TaxTMI 
TaxTMI 
2026 (3) TMI 486
X X X X Extracts X X X X
X X X X Extracts X X X X
....e order of ld. CIT (A) deleting the addition of Rs.27,63,00,000/- as made by the ld. AO u/s 68 of the Income-tax Act, 1961 (the Act) by treating the share capital/ share premium as unexplained cash credit. 4. The facts in brief are that the assessee filed the return of income on 23.09.2013, which was selected for scrutiny through CASS for large share capital/ share premium received by the assessee. The assessment was completed u/s 143(3) of the Act vide order dated 13.03.2015, assessing the total income at Rs.27,63,00,680/- by making addition u/s 68 of the Act. The said order was challenged before the ld. CIT (A) who confirmed the addition and the matter travelled to ITAT. The Tribunal set aside the order of the ld. CIT (A) and restored the issue to the file of the ld. AO for deciding the issue afresh after affording reasonable opportunity of hearing to the assessee. In the set aside proceedings, the ld. AO again called for the details qua the share capital/ share premium from assessee which were duly furnished by the assessee before the ld. AO (faceless assessment scheme) on 25.01.2021. The assessee furnished before the ld. AO all the details /evidences, vide written submission....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... (i) In the case of these 8 investors scrutiny assessments u/s 143(3) of the Act for the AY under consideration, that is, AY 2012-13 have been completed and following additions have been made to their Total Income wrt share application moneys received on high premium per share: SL No (as per table) Name of the Applicant No of shares Face Value (Rs) Share Premium (Rs) Amount received (Rs) Addition in scrutiny assessment (Rs Crores) 2) 6 INTIMATE SECURITIES P. LIMITED 23,300 1/- 999 2,33,00,000 27.93 7 IMAX SECURITIES PVT LTD 28,000 1/- 999 2,80,00,000 36.42 8 ROVER SECURITIES PVT LTD 17,800 1/- 999 1,78,00,000 23.63 11 PALAK HIRISE PVT LTD 38,600 1/- 999 3,86,00,000 12.19 12 LIMELIGHT PROMOTERS PVT LTD 26,000 999 2,60,00,000 15.08 13 EVERSAFE SECURITIES PVT LTD 31,100 1/- 999 3,11,00,000 14.48 15 MICRO INFRA PROPERTIES P. LTD 8,100 1/- 999 81,00,000 13.25 16 SEASIDE SECURITIES PVT LTD 18,400 1/- 999 1,84,00,000 12.09 ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....3/143 (3)/147 of the Act, the said sum of Rs. 14,80,00,000/- was added. Since the alleged sum has been added in the case of Honesty Dealers Pvt. Ltd., and the sum received by it was invested in the form of loans and advances and investments, during the year under consideration some of the funds have been received backed by Honesty Dealers Pvt. Ltd., and has been utilised for investing in the equity share capital of the assessee company. These details have gone uncontroverted at the end of the revenue authorities and it remains an admitted fact that the source of the source stands proved with the details filed before us and, therefore, making an addition again in the hands of the assessee would tantamount to double addition and, therefore, the addition in the year under consideration is not warranted and the ld. CIT(A) has rightly deleted the same. 9. We find support from the decisions of the ITAT, Kolkata in the case of ITO v. Happy Structure (P) Ltd. [IT Appeal No. 1977 (Kol) of 2016, dated 22-5-2019] wherein on similar facts it was held that:- "Applying the proposition of law laid down in the above referred cases to the facts of this case and keeping in view the....
X X X X Extracts X X X X
X X X X Extracts X X X X
....hus, we find no question of law much less substantial question of law is arising for consideration in this appeal. 9. Hence, the appeal fails and is dismissed. (iv) As on the same set of facts, the Jurisdictional High Court of Calcutta has already ruled in favour of the assessee in its recent decision dated 11/0-3/2024 as quoted above, it is felt that, in so far addition made by the AO of the sum of Rs. 19,13,00,000/- invested by the above tabulated 8 "Corporate Investors at-premium" is concerned, it amounted to double addition and therefore the same ought to be deleted in the hands of the Appellant. 5.3. In third category, the ld. CIT (A) dealt with the corporate investors to whom the shares were issued at a premium. The ld. CIT (A) noted that the corporate investors to whom the shares were issued at a premium, as mentioned in table at a page no.16 of the ld. CIT (A) at a serial no.5,9,10 and 14 of the said table, in whose cases the scrutiny assessments u/s 143(3) of the Act were framed. In respect of three investors at a serial no.5,10 and 14 the scrutiny assessments were framed for A.Y. 2012-13 and in case of investors at a serial no.9, the scrutiny assessme....
X X X X Extracts X X X X
X X X X Extracts X X X X
....hare Applicant Yes No 2,33,00,000 6. Micro Infra Properties P. Ltd. Share Applicant Yes No 81,00,000 7. Reward Plazza P Ltd. Share Applicant Yes No 70,00,000 8. Rover Securities P. Ltd. Share Applicant Yes Yes 1,78,00,000 9. Circle Infra Projects Pvt. Ltd. Share Applicant Yes Yes 35,00,000 10. Eversafe Securities Pvt. Ltd. Share Applicant Yes Yes 3,11,00,000 11. Fairplan Securities Limited Share Applicant Yes Yes 3,49,00,000 12. Girik Securities Pvt. Ltd. Share Applicant Yes Yes 1,14,00,000 13. Limelight Promoters Pvt. Ltd. Share Applicant Yes Yes 2,60,00,000 14. Palak Hirise Pvt. Ltd. Share Applicant Yes Yes 3,86,00,000 15. Pratham Niketan P. Limited Share Applicant Yes Yes 70,00,000 16. Seaside Securities Pvt. Ltd. Share Applicant Yes Yes 1,84,00,000 6.1. We note from the above table that even the notices were issued u/s 133(6)of the Act which were duly complied with by the subscribers. Similarly, we note that in the case of 14 subscribers, the assessments were framed u/s 1....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... is also covered by the decision of the jurisdictional Hon'ble Calcutta High Court in the case of PRINCIPAL COMMISSIONER OF INCOME TAX-2. KOLKATA VS M/S EXPRESS TRADELINK PVT. LTD- ITAT 95 OF 2025.In this case the Revenue challenged the tribunal's order on the ground that the tribunal failed to apply the "test of human probability," contending that nine subscriber companies had declared meagre income disproportionate to the high share premium invested and that their directors failed to appear in response to summons issued under Section 131. However, the Court noted that the assessee had produced extensive documentary evidence including PAN details, share application forms, allotment advices, bank statements, ITR acknowledgements, and audited financial statements of all subscriber companies. The Court held that under Section 68, once the assessee provides credible documentary evidence establishing identity, banking transactions, and financial details of the investors, the initial onus stands discharged and the burden shifts to the Revenue. The Assessing Officer cannot dismiss such audited records as mere "paper compliance" without bringing contrary evidence on record. The Co....
X X X X Extracts X X X X
X X X X Extracts X X X X
....annot merely brush aside audited balance sheets and PAN details as "paper compliance" without bringing on record contrary evidence to impeach the veracity of such documents. 7. A significant portion of the Revenue's argument rests on the non- appearance of the subscribers' directors. We reiterate our settled view that personal appearance is not a statutory substitute for documented financial traceability. The AO is vested with co-terminus powers under Section 131. If the AO fails to utilize these powers to compel attendance or to seek verification from the creditors' respective Assessing Officers, the Revenue cannot visit the consequences of such investigative failure upon the assessee. Suspicion, however strong, cannot replace evidence. 8. Regarding the Revenue's reliance on the decision of the Hon'ble Supreme Court in PCIT vs. NRA Iron & Steel (P) Ltd., we find the same to be fundamentally misplaced. That case dealt with "phantom" entities where notices were returned unserved. In the present case, the investors are traceable taxpayers who confirmed the transactions through Section 133(6) responses. To equate "traceable investors" with "phanto....
X X X X Extracts X X X X
X X X X Extracts X X X X
....nder Section 133(6) of the Act and various other details to show that most of the share subscribers have also passed through scrutiny proceedings. These details were placed before the learned Tribunal by way of paper books in three volumes. The learned Tribunal has in extenso referred to the details which have been furnished. Furthermore, the shareholders have responded to the notice under Section 133(6) of the Act directly to the Assessing Officer and their respective assessment orders framed under Sections 147/143(3) of the Act were also placed before the Assessing Officer as well as before the learned Tribunal. Thus, it is evident that the assessee has produced all the documents before the Assessing Officer not once but twice and the authority except indicating a theory of routine entries of paper companies/shell companies, no discrepancies had been pointed out in the financials of the alleged cash creditors. Furthermore, all the share subscribers are private limited companies duly registered with the Ministry of Corporate Affairs and have been furnishing the audited financial statements in the portal of the Ministry. That apart, the share subscribers have also demonstrated that....
X X X X Extracts X X X X
X X X X Extracts X X X X
....the assessing officer issued notice under Section 133 (6) of the Act to the investing companies and both the parties have complied with the said notice and furnished the requisite details. Summons under Section 131 of the Act was issued to the Director of the assessee company to be personally present and also to produce the Directors of the investing company for examination of genuineness of the transaction, identity and creditworthiness of the lenders. The Tribunal noted that the Directors appeared pursuant to the summons but the assessing officer wrongly recorded that the Directors of the assessee company failed to appear in response to the summons issued under 131 of the Act. Furthermore, the Tribunal examined the factual position and noted that the assessee has filed evidences as called for by the assessing officer in respect of the assessee as well as the investing companies. The evidences filed comprised of income tax retums, audited balance sheet, profit and loss account, audited report, bank statement and master data in respect of each of the subscribers. Furthermore, both the parties have submitted their reply pursuant to the notice issued under Section 1....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e assessee had discharged its burden under Section 68 by establishing the identity, creditworthiness, and genuineness of the investors through strong documentary evidence. The Court further held that the non-appearance of directors could not invalidate documented transactions, especially when the AO had powers under Section 131 to enforce attendance. Distinguishing NRA Iron & Steel, the Court observed that the said judgment applies to phantom or non-existent entities, whereas the present investors were identifiable taxpayers who confirmed the transactions. Emphasizing that suspicion cannot replace evidence, the Court upheld the Tribunal's findings and dismissed the Revenue's appeal, holding that no substantial question of law arose. It was held: 3. The factual matrix, as can be gleaned from the records, reveals that the respondent-assessee is a Non-Banking Financial Company (NBFC) duly registered with the Reserve Bank of India. For the relevant Assessment Year, its retum was selected for scrutiny specifically to examine the receipt of a large share premium. During the assessment proceedings, the Assessing Officer (AO) noted that the assessee had raised share capita....
X X X X Extracts X X X X
X X X X Extracts X X X X
....us factual inquiry and recorded a specific finding that the assessee provided a "Cast Iron" documentary foundation. The audited balance sheets of the subscribers demonstrated a substantial net worth, which was far in excess of the amounts invested. 10. Furthermore, we find that the AO's reliance on the non-appearance of the directors is misplaced and is not supported by the statutory scheme where robust documentary evidence isavailable. As held by this Court in PCIT vs. Sreeleathers [2022] 448 ITR 332 (Cal), the AO is vested with co-terminus powers under Section 131 of the Act to compel attendance. If the AO fails to exercise these powers, he cannot subsequently visit the consequences of such failure upon the assessee. Personal appearance of a director is not a statutory substitute for documented traceability in a corporate assessment, especially when the entities are active taxpayers. 11. Insofar as the reliance on NRA Iron & Steel is concerned, we find the facts of that case to be clearly distinguishable. In that case, the investors were found to be non-existent or "phantom" entities upon field inquiry. In the case before us, the investors are identifiable t....