ANUBANDH FINANCIAL SERVICES PRIVATE LIMITED,KOLKATA V. ACIT, CENTRAL CIRCLE 3.2, KOLKATA

CO 5/KOL/2025

AI Insights

The case involves M/s. Anubandh Financial Services Private Limited, which faced scrutiny over the share capital and premium it received, amounting to Rs. 4,68,00,000. The Assessing Officer (AO) added this amount to the income of the assessee under section 68 of the Income Tax Act, 1961, citing unexplained cash credits. The CIT(A) later deleted this addition, leading to an appeal by the Revenue. The Tribunal noted that the CIT(A) did not fully address the concerns raised during the assessment, particularly regarding the non-traceability of some share applicants and the lack of substantial evidence proving the genuineness of the transactions. The Tribunal highlighted the need for a detailed examination of the facts and directed the CIT(A) to utilize his powers to enhance the assessment if necessary.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 717494 (ITAT-KOLKATA)
• Duration Of Justice: 6 month(s) 11 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 11-08-2025
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Assessment Year: 2009-2010
• Appeal Filed On: 30-01-2025
• Other Referred Cases: PCIT(Central)-1 vs NRA Iron & Steel Pvt. Ltd., Principal Commissioner of Income-tax v. Mundhra Construction (P.) Ltd., NRA Iron and Steel Private Limited vs. Principal Commissioner of Income Tax (Central) - 2
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Keywords: Condonation of delay; Set aside; Opportunity of being heard; Invalid notice; Question of law; Unexplained cash credit; Onus to prove; Search and seizure; Source of fund; Competent authority; Bogus
• Section: 147; 148; 143(3); 132; 68; 131; 133(6)

Judgement Text

"आयकर अपीलीय अधिकरण कोलकाता 'बी' पीठ, कोलकाता में IN THE INCOME TAX APPELLATE TRIBUNAL KOLKATA ‘B’ BENCH, KOLKATA श्री जॉजज माथान, न्याधयक सदस्य एवं श्री राक ेश धमश्रा, लेखा सदस्य क े समक्ष Before SHRI GEORGE MATHAN, JUDICIAL MEMBER & SHRI RAKESH MISHRA, ACCOUNTANT MEMBER I.T.A. No.: 2390/KOL/2024 Assessment Year: 2009-10 ACIT, Central Circle-3(2), Kolkata Vs. M/s. Anubandh Financial Services Private Limited (Appellant) (Respondent) PAN: AACCA2417N C.O. No.: 5/KOL/2025 Assessment Year: 2009-10 M/s. Anubandh Financial Services Private Limited Vs. ACIT, Central Circle-3(2), Kolkata (Appellant) (Respondent) PAN: AACCA2417N Appearances: Department represented by : Kapil Mandal, Addl. CIT (DR). Assessee represented by : Anil Kochar, Adv. Date of concluding the hearing : 17-June-2025 Date of pronouncing the order : 11-August-2025 ORDER PER RAKESH MISHRA, ACCOUNTANT MEMBER: The appeal filed by the Revenue and the Cross Objections filed by the assessee are against the order of the Commissioner of Income Tax Printed from counselvise.com Page | 2 I.T.A. No.: 2390/KOL/2024 C.O. No.: 5/KOL/2025 Assessment Year: 2009-10 M/s. Anubandh Financial Services Private Limited. (Appeals)-21, Kolkata [hereinafter referred to as Ld. 'CIT(A)'] passed u/s 250 of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’) for AY 2009-10 dated 03.07.2024, which has been passed against the assessment order u/s 143(3) of the Act, dated 30.12.2016. 1.1. The Registry has informed that the appeal filed by the Revenue is barred by limitation by 83 days. An application seeking condonation of delay has been filed by the Revenue stating as under: Dates Events /Reasons 03.07.2024 CIT(A) order received to the office of the Pr. CIT, Central - 2, Kolkata. 06.08.2024 Requisition of Appeal Scrutiny Report (ASR) called from the DCIT(Hqrs), Central-2, Kolkata. 13.09.2024 Appeal Scrutiny Report (ASR) sent to the Office of the Pr. CIT, Central-2, Kolkata through proper channel. 29.10.2024 Approval for filing 2nd appeal u/s.253 before the Hon’ble ITAT received from the Office of the Pr. CIT, Central-2, Kolkata. 23.11.2024 Filed 2nd Appeal u/s.253 before the Hon’ble ITAT, Kolkata As the limitation to file appeal under section 253 expires on 29.09.2024, there caused a delay in filling of this Appeal in 84 days. Therefore, it is requested to kindly condone the delay of 84 days in filing appeal for the sake of substantial justice.” 1.2. Considering the application for condonation of delay and the reasons stated therein, we are satisfied that the Revenue had a reasonable and sufficient cause and was prevented from filing the instant appeal within the statutory time limit. We, therefore, condone the delay and admit the appeal for adjudication. 2. First, we shall take up the Revenue’s appeal in ITA No. 2390/KOL/2024. The Revenue is in appeal before the Tribunal raising the following grounds of appeal: “1. Whether on the facts and circumstances of the case, the Ld. CIT(A) has erred in deleting the addition of share capital, to the tune of Printed from counselvise.com Page | 3 I.T.A. No.: 2390/KOL/2024 C.O. No.: 5/KOL/2025 Assessment Year: 2009-10 M/s. Anubandh Financial Services Private Limited. Rs.4,68,00,000/- made under section 68 of the Act when the source of funds for such huge investment could not be verified? 2. Whether on the facts and circumstances of the case, the Ld. CIT(A) has erred in deleting the addition without appreciating the fact that during the course of assessment proceedings, the assessee failed to discharge its duty to prove the genuineness of transactions, identity and creditworthiness of its share subscribers? 3. Whether, on the facts and circumstances of the case, the Ld. CIT(A) has erred in deleting the addition without appreciating the fact that during the course of assessment proceedings, an inspector was deputed to physically serve summonses under section 131 of the Act to the share subscribers, none of which were found to exist at their registered address and as such, identity of such share subscribers could not be established? 4. Whether the Ld. CIT(A) has erred in law by deleting the addition of Rs. 4,68,00,000/- made by the AO under section 68 of the Act thereby acting in contravention of the established and binding judicial precedents laid down by the Apex Court in the case of PCIT(Central)-1 vs NRA Iron & Steel Pvt. Ltd.? 5. The department craves the right to add, alter, amend or withdraw any ground of appeal before or at the time of hearing. 3. The assessee has filed the Cross Objections before the Tribunal on the following grounds: “1. For that the orders passed by the lower authorities are arbitrary, erroneous, without proper reasons, invalid and bad-in-law, to the extent to which they are prejudicial to the interests of the appellant. 2. For that the Ld. CIT (A) erred in not adjudicating the grounds: - (a) relating to assumption of jurisdiction by the A.O., Ward-8(1), Kolkata in issuing Notice u/s 148 of the Income Tax Act, 1961 on 10.03.2016 whereas vide Order dated 10.09.2015 the Ld. Pr. CIT, Kolkata-3 having transferred the jurisdiction to DCIT, CC-3(2), Kolkata the Notice so issued u/s 148 of the Act on 10.03.2016 by the A.O., Ward-8(1), Kolkata was bad-in-law, (b) relating to assessment made u/s 143(3)/147 on 30.12.2016 by the DCIT, CC-3(2), Kolkata whereas the Notice had been issued u/s 148 of the Act on 10.03.2016 by the ITO, Ward-8(1), Kolkata who was having no jurisdiction on the relevant date, Printed from counselvise.com Page | 4 I.T.A. No.: 2390/KOL/2024 C.O. No.: 5/KOL/2025 Assessment Year: 2009-10 M/s. Anubandh Financial Services Private Limited. (c) relating to the assessment proceeding being bad-in-law having been done on invalid Notice and the assessment thereof is liable to be quashed and annulled. 3. For that the appellant craves leave to amend, alter, modify, substitute, add to, abridge and/or rescind any or all of the above grounds.” 4. Brief facts of the case are that in this case, information had been received by the Ld. AO from the Investigation Wing, Kolkata that a search and seizure operation u/s 132(1) of the Act was conducted on Chitralekha Sarees Group on 15.12.2015. It was further reported that M/s. Anubandh Financial Services Pvt. Ltd. happened to be one of the group companies of M/s. Chitralekha Sarees Group. The warrant u/s 132 was also executed in the case of M/s. Anubandh Financial Services Pvt. Ltd. The report of the Investigation Wing also showed that M/s. Anubandh Financial Services Pvt. Ltd. had brought in share capital and share premium amounting to ₹9,73,00,000/- by issuing 1,94,600 no. of shares at the Face value of ₹10/- and premium of ₹490/- per share to various companies, some of them being M/s. Agradoot Land Development Pvt. Ltd, M/s. Garima Suppliers Pvt. Ltd, M/s. HKB Commercials Pvt. Ltd., M/s. Ultraplus Housing Estates Pvt. Ltd., M/s. Vandana Commodities Pvt. Ltd and M/s. Waltz Mercantile Pvt. Ltd totalling 93,600 number of shares with the total share capital and share premium of ₹4,68,00,000/-. The assessment was reopened u/s 147 of the Act after obtaining the prior approval of the competent authority. The Assessing Officer (hereinafter referred to as Ld. 'AO') added the same u/s 68 of the Act to the income of the assessee and assessed the total income at ₹4,68,19,230/- u/s 143(3)/147 of the Act for the reasons mentioned in the reassessment order. Aggrieved with the reassessment order, the assessee filed an appeal before the Ld. CIT(A) who, vide order dated 03.07.2024, deleted the additions made u/s 68 Printed from counselvise.com Page | 5 I.T.A. No.: 2390/KOL/2024 C.O. No.: 5/KOL/2025 Assessment Year: 2009-10 M/s. Anubandh Financial Services Private Limited. of the Act and partly allowed the appeal of the assessee. Aggrieved with the order of the Ld. CIT(A), the Revenue has filed the appeal before the Tribunal and the assessee has filed cross objections. 5. Rival contentions were heard and the submissions made and the paper book filed have been examined. A perusal of the assessment order shows that the summons under section 131 were issued by post to some of the applicant companies to verify their identity, creditworthiness and genuineness of the transactions at both their then registered addresses and old addresses at the time of allotment of shares. The Inspector of Income-tax attached to the office of the Investigation Wing was deputed in order to verify the genuineness of the business of the 6 companies as is mentioned on page 3 of the assessment order; however, none of the companies mentioned was found to be operating at the address given. It was, therefore, concluded that the applicant companies were just paper companies which were not traceable. The assessee was also given reasonable opportunities to substantiate the identity, creditworthiness and genuineness of the transaction and was also requested to produce the directors of the share applicant private companies, along with all documentary evidences, but the assessee could furnish only some documentary evidences like copy of audited accounts, copy of bank statements, copy of PAN card, etc. The Ld. AO has observed in para 6.13 of the assessment order that the assessee cannot avoid the verification process by submitting some papers and documents and as the assessee had failed to prove the creditworthiness and genuineness of the credits that took place in its books of account by way of share application money, therefore, a sum of Rs.4,68,00,000/- credited in the books of account of the assessee during the financial year 2008-09 relevant to Printed from counselvise.com Page | 6 I.T.A. No.: 2390/KOL/2024 C.O. No.: 5/KOL/2025 Assessment Year: 2009-10 M/s. Anubandh Financial Services Private Limited. the A. Y. 2009-10 was treated as unexplained cash credit u/s 68 of the I. T. Act, 1961 and added to the total income of the assessee. Aggrieved with the assessment order, the assessee preferred an appeal before the Ld. CIT(A), who called for a remand report and vide the impugned order, deleted the addition of Rs.4,68,00,000/- and partly allowed the appeal. Aggrieved with the order of the Ld. CIT(A), the revenue has filed the appeal before the Tribunal. The assessee has also filed the cross objections as the Ld. CIT(A) allowed the appeal on merits but did not adjudicate the legal grounds relating to the jurisdiction of the Ld. AO which was challenged by way of filing the additional grounds of appeal before him. 6. The Ld. DR submitted before us that the assessee is one of the group companies of Chitralekha Sarees Group in which a search was carried out on 15.12.2015 under section 132 of the Act. The assessee had issued shares of the face value of Rs. 10/- with premium of Rs. 490/- to various companies and as mentioned on page 3 of the assessment order, summons under section 131 were issued but none of the companies was found to be operating as per the report of the Inspector of Income-tax as is mentioned at pages 3 and 4 of the assessment order. It was submitted that some documentary evidences like copy of audited accounts, bank statements, copy of PAN cards were filed but the relevant persons could not be produced nor any of the 6 companies could be located. Our attention was drawn to page 8 para 6.13 of the assessment order in which it is held that the assessee failed to produce evidence for the creditworthiness of the creditors and genuineness of the credits for the share capital and the premium received. A query was raised by the Bench as to what was wrong with Printed from counselvise.com Page | 7 I.T.A. No.: 2390/KOL/2024 C.O. No.: 5/KOL/2025 Assessment Year: 2009-10 M/s. Anubandh Financial Services Private Limited. the order of the Ld. CIT(A) in which the remand report, the submission of the assessee and the documentary evidences furnished were considered to which the Ld. DR submitted that these were paper/shell companies and the persons behind the companies were not actual persons, therefore, the amounts received were liable to be added to the income of the assessee. In the appeal order on page 16 para 2, It has been mentioned as under: “On perusal of the assessment order, it has been observed that the proceedings u/s 147 of the Act were initiated on 10.03.2016 against the assessee on the basis of information received from the Investigation Wing. The AO in Page 1 of the assessment order has recorded that a search and seizure operation was conducted on the Chitralekha Sarees Group on 15.12.2015 and the appellant company is one of the group concerns of Chitralekha Sarees Group. The primary contention of the AO while making the said additions was that during the course of post search enquiry, the existence of the 6 share applicant companies tabulated above were not found by the Inspector of Investigation Wing and therefore it has been contended that the said 6 share applicant companies were physically untraceable. In Page 3 of the assessment order, the AO has reproduced the Inspector report regarding the verification made by the Inspector attached to the Investigation Wing. As per the Inspector Report, the Inspector went to the address of the 6 share applicant companies, but was unable to serve the summons u/s 131 on the 6 share applicant companies as their offices were not traceable at the addresses provided. The date of such enquiry has been mentioned as 16.02.2016 which evidently is prior to the date of issuance of notice u/s 148. That being the case, no further discussion has been made by the AO in the assessment order, which would indicate as to what enquiries were made by the AO in this regard during the course of assessment proceedings. The AO has however recorded that vide letter dated 30.11.2016, the assessee was requested to produce the directors of the share applicant companies, but the appellant could not produce the Directors of the share applicant companies.” 7. The Ld. AR on the other hand argued before us in respect of the Cross Objections filed that the case was transferred from the ITO, Ward- 8(1), Kolkata to the DCIT, Central Circle-3(2), Kolkata and the order dated 10.09.2015 has been enclosed in the paper book from pages 1 to 2 in this regard. This issue was raised in the additional grounds of Printed from counselvise.com Page | 8 I.T.A. No.: 2390/KOL/2024 C.O. No.: 5/KOL/2025 Assessment Year: 2009-10 M/s. Anubandh Financial Services Private Limited. appeal before the Ld. CIT(A), which are reproduced on page 5 of the appeal order of the Ld. CIT(A), but were not adjudicated by him. The Ld. AR also drew our attention to page 3 of the paper book which is the proposal dated 04.03.2016 submitted by the ITO Ward-8(1), Kolkata for initiation of proceedings u/s 147 of the Act and it was argued that the notice u/s 148 issued on 10.03.2016 was without jurisdiction. It was submitted that the DCIT, Central Circle-3(2), Kolkata holding jurisdiction on 10.09.2015 ought to have issued the notice. Our attention was drawn to page 29 of the order of the Ld. CIT(A) in which the legal grounds raised were not adjudicated by the Ld. CIT(A) and as the notice issued under section u/s 148 of the Act did not survive, it was submitted that the appeal of the Department deserves to be dismissed. 8. The Ld. DR countered that the assessee did not agitate this issue before the Ld. AO and the Ld. CIT(A) has gone into the merits of the case and did not take any cognizance of this issue. He requested that the order of the Ld. CIT(A) may be set aside and the order of the Ld. AO may be restored. 9. We have heard the submissions made by both the sides. As regards the relief allowed by deleting the addition u/s 68 of the Act, similar issue arose in the case of Principal Commissioner of Income- tax v. Mundhra Construction (P.) Ltd. [2025] 173 taxmann.com 361 (Calcutta) in which it has been held as under: “ The assessee carried the matter on appeal to the Tribunal which was allowed the assessee’s appeal by the impugned order when surprisingly the Tribunal has not discussed or dealt with the correctness of the findings recorded by the appellate authority, which, was done after a detailed factual exercise. The Tribunal has stated in the impugned order that on perusal of the paper book and document three factors have been proved by the assessee. This, is wholly Printed from counselvise.com Page | 9 I.T.A. No.: 2390/KOL/2024 C.O. No.: 5/KOL/2025 Assessment Year: 2009-10 M/s. Anubandh Financial Services Private Limited. inadequate and insufficient for the Tribunal to set aside the order passed by the appellate authority. In other words, the Tribunal was required to examine the correctness of the factual findings recorded by the Commissioner (Appeals) and then recorded its views as to why it is not in agreement with the findings of the appellate authority. On reading of the impugned order it is seen that this aspect of the matter is conspicuously absent. The decision of this court in Balgopal Merchants (P.) Ltd. v. Pr. CIT [2024] 162 taxmann.com 465/468 ITR 136 (Calcutta) is relevant. The said decision also arose under section 68 and the facts and circumstances of the case were more or less identical. In the said case also the Commissioner (Appeals) on examining the facts found that the assessee-company therein had no track record or asset base for demanding astronomical high premium per share which defied all commercial and financial prudence and logic. Furthermore, the test of human probability was also applied and when done so it was held that high premium share defying logic. Thus, if the test of human probability is applied in the facts of the case on hand, it should have been established by the assessee as to why and for what reason the share subscription invested in shares of the assessee-company at such huge premium despite the factual position being that the assessee-company had no track record. [Para 7]  ■ Thus, the Tribunal did not go into all these aspects and proceeded to accept the case of the assessee solely by making certain observations with regard to the paper book which was filed by the assessee. The Tribunal over-turning the order passed by the Commissioner (Appeals) was required to examine the correctness of the findings recorded by the Commissioner (Appeals) and then come to the conclusion why such findings are not acceptable and while doing so reasons have to be recorded in writing. In the absence of all these essential requirements, it is to be held that the impugned order is not sustainable in law and the Tribunal committed an error of law in allowing the assessee’s appeal. [Para 8]” {emphasis supplied} 10. It is incomprehensible if the applicants could respond to the notices issued u/s 133(6) of the Act without being traceable, what prevented the assessee to produce their directors before the Ld. AO. The Ld. CIT(A) has also not mentioned whether the companies were traceable subsequently as on physical inspection by the ITI, they were found not to be existing at the addresses given. It is also not understood as to what were the terms of reference of the remand report called for by the Ld. CIT(A) from the Ld. AO and whether the Ld. AO was directed to carry out any inquiries or simply offer his comments on the submissions/documents sent to him and whether there was a failure Printed from counselvise.com Page | 10 I.T.A. No.: 2390/KOL/2024 C.O. No.: 5/KOL/2025 Assessment Year: 2009-10 M/s. Anubandh Financial Services Private Limited. on his part while sending the remand report. the Ld. CIT(A) has observed in respect of Ground Nos. 4 and 5 before him on page 13 that the grounds agitate against the action of the AO in making addition of Rs.4,68,00,000/- under section 68 of the Act in respect of amounts received by the Appellant Company against issue and allotment of 93,600 equity shares of the face value of Rs.10 each at a premium of Rs.490 per share. The details of share capital raised by the appellant company during the F.Y: 2008-09 from 13 applicant companies have been mentioned. It is also mentioned that the Ld. AO in his assessment order has made an addition of Rs.4,68,00,000/- towards share capital raised along with share premium from the 6 share applicants out of the 13 applicant companies. However, the remaining share applicant companies were not placed under doubt and their subscriptions to the share capital has been accepted by the AO. Therefore, the share premium charged to the tune of Rs.490/- by the appellant company from all the share applicant companies are not placed under doubt by the Ld. AO and has mentioned that the issue of share premium does not need any discussion whatsoever. This finding is not correct as in respect of the companies from which replies were received, no addition was made but in respect of companies which were not traceable, the share application money as well as the share premium was added. Further, since the powers of the Ld. CIT(A) are coterminous with that of the Ld. AO, and he has mentioned receipt of share premium on which he seems to have some apprehensions, it was his duty to have exercised his power once he had noted the huge share premium or should have examined the genuineness of the transaction, specifically when the Ld. AO had raised doubts about the share capital and share premium Printed from counselvise.com Page | 11 I.T.A. No.: 2390/KOL/2024 C.O. No.: 5/KOL/2025 Assessment Year: 2009-10 M/s. Anubandh Financial Services Private Limited. received from the six defaulting companies. A reading of the provision of section 251 shows that the powers of the CIT(A) extend not only to the subject matter of the appeal against the assessment that in a given case, it is open to the first appellate authority to even enhance the assessment. Thus, apart from confirming an assessment or granting relief to the assessee or cancelling the assessment, the first appellate authority has the power of an AO to enhance the assessment which is under appeal before him. The CIT(A) has the jurisdiction to examine all matters covered by the assessment order and correct the assessment in respect of all such matters even to the prejudice of the assessee and remand the case to the AO to inquire into matters which were not the subject matter of appeal. The only restriction on the power while enhancement is that the assessee must be given a reasonable opportunity of showing cause as against such assessment or reducing the amount of refund. Explanation appended to section 251 is a further addition to the power given to the CIT(A) as specified u/s 251(1). A reading of the said Explanation shows that the authority of the CIT(A) travels to any matter which may arise out of the proceedings, which is appealed against, notwithstanding the fact that such matter was not raised by an assessee before the CIT(A). Such a view has been held in M. Loganathan v. ITO [2012] 25 taxmann.com 174/209 Taxman 508 (Mad.) and also in CIT v. K. S. Dattatreya [2011] 9 taxmann.com 106/197 Taxman 151 (Kar.). In fact, the appellate authority could substitute the order of the ITO by one of his own as held in V. Subramonia Iyer v. CIT [1978] 113 ITR 685 (Ker.). Further, in CIT v. Kanpur Coal Syndicate [1964] 53 ITR 225 (SC), it has been held that the scope of CIT(A) power is conterminous with that of the AO. He can Printed from counselvise.com Page | 12 I.T.A. No.: 2390/KOL/2024 C.O. No.: 5/KOL/2025 Assessment Year: 2009-10 M/s. Anubandh Financial Services Private Limited. do what the AO can do and also direct him to do what he has failed to do. If the AO has the option to assess one or other of the entities in the alternative, the CIT(A) can direct him to do what he should have done in the circumstances of a case. In CIT v. K. S. Dattatreya [2011] 9 taxmann.com 106/197 Taxman 151 (Kar.) these are held to be special and exceptional attributes of the jurisdiction of a tax appellate authority. These attributes underline the truth that the appellate authority is no different, functionally and substantially, from the assessing authority itself. The CIT(A) has been constituted as a revisional authority against the decision of the AO, a revising authority not in the narrow sense of revising what is the subject-matter of the appeal, not in the sense of revising those matters about which the assessee makes a grievance, but as a revising authority in the sense that once the appeal is before him he can revise not only the ultimate computation arrived at by the AO but can revise every process which led to the ultimate computation or assessment. He is entitled to revise the various decisions given by the AO in the course of assessment and also the various incomes or deductions which came in for consideration of the AO. It was, therefore, held in Jute Corporation of India Ltd. v. CIT [1990] 53 Taxman 85 (SC) and CIT v. Nirbheram Deluram [1997] 91 Taxman 181 (SC) that if that be so, there appears to be no reason as to why the appellate authority cannot modify the assessment order on an additional ground even if not raised before the AO. No exception could be taken to this view as the 1961 Act does not place any restriction or limitation on the exercise of appellate power. Even otherwise an appellate authority while hearing appeal against the order of a subordinate authority has all the powers which the original Printed from counselvise.com Page | 13 I.T.A. No.: 2390/KOL/2024 C.O. No.: 5/KOL/2025 Assessment Year: 2009-10 M/s. Anubandh Financial Services Private Limited. authority may have in deciding the question before it subject to the restrictions or limitations, if any, prescribed by the statutory provisions. In the absence of any statutory provision, the appellate authority is vested with all the plenary powers which the subordinate authority may have in the matter. The Ld. CIT(A) does not seem to have exercised his powers despite observing the huge share premium and consequently having some apprehensions in respect of share premium. Hence, the order of the Ld. CIT(A) is liable to be set aside as the addition has been deleted despite the facts being abnormal, these six companies not existing at the addresses mentioned and the addition u/s 68 has not been examined on appreciation of the facts of the case that the directors also did not appear. 11. Similar issue arose in the case of Blackberry Vyapaar Pvt. Ltd. I.T.A. No.: 1234/KOL/2023 for the Assessment Year: 2008-09, order dated 16.06.2025 in which, relying upon the jurisdictional High Court’s decision in the case of Principal Commissioner of Income-tax (Central)-2 vs. BST Infratech Ltd. [2024] 161 taxmann.com 668 (Calcutta)/[2024] 468 ITR 111 (Calcutta)[23-04-2024], following findings have been made: “8. Since in this case, the identity, creditworthiness of the creditors/share applicants and the genuineness of the transactions could not be proved, therefore, there was justification for making the additions. The Ld. CIT(A) was, however, was carried away by the fact that the directors did not receive the notices, therefore, they could not appear which, however, is contrary to the facts mentioned by the Ld. AO in the assessment order, as was also pointed out by the Ld. DR before us. Thus, the order of the Ld. CIT(A), not being based upon facts of the case and there being no justification for charging huge premium of ₹90/- on the face value of ₹10/- per share and the inability to produce the directors for examination but response being received for notices issued u/s 133(6) of the Act, all establish the fact that the share capital was arranged by the assessee and therefore, despite the directors not appearing, the self-serving Printed from counselvise.com Page | 14 I.T.A. No.: 2390/KOL/2024 C.O. No.: 5/KOL/2025 Assessment Year: 2009-10 M/s. Anubandh Financial Services Private Limited. responses to notices u/s 133(6) of the Act were filed. Thus, in view of the finding of the Ld. AO and the principles laid down in the decision of the Hon'ble Jurisdictional High Court in the case of BST Infratech Ltd. (supra), the failure of the assessee to justify the charging of share premium and no further compliance before us, the order of the Ld. CIT(A) is hereby set aside and the order of the Ld. AO is hereby confirmed. Hence, all the grounds of appeal raised by the Revenue are allowed.” 12. In the case of Principal Commissioner of Income Tax (Central) - 2 v. M/s. BST Infratech Limited [ITAT 67 of 2024 dated 23.04.2024], the court took note of the various decisions on the point and it would be useful to the refer to the relevant paragraphs of the said judgment:- 16. In Commissioner of Income Tax v. N.R. Portfolio Private Limited [2014] 42 taxmann.com 339/264 CTR 258/222 Taxman 157 (Delhi) the substantial question of law which was framed for consideration is whether the tribunal was right in deleting the additions under Section 68 of the Act and whether the decision of the tribunal is perverse. 17. With regard to the role of the assessing officer, the Hon'ble Court held that the assessing officer is both an investigator and an adjudicator; when a fact is alleged and stated before the assessing officer by an assessee, he must and should examine and verify, when in doubt or when the assertion is debatable. Normally a factual assertion made should be accepted by the assessing officer unless for justification and reasons the assessing officer feels that he needs/requires a deeper and detailed verification of the facts alleged. The assessee in such circumstances should cooperate and furnish papers, details and particulars, this may entail issue of notices to third parties to furnish and supply information or confirm facts or even attend as witnesses. The assessing officer can also refer to incriminating material or evidence available with him and call upon the assessee to file their response. A universal procedure or method which should be adopted by the assessing officer when verification of facts is required cannot be laid down. The manner and mode of conducting assessment proceedings has to be left to the discretion of the assessing officer and the same should be just, fair and should not cause harassment to the assessee or third person from whom the confirmation or verification is required. 18. It was further held that the provisions of the Evidence Act are not applicable but the assessing officer being a quasi-judicial authority must take care and caution to ensure that the decision is reasonable and satisfies the cannons of equity, fairness and justice. The principle of Preponderance of Probability Printed from counselvise.com Page | 15 I.T.A. No.: 2390/KOL/2024 C.O. No.: 5/KOL/2025 Assessment Year: 2009-10 M/s. Anubandh Financial Services Private Limited. applies. On the question of creditworthiness and genuineness of the transaction in the said case, the Hon'ble Court recorded the following finding:- 19. On the question of creditworthiness and genuineness, it was highlighted that the money no doubt was received through banking channels, but did not reflect actual genuine business activity. The share subscribers did not have their own profit making apparatus and were not involved in business activity. They merely rotated money, which was coming through the bank accounts, which means deposits by way of cash and issue of cheques. The bank accounts, therefore, did not reflect their creditworthiness or even genuineness of the transaction. The beneficiaries, including the respondent-assessee, did not give any sharedividend or interest to the said entry operators/subscribers. The profit motive normal in case of investment, was entirely absent. In the present case, no profit or dividend was declared on the shares. Any person, who would invest money or give loan would certainly seek return or income as consideration. These facts are not adverted to and as noticed below are true and correct. They are undoubtedly relevant and material facts for ascertaining creditworthiness and genuineness of the transactions. 19. The doctrine of \"Source of Source\" or \"Origin of Origin\" was explained in the following terms:- 24. We are conscious of the doctrine of 'source of source' or 'origin of origin' and also possible difficulty which an assessee may be faced with when asked to establish unimpeachable creditworthiness of the share subscribers. But this aspect has to be decided on factual matrix of each case and strict or stringent test may not be applied to arms length angel investors or normal public issues. Doctrine of source of source' or „origin of origin' cannot be applied universally, without reference to the factual matrix and facts of each case. The said test in case of normal business transactions may be light and not vigorous. The said doctrine is applied when there is evidence to show that assessee may not be aware, could not have knowledge or was unconcerned as to the source of money paid or belonging to the third party. This may be due to the nature and character of the commercial/business transaction relationship between the parties, statutory postulates etc. However, when there is surrounding evidence and material manifesting and revealing involvement of the assessee in the \"transaction\" and that it was not entirely an arm's length transaction, resort or reliance to the said doctrine may be counter- productive and contrary to equity and justice. The doctrine is not an eldritch or a camouflage to circulate ill gotten and unrecorded money. Without being oblivious to the constraints of the assessee, an objective and fair approach/determination is required. Thus, no assessee should be harassed and harried but any dishonest faqade and smokescreens which masquerade as pretence should be exposed and not accepted. 20. With regard to the identity, creditworthiness and genuineness of the Printed from counselvise.com Page | 16 I.T.A. No.: 2390/KOL/2024 C.O. No.: 5/KOL/2025 Assessment Year: 2009-10 M/s. Anubandh Financial Services Private Limited. transaction and the onus of prove the Hon'ble Court held as follows:- 30. What we perceive and regard as correct position of law is that the court or tribunal should be convinced about the identity, creditworthiness and genuineness of the transaction. The onus to prove the three factum is on the assessee as the facts are within the assessee's knowledge. Mere production of incorporation details, PAN Nos. or the fact that third persons or company had filed income tax details in case of a private limited company may not be sufficient when surrounding and attending facts predicate a cover up. These facts indicate and reflect proper paper work or documentation but genuineness, creditworthiness, identity are deeper and obtrusive. Companies no doubt are artificial or juristic persons but they are soulless and are dependent upon the individuals behind them who run and manage the said companies. It is the persons behind the company who take the decisions, controls and manage them. 31. Identity, creditworthiness or genuineness of the transaction is not established by merely showing that the transaction was through banking channels or by account payee instrument. It may, as in the present case required entail a deeper scrutiny. It would be incorrect to state that the onus to prove the genuineness of the transaction and creditworthiness of the creditor stands discharged in all cases if payment is made through banking channels. Whether or not onus is discharged depends upon facts of each case. It depends on whether the two parties are related or known to each; the manner or mode by which the parties approached each other, whether the transaction was entered into through written documentation to protect the investment, whether the investor professes and was an angel investor, the quantum of money, creditworthiness of the recipient, the object and purpose for which payment/investment was made etc. These facts are basically and primarily in knowledge of the assessee and it is difficult for revenue to prove and establish the negative. Certificate of incorporation of company, payment by banking channel, etc. cannot in all cases tantamount to satisfactory discharge of onus. The facts of the present case noticed above speak and are obvious. What is unmistakably visible and apparent, cannot be spurred by formal but unreliable pale evidence ignoring the patent and what is plain and writ large. 21. In Rajmandir Estates Private Limited v. Principal Commissioner of Income Tax [2016 SCC Online Cal 1237], one of the substantial questions of law which fell for consideration was whether the finding of the CIT(A) that unaccounted money was or could have been laundered as clean share capital by creating faqade of paper work, routing the money through several bank accounts and getting the seal of statutory approval by getting the case re-opened under Section 147 suo motu and whether the same is perverse. The facts of the said case was noted wherein 19 out of the 13 applicants secured funds for the purpose of contributing to the share capital of the assessee therein, on account Printed from counselvise.com Page | 17 I.T.A. No.: 2390/KOL/2024 C.O. No.: 5/KOL/2025 Assessment Year: 2009-10 M/s. Anubandh Financial Services Private Limited. of share application money. In other words, those 19 applicants collected funds on account of share application money in their respective companies and that money was contributed to the share capital of the assessee. 15 out of the 39 applicants procured the requisite funds by selling the shares and the rest of the applicants of shares, in the share capital of the assessee company, did not disclose the nature of receipt at their end though the source of funds were identified. Further the shares were offered to and subscribed by closely held companies owned by the promoter/director or their close relatives and friends. After noting the facts, the Hon'ble Court held that the identity of the alleged shareholders is known but the transaction was not a genuine transaction. The transaction was nominal rather than real; creditworthiness of the alleged shareholders is also not established because they did not have money of their own, each one of them received from somebody and that somebody received from a third person and therefore prima facie, shareholders are near namelenders. 22. In Principal Commissioner of Income Tax, (Central - 1) v. NRA Iron and Steel Private Limited [2019] 15 SCC 529 the issue which fell for consideration is when share capital/premium is credited in the Books of Account of the assessee company, the onus of prove is on the assessee to establish by cogent and reliable evidence of the identity of the investor company, the creditworthiness of the investor and genuineness of the transaction, to the satisfaction of the assessing officer. The Hon'ble Supreme Court observed that the courts have held that in the case of cash credit entries, it is necessary for the assessee to prove not only the identity of the creditors but also the capacity of the creditors to advance money, and establish the genuineness of those transaction. The initial onus of proof lies on the assessee. The decision in Roshan Di Hatti v. Commissioner of Income Tax [1977] 2 SCC 378 was referred to wherein it was held that if the assessee fails to discharge the onus by producing cogent evidence and explanation the assessing officer would be justified in making the addition back into the income of the assessee. 23. The decision in N.R. Portfolio Private Limited was quoted with approval wherein it has been held that creditworthiness or genuineness of a transaction regarding share application money depends on whether two parties are related or known to each other, or mode by which parties approached each other, whether a transaction is entered into through written documentation to protect investment or whether the investor was a angel investor, the quantum of money invested, the creditworthiness of the receipt, object and purposes for which payment/investment was made etc. The incorporation of a company and payment by banking channel etc. cannot in all cases tantamount to satisfactory discharge of onus. The principles which emerge were sums of money are credited as share capital/premium was summarised as follows:- 13.1. The assessee is under a legal obligation to prove the genuineness of the Printed from counselvise.com Page | 18 I.T.A. No.: 2390/KOL/2024 C.O. No.: 5/KOL/2025 Assessment Year: 2009-10 M/s. Anubandh Financial Services Private Limited. transaction, the identity of the creditors, and creditworthiness of the investors who should have the financial capacity to make the investment in question, to the satisfaction of the AO, so as to discharge the primary onus. 13.2. The assessing officer is duty-bound to investigate the creditworthiness of the creditor/subscriber, verify the identity of the subscribers, and ascertain whether the transaction is genuine, or these are bogus entries of name-lenders. 13.3. If the enquiries and investigations reveal that the identity of the creditors to be dubious or doubtful, or lack creditworthiness, then the genuineness of the transaction would not be established. In such a case, the assessee would not have discharged the primary onus contemplated by Section 68 of the Act. 13. Hence, on the reasons as mentioned in the appeal order of the Ld. CIT(A), when examined in the light of the recent judicial pronouncements on the issue, the order of the Ld. CIT(A) does not appear to be justified as despite noting that the AO has recorded that vide letter dated 30.11.2016, the assessee was requested to produce the directors of the share applicant companies, but the appellant could not produce the Directors of the share applicant companies, relief has been allowed in respect of the alleged shell companies without examining the facts. He has further noted on page 17 that “since, the Inspectors report towards non service of summons were before initiation of assessment proceedings u/s 147 and the share applicant companies having responded to the notices u/s 133(6) during the course of assessment proceedings, I find that the identity of the share applicants cannot be placed under doubt merely on the basis of the Inspectors Report which was made prior to initiation of proceedings u/s 147.” However, once the companies were found to be non-existent, merely on the basis of paper documents filed on their behalf, the identity of the companies or their transactions being genuine could not be established as no further facts have been mentioned to reverse the finding of the ITI or any additional finding regarding the existence of the company being placed on record subsequently, at the time of framing of the assessment. Hence, the Printed from counselvise.com Page | 19 I.T.A. No.: 2390/KOL/2024 C.O. No.: 5/KOL/2025 Assessment Year: 2009-10 M/s. Anubandh Financial Services Private Limited. order of the Ld. CIT(A) is liable to be set aside, the same is hereby set aside to be done de novo after examining the full facts of the case as the directors did not appear. Hence, the Revenue’s appeal is partly allowed for statistical purposes and the Ld. CIT(A) shall examine the complete facts of the case before giving his findings and if required, utilize his powers as mentioned in the preceding paras. 14. Now, we will take up the cross objection in CO No. 5/KOL/2025 filed by the assessee. As regards the cross objections of the assessee, the Ld. DR submitted that the assessee had not agitated this issue before the Ld. AO. In this respect it is relevant to refer to the provision of section 124(3)(a) of the Act which is reproduced as under: “124(3) No person shall be entitled to call in question the jurisdiction of an Assessing Officer- (a) where he has made a return [under sub-section (1) of section 115WD or] under sub-section (1) of section 139, after the expiry of one month from the date on which he was served with a notice under sub-section (1) of section 142 or [sub-section (2) of section 115WE or] sub- section (2) of section 143 or after the completion of the assessment, whichever is earlier.” 15. This issue arose in the case of Deputy Commissioner of Income- tax (Exemption) v. Kalinga Institute of Industrial Technology [2023] 151 taxmann.com 434 (SC) wherein the Hon'ble Supreme Court have held as under while reversing the order of the Hon'ble Orissa High Court: “1. The impugned order set asides the assessment for A.Y. 2014-2015 the ground that the jurisdictional officer had not adjudicated upon the returns. The jurisdiction had been changed after the returns were filed. However, the records also reveals that the assessee had participated pursuant to the notice issued under section 142 (1) and had not questioned the jurisdiction of the assessing officer. Section 124(3)(a) of the Income-tax Act precludes the assessee from questioning the Printed from counselvise.com Page | 20 I.T.A. No.: 2390/KOL/2024 C.O. No.: 5/KOL/2025 Assessment Year: 2009-10 M/s. Anubandh Financial Services Private Limited. jurisdiction of the assessing officer, if he does not do so within 30 days of receipt of notice under section 142 (1). 2. In the present case, the facts did not warrant the order made by the High Court. At the same time, this Court notices that the High Court had granted liberty to the concerned authority to issue appropriate notice. 3. It is clarified, therefore, that the assessing officer is free to complete the assessment (in case the assessment order has not been issued) within the next 60 days. In such event, the question of limitation shall not be raised by the assessee. 4. The special leave petition is allowed in the above terms. 5. Pending application, if any, are disposed of.” {emphasis supplied} 16. It is not comprehensible whether the assessee had raised this issue before the Ld. AO as per the provision of section 124(3)(a) of the Act. Since this issue has not been adjudicated by the Ld. CIT(A) therefore, the matter needs to be remanded to the Ld. CIT(A) who shall examine the facts of the case, consider the evidence filed by the assessee and adjudicate the issue as the appeal has already been set aside to be done afresh in the Department’s appeal. 17. Hence, in view of the discussion made above and to sum up, since the facts have not been correctly appreciated while deciding the appeal, the order of the Ld. CIT(A) is liable to be set aside as the judicial precedents laid down by the Apex Court in the case of PCIT(Central)-1 vs NRA Iron & Steel Pvt. Ltd. relied upon by the Revenue in the grounds of appeal and others as cited in the preceding paras have not been considered. We, therefore, set aside the order of the Ld. CIT(A) and remit the appeal to him to be decided afresh, who shall allow an opportunity of being heard to the assessee and also grant an opportunity of representing the case and be heard to the Ld. AO as per rule 46A of the Income Tax Rules, 1962, if required, and thereby pass an order in Printed from counselvise.com Page | 21 I.T.A. No.: 2390/KOL/2024 C.O. No.: 5/KOL/2025 Assessment Year: 2009-10 M/s. Anubandh Financial Services Private Limited. accordance with law. The appeal of the Revenue as well as the Cross Objection filed by the assessee both are partly allowed for statistical purposes. The assessee shall be at liberty to raise all contentions including the legal issues before the Ld. CIT(A). 18. In the result, both the appeal filed by the Revenue as well as the Cross Objections filed by the assessee are partly allowed for statistical purposes. Order pronounced in the open Court on 11nd August, 2025. Sd/- Sd/- [George Mathan] [Rakesh Mishra] Judicial Member Accountant Member Dated: 11.08.2025 Bidhan (Sr. P.S.) Printed from counselvise.com Page | 22 I.T.A. No.: 2390/KOL/2024 C.O. No.: 5/KOL/2025 Assessment Year: 2009-10 M/s. Anubandh Financial Services Private Limited. Copy of the order forwarded to: 1. ACIT, Central Circle-3(2), Kolkata. 2. M/s. Anubandh Financial Services Private Limited, 111, Park Street, Kolkata, West Bengal, 700016. 3. CIT(A)-21, Kolkata. 4. CIT- 5. CIT(DR), Kolkata Benches, Kolkata. 6. Guard File. //True copy // By order Assistant Registrar ITAT, Kolkata Benches Kolkata Printed from counselvise.com "