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Facts
The assessee, Aryan Promoters Pvt. Ltd., filed an appeal with a delay of 137 days against a CIT(A) order for AY 2012-13, which had set aside an addition of ₹1,34,00,000/- made by the AO under Section 68 for share application money. The delay was due to the appellate order not being delivered to the specified address but uploaded on the ITBA portal, which escaped the assessee's notice. The original addition by the AO was made ex-parte under Section 144 due to non-compliance by the assessee.
Held
The Tribunal condoned the 137-day delay, finding the reasons genuine and bonafide. It held that the amount of ₹1,21,00,000/- received in earlier assessment years could not be treated as cash credit under Section 68 in the current year. For the ₹13,00,000/- received in the current year, the Tribunal found that the assessee had proved the identity, creditworthiness, and genuineness of the transactions, and thus directed the deletion of both parts of the addition.
Key Issues
1. Whether the delay in filing the appeal should be condoned due to non-delivery of the order. 2. Whether the addition under Section 68 for share application money, including amounts received in prior years and the current year, is sustainable.
Sections Cited
68, 131, 142(1), 143(2), 143(3), 144
AI-generated summary — verify with the full judgment below
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), Kolkata-26(hereinafter referred to as the “Ld. CIT(A)”] dated 23.01.2025 for the AY 2012-13.
At the outset, we observe from the appellate folder that there is a delay of 137 days in 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 portal on 23.01.2025 which has escaped the notice of the staff of the
The assessee ,at the time of hearing, pressed ground no.4, which is against the confirmation of addition of ₹1,34,00,000/- (wrongly mentioned as 13.40 crores) by the ld. CIT (A) as made by the ld. AO u/s 68 of the Act in respect of share application money.
Ground no.1 to 3 are in support of ground no. 4 that the ld. CIT (A) should have decided the appeal instead of setting aside the same to the file of the ld. AO.
The facts in brief are that the assessee filed the return of income on 28.09.2012, which was selected for scrutiny. The statutory notices u/s
In the appellate proceedings, the ld. AO furnished before the ld. CIT (A) all the details/ evidences qua the allotment of shares made of ₹1,34,00,000/- (wrongly stated as 13.40 Cr). The ld. AR submitted before the appellate authority that the assessee has allotted 1,34,000 equity shares of face value of ₹10 each at a premium of ₹90 per share thereby making a total allotment for ₹1,34,00,000/-. The ld. AR also submitted before the ld. CIT (A) that as per the audited balance sheet of the assessee, the total assets/ liabilities were ₹1,35,02,000/-. The ld. AR also furnished before the ld. CIT (A) the bank statement of the assessee. The ld. AR submitted that the substantial part of the money out of which the allotment was made was received during the proceeding assessment year and only 13 lakh out of 1,34,00,000 was received during the year. However, the ld. CIT (A) instead deciding the issue himself restored the issue back to the file of the ld. AO by directing the ld. AO to examine the issue and decide accordingly.
After hearing the rival contentions and perusing the materials available on record, we find that in this case the assessee has allotted equity shares worth of ₹1,34,00,000/- during the year comprising
In our opinion, the provisions of Section 68 of the Act are not applicable to the money which are received in the earlier assessment years and therefore, cannot be brought to tax u/s 68 of the Act as unexplained cash credit. The case of the assessee find support from the decision of Rajasthan High Court in the case of CIT v. Prameshwar Bohra (2008) 301 ITR 404 (Raj), wherein Hon'ble Court held as under:-
“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 “"8. Here, the CIT(A) has deleted the addition of Rs. 15 lacs mainly on the ground that this credit balance of Rs. 15 lacs is being reflected in the accounts of the assessed over the past four to five years or so and hence this was not a fresh credit entry of the previous year underconsideration and these credit entries were already made and accounted for in the assessment years 1995-96 and 1997-98 which were introduced in the form of advance against breeding stallions owned by the assessed and thus these credit entries did not relate to the year under consideration for being considered under Section 68 of the Act.
9. Since it is a finding of fact recorded by the CIT(A) that this credit balance appearing in the accounts of the assessed, does not pertain to the year under consideration, under these circumstances, the Assexsing Officer was not justified in making the impugned addition under Section 68 of the Act and as such no fault can be found with the order of the Tribunal which has endorsed the decision of the CIT(A)."”
Therefore, considering the facts of the assessee’s case in the light of aforesaid decisions , we are of the considered view that the money received in the earlier assessment years cannot be treated as cash credit in the books of the assessee during the year and consequently addition made by the ld. AO is not sustainable in the eyes of law. Accordingly, we set aside the order of ld CIT(A) and the ld. AO is directed to delete the addition.
So far as the money received of ₹13.00 lacs during the year is concerned, we note that the same was received from Sampoorna Merchandise Pvt. Ltd. from whom the application was also received in the earlier years. The assessee furnished before ld. CIT (A) as well as before us the details of money received during the year which clearly established the three ingredients u/s 68 of the Act. We note that the assessee has filed balance sheet, ITR, bank statements, which are
In the result the appeal of the assessee is allowed.
Order pronounced in the open court on 11.11.2025.