RAMESHWAR FINVEST PRIVATE LIMITED,KOLKATA V. DCIT, CENTRAL CIRCLE 3(3), KOLKATA

ITA 2107/KOL/2025

AI Insights

The case involves Rameshwar Finvest Private Limited, which appealed against the order of the Commissioner of Income-tax (Appeals), Kolkata, confirming the addition of 32,04,00,000 as unexplained cash credit under Section 68 of the Income-tax Act, 1961. The addition was initially made by the Assessing Officer following a revisionary order under Section 263 of the Act. The Tribunal examined whether the assessee had adequately substantiated the share capital and premium received through equity shares at a significant premium, which was questioned during the reassessment proceedings. The Tribunal's decision hinged on the interpretation and application of Sections 142(1), 142(2), 142(3), and 143(3) of the Act, alongside principles of natural justice concerning the opportunity for cross-examination and the handling of evidence.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 822832 (ITAT-KOLKATA)
• Duration Of Justice: 3 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-12-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Assessment Year: 2008-2009
• Appeal Filed On: 15-09-2025
• Other Referred Cases: Andaman Timber Industries Vs. CIT, Pr. Commissioner of Income Tax Vs. M/s. Sreeleathers, CIT vs. Naina Distributors (P.) Ltd., PCIT Vs. Best Infrastructure (India) Pvt. Ltd. & Ors., CIT vs. Orissa Corpn, (P.) Ltd., M/s SPML Infra Ltd. Vs. DCIT, ACIT Vs. Sur Buildcon Pvt. Ltd., CIT Vs. Gagandeep Infrastructure Pvt. Ltd.
• Laws Referred To: Income-tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SANAT KUMAR RAHA
• Assessee Lawyers: S. K. TULSIYAN; PUJA SOMANI; ARS
• Keywords: Set aside; Opportunity of being heard; Retrospective amendment; Reassessment proceedings; Question of law; Unexplained cash credit; Principle of natural justice; Accommodation entries; Revision of order; Bogus
• Section: 147; 144; 143(3); 142(1); 263; 132; 68; 131; 133(6)

Judgement Text

" IN THE INCOME TAX APPELLATE TRIBUNAL “D” BENCH, KOLKATA BEFORE SHRI RAJESH KUMAR, AM AND SHRI PRADIP KUMAR CHOUBEY, JM ITA No.2107/KOL/2025 (Assessment Year: 2008-09) Rameshwar Finvest Private Limited 111, Park Street, Kolkata- 700016, West Bengal Vs. DCIT, Central Circle 3(3) Aaykar Bhawan Poorva, Santil Palli, 110, Eastern Metropolitan Bypass, Opposite Ruby, kasba, Kolkata-700107, West Bengal (Appellant) (Respondent) PAN No. AABCR1053N Assessee by : Shri S.K. Tulsiyan & Ms. Puja Somani, ARs Revenue by : Shri Sanat Kumar Raha, DR Date of hearing: 17.11.2025 Date of pronouncement: 23.12.2025 O R D E R Per Rajesh Kumar, AM: This is an appeal preferred by the assessee against the order of the Commissioner of Income-tax (Appeals), Kolkata-21(hereinafter referred to as the “Ld. CIT(A)”] dated 06.08.2025 for the AY 2008-09. 2. In ground nos.1 and 2, the assessee has challenged the assessment framed u/s 263/143(3)/147 of the Income-tax Act, 1961 (hereinafter referred to as the Act) dated 28.03.2014, to be invalid on the ground that the in consequent to invalid exercise of revisionary jurisdiction u/s 263 of the Act, although, the appeal of the assessee preferred before the Tribunal against the revisionary order was dismissed by Printed from counselvise.com Page | 2 ITA No. 2107/KOL/2025 Rameshwar Finvest Private Limited; A.Y. 2008-09 the Tribunal but the issue of invalidity was not the subject matter decision passed by the tribunal and therefore all proceedings consequential to 263 of the Act including assessment framed are invalid and nullity. The issue is not being decided at this stage and left open to be decided at later on if the need arises for the same. 3. The second issue raised by the assessee in ground no.3,4 and 5 is against the confirmation of addition of ₹32,04,00,000/- by the ld. CIT (A) as made by the ld. AO on account of unexplained cash credit u/s 68 of the Act by ignoring the fact that all the evidences were produced during the re-assessment proceedings as well as in the set aside assessment proceedings. 3.1. First of all, we are deciding the issue raised on merit against confirmation of addition by ld. CIT (A).The facts in brief are that the order u/s 143(3)/147 of the Act was passed on 27.12.2010, assessing the total income at ₹2,15,920/- as against the returned income of ₹5,422/-. Thereafter, the ld. PCIT vide order dated 22.03.2013, passed the revisionary order u/s 263 of the Act, revising the said assessment order passed u/s 143(3)/147 of the Act on the ground of being erroneous and prejudicial to the interest of the Revenue. In the Consequential proceedings , the assessee was issued notice u/s 142(1) of the Act dated 24.10.2013, which was complied with by the assessee and the details called for were also furnished. The ld. AO noted that the assessee company had received ₹32,04,00,000/- by way of share capital and share premium by issuing equity shares at a face value of ₹10/- each at a premium of ₹190/- per share. During the course of hearing the counsel of the assessee was asked to produce the directors of the assessee company who were directors during the period under consideration. Printed from counselvise.com Page | 3 ITA No. 2107/KOL/2025 Rameshwar Finvest Private Limited; A.Y. 2008-09 The summons u/s 131(1) of the Act were also issued to the Directors of the assessee company as well as subscribing companies. In reply, the ex-director of the assessee company Shri Rao Birendra Singh showed up and his statement was recorded u/s 131 of the Act, in which he admitted that there was no basis for calculating the premium per equity share. The ld. AO thereafter noted that the summons issued to the directors of the subscriber companies were returned back unserved and accordingly it was brought to the notice of the counsel of the assessee who submitted that the subscribers had changed their addresses. The ld. AO also noted that in a few cases summon were served. Finally, the AO treated the amount of share capital/premium as bogus and added the same to the income of the assessee as unexplained cash credit u/s 68 of the Act in the assessment framed u/s 143(3)/263/143(3)/147 of the Act dated 28.03.2014. 3.2. In the appellate proceedings the ld. CIT (A) confirmed the addition on the ground that identity and creditworthiness of the share applicants as well as the genuineness of the transactions was not proved and there was no basis for charging premium of ₹190/- per share. 3.3. The ld. AR vehemently submitted before us that the addition has been confirmed by the ld. CIT (A) by grossly ignoring the facts available on record right from the first round of assessment. The ld. AR vehemently submitted that even in the first round of assessment the notice u/s 143(2) of the Act and 142(1) of the Act along with questionnaire were issued to the assessee and the assessee filed the copies of audited accounts, ITRs, bank statements, etc before the AO during the reassessment proceedings which were initiated by the ld. Printed from counselvise.com Page | 4 ITA No. 2107/KOL/2025 Rameshwar Finvest Private Limited; A.Y. 2008-09 AO u/s 147 of the Act by issuing notice u /s 148 of the Act. The ld. AR submitted that the reassessment was done by the ld. AO on the ground that consultancy fee of ₹ 1,05,500/- was not included in the return of income and thus has escaped assessment. The ld AR submitted that, however, the ld. AO by applying the explanation 3 to Section 147 of the Act called upon the assessee to explain the share capital/ share premium raised during the impugned financial year amounting to ₹32,04,00,000/-. The ld. AR submitted that the ld. AO during the assessment proceedings issued notice u/s 142(1) of the Act and directed the assessee to furnish names, addresses, PANs of the share subscribers and the amounts received along with bank statements and confirmation of the subscribers, which were duly furnished by the assessee before the ld. Assessing Officer. The ld. AR further referred to the notices issued u/s 133(6) of the Act to the share applicants which were duly responded and replies are available in the assessment folder. The ld. AR submitted that the ld. AO having examined the evidences furnished by the assessee as well as by the share subscribers came to the conclusion that the assessee has proved the identity, creditworthiness of the subscribers and the transactions were found to be genuine. Therefore, no addition was made u/s 68 of the Act in the assessment framed vide order dated 27.12.2010. However, the ld. AO disallowed in the said assessment filing fees of ₹1,05,000/- claimed u/s 35D of the Act. The ld. AR therefore submitted that the issue was examined at length by the ld. AO in the original assessment proceedings. The ld. AR submitted that the said order was revised by the ld. PCIT, for which show cause notice issued to the assessee was never served. Printed from counselvise.com Page | 5 ITA No. 2107/KOL/2025 Rameshwar Finvest Private Limited; A.Y. 2008-09 3.4. ld. AR submitted that in the second round of assessment also the assessee produced before the ld. AO the sources of funds audited of accounts, banking statement, ITRs, etc. and submitted that the money was received through banking channels and was duly recorded in the book of accounts. The ld. AR further submitted that the ld. AO has not found any defects in the documents furnished by the assessee. The learned AR submitted that even the AO has not followed the directions given by the PCIT in the revisionary order such as no summons were issued to the subscribers. One summons was issued by the AO to the director of the assessee company that too on the company’s name and without mentioning the name of the director. Similarly, other directions given by PCIT as regards conducting enquiries regarding certain issues were not followed. 3.5. The learned AR submitted that in the first round of assessment, the most of the subscriber companies submitted these documents in response to summons u/s 131 of the Act and the copies of acknowledgements by these parties are available from page no.71 to 121 of the Paper Book along with replies filed by the share subscribers. The ld. AR submitted that the assessee is a NBFC since financial year 2000-01. The ld. AR also submitted that the ld. AO noted in the assessment that erstwhile director of the company Shri Rao Birendra Singh, who also happened to be director of the some subscriber companies namely; M/s Maateswari Vanijya Pvt. Ltd., M/s Nirnidhi commercial Pvt. Ltd. & M/s Poddar Agro Co. Pvt. Ltd. and his statement was recorded but the same was never confronted to the assessee and no opportunity of cross-examination was ever allowed of the director of the subscriber companies before using their statements against the assessee. The ld AR submitted that the same Printed from counselvise.com Page | 6 ITA No. 2107/KOL/2025 Rameshwar Finvest Private Limited; A.Y. 2008-09 was the position with regard to Shri Binod Kumar Dugar, Director of M/s Sunray Tie-up Pvt. Ltd., M/s Bhaneswari Delacom Pvt. ltd., M/s Remahay Stores Pvt. ltd. & M/s Matshri Wires Pvt. Ltd. Similarly, no opportunity to cross-examine the director of the share subscribing companies as provided to the assessee before using their statement to the detriment of the assessee.In defense of his arguments the ld. AR relied on the decisions of i) Andaman Timber Industries Vs. CIT 2015(10) TMI 442 (SC) and Pr. Commissioner of Income Tax Vs. M/s. Sreeleathers ITAT/18/2022 (IA No.GA/02/2022) dated 14.07.2022 (Cal). 3.6. The ld. AR also vehemently referred to the provisions of Section 142(1) and 143(3) of the Act and emphasized that as per provisions of Section 142(2) the ld. AO is required to make all enquiries as it deems and consider necessary for the purpose of obtaining full information in respect of loss or income of the assessee and in the very next sub section 142(3) of the Act, it is provided that in respect of material gathered on the basis of said enquiry made u/s 142(2) of the Act and which is proposed to be used for the purpose of assessment, the ld. AO has to give any opportunity of being heard qua the same to the assessee but the same has not been granted to the assessee. Therefore, the mandate of Section 142(2) and 142(3) of the Act was not followed by the ld. Assessing Officer. The ld. AR in defense of his arguments relied on a series of decisions namely M/s SPML Infra Ltd. Vs. DCIT ITA No. 1228/KOL/2018, vide order dated 17.01.2020 and ACIT Vs. Sur Buildcon Pvt. Ltd. ITA No. 6174/DEL/2013, vide order dated 15.07.2021. The ld. AR also referred to the decision of Apex court in the case of Andaman Timber Industries Vs. CCE in Civil Appeal No. 4228 of 2006, wherein it was Printed from counselvise.com Page | 7 ITA No. 2107/KOL/2025 Rameshwar Finvest Private Limited; A.Y. 2008-09 held that, failure to give assessee the right to cross-examine the witnesses whose statements are relied upon in breach of principle of natural justice is a serious flaw which renders the order nullity. The ld. AR also referred to the decision of Hon'ble Delhi High Court in case of PCIT Vs. Best Infrastructure (India) Pvt. Ltd. & Ors. (2017) 397 ITR 0082 (Delhi). The ld. Counsel for the assessee therefore submitted that the order passed by the ld. AO and sustained by the ld. CIT (A) are in violation of principle of natural justice and may be quashed. 3.7. The ld. AR further submitted that it is not the case of the Revenue that the directors of the share applicant companies have denied transactions with the assessee company. The ld. AR submitted that they have admitted that share applicant companies have invested in the assessee company. The ld. AR also submitted in case of private entity it is no uncommon that these are closely held companies and premium is decided by the management already and parties are also known to each and every. Therefore, this cannot be stated to be averse to the assessee company. Therefore, the statement recorded of these two parties do not in any way lead to the interference that share transactions were not genuine. 3.8. The ld. AR submitted that the ld. AO relied on the decision of Hon'ble Delhi High Court in case of CIT Vs. Nipun Builders and Developers Pvt. Ltd. [2013] 30 taxmann.com 292 (Delhi), wherein it has been held that where the assessee failed to prove the identity and capacity of the subscriber companies to pay share application money. The amount so received was liable to be taxed u/s 68 of the Act. However, the said decision is distinguishable on facts vis-à-vis the facts of the present case. The ld. AR submitted in that case, the Printed from counselvise.com Page | 8 ITA No. 2107/KOL/2025 Rameshwar Finvest Private Limited; A.Y. 2008-09 share application money was received from the different companies to whom the summon u/s 131 of the Act were not served and all of them were returned with remark that no such company existed, which was also confirmed by the inspector who was send to the addresses of share applicants for verification. However, in the present case, the ld. AO issued notice u/s 133(6) of the Act which were duly replied by the subscribers by furnishing the documents such as bank statements, ITR acknowledgements and audited statements and in the second assessment proceedings, most of the share applicants filed their response to summons issued u/s 131 of the Act. The assessee submitted the summons was replied by 23 subscribers’ details whereof are as under: - 3.9. The ld. AR also submitted that the director Shri Rao Birendra Singh, of Maateshwari Vanijya Pvt. ltd., Nirnidhi commercial P. Ltd., Printed from counselvise.com Page | 9 ITA No. 2107/KOL/2025 Rameshwar Finvest Private Limited; A.Y. 2008-09 Poddar Agro Co. Ltd., and Director, Shri Vinod Kumar Dugar of Sunray Tie-up Pvt. Ltd., Bhaneshwari Dealcomm Pvt. Ltd, Rehamay Stores Pvt. Ltd., Matshri Wires Pvt. ltd, appeared before the ld. AO and their statements were recorded. Therefore, the facts of the assessee’s case are clearly distinguishable from the decision of the Hon'ble Delhi High Court in case of CIT Vs. Nipun Builders and Developers Pvt. Ltd. (supra). 3.10. The ld. AR also relied on the decision of CIT vs. Orissa Corpn, (P.) Ltd.[1986] 159 ITR 78 (SC) dated 19-03-1986, wherein the Hon'ble Court had held that where the assessee has given the names and addresses of the creditors and it was in the knowledge of the Revenue that the said creditors were income-tax assesses, then the Revenue apart from issuing notice u/s 131 of the Act at the instance of the assessee did not pursue the matter further. In that case, it was held that no addition can be made merely because there was no compliance to summons issued u/s 131 of the Act. Similarly, Delhi High Court in case of Commissioner of Income-tax-IV vs. Dwarkadhish Investment (P.) Ltd.[2011] 330 ITR 298 (Delhi) dated 02-08-2010, held that just because creditors / share applicants could not be found at the addresses given, it would not give the Revenue the right to invoke Section 68 of the Act. One must not lose sight of the fact that it is the Revenue which has all the powers and wherewithal to trace any person and assessee has not to prove the source of source. The ld. AR also relied on the decision of Kolkata High Court in case of PCIT Vs. M/s Jealous Commercial Private Limited in ITAT/138/2025 vide order dated 28.10.2025 and also, in case of CIT Vs. Naina Distributors (P.) Ltd. in ITAT No.113 of 2023 dated 28.06.2023. Printed from counselvise.com Page | 10 ITA No. 2107/KOL/2025 Rameshwar Finvest Private Limited; A.Y. 2008-09 3.11. The ld. AR further submitted that proviso to Section 68 of the Act was inserted by Finace Act, 2012, with effect from 01.04.2013 and the said amendment is not retrospective in nature and is effective from A.Y. 2013-14 onwards. The Hon'ble Bombay High Court in case of CIT Vs. M/s Gagandeep Infrastructure Pvt. Ltd. (2017) 80 taxmann.com 272 (Bombay), wherein it has been held that the amendment u/s 68 of the Act is prospective and source of source is not required to be proved. The ld. AR therefore prayed that in view of this facts the case of the assessee may kindly be allowed by setting aside the order of ld. CIT (A) by directing the ld. AO to delete the addition. 3.12. The ld. DR on the other hand relied heavily on the orders of the authorities below by submitting that the assessee has raised a share capital/ share premium from subscribers whose identity, creditworthiness were doubtful and genuineness of the transactions could not be proved by the assessee and therefore, the appeal of the assessee may be dismissed by upholding the order of the ld. CIT (A). The ld. DR submitted that in this case , mere furnishing of documents along with the share subscribers details or they are replying to the notices issued u/s 133(6) of the Act or summons issued u/s 131 of the Act would not ipso facto prove that these are genuine transactions. The ld. DR submitted that it is the known fact that a huge racket is prevalent in the market in which the accommodation entries are given in organized manner in the form of unsecured loans and share capital and the modus operandi of all these companies are similar as they are maintaining all their accounts and documents as has been brought out during various searches conducted on them. Printed from counselvise.com Page | 11 ITA No. 2107/KOL/2025 Rameshwar Finvest Private Limited; A.Y. 2008-09 The ld. DR therefore, prayed that the appeal of the assessee may kindly be dismissed. 3.13. After hearing the rival contentions and perusing the materials available on record including the appellate order and paper book filed and written submission filed by the assessee, we find that this is second round of assessment pursuant to revisionary order passed by the ld. PCIT u/s 263 of the Act, which travelled to the Tribunal. In the first round, we find that the assessment was re- opened u/s 147 of the Act. Thus, the ld. AO has during the assessment proceedings called for all the evidences qua the share capital/premium and share subscribers which were duly furnished before the ld. AO and even notice issued u/s 133(6) of the Act were duly replied by the share subscribers by confirming these transactions by invoking Explanation 3 to section 147 of the Act. We note that having satisfied with the evidences filed by the assessee as well as by the subscribers the issue of share capital/premium was accepted and no addition was made on account of share capital/ share premium under Explanation 3 to Section 147 of the Act. 3.14. We further note that the ld. PCIT revised the said order by directing the ld. AO to conduct the enquires in respect of share capital/share premium afresh and thus, this is a second round of assessment pursuant to the order passed by the ld. PCIT u/s 263 of the Act. However, in the second round of assessment, we note that the ld. AO issued notice u/s 131 of the Act which was served upon these share subscribers and as many as 23 share subscribers furnished their replies in compliance. We note that the assessee has furnished all documents even in the second round of assessment before the ld. AO comprising the names, addresses, audited balance Printed from counselvise.com Page | 12 ITA No. 2107/KOL/2025 Rameshwar Finvest Private Limited; A.Y. 2008-09 sheets of the subscribers, ITRs, PAN numbers, etc., which were also filed during the first round of assessment. Therefore, the assessee has discharged its onus cast upon it by the statute. The ld. AO has made the addition on the ground that there was no compliance to summons u/s 131 of the Act by most of the subscribers and also on the basis of statements recorded of two directors Shri Rao Birendra Singh and Shri Binod Kumar Dugar, who appeared before the ld. AO in compliance to summons u/s 131 of the Act. Shri Rao Birendra Singh director of M/s Maateswari Vanijya Pvt. Ltd., M/s Nirnidhi commercial Pvt. Ltd. & M/s Poddar Agro Co. Pvt. Ltd., whereas Shri Binod Kumar Dugardirector of M/s Sunray Tie-up Pvt. Ltd., M/s Bhaneswari Delacom Pvt. ltd., M/s Remahay Stores Pvt. ltd. & M/s Matshri Wires Pvt. ltd. Even this statement recorded during the assessment proceedings u/s 131 of the Act were not provided to the assessee and no cross-examination was allowed of these individuals, which in our opinion is in violation of principle of natural justice as has been held by the Hon'ble Apex Court in the case of Andaman Timber Industries (supra). Besides, in our opinion, the ld. AO cannot make addition on the ground that there was no compliance to the summons when the assessee has furnished all the evidences and in order to substantiate the transactions of share subscriptions. We also note that the AO had issued notices u/s 133(6) to the subscribers and the parties have complied with to the notices issued u/s 133(6) of the Act though in the first round, majority of the subscribers also responding to the summons issued u/s 131 of the Act as stated hereinabove. In second round also as many as 23 subscribers responded to the summons u/s 131 of the Act. The case of the assessee even stands on better footings. In defense of his argument, he relied on the following decisions: We find support from the Printed from counselvise.com Page | 13 ITA No. 2107/KOL/2025 Rameshwar Finvest Private Limited; A.Y. 2008-09 decision of Hon’ble Supreme Court in the case of Orissa Corporation Ltd. ((1986) 159 ITR 78 (SC):- “That in this case the respondent had given the names and addresses of the alleged creditors. It was in the knowledge of the Revenue that the said creditors were income-tax assessees. Their index numbers were in the file of the Revenue. The Revenue, apart from issuing notices under Section 131 at the instance of the respondent, did not pursue the matter further. The Revenue did not examine the source of income of the said alleged creditors to find out whether they were creditworthy. There was no effort made to pursue the so-called alleged creditors. In those circumstances, the respondent could not do anything further. In the premises, if the Tribunal came to the conclusion that the respondent had discharged the burden that lay on it, then it could not be said that such a conclusion was unreasonable or perverse or based on no evidence. I f the conclusion was based on some evidence on which a conclusion could be arrived at, no question of law as such arose. The High Court was right in refusing to state a case.” 3.15. The case of the assessee is also squarely covered by the decisions of Hon’ble Calcutta High Court in the case of Crystal Networks Pvt. Ltd. vs. CIT (353) ITR 171 (Kol)) wherein it has held that where all the evidences were filed by the assessee proving the identity and creditworthiness of the loan transactions , the fact that summon issued were returned un- served or no body complied with them is of little significance to prove the genuineness of the transactions and identity and creditworthiness of the creditors. The relevant portion of the decision is extracted below: “We find considerable force of the submissions of the learned Counsel for the appellant that the Tribunal has merely noticed that since the summons issued before assessment returned unserved and no one came forward to prove. Therefore it shall be assumed that the assessee failed to prove the existence of the creditors or for that matter creditworthiness. As rightly pointed out by the learned counsel that the Ld. CIT(A) has taken the trouble of examining of all other materials and documents viz., confirmatory statements, invoices, challans and vouchers showing supply of bidi as against the advance. Therefore, the attendance of the witnesses pursuant to the summons issued in our view is not important. The important is to prove as to whether the said cash credit was received as against the future sale of the product of the assessee or note. When it was found by the Ld. CIT(A) on fact having examined the documents that the advance given by the creditors have been established the Tribunal should not have ignored this fact findings. Indeed the Tribunal did not really touch the aforesaid fact finding of the Ld. CIT(A) as rightly pointed out by the learned counsel. The Supreme Court has already stated as to what should be the duty of the learned Tribunal to decide in this situation. In the said judgment noted by us at page 463, the Supreme Court has observed as follows: Printed from counselvise.com Page | 14 ITA No. 2107/KOL/2025 Rameshwar Finvest Private Limited; A.Y. 2008-09 “The Income-Tax Appellate Tribunals performs a judicial function under the Indian Income-tax Act. It is invested with authority to determine finally all questions of fact. The Tribunal must, in deciding an appeal, consider with due care all the material facts and records its findings on all the contentions raised by the assessee and the Commissioner, in the light of the evidence and the relevant law.” The Tribunal must, in deciding an appeal, consider with due care all the material facts and record its findings on all contentions raised by the assessee and the Commissioner, in the light of the evidence and the relevant law. It is also ruled in the said judgment at page 465 that if the Tribunal does not discharge the duty in the manner as above then it shall be assumed the judgment of the Tribunal suffers from manifest infirmity. Taking inspiration from the Supreme Court observation we are constrained to hold in this matter that the Tribunal has not adjudicated upon the case of the assessee in the light of the evidence as found by the Ld. CIT(A). We also found no single word has been spared to up set the fact finding of the Ld. CIT(A) that there are materials to show the cash credit was received from various persons and supply as against cash credit also made. Hence, the judgment and order of the Tribunal is not sustainable. Accordingly, the same is set aside. We restore the judgment and order of the Ld. CIT(A). The appeal is allowed.” 3.16. The case of is also covered by the decision of the coordinate bench by ITO Vs M/s Cygnus Developers India Pvt. Ltd. ((ITA No. 282/Kol/2012) the operative part whereof is extracted below: “8. We have heard the submissions of the learned D.R, who relied on the order of AO. The learned counsel for the assessee relied on the order of Ld. CIT(A) and further drew our attention to the decision of Hon’ble Allahabad High Court in the case of CIT vs. Raj Kumar Agarwal vide ITA No. 179/2008 dated 17.11.2009 wherein the Hon’ble Allahabad High Court took a view that non-production of the director of a Public Limited Company which is regularly assessed to Income tax having PAN, on the ground that the identity of the investor is not proved cannot be sustained. Attention was also to the similar ruling of the ITAT Kolkata bench in the case of ITO vs. Devinder Singh Shant in ITA No. 208/Kol/2009 vide order dated 17.04.2009. 9. We have considered the rival submissions. We are of the view that order of Ld. CIT(A) does not call for any interference. It may be seen from the grounds of appeal raised by the revenue that the revenue disputed only the proof of identity of share holder. In this regard it is seen that for AY 2004-05 Shree Shyam Trexim Pvt. Ltd. was assessed by ITO, Ward-9(4), Kolkata and the order of assessment u/s 143(3) dated 25.01.2006 is placed in the paper book. Similarly Navalco Commodities Pvt. Ltd. was assessed to tax u/s 143(3) for AY 2005-06 by ITO, Ward-9(4), Kolkata by order dated 20.03.2007. Similarly Jewellock Trexim Pvt. Ltd. was assessed to tax for AY 2005-06 by the very same ITO, Ward- 9(3), Kolkata assessing the assessee. In the light of the above factual position which is not disputed by the revenue, it cannot be said that the identity of the share applicants remained not proved by the assessee. The decision of the Hon’ble Allahabad High Court as well as ITAT, Kolkata Bench on which reliance was placed by the learned counsel for the assessee also supports the view that for non- production of directors of the investor company for examination by the AO it cannot be held that the identity of a limited company has not been established. For the reasons given above we uphold the order of Ld. CIT(A) and dismiss the appeal of the revenue.” Printed from counselvise.com Page | 15 ITA No. 2107/KOL/2025 Rameshwar Finvest Private Limited; A.Y. 2008-09 3.17. Similar ratio has been laid down by the Hon’ble Mumbai High Court in the case of CIT Vs Orchid Industries (P) Ltd (397 ITR 136 (Bom)) by holding that provisions of section 68 of the Act cannot be invoked for the reasons that the person has not appeared before the AO where the assessee had produced on records documents to establish genuineness of the party such as PAN ,financial and bank statements showing share application money . 3.18. Further, the assessment year involved is A.Y. 2008-09 and the proviso to Section 68 of the Act as inserted by the Finance Act, 2012, with effect from 01.04.2013, is not applicable to year under consideration as the same is applicable and effective from A.Y. 2013-14 onwards as has been held by the Hon'ble Bombay High Court in case of M/s Gagandeep Infrastructure Pvt. Ltd.(supra), the relevant findings is as under:- “(e) We find that the proviso to Section 68 of the Act has been introduced by the Finance Act 2012 with effect from 1st April, 2013. Thus, it would be effective only from the Assessment Year 2013-14 onwards and not for the subject Assessment Year. In fact, before the Tribunal, it was not even the case of the Revenue that Section 68 of the Act as in force during the subject years has to be read/understood as though the proviso added subsequently effective only from 1st April, 2013 was its normal meaning. The Parliament did not introduce to proviso to Section 68 of the Act with retrospective effect nor does the proviso so introduced states that it was introduced \"for removal of doubts\" or that it is \"declaratory\". Therefore, it is not open to give it retrospective effect.\"” 3.19. We have also perused the provisions of Section 142(2) and 142(3) of the Act and find that Section 142(2) of the Act deals with the obtaining full information in respect of income or loss of any person qua which the ld. AO wants enquire into as he considered Printed from counselvise.com Page | 16 ITA No. 2107/KOL/2025 Rameshwar Finvest Private Limited; A.Y. 2008-09 necessary whereas the provisions of Section 142(3) of the Act provides that unless the assessment is made u/s 144 of the Act ,the assessee has to be given an opportunity of hearing in respect of any material gathered on the basis of enquiry u/s 142(2) of the Act or any audit under sub section 2A of the Act, which are proposed to be relied for the purpose of assessment. However, in the present case, we note that the material gathered by the ld. AO during the course of enquiry were never confronted to the assessee thereby violating the mandate of provisions of Section 142(2) and 142(3) of the Act as the information gathered at the back of the assessee was used in framing the assessment against the assessee without providing any opportunity to the assessee. The case of the assessee find support from the decision of the co-ordinate Bench in case of M/s SPML Infra Ltd. Vs DCIT (supra), wherein it has been held as under:- “\"14. To conclude: We note that none of the statements were recorded by the assessing officer of the assessee company, and no opportunity for cross examination has been provided to the assessee company. The mandate of law to conduct enquiry by the Assessing Officer on due information coming to him to verify authenticity of information was not done as per section 142 of the Act. Therefore, mere receipt of unsubstantiated statement recorded by some other officer in some other proceedings more particularly having no bearing on the transaction with the assessee does not create any material evidence against the assessee. This is because section 142(2) mandates any such material adverse to the facts of assessee collected by AO u/s 142(1) has to be necessarily put to the assessee u/s 142(3) before utilizing the same for assessment so as to constitute as reliable material evidence through the process of assessment u/s 143(3) of the Act.\" 3.20. Similarly, in the case of Sur Buildcon Pvt. Ltd. (supra) has held as under:- “7.11 Applying the law to the case at hand, it is evident that the Inspector Reports, that had been relied upon by the A.O., have been reproduced in length for the first time in the Assessment Orders only. The A.O., by failing to confront the assessee with the evidence he had gathered u/s 142(2) Act, has, therefore, erroneously skipped the mandatory intermediary step prescribed u/s 142(3) of the Act. Thus, when the A.O. has directly gone on to pass the Assessment Orders u/s 147/143(3) of the Act to make the impugned additions u/s 68, the same is in direct violation of the procedure of Printed from counselvise.com Page | 17 ITA No. 2107/KOL/2025 Rameshwar Finvest Private Limited; A.Y. 2008-09 enquiry prescribed in the Statute that inherently encompasses the Principle (s) of Natural Justice. We derive support to our line of reasoning from the decision of the coordinate Bench of the Hon'ble Kolkata Tribunal in M/s. SPML Infra Ltd. vs. DCIT, ITA No. 1228/Kol/2018 wherein it has been held as under: ……………………………………. It was further held that, 7.14 Since the results of the enquiries conducted by the A.O. u/s 142(2) of the Act have not been confronted to the assessees, we are inclined to agree with the Ld. A.R. that there has been a violation of the Principle(s) of Natural Justice implied within Section142 (2) of the Act and such statutory non-compliance vitiates the entire assessment proceedings, therefore, rendering it to be null and void. Thus, the Cross Objection taken on the violation of the Principle(s) of Natural Justice is also allowed in favour of the assessees.” 3.21. Similarly, PCIT Vs. Best Infrastructure (India) Pvt. ltd. (supra) and others. It was held that statement recorded u/s 132(4) of the Act do not by these constitute incriminating material and copy of the statement together that opportunity to cross-examine the deponent has to be provided to the assessee. The Hon'ble court held that if the statement is retracted or if cross examination is not provided the statement has to be discarded, wherein it is held as under:- \"Statements recorded u/s 132 (4) do not by themselves constitute incriminating material. A copy of the statement together with the opportunity to cross-examine the deponent has to provided to the assessee. If the statement is retracted and/or if cross- examination is not provided, the statement har to be discarded. The onus of ensuring the presence of the deponent cannot be shifted to the assesses The omis is on the Revenue to ensure his presence” 3.22. We have also perused the decision of the Hon'ble Delhi High Court in case of Nipun Builders Pvt. Ltd (supra), which was relied by the ld. AO in order to make the addition. However, the facts of that case are distinguishable vis-à-vis the facts of the assessee’s case as in that case the summons issued u/s 131 of the Act were returned and served with remark no such company which were corroborated by the inspector report whereas in the present case Printed from counselvise.com Page | 18 ITA No. 2107/KOL/2025 Rameshwar Finvest Private Limited; A.Y. 2008-09 before us, the notice u/s 133(6) of the Act were duly complied with besides the summons issued to the subscriber were also complied with by majority of them. Considering these facts and circumstances on record and respectfully following the ratio laid down in the decisions as discussed above , we are not in agreement with the conclusion drawn by the ld. CIT (A). Consequently, we set aside the order of ld. CIT (A) on this issue and direct the ld. AO to delete the addition. 3.23. In the result, the appeal of the assessee is allowed. Order pronounced in the open court on 23.12.2025. Sd/- Sd/- (PRADIP KUMAR CHOUBEY) (RAJESH KUMAR) (JUDICIAL MEMBER) (ACCOUNTANT MEMBER) Kolkata, Dated: 23.12.2025 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 "