EXCEL FINANCIAL CONSULTANTS (P)LTD.,KOLKATA vs. ITO, KOLKATA

PDF · subscribers
ITA 990/KOL/2023Status: DisposedITAT Kolkata11 November 2025AY 2012-13Bench: SHRI RAJESH KUMAR, AM\nAND\nSHRIPRADIP KUMAR CHOUBEY, JM\nITA No.990/KOL/2023\n(Assessment Year:2012-13)\n\nExcel Financial Consultants P.\nLtd.\nC/o S.N. Ghosh & Associates,\nAdvocates 2, Garstin Place, 2nd\nFloor, Suite No.203, Off hare\nstreet, Kolkata-700001,\nWest Bengal\n(Appellant)\nVs.\nIncome Tax Officer, Ward 5(3)\nAaykar Bhavan, P-7,\nChowringhee Square, Eight\nFloor, Kolkata-700069,\nWest Bengal\n(Respondent)\n\nPAN No. AACCE1409J\n\nAssessee by\nRevenue by\nDate of hearing:\nDa35 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 decided the issue in favour of the assessee. It held that the assessee had discharged its onus under Section 68 of the Income Tax Act, 1961, by providing substantial documentary evidence to establish the identity, creditworthiness, and genuineness of the share capital and share premium transactions. The Tribunal noted that the assessee had furnished details such as PAN, assessment orders, bank statements, and ROC data for the subscribers. The Tribunal found that the AO had not brought on record any evidence to the contrary and had not adequately explained how the overwhelming evidence provided by the assessee fell short of discharging the onus. Crucially, the Tribunal agreed with the assessee's submission that the non-appearance of the directors of the shareholder companies cannot be a sole ground for making an addition under Section 68, citing various High Court and ITAT judgments, including the Delhi High Court in *Pr. CIT vs Hi-Tech Residency (P) Ltd*, where the SLP was dismissed by the Supreme Court. The Tribunal reasoned that when an assessee provides sufficient documentation proving the identity, creditworthiness, and genuineness of the transaction, and the AO fails to conduct proper scrutiny or provide contrary evidence, the addition cannot be sustained. Therefore, the addition made by the AO and confirmed by the CIT(A) was deleted.

What were the facts?

The assessee, Excel Financial Consultants P. Ltd., filed its return of income for Assessment Year 2012-13 declaring a total income of Rs. 6,730/-. The case was selected for scrutiny. The Assessing Officer (AO) issued notices under sections 143(2) and 142(1) of the Income Tax Act, 1961. The assessee provided details and evidences regarding share capital and share premium. The AO also issued summons under section 131 to the directors of shareholder companies, but none appeared personally. The AO concluded that the identity, creditworthiness, and genuineness of the transactions could not be verified. Consequently, the AO treated share capital/share premium of Rs. 25,34,35,603/- as unexplained cash credit and added it to the assessee's income in an assessment framed under section 143(3). The assessee appealed to the National Faceless Appeal Centre (NFAC), Delhi, which confirmed the AO's addition. The assessee is now appealing this order before the ITAT.

What were the issues?

1. Whether the addition of Rs. 25,34,35,603/- made by the AO on account of share capital and share premium is justified, in light of the documents and evidence provided by the assessee to establish the identity, creditworthiness, and genuineness of the subscribers, and whether the non-appearance of directors of shareholder companies is a valid ground for making such addition, as per Section 68 of the Income Tax Act, 1961? Assessee's Contention: The assessee argued that all required details and evidences, including audited balance sheets, bank statements, income tax return acknowledgements, and ROC data, were submitted for all subscribers. It contended that the AO did not adversely comment on these documents and failed to specify how the onus was not discharged. The assessee asserted that the identity of shareholders could not be disputed as they were assessed to tax and had PAN. The genuineness of transactions was proved by account payee cheques and bank statements. The assessee relied on the judgments in *Cygnus Developer Pvt Ltd*, *Rajkumar Agarwala*, *Devendra Kumar Sant*, *Pr. CIT Vs Laxman Industrial Resources Limited* (Delhi High Court), *Pr. CIT vs Hi-Tech Residency (P) Ltd* (Delhi High Court, SLP dismissed by Supreme Court), and *Optical Pvt Ltd* (ITAT Delhi Bench) to argue that non-appearance of directors is not a ground for addition under Section 68. Revenue's Contention: The revenue, through the AO and implicitly supported by the CIT(A)'s order, contended that the identity, creditworthiness, and genuineness of the transactions could not be verified, primarily due to the non-appearance of the directors of the shareholder companies. The revenue's argument is not explicitly detailed in the provided text but is inferred from the AO's actions and the CIT(A)'s confirmation.

Which sections of the Income-tax Act were involved?

Section 68,Section 143(1),Section 143(2),Section 142(1),Section 131,Section 133(6),Section 143(3)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, “A” BENCH, KOLKATA

Before: SHRI RAJESH KUMAR, AM & SHRIPRADIP KUMAR CHOUBEY, JM

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 31.07.2023 for the AY 2012-13.

2.

The only issue raised by the assessee in the various grounds of appeal is against the order of ld. CIT(A) confirming the addition as med by the AO in respect of share CapitaLand share premium.

3.

The facts in brief are that assessee filed its Return of Income for the Assessment Year 2012-13 on 30.11.2012 declaring total income of Rs. 6,730/-. Return was duly processed u/s 143(1) of the I.T. Act,

4.

Aggrieved assessee preferred an appeal before the ld. CIT (A). The ld. CIT (A) dismissed the appeal of the assessee after taking into consideration the arguments and written submissions filed during the course of assessment proceedings. The ld. CIT (A) extracted the written submission of the assessee from para 5.2 page 7 to 25 of the appellate order. However, the ld. CIT(A) in the operative part wrongly mentioned the facts in relation to the unsecured loans raised by the assessee which is totally wrong and factually incorrect because the issue involved is as regards share capital/share premium. The written submission of the assessee are as under: - “5.2. SUBMISSION: -During the appellate proceedings, the appellant has furnished following written submission through e-filing portal dated 15.12.2022.

It is submitted that the assessee has duly discharged its onus of proof of cash credit; the onus was shifted on the department by prima facie proving that the money has flown from the share applicants, they are identifiable, duly assessed to tax and in their assessment the aforesaid share capital contribution was accepted. On the issue there are number of judgments. The facts of the case are similar to the recently decided cases namely CIT Vs. Gangeshwari Metal Pvt. Ltd. reported in 361 ITR Page 10, (Delhi). It was held that where the Assessee in support of transaction of receipt of share application money brought on record various documents such as name and addresses of the share applicants, their confirmatory letters, PAN No. etc., the said transaction is to be considered as genuine as the assessee has furnished all the documents to prove the identity of the shareholders and also the genuineness of the transaction by showing the entries in the books through account payee cheques addition cannot be made. (wherein Nova Promoters on behalf of the department was also cited) Lalpura Construction (P) Ltd. Rajasthan High Court ((2014 Tax Pub (DT) 393) decided on 25.2.2013, Nipuan Auto P Ltd., reported in 361 ITR 155 Matrix Export Holdings P Ltd., 2014 (Tax Pub (DT) 3169. The appellant also refers to the following judgments: - In the case of CIT v. Divine Leasing and Finance Ltd. 299 ITR 268 it washeld that since the entire gamut of case law as on that date was visited, we may initiate our discussion by taking note of this case. In this case, the Court highlighted the menace of conversion of unaccounted money through the masquerade or such channels of investment in the share capital of a company and thus stressed upon the duty of the Revenue to firmly curb the same. It was also observed that, in 6.1 On the first issue in question, AO has made disallowance u/s 14A of the Act,even though no exempt income is earned during the year under consideration. Recently, Hon'ble Delhi High Court has given decision on this issue in the case of Pr. CIT (Central)-2 Vs. M/s Era Infrastructure (India) Ltd.

&CM APPL.31445/2022 Dated 20.07.2022 giving relief to assessee; relevant portion of which is reproduced as under: "4. Learned counsel for the petitioner also submits that in view of theamendment made by the Finance Act, 2022 to Section 14A of the Act byinserting a non obstante clause and an explanation after the proviso, achange in law has been brought about and consequently, the judgmentsrelied upon by the authorities below including PCIT vs. IL&FS Energy Development Company Ltd (supra) are no longer good law. The amendmentto Section 14A of the Act is reproduced hereinbelow:- "Amendment of section 14A. In section 14A of the Income-tax Act, (i) CIT Vs. Orissa Corporation Pvt. Ltd. (1986) 159 ITR 78 (SC); (ii) CIT Vs. Orchid Industries Ltd. 397 ITR 136 (Bom); (iii) Crystal Networks Pvt. Ltd. Vs. CIT 353 ITR 171 (Kol); (iv) ITO Vs. M/s. Cygnus Developers India Pvt. Ltd.(ITA No. 282/Kol/2012) and (v) Joy Consolidated Pvt. Ltd. Vs. ITO (ITA No. 547/Kol/2020.

8.

After hearing the rival contentions and perusing the materials available on record, we find that during the year the assessee has issued shares to 17 share applicants consisting of six individuals/ HUFs and 11 bodies corporates. The shares were issued at a face value of 10 each at a premium of ₹990/-. The assessee raised by way of share capital/ share premium by issuing 2,52,390 equity shares comprising of ₹25,23,900/- as share capital and ₹24,98,66,100/- by way of share premium. In all, the assessee issue 2,52,390/-equity shares thereby realizing ₹25,23,90,000/- from subscription of equity shares. The ld. AO during the course of assessment proceedings required the assessee to furnish the evidences/ documents qua the share subscribers proving identity, creditworthiness of the creditors and genuineness of the transactions, which were accordingly furnished by the assessee comprising the names, addresses, ITRs ,certificates of

9.

We have perused the appellate order and find that the ld. CIT (A) in para no.5.2 from page no.7 to 25 where the ld CIT(A) extracted the submissions of the assessee noting in the appellate order the facts qua the each and every subscribers from para no.6.3 till 6.11. We note that the ld. CIT (A) from para no.6.3 at page no.30 to para no.6.11 at page no.41, passed a detailed order dismissing the appeal of the assessee but to our great surprise the ld. CIT (A) in Para no.6.5 discussed the 11 parties which are different from the share

10.

On the next date of hearing, the case was heard from both the sides at length and all the evidences placed on record were examined minutely. We find that in this case the assessee has file all the evidences qua the share subscribers as stated hereinabove before the authorities below and the ld. AO has not pointed out any defect or deficiency in the same except the fact that the subscribers did not attend the office of the ld. AO personally in compliance to summons issued u/s 131 of the Act and therefore, the identity, genuineness of the transactions could not be verified. In our opinion, the order passed by the ld. AO making the addition merely for the ground that the summons was not complied with is not sufficient ground to make addition especially when the assessee as well as subscribers furnished all the evidences and no enquiry was carried out by the AO nor defect in the documents furnished were pointed out. Therefore, the addition made cannot be sustained.

11.

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

Order pronounced in the open court on 11.11.2025.

More judgments on Section 68

All 29,931 judgments and leading authorities on Section 68 →

Recent GST High Court judgments

Search GST case law →