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Facts
The assessee, Namrata Dealmark Private Limited, filed a return of income that was selected for scrutiny. During the assessment under Section 143(3), the Assessing Officer added Rs. 1,95,00,000/- as unexplained cash credit under Section 68 for share premium, citing poor financials and the non-appearance of directors summoned under Section 131. The CIT(A) confirmed this addition, and the assessee appealed to the ITAT but did not appear for hearings.
Held
The ITAT, after hearing the Ld. DR and reviewing the lower authorities' orders and cited case laws, found no merit in the assessee's appeal. It held that the charging of a high share premium despite poor financials and the non-appearance of directors before the Ld. AO were fatal to the assessee's case, concluding that Section 68 provisions were correctly applied.
Key Issues
Whether the addition of share premium as unexplained cash credit under Section 68 of the Income Tax Act was justified given the assessee's poor financials and the non-appearance of its directors for verification, and whether the CIT(A) erred in dismissing the appeal without due process.
Sections Cited
250, 68, 46A, 143(2), 142(1), 131, 143(3)
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, “A” BENCH, KOLKATA
Appearances by: Assessee represented by : None Department represented by : Bonnie Debbarma, Addl. CIT, Sr. DR Date of concluding the hearing : 23.06.2025 Date of pronouncing the order : 30.06.2025 O R D E R
PER SANJAY AWASTHI, ACCOUNTANT MEMBER
This appeal arises from an order passed by the Ld. Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi dated 08.01.2024, u/s 250 of the Income Tax Act, 1961 (hereafter “the Act”).
1.1 In this case, it is seen that the appeal has been fixed on as many as four occasions but none have appeared on behalf of the assessee. Accordingly, this matter is being disposed of with the help of Ld. DR.
Being aggrieved, the assessee has approached the ITAT with the following grounds:
“1. That the Ld. Commissioner of Income Tax (Appeal), NFAC, Delhi erred in passing an order dated 8th of January, 2024 under section 250 of the Income Tax Act, 1961 Namrata Dealmark Pvt. Ltd. dismissing the appeal of the Appellant without considering the submission and allowing reasonable opportunity of being heard.
2. That the Ld. Commissioner of Income Tax (Appeal), NFAC, Dellu erred in confirming the addition of Rs 1,95,00,000/-made by the Assessing Officer under section 68 of the Income Tax Act, 1961 on irrelevant considerations and arbitrary grounds.
3. That the Ld. Commissioner of Income Tax (Appeal), NFAC, Delhi erred in confirming the addition of Rs 1,95,00,000/-made by the Assessing Officer under section 68 of the Income Tax Act, 1961 on the basis of judgments which are distinguishable on facts as well as on law 4. That the Ld. Commissioner of Income Tax (Appeal), NFAC erred in confirming the addition of share capital including share premium of Rs. 1,95,00,000/-made under section 68 of the Income Tax Act, 1961 in disregard of the binding judgments of Hon'ble Apex Court, Hon'ble Jurisdictional High Court and the Hon'ble Jurisdictional ITAT which directly lays down ratio on the merits of the addition of share capital and share premium under section 68 of the Income Tax Act, 1961 5. That the Ld. Commissioner of Income Tax (Appeal), NFAC erred in dismissing the appeal by passing order under section 250 of the Income Tax Act, 1961 dated 8 of January, 2024 without admitting the petition for additional ground filed u/s 46A of the act filed by the appellant assessee during the course of appellate proceeding.
That the appellant craves leave to add, alter or delete all or any of the grounds of appeal
.”
2. Brief facts of the case are that in the instant case return of Income was filed by the assessee showing income of Rs.7.240/-on 21/01/2013. The case was selected for scrutiny under CASS.
2.1 The notice u/s 143(2) and 142(1) were issued requiring certain details and documents. The assessee complied with the terms of the notice and submitted the said documents. On finding shares being issued at a premium, the Id.AO issued summons u/s 131 to the directors of the company, to verify the genuineness of the subscribers of the shares.
2.2 The Director could not personally attend the hearing on the relevant date before the Assessing Officer. However, the AO completed the assessment u/s 143(3) of the Act by making an addition of the entire amount of the share premium of Rs. 1,95,00,000/- as unexplained cash credit u/s 68 of the Act.
Before us, the Ld. DR pointed out that there was a clear finding of fact in the Ld. AO’s order that a very high share premia was charged by the Namrata Dealmark Pvt. Ltd. assessee even without there being no clear-cut indication as to the future financial prospects of business or even there being a strong balance sheet at present. In fact, the Ld. AO is seen to have dwelt at length on the poor financials of the company. In light of these circumstances, the Directors were summoned for verification. Admittedly, the Directors did not appear before the Ld. AO and thereafter, he proceeded ahead to add Rs. 1,95,00,000/- u/s 68 of the Act.
3.1 Before the Ld. CIT(A) also, the assessee could not succeed since the fact of poor financials and nonappearance of Directors could not be plausibly explained. The Ld. DR relied on the case of BST Infratech Ltd reported in 468 ITR 111 (Calcutta) and the case of Balgopal Merchants reported in 468 ITR 136 (Cal)
We have gone through the orders of authorities below and heard the Ld. DR. We have also perused the judgments in the cases of BST Infratech (supra) and Balgopal Merchants (supra). We find that there are substantial similarities on facts between the present case and the factual issues before the Hon’ble Jurisdictional High Court in the two case laws. Accordingly, we find no merit in the grounds of appeal of the assessee in as much as the fact of high premium on inadequate financials and the nonappearance of the Directors before the Ld. AO would be in, in our opinion, fatal for the assessee’s case and thus, it deserves to be held that the provisions of section 68 of the Act have been correctly applied on the facts of the present case.
In result, the appeal of the assessee is dismissed.
Order pronounced on 30.06.2025