DIVYA ELECTRONICS PVT. LTD.,KOLKATA V. ITO, WARD 6(2), KOLKATA

ITA 1654/KOL/2025

AI Insights

Divya Electronics Pvt. Ltd. appealed against the order of the National Faceless Appeal Centre, which confirmed the addition of 55 lacs as unexplained cash credit concerning share capital raised during the assessment year 2012-13. The Assessing Officer had initially made this addition, citing non-compliance with summons under section 131 of the Income Tax Act and the meager income of the subscribers. The Tribunal, after reviewing the evidence and the arguments presented, including precedents from similar cases, found that the assessee had adequately responded to all inquiries and provided necessary documentation, thus setting aside the lower authorities' decisions and allowing the appeal.

• Counselvise Citation: [2026] 140 COUNSELVISE.COM (IT) 830559 (ITAT-KOLKATA)
• Duration Of Justice: 5 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-01-2026
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: misc
• Appeal Filed On: 25-07-2025
• Other Referred Cases: 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. Daulat Ram Rawatmull [1973] 87 ITR 349 (SC), Omar Salay Mohamed Sait vs. Commissioner of Income-tax [1959] 37 ITR 151 (SC)
• Laws Referred To: Income-tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MANOJ KUMAR PATI
• Assessee Lawyers: S.M. SURANA
• Keywords: Set aside; Unexplained cash credit
• Section: 142(1); 68; 131; 133(6)

Judgement Text

" IN THE INCOME TAX APPELLATE TRIBUNAL “A” BENCH, KOLKATA BEFORE SHRI RAJESH KUMAR, AM AND SHRI PRADIP KUMAR CHOUBEY, JM ITA No. 1654/KOL/2025 (Assessment Year: 2012-13) Divya Electronics Pvt. Ltd. 4th Floor, Room No.401, 32, Ezra Street, Kolkata-700001, West Bengal Vs. ITO, Ward 6(2) Aaykar Bhawan, P-7, chowringhee Square, Kolkata- 700069, West Bengal (Appellant) (Respondent) PAN No. AAACD9721C Assessee by : Shri S.M. Surana, AR Revenue by : Shri Manoj Kumar Pati, DR Date of hearing: 12.01.2026 Date of pronouncement: 20.01.2026 O R D E R Per Rajesh Kumar, AM: This is an appeal preferred by the assessee against the order of the National Faceless Appeal Centre, Delhi (hereinafter referred to as the “Ld. CIT(A)”] dated 09.04.2025 for the AY 2012-13. 2. At the outset, we note that the appeal of the assessee is barred by limitation by 25 days. At the time of hearing the counsel of the assessee explained the reasons for delay in filing the appeal. The Ld. D.R did not raise any objection in condoning the delay. After hearing the rival contentions and perusing the materials available on record, Printed from counselvise.com Page | 2 ITA No. 1654/KOL/2025 Divya Electronics Pvt. Ltd.; A.Y. 2012-13 we find that the delay is for bonafide and genuine reasons and hence, we condone the delay and admit the appeal for adjudication. 3. The issue raised in ground nos. 1 and 2 is not pressed at the time of hearing and therefore, ground nos.1 &2 are dismissed. 4. The issue raised in ground no.3 to 7 is against the confirmation of addition of ₹55 lacs by the ld. CIT (A) as made by the ld. AO in respect of share capital raised by the assessee during the year as unexplained cash credit u/s 68 of the Act. 4.1. The facts in brief are that the assessee filed the return of income on 11.01.2013, declaring total income at ₹1,01,754/-. The return was processed u/s 143(1) of the Act. Thereafter, the case of the assessee was selected for scrutiny and notice u/s 143(2) and 142(1) of the Income-tax Act, 1961 (the Act) along with questionnaire were issued and duly served upon the assessee. The ld. AO called upon the assessee to furnish the evidences/ explanation regarding share capital raised during the year from three parties by allotting equity shares which were duly furnished before the ld. AO. The assessee issued shares of face value of ₹10/- each at a premium of ₹990/-. Thus, assessee filed before the ld. AO the names, addresses, PANs, the accounts/ audited accounts/ bank statements and confirmations of the subscribers. The ld. AO also issued notice u/s 131 of the Act to the directors of the assessee company and of the subscribers. The shares were allotted to three entities/ subscribers. The shares were allotted to three entities/ subscribers, (i) M/s Ranbhumi Marketing (P) Ltd. of ₹5,00,000/- (ii) Kamla Devi Kothari of ₹2,50,000/- (iii) R.C. Suppliers Pvt Ltd. of ₹50,00,000/-. The ld. AO noted that in case of none of the Printed from counselvise.com Page | 3 ITA No. 1654/KOL/2025 Divya Electronics Pvt. Ltd.; A.Y. 2012-13 investors companies’ the directors appeared in compliance to summons u/s 131 of the Act. However, RK Kothari, the Director of the assessee company submitted the confirmations from the investors. Finally, the addition was made by the ld. AO by treating the share capital /premium by two corporate subscribers as unexplained cash credit on the ground that there was no compliance to the summons and the subscribers have meagre income thereby making addition of Rs. 55,00,000 /- in the assessment framed u/s 143(3). 4.2. The ld. CIT (A) confirmed the addition in the appellate proceedings. 4.3. After hearing the rival contentions and perusing the materials available on record, we find that the issue of equity shares to three subscribers. We note that the assessee has produced all the evidences before the ld. AO as well as the ld. CIT (A) qua the share subscribers. The ld. AO also issued summons u/s 131 of the Act. However, the addition was confirmed on the ground that there was no compliance to the summons and the subscriber have low incomes. The ld. AO has not pointed out any deficiency or defect in the documents furnished by the assessee and merely made the addition for non-compliance u/s 131 of the Act. In our opinion, the addition made by the ld. AO and sustained by the ld. CIT (A) is not correct and therefore, cannot be sustained. 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); ii. CIT Vs. Orchid Industries Ltd. 397 ITR 136 (Bom); Printed from counselvise.com Page | 4 ITA No. 1654/KOL/2025 Divya Electronics Pvt. Ltd.; A.Y. 2012-13 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. 4.3.1. Considering the facts of the assessee in the light of the above decisions, we are inclined to set aside the order of the ld. CIT (A) and direct the ld. AO to delete the addition of ₹55 lacs. 5. The second issue raised by the assessee in ground nos. 8 & 9 is against the confirmation of disallowance by the ld. CIT (A) of ₹1,00,00,000/- as made by the ld. AO in respect of employees benefits and other expenses. 5.1. The facts in brief are that the ld. AO, during the course of assessment proceedings, observed that employment benefit expenses increased from 54,12,854/- in the preceding financial year to ₹62,88,525/- in the current financial year. Similarly, the other expenses have also gone up. The assessee produced before the ld. AO the books of account to prove of payments by cheque/ cash to the employees. The ld. AO also issued letter u/s 133(6) of the Act to the employees, who also replied the said notices confirming the payments received from the employer towards salary. However, the ld. AO noted that salary and other expenses have increased astronomically during the year. 5.2. We have examined the audited accounts of the assessee during the year and find that though there is some increase in the expenses of the assessee but the income of the assessee has also gone up from Printed from counselvise.com Page | 5 ITA No. 1654/KOL/2025 Divya Electronics Pvt. Ltd.; A.Y. 2012-13 85.98 lac to 111.43 lacs. Moreover, the assessee has produced all the evidences before the ld. Assessing Officer. Therefore, the disallowance of expenses on the basis of presumption and surmises cannot be sustained. The case of the assessee is squarely covered by a series of decisions namely CIT vs. Daulat Ram Rawatmull [1973] 87 ITR 349 (SC)vide order dated 12-09-1972 and Omar Salay Mohamed Sait vs. Commissioner of Income-tax [1959] 37 ITR 151 (SC) dated 05-03- 1959 wherein it has been held that no disallowance can be made on presumptions and surmises. Accordingly, we set aside the order of ld. CIT (A) and direct the ld. AO to delete the addition. 6. In the result, the appeal of the assessee is allowed. Order pronounced in the open court on 20.01.2026. Sd/- Sd/- (PRADIP KUMAR CHOUBEY) (RAJESH KUMAR) (JUDICIAL MEMBER) (ACCOUNTANT MEMBER) Kolkata, Dated:20.01.2026 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 "