JAI BHOLA TRADING CO PVT LTD,KOLKATA V. I.T.WARD 9(3)KOLKATA, KOLKATA

ITA 507/KOL/2024

AI Insights

The case involves Jai Bhola Trading Co. Pvt. Ltd., which appealed against the order of the National Faceless Appeal Centre, Delhi, confirming an addition of \\u20b91,43,00,000 to the assessee's income for the Assessment Year 2012-13. The addition was initially made by the AO under Section 68 of the Income Tax Act, treating the share capital/share premium as unexplained cash credit. The CIT (A) upheld this addition, which was contested by the assessee in the Tribunal. The Tribunal, after reviewing the submissions and evidence, including the provisions of Section 68 and relevant case law, found in favor of the assessee, citing precedents that money not received during the year cannot invoke Section 68.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 473861 (ITAT-KOLKATA)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-03-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Assessment Year: 2012-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SATYNARAYAN RAJU
• Assessee Lawyers: SIDDHARTH AGARWAL
• Keywords: Set aside; Unexplained cash credit; Source of fund
• Section: 143(3); 68; 131; 133(6)

Judgement Text

" IN THE INCOME TAX APPELLATE TRIBUNAL “C” BENCH, KOLKATA BEFORE SHRI RAJESH KUMAR, AM AND SHRI SONJOY SARMA, JM ITA No.507/KOL/2024 (Assessment Year:2012-13) Jai Bhola Trading Co. Pvt. Ltd. 4 Ballav Das Street, 3 rd Floor, Room No.334A, Kolkata-700007, West Bengal Vs. IT Ward 9(3), Kolkata Aaykar Bhavan, P-7 Chowringhee Square, 5 th Floor, Kolkata-700069, West Bengal (Appellant) (Respondent) PAN No. AABCJ1130C Assessee by : Shri Siddharth Agarwal, AR Revenue by : Shri Satynarayan Raju, CIT DR Date of hearing: 28.01.2025 Date of pronouncement : 04.03.2025 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 09.02.2024 for the AY 2012-13. 02. The only issue raised by the assessee in the grounds of appeal is against the confirmation of addition of ₹1,43,00,000/- by the ld. CIT (A) as made by the ld. AO on account of share capital/ share premium being unexplained cash credit u/s 68 of the Act by ignoring the fact that out of the said amount share capital/share premium, Rs. ₹1,33,00,000/- was received in the preceding assessment years. Page | 2 ITA No.507/KOL/2024 Jai Bhola Trading Co. pvt. ltd.; A.Y. 2012-13 03. The facts in brief are that the assessee filed the return of income on 29.09.2012, declaring total income at ₹ 4,16,751/-. The case of the assessee was selected for scrutiny under Computer Assisted Scrutiny Selection (CASS) and statutory notices along with questionnaire were duly issued and served upon the assessee. The assessee complied with the said notices from time to time by filing the copies of ITR, audited accounts, bank statements, copies of the replies filed by the investors u/s 133(6) of the Act. Nonetheless, the summons issued by the ld. AO u/s 131 of the Act were not complied with directing the assessee company for producing the directors of the subscribers companies for cross examination. Thereafter, the ld. AO reached a conclusion that the assessee failed to offer any explanation on the share capital/ share premium including the source and nature of cash credits and therefore, treated the same as unexplained cash credit u/s 68 of the Act and consequently made addition to the income of the assessee in the assessment framed u/s 143(3) of the Act dated 07.03.2015. 04. Aggrieved assessee filed an appeal before the ld. CIT (A) and ld. CIT (A) dismissed the appeal after taking into consideration the contentions/submissions of the assessee. The ld. CIT (A) in Para no.4.3.2 of the appellate order noted that out of total ₹1,43,00,000/- share capital/ share premium, ₹1,33,00,000/- was received in the earlier assessment years however, simultaneously, given a finding that ₹1,72,25,000/- has to be taken as the amount moved to the share capital/ share premium which is factually incorrect. 05. After hearing the rival contentions and perusing the materials available on record, we find that undisputedly, the assessee has issued share capital/ share premium of ₹1,43,00,000/- during the Page | 3 ITA No.507/KOL/2024 Jai Bhola Trading Co. pvt. ltd.; A.Y. 2012-13 year out of which ₹1,33,00,000/- was received in the earlier assessment years the details thereof are available in page no. 24 of the Paper Book. Considering the said facts, we are of the view that the order passed by the ld. CIT (A) is completely in violation of the ratio laid by Hon'ble Calcutta High Court in case of Jatia Investment Co. vs CIT [1994] 206 ITR 718 (Cal), wherein the Hon'ble Jurisdictional High Court held that when the money is not received during the year the provisions of Section 68 of the Act cannot be invoked. So far as the remaining ₹10 lacs is concerned, we note that the same was received from Para bepar South Pvt. ltd. to whom 1,000 equity shares of face value 100/- each at a premium of ₹900 were issued. We note that the ITR, audited accounts, bank statements of Para Bepar South Pvt. Ltd. were available before the ld. AO as well as before the ld. Commissioner of Income-tax (Appeals). Share application form, copy of reply to notice u/s 133(6) of the Act along with source of funds were available before the lower authorities. The assessee has filed evidences before us too. We note that the assessee has furnished all the evidences before the lower authorities below and therefore, the addition was merely made on the basis that summons issued u/s 131 of the Act were not complied with by the directors of the assessee company by not producing the directors of the subscribers’ companies which is incorrect and cannot be sustained. We also note that Hon'ble jurisdictional High Court has decided the similar issues in the case of PCIT Vs. M/s Maninya Comfin Pvt. Ltd ITAT/271/2023 IA No: GA/1/2023 dated 01/05/2024, PCIT Vs. M/s Sitka mercantile Pvt. ltd. ITAT/68/2024 IA No: GA/2/2024 dated 19/06/2024, PCIT Vs. M/s Hirak Vyaapar Pvt. ltd. ITAT/242/2023 IA No: GA/1/2023 dated 03/05/2024, PCIT Vs. M/s Snowhite Infrastructure Pvt. Ltd. ITAT/108/2024 IA No: GA/2/2024 dated 15/05/2024 and PCIT Vs. Page | 4 ITA No.507/KOL/2024 Jai Bhola Trading Co. pvt. ltd.; A.Y. 2012-13 M/s Outcome Buildcom Pvt. ltd. ITAT/03/2024 IA No: GA/1/2024 dated 03/05/2024. In view of the above facts and circumstances and the ratio laid down in the above decisions, we are inclined to set aside the order of the ld. CIT (A) and direct the AO to delete the addition. 06. In the result, the appeal of the assessee is allowed. Order pronounced in the open court on 04.03.2025. Sd/- Sd/- (SONJOY SARMA) (RAJESH KUMAR) (JUDICIAL MEMBER) (ACCOUNTANT MEMBER) Kolkata, Dated: 04.03.2025 Sudip Sarkar, Sr.PS Copy of the Order forwarded to : 1. The Appellant 2. The Respondent 3. CIT 4. DR, ITAT, 5. Guard file. BY ORDER, True Copy// Sr. Private Secretary/ Asst. Registrar Income Tax Appellate Tribunal, Kolkata "