PRAYAG CAPITALS INDIA LIMITED,ALLAHABAD V. ITO, WARD-2(2) NOW WARD-2(1), , ALLAHABAD

ITA 81/ALLD/2024

AI Insights

The case involves Prayag Capitals India Limited appealing against the additions made to its income by the Income Tax Officer, which were confirmed by the Commissioner of Income Tax (Appeals). The additions were made on the grounds that the share capital received by the assessee from M/s Sakshi Barter Pvt. Ltd. and other entities were income from undisclosed sources. The Tribunal examined the evidence and submissions presented during the appellate proceedings and found that the additions were not justified, leading to the allowance of the assessee's appeal.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 712908 (ITAT-ALLAHABAD)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-07-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Assessment Year: 2015-2016
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: A.K. SINGH
• Assessee Lawyers: ASEEM THAKKAR; WAY OF CAPITAL CONTRIBUTION FROM MS SAKSHI BARTER PVT. LTD. WAS
• Keywords: Additional evidence; Income from undisclosed sources
• Section: 144; 143(3)

Judgement Text

"I.T.A. No.81/Alld/2024 Assessment Year:2015-16 1 IN THE INCOME TAX APPELLATE TRIBUNAL ALLAHABAD BENCH, ALLAHABAD BEFORE SHRI ANADEE NATH MISSHRA, ACCOUNTANT MEMBER AND SHRI SUBHASH MALGURIA, JUDICIAL MEMBER I.T.A. No.81/Alld/2024 Assessment year:2015-16 Prayag Capitals India Limited, Village- Junedpur, Post-Hanumanganj, Allahabad. PAN:AACCP7782K Vs. Income Tax Officer, Ward-2(2), Now Ward-2(1), Allahabad (Appellant) (Respondent) O R D E R PER SUBHASH MALGURIA:J.M. This appeal vide I.T.A. No.81/Alld/2024 has been filed by the assessee for assessment year 2015-16 against impugned appellate order dated 21/03/2024 (DIN & Order No.ITBA/NFAC/S/250/2023- 24/1063106082(1) of Commissioner of Income Tax (Appeals) [“CIT(A)” for short]. In this appeal the assessee has raised the following grounds: “1. The learned CIT(A), NFAC, Delhi/Commissioner of Income Tax (Appeals) Unit-3 Coimbatore has erred in confirming the addition of Rs.70,00,000/- made by the Assessing Officer for the alleged income from undisclosed sources. Appellant by Shri Aseem Thakkar, C.A. Respondent by Shri A. K. Singh, Sr. D.R. Printed from counselvise.com I.T.A. No.81/Alld/2024 Assessment Year:2015-16 2 2. The learned CIT(A), NFAC, Delhi/Commissioner of Income Tax (Appeals) Unit-3 Coimbatore has erred in confirming the addition of Rs.56,80,000/- out of total addition of Rs.1,01,80,000/- made by the Assessing Officer for the alleged income from undisclosed sources.” 2. In this case assessment order dated 20/12/2017 was passed by the Assessing Officer u/s 143(3) of the Income Tax Act, 1961 (“the Act” for short) whereby the assessee’s total income was determined at Rs.1,82,90,050/- as against returned income of Rs.11,10,050/-. In the aforesaid assessment order an addition of Rs.1,71,80,000/- was made by treating the increase in the assessee’s share capital of the aforesaid amount of Rs.1,71,80,000/- as the assessee’s income from undisclosed sources. The relevant portion of the assessment order is reproduced as under: “………..Assessee was asked to explain the details regarding increase in capital by this office letter/email dated 07/12/2017. Vide letter/email dated 13/12/2017, the assessee has submitted some details. After perusal of the details submitted by the assessee, it is found that only one share holder Sakshi Barter Pvt. Ltd. has submitted his return and bank accounts which are as under: S.No. Assessment year Returned income ------- --------------------- ---------------------- 1. 2013-14 4,830/- 2. 2014-15 780/- 3. 2015-16 18,670/- Bank account No. 372001010036781 of M/s Sakshi Barter Private Ltd. for the period from 01/04/2014 to 31/03/2015 Date Withdrawals Deposits Balance --------- ---------------- ----------- --------------- 01/04/2014 4,362 4,362 07/05/2014 2,76,000 2,80,362 19/08/2014 2,69,800 10,562 12/12/2014 70,00,000 70,10,562 12/12/2014 70,00,000 10,562 Printed from counselvise.com I.T.A. No.81/Alld/2024 Assessment Year:2015-16 3 From the perusal of the above bank account and Income Tax return, it is crystal clear that M/s Sakshi Barter Pvt. Ltd has no capacity to contribute the share capital of Rs.70,00,000/-. It appears that the M/s Sakshi Barter Pvt. Ltd. is entry operator or shell company. Thus the creditworthiness the share holder is net proved, therefore the deposit of Rs.70,00,000/- as share capital is income of the assessee from undisclosed sources , therefore the addition of Rs.70,00,000/- is added to the income of the assessee. It will not be out of place to mention that in the bank account of M/s Sakshi Barter Pvt. Ltd, the money has came from a/c no. 372001010036736 and the assesses i.e. Prayag Capitals India Limited has again transferred Rs.67,25,000/-(i.e Rs.15,00,000/- on 16.12.2014, Rs.30,00,000/- on 01.01.2015 and Rs.22,25,000/- on 31.03.2015 ) in the same bank account i.e a/c no. 372001010036736 from where the money was came in the a/c of M/s Sakshi Barter Private Ltd . Addition Rs. 70, 00,000/- Further the assesses has neither furnished the identity nor creditworthiness of the person who has made the deposit of Rs.1,01,80,000/- (i.e. Rs.1,71,80,000 - Rs.70,00,000/-), against share capital . Thus the assessee has failed to prove all 3 ingredients of the cash credits i.e. identity of the depositors, creditworthiness of the depositors as well as genuineness of the deposit, therefore, I made the addition of Rs.1,01,80,000/- from undisclosed source. Addition:Rs.1,01,80,000/- 2.1 The assessee filed appeal against the aforesaid addition of Rs.1,71,80,000/- in the office of the learned CIT(A). Vide impugned appellate order dated 21/03/2024, the learned CIT(A) upheld the addition of Rs.70,00,000/- received by the assessee from M/s Sakshi Barter Private Limited. Out of the remaining amount of Rs.1,01,80,000/-, (1,71,80,000 – 70,00,000/-), the learned CIT(A) deleted Rs.45,00,000/- (received by the assessee from M/s Innovative Infraplus) and confirmed the remaining amount of Rs.56,80,000/-. Thus, out of the aforesaid total addition of Rs.1,71,80,000/-, addition amounting to Rs.45,00,000/- was deleted and the remaining amount of Rs.70,00,000/- plus Rs.56,80,000/- i.e. Rs.1,26,80,000/- was confirmed. During the appellate proceedings in the Printed from counselvise.com I.T.A. No.81/Alld/2024 Assessment Year:2015-16 4 office of the learned CIT(A), additional evidences were filed by the assessee. The learned CIT(A) admitted the additional evidences and obtained remand report on the same from the Assessing Officer. The order of the learned CIT(A) was passed after due consideration of the remand report of the Assessing Officer. 3. The present appeal before us has been filed by the assessee against the aforesaid impugned appellate order dated 21/03/2024 of learned CIT(A). In the course of appellate proceedings in Income Tax Appellate Tribunal, paper book in two parts was submitted from the assessee’s side containing the following particulars: Printed from counselvise.com I.T.A. No.81/Alld/2024 Assessment Year:2015-16 5 Printed from counselvise.com I.T.A. No.81/Alld/2024 Assessment Year:2015-16 6 Printed from counselvise.com I.T.A. No.81/Alld/2024 Assessment Year:2015-16 7 3.1 Paper book containing total of five parts was filed by the learned D.R. during appellate proceedings in Income Tax Appellate Tribunal, as per the following details: Printed from counselvise.com I.T.A. No.81/Alld/2024 Assessment Year:2015-16 8 Printed from counselvise.com I.T.A. No.81/Alld/2024 Assessment Year:2015-16 9 Printed from counselvise.com I.T.A. No.81/Alld/2024 Assessment Year:2015-16 10 Printed from counselvise.com I.T.A. No.81/Alld/2024 Assessment Year:2015-16 11 Printed from counselvise.com I.T.A. No.81/Alld/2024 Assessment Year:2015-16 12 Printed from counselvise.com I.T.A. No.81/Alld/2024 Assessment Year:2015-16 13 Printed from counselvise.com I.T.A. No.81/Alld/2024 Assessment Year:2015-16 14 Printed from counselvise.com I.T.A. No.81/Alld/2024 Assessment Year:2015-16 15 Printed from counselvise.com I.T.A. No.81/Alld/2024 Assessment Year:2015-16 16 Printed from counselvise.com I.T.A. No.81/Alld/2024 Assessment Year:2015-16 17 Printed from counselvise.com I.T.A. No.81/Alld/2024 Assessment Year:2015-16 18 Printed from counselvise.com I.T.A. No.81/Alld/2024 Assessment Year:2015-16 19 Printed from counselvise.com I.T.A. No.81/Alld/2024 Assessment Year:2015-16 20 Printed from counselvise.com I.T.A. No.81/Alld/2024 Assessment Year:2015-16 21 Printed from counselvise.com I.T.A. No.81/Alld/2024 Assessment Year:2015-16 22 Printed from counselvise.com I.T.A. No.81/Alld/2024 Assessment Year:2015-16 23 Printed from counselvise.com I.T.A. No.81/Alld/2024 Assessment Year:2015-16 24 Printed from counselvise.com I.T.A. No.81/Alld/2024 Assessment Year:2015-16 25 Printed from counselvise.com I.T.A. No.81/Alld/2024 Assessment Year:2015-16 26 Printed from counselvise.com I.T.A. No.81/Alld/2024 Assessment Year:2015-16 27 Printed from counselvise.com I.T.A. No.81/Alld/2024 Assessment Year:2015-16 28 3.2 Written submissions were initially filed by the learned D.R. in aforesaid paper book part-III. Later the written submissions were revised in the aforesaid paper book part-5. At the time of hearing, the learned D.R. submitted that the revised written submissions, as contained in aforesaid paper book part-5 should be considered and earlier written submissions may be ignored. The revised written submissions filed by learned D.R., as contained in aforesaid paper book part-5 are reproduced below for ready reference: Printed from counselvise.com I.T.A. No.81/Alld/2024 Assessment Year:2015-16 29 Printed from counselvise.com I.T.A. No.81/Alld/2024 Assessment Year:2015-16 30 Printed from counselvise.com I.T.A. No.81/Alld/2024 Assessment Year:2015-16 31 Printed from counselvise.com I.T.A. No.81/Alld/2024 Assessment Year:2015-16 32 Printed from counselvise.com I.T.A. No.81/Alld/2024 Assessment Year:2015-16 33 Printed from counselvise.com I.T.A. No.81/Alld/2024 Assessment Year:2015-16 34 Printed from counselvise.com I.T.A. No.81/Alld/2024 Assessment Year:2015-16 35 Printed from counselvise.com I.T.A. No.81/Alld/2024 Assessment Year:2015-16 36 Printed from counselvise.com I.T.A. No.81/Alld/2024 Assessment Year:2015-16 37 Printed from counselvise.com I.T.A. No.81/Alld/2024 Assessment Year:2015-16 38 Printed from counselvise.com I.T.A. No.81/Alld/2024 Assessment Year:2015-16 39 4. At the time of hearing before us, the learned A.R. for the assessee submitted that the assessee had filed additional evidence along with written submissions in the course of appellate proceedings in the office of the learned CIT(A), which were forwarded by the learned CIT(A) to the Assessing Officer and the report of the Assessing Officer was obtained. The learned CIT(A) has passed the impugned order, the learned A.R. for the assessee submitted, after considering the Assessing Officer’s aforesaid report. He drew our attention to the paper book filed from the assessee’s side during appellate proceedings in Income Tax Appellate Tribunal (already referred to in foregoing paragraph No……. of this order) containing the copy of written submissions filed by the assessee during appellate proceedings in the office of the learned CIT(A). He also drew our attention to acknowledgement receipt in the written submissions and paper book Printed from counselvise.com I.T.A. No.81/Alld/2024 Assessment Year:2015-16 40 (including additional evidence) filed by the assessee during the appellate proceedings in the office of learned CIT(A). The learned A.R. for the assessee placed reliance on the written submissions filed by the assessee during appellate proceedings in the office of the learned CIT(A), which is being reproduced below for the ease of reference: Printed from counselvise.com I.T.A. No.81/Alld/2024 Assessment Year:2015-16 41 Printed from counselvise.com I.T.A. No.81/Alld/2024 Assessment Year:2015-16 42 Printed from counselvise.com I.T.A. No.81/Alld/2024 Assessment Year:2015-16 43 Printed from counselvise.com I.T.A. No.81/Alld/2024 Assessment Year:2015-16 44 Printed from counselvise.com I.T.A. No.81/Alld/2024 Assessment Year:2015-16 45 Printed from counselvise.com I.T.A. No.81/Alld/2024 Assessment Year:2015-16 46 Printed from counselvise.com I.T.A. No.81/Alld/2024 Assessment Year:2015-16 47 Printed from counselvise.com I.T.A. No.81/Alld/2024 Assessment Year:2015-16 48 Printed from counselvise.com I.T.A. No.81/Alld/2024 Assessment Year:2015-16 49 Printed from counselvise.com I.T.A. No.81/Alld/2024 Assessment Year:2015-16 50 Printed from counselvise.com I.T.A. No.81/Alld/2024 Assessment Year:2015-16 51 Printed from counselvise.com I.T.A. No.81/Alld/2024 Assessment Year:2015-16 52 Printed from counselvise.com I.T.A. No.81/Alld/2024 Assessment Year:2015-16 53 4.1 He also placed reliance on oral submissions/further written submissions made by the assessee during appellate proceedings in the office of the learned CIT(A), which have been included in the impugned order of the learned CIT(A), and is reproduced below for the ease of reference: Printed from counselvise.com I.T.A. No.81/Alld/2024 Assessment Year:2015-16 54 Printed from counselvise.com I.T.A. No.81/Alld/2024 Assessment Year:2015-16 55 Printed from counselvise.com I.T.A. No.81/Alld/2024 Assessment Year:2015-16 56 Printed from counselvise.com I.T.A. No.81/Alld/2024 Assessment Year:2015-16 57 4.2 In response to a query from the Bench, the learned A.R. for the assessee submitted that the assessee had no objection to admission of additional evidence filed by learned D.R. in the course of appellate proceedings in Income Tax Appellate Tribunal. 5. Specifically, as regards the aforesaid addition amounting to Rs.70,00,000/-, received by the assessee from M/s Sakshi Barter Pvt. Ltd., the learned A.R. for the assessee took us through the paper book to show that the amount of Rs.70,00,000/- was routed through the bank account of M/s Sakshi Barter Pvt. Ltd. He also drew our attention to bank account of the assessee and M/s Sakshi Barter Pvt. Ltd. to establish this point. He further drew our attention to bank account of M/s Infraplus India Pvt. Ltd. The learned A.R. for the assessee took us through the detailed bank account of M/s Sakshi Barter Pvt. Ltd. to establish that there was gradual accretion Printed from counselvise.com I.T.A. No.81/Alld/2024 Assessment Year:2015-16 58 of fund in the bank account of M/s Infraplus India Pvt. Ltd. through steady process of multiple transactions with various parties during the preceding period from time to time. He also submitted that the assessee, M/s Sakshi Barter Pvt. Ltd., and M/s Infraplus India Pvt. Ltd. are entities of the same group. He furthermore submitted that addition in share capital of the assessee by way of capital contribution from M/s Sakshi Barter Pvt. Ltd. was a group decision as part of overall corporate strategy of the group and transactions within the groups were organized in a manner that M/s Sakshi Barter Pvt. Ltd. as well as M/s Infraplus India Pvt. Ltd. had sufficient funds for effecting the aforesaid transactions. The learned A.R. for the assessee contended that the impugned order of the learned CIT(A) and the assessment order passed by the Assessing Officer to the effect that the M/s Sakshi Barter Pvt. Ltd. was entry provider/shell company and capital contribution of the aforesaid amount of Rs.70,00,000/- by M/s Sakshi Barter Pvt. Ltd. was perverse finding and contrary to materials on record. He submitted that the assessee, M/s Sakshi Barter Pvt. Ltd. and M/s Infraplus India Pvt. Ltd. are registered companies, which filed return regularly and therefore, the identity was fully established. Further he submitted that the M/s Sakshi Barter Pvt. Ltd. had received funds from M/s Infraplus India Pvt. Ltd. (as discussed earlier) and M/s Infraplus India Pvt. Ltd. had gradually accumulated sufficient funds in order to transfer the aforesaid amount of Rs.70,00,000/- to M/s Sakshi Barter Pvt. Ltd. Thus, the capacity of M/s Sakshi Barter Pvt. Ltd. was also fully established. Further it was the bonafide group decision as part of over all strategy of the group which resulted in M/s Sakshi Barter Pvt. Ltd. transferring funds of Rs.70,00,000/- to the assessee as capital contribution. Thus, he submitted, all the three ingredients, namely identity, capacity and genuineness were established and the addition of aforesaid amount of Rs.70,00,000/- was contrary to evidence Printed from counselvise.com I.T.A. No.81/Alld/2024 Assessment Year:2015-16 59 and material on record. He submitted that the Assessing Officer be directed to delete this addition. 5.1 As regards the aforesaid addition of Rs.56,80,000/-, the learned A.R. for the assessee submitted that the aforesaid amount of Rs.56,80,000/- was the sum total of small amounts received from a number of individuals/HUF. He placed further reliance on the additional evidences filed by learned D.R. for Revenue for the contention that the amounts contributed by the aforesaid persons were consistent with their financial capacity and no adverse view could be taken considering that these were small amounts. 5.2 For the aforesaid addition of Rs.70,00,000/- as well as for the aforesaid addition of Rs.56,80,000/-, the learned A.R. for the assessee once again placed heavy reliance on the written submissions filed during appellate proceedings in the office of the learned CIT(A). 6. Learned Sr. D.R. placed reliance on the written submissions [already reproduced in foregoing paragraph (3.2) of this order]. He also highlighted that the assessee did not make compliance with notices issued by the Assessing Officer in the earlier part of the assessment proceedings which led to levy of non-compliance penalty u/s 271(1)(b) of the Act, amounting to Rs.10,000/-. It was only after final show cause notice issued by the Assessing Officer that the assessee filed submissions during assessment proceedings; he submitted. He also contended that M/s Sakshi Barter Pvt. Ltd. did not have adequate funds of its own to make capital contribution and had instead taken the funds from Infraplus India Pvt. Ltd. He also contended that merely because a transaction is routed through bank account need, it not be treated as a genuine transaction. For this proposition, he placed reliance on the various case laws, which were Printed from counselvise.com I.T.A. No.81/Alld/2024 Assessment Year:2015-16 60 included in the paper book filed from the side of Revenue [already reproduced in foregoing paragraph (3.2) of this order.] 6.1 In rejoinder, the learned A.R. for the assessee submitted that the assessment order had been passed u/s 143(3) of the Act. It was not a best judgment assessment order u/s 144 of the Act. Therefore, he submitted, a logical inference arises that the Assessing Officer was satisfied with the compliance made to the notices issued during the assessment proceedings. Further he submitted that the learned CIT(A) had admitted additional evidence within the provisions of Rule 46A of the I.T. Rules in accordance with law, which are now part of record and should be given full consideration. He also submitted that the learned CIT(A) had obtained remand report from the Assessing Officer in respect of additional evidence filed during the appellate proceedings before the learned CIT(A). Therefore, Revenue side had got full opportunity and there is no occasion at present for Revenue to hold any grievance against the assessee regarding lack of compliance. 7. We have heard both sides, We have perused the materials on record. We are of the view that accumulation of funds by Infraplus India Pvt. Ltd. through steady transactions with numerous parties, is, as submitted by learned A.R. for assessee, adequately explained. Further, the group decision that it should be M/s Sakshi Barter Pvt. Ltd. to make capital contribution in the assessee company is a bonafide decision as there is no material on record to the contrary to even remotely suggest that there was any malafide purpose behind it. Thus, the act of M/s Sakshi Barter Pvt. Ltd. taking funds from Infraplus India Pvt. Ltd. for the purpose of making capital contribution in the assessee company is treated as a genuine transaction. Further, the capacity of M/s Sakshi Barter Pvt. Ltd. to make capital Printed from counselvise.com I.T.A. No.81/Alld/2024 Assessment Year:2015-16 61 contribution is also established in view of transaction of Infraplus India Pvt. Ltd. with M/s Sakshi Barter Pvt. Ltd. and with other group entities and persons. M/s Sakshi Barter Pvt. Ltd. is a registered company and regular income tax assessee and therefore, the identity of M/s Sakshi Barter Pvt. Ltd. is also established. Thus, all the three ingredients, namely identity, capacity and genuineness are established. Accordingly, we hold that the aforesaid addition of Rs.70,00,000/- is to be deleted. We direct the Assessing Officer to delete the aforesaid addition of Rs.70,00,000/-. As regards the aforesaid addition of Rs.56,80,000/-, we have considered the rival submissions and material on record. It is not in dispute that the aforesaid amount has been received by the assessee from a number of individual persons/HUF [already mentioned in the submissions of learned A.R. for the assessee in foregoing paragraph (5.1) of this order]. Moreover, it is also found that the amounts received from individual persons/HUF are small amounts which are consistent with financial capacity of the individual persons/HUF. We are of the view that no adverse view should be taken having regard to the submissions made by the learned A.R. for the assessee during appellate proceedings in the office of the learned CIT(A) and the submissions made in the course of appellate proceedings in Income Tax Appellate Tribunal. Therefore, the Assessing Officer is directed to delete the aforesaid amount of Rs.56,80,000/-. 8. In the result, the appeal of the assessee stands allowed. (Order pronounced in the open court on 29/07/2025) Sd/. Sd/. (ANADEE NATH MISSHRA) (SUBHASH MALGURIA) Accountant Member Judicial Member Dated:29/07/2025 *Singh Printed from counselvise.com I.T.A. No.81/Alld/2024 Assessment Year:2015-16 62 Copy of the order forwarded to : 1. The Appellant 2. The Respondent. 3. Concerned CIT 4. D.R., I.T.A.T., Allahabad Printed from counselvise.com "