SAVERA COMMOTRADE PRIVATE LIMITED,KOLKATA vs. ITO, WARD 5(3),, KOLKATA

ITA 1719/KOL/2025Status: DisposedITAT Kolkata10 February 2026AY 2009-20109 pages
AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that the addition of Rs. 6,99,50,000/- as unexplained cash credit under Section 68 of the Income-tax Act, 1961, was not justified and directed its deletion. The Tribunal found that the assessee had discharged its initial onus by furnishing details of all 20 share subscribers, including their PANs, CINs, and proof of service of notices under Section 133(6). The subscribers were regular income-tax filers, and their financial statements demonstrated sufficient strength to justify their investments, with their net worth being considerably higher than the amounts subscribed. The Tribunal noted that the AO had erroneously observed no compliance from the subscribers, whereas the records showed otherwise. Relying on the decision in PCIT vs. Omkar Parivahan Finance Pvt Ltd, the Tribunal stated that a higher net worth establishes creditworthiness. Furthermore, the Tribunal addressed the non-compliance with summons under Section 131 by directors, citing PCIT vs. Jealous Commercial Private Limited, which held that mere non-appearance of directors before the AO cannot lead to a finding of unsatisfactory explanation under Section 68, especially when other relevant materials are produced. The Tribunal also referred to the Calcutta High Court's decision in PCIT vs. Bright Commodeal Pvt Ltd, which highlighted that the AO and CIT(A) did not verify the evidence filed by the assessee. The Tribunal concluded that the assessee had provided all necessary evidence proving the identity, creditworthiness of investors, and genuineness of the transactions, and the AO had not commented on these evidences. The ratio decidendi is that when an assessee provides substantial evidence for identity, creditworthiness, and genuineness of share transactions, and the AO fails to point out specific falsity or conduct proper verification, the addition under Section 68 is unsustainable, even if there was non-compliance with summons by directors of subscribing entities, especially when the transactions are old.

What were the facts?

The assessee, Savera Commotrade Private Limited, is in appeal before the Income Tax Appellate Tribunal (ITAT) against the order of the National Faceless Appeal Centre, Delhi (CIT(A)) dated 05.06.2025 for Assessment Year 2009-10. The dispute concerns the addition of Rs. 6,99,50,000/- made by the Assessing Officer (AO) and confirmed by the CIT(A) as unexplained cash credit under Section 68 of the Income-tax Act, 1961, representing share capital/premium. The assessee initially filed a return showing a loss. The case was reopened under Section 147. The AO framed an assessment under Section 147/143(3). Subsequently, the Principal Commissioner of Income Tax (PCIT) revised the assessment under Section 263, directing the AO to make a fresh assessment due to inadequate enquiries into the source of share capital. The AO issued notices under Section 142(1) and 133(6) to share subscribers, who provided details. Summons under Section 131 to directors of subscribing companies were not complied with. The AO treated the share capital/premium as unexplained cash credit, which was upheld by the CIT(A).

What were the issues?

1. Whether the addition of Rs. 6,99,50,000/- as unexplained cash credit under Section 68 of the Income-tax Act, 1961, is justified, considering the share capital and premium received by the assessee? Assessee's contentions: - The assessee furnished all details of 20 share subscribers, including names, addresses, PANs, audited balance sheets, profit and loss accounts, audited reports, and bank accounts. - Notices under Section 133(6) were served, and the subscribers were found to exist at their given addresses. - Each subscriber provided information substantiating their identity, creditworthiness, and the source of funds. - The AO erroneously observed no compliance from subscribers, despite evidence to the contrary. - The AO's emphasis on non-compliance with summons under Section 131 by directors of subscribing companies, issued over seven years after the transaction, is misplaced, relying on the principle laid down in PCIT vs. Jealous Commercial Private Limited (308 taxman 80). - The net worth of the subscribers was significantly higher than their investments, establishing their creditworthiness, as per PCIT vs. Omkar Parivahan Finance Pvt Ltd (ITAT No. 227 of 2024). - The AO's analysis of the assessee's return of income was irrelevant to the genuineness of the investors. - The case is supported by numerous decisions of the Hon'ble Calcutta High Court. Revenue's contentions: - The revenue's primary contention, as reflected in the AO's actions and the CIT(A)'s order, is that the genuineness of the share capital/premium transaction could not be proved due to non-compliance with summons by the directors of the subscribing companies and the assessee's perceived lack of future prospects.

Which sections of the Income-tax Act were involved?

Section 68,Section 147,Section 143(3),Section 263,Section 142(1),Section 133(6),Section 131

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, “D” BENCH, KOLKATA

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

For Appellant: Shri Akkal Dudhwewala, AR
For Respondent: Shri V Vidhyadhar, DR
Hearing: 13.01.2026Pronounced: 10.02.2026

Per Rajesh Kumar, AM:

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 05.06.2025 for the AY 2009-10. 2. The only issue raised by the assessee in the various grounds of appeal is against the confirmation of addition of Rs. 6,99,50,000/- by the Id. CIT(A) as made by the Id. AO in respect of share capital / share premium by treating the same as unexplained cash credit u/s 68 of the Income-tax Act, 1961 (hereinafter referred to as the Act).

3.

The facts in brief are that, the assessee has filed the return of

The order continues below.

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