HAPPY HOMES & HOUSES PVT. LTD.,KOLKATA V. ITO, WARD 9(2), KOLKATA

ITA 2488/KOL/2025

AI Insights

The case involves Happy Homes & Houses Pvt. Ltd., which appealed against the order of the National Faceless Appeal Centre, Delhi, confirming the addition of Rs. 1,50,00,000 as unexplained cash credit under section 68 of the Income-tax Act, 1961. The addition was initially made by the AO during the assessment for the AY 2012-13, due to non-compliance with summons issued to the directors of subscriber companies who subscribed to the company's share capital. The Tribunal, after reviewing the evidence and precedents, concluded that the assessee had sufficiently proved the genuineness of the transactions and the creditworthiness of the subscribers, thus allowing the appeal.

• Counselvise Citation: [2026] 140 COUNSELVISE.COM (IT) 828456 (ITAT-KOLKATA)
• Duration Of Justice: 2 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-01-2026
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: Kolkata
• Assessment Year: misc
• Appeal Filed On: 31-10-2025
• Other Referred Cases: Orissa Corporation Ltd. (1986) 159 ITR 78 (SC), Crystal Networks Pvt. Ltd. vs. CIT 353 ITR 171 (Kol), ITO Vs M/s Cygnus Developers India Pvt. Ltd. ITA No. 282/Kol/2012, CIT vs. Raj Kumar Agarwal ITA No. 179/2008, ITO vs. Devinder Singh Shant ITA No. 208/Kol/2009, CIT Vs Orchid Industries (P) Ltd 397 ITR 136 (Bom)
• Laws Referred To: Income-tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S ANDEEP KUMAR MEHTA
• Assessee Lawyers: MIRAJ D. SHAH
• Keywords: Set aside; Question of law; Unexplained cash credit
• Section: 143(3); 142(1); 68; 131

Judgement Text

" IN THE INCOME TAX APPELLATE TRIBUNAL “B” BENCH, KOLKATA BEFORE SHRI RAJESH KUMAR, AM AND SHRI PRADIP KUMAR CHOUBEY, JM ITA No. 2488/KOL/2025 (Assessment Year: 2012-13) Happy Homes & Houses Pvt. Ltd. 46, Strand Road, Burra Bazar, Kolkata-700007, West Bengal Vs. ITO, Ward 9(2) P-7, Chowringhee Square, Kolkata-700069, West Bengal (Appellant) (Respondent) PAN No. AAACH7589Q Assessee by : Shri Miraj D. Shah, AR Revenue by : Shri Sandeep Kumar Mehta, DR Date of hearing: 06.01.2026 Date of pronouncement: 13.0.2026 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 01.09.2025 for the AY 2012-13. 2. The only issue raised by the assessee in the various grounds of appeal is against the confirmation of Rs. 1,50,00,000/- by the ld. CIT (A) as made by the ld. AO in respect of share capital / share premium by treating the same as unexplained cash credit u/s 68 of the Income-tax Act, 1961 (the Act). 3. The assessee filed the return of income on 26.09.2012, declaring the total income at ₹1,120/-. The case of the assessee was selected for scrutiny for the reason of large share premium received. The notice Printed from counselvise.com Page | 2 ITA No. 2488/KOL/2025 Happy Homes & Houses Pvt. Ltd.; A.Y. 2012-13 u/s 143(2) of the Act and 142(1) of the Act along with questionnaire were issued and duly replied by the assessee by filing all the evidences comprising names, addresses, PAN Numbers, audited balance sheets, bank accounts, confirmations etc. of the subscribers. The ld. AO in order to independently verify the transactions issued summons u/s 131 of the Act to the directors of the subscriber companies. However, there was no compliance made to the said summons. The ld. AO noted that the mere submission of documents in reply to the summons would not satisfy the conditions as envisaged u/s 68 of the Act. Thereafter, the ld. AO treated the share capital /share premium of ₹1,50,00,000/- as unexplained cash credit and added to the income of the assessee in the assessment framed. 4. In the appellate proceedings, the ld. CIT (A) dismissed the appeal of the assessee after calling for the remand report from the ld. AO in which the ld. AO again noted that the there was no compliance to the summons issued to the subscriber companies from 8 private limited companies and accordingly, the ld. CIT (A) dismissed the appeal of the assessee. 5. After hearing the rival contentions and perusing the materials available on record, we find that that the assessee has raised share capital from 8 share subscribers by issuing 30,000 equity shares of face value of ₹10 at a premium of ₹490 and thus, received ₹1,50,00,000/- as share capital/ share premium. The assessee filed in response to questionnaire, the documents such as; PANs, ITRs, audited financial statements, share application forms, board resolutions and confirmations of share applicants. However, the ld. AO treated the said amount as unexplained cash credit for the reason that there was no compliance to the summons issued u/s 131 of the Act to all 8 Printed from counselvise.com Page | 3 ITA No. 2488/KOL/2025 Happy Homes & Houses Pvt. Ltd.; A.Y. 2012-13 subscriber companies though the said subscriber companies complied with the summons by fling all the details as required by the ld. AO. In the appellate proceedings, the ld. CIT (A) called for the remand report, but the ld. AO again stated that there was no compliance to the summons and the ld. CIT (A) confirmed the addition. In our opinion, the addition u/s 68 of the Act cannot be made merely on the ground that there was no compliance to the summons issued u/s 131 of the Act, when the share subscribers filed all the evidences before the authorities below and the authorities have not pointed out any defect in the said documents by doing further enquiry. The case of the assessee is squarely covered by the following decisions:- 5.1. We find support from the decision of Hon’ble Supreme Court in the case of Orissa Corporation Ltd. (1986) 159 ITR 78 (SC): “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 assessees. 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.” 5.2. 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 353 ITR 171 (Kol) 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 Printed from counselvise.com Page | 4 ITA No. 2488/KOL/2025 Happy Homes & Houses Pvt. Ltd.; A.Y. 2012-13 and creditworthiness of the creditors. The relevant portion of the decision is extracted below: “10. 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 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.” 11. 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. 12. 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. 13. 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.” Printed from counselvise.com Page | 5 ITA No. 2488/KOL/2025 Happy Homes & Houses Pvt. Ltd.; A.Y. 2012-13 5.3. The case of is also covered by the decision of the coordinate bench by ITO Vs M/s Cygnus Developers India Pvt. Ltd. ITA No. 282/Kol/2012 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 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.” 5.4. Similar ratio has been laid down by the Hon’ble Mumbai High Court in the case of CIT Vs Orchid Industries (P) Ltd 397 ITR 136 (Bom) by holding that provisions of section 68 of the Act can not 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 . 5.5. In the instant case before us also, the assessee has furnished all the evidences proving identity and creditworthiness of the investors Printed from counselvise.com Page | 6 ITA No. 2488/KOL/2025 Happy Homes & Houses Pvt. Ltd.; A.Y. 2012-13 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 discussed above , we are inclined to set aside the order of Ld. CIT(A) by directing the AO to delete the addition. 6. In the result, the appeal of the assessee is allowed. Order pronounced in the open court on 13.01.2026. Sd/- Sd/- (PRADIP KUMAR CHOUBEY) (RAJESH KUMAR) (JUDICIAL MEMBER) (ACCOUNTANT MEMBER) Kolkata, Dated: 13.01.2026 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 "