TaxTMI 
TaxTMI 
2026 (5) TMI 1631
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....es as called for by the AO. The ld. Assessing Officer on examination of the evidences filed by the assessee and return of income noted that the assessee has raised share capital of Rs.5,53,500/- and share premium of Rs.5,47,95,500/-. The ld. AO issued notice u/s 131 of the Act to the assessee, calling upon to produce the directors of the share holding companies on 16.02.2015. The said summons were not complied with. Thereafter the ld. AO treated the share capital / share premium as unexplained cash credit for the reason that the summon issued u/s 131 of the Act and show cause notice were not complied and made the addition to the income of the assessee of Rs. 5,53,50,000/- as unexplained cash credit besides interalia making other additions in the assessment framed u/s 143(3) of the Act dated 24.03.2015. 4. In the appellate proceedings, the ld. CIT (A) allowed the appeal of the assessee on this issue on merit by holding that the no addition can be made for non-appearance of directors of the assessee company in compliance to summons issued u/s 131 of the Act where the assessee has filed all the documents, details/ evidences before the ld. AO and the ld. AO did not point out any def....
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.... ld. AO, then addition cannot be made merely on the ground of summons u/s 131 of the Act were not complied with. 5.1. The case of the assessee is also supported by the decision of the Hon'ble Calcutta High Court in the case of PCIT vs. Bright Commodeal Pvt Ltd (ITAT No. 162 of 2025 IA No:GA/1/2025, GA/2/2026) dated 28.08.2025, wherein, it was held as under: "We have perused the reasons assigned by the learned Tribunal for allowing the assessee's appeal. It is seen that the assessing officer issued notice under Section 33 (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. F....
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....IT(A). The Tribunal reversed the addition after noting that all subscriber companies were active taxpayers who had responded to notices issued under Section 133(6) and confirmed the transactions conducted through banking channels. Before the High Court, the Revenue argued that the low income declared by the investors compared to the high share premium suggested accommodation entries, relying on the Supreme Court judgment in PCIT v. NRA Iron & Steel (P) Ltd. However, the Court held that the 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....
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.... records of the Income Tax Department and had duly responded to the notices issued by the AO under Section 133(6) of the Act. 9. We have carefully considered the rival submissions and perused the materials on record. It is a settled legal position that to discharge the initial onus under Section 68, the assessee must establish the identity of the creditor, their creditworthiness, and the genuineness of the transaction. In the instant case, the leamed Tribunal conducted a meticulous 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 is available. 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....