MONTROSE COMMODITIES PVT. LTD.,KOLKATA vs. I.T.O., WARD - 4(2), KOLKATA, KOLKATA

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ITA 1124/KOL/2024Status: DisposedITAT Kolkata26 August 2025AY 2012-20134 pages
AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that the assessee had discharged its onus by furnishing all the required documentary evidence to the AO, which was acknowledged in the assessment order. The AO's sole basis for the addition was the non-compliance with summons under Section 131 by the investors, which prevented the recording of their depositions and thus, the verification of their genuineness and creditworthiness. However, the AO did not point out any defect or deficiency in the documents submitted by the assessee. The CIT(A) provided conflicting findings regarding the evidence. The Tribunal found that the addition made merely on the ground of non-compliance with summons, without any adverse comment on the documents filed, was not sustainable. Relying on the precedents cited by the assessee, the Tribunal set aside the order of the CIT(A) and directed the AO to delete the addition. The Tribunal did not expressly leave any issue undecided.

What were the facts?

The assessee, Montrose Commodities Pvt. Ltd., is in appeal against the order of the National Faceless Appeal Centre, Delhi (CIT(A)) dated 30.04.2024 for Assessment Year 2012-13. The appeal challenges the confirmation of an addition of ₹1,58,00,000/- made by the Assessing Officer (AO) under Section 68 of the Income Tax Act, 1961, on account of unexplained credit. The case was selected for scrutiny due to large share premium received. The assessee provided documents including subscriber details, audited accounts, bank statements, and confirmations. The AO made the addition primarily because the assessee did not comply with summons issued under Section 131, preventing the recording of depositions from directors of subscriber companies. The AO did not conduct further inquiry or point out defects in the furnished evidence. The CIT(A) affirmed the AO's order, providing conflicting findings regarding the evidence furnished.

What were the issues?

1. Whether the addition of ₹1,58,00,000/- as unexplained credit under Section 68 of the Income Tax Act, 1961, is justified when the assessee furnished all documentary evidence regarding share capital/premium, and the AO's sole ground for addition was non-compliance with summons under Section 131 by the investors, preventing deposition recording. Assessee's contentions: The assessee argued that all necessary documents proving the identity, creditworthiness of investors, and genuineness of the transactions were furnished to the AO, who acknowledged them. The addition was made solely because summons under Section 131 were not complied with by the investors, preventing their deposition, which is not a valid ground for treating share capital/premium as unexplained money. The assessee relied on decisions in CIT Vs. Orissa Corporation Pvt. Ltd., CIT Vs. Orchid Industries Ltd., Crystal Networks Pvt. Ltd. Vs. CIT, ITO Vs. M/s. Cygnus Developers India Pvt. Ltd., and Joy Consolidated Pvt. Ltd. Vs. ITO. Revenue's contentions: The judgment records no specific contentions for the revenue.

Which sections of the Income-tax Act were involved?

Section 68,Section 131,Section 143(2),Section 142(1)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, “C” BENCH, KOLKATA

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

For Appellant: Shri Siddharth Agarwal, AR
For Respondent: Shri Sandeep Lakra, DR
Hearing: 30.07.2025Pronounced: 26.08.2025

This an appeal preferred by the assessee against the order of the National Faceless Appeal Centre, Delhi [the learned CIT (A)](hereinafter referred to as the “Ld. CIT(A)”] dated 30.04.2024 for the AY 2012-13.

2.

The only issue raised by the assessee is against the confirmation of addition of ₹1,58,00,000/- as made by the ld. AO u/s 68 of the Act on account of unexplained credit.

4.

In the appellate proceedings, the ld. CIT (A) affirmed the order of the ld. AO by giving conflicting and contradictory findings as regards to furnishing of evidences by the assessee when the ld. AO has recorded the finding that the assessee has furnished all the evidences qua the share capital and share premium in respect share subscribers.

5.

After hearing the rival contentions and perusing the materials available on record, we find that in this case, the assessee has furnished all the evidences before the ld. AO and the ld. AO has acknowledged the same in the assessment order. We note that the addition was only made for the reason that there was no compliance to the summons issued u/s 131 of the Act and therefore, deposition of the subscriber companies could not be recorded and consequently, the

6.

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. Under these facts and circumstances and considering underlying facts in the light of ratio laid down in the

7.

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

Order pronounced in the open court on 26.08.2025.

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