SILKINA COMMODEAL PVT. LTD.,KOLKATA vs. I.T.O., WARD - 3(1), KOLKATA

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ITA 2081/KOL/2025Status: DisposedITAT Kolkata20 January 2026AY 2008-200911 pages
AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that the addition made by the AO merely on the ground of non-compliance with summons for personal appearance was not justified, especially when the assessee had filed all the evidences before the AO and the CIT(A), and no further independent inquiry was carried out by either of them, nor were any defects pointed out in the furnished evidences. The Tribunal noted that in the second round of assessment, the AO did not conduct any independent inquiry to verify the genuineness of the transactions despite the assessee furnishing all details and documents. The Tribunal found that the case was squarely covered by a series of decisions of the Hon'ble Jurisdictional High Court. Therefore, the Tribunal set aside the order of the CIT(A) and directed the AO to delete the addition. The ratio decidendi is that an addition under Section 68 cannot be made solely on the basis of non-compliance with summons if the assessee has provided substantial documentary evidence and no independent verification or specific defects have been identified by the revenue authorities.

What were the facts?

The assessee, Silkina Commodeal Pvt. Ltd., is in appeal against the order of the National Faceless Appeal Centre, Delhi, for Assessment Year 2008-09. The dispute concerns an addition of ₹21,39,80,400 made by the Assessing Officer (AO) under Section 68 of the Income-tax Act, 1961, treating share capital and share premium as unexplained cash credits. The AO's initial assessment was revised under Section 263 by the Principal CIT due to insufficient inquiries. In the fresh assessment, the AO noted that the assessee raised ₹1,78,52,900 as share capital and ₹19,61,27,500 as share premium. Despite the assessee furnishing details like PANs, bank statements, and confirmations, the AO added the amount as unexplained cash credit, primarily citing non-compliance with summons issued under Section 131 to directors and subscribers. The CIT(A) dismissed the assessee's appeal.

What were the issues?

1. Whether the addition of ₹21,39,80,400 as unexplained cash credit under Section 68 of the Income-tax Act, 1961, is justified, considering the assessee's submission of documents and the AO's reliance on non-compliance with summons for personal appearance. Assessee's contentions: The assessee argued that all requisite evidences were furnished to prove the identity, creditworthiness of share applicants, and genuineness of the transactions. The addition made by the AO was without basis and deserved to be deleted. The assessee relied on several decisions of the jurisdictional High Court, including PCIT Vs. Goodview Marketing P Ltd., PCIT Vs. K/s Kunjal Synergies Private Limited, and PCIT Vs. M/s Jealous Commercial Private Limited. Revenue's contentions: The Revenue relied on the orders of the authorities below, submitting that the directors of the assessee company and share subscribers did not appear personally in compliance with summons issued under Section 131. Consequently, necessary verification could not be carried out, and the creditworthiness of the parties could not be judged. Therefore, the addition was rightly made by the AO and confirmed by the CIT(A).

Which sections of the Income-tax Act were involved?

Section 68,Section 143(1),Section 147,Section 148,Section 143(3),Section 263,Section 142(1),Section 133(6),Section 131,Section 69

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, D” BENCH, KOLKATA

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

For Appellant: Shri S.M. Surana, AR
For Respondent: Shri Sanat Kumar Raha, DR
Hearing: 07.01.2026Pronounced: 20.01.2026

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 26.07.2025 for the AY 2008-09.

2.

The only issue raised in the various grounds of appeal is against the confirmation of addition of ₹21,39,80,400/- as made by the Ld. AO in respect of share capital/ share premium treated as unexplained cash credit u/s 68 of the Income-tax Act, 1961 (the Act).

3.

The facts in brief are that the assessee filed the original return of income on 10.02.2010, declaring total income at ₹29,480/- which was processed u/s 143(1) of the Act. The assessee derived income from share dealing and investments during the year. The case of the 3.1. The Ld. PCIT upon perusal of the assessment records observed that the Ld. AO has not made proper enquiries and examination of evidences during the course of assessment proceedings to verify the genuineness and source of capital as well as identity and creditworthiness of the share holders which has rendered the assessment order as erroneous and prejudicial to the interest of the Revenue. Accordingly, the revisionary jurisdiction was invoked. The revisionary order u/s 263 of the Act was passed on 30.03.2013, setting aside the assessment and directing the Ld. AO to make the assessment afresh by taking into account all these directions and making inquiries as directed in the order passed u/s 263 of the Act. The Ld. AO accordingly issued notice u/s 142(1) of the Act along with questionnaire to the assessee asking to furnish certain details and documents in respect of share capital/ share premium. The Ld. AO observed from the balance sheet that the Ld. AO has raised ₹1,78,52,900/- as share capital and ₹19,61,27,500/- as share premium. The assessee furnished before the Ld. AO all the details and evidences comprising names, addresses, PANs, audited accounts, confirmations etc. Besides, the Ld. AO issued notices u/s 133(6) of the Act to the shareholders/ share subscribers beside issuing the summons u/s 131 of the Act to the director of the assessee company as well as these subscribers to appear on 24.03.2014. Thereafter the Ld. AO issued show cause notice on 21.03.2014, giving a show cause as . The Ld. AO finally noted that the identity of the share holders and the assessee could not be

4.

The assessee preferred an appeal before the Ld. CIT (A), who dismissed the appeal after taking into account the submissions and contentions of the assessee by observing and holding as under:-

“5. Discussion and Decision: I carefully considered the submission of the appellant with reference to the impugned assessment order. Also perused and considered the details and documents uploaded by the appellant on ITBA portal during the appellant proceedings. Considered the case laws referred by the appellant and the AO. This appeal emanates from the order passed by the Assessing Officer u/s 143(3)/147/263 of the Income-tax Act, 1961 (hereinafter referred to as "the Act") for A.Y. 2008-09 wherein an addition of Rs. 21,39,80,400/- was made under section 68 on account of unexplained share capital and share premium. The appellant challenged this addition primarily on the ground that all requisite evidences were furnished to prove the identity, creditworthiness of the share applicants and the genuineness of the transaction. 5.1. Ground no. 4 of the appeal is consequential in nature and covered by other grounds of appeal, thus, need not to be discussed and decided separately. 5.2. Ground no. 5 of the appeal has become infructuous as no additional ground of appeal has been filed by the appellant during the appellate proceedings. 5.3.1. Ground no. 1, 2 and 3 of the appeal are against the addition of Rs. Rs.21,39,80,400/- made by the AO u/s 68 of the Act on account of share capital and share premium received by the appellant company in the financial year relevant to the assessment year under reference. Since all these grounds of appeal are interrelated and pertain to different aspects of a single issue, all of them are taken together for discussion and decision. 5.3.2. Section 68 of the Act places the initial onus on the assessee to satisfactorily explain the nature and source of any credit found in its books. In the case of private limited companies, especially those with closely held shareholding structures, the requirement extends to establishing: • The identity of the share applicant; • The creditworthiness of the share applicant, and • The genuineness of the transaction 4.2. The Ld. Authorised Representative submitted that the Ld. AO simply made the addition by treating the share capital/ share premium as undisclosed cash credit (stated in the assessment order) on the ground that the directors did not appear and therefore the assessee has failed to prove the identity of the shareholders and genuineness of the transactions and creditworthiness of the parties. The Ld. Authorised Representative therefore prayed that the addition made by the Ld. AO is without basis and deserved to be deleted. In defense of his arguments, the Ld. Authorised Representative relied on the following decisions:- i. PCIT Vs. Goodview Marketing P Ltd. in ITAT/114/2025, GA/2/2025 dated 03.09.2025 ii. PCIT Vs. K/s Kunjal Synergies Private Limited in ITAT/42/2025, IA No.GA/2/2025 vide order dated 01.12.2025 iii. PCIT Vs. M/s Jealous Commercial Private Limited in ITAT/138/2025, IA No. GA/2/2025 vide order dated 28.10.2025 v. PCIT Vs. True Man Consultants Pvt. Ltd. in ITAT/203/2024, IA No.GA/1/2024, vide order dated 25.04.2025. vi. PCIT Vs. Atlantic Dealers Pvt. ltd. in ITAT/41/2024, IA No.GA/2/2024 vide order dated 03.05.2024.

4.3. The Ld. Authorised Representative therefore prayed that the order of Ld. CIT (A) may be set aside and the Ld. AO may be directed to delete the addition.

4.4. The Ld. DR on the other had relied heavily on the orders of the authorities below by submitting that the directors of the assessee company as well as the share subscribers did not appear personally in compliance to the summons issued u/s 131 of the Act. Therefore, the necessary verification could not be carried out and the creditworthiness of the parties could not be judged. Therefore, the addition was rightly made by the Ld. AO and confirmed by the Ld. CIT (A).

5.

After hearing the rival contentions and perusing the materials available on record, we find that the assessee has raised share capital of ₹1,78,52,900/- and share premium of ₹19,61,27,500/- from private corporate entities. The original assessment was framed u/s 147/ 143(3) of the Income-tax Act, 1961 (the Act) on 02.07.2010, wherein the issue of raising of share capital/ share premium was examined by the Ld. AO by calling upon the assessee to prove the identities and creditworthiness of the investors and genuineness of the transactions. The assessee even filed 5.1. Considering the ratio laid down in the above decisions and also the fact that the Ld. AO in the second round did not make any independent enquiry to verify the genuineness of the transactions despite the assessee having furnished all the details and documents. That apart AO has not pointed out any defect or deficiency in the evidences filed by the assessee. Therefore, we are inclined to set aside the order of Ld. CIT (A) and direct the Ld. AO to delete the addition.

6.

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

Order pronounced in the open court on 20.01.2026.

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