ितिनिध, आय.अपी.अिध., मुंबई/DR, ITAT, JODHPUR 5. गाड फाइल/Guard file.