EXOTICA ENCLAVE PVT. LTD.,KOLKATA V. I.T.O., WARD - 2(1), KOLKATA

ITA 2003/KOL/2025

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Exotica Enclave Pvt. Ltd., a private limited company engaged in real estate, appealed against the order of the CIT(A) which confirmed the addition of Rs.55,00,000 as unexplained cash credit under Section 68 of the Income Tax Act. The addition was initially made by the Assessing Officer during the scrutiny assessment of the company's return for the assessment year 2012-13. The company had raised share capital from its promoters, which the AO questioned. The CIT(A) upheld the addition for three of the four shareholders, finding their sources of funds suspicious. However, the Tribunal, after examining the evidence and the statements recorded under Section 131, concluded that the sources of funds were verifiable and legitimate, leading to the allowance of the appeal.

• Counselvise Citation: [2026] 140 COUNSELVISE.COM (IT) 828635 (ITAT-KOLKATA)
• Duration Of Justice: 4 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-01-2026
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: Kolkata
• Assessment Year: misc
• Appeal Filed On: 01-09-2025
• Other Referred Cases: CIT Vs. Gagandeep Infrastructure (P) Ltd., Lovely Exports (P.) Ltd.
• Laws Referred To: Income Tax Act
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Retrospective amendment; Unexplained cash credit; Onus to prove; Source of fund; Bogus
• Section: 142(1); 68; 131

Judgement Text

"आयकर अपीलीय अधिकरण, कोलकाता पीठ, कोलकाता IN THE INCOME TAX APPELLATE TRIBUNAL “A”BENCH KOLKATA Before Shri Rajesh Kumar, Accountant Member and Shri Pradip Kumar Choubey, Judicial Member ITA No.2003/Kol/2025 Assessment Year: 2012-13 Exotica Enclave Pvt. Ltd..………...………..............................……….……Appellant 31 Ganesh Chandra Avenue, 4th Floor, Kol-13. [PAN: AACCE7832R] vs. ITO, Ward-2(1), Kolkata..………….……………………...……...…..…..Respondent Appearances by: ShriAkkal Dudhwewala, FCA,appeared on behalf of the appellant. Shri Ruchika Sharma, Sr. DR, appeared on behalf of the Respondent. Date of concluding the hearing :December 04, 2025 Date of pronouncing the order :January 12, 2026 ORDER Per Rajesh Kumar, Accountant Member: This is an appeal preferred by the assessee against the order of the NFAC, Delhi (hereinafter referred to as the “Ld. CIT(A)”] dated 18.08.2025passed u/s 250 of the Income Tax Act (hereinafter referred to as the ‘Act’) for the AY 2012-13. 2. The sole ground raised by the assessee in this appeal is against the confirmation of addition of Rs.55,00,000/- by ld CIT(A) as made by the AO on account of share capital as unexplained cash credit u/s 68 of the Act. 3. The facts in brief are that, the assessee is a private limited company promoted by Goel family and is engaged in the business of real estate. The assessee filed the return of income on 24.12.2012 declaring total income of Rs.68,130/-. The case of the Printed from counselvise.com ITA No.2003/Kol/2025 Exotica Enclave Pvt. Ltd; A.Y. 2012-13 2 assessee was selected for scrutiny and statutory notice u/s 143(2) and notice u/s 142(1) of the Act were issues with questionnaire to the assessee and were duly served. During the financial year 2011- 12, the company had decided to acquire certain immovable property for which it had obtained a bank loan and had also raised funds from its promoters aggregating to Rs.60,00,000/-, which comprised of three individuals and one body corporate, all of which belonged to the promoter group i.e. the Goel family. The AO during the course of assessment proceedings required the assessee to explain the source of the share capital with evidences which was complied with by furnishing the financials & ITRs of the share subscribers along with their bank statements. The AO had issued summons to the Directors of the assessee company u/s 131 of the Act and in response Mr. K.B. Goel had attended and his statement was recorded, copy of which is available at Page Nos. 28 to 33 of Paper Book. It is observed from the statement that, Mr. K.B. Goel was the director of both the assessee company as well as the share subscribing company, M/s Vikrangee Sales & Services Pvt. Ltd and he himself had also subscribed to the shares of the assessee company in his individual capacity along with his father and brother. When enquired about the reasons for issuing shares at a premium, Mr. Goel had explained that, since the share applicants belonged to the same promoter group, the shares were issued at premium to keep the capital base small and save on unnecessary registration costs. The AO however was not convinced to this explanation and held that there was no cogent justification given for issuing shares at premium and hence added back the entire share capital of Rs.60,00,000/- u/s 68 of the Act. Printed from counselvise.com ITA No.2003/Kol/2025 Exotica Enclave Pvt. Ltd; A.Y. 2012-13 3 4. In the appellate proceedings, the Ld. CIT(A) had examined the source of funds of each of the four (4) shareholders and found that only the source of source of funds of one (1) shareholder, Mr. Brahmanand Goel was verifiable and that the source of source of funds of other three (3) shareholders viz., Mr. K.B. Goel, Mr. Sunil Goel and their company, M/s Vikrangee Sales & Services Pvt. Ltd were suspicious. The Ld. CIT(A) accordingly deleted the share capital of Rs.5,00,000/- issued to Mr. Brahmanand Goel and confirmed the balance addition of Rs.55,00,000/- b y partly allowing the appeal.. 5. Assailing the action of Ld. CIT(A), the Ld. AR, referring to the evidences filed by the assessee as well as by the share 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 also submitted that, the summons issued u/s. 131 of the Act was complied with as well. According to him, the assessee was not required to substantiate the source of source of funds, as the proviso to Section 68 of the Act was applicable only from AY 2013- 14. He further took us through the evidences furnished by the share subscribers and demonstrated that even their source of funds stood explained. Per contra, the Ld. DR supported the order of Ld. CIT(A) and contended that the Ld. CIT(A) had examined in depth the source of funds of each shareholders for confirming the impugned addition. Printed from counselvise.com ITA No.2003/Kol/2025 Exotica Enclave Pvt. Ltd; A.Y. 2012-13 4 6. After hearing the rival contentions and perusing the materials available on record, we note that the assessee is a private limited company of the Goel Group. During the year, the assessee had raised share capital of Rs.60,00,000/- from four (4) subscribers, the details whereof is available at page nos. 37 to 84 of Paper book. We note that, each of the share subscriber had duly furnished evidences including their ITRs, bank statements, audited financial statements along with explanation regarding source of funds etc. We note that , the AO had also issued summons u/s 131 of the Act, which were personally attended to by the Director of the assessee company. Having perused the statement recorded u/s 131 of the Act, we find that the AO at no point of time had doubted the source of funds of the share subscribers, all of whom belonged to the same group. We thus find that the observations made by the Ld. CIT(A) doubting the source of funds of the shareholders was driven by suspicion, without bringing on record any tangible evidence or material. 7. We note that the assessee had raised Rs.13,50,000/- each from Mr. K B Goel and Mr. Sunil Goel respectively. As observed above, both these share subscribers had furnished the relevant evidences including their ITRs, bank statements, audited financial statements before the lower authorities. According to Ld. CIT(A), while the share subscription monies were received from their bank statements but their source of funds was not verifiable as because these individuals carried small bank balances and only at the time of subscription, they had received fund transfers which they had Printed from counselvise.com ITA No.2003/Kol/2025 Exotica Enclave Pvt. Ltd; A.Y. 2012-13 5 immediately remitted to the assessee company. In our opinion this reasoning given by the Ld. CIT(A) is based on suspicion and conjectures and cannot be reason enough to justify the addition u/s 68 of the Act. Moreover, the Ld. AR brought to our notice that, the amount paid by Mr. Sunil Goel was out of the remittances received from his proprietorship entity, M/s Sunil Enterprises which was involved in business of exports and the source of funds was the proceeds received during the course of the said business. Likewise, it is seen that, Mr. K B Goel is a financial consultant rendering his services by his proprietorship concern, M/s Kailash B Goel & Co. and that the funds paid towards the share capital was out of the monies withdrawn from his proprietorship concern. We thus find that the source of funds out of which these two individuals subscribed to the shares of the assessee is verifiable. 8. In so far as the amount of Rs.28,00,000/- subscribed by M/s Vikrangee Sales & Services Pvt. Ltd is concerned, we find that the share subscriber had sufficient own funds of Rs. 6.97 Crores as of 31st March 2012 to make the investment in shares of the assessee company. It is also seen that, the company had reported turnover of Rs.40.48 lacs and profits of Rs.16.24 lacs. We also find that, the immediate source of funds was repayment of loan which was earlier advanced to another group concern, M/s KBG Consultants Pvt Ltd. Hence, we agree with the Ld. AR that, the source of funds of this shareholder is also explained. 9. Coming to the justification of share premium, it is noted that, the Director of the assessee had given the explanation regarding the same when he was examined u/s 131 of the Act. We also note that, Printed from counselvise.com ITA No.2003/Kol/2025 Exotica Enclave Pvt. Ltd; A.Y. 2012-13 6 the year involved is assessment year 2012-13 and the proviso to section 68 of the Act introduced by Finance Act, 2012, is prospective and is applicable from 01.04.2013 effective from A.Y. 2013-14. We observe that, the amendment to Section 68 by inserting proviso is not retrospective and is applicable prospectively as has been held by the Hon'ble Bombay High Court in the case of CIT Vs. Gagandeep Infrastructure (P) Ltd. delivered in Income Tax Appeal No.1613 of 2014, dated 20.03.2017, wherein the Hon'ble High Court has held as under :- \"We find that the proviso to section 68 of the Act has been introduced by the Finance Act 2012 with effect from 1st April, 2013. Thus it would be effective only from the Assessment Year 2013-14 onwards and not for the subject Assessment Year. In fact, before the Tribunal, it was not even the case of the Revenue that Section 68 of the Act as in force during the subject years has to be read/understood as though the proviso added subsequently effective only from 1st April, 2013 was its normal meaning. The Parliament did not introduce to proviso to Section 68 of the Act with retrospective effect nor does the proviso so introduced states that it was introduced \"for removal of doubts\" or that it is \"declaratory\". Therefore it is not open to give it retrospective effect, by proceeding on the basis that the addition of the proviso to Section 68 of the Act is immaterial and does not change the interpretation of Section 68 of the Act both before and after the adding of the proviso. In any view of the matter the three essential tests while confirming the pre-proviso Section 68 of the Act laid down by the Courts namely the genuineness of the transaction, identity and the capacity of the investor have all been examined by the impugned order of the Tribunal and on facts it was found satisfied. Further it was a submission on behalf of the Revenue that such large amount of share premium gives rise to suspicion on the genuineness (identity) of the shareholders i.e. they are bogus. The Apex Court in Lovely Exports (P.) Ltd. (supra) in the context to the pre-amended Section 68 of the Act has held that where the Revenue urges that the amount of share application money has been received from bogus shareholders then it is for the Income Tax Officer to proceed by reopening the assessment of such shareholders and assessing them to tax in accordance with law. It does not entitle the Revenue to add the same to the assessee's income as unexplained cash credit.\" 10. In view of the above discussions and facts , we are of the view that, the assessee has discharged its burden of proof by satisfying all three conditions as envisaged u/s 68 of the Act and therefore no addition u/s 68 of the Act is called for. Consequently we direct the Printed from counselvise.com ITA No.2003/Kol/2025 Exotica Enclave Pvt. Ltd; A.Y. 2012-13 7 AO to delete the addition of Rs.55,00,000/- which was retained by the Ld. CIT(A) by setting aside the order of ld. CIT(A) on this issue. The appeal of the assessee is allowed. 11. In the result, the appeal of the assessee is allowed. Kolkata, the 12th January, 2026. Sd/- Sd/- [Pradip Kumar Choubey] [Rajesh Kumar] Judicial Member Accountant Member Dated:12.01.2026. RS Copy of the order forwarded to: 1. Appellant - 2. Respondent - 3. CIT(A)- 4. CIT- , 5. CIT(DR), //True copy// By order Assistant Registrar, Kolkata Benches Printed from counselvise.com "