M/S. HHP HOSPITAL PVT. LTD.,KOLKATA V. DCIT, CIRCLE 11(1), KOLKATA

ITA 280/KOL/2025

AI Insights

The case revolves around an appeal by M/s HHP Hospital Private Ltd against the order of the CIT(A), National Faceless Appeal Centre, Delhi, which sustained the addition of Rs.1,92,00,000/- as unexplained cash credit under section 68 of the Income Tax Act. The addition was initially made by the Assessing Officer during scrutiny of the assessee's return for the assessment year 2012-2013, where it was noted that the assessee received substantial share capital and share premium from three companies. The Assessing Officer questioned the genuineness of these transactions due to the non-production of the directors of the shareholder companies. The CIT(A) upheld this addition, leading to the present appeal. The Tribunal, after considering the evidence and the legal precedents cited, concluded that the transactions were genuine and the additions were unjustified.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 776869 (ITAT-KOLKATA)
• Duration Of Justice: 7 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-09-2025
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2012-2013
• Appeal Filed On: 07-02-2025
• Other Referred Cases: Pr.CIT Vs. M/s Paradise Inland Shipping Pvt. Ltd., CIT Vs. Orchid Industries, M/s Aastha Vincom Pvt. Ltd. vs. ITA No.2269/Kol/2019, CIT vs. Lovely Exports (P.) Ltd.
• Laws Referred To: Income Tax Act
• Court: TRIBUNAL
• Department Lawyers: KAPIL MANDAL
• Assessee Lawyers: SUNIL SURANA
• Keywords: Set aside; Unexplained cash credit

Judgement Text

" IN THE INCOME TAX APPELLATE TRIBUNAL “B” BENCH, KOLKATA BEFORE SHRI MANJUNATHA G, ACCOUNTANT MEMBER AND SHRI SONJOY SARMA, JUDICIAL MEMBER ITA No.280/KOL/2025 (निर्धारण वर्ा /Assessment Year : 2012-2013) M/s HHP Hospital Private Ltd, 2406, Garia Main Road, Kolkata-700084 Vs DCIT, Circle-11(1), Kolkata PAN No. AABCH 2642 B (अपीलधर्थी /Appellant) .. (प्रत्यर्थी / Respondent) निर्धाररती की ओर से /Assessee by : Shri Sunil Surana, AR रधजस्व की ओर से /Revenue by : Shri Kapil Mandal, Addl.CIT-Sr. DR सुनवाई की तारीख / Date of Hearing : 18/09/2025 घोषणा की तारीख/Date of Pronouncement : 19/09/2025 आदेश / O R D E R Per Manjunatha G, AM: This appeal filed by the assessee is directed against the order passed by the ld. CIT(A), National Faceless Appeal Centre (NFAC), Delhi, dated 04.01.2024 pertaining to assessment year 2012-2013. 2. At the outset, we note that the appeal of the assessee is barred by limitation by 313 days, for which condonation petition is filed. At the time of hearing the counsel of the assessee explained the reason for delay in filing the appeal. The Ld. A.R did not raise any objection in condoning the delay. 3. After hearing the rival contentions and perusing the materials available on record, we find that the delay is for bonafide and genuine reason, hence, we condone the delay and adjudicate the appeal. 4. Brief facts of the case are that the assessee e-filed its return of income for assessment year 2012-2013 on 30.09.2012 declaring total income at Rs.37,06,960/-. The case was selected for scrutiny and during Printed from counselvise.com ITANo.280/Kol/2025 2 the course of assessment proceedings, the Assessing Officer noticed that the assessee has received share capital including share premium from Bircot Tracom Pvt. Ltd., Omnitech Industries Ltd. and Utpal Trading Pvt. Ltd. to the tune of Rs.1,92,00,000/-. The Assessing Officer called upon the assessee to file relevant evidences and also produce the aforesaid shareholders for verification. The Assessing Officer had also issued summons u/s.131 of the Act, which were served on the shareholders companies for which they have furnished relevant evidence. The Assessing Officer after considering the relevant submissions of the assessee observed that although the assessee has furnished various evidence in support of share capital received from above companies but failed to produce the directors of the shareholder companies which renders the transactions between assessee company and the shareholders companies, non- genuine. Therefore, the Assessing Officer observed that the assessee failed to prove the identity of the creditors, genuineness of the transactions and creditworthiness of the parties, thus, rejected the submissions of the assessee and made additions of Rs.1,92,00,000/- u/s.68 of the Act as unexplained cash credit towards share capital and share premium received from the above three companies. 5. Aggrieved by the assessment order, the assessee preferred an appeal before the ld.CIT(A). Before the ld.CIT(A), the assessee has reiterated its submission made before the Assessing Officer and further argued that mere non-production of directors of the shareholders company is not a ground for disbelieving various documents furnished by the Printed from counselvise.com ITANo.280/Kol/2025 3 assessee to prove the identity of the creditors, genuineness of the transactions and creditworthiness of the parties. The ld.CIT(A) after considering the relevant submissions of the assessee and also taking note of various facts brought on record by the Assessing Officer, observed that although the assessee company has filed certain basic evidence, like confirmation of the parties along with financial statements, but failed to prove the genuineness of the transaction, which is evident from the financer of the investor company, namely, Utpal Trading Pvt. Ltd. who has shown meagre income of Rs.179/- in its ITR for the relevant year and further the Bircot Tracom Pvt. Ltd. has shown Rs.217 as income for the relevant year. In respect of third company, i.e. Omnitech Industries Ltd., the income tax details could not be located from the reply of the assessee. Therefore, taking note of the relevant facts, rejected the explanation of the assessee and sustained the addition made by the Assessing Officer towards share capital and premium as unexplained cash credit u/s.68 of the Act. 6. Ld. counsel for the assessee submitted that the assessee filed all the documentary evidence to prove the identity of the parties, genuineness of the transactions and creditworthiness of the parties. Further the assessee company has received share capital including share premium from group companies and in all three companies there is common director and, therefore, cannot be alleged that these companies do not have identity, genuineness of the transaction and also the creditors do not have creditworthiness to explain the share capital given to the assessee company. Ld. counsel further referring to the paper book in the case of Utpal Trading Pvt. Ltd., submitted that the share capital was received in the Printed from counselvise.com ITANo.280/Kol/2025 4 earlier financial year 2010-2011, whereas the allotment has been done in the year under consideration. Similarly, in respect of Bircot Tracom Pvt. Ltd., the share capital was received in the financial year 2010-2011, whereas the allotment has been given in the year under consideration. In respect of Omnitech Industries Ltd., it was the running current account between the two companies in the normal course of business and out of the balance available, the same has been converted into share capital. The assessee has furnished all details including confirmation letters from the parties, their bank accounts, financial statements etc. In fact, the Assessing Officer issued notice u/s.131 of the Act for which the companies have responded. The AO merely for the reason of non-appearance of the directors observed that the transaction between the companies and the shareholders are not genuine, even though various documents have been furnished, therefore, submitted that the Assessing Officer has erred in making the additions towards share capital and share premium treating the same as unexplained cash credit u/s.68 of the Act. The ld.CIT(A) without considering the relevant facts, simply sustained the additions. In this regard, the ld. counsel relied on the decision of the Hon’ble Supreme Court in the case of Pr.CIT Vs. M/s Paradise Inland Shipping Pvt. Ltd., passed in Special Leave Petition No.12644/2018, dated on 23.04.2018. 7. Ld. Sr. DR for the revenue, on the other hand, supporting to the order of the ld. CIT(A), submitted that the ld. CIT(A) has given a categorical reason in para 7.2.3 of the order that the shareholders company failed to establish the creditworthiness, which is evident from the meagre income declared for the year under consideration in their ITRs filed for the relevant Printed from counselvise.com ITANo.280/Kol/2025 5 assessment years. Further the directors of the above companies have failed to appear before the Assessing Officer in response to the notice issued u/s.131 of the Act by the Assessing Officer. Ld. Sr. DR also submitted that since the assessee company failed to discharge the genuineness of the transactions, identity and creditworthiness of the parties, the Assessing Officer had rightly made the addition treating the share capital and share premium received by the assessee as unexplained cash credit u/s.68 of the Act, and the same has rightly been sustained by the ld.CIT(A) and, therefore, the order of the ld. CIT(A) should be upheld. 8. We have heard both the parties, perused the material available on record and gone through the orders of the authorities below. There is no dispute with regard to the fact that the assessee company had received share capital from three companies and all three companies are group companies of the assessee. The assessee has received Rs.6 lakhs as share capital from Bircot Tracom Pvt. Ltd.. The above company is a group company of the assessee company, which is evident from the common director between assessee company and the shareholders company. Further the share capital amount of Rs.6 lakhs was received in financial year 2010-2011 and the only allotment of shares have been given in financial year 2011-2012. The assessee had also filed various evidence including the name and address of the shareholders, their bank account statements along with financial statements. From the details filed by the assessee, it is very clear that the transactions between the assessee company and the shareholders company are through proper banking channel. Further, the Assessing Officer issued summons u/s.131 of the Act Printed from counselvise.com ITANo.280/Kol/2025 6 warranting the shareholders company and in response to which they have replied with all details. Although the directors of the shareholder companies did not appear before the Assessing Officer but the said fact alone cannot lead to an inference that the transaction between the assessee company and the shareholder company, are not genuine. Similarly, the assessee company has received Rs.9 lakhs share capital from Utpal Trading Pvt. Ltd. in the financial year 2010-2011 whereas the allotment has been done in the financial year 2011-2012. The assessee has furnished all details and the Assessing Officer never disputed the fact that the assessee furnished all details. Once again the director of the above companies never appeared before the Assessing Officer. In respect of Omnitech Industries Ltd., the assessee has received Rs.1,77,00,000/- as share capital out of the running current account between the assessee company and the shareholders company in the normal course of its business. The assessee company had allotted 11800 shares for a consideration of Rs.1,77,00,000/- out of opening balance available in their books of accounts. The assessee has furnished all details including the name and address of the shareholders, their bank accounts, financial statements and confirmation letters. Since all the three companies are group companies of the assessee and it was not a case of the AO that these companies are shell/paper companies, once the relevant details have been filed to prove the identity of the creditors, genuineness of the transaction and the creditworthiness of the parties, merely for the reason that non-appearance of the directors of the above companies, the Assessing Officer cannot disbelieve the transaction between assessee company and the shareholders company. This legal proposition is Printed from counselvise.com ITANo.280/Kol/2025 7 supported by the decision of the Hon’ble Supreme Court in the case of M/s Paradise Inland Shipping Pvt. Ltd.(supra), wherein the Hon’ble Supreme Court has very clearly held that it cannot be held that the transaction between the assessee company and the shareholder company not genuine. A similar view has been taken by the Hon’ble High Court of Bombay in the case of CIT Vs. Orchid Industries, reported in 397 ITR 136. The ITAT Kolkata Bench in the case of M/s Aastha Vincom Pvt. Ltd. passed in ITA No.2269/Kol/2019, order dated 26.08.2022 has also taken the similar view and held that mere non-appearance of the directors is not a ground for disbelieving the transaction between the assessee company and the shareholders company when other evidence comes to prove that the transaction between the assessee company and the shareholders company are genuine. 9. In the present case, there is no dispute with regard to the fact that the assessee has furnished all evidence and also proved identity, genuineness of the transaction and creditworthiness of the parties. Once, the identity of the loan creditor is established then the department is free to proceed on the loan creditors in accordance with law but the sum received from the loan creditors cannot be regarded as income of the assessee. This principle is supported by the decision of the Hon’ble Supreme Court in the case of CIT vs. Lovely Exports (P.) Ltd., reported in [(2008) 216 CTR 195 (SC)]. 10. In view of the above and considering the facts and circumstances of the case, we are of the considered view that the Assessing Officer has erred in making the addition towards share capital including share premium Printed from counselvise.com ITANo.280/Kol/2025 8 received from the above said three companies as unexplained cash credit u/s.68 of the Act. The ld. CIT(A) after considering the relevant facts simply sustained the addition. Accordingly, we set aside the order of the ld.CIT(A) and direct the Assessing Officer to delete the addition of Rs.1,92,00,000/- towards share capital and premium received by the assessee from the three companies. 11. In the result, appeal of the assessee is allowed. Order dictated in the open court on 19/09/2025. Sd/- (SONJOY SARMA) Sd/- (MANJUNATHA G) न्यधनयक सदस्य / JUDICIAL MEMBER लेखा सदस्य/ ACCOUNTANT MEMBER कोलकाता Kolkata; ददनाांक Dated 19/09/2025 Prakash Kumar Mishra, Sr.P.S. आदेश की प्रनतललपप अग्रेपर्त/Copy of the Order forwarded to : आदेशधिुसधर/ BY ORDER, (Assistant Registrar) Income Tax Appellate Tribunal, Kolkata 1. अपीलार्थी / The Appellant- 2. प्रत्यर्थी / The Respondent- 3. आयकर आयुक्त(अपील) / The CIT(A), 4. आयकर आयुक्त / CIT 5. विभागीय प्रविविवि, आयकर अपीलीय अविकरण, कोलकाता / DR, ITAT, Kolkata 6. गार्ड फाईल / Guard file. सत्यापपत प्रतत //True Copy// Printed from counselvise.com "