INCOME TAX OFFICER, WARD-4(1)(1), VEJALPURT V. SHRI GOVINDAM AGRO FOODS PRIVATE LIMITED, AHMEDABAD

ITA 1866/AHD/2025

AI Insights

The case involves the Income Tax Officer (ITO) Ward-4(1)(1), Ahmedabad, as the appellant, and Shri Govindam Agro Foods Private Limited, as the respondent. The dispute centered on the addition of Rs. 3,05,38,000 to the income of the assessee for the Assessment Year 2011-12, which was treated as unexplained income by the AO. The addition was initially deleted by the Commissioner of Income Tax (Appeals) at the National Faceless Appeal Centre, Delhi, but was later reinstated by the Tribunal. The Tribunal's decision was based on the failure of the assessee to provide satisfactory evidence regarding the genuineness of the share application money received from various entities, which were found to be dubious.

• Counselvise Citation: [2026] 140 COUNSELVISE.COM (IT) 834423 (ITAT-AHMEDABAD)
• Duration Of Justice: 4 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-02-2026
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: C
• Assessment Year: 2011-2012
• Appeal Filed On: 30-09-2025
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: ABHIJIT
• Keywords: Set aside; Reassessment proceedings; Unexplained cash credit; Income from undisclosed sources; Principle of natural justice
• Section: 143(3); 271(1)(c); 68; 131

Judgement Text

"IN THE INCOME TAX APPELLATE TRIBUNAL “C” BENCH, AHMEDABAD BEFORE: SHRI SANJAY GARG, JUDICIAL MEMBER AND SMT. ANNAPURNA GUPTA, ACCOUNTANT MEMBER आयकर अपील सं./I.T.A. No. 1866/Ahd/2025 (िनधा[रण वष[ / Assessment Year : 2011-12) Income Tax Officer Ward-4(1)(1), Ahmedabad बनाम/ Vs. Shri Govindam Agro Foods Private Limited B-14, Phase-2, GIDC Industrial Area, Naroda, Ahmedabad, Gujarat - 382330 Öथायी लेखा सं./जीआइआर सं./PAN/GIR No. : AAMCS0204K (Appellant) .. (Respondent) अपीलाथȸ ओर से /Appellant by : Shri Abhijit, Sr.DR Ĥ×यथȸ कȧ ओर से/Respondent by : None Date of Hearing 29/01/2026 Date of Pronouncement 04/02/2026 (आदेश)/ORDER PER ANNAPURNA GUPTA, AM: The present appeal has been filed by the Revenue against the order of the Ld. Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (hereinafter referred to as “NFAC”), Delhi (hereinafter referred to as “CIT(A)”) dated 25.07.2025 passed under Section 250 of the Income Tax Act, 1961 (hereinafter referred to as the “Act”) and relates to Assessment Year (A.Y.) 2011-12. Printed from counselvise.com ITA No. 1866/Ahd/2025 [ITO vs. Shri Govindam Agro Foods Private Limited] A.Y. 2011-12 - 2 – 2. None appeared on behalf of the assessee despite the notice being served on the assessee through DR, who served the notice through affixture since the premises of the assessee was found locked. Report of the AO regarding the service of notice through affixture was submitted to us, the contents of which are as under: Printed from counselvise.com ITA No. 1866/Ahd/2025 [ITO vs. Shri Govindam Agro Foods Private Limited] A.Y. 2011-12 - 3 – 3. Despite all efforts to intimate the assessee of the hearing in the matter, the assessee was not found at its last known address, nor it appears the assessee has in any way intimated the department of change of its address. It seems futile to expect any participation from the assessee in the light of the fact that its current whereabouts have not been informed to the department The appeal was therefore proceeded to be decided exparte the assessee. 4. The grounds of appeal raised by the Revenue are as under: Printed from counselvise.com ITA No. 1866/Ahd/2025 [ITO vs. Shri Govindam Agro Foods Private Limited] A.Y. 2011-12 - 4 – “(a) The Ld.CIT(A) has erred in law and on facts in not holding that the reopening of the assessment under Section 147/148 was invalid due to a clear mismatch between the reasons recorded for reopening, which cited receipt of share application money with premium of Rs. 3,05,38,000/-, and the actual additions made in the assessment order, rendering the proceedings void ab initio (b) The Ld.CIT(A) has erred in law and on facts to state that in the assessment order share capital/premium of Rs. 2,38,70,000/- was discussed while addition of Rs. 3,05,38,000/- was made, without appreciating the fact that as per ITR filed by the assessee, it had received share application money of Rs. 3,05,38,000/- during the year under consideration. (c) The Ld.CIT(A) has erred in law and on facts in accepting the creditworthiness, genuineness and identity of the shareholders without appreciating that in para 5 and 6 of the assessment order, the AO had given detailed reasoning as to why the identity, creditworthiness and genuineness of the shareholders could not be established. (d) The appellant craves leave to add, alter and/or to amend all or any the ground before the final hearing of the appeal.” 5. Ground No. (a) challenging the order of the Ld. CIT(A) holding the re-assessment to be invalid, was fairly admitted by the Ld. DR to have been incorrectly raised. He admitted to the fact that the Ld. CIT(A) had decided this issue against the assessee at para 5 of the appellate order and, therefore, there was no cause of grievance for the Revenue on this account. 6. Ground of Appeal No.(a) is accordingly dismissed as infructuous. 7. Ground of Appeal Nos. (b) & (c) relate to the issue of addition made to the income of the assessee of share application money received during the year amounting to Rs.3,05,38,000/- Printed from counselvise.com ITA No. 1866/Ahd/2025 [ITO vs. Shri Govindam Agro Foods Private Limited] A.Y. 2011-12 - 5 – finding it to be an accommodation entry for introducing the unaccounted income of the assessee, which addition was deleted by the Ld. CIT(A). 8. The contention of the Ld. DR was that the Ld. CIT(A) had deleted the addition without considering the factual findings of the AO which clearly supported his findings of the genuineness of the impugned share applications received by the assessee not being proved. 9. In this regard he first drew our attention to para 4 of the assessment order pointing out there from the parties from whom share application, including premium, had been received as under: “4. On verification of copy of Balance Sheet furnished by the assessee, it was noticed that the assessee had shown share application money amounting to Rs. 3,05,38,000/-. The Form 2 showing the return of allotment furnished by the assessee shows that the total amount paid and received by the assessee including the premium on allotment from the following parties:- (1) Nimbus Stock Invest Ltd. Rs. 7,00,000/- (2) Balaji Resources and Trading Limited. Rs. 48,00,000/- (3) Chinar Capital Marketing Pvt. Ltd. Rs. 18,20.000/- (4) Zenith Medicine Pvt. Ltd. Rs.1,65,50,000/- Total Rs.2,38,70,000/- 10. Thereafter, he drew our attention to para 5 & 6 of the assessment order pointing out therefrom that it detailed the exact facts and circumstances in which the amount received from the Printed from counselvise.com ITA No. 1866/Ahd/2025 [ITO vs. Shri Govindam Agro Foods Private Limited] A.Y. 2011-12 - 6 – impugned parties was held to be in-genuine. He drew our attention to the said paragraphs as under: “5. On perusal of the submissions of the assessee vis-à-vis the reasons recorded, copy of which had already been provided to the assessee, as clearly indicated in the reasons recorded that especially the fund received in form of share application money from Zenith Medicine Pvt. Ltd. amounting to Rs. 1,65,50,000/- was only an accommodation entry and the same cannot be considered as genuine one. Similar is the situation in respect of the other entities from whom the share application money claimed to have been received totaling to Rs. 3,05,38,000/-, For the reasons clearly indicated in the reasons recorded as to the shared share/application share application money alleged to have been received from M/s. Zenith Medicine Pvt. Ltd., the genuineness of the total share application money with premium amounting to Rs. 3,05,38,000/- as shown in the Balance Sheet cannot be considered to be genuine one and with a view to thoroughly examine the correctness and the genuineness of the same, a summons u/s. 131 of the Act was issued to the Director of the assessee company Shri Rakesh Baghra on 03/12/2018 which was duly served on 04/12/2018 In person requiring his personal attendance in connection with the assessment proceedings in the case of the assessee Shree Govindham Agro Foods Pvt. Ltd. on 07/12/2018 at 12.00 P.M. However, on the given date. Shri Rakesh Baghra. the Director of the assessee company neither attended personally nor furnished any written explanation/request or sought for any adjournment. Therefore, with a view to meet the law of natural justice before taking any adverse view in the matter, a reminder in respect of the summons was also issued on 14/12/2018 to the assessee company giving reference to the summons u/s. 131 issued to the Director on 03/12/2018 and thereby giving a final opportunity to the Director to attend office on 17/12/2018 at 11.00 A.M. in connection with the subject matter. However, again there was no response to the reminder of summons issued also. It may be mentioned here that the responsibility in complying to any of the provisions of the Act on behalf of the company lies with the Directors, who in the present case have not bothered even to response to the summons issued u/s. 131 of the Act. Due to non cooperation by the Director in complying to the summons as stated hereinabove, the correctness and the genuineness of the total credits in form of share application money amounting to Rs. 3,05,38,000/-stands unproved by furnishing proper details as called for. 6. As stated hereinabove that the total share application money shown in the balance sheet includes the amount of Rs. 1.65 crores Printed from counselvise.com ITA No. 1866/Ahd/2025 [ITO vs. Shri Govindam Agro Foods Private Limited] A.Y. 2011-12 - 7 – claimed to have received from Zenith Medicine Pvt. Ltd. it is to be mentioned here that the said company Zenith Medicine Pvt. Ltd was incorporated on 01/12/2010 relevant to A.Y. 2011-12 by changing the name of Vedika Trade & Advisors Pvt. Ltd. which was having two directors, having share holding of 50% each. The said old directors of the company were replaced by new directors of the flagship company Zenith Life Care Pvt Ltd. On the basis of information and as clearly indicated in the reasons recorded that during the investigation it was revealed that the said company Zenith Medicine Pvt. Ltd. had received share premium of Rs. 4,26,79,000/- from 36 persons who were not having sufficient credit worthiness to make investment of the sums shown against their names in the said company Zenith Medicine Pvt. Ltd. Even the said 36 share holders were not having PAN and none of them were assessed lo lax The said Zenith Medicine Pvt. Ltd. had received the share premium @ Rs. 490/- per share, a company which was newly incorporated, not having any financial strength to charge such high premium. All these credits in form of share application money were considered to be non genuine as the said company could not prove the identity, creditworthiness and the genuineness of the share holders. Thus, it is clear that the share application money claimed to have been received from the said company Zenith Medicine Pvt. Ltd. amounting to Rs. 1.65 crores are from non genuine funds as demonstrated hereinabove. Similar would be the situation in the case of other concerns from whom the assessee alleged to have received the share application money. With a view to verify the correctness, genuineness, Creditworthiness and even the identity of all these creditors as a last course, a summon u/s. 131 of the Act was issued to the Director of the assessee company who did not turn up by the given date or even bothered to respond to the reminder to the summons issued. Therefore, the identity, creditworthiness and the genuineness of the transactions shown in the balance sheet in form of share application money amounting to Rs. 3,05,38,000/- stands unproved and cannot be accepted as such. Therefore, the said amount shown as share application money amounting to Rs. 3,05,38,000/- is treated as unexplained credits appearing in the accounts and added to the total income of the assessee for the year under consideration treating the same as unaccounted income of the assessee. Penalty proceedings u/s. 271(1)(c) of the Act is being Initiated separately for furnishing inaccurate particulars of income to this extent. [Addition on account of unexplained Income in form of share application money Rs.3,05,38,000/-]” Printed from counselvise.com ITA No. 1866/Ahd/2025 [ITO vs. Shri Govindam Agro Foods Private Limited] A.Y. 2011-12 - 8 – 11. Referring to the above, he pointed out that the AO was in possession of information with respect to the share applicant M/s. Zenith Medicine Pvt. Ltd. from whom Rs.1.65 Crores of funds had been received by way of share applications that it was an accommodation entry. The AO had information that it was a newly incorporated entity having no worth, but still had received share premium of Rs.4.26 Crores from 36 persons who were not having sufficient creditworthiness to make investments of sums shown against their name in M/s. Zenith Medicine Pvt. Ltd. That even the 36 shareholders were not having PAN number and were not even assessed to tax. The share application money received from M/s. Zenith Medicine Pvt. Ltd. were therefore found to be not from genuine funds. Similar, Ld.DR pointed, it was noted to be the case in the case of other share applicants of the assessee also. Ld. DR pointed out that in the backdrop of this information in the possession of the AO, he tried to verify the correctness and the genuineness of the share application money received by the assessee by issuing summons to the Directors of the assessee company who did not turn up nor bothered to respond to the reminders to the summons issued. In these facts and circumstances, Ld. DR pointed out that, the AO found the entire share application money received by the assessee to be in-genuine. 12. Taking us to the findings of the Ld. CIT(A) deleting the additions made at page 5 to 7 of his order as under: Printed from counselvise.com ITA No. 1866/Ahd/2025 [ITO vs. Shri Govindam Agro Foods Private Limited] A.Y. 2011-12 - 9 – “The grounds of appeal are inter-related and directed against an addition of Rs.3,05,38,000/- to the income of the assessee u/s 68 of the Act. During the course of reassessment proceedings, the Ld. AO observed that the assessee had received share application money/share premium amounting to Rs.3.05,38,000/- from various parties. The share premium details of some of the parties were as follows: i) Nimbus Stock Invest Ltd. Rs.7,00,000/- ii) Balaji Resources and Trading Ltd. Rs.48,00,000/- iii) Chinar Capital Marketing Pvt. Ltd. Rs. 18,20,000/- Iv) Zenith Medicine Pvt. Ltd. Rs. 1,65,50,000/- Total Rs.2,38,70,000/- The Ld. AO also issued summons u/s 131 of the Act to the director of the assessee company which were not complied with. Not satisfied with the reply of the assessee, the Ld. AO made the impugned addition of Rs. 3,05,38,000/- to the income of the assessee. During the course of appellate proceedings, the appellant has made various submissions which have been perused. The appellant has stated that during the course of assessment proceedings, the appellant has submitted copy of ITR, audited financial statements and bank statements of M/s Zenith Medicine Pvt. Ltd, from whom share capital/premium of Rs. 1,65,50,000/- was received. It has also been submitted that the scrutiny order of M/s Zenith Medicine Pvt. Ltd. for A.Y. 2015-16 has been passed u/s 143(3) of the Act wherein the returned income was accepted by the Ld. AO. In respect of M/s Chinar Capital Marketing Pvt. Ltd. and M/s Nimbus Stock Invest Ltd., it has been stated that both the companies are disclosed as \"Associate Concern\" in the related party disclosure of the appellant company. Hence, it can be stated that the appellant company has entered into transactions with entities which are running businesses with adequate funds. Further, during the assessment proceedings of Nimbus Stock Invest Ltd. for A.Y. 2011-12, the Ld. AO had specifically asked about the share capital/premium received from M/s Zenith Medicine Pvt. Ltd. which was accepted by the Ld. AO. In respect of non-compliance of summons u/s 131 of the Act by the director of the company, it can be stated that all the documentary evidence pertaining to the companies from whom share capital was received had already been provided to the Ld. AO. No further inquiry was warranted from the appellant company. Printed from counselvise.com ITA No. 1866/Ahd/2025 [ITO vs. Shri Govindam Agro Foods Private Limited] A.Y. 2011-12 - 10 – It is further seen that the appellant had thereof discharged the initial onus of proving the identity, creditworthiness and genuineness of the share capital/premium received from M/s Zenith Medicine Pvt. Ltd., M/s Chinar Capital Marketing Pvt. Ltd. and M/s Nimbus Stock Invest Ltd. It is not clear how the Ld. AO has arrived at the figure of Rs 3,05,38,000/- when in the assessment order only share capital/premium amounting to Rs.2,38,70,000/- has been specifically discussed. In view of the facts and circumstances as stated above, the impugned additions of Rs. 3,05,38,000/- made by the Ld. AO is hereby directed to be deleted.” 13. Ld. DR pointed out that the Ld. CIT(A) held the creditworthiness and the genuineness of the share applicants to be established merely on the basis of documents submitted of the share applicants being copy of ITR, audited balance sheet and bank statements and he held that in the light of these documents, no further enquiry was warranted from the appellant company. He pointed out that the Ld. CIT(A) held the assessee to have discharged onus of proving the genuineness of the transaction of the share application money received. Ld. DR contended that the Ld. CIT(A) had failed to appreciate the incriminating information in the possession of the AO with respect to the amounts received by these share applicants from dubious parties whose neither existence nor creditworthiness was found to be existing. He, therefore, pleaded that the deletion of addition made by the Ld. CIT(A) of share application money received by the assesse was not justified. 14. Having heard the Ld.DR and on going through the orders of both the AO and the Ld. CIT(A), we find merit in the contention Printed from counselvise.com ITA No. 1866/Ahd/2025 [ITO vs. Shri Govindam Agro Foods Private Limited] A.Y. 2011-12 - 11 – of the Ld. DR. Undoubtedly, the addition made on account of share application money received by the assessee amounting to Rs.3,05,38,000/- treated as in-genuine by the AO was deleted by the Ld. CIT(A) finding the assessee to have discharged its onus of proving the genuineness of the same merely on the basis of documentary evidences submitted. The order of the AO reveals that the AO was in possession of information that these share applicants had received money, which was invested in the assessee company, from dubious sources whose identity and creditworthiness was in clear doubt. The AO has clearly noted in the case of one share applicant, M/s Zenith Medicine (P) Ltd. that it had made invested in the share application of the assessee company to the tune of Rs.1.65 Crs out of share premium received by it of Rs.4.26 Crs when it had no financial credibility for receiving this huge sum of premium being a newly formed company. M/s Zenith was also found to have received share premium from 36 applicants whose identity and even creditworthiness was not established. Similar has been noted to be the case with other share application money received by the assessee. Ld. CIT(A), we find, has not appreciated this aspect of the matter and has merely relied on basic documentary evidences with respect to each share applicants. 15. Mere filing of documentary evidences which only establishes the fact of investment made by the share applicants does not discharge the onus of the assessee to establish the genuineness of the share application money particularly when the source of Printed from counselvise.com ITA No. 1866/Ahd/2025 [ITO vs. Shri Govindam Agro Foods Private Limited] A.Y. 2011-12 - 12 – investment by the share applicants is found to be clearly dubious and in doubt. The findings of the Ld. CIT(A), therefore, holding the share application money to be genuine, we hold, is incorrect. We agree with the Ld. DR that the assessee has failed to discharge its onus of proving the genuineness of the share application money received by it amounting to Rs.3,05,38,000/-. The order of the Ld. CIT(A) is, therefore, set aside. The addition made by the AO is upheld. Ground of Appeal Nos. (b) & (c) are allowed. 16. In the result, appeal filed by the Revenue is allowed in above terms. This Order pronounced on 04/02/2026 Sd/- Sd/- (SANJAY GARG) (ANNAPURNA GUPTA) JUDICIAL MEMBER ACCOUNTANT MEMBER Ahmedabad; Dated 04/02/2026 S. K. SINHA True Copy आदेश कȧ Ĥितिलǒप अĒेǒषत/Copy of the Order forwarded to : 1. अपीलाथȸ / The Appellant 2. Ĥ×यथȸ / The Respondent. 3. संबंिधत आयकर आयुƠ / Concerned CIT 4. आयकर आयुƠ(अपील) / The CIT(A)- 5. ǒवभागीय Ĥितिनिध, आयकर अपीलीय अिधकरण, अहमदाबाद / DR, ITAT, Ahmedabad 6. गाड[ फाईल / Guard file. आदेशानुसार/ BY ORDER, उप/सहायक पंजीकार (Dy./Asstt. Registrar) आयकर अपीलीय अिधकरण, अहमदाबाद / ITAT, Ahmedabad Printed from counselvise.com "