INCOME TAX OFFICER, KOLKATA vs. FAVOURITE CLOTH MERCHANTS PVT LTD, KOLKATA

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ITA 391/KOL/2024Status: DisposedITAT Kolkata06 January 2026AY 2012-13Bench: SHRI SONJOY SARMA (Judicial Member), SHRI RAKESH MISHRA (Accountant Member)1 pages

AI SummaryPartly Allowed

Facts

The Revenue filed an appeal against the order of the CIT(A) for AY 2012-13. The Assessing Officer had added ₹26,92,50,000 as unexplained cash credit under Section 68 of the Income Tax Act, 1961, which was treated as the assessee's own money. The CIT(A) had partly allowed the appeal, directing the addition to be restricted to the 'real money' received.

Held

The Tribunal observed that the CIT(A)'s power to set aside the case to the AO was not available after June 1, 2001. Relying on various judicial precedents, the Tribunal noted that Section 68 of the Act is widely worded and empowers the ITO to enquire into the nature and source of any sum credited. The CIT(A) had exceeded his power by issuing directions to the AO to assess 'real money', implicitly setting aside the assessment order.

Key Issues

Whether the CIT(A) had the power to set aside the assessment order and direct the AO to ascertain 'real money' under Section 68 of the Income Tax Act, 1961.

Sections Cited

68 of the Income Tax Act, 1961, 250 of the Income Tax Act, 1961, 143(1) of the Act, 143(2) of the Act, 142(1) of the Act, 143(3)/144 of the Act, Rule 46A of the Income Tax Rules, 1962, Section 250(6) of the Act

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, KOLKATA ‘C’ BENCH, KOLKATA

Before: SHRI SONJOY SARMA & SHRI RAKESH MISHRA

PER RAKESH MISHRA, ACCOUNTANT MEMBER:

This appeal filed by the Revenue is against the order of the Commissioner of Income Tax (Appeals)-NFAC, Delhi [hereinafter referred to as Ld. 'CIT(A)'] passed u/s 250 of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’) for AY 2012-13 dated 29.12.2023. 2. The Revenue is in appeal before the Tribunal raising the following grounds of appeal:

“1. For that, the Ld. CIT(A), NFAC, New Delhi erred in restrict the addition of Rs. 26,92,50,000/- in the form of unexplained cash credit u/s 68 of the I.T. Act 1961, to real money only without giving due weightage to the unjustified payment of high premium to acquire shares so credited which has money’s worth and once the credit so mentioned in the section U/s 68 of the Act is found to be not supported by any acceptable evidence and despite the fact that creditworthiness and genuineness of transactions of subscribing companies was not beyond doubt. ITA No.: 391/KOL/2024 Assessment Year: 2012-13 Favourite Cloth Merchants Pvt. Ltd.

For that, the appellant craves leave to add, delete, alter, modify, substitute otherwise in any or all of the grounds of appeal at or before the time of hearing of the appeal.”

Brief facts of the case are that the assessee is a company and had filed its original return of income showing total income of ₹480/- and the return was duly processed u/s 143(1) of the Act. Subsequently, the case was selected for scrutiny under Computer Assisted Scrutiny Selection (in short 'CASS') and the statutory notices u/s 143(2) and 142(1) of the Act were issued and duly served upon the assessee but there was non-compliance on the part of the assessee company. The Assessing Officer (hereinafter referred to as Ld. 'AO'), on perusal of the facts and circumstances in the instant case as well as the assessee’s inability to discharge its own burden of proof to substantiate its claim of introduction of fresh share capital even after given several numbers of opportunities, held that the purported fresh capital along with the premium aggregating to ₹26,92,50,000/- was nothing but the assessee’s own money introduced under the garb of fresh share capital in the assessee’s business. Therefore, a sum of ₹26,92,50,000/- was treated as unexplained cash credit found in the books of the assessee during the AY 2012-13 and added back to the total income of the assessee. The Ld. AO assessed the total income of the assessee at ₹26,92,69,613/- u/s 143(3)/144 of the Act. Aggrieved with the assessment order, the assessee filed an appeal before the Ld. CIT(A) vide order dated 29.12.2023 partly allowed the appeal of the assessee by holding as under: