ADHIRA VINICOM PRIVATE LIMITED,HOWRAH V. INCOME TAX OFFICER, WARD (10)1, KOLKATA

ITA 998/KOL/2024

AI Insights

The case involves Adhira Vincom Private Limited, which appealed against the order of the Commissioner of Income-tax (Appeals), Patna, confirming the addition of 5.00 crores to the assessee's income as unexplained cash credit under section 68 of the Income-tax Act, 1961. The addition was initially made by the Assessing Officer (AO) due to large share premium received by the company. The Tribunal examined the evidences provided by the assessee and the subscribers, including identities, creditworthiness, and bank statements, and found them satisfactory. The Tribunal criticized the lower authorities for not adequately verifying these evidences and for relying on circumstantial evidences to uphold the addition.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 784721 (ITAT-KOLKATA)
• Duration Of Justice: 1 year(s) 6 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-11-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2012-2013
• Appeal Filed On: 03-05-2024
• Other Referred Cases: Commissioner of Income-tax vs. Durga Prasad More [1971] 82 ITR 540 (SC), Sumati Dayal vs. Commissioner of Income-tax [1995] 80 Taxman 89 (SC), PCIT v. Abhisar Buildwell P. Ltd. (2023)454 ITR 212(SC), Principal Commissioner of Income-tax vs. Sreeleathers [2022] 448 ITR 332 (Calcutta), CIT Vs. Orissa Corporation Pvt. Ltd. (1986) 159 ITR 78 (SC), CIT Vs. Orchid Industries Ltd. 397 ITR 136 (Bom), Crystal Networks Pvt. Ltd. Vs. CIT 353 ITR 171 (Kol), ITO Vs. M/s. Cygnus Developers India Pvt. Ltd.(ITA No. 282/Kol/2012), Joy Consolidated Pvt. Ltd. Vs. ITO (ITA No. 547/Kol/2020), CIT vs. Gangadeep Infrastructure Pvt. Ltd. in 80 taxmann.com 272 (Bom), CIT vs. Raj Kumar Agarwal vide ITA No. 179/2008 dated 17.11.2009
• Laws Referred To: Income-tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: PANKAJ PANDEY
• Assessee Lawyers: DEVESH PODDAR
• Keywords: Set aside; Question of law; Unexplained cash credit
• Section: 143(3); 142(1); 56; 132; 153A; 68; 131; 133(6)

Judgement Text

" IN THE INCOME TAX APPELLATE TRIBUNAL “A” BENCH, KOLKATA BEFORE SHRI RAJESH KUMAR, AM AND SHRIPRADIP KUMAR CHOUBEY, JM ITA No.998/KOL/2024 (Assessment Year: 2012-13) Adhira Vincom Private Limited 52/1, 2nd floor, Santan Mistry Lane, Near Oriya Para mandir, Howrah-711011, West Bengal Vs. ITO, Ward (10)1, Kolkata Chowringhee Square, Kolkata-700069, West Bengal (Appellant) (Respondent) PAN No. AAHCA4935E Assessee by : Shri Devesh Poddar, AR Revenue by : Shri Pankaj Pandey, DR Date of hearing: 14.10.2025 Date of pronouncement: 11.11.2025 O R D E R Per Rajesh Kumar, AM: This is an appeal preferred by the assessee against the order of the Commissioner of Income-tax (Appeals), Patna(hereinafter referred to as the “Ld. CIT(A)”] dated 05.03.2024 for the AY 2012-13. 02. The issue raised by the assessee in ground no.1 is against the confirmation of addition of ₹5.00 crores by the ld. CIT (A) as made by the ld. AO u/s 68 of the Act in respect of share capital/ share premium received by the assessee company during the year. The ground no.2,3 and 5 are in support of ground no.1. 03. The facts in brief are that the assessee filed the return of income on 29.09.2012, declaring total income at ₹nil. Subsequently, the case of Printed from counselvise.com Page | 2 ITA No. 998/KOL/2024 Assessment Year; 2012-13 the assessee was selected for scrutiny under Computer Assisted Scrutiny Selection (CASS) on account of large share premium received by the assessee. Accordingly, notice u/s 143(2) and 142(1) of the Act were issued along with questionnaire which were duly served upon the assessee. The assessee filed detailed submissions along with necessary evidences and documents vide letter dated 05.10.2014. The ld. AO in order to independently verify the transactions of issue of shares and receipt of money received by the assessee issued u/s 133(6) of the Act to all the subscribers which were duly replied by them by filing the necessary information/ documents. The ld. AO noted that during the year the assessee company has issued share capital/ share premium of ₹5.00 crores comprising share capital of ₹5 lacs + share premium of ₹4,95,00,000/-. The assessee issued equity share at a face value of ₹10 each at a premium of ₹990/- aggregating to 50,000 equity shares to four parties namely; (i)M/s Vibhakar Trading Pvt. Ltd., (ii) M/s Vrajesh Marketing Pvt. Ltd., (iii) M/s Briravi Commercial Pvt. ltd. (iv) M/s Ganesh Stockist Pvt. ltd. The ld. AO issued summons u/s 131 of the Act to the directors of the assessee company for in person deposition and producing the documents, which were duly produced. Besides, the ld. AO directed the director of the assessee company to produce the directors of the investor’s companies along with their identity proof, copy of bank statement from 01.04.2011 to 30.03.2012, with complete narration and sources of funds. The assessee complied with the said summons vide written submission dated 25.02.2015 and enclosing all the documents as called for by the ld. AO but no personal appearance was made in terms of summon issued u/s 131 of the Act. Thereafter, the ld. AO relied on the decision of Commissioner of Income-tax vs. Durga Prasad More [1971] 82 ITR 540 (SC)[26-08-1971] and Sumati Dayal Printed from counselvise.com Page | 3 ITA No. 998/KOL/2024 Assessment Year; 2012-13 vs. Commissioner of Income-tax [1995] 80 Taxman 89 (SC)/[1995] 214 ITR 801 (SC)/[1995] 125 CTR 124 (SC)[28-03-1995] and observed that surrounding circumstances to be taken into account to determine the true nature of these transactions and finally, held that the assessee has introduced his own money in the grub of share subscription. Consequently , the amount of share capital/share premium was added to the income of the assessee as unexplained cash credit u/s 68 of the Act. 04. In the appellate proceedings, the ld. CIT (A) after taking into account the arguments/ submissions of the assessee dismissed the appeal by simply affirming the order of the ld. Assessing Officer 05. After hearing the rival contentions and perusing the materials available on record, we find that the undisputed facts are that the assessment in this case was framed u/s 143(3) of the Act vide order dated 21.03.2015, wherein the addition of ₹5.00 crores was made u/s 68 of the Act as unexplained cash credit. The said order was challenged before the ld. CIT (A) and the ld. CIT (A) disposed off the appeal vide order dated 05.03.2024, confirming the addition and the said order of ld. CIT (A) is under challenge before us. We further note that during the pendency of the appeal before the ld. CIT (A) on 20.09.2015 a search action u/s 132 of the Act was conducted upon the assessee and proceedings u/s 153A of the Act were initiated for the year under consideration. Accordingly, the assessment was framed by the ld. AO u/s 153A/ 143(3) of the Act vide order dated 28.12.2017, replicating the same addition to the income of the assessee. The said order also travelled to the first appellate authority and the ld. CIT (A) vide order dated 05.03.2024 allowed the appeal of the assessee on legal issue challenging the proceedings u/s 153A of Printed from counselvise.com Page | 4 ITA No. 998/KOL/2024 Assessment Year; 2012-13 the Act by following the decision of Hon'ble Apex Court in the case of PCIT v. Abhisar Buildwell P. Ltd. (2023)454 ITR 212(SC). Now, with the passing of the said order the assessee has challenged the addition confirmed by ld. CIT (A) in the order framed u/s 143(3) of the Income-tax Act, 1961 (the Act) which is being adjudicated in the ensuring paras. 06. Ld. Counsel for the assessee vehemently submitted before the bench that the order passed by the Ld. CIT(A) is wrong and against the facts on record and various decisions given by different judicial forum. The Ld. AR ,while referring to the evidences filed by the assessee as well as by the subscribers, submitted that the assessee as well as the subscribers have filed all the evidences proving the identity and creditworthiness of the subscribers as well as genuineness of the transactions. The Ld. AR referred to the replies filed in response to notice u/s. 133(6) of the Act and in response to summons u/s. 131 of the Act and submitted that the AO has not pointed out any defect or deficiency in these evidences, which abundantly proved the three conditions of section 68 of the Act. The Ld. AR stated that where the assessee has filed all the evidences qua the subscribers consisting of names and addresses, PANs, audited accounts, bank statements etc. and AO has not carried out any further verification, then the addition cannot be made merely on the ground that there was no compliance to summon issued u/s. 131 of the Act. The Ld. AR stated that even the information sought by the AO in the summons issued u/s. 131 of the Act were duly complied. In defense of his argument he relied on the following decisions: (i) CIT Vs. Orissa Corporation Pvt. Ltd. (1986) 159 ITR 78 (SC); Printed from counselvise.com Page | 5 ITA No. 998/KOL/2024 Assessment Year; 2012-13 (ii) CIT Vs. Orchid Industries Ltd. 397 ITR 136 (Bom); (iii) Crystal Networks Pvt. Ltd. Vs. CIT 353 ITR 171 (Kol); (iv) ITO Vs. M/s. Cygnus Developers India Pvt. Ltd.(ITA No. 282/Kol/2012) and (v) Joy Consolidated Pvt. Ltd. Vs. ITO (ITA No. 547/Kol/2020. 07. The Ld. D.R strongly controverted and opposed the arguments as put forth by the Ld. A.R by submitting that the share application money was received by the assessee from various subscribers who were not having any creditworthiness. The Ld. D.R submitted that replying to the notices u/s 133(6) and u/s 131 of the Act did not mean that the ingredients as envisaged in section 68 of the Act were duly satisfied. Besides the ld DR stated that the enquiries and investigation could not be carried out by the AO when the subscribers did not appear personally in compliance to summons issued u/s 131 of the Act. Therefore the Ld. D.R ,therefore, submitted that the addition was rightly made by the AO and also confirmed by the Ld. CIT(A) after taking into account the reply of the assessee and the various circumstantial evidences. 08. We note that in the original assessment proceedings, the notices were issued u/s 133(6) of the Act to all the investors which were duly complied and replied and are available in the assessment folder as noted by the ld. AO in Para no.1 even in the proceedings u/s 153A of the Act. The assessee filed all the documents qua the investors comprising the names addresses, PANs, ITRs, audited financials, confirmations, bank statements, etc. before the ld. AO who has not pointed out any defect or deficiency in the said evidences filed by the Printed from counselvise.com Page | 6 ITA No. 998/KOL/2024 Assessment Year; 2012-13 assessee and simply made the addition by relying on the circumstantial evidences which is incorrect and can not sustained. We note that the ld. AO has relied on the decision of Durga Prasad More (Supra)by ignoring the facts available on record and evidences filed by the assessee as well as subscribers. Though, the summons u/s 131 of the Act were not complied with by the assessee by making the physical appearance before the ld. Assessing Officer, however, the information desired were duly furnished before the ld. AO. In our opinion, the addition confirmed by the ld. CIT (A) is incorrect and can not be sustained as the assessee as well as the subscribers had furnished all the evidences before the AO which are also available before the ld CIT(A). The case of the assessee is squarely covered by the decision of the jurisdictional High Court in case of Principal Commissioner of Income-tax vs. Sreeleathers [2022] 448 ITR 332 (Calcutta)[14-07-2022], wherein the Hon'ble Court has held as under:- “‘In the absence of any such finding, it is held that the order passed by the Assessing Officer was utterly perverse and rightly interfered by the Commissioner (Appeals). The Tribunal re-appreciated the factual position and agreed with the Commissioner (Appeals). The Tribunal apart from taking into consideration, the legal effect of the statement of AKA also took note of the fact that the notices which were issued by the Assessing Officer under section 133(6) to the lenders where duly acknowledged and all the lenders confirmed the loan transactions by filing the documents which were placed before the tribunal in the form of a paper book. These materials were available on the file of the Assessing Officer and there is no discussion on this aspect. Thus, the tribunal rightly dismissed the appeal filed by the revenue. [Para 5]’ 09. We note that even in the proceedings u/s 153A of the Act, the subscriber replied to the notices issued u/s 133(6) of the Act which are available from page no.35 to 62 of the Paper Book. Therefore, the additions as sustained by the ld. CIT (A) cannot be sustained. Moreover, the addition cannot be made on the basis that summon u/s Printed from counselvise.com Page | 7 ITA No. 998/KOL/2024 Assessment Year; 2012-13 131 of the Act were not complied with when the assessee as well as the subscribers produces all the evidences before the ld. AO and the ld. AO has not pointed out any defect or deficiency in the said documents by further carrying out any enquiry into the mater. The case of the assessee has supported the decisions as relied by the ld AR. Besides the AO has harped on the fact that these shares were allotted at very high premium by ignoring the facts that there was no bar on issue of shares of high premium in the AY 2012-13 and the same was applicable from AY 2013-14 because Clause (viib) to Clause 2 section 56 inserted by Finance Act, 2012 w.e.f. 01.04.2013. Similarly, the provisions in Finance Act, 2012 that the assessee company issuing share premium have to prove source of source has been inserted w.e.f. 1.4.2013 is not applicable in the case of assessee for AY 2013-14 onwards. The case of the assessee finds support from the decision of the Hon’ble Bombay High Court in the case of CIT vs. Gangadeep Infrastructure Pvt. Ltd. in 80 taxmann.com 272 (Bom). Therefore, the appellate order passed by the Ld. CIT(A) upholding the assessment order which lacked any enquiry on the evidences filed by the assessee and also failure on the part of the AO to bring any substantive evidences on record, we are unable to sustain the appellate order. In our opinion, the addition cannot be made merely on the ground that the summon issued u/s 131 to the directors of the assessee company were not complied with whereas on the other hand the assessee has filed all the evidences called for by the AO qua the subscribers. We also noted that even the notice issued u/s 133(6) of the Act were fully complied with and same by position with regard to summon issued u/s 131 of the Act as all the details called for by the AO were duly furnished nonetheless no personal appearance was made for deposition. The case of the assessee finds support from the Printed from counselvise.com Page | 8 ITA No. 998/KOL/2024 Assessment Year; 2012-13 following: Under the circumstances, we are not in a position to sustain the order of Ld. CIT(A). We find support from the decision of Hon’ble Supreme Court in the case of Orissa Corporation Ltd. (supra), wherein it has held as under:- “That in this case the respondent had given the names and addresses of the alleged creditors. It was in the knowledge of the Revenue that the said creditors were income-tax assessee’s. Their index numbers were in the file of the Revenue. The Revenue, apart from issuing notices under Section 131 at the instance of the respondent, did not pursue the matter further. The Revenue did not examine the source of income of the said alleged creditors to find out whether they were creditworthy. There was no effort made to pursue the so- called alleged creditors. In those circumstances, the respondent could not do anything further. In the premises, if the Tribunal came to the conclusion that the respondent had discharged the burden that lay on it, then it could not be said that such a conclusion was unreasonable or perverse or based on no evidence. I f the conclusion was based on some evidence on which a conclusion could be arrived at, no question of law as such arose. The High Court was right in refusing to state a case.” 010. The case of the assessee is also squarely covered by the decisions of Hon’ble Calcutta High Court in the case of Crystal Networks Pvt. Ltd. vs. CIT (supra ) wherein it has held that where all the evidences were filed by the assessee proving the identity and creditworthiness of the loan transactions , the fact that summon issued were returned un- served or no body complied with them is of little significance to prove the genuineness of the transactions and identity and creditworthiness of the creditors. The relevant portion of the decision is extracted below: “We find considerable force of the submissions of the learned Counsel for the appellant that the Tribunal has merely noticed that since the summons issued before assessment returned unserved and no one came forward to prove. Therefore it shall be assumed that the assessee failed to prove the existence of the creditors or for that matter creditworthiness. As rightly pointed out by the learned counsel that the Ld. CIT(A) has taken the trouble of examining of all other materials and documents viz., confirmatory statements, invoices, challans and vouchers showing supply of bidi as against the advance. Therefore, the attendance of the witnesses pursuant to the summons issued in our view is not important. The important is to prove as to whether the said cash credit was Printed from counselvise.com Page | 9 ITA No. 998/KOL/2024 Assessment Year; 2012-13 received as against the future sale of the product of the assessee or note. When it was found by the Ld. CIT(A) on fact having examined the documents that the advance given by the creditors have been established the Tribunal should not have ignored this fact findings. Indeed the Tribunal did not really touch the aforesaid fact finding of the Ld. CIT(A) as rightly pointed out by the learned counsel. The Supreme Court has already stated as to what should be the duty of the learned Tribunal to decide in this situation. In the said judgment noted by us at page 463, the Supreme Court has observed as follows: “The Income-Tax Appellate Tribunals performs a judicial function under the Indian Income-tax Act. It is invested with authority to determine finally all questions of fact. The Tribunal must, in deciding an appeal, consider with due care all the material facts and records its findings on all the contentions raised by the assessee and the Commissioner, in the light of the evidence and the relevant law.” The Tribunal must, in deciding an appeal, consider with due care all the material facts and record its findings on all contentions raised by the assessee and the Commissioner, in the light of the evidence and the relevant law. It is also ruled in the said judgment at page 465 that if the Tribunal does not discharge the duty in the manner as above then it shall be assumed the judgment of the Tribunal suffers from manifest infirmity. Taking inspiration from the Supreme Court observation we are constrained to hold in this matter that the Tribunal has not adjudicated upon the case of the assessee in the light of the evidence as found by the Ld. CIT(A). We also found no single word has been spared to up set the fact finding of the Ld. CIT(A) that there are materials to show the cash credit was received from various persons and supply as against cash credit also made. Hence, the judgment and order of the Tribunal is not sustainable. Accordingly, the same is set aside. We restore the judgment and order of the Ld. CIT(A). The appeal is allowed.” 011. The case of is also covered by the decision of the coordinate bench by ITO Vs M/s Cygnus Developers India Pvt. Ltd. (supra) the operative part whereof is extracted below: “8. We have heard the submissions of the learned D.R, who relied on the order of AO. The learned counsel for the assessee relied on the order of Ld. CIT(A) and further drew our attention to the decision of Hon’ble Allahabad High Court in the case of CIT vs. Raj Kumar Agarwal vide ITA No. 179/2008 dated 17.11.2009 wherein the Hon’ble Allahabad High Court took a view that non- production of the director of a Public Limited Company which is regularly assessed to Income tax having PAN, on the ground that the identity of the investor is not proved cannot be sustained. Attention was also to the similar Printed from counselvise.com Page | 10 ITA No. 998/KOL/2024 Assessment Year; 2012-13 ruling of the ITAT Kolkata bench in the case of ITO vs. Devinder Singh Shant in ITA No. 208/Kol/2009 vide order dated 17.04.2009. 9. We have considered the rival submissions. We are of the view that order of Ld. CIT(A) does not call for any interference. It may be seen from the grounds of appeal raised by the revenue that the revenue disputed only the proof of identity of share holder. In this regard it is seen that for AY 2004-05 Shree Shyam Trexim Pvt. Ltd. was assessed by ITO, Ward-9(4), Kolkata and the order of assessment u/s 143(3) dated 25.01.2006 is placed in the paper book. Similarly Navalco Commodities Pvt. Ltd. was assessed to tax u/s 143(3) for AY 2005-06 by ITO, Ward-9(4), Kolkata by order dated 20.03.2007. Similarly Jewellock Trexim Pvt. Ltd. was assessed to tax for AY 2005-06 by the very same ITO, Ward-9(3), Kolkata assessing the assessee. In the light of the above factual position which is not disputed by the revenue, it cannot be said that the identity of the share applicants remained not proved by the assessee. The decision of the Hon’ble Allahabad High Court as well as ITAT, Kolkata Bench on which reliance was placed by the learned counsel for the assessee also supports the view that for non-production of directors of the investor company for examination by the AO it cannot be held that the identity of a limited company has not been established. For the reasons given above we uphold the order of Ld. CIT(A) and dismiss the appeal of the revenue.” 012. Similar ratio has been laid down by the Hon’ble Mumbai High Court in the case of CIT Vs Orchid Industries (P) Ltd (supra) by holding that provisions of section 68 of the Act cannot be invoked for the reasons that the person has not appeared before the AO where the assessee had produced on records documents to establish genuineness of the party such as PAN ,financial and bank statements showing share application money . 013. In the instant case before us also, the assessee has furnished all the evidences proving identity and creditworthiness of the investors and genuineness of the transactions but AO has not commented on these evidences filed by the assessee. Besides the investors have also furnished complete details/evidences before the AO which proved the identity , creditworthiness of investors and genuineness of the transactions. Under these facts and circumstances and considering underlying facts in the light of ratio laid down in the decisions as Printed from counselvise.com Page | 11 ITA No. 998/KOL/2024 Assessment Year; 2012-13 discussed above , we are inclined to set aside the order of Ld. CIT(A) by directing the AO to delete the addition. 014. In the result, the appeal of the assessee is allowed. Order pronounced in the open court on 11.11.2025. Sd/- Sd/- (PRADIP KUMAR CHOUBEY) (RAJESH KUMAR) (JUDICIAL MEMBER) (ACCOUNTANT MEMBER) Kolkata, Dated: 11.11.2025 Sudip Sarkar, Sr.PS Copy of the Order forwarded to: BY ORDER, True Copy// Sr. Private Secretary/ Asst. Registrar Income Tax Appellate Tribunal, Kolkata 1. The Appellant 2. The Respondent 3. CIT 4. DR, ITAT, 5. Guard file. Printed from counselvise.com "