M/S. AKSHARA ABASAN PRIVATE LIMITED,KOLKATA vs. ITO, WARD 2(1), , KOLKATA

The Ld. Counsel for the assessee vehemently submitted before the bench that the order passed by the Ld. CIT(A) is wrong and against the facts on record and various decisions given by different judicial forums. The Ld. AR stated that the assessee raised share capital of Rs.1,24,00,000/- along with premium from two companies namely M/s Newtown Mercantiles Pvt. Ltd. and M/s Positive Vinimay Pvt. Ltd. and the assessee filed the following documents in respect of each share applicants: a. Copy of allotment of shares b. Copy of documents filed by assessee vide letter dated 16.02.2015 in response to summon u/s 131 of the Act c. Copy of form for application of shares. d. Copy of confirmation for application of shares. e. Copy of ITR Acknowledgement f. Copy of Balance Sheet and Profit & Loss Account for the year ended 31st March, 2011. 2 M/s Akshara Abasan Pvt. Ltd g. Copy of resolution passed in the meeting of Board of Directors h. Copy of PAN Card i. Copy of Memorandum and Articles of Association j. Copy of Audited Financial Statements for the year ended 31.03.2012. k. Copy of letter filed on 10.12.2014 in response to notice u/s 133(6) l. Copy of order u/s 143(3) of the I.T. Act, 1961 for the A.Y. 2012-13 dated 29.03.2015. m. Copy of bank statement 5.1 The ld. AR also stated that all the evidences were submitted during the assessment proceedings to prove the identity and creditworthiness of the subscribers as well as genuineness of the transactions. The Ld. AR referred to the replies filed in response to notice u/s. 133(6) of the Act and in response to summons u/s. 131 of the Act to submit that the assessee responded the notices and submitted necessary details as were called for by the Assessing Officer and the Assessing Officer has not pointed out any defect or discrepancy in the evidences furnished by the assessee which clearly proved the three conditions of section 68 of the Act. The Ld. AR stated that where the assessee has filed all the evidences qua the share subscribers consisting of names and addresses, PANs, audited books of accounts, bank statements etc. and the Assessing Officer has not carried out any further verification, then the addition cannot be made merely on the ground that there was no compliance to summon issued u/s. 131 of the Act. The Ld. AR stated that even the information sought by the Assessing Officer in the summons issued u/s. 131 of the Act were duly complied. In defence of his argument, he relied on the following decisions: (i) Pr. CIT vs. Jealous Commercial Pvt. Ltd. Hon'ble Calcutta High Court. ITAT/138/2025 [dt. 28.10.2025] 3 M/s Akshara Abasan Pvt. Ltd ii) Pr. CIT vs. Goodview Marketing Pvt. Ltd. Hon'ble Calcutta High Court. ITAT/114/2025 (iii) CIT Vs. Orissa Corporation Pvt. Ltd. (1986) 159 ITR 78 (SC); (iv) Crystal Networks Pvt. Ltd. Vs. CIT 353 ITR 171 (Kol);

“That in this case the respondent had given the names and addresses of the alleged creditors. It was in the knowledge of the Revenue that the said creditors were income-tax assessees. Their index numbers were in the file of the Revenue. The Revenue, apart from issuing notices under Section 131 at the instance of the respondent, did not pursue the matter further. The Revenue did not examine the source of income of the said alleged creditors to find out whether they were creditworthy. There was no effort made to pursue the so-called alleged creditors. In those circumstances, the respondent could not do anything further. In the premises, if the Tribunal came to the conclusion that the respondent had discharged the burden that lay on it, then it could not be said that such a conclusion was unreasonable or perverse or based on no evidence. I f the conclusion was based on some evidence on which a conclusion 5 M/s Akshara Abasan Pvt. Ltd could be arrived at, no question of law as such arose. The High Court was right in refusing to state a case.” 7.1 The case of the assessee is also squarely covered by the decisions of Hon’ble Calcutta High Court in the case of Crystal Networks Pvt. Ltd. vs. CIT (supra) wherein it has held that where all the evidences were filed by the assessee proving the identity and creditworthiness of the loan transactions , the fact that summon issued were returned un-served or no body complied with them is of little significance to prove the genuineness of the transactions and identity and creditworthiness of the creditors. The relevant portion of the decision is extracted below:

“We find considerable force of the submissions of the learned Counsel for the appellant that the Tribunal has merely noticed that since the summons issued before assessment returned unserved and no one came forward to prove. Therefore it shall be assumed that the assessee failed to prove the existence of the creditors or for that matter creditworthiness. As rightly pointed out by the learned counsel that the Ld. CIT(A) has taken the trouble of examining of all other materials and documents viz., confirmatory statements, invoices, challans and vouchers showing supply of bidi as against the advance. Therefore, the attendance of the witnesses pursuant to the summons issued in our view is not important. The important is to prove as to whether the said cash credit was received as against the future sale of the product of the assessee or note. When it was found by the Ld. CIT(A) on fact having examined the documents that the advance given by the creditors have been established the Tribunal should not have ignored this fact findings. Indeed the Tribunal did not really touch the aforesaid fact finding of the Ld. CIT(A) as rightly pointed out by the learned counsel. The Supreme Court has already stated as to what should be the duty of the learned Tribunal to decide in this situation. In the said judgment noted by us at page 463, the Supreme Court has observed as follows: “The Income-Tax Appellate Tribunals performs a judicial function under the Indian Income-tax Act. It is invested with authority to determine finally all questions of fact. The 6 M/s Akshara Abasan Pvt. Ltd Tribunal must, in deciding an appeal, consider with due care all the material facts and records its findings on all the contentions raised by the assessee and the Commissioner, in the light of the evidence and the relevant law.” The Tribunal must, in deciding an appeal, consider with due care all the material facts and record its findings on all contentions raised by the assessee and the Commissioner, in the light of the evidence and the relevant law. It is also ruled in the said judgment at page 465 that if the Tribunal does not discharge the duty in the manner as above then it shall be assumed the judgment of the Tribunal suffers from manifest infirmity. Taking inspiration from the Supreme Court observation we are constrained to hold in this matter that the Tribunal has not adjudicated upon the case of the assessee in the light of the evidence as found by the Ld. CIT(A). We also found no single word has been spared to up set the fact finding of the Ld. CIT(A) that there are materials to show the cash credit was received from various persons and supply as against cash credit also made. Hence, the judgment and order of the Tribunal is not sustainable. Accordingly, the same is set aside. We restore the judgment and order of the Ld. CIT(A). The appeal is allowed.” 7.2. We find also support from the referred judgment of Hon'ble Calcutta High Court in Pr. CIT vs. Jealous Commercial Pvt. Ltd. (supra), the Hon'ble Calcutta High Court has held as under:

“Section 68 of the Act of 1961 allows the Assessing Officer on his subjective satisfaction arrived at and on the basis of the appreciation of the materials placed before him, to charge the sum credited in the books of the assessee to income tax of the assessee as income of the assessee. In other words, the Assessing Officer is required to assess the explanation given by the assessee after an opportunity is granted to the assessee to offer explanation about the nature and source of the credit shown in the account and once it arrives at a finding that, there is no explanation with regard to the nature and source of the sum involved, treat the same as income of the assessee and charge income tax for the relevant assessment year. There are three provisos to Section 68 of the Act of 1961. The first proviso deals with a loan or borrowing. The second proviso deals with share 7 M/s Akshara Abasan Pvt. Ltd application money and the third proviso speaks about venture capital fund. In the facts and circumstances of the present case, the assessee issued allotted shares at a premium. Therefore, at the highest, the second proviso to Section 68 will come into operation, assuming though not admitting that the first part of Section 68 of the Act of 1961 stands satisfied. In the facts and circumstances of the present case, the consistent finding of the appellate authority and the income tax appellate tribunal is that, the persons who applied for the shares stand identified and that, the assessee offered sufficient explanation about the nature of the transactions in question. In course of hearing before us, the appellant is not in a position to produce any additional or new materials to substantiate that, the concurrent finding of fact by the two authorities, namely, the appellate authority and the income tax tribunal with regard to the explanation offered by the assessee is perverse. In M/s. Naina Distributors Pvt. Ltd. (supra) the co-ordinate Bench, found in the facts and circumstances of that case that, the transaction in share allotment in respect of the assessee concerned, was verified independently and that, independent verification did not render any finding so as to invoke Section 68 of the Act of 1961. 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. Before the Assessing Officer, the assessee produced all such relevant materials with regard to the transaction in question. The absence/non- appearance of the Directors 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 theAct of 1961 was offered by the assessee particularly in the factual matrix of the present case. 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. ITAT/138/2025 along with connected application being IA No.GA/2/2025 stands disposed of accordingly without any order as to costs.”

M/s Akshara Abasan Pvt. Ltd 7.3. Under these facts and circumstances and considering the ratio laid down in the decisions as discussed above, we are inclined to set aside the order of Ld. CIT(A) by directing the AO to delete the addition.