INCOME TAX OFFICER, WARD-9(1), KOLKATA, KOLKATA V. S G S FASHION PRIVATE LIMITED, KOLKATA

ITA 729/KOL/2025

AI Insights

The case involves an appeal by the Income Tax Officer against SGS Fashion Private Limited concerning the assessment year 2012-13. The primary issue was the addition of \\u20b91,93,50,000/- to the assessee's income, treated as unexplained cash credit under section 68 of the Income Tax Act, due to share premium received. The Assessing Officer (AO) had initially added this amount after finding deficiencies in the compliance with summons and the documentation provided. However, the CIT (A) reversed this decision, noting that the AO had not conducted any substantial inquiry and that the assessee had adequately demonstrated the legitimacy of the transactions. The Tribunal, after reviewing the submissions and evidence, concurred with the CIT (A) and dismissed the Revenue's appeal.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 779246 (ITAT-KOLKATA)
• Duration Of Justice: 6 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-10-2025
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Assessment Year: 2012-2013
• Appeal Filed On: 04-04-2025
• Other Referred Cases: Sumati Dayal Vs. CIT 214 ITR 801 (SC), CIT Vs. Durga Prasad More 82 ITR 540 (SC), CIT Vs Orissa Corporation (P) ltd. (1986) 159 ITR 78 (SC), Jawahar Lal Oswal reported at 382 ITR 453, (Punjab and Haryana), CIT VS. Navodaya Castles (P.) Ltd. (2014) 367 ITR 306 (Delhi)
• Laws Referred To: Income Tax Act
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MANAS MONDAL
• Assessee Lawyers: MANISH TIWARI
• Keywords: Unexplained cash credit
• Section: 143(3); 142(1); 68; 131

Judgement Text

" IN THE INCOME TAX APPELLATE TRIBUNAL “D” BENCH, KOLKATA BEFORE SHRI RAJESH KUMAR, AM AND SHRIPRADIP KUMAR CHOUBEY, JM ITA No.729/KOL/2025 (Assessment Year:2012-13) Income Tax Officer, Ward 9(1), 5th Floor, Room No.5/12/2B, Aayakar Bhawan, P-7, Chowringhee Square, Kolkata-700069, West Bengal Vs. SGS Fashion Private Limited 49/1/1, Cotton Street, Barabazar, H.O. Kolkata-700007, West Bengal (Appellant) (Respondent) PAN No. AANCS2236G Assessee by : Shri Manish Tiwari, AR Revenue by : Shri Manas Mondal, DR Date of hearing: 18.09.2025 Date of pronouncement: 15.10.2025 O R D E R Per Rajesh Kumar, AM: This is an appeal preferred by the Revenue against the order of the National Faceless Appeal Centre, Delhi (hereinafter referred to as the “Ld. CIT(A)”] dated 19.11.2024 for the AY 2012-13. 02. At the outset, we observe from the appeal folder that there is a delay of 63 days in filing the appeal by the department in support of which a condonation petition was filed. It was stated in the condonation petition that the delay has occurred due to obtaining the administrative approval from the competent authorities, which took quite a long time and accordingly, the delay may be condoned. The ld. AR, on the other hand, did not oppose the condonation of delay. Printed from counselvise.com Page | 2 ITA No.729/KOL/2025 SGS Fashion Private Limited; A.Y. 2012-13 Considering the reasons cited before us, we are inclined to condone the delay and admit the appeal for hearing. 03. The only issue raised by the Revenue is against the deletion of addition of ₹1,93,50,000/- by the learned CIT (A) as made by the learned AO on account of unexplained credit u/s 68 of the Act in respect of share application / share premium raised by the assessee during the year. 04. The facts in brief are that the assessee filed the return of income on 30.09.2012, declaring total income at ₹12,71,540/-. The case of the assessee was selected for CASS for scrutiny of large share premium. Accordingly, the notice u/s 143(2) and 142(1) of the Act along with questionnaire were issued to the assessee. The assessee filed before the learned AO the details of share subscribers comprising names, addresses, copies of ITRs, Bank statements, sources of funds, bank statement of the subscribers explaining source of income in the hands of the subscribers, copy of audited balance sheets, etc. The learned AO also issued summons u/s 131 of the Act to the Director of the assessee company, which were not complied with by making a personal appearance due to medical issue. Accordingly, the learned AO noted that the assessee has failed to establish the three ingredients namely; identity of the subscribers, creditworthiness of the subscriber and genuineness of the transactions and thereafter discussing and relying on the decisions of Sumati Dayal Vs. CIT 214 ITR 801 (SC) and CIT Vs. Durga Prasad More 82 ITR 540 (SC), treated the entire share capital/ share premium of ₹1,93,50,000/- as unexplained cash credit in the books of the assessee and added to the income of the assessee in the assessment framed u/s 143(3) of the Act dated 20.03.2015. Printed from counselvise.com Page | 3 ITA No.729/KOL/2025 SGS Fashion Private Limited; A.Y. 2012-13 05. In the appellate proceedings, the learned CIT (A), after taking into consideration and submissions and reply of the assessee along with evidences filed, deleted the additions by noting that the assessee has filed all the documents before the learned AO qua the share subscribers in order to prove the identity and creditworthiness of the investors and genuineness of the transactions. However, the learned AO has not done any enquiry to find out the truth. The learned CIT (A) also noted that the addition cannot be made solely on the ground that there was no compliance to the summons issued u/s 131 of the Act. The learned CIT (A) relied on the decision of the CIT Vs Orissa Corporation (P) ltd. (1986) 159 ITR 78 (SC), and the decision of the Punjab and Haryana High Courtin case of Jawahar Lal Oswal reported at 382 ITR 453, (Punjab and Haryana)& CIT VS. Navodaya Castles (P.) Ltd. (2014) 367 ITR 306 (Delhi). 06. After hearing the rival contentions and perusing the materials available on record, we find that in this case the assessee company is engaged in trading in services. We note that during the year the assessee issued 1,93,500 equity shares of face value of ₹10 each at a premium of ₹90 to four entities, details whereof were given by the learned CIT (A) on page no.13 of the appellate order. We also note that the learned CIT (A) on page no.15 has given the investible sources available with the investors and noted that investments ranging from 3.30% to 35.76 % were made of their investible sources. The learned CIT (A) also noted that in the case of four subscribers namely; 1. Davesh Commercial Pvt. ltd. 2. F.M Fashion Pvt. ltd. 3. Siddhi Management pvt. ltd. 4. Sidhanta Sales Pvt. Ltd. the orders u/s 143(3) were framed by the Revenue/ Department. We also concur with the opinion of the ld CIT(A) that the addition cannot be made solely on the ground that the director of the assessee company Printed from counselvise.com Page | 4 ITA No.729/KOL/2025 SGS Fashion Private Limited; A.Y. 2012-13 has not complied with summons u/s 131 of the Act and the case is squarely covered by the decision of the Hon'ble Supreme Court in the case of CIT vs. CIT Vs Orissa Corporation (P) ltd. (supra). More so when the AO has not carried out any enquiry and pointed out any defect in the evidences filed by the assessee. Therefore, we are inclined to uphold the order of the learned CIT (A) by dismissing the appeal of the Revenue. 07. In the result, the appeal of the Revenue is dismissed. Order pronounced in the open court on 15.10.2025. Sd/- Sd/- (PRADIP KUMAR CHOUBEY) (RAJESH KUMAR) (JUDICIAL MEMBER) (ACCOUNTANT MEMBER) Kolkata, Dated: 15.10.2025 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 "