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Facts
The assessee's case for AY 2012-13 involved an addition of ₹2,02,70,000/- under Section 68 for unexplained cash credit related to share capital/premium. A substantial portion (₹1,65,00,000/-) was received in earlier assessment years, while ₹37,70,000/- was received during the current year. The appeal to the ITAT was filed with a delay of 209 days, which the Tribunal condoned after finding the reasons for the delay, primarily concerning delivery of the appellate order, to be genuine and bona fide.
Held
The Tribunal held that Section 68 of the Income Tax Act is not applicable to money received in earlier assessment years. For the ₹37,70,000/- received in the current year from six group companies, the assessee successfully provided sufficient evidence for the identity, creditworthiness of the subscribers, and genuineness of the transactions. Consequently, the Tribunal, relying on High Court precedents, set aside the order of the Ld. CIT(A) and directed the Ld. AO to delete the entire addition.
Key Issues
1. Whether additions under Section 68 can be made for share capital/premium received in earlier assessment years or when identity, creditworthiness, and genuineness are proved. 2. Condonation of delay in filing the appeal due to non-receipt of the appellate order.
Sections Cited
68, 144, 142(1), 153A, 14A
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, “D” BENCH, KOLKATA
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 12.11.2024 for the AY 2012-13.
At the outset, we observe from the appellate folder that there is a delay of 209 days in not filing the appeal of the assessee for which condonation petition along with affidavit was filed.
After hearing the rival contentions and perusing the materials available on record, we find from the record that the appellate order was not delivered at the address specified in from no.35 as communication address, whereas the order was uploaded on ITBA
Ground nos.1 to 3 are in support of ground no.4 while the issue raised in ground no.4 is against the order of ld. CIT (A) confirming the addition of ₹2,02,70,000/- as made by the ld. AO u/s 68 of the Act in respect of share capital/ share premium.
The facts in brief are that the assessee filed the return of income on 29.09.2012, declaring total income at ₹Nil. The case of the assessee
In the appellate proceedings, though the assessee filed all the details before the ld. CIT(A) qua the allotment made during the year amounting to ₹2,02,70,000/-, however, the ld. CIT (A) restored the issue to the file of the ld. AO for examining the evidences and deciding the issue accordingly. The ld. AR submitted before the ld. CIT (A) in the appellate proceedings that the substantial part of the money in respect of current year allotment of shares of ₹1,65,00,000/- was received in the earlier assessment year and only the remaining amount of ₹37,70,000/- was received during the year.
After hearing the rival contentions and perusing the materials available on record, we find that undisputedly the assessee has made allotment of equity shares of ₹2,02,70,000/- on account of share capital/ share premium. We observe from the evidences before us that the substantial part of the money of ₹1,65,00,000/- which formed the part of allotment during the year was received in the earlier assessment year and only ₹37,70,000/- was received during the year. The assessee has furnished all the evidences in the paper book.
“4. On the merit of the additions made in the income of the assessee, there is a clear finding and above which there is no dispute that the amount added in the income of the assessee as unexplained investment or cash credit in the assessment year 1993-94 was the same amount which was credited in the books of account of the assessee for the previous year ending on March 31. 1992. The Tribunal has categorically come to a finding, and that finding is not under challenge, that this is not a case of cash credit entered in the books of account of the assessee during the year but it is a case in which the assessee has invested the capital in the business and this amount was shown as a closing capital as on March 31. 1992, and on April 1. 1992, it was an opening balance. Considering this aspect, the Tribunal has come to the conclusion that what was already credited in the books of account ending on March 31. 1992. for the financial year 1991-92 relevant to the assessment year 1992-93 cannot be an unexplained cash credit or investment in the books of account maintained for the financial year 1992-93, the accounting period of which ends on March 31. 1993, so as to warrant its consideration as unexplained investment or cash credit for its relevant assessment year 1993-94
5. It does not require any elaborate argument that a carried forward amount of the previous year does not become an investment or cash credit generated during the relevant year 1993-94. This alone is sufficient to sustain the order of the Tribunal in deleting the amount of Rs. 1.55,316 from the assessment for the assessment year 1993-94. Since the appeal succeeds on the merits of the assessee's case in respect of the additions made in the income computed on reassessment the validity of notice dated June 17, 1997, need not be gone into,"” 09. Similarly, the Delhi High Court in the case of Commissioner of Income-tax, Delhi-VI vs. Usha Stud Agricultural Farms Ltd. [2008] 301 ITR 384 (Delhi) dated 14-03-2008, has held as under:-
i. Raghu Management Ltd. ₹1,00,000/- ii. Sampoorna Merchandise Pvt. Ltd. ₹1,00,000/- iii. Sri Agro Hinghar Ltd. ₹25,00,000/- iv. Sri Siromani Dealers Pvt. Ltd. ₹3,70,000/- v. Tirumati Merchandise Pvt. Ltd. ₹2,00,000/- vi Varahi Commercial Pvt. Ltd. ₹5,00,000/- ₹37,70,000/-
We note from the above details that the assessee has received ₹37,70,000/- from six parties which are group companies of the assessee. The assessee made detailed submissions before us along with all evidences in respect of said subscriber companies which are extracted as under:-
i. Raghu Management Ltd: The company had invested a sum of Rs.1,00,000/- during the year under appeal. The copy of balance sheet, assessment orders for A.Y.
Therefore, Considering the facts of the assessee in the light of the above decisions , we hold that the share application received in earlier assessment years cannot be added as unexplained cash credit during the year. We also hold that the money received during the year has been fully explained and therefore no addition is called for u/s 68 of the Act. Consequently we are inclined to set aside the order of ld. CIT (A) and direct the ld. AO to delete the addition.
In the result, the appeal of the assessee is allowed.
Order pronounced in the open court on 11.11.2025.