2026 (2) TMI 320

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....der passed by the Income Tax Appellate Tribunal (ITAT), "B" Bench, Kolkata, dated 8th February, 2024, in ITA No. 43/Kol/2021 for the Assessment Year 2009- 10. The Revenue has primarily challenge the deletion of an addition of Rs. 7,26,50,000/- made by the Assessing Officer (AO) under Section 68 of the Act on account of unexplained share capital and share premium. 2. The revenue has proposed the following substantial questions of law for consideration: i. Whether the Learned ITAT has committed substantial error in law in deleting the addition of Rs 7,26,50,000/- on account of unaccounted cash credit of share capital and premium, ignoring the facts that the assessee failed to prove the identity of the alleged shareholders, their c....

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....Advocate for the respondent-assessee. 4. The focal point of the Revenue's grievance is that the learned Tribunal failed to appreciate the "Test of Human Probability." It is contended that the nine subscriber companies, while being income-tax assessees, declared meagre income which bore no rational proportion to the high share premium paid. Further, the Revenue places heavy reliance on the non-appearance of the directors of these companies in response to summons issued under Section 131 of the Act. 5. We have carefully perused the records and the findings of the learned Tribunal. It is observed that the respondent-assessee had placed a voluminous "Paper Book" before the authorities, which included PAN details, share application forms, ....

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....ns through Section 133(6) responses. To equate "traceable investors" with "phantom entities" is a leap in logic that this Court cannot countenance. 9. Furthermore, for the Assessment Year 2009-10, the "Source of Source" doctrine remains inapplicable as the proviso to Section 68, introduced by the Finance Act, 2012, is prospective. The Tribunal noted that the subscribers possessed substantial Net Worth (Reserves and Surplus) far exceeding the investment amounts, thereby satisfying the creditworthiness test. 10. In a corporate assessment, documented traceability through legitimate banking channels carries greater evidentiary weight than the subjective suspicion of an officer. Terms like "money laundering" or "round-tripping" should not ....