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Facts
For AY 2012-13, the assessee, an NBFC, faced additions of ₹77.96 crores under Section 68 for share capital and premium, with lower authorities alleging a failure to prove identity, creditworthiness, and genuineness of investors. For AY 2014-15, 2015-16, and 2016-17, reassessment proceedings were initiated under Section 148/148A, leading to additions of ₹3.88 crores for unexplained cash credit (AY 2014-15) and ₹1.13 crores for bogus accommodation entries (AY 2016-17), which the assessee challenged as time-barred.
Held
For AY 2012-13, the Tribunal held that the assessee had discharged its onus under Section 68 by providing all necessary documents and proving the identity, creditworthiness, and genuineness of the share subscribers, directing deletion of the addition. For AY 2014-15, 2015-16, and 2016-17, the Tribunal found the reassessment notices issued under Section 148/148A to be time-barred under the pre-01.04.2021 regime (for AY 2014-15) and for exceeding the three-year limitation period where the income escapement was below ₹50 lakhs (for AY 2016-17), thereby quashing the reassessment proceedings for these years.
Key Issues
1. Whether additions under Section 68 for share capital and premium are justified if the assessee proves the identity, creditworthiness, and genuineness of the investors and transactions. 2. Whether reassessment proceedings initiated under Section 148/148A are time-barred due to statutory limitation periods or thresholds for income escapement.
Sections Cited
68, 131, 133(6), 139(1), 142(1), 143(2), 143(3), 144B, 147, 148, 148A, 149, 263
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, “D” BENCH, KOLKATA
Before: SHRI RAJESH KUMAR, AM & SHRIGEORGE MATHAN, JM
At the outset, we note that there is a delay of 44 days in filing the appeals for which condonation petition along with affidavits were filed. The reasons stated for the delay in fling these appeals were that the counsel was not aware of the Tribunal matters and therefore, did not advise assessee to prefer the appeal before the Tribunal against the order of ld. CIT (A). It is only subsequently in the first week of May 2025, that some other taxation matter was discussed with some other
3. Having considered the reasons attributable to the late filing the appeals, we are of the considered opinion that the delay is for bonafide and genuine reasons and therefore, the delay is condoned and appeals are admitted for adjudication.
04. At the time of hearing, the ld. Counsel for the assessee pressed the issue raised in ground no.5 to 7, 9 and 10, which are extracted as under: - “5. For that on the facts of the case, the A.O. has complied with the direction of Pr. CIT'S Order u/s. 263 dated 27.09.2016 by calling upon all the directors of the shareholders companies which is mentioned in the assessment order u/s. 263/143(3) dated 29.12.2017, therefore, the whole addition u/s. 68 amounting to Rs.77,96,70,000/- is completely arbitrary, unjustified and illegal.
6. For that on the facts of the case, the Ld. CIT(A) was wrong in not considering the facts that the directors of allottee shareholders companies appeared on different dates against summons u/s. 131 and their statements have been recorded and all the evidences with paper books regard to the receipt of the share application money as well as the source thereof was explained and kept on record after due perusal and examination mentioned in the assessment order, as such the finding of Ld. CIT(A) is completely arbitrary, unjustified and illegal.
For that on the facts of the case, the Ld. CIT(A) was not justified in confirming the addition of Rs.77,96,70,000/- on account of share application money with premium by wrongly treating the same as unexplained cash credit u/s 68 which is completely arbitrary, unjustified and illegal.
9. For that on the facts of the case, the Ld. CIT(A) ought to have considered that the assessee company had discharged its onus by furnishing all the relevant documents in connection with the share capital raised and also proved the identity, creditworthiness of the share application and genuineness of transactions, thus his action is completely arbitrary, unjustified and illegal.
10. For that the issue relating to the raising of share capital is concluded in favour of the assessee by the judgment of the Hon'ble Supreme Court in the
The ld. AO called upon the assessee to prove the identity, creditworthiness of the transactions and genuineness of the transactions by various details/ evidences. The A.O. also issued notices u/s 133(6) to share applicants contributing share capital including share premium of Rs.77,96,70,000/- . All the shareholders subscriptions had submitted their replies along with evidences. Copies of the same are available in the paper book from page no. 1 to 3459 in the paper book. Thus, the 34 share applicants had filed the ITR acknowledgement, Final accounts and bank statement, along with other details at the time of assessment proceedings, which proves that the transactions are genuine and investor had creditworthiness to
7. The aggrieved assessee filed an appeal before the ld. CIT (A) against the order of ld. AO which was also dismissed by the first appellate authority after taking into account the submission and contention of the assessee. The ld. CIT (A) noted that the assessee has received the share subscription from 34 parties/ private entities aggregating to ₹78,66,70,000/-. In Para no.6.2.1, the ld. CIT (A) extracted the details of investments/ subscription received by the assessee and noted that assessee submitted all the documents before the ld. AO as well as before the ld. CIT (A). However, the ld. CIT (A) noted that assessee has failed to justify the high share premium. The ld. CIT (A) even noted that the ld. AO had issues summon to the subscribers and recorded a statement of the directors of the subscribing companies but despite that he ld. AO made addition on the ground that creditworthiness of the investing companies were questionnaire and shares were issued at a abnormal high price. The ld. CIT (A) also noted that the investors company were received funds from some other companies and thus providing to the assessee company without
“6.2.12. In view of the aforesaid judicial pronouncements as well as the discussions held above, it can be inferred that the assessee has failed to discharge its initial burden to establish the creditworthiness and genuineness of the transaction in support of the said share capital of Rs.77,96,70,000/-. It is a settled law that whether any sum credited in the accounts of the assessee through banking channel or not and whether any investment confirmation from such share subscribing entities is present on record or not, the "onus" to prove
The ld. AR also submitted that the summons u/s 131 of the Act were also issued during the assessment proceedings, which were duly served upon the share subscribers and the share subscriber duly complied with the summons u/s 131 of the Act and therefore, the identity of the subscribers cannot be doubted and even statements of the subscribers were recorded. The ld. AR submitted even if there is a non-compliance u/s 133(6) of the Act/ 131 of the Act, which is not the case before the Tribunal no adverse inference can be drawn. The ld. AR relied on the following decisions: - “(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.”
The ld. AR also referred to the chart showing the full details as to investor demonstrating the amounts invested by them, statement recorded u/s 131 of the Act and assessments, framed u/s 143(3)/ 143(1) of the Act. The ld. AR submitted that the share applicant duly
The ld. AR also submitted that the assessee company has proved the source of funds of the subscribers and the theory of investigating the source to source is not applicable to the instant A.Y. 2012-13. The ld. AR submitted the provision of Section 68 of the Act prior to amendment by Finance Act, 2012, with effect from 01.04.2013 does
The ld. DR on the other hand relied heavily on the order of ld. AO as well as the ld. CIT (A). The ld. DR vehemently controverting the argument as presented by the ld. AR submitted that the ld. AO has carried out a very detailed inquiry and recorded categorical finding that these companies were not having any creditworthiness to make the investments in the assessee company as these were not having any operating income and even the fixed assets which makes it clear that these were in fact bogus/ shell companies and investments were
We have heard the rival contentions and perused the records carefully as placed before us. The Assessee was incorporated on 28/03/1996. The assessee had issued 71,15,670 equity shares, out of these 64,00,000 shares were issued as Right share to the existing shareholders while remaining 7,15,670 were issued by other parties during the year under consideration.
Sl No. Name of the share applicants Amount (Rs) 1. Amarlaxmi Deal Trade pvt. ltd. 3,20,00,000 2. Baghbaan deal trade pvt. Ltd. 3,20,00,000 3. Accurate Shoppers Pvt. Ltd. 2,79,80,000 4. Active Dealmark Pvt. Ltd. 85,00,000 5. Anita Promoters Pvt. ltd. 5000000
We note that during the assessment proceedings the assessee had filed before the all the details as called for comprising the followings:
“1. Confirmation of accounts having description of source of investment. 2. Copy of ITR filing acknowledgment. 3. Audited financials of subscribers 4. List of Investment of subscriber companies 5. Extract of bank statement of subscribers. 6. Latest master Data as downloaded from Ministry of Corporate Affairs. 7. Signatory Details of subscriber companies”
‘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 b y the revenue. [Para 5]’ 016. We also note from perusal of assessment order that, the summons issued u/s 131 of the Act during assessment proceedings were also served upon the share subscribers. Thus, it is evident that the share subscribers were existing at their respective addresses. Thus, notices u/s 133(6) as well as summons u/s 131 of the Act were duly served upon them. In view of this fact identity of share subscribers cannot be doubted. In our opinion upon non-compliance of notices u/s 133(6)/ summons u/s 131 of the Act, no adverse inference can be drawn. Reliance was placed on the decision of Hon'ble Delhi High Court in the case of CIT v. Kamdhenu Steel & Alloys Ltd. [2012] 19 taxmann.com 26/206 Taxman 254/[2019] 361 ITR 22, wherein the Hon'ble Court
The Assessee relied on the decision of the Hon’ble Supreme Court in the case of Orissa Corporation 159 ITR 360 which was followed by the Hon'ble Gujarat High Court, in the case of Dy. CIT v. Rohini Builders [2002] 256 ITR 360 /[2003] 127 Taxman 523, wherein it was held when the assessee furnishes names and addresses of the alleged creditors and the GIR numbers, the burden shifts to the Department to establish the Revenue's case and in order to sustain the addition the Revenue has to pursue the enquiry and to establish the lack of creditworthiness and mere non-compliance of summons issued by the Assessing Officer under section 131, by the alleged creditors will not be sufficient to draw and adverse inference against the assessee. in the case of six creditors who appeared before the Assessing Officer and whose statements were recorded by the Assessing Officer, they have admitted having advanced loans to the assessee by account payee cheques and in case the Assessing Officer was not satisfied with the cash amount deposited by those creditors in their bank accounts, the proper course would have been to make assessments in the cases of those creditors by treating the cash deposits in their bank accounts as unexplained investments of those creditors under section 69.
Similarly, the Hon'ble Calcutta High Court in the case of Crystal Networks (P.) Ltd. v. CIT [2013] 35 taxmann.com 432/353 ITR 171 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. That Hon’ble Calcutta High Court in the case of Pr. CIT vs. M/s. Naina Distributors Pvt. Ltd. [ITAT /113/2023 & IA No. GA/1/2023] has held ‘that non-appearance of the director cannot be made a ground for addition in the hands of the assessee under Section 68 of the Act
Further the assessee has duly furnished all the evidences necessary to substantiate creditworthiness and genuineness of transactions, i.e., for discharge of onus cast upon it u/s 68 of the Act as is evident from Page-2 in the assessment order, which is extracted as under:-
‘Shri Mukesh Gupta, FCA and AR appeared from time to time and the relevant aspects of the return and the issue involved were discussed and explained ,. The documents/particulars requisitions by the notice u/s. 142(1) of the I.T. Act and the statement of accounts and explanations requisitioned during the course of proceedings were produced/submitted which were examined and verified with the statement of accounts filed with the details available in the return of income other account statements filed/furnished vis-à-vis the relevant issues of the case.’ 021. It is noteworthy that the Ld. AO in the order passed has not found any deficiency in the submissions made and evidences furnished by the assessee. The details of 78,12,670 equity shares issued of Rs.10/- each at a premium of Rs. 190/- to 34 shareholders , details money invested , documents furnished , their statements recorded u/s 131 of the Act and status of their assessments are tabulated below:-
SL. NAME OF THE SHARE AMOUNT(Rs) Documents Statement Assessment N0. APPLICANTS filed in recorded u/s. made paper 131 in Paper book Book 1. AMARLAXMI DEALTRADE 3,20,00,000.00 88-277 Face value 143(3) PVT LTD 2. BAGHBAAN DEALTRADE 3,20,00,000.00 278-445 Face Value 143(3) PVT LTD 3. ACCURATE SHOPPERS PVT 2,79,80,000.00 446 to 642 3431 to 3433 143(3) LTD 4. ACTIVE DEALMARK PVT 85,00,000.00 643 to 710 3406 to 3408 143(3) LTD 026. At the time of hearing the ld. Counsel for the assessee pressed ground no.2,3 and 4 which are extracted as under-
The facts in brief are that the assessee filed the return of income on 30.11.2014, declaring total income at ₹5,24,996/-. Thereafter, the case of the assessee was reopened by issuing notice u/s 148 of the Act on 30.07.2022, which was not complied with by the assessee. Thereafter, the notice u/s 142(1) of the Act along with questionnaire were issued and in response, the assessee filed the return of income on 14.02.2023. Thereafter, notice u/s 143(2) dated 14.02.2023, was issued to the assessee to file documentary evidences, which was replied by the assessee. The learned AO noted that the assessee has received money of ₹3,88,29,138/- from certain entities which were found to be struck off by the ROC. The learned AO noted that these companies have neither any fixed nor claimed any expenses under various heads of expenditure and thereafter, they are shell companies. Finally, the learned AO treated the money credited in the
In the appellate proceedings, the learned CIT (A) affirmed the order of the learned AO on merit, however, the issue of notice u/s 148 being time barred was not raised and thus, not adjudicated by the learned Commissioner of Income-tax (Appeals).
After hearing the rival contentions and perusing the materials available on record, we find that the assessment in this case was framed u/s 143(3) of the Act vide order dated 31.12.2016. Thereafter, the notice u/s 148 of the Act was issued on 28.04.2021 and ITR was filed on 07.05.2021. Thereafter, the assessee filed the objection on the validity of notice issued u/s 148 of the Act, challenging the same on the various grounds. The assessee submitted that in Para no.2 that the new scheme of reassessment has come in place with effect from 01.04.2021, therefore was any reopening notice u/s 148 of the Act on or after 01.04.2021, has to be in accordance with the new provisions of Section 148 and 148A of the Act. The assessee requested the ld. AO to drop the proceedings immediately. Thereafter, the learned AO issued notice u/s 148A(b) of the Act on 31.12.2022, which were replied by the assessee by uploading the submission on online portal on 01.07.2021. The order u/s 148A(d) of the Act was passed on 30.07.2022 and the notice u/s 148 of the Act, was issued u/s 30.07.2022. We find that {Taxation and Other Laws [Relaxation and Amendment of Certain Provisions] Act} TOLA is not applicable. In the present case as has been admitted in the case of Union of India and other Vs. Rajeev Bansal [2024] 469 ITR 46 (SC), dated 03.10.2024. Therefore, the notice u/s 148 of the Act dated 30.07.2022, is barred by limitation and so is the assessment framed consequently u/s 143(3)/ 147 of the Act. We note that as per the Section 149(1) of the
As we have already quashed the assessment, other grounds raised by the assessee is the memorandum of appeal are not being adjudicated at this stage.
The appeal of the assessee in for A.Y. 2014- 15 is allowed on legal issue.
033. The issue raised in this appeal is similar to one as decided by us in for A.Y. 2014-15. Accordingly, our decision would, mutatis mutandis, apply to this appeal of assessee in ITA No. 1037/KOL/2025 for A.Y. 2015-16 as well. Hence, the appeal of the assessee is allowed.
034. At the time of hearing, the ld. Counsel for the assessee pressed ground no.2,3,4 which are extracted below: - “2. For that on the facts of the case, the Ld CIT(A) erred in confirming the order of the A.O. when notice u/s. 148 dated 29.07.2022 was barred by limitation, notice u/s. 148A(b) having been initiated after 6 years from the assessment year, the assessment year in question was not covered by TOLA and as admitted by the Ld ASG in the case of Rajeev Bansal (SC) and so held in the said judgement.
For that on the facts of the case, the impugned order is at best capable of being classified as a case of mere change of opinion, and the 148 notice issued on 29.07.2022 after a lapse of 6 years, although the original assessment made u/s. 143(3) on 28.12.2017 and all the material facts disclosed truly and fully
The learned Authorized Representative vehemently submitted before us that the notice u/s 148 of the Act is hopelessly barred by limitation on the ground that in the order passed u/s 148A(d) of the Act dated 30.07.2022, the learned AO came to the conclusion that escapement is ₹21,78,610/- which is apparently below ₹50 lacs and therefore, barred by limitation in terms of provisions of section 149(1)(9) of the Act. Consequently, the notice issued u/s 148B and all other consequential proceedings are bad in law. In defence of his arguments the ld. Counsel for the assessee relied on the decision of Delhi High Court in case of Ganesh Dass Khanna vs. Income-tax Officer [2024] 460 ITR 546 (Delhi) dated 10-11-2023. The learned Authorized Representative also relied on the decision of Hon'ble Madrass High Court in case of Mrs. Thulasidass Prabavathi vs. Income-tax Officer [2025] 174 taxmann.com 508 (Madras) in WP no. 19010 of 2022 and 18331 and 18332 of 2022 dated 24.01.2025. The ld. Counsel for the assessee therefore prayed that the notice u/s 148 of the Act as well as the assessment framed is barred by limitation as in terms of section 149(1)(a) of the Act which provides that the reopening could be made beyond three years but not more than 10 years if the escapement amounts to or likely to amount to ₹50 lacs or more. Meaning thereby that in case of clause (a) to 149(1) of the Act, the reopening could be made within a period of three years of the income escaped was noted by AO is less than ₹50 lacs but in the present case the income escaped as per the AO was ₹21,78,610/-. Therefore, the reopening of assessment is barred by limitation. The case of the assessee find support from the decision of Delhi High Court in case of Ganesh Dass Khanna vs. ITO (supra) as well as Madras High Court in case of Mrs.
As we have already quashed the assessment, other grounds raised by the assessee hence not been adjudicated at this stage.
The appeal of the assessee in for A.Y. 2016-17 is allowed on legal issue.
In the result, the appeals of the assessee are partly allowed.
Order pronounced in the open court on 16.10.2025.