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Facts
The assessee, Adhira Vincom Private Limited, filed a return declaring nil income for AY 2012-13. During scrutiny, the AO added ₹5.00 crores as unexplained cash credit under Section 68, representing share capital/premium received. This addition was confirmed by the Ld. CIT(A) in the original assessment proceedings. Subsequently, a search action under Section 132 led to a reassessment under Section 153A, replicating the same addition, but the CIT(A) allowed the appeal against the 153A proceedings on a legal issue. The current appeal concerns the addition made in the original assessment confirmed by the Ld. CIT(A).
Held
The Tribunal set aside the order of the Ld. CIT(A) and directed the AO to delete the addition of ₹5.00 crores. It was held that the assessee had furnished all necessary evidences proving the identity, creditworthiness, and genuineness of the share transactions, and the AO failed to point out any defect or conduct further inquiry. The non-compliance with summons for personal appearance under Section 131 was deemed insignificant when complete documentation was provided.
Key Issues
Whether the addition of share capital/premium as unexplained cash credit under Section 68 was justified when the assessee provided comprehensive documentation, and whether non-appearance of investors in response to summons under Section 131 can be the sole basis for disallowing the claim.
Sections Cited
68, 143(2), 142(1), 133(6), 131, 143(3), 132, 153A, 56
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Income Tax Appellate Tribunal, “A” BENCH, KOLKATA
This is an appeal preferred by the assessee against the order of the Commissioner of Income-tax (Appeals), Patna(hereinafter referred to as the “Ld. CIT(A)”] dated 05.03.2024 for the AY 2012-13.
The issue raised by the assessee in ground no.1 is against the confirmation of addition of ₹5.00 crores by the ld. CIT (A) as made by the ld. AO u/s 68 of the Act in respect of share capital/ share premium received by the assessee company during the year. The ground no.2,3 and 5 are in support of ground no.1.
The facts in brief are that the assessee filed the return of income on 29.09.2012, declaring total income at ₹nil. Subsequently, the case of
After hearing the rival contentions and perusing the materials available on record, we find that the undisputed facts are that the assessment in this case was framed u/s 143(3) of the Act vide order dated 21.03.2015, wherein the addition of ₹5.00 crores was made u/s 68 of the Act as unexplained cash credit. The said order was challenged before the ld. CIT (A) and the ld. CIT (A) disposed off the appeal vide order dated 05.03.2024, confirming the addition and the said order of ld. CIT (A) is under challenge before us. We further note that during the pendency of the appeal before the ld. CIT (A) on 20.09.2015 a search action u/s 132 of the Act was conducted upon the assessee and proceedings u/s 153A of the Act were initiated for the year under consideration. Accordingly, the assessment was framed by the ld. AO u/s 153A/ 143(3) of the Act vide order dated 28.12.2017, replicating the same addition to the income of the assessee. The said order also travelled to the first appellate authority and the ld. CIT (A) vide order dated 05.03.2024 allowed the appeal of the assessee on legal issue challenging the proceedings u/s 153A of (i) CIT Vs. Orissa Corporation Pvt. Ltd. (1986) 159 ITR 78 (SC);
(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.
The Ld. D.R strongly controverted and opposed the arguments as put forth by the Ld. A.R by submitting that the share application money was received by the assessee from various subscribers who were not having any creditworthiness. The Ld. D.R submitted that replying to the notices u/s 133(6) and u/s 131 of the Act did not mean that the ingredients as envisaged in section 68 of the Act were duly satisfied. Besides the ld DR stated that the enquiries and investigation could not be carried out by the AO when the subscribers did not appear personally in compliance to summons issued u/s 131 of the Act. Therefore the Ld. D.R ,therefore, submitted that the addition was rightly made by the AO and also confirmed by the Ld. CIT(A) after taking into account the reply of the assessee and the various circumstantial evidences.
We note that in the original assessment proceedings, the notices were issued u/s 133(6) of the Act to all the investors which were duly complied and replied and are available in the assessment folder as noted by the ld. AO in Para no.1 even in the proceedings u/s 153A of the Act. The assessee filed all the documents qua the investors comprising the names addresses, PANs, ITRs, audited financials, confirmations, bank statements, etc. before the ld. AO who has not pointed out any defect or deficiency in the said evidences filed by the “‘In the absence of any such finding, it is held that the order passed by the Assessing Officer was utterly perverse and rightly interfered by the Commissioner (Appeals). The Tribunal re-appreciated the factual position and agreed with the Commissioner (Appeals). The Tribunal apart from taking into consideration, the legal effect of the statement of AKA also took note of the fact that the notices which were issued by the Assessing Officer under section 133(6) to the lenders where duly acknowledged and all the lenders confirmed the loan transactions by filing the documents which were placed before the tribunal in the form of a paper book. These materials were available on the file of the Assessing Officer and there is no discussion on this aspect. Thus, the tribunal rightly dismissed the appeal filed by the revenue. [Para 5]’ 09. We note that even in the proceedings u/s 153A of the Act, the subscriber replied to the notices issued u/s 133(6) of the Act which are available from page no.35 to 62 of the Paper Book. Therefore, the additions as sustained by the ld. CIT (A) cannot be sustained. Moreover, the addition cannot be made on the basis that summon u/s “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 assessee’s. 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 could be arrived at, no question of law as such arose. The High Court was right in refusing to state a case.”
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 “8. We have heard the submissions of the learned D.R, who relied on the order of AO. The learned counsel for the assessee relied on the order of Ld. CIT(A) and further drew our attention to the decision of Hon’ble Allahabad High Court in the case of CIT vs. Raj Kumar Agarwal vide dated 17.11.2009 wherein the Hon’ble Allahabad High Court took a view that non- production of the director of a Public Limited Company which is regularly assessed to Income tax having PAN, on the ground that the identity of the investor is not proved cannot be sustained. Attention was also to the similar
In the instant case before us also, the assessee has furnished all the evidences proving identity and creditworthiness of the investors and genuineness of the transactions but AO has not commented on these evidences filed by the assessee. Besides the investors have also furnished complete details/evidences before the AO which proved the identity , creditworthiness of investors and genuineness of the transactions. Under these facts and circumstances and considering underlying facts in the light of ratio laid down in the decisions as
In the result, the appeal of the assessee is allowed.
Order pronounced in the open court on 11.11.2025.