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Facts
The Revenue filed appeals against the order of the CIT(A) deleting additions made by the AO under Section 68 of the Income Tax Act. The assessee had sold investments amounting to Rs. 11,00,000/- and Rs. 50,00,000/- to two different entities, and the proceeds were received through banking channels. The AO treated these receipts as unexplained cash credits. The CIT(A) deleted the additions, finding the transactions genuine and supported by documentary evidence.
Held
The Tribunal held that the transactions were genuine as they were conducted through banking channels and supported by documentary evidence. The identity, creditworthiness, and genuineness of the parties were not doubted by the Assessing Officer. The investments sold were also accepted in the prior assessment years. Therefore, the addition made under Section 68 was deleted.
Key Issues
Whether the addition made under Section 68 of the Income Tax Act for cash credits from sale of investments is justified when the transactions are supported by documentary evidence and conducted through banking channels.
Sections Cited
68, 148A, 143(2), 142(1), 133(6), 271(1)(c), 234A, 234B
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Income Tax Appellate Tribunal, “D” BENCH, KOLKATA
Before: SHRI RAJESH KUMAR, AM & SHRI PRADIP KUMAR CHOUBEY, JM
These are appeals preferred by the Revenue against the orders of the National Faceless Appeal Centre, Delhi (hereinafter referred to as the “Ld. CIT(A)”] even dated 21.04.2025 for the AYs 2014-15, 2015- 16, 2016-17.
At the outset, we note that the appeals of the assessee are barred by limitation by 4,11 & 18 days in 1505 & 1590/KOL/2025 respectively. At the time of hearing the counsel of the assessee explained the reasons for the delay in filing these appeals. The Ld. D.R did not raise any objection in condoning the delay. After hearing the rival contentions and perusing the materials available on record, we
The common issue raised in all the appeals of Revenue is against the deletion of addition by the ld. CIT (A) as made by the ld. AO u/s 68 of the Income-tax Act, 1961 (the Act). As the facts and circumstances are exactly identical in all the three appeals hence, we will take first for A.Y. 2014-15 as lead case and decide the issue accordingly.
A.Y. 2014- The facts in brief are that the assessee filed the return of income on 30.09.2014, declaring total income at ₹3,280/-. Thereafter, the case of the assessee was reopened by issuing notice u/s 148 of the Income- tax Act, 1961 (the Act) on 28.07.2022, after following the procedure laid down under the Act by passing order u/s 148A(d) of the Act on 28.07.2022, recording the reasons that assessee has received ₹67 lacs from certain entities which has escaped assessment. Accordingly, notice u/s 143(2) and 142(1) along with questionnaire were issued and assessee replied such questionnaire by filing all the details and evidences before the ld. AO. The ld. AO noted that the assessee has received money from other companies and passed on the funds to the beneficiaries, Khetan Tracon P. Ltd. of ₹17,00,000/- and Prateek Plastometals P. Ltd. of ₹50,00,000/-. The ld. AO issued show cause notice on 15.04.2023, calling upon the assessee as to why the said amounts should not be treated as unexplained cash credit and added to the income of the assessee. Finally, the addition was made to the income of the assessee u/s 68 of the Act.
“Ground Nos. 5 to 8: These grounds raised by the appellant relate to the addition of Rs.67,00,000/- made by the AO u/s. 68 of the Act. After careful consideration of the assessment order and the appellant’s submission, it is noticed that during the previous year, the bank account of assessee reflected receipt of Rs. 67 lakhs and AO treated it as unexplained credit and added u/s 68 of the Act. During the year under consideration, i) The appellant disposed of investments amounting to Rs.11,00,000/- to M/s. Khetan Tracon Pvt. Ltd. of Room No. 3A, Ashirwad Appts, 171/12, Roy Bahadur Road, Kolkata – 700034 having PAN: AABCK9871F. It received total Rs.17,00,000 from the said party during the year itself and refunded the balance amount of Rs.6,00,000 (Rs.17,00,000 – Rs. 11,00,000). All the transactions took place through the banking channels only. Also, in response to notice under section 133(6) of the Act, the said Khetan Tracon Pvt. Ltd. officially confirmed the transaction. ii) The appellant disposed of investments amounting to Rs.50,00,000/- to Prateek Plastometals Private Limited of P-64/65, Pagladanga Udyan Industrial Estate, Kolkata – 700015 having PAN: AAECP4953E. It received the total dues of Rs.50,00,000/- from the said party against such disposal. All the transactions took place through the banking channels only. 5.3.1 Firstly, it is pertinent to note that no sum was credited in the name of any party in the books of account of appellant. In fact, the company sold the shares held by it as investment and on receipt of such sale proceeds, Share sales a/c gets credited and bank book gets debited (though the sale proceeds were credited in the bank account of the appellant). This appears as credit in the account statement maintained by the bank. In short, the books of account of appellant was not credited, but debited on account of receipt of sale proceeds of shares. Subsequently, when the appellant company returned the advance through banking channel, only debit entry was made in the name of creditor. Thus, the whole exercise of making addition u/s 68 was a misnomer since no party account was credited in these transactions. Even for the sake of argument, if one considers the application of sec. 68, the three major parameters as per the decisions of various courts are to be considered viz., identity of the creditor, genuineness of transaction and creditworthiness of the party advancing funds. In this case, the appellant company sold the shares and received the sale proceeds from M/s Khetan Tracon Pvt. Ltd. (Rs. 17 lakhs out of which sum of Rs. 6 lakhs received in excess was returned) and from M/s Prateek Plastimetals Pvt. Ltd. (Rs.; 60 lakhs). Assessing Officer has not doubted the identity of these purchasers of shares, their creditworthiness and genuineness of the transactions.
A.Ys. 2015-16 & 2016- The issue raised in these appeals are similar to one as decided by us in for A.Y. 2014-15. Accordingly, our decision would, mutatis mutandis, apply to these appeals of assessee in ITA
In the result, all the three appeals of the Revenue are dismissed.
Order pronounced in the open court on 20.01.2026.