TaxTMI 
TaxTMI 
2026 (10) TMI 531
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....by way of accommodation entry in the form of share capital/ share premium. The notice u/s 148 of the Act was issued on 31.12.2016. Thereafter, the ld. Counsel of the assessee furnished before the ld. AO the details qua the share subscribers submitting name, address, PAN, audited balance sheet, bank account, etc. and also produced the books of accounts of the assessee company along with the bank statements. However, the ld. AO noted that the said subscriber has no creditworthiness to invest in the assessee company. Accordingly, the ld. AO added Rs.2.00 crores as unexplained cash credit to the income of the assessee u/s 68 of the Act in the assessment framed u/s 143(3)/ 147 dated 31.12.2016. 4. In the appellate proceedings, the ld. CIT (A) also confirmed the order of the ld. AO by passing a very cryptic order by observing and holding as under:- "The assessee company was involved in the business of investments, during the relevant previous year. From the documents submitted by the assessee, it is found that the assessee company had received an amount of Rs. 2,00,00,000/- form MIS Mandapam Commercial Ltd. as Share application money, during the F.Y-2008-09. From the bank sta....
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....rong and cannot be sustained. Hence we are not in conmcurrence with the ld. CIT(A) on this issue. The case of the assessee is squarely covered by the decision of Hon'ble Kolkata High Court in the following decisions:- i. Principal Commissioner of Income-tax 1 Kolkata vs. Shipra Enclave (P.) Ltd. [2026] 183 taxmann.com 413 (Calcutta) order dated 04.02.2026. ii. Principal Commissioner of Income-tax vs. Express Tradelink (P.) Ltd. [2026] 183 taxmann.com 398 (Calcutta) order dated 04.02.2026 iii. Principal Commissioner of Income Tax-2, Kolkata V Karni Infraprojects Private Limited ITAT/168/2025 & ΙΑ No GA/2/2025 order dated 28.01.2026. iv. PCIT vs Outcome Buildcom P. Ltd. (ITAT/3/2024 (Calcutta) dated 03.05.2024) (Refer Page 14 Para 2) v. Principal Commissioner of Income Tax-1, Kolkata vs True Man Consultants Private Limited (ITAT/203/2024 (Calcutta) order dated 25.04.2025) 5.1.1. The Hon'ble Calcutta High Court in case of Shipra Enclave (P.) Ltd. (supra), while deciding the similar issue held as under:- "9. We have carefully considered the rival submissions and perused the materials on record. It is a settled ....
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....de that the ratio in NRA Iron & Steel is applicable only to "phantom" or "non-existent" entities found to be non-traceable upon field inquiry. It cannot be extended to active, traceable taxpayers simply because their investment decisions appear commercially improbable to the Revenue. Equating "traceable investors" with "phantom entities" is a leap in logic that cannot be countenanced. Furthermore, the valuation of shares is a matter of commercial wisdom. Unless the Revenue proves a "live link" showing that the funds originated from the assessee's own coffers, the AO cannot substitute his judgment for that of the marketplace. 13. Upon considering the submissions made on either side and perusing the materials on record, we find that the learned Tribunal has conducted a meticulous factual inquiry. The Tribunal has recorded a specific finding that the assessee had provided "Cast Iron" documentary evidence to establish the identity and creditworthiness of the subscribers. The audited balance sheets of these companies reflected a substantial net worth, which was far in excess of the amounts invested in the assessee company. 14. We are convinced that the findings of ....
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....' 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 v. NRA Iron & Steel (P) Ltd. [2019] 103 taxmann.com 48/412 ITR 161/262 Taxman 74 (SC), 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 "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 Fin....
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....te that on what account he was not satisfied with the details and evidences furnished by the assessee and confronting with the same to the assessee. In view of this, even applying the ratio laid down by the Hon'ble Supreme Court in the case of PCIT vs. NRA Iron and Steel Pvt. Ltd. (supra), impugned additions are not warranted in this case." Heard learned counsel for the appellant/revenue. The materials were all available on the file of the Assessing Officer as well as before the CIT and no question can be raised regarding the genuineness, identity and creditworthiness of the creditors. Hence, the Tribunal has rightly dismissed the appeal filed by the revenue. For the above reasons, we find that no substantial question of law arises for consideration in this appeal and the appeal is dismissed." 5.1.4. The Hon'ble Calcutta High Court in case of PCIT vs Outcome Buildcom P. Ltd. (supra), held as under:- "The short question which falls for consideration is whether the addition made by the Assessing Officer under Section 68 of the Act was justifiable. The Commissioner of Income Tax (Appeals) - 7 Kolkata (CITA) set aside the addition made and allowed ....