AI Insights
The case involves Shri Satabdi Developers Pvt. Ltd., which appealed against the order of the National Faceless Appeal Centre, Delhi, concerning the assessment year 2012-13. The primary issue was the addition of 2,02,70,000 as unexplained cash credit under Section 68 of the Income Tax Act, related to share capital and share premium. The Tribunal noted procedural delays in filing the appeal but found the reasons for the delay genuine and admitted the appeal for adjudication. Upon examination, the Tribunal concluded that the share application money received during the year was adequately explained and that amounts received in previous years should not be re-assessed as unexplained cash credits in the current year.
Appeal Details
Counselvise Citation
[2025] 140 COUNSELVISE.COM (IT) 784116 (ITAT-KOLKATA)
Assessee PAN
Bench
Appeal Number
CRN Number
Duration Of Justice
3 month(s) 2 day(s)
Appellant
Respondent
Appeal Type
Income Tax Appeal
Pronouncement Date
11-11-2025
Appeal Filed By
Assessee
Order Result
Allowed
Bench Allotted
D
Assessment Year
2012-2013
Appeal Filed On
08-08-2025
Judgement Text
" IN THE INCOME TAX APPELLATE TRIBUNAL “D” BENCH, KOLKATA BEFORE SHRI DUVVURU RL REDDY, VP AND SHRI RAJESH KUMAR, AM ITA No.1787/KOL/2025 (Assessment Year: 2012-13) Shri Satabdi Developers Pvt. ltd. Ruby House, 8, India Exchange Place, 2nd Floor, Kolkata-700001, West Bengal Vs. ITO, Ward 10(2) Aaykar Bhawan Poorva, 110, Shanti Pally, Kolkata-700107, West Bengal (Appellant) (Respondent) PAN No. AAKCS8130L Assessee by : Shri S.K. Tulsiyan& Ms. Lata Goyal, ARs Revenue by : Shri S.B. Chakraborthy, DR Date of hearing: 16.10.2025 Date of pronouncement: 11.11.2025 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 12.11.2024 for the AY 2012-13. 02. At the outset, we observe from the appellate folder that there is a delay of 209 days in not filing the appeal of the assessee for which condonation petition along with affidavit was filed. 03. After hearing the rival contentions and perusing the materials available on record, we find from the record that the appellate order was not delivered at the address specified in from no.35 as communication address, whereas the order was uploaded on ITBA Printed from counselvise.com Page | 2 ITA No.1787/KOL/2025 Shri Satabdi Developers Pvt. ltd.; A.Y. 2012-13 portal on 23.01.2025. This has escaped the notice by the staff and therefore, the assessee could not keep track of the same. We note that the issue was set aside by the ld. CIT (A) to the ld. AO and thereafter notice u/s 142(1) of the Act dated 29.07.2025, was received through e-portal. It is only it was realized that the said notice might have been sent for assessment proceedings against which the appellate order from ld. CIT (A) was yet to be received. On accessing the portal, the assessee came to know that appellate order was already passed on 23.01.2025 by ld CIT(A) by allowing the appeal for statistical purposes. Thereafter, the assessee immediately took steps to file the appeal and it was ultimately filed on 08.08.2025 with a delay of 209 days. In our opinion, the reasons cited by the assessee before us appears to be genuine and bonafide. We are of the opinion that the assessee should not be denied justice on the technical reasons. The case of the assessee find support from the decision of Hon'ble Apex Court in the case of COLLECTOR, LAND ACQUISITION v. Mst. KATIJI (1987) 167 ITR 471 (SC) and Senior Bhosale Estate (HUF) vs. ACIT [2019] 419 ITR 732 (SC) dated 07-11-2019. Considering the facts of the case in the light of the aforesaid decisions, we are inclined to condone the delay and admit the appeal for adjudication. 04. Ground nos.1 to 3 are in support of ground no.4 while the issue raised in ground no.4 is against the order of ld. CIT (A) confirming the addition of ₹2,02,70,000/- as made by the ld. AO u/s 68 of the Act in respect of share capital/ share premium. 05. The facts in brief are that the assessee filed the return of income on 29.09.2012, declaring total income at ₹Nil. The case of the assessee Printed from counselvise.com Page | 3 ITA No.1787/KOL/2025 Shri Satabdi Developers Pvt. ltd.; A.Y. 2012-13 was selected for scrutiny and statutory notices along with questionnaire were issued which were not replied by the assessee. Finally, show cause was given on 02.03.2015, calling upon the assessee as to why the share capital / share premium issued of ₹2,02,70,000/- should not be added as an unexplained cash credit which was also not replied by the assessee. The same was added as unexplained cash credit u/s 68 of the Act to the total income of the assessee by passing an ex-parte order u/s 144 of the Act dated 13.03.2015. 06. In the appellate proceedings, though the assessee filed all the details before the ld. CIT(A) qua the allotment made during the year amounting to ₹2,02,70,000/-, however, the ld. CIT (A) restored the issue to the file of the ld. AO for examining the evidences and deciding the issue accordingly. The ld. AR submitted before the ld. CIT (A) in the appellate proceedings that the substantial part of the money in respect of current year allotment of shares of ₹1,65,00,000/- was received in the earlier assessment year and only the remaining amount of ₹37,70,000/- was received during the year. 07. After hearing the rival contentions and perusing the materials available on record, we find that undisputedly the assessee has made allotment of equity shares of ₹2,02,70,000/- on account of share capital/ share premium. We observe from the evidences before us that the substantial part of the money of ₹1,65,00,000/- which formed the part of allotment during the year was received in the earlier assessment year and only ₹37,70,000/- was received during the year. The assessee has furnished all the evidences in the paper book. Printed from counselvise.com Page | 4 ITA No.1787/KOL/2025 Shri Satabdi Developers Pvt. ltd.; A.Y. 2012-13 08. In our opinion, the provisions of Section 68 of the Act are not applicable to the money which are received in the earlier assessment years as the same cannot treated as cash credit during the year and therefore, cannot be brought to tax u/s 68 of the Act as unexplained cash credit. The case of the assessee find support from the decision of Rajasthan High Court in the case of CIT v. Prameshwar Bohra (2008) 301 ITR 404 (Raj), wherein Hon'ble Court held as under:- “4. On the merit of the additions made in the income of the assessee, there is a clear finding and above which there is no dispute that the amount added in the income of the assessee as unexplained investment or cash credit in the assessment year 1993-94 was the same amount which was credited in the books of account of the assessee for the previous year ending on March 31. 1992. The Tribunal has categorically come to a finding, and that finding is not under challenge, that this is not a case of cash credit entered in the books of account of the assessee during the year but it is a case in which the assessee has invested the capital in the business and this amount was shown as a closing capital as on March 31. 1992, and on April 1. 1992, it was an opening balance. Considering this aspect, the Tribunal has come to the conclusion that what was already credited in the books of account ending on March 31. 1992. for the financial year 1991-92 relevant to the assessment year 1992-93 cannot be an unexplained cash credit or investment in the books of account maintained for the financial year 1992-93, the accounting period of which ends on March 31. 1993, so as to warrant its consideration as unexplained investment or cash credit for its relevant assessment year 1993-94 5. It does not require any elaborate argument that a carried forward amount of the previous year does not become an investment or cash credit generated during the relevant year 1993-94. This alone is sufficient to sustain the order of the Tribunal in deleting the amount of Rs. 1.55,316 from the assessment for the assessment year 1993-94. Since the appeal succeeds on the merits of the assessee's case in respect of the additions made in the income computed on reassessment the validity of notice dated June 17, 1997, need not be gone into,\"” 09. Similarly, the Delhi High Court in the case of Commissioner of Income-tax, Delhi-VI vs. Usha Stud Agricultural Farms Ltd. [2008] 301 ITR 384 (Delhi) dated 14-03-2008, has held as under:- Printed from counselvise.com Page | 5 ITA No.1787/KOL/2025 Shri Satabdi Developers Pvt. ltd.; A.Y. 2012-13 \"8. Here, the CIT(A) has deleted the addition of Rs. 15 lacs mainly on the ground that this credit balance of Rs. 15 lacs is being reflected in the accounts of the assessed over the past four to five years or so and hence this was not a fresh credit entry of the previous year under consideration and these credit entries were already made and accounted for in the assessment years 1995-96 and 1997-98 which were introduced in the form of advance against breeding stallions owned by the assessed and thus these credit entries did not relate to the year under consideration for being considered under Section 68 of the Act. 9. Since it is a finding of fact recorded by the CIT(A) that this credit balance appearing in the accounts of the assessed, does not pertain to the year under consideration, under these circumstances, the Assessing Officer was not justified in making the impugned addition under Section 68 of the Act and as such no fault can be found with the order of the Tribunal which has endorsed the decision of the CIT(A).\" 010. So far as the allotment of shares out of money received during the year is concerned, we observe that the assessee received share application from the following parties:- “i. Raghu Management Ltd. ₹1,00,000/- ii. Sampoorna Merchandise Pvt. Ltd. ₹1,00,000/- iii. Sri Agro Hinghar Ltd. ₹25,00,000/- iv. Sri Siromani Dealers Pvt. Ltd. ₹3,70,000/- v. Tirumati Merchandise Pvt. Ltd. ₹2,00,000/- vi Varahi Commercial Pvt. Ltd. ₹5,00,000/- ₹37,70,000/-” 011. We note from the above details that the assessee has received ₹37,70,000/- from six parties which are group companies of the assessee. The assessee made detailed submissions before us along with all evidences in respect of said subscriber companies which are extracted as under:- i. Raghu Management Ltd: The company had invested a sum of Rs.1,00,000/- during the year under appeal. The copy of balance sheet, assessment orders for A.Y. Printed from counselvise.com Page | 6 ITA No.1787/KOL/2025 Shri Satabdi Developers Pvt. ltd.; A.Y. 2012-13 2012-13 and bank statement highlighting the transaction is enclosed at page 7-29 of the paper book. The assessment order passed in the case of the company itself proves the identity of the company. Further search was conducted in the premise of the company and proceedings were initiated u/s 153A. The assessment order was passed and section 14A disallowance has been made. This very clearly shows that the jurisdictional AO of the said company had duly examined the investments of the company. Therefore, the said share application of Rs.1,00,000/- is genuine. The Source of the share application money received during the year is enclosed at page 2of the Paper Book. The share application of Rs.1,00,000/- is made from the share application money received from Sri Damodar Prasad Choudhary. Copy of the Balance Sheet and Profit and loss account and the assessment order and bank statement of Sri Damodar Prasad Choudhary is enclosed at page 30-38 of the Paper Book. Further source of source is also established (Refer page 2). Copy of documents enclosed at page 39-59 of the paper Book. It is evident from the financial statement of M/s Raghu Management Ltd that the own fund of the company had increased from Rs.6.88 crores to Rs.40.84 crores. This clearly shows that own fund of the companies had been utilized for making investment. Hence, the identity and creditworthiness of the company and genuineness of the company is duly established. ii. Sampoorna Merchandise Pvt. Ltd. The company had invested a sum of Rs.1,00,000/- during the year under appeal. The copy of balance sheet, assessment orders for A.Y. 2012-13 and bank statement highlighting the transaction is enclosed at page 88-108 of the paper book. The assessment order itself proves the identity of the company. The Source of the share application money received during the year is enclosed in page 2 of the paper Book. The share application of Rs.1,00.000- is paid from the opening hand balance as on 01.04.2011. Bank statement of Sampoorna Merchandise Pvt Ltd is enclosed at page 108 of the paper Book. It is evident from the financial statement of Mis Sampoorna Merchandise Pvt Ltd that the company had own fund of Rs.14.41 crores. The company had not borrowed fund from outside Hence, it is very clear that the company had utilized its own fund for making investment. This clearly shows the creditworthiness of the company. iii. Sri Agro Hinghar Ltd. The company during the year had paid share application money amounting to Rs.25,00,000/- to the assessee company. The copy of Balance sheet, assessment order and bank statement highlighting the transaction is enclosed at page 109-134 of the Paper Book. Hence, the identity of the company can be evident from the assessment order. Printed from counselvise.com Page | 7 ITA No.1787/KOL/2025 Shri Satabdi Developers Pvt. ltd.; A.Y. 2012-13 The Source of the share application money received during the year is enclosed at page 3 of the paper Book. The share application of Rs.25,00,000/- was paid from cold storage rent received during the year. Bank statement of Sri Agro Himghar Ltd is enclosed at page 131-134 of the paper Book. It is evident from the financial statement of Sri Agro Himghar Ltd that the company had own fund of Rs.24.79 crores. The revenue from operation amounts to Rs.1.31.88.755/- The company also had fixed assets worth Rs. 1,44 crores, fixed deposit with Central Bank of India of Rs.15.94 lakhs, cash in hand of Rs.27.43 lakhs. The company also did not have borrowed fund outstanding in the books during the year. Hence, the credit worthiness of the company cannot be doubted. iv. Sri Siromani Dealers Pvt Ltd The company during the year had paid share application money amounting to Rs.3,70,000/- to the assessee company. The copy of Balance sheet, assessment order and bank statement highlighting the transaction is enclosed at page 135-155 of the Paper Book. Hence, the identity of the company can be evident from the assessment order. The Source of the share application money received during the year is enclosed in page 3 of the paper Book. The share application of Rs.3,70,000/- was paid from the refund of share application money received from group company Kamna Developers Pvt Ltd. Bank statement of Sri Siromani Dealers Pvt Ltd is enclosed at page 154-155 of the paper Book. Further source of source is also established (Refer page 3). Copy of documents enclosed at page 156-166 of the paper Book. It is evident from the financial statement of Sri Siromani Dealers Pvt Ltd that the company had own fund of Rs.5.71 crores. The company also did not have borrowed fund outstanding in the books during the year. This very clearly shows that the company had utilized its own fund for purpose of investment. Hence, the credit worthiness of the company is duly established. v. Tirumati Merchandise Pvt Ltd, The company during the year had paid share application money amounting to Rs.2.00.000 to the assessee company. The copy of Balance sheet, assessment order and hank statement highlighting the transaction is enclosed at page 167- 189 of the Paper Roak. Hence, the identity of the company can be evident from the assessment order The Source of the share application money received during the year is enclosed at page 3 of the paper Book. The share application of Rs.2,00,000/- was paid from share application money received from Sri Shyam Sundar Choudhary. Bank statement of Tirumati Merchandise Pvt Lul is enclosed at page 185-189 of the paper Book. Printed from counselvise.com Page | 8 ITA No.1787/KOL/2025 Shri Satabdi Developers Pvt. ltd.; A.Y. 2012-13 Further source of source is also established (Refer page 3). Copy of documents enclosed at page 190-197 of the paper Book. It is evident from the financial statement Tirumati Merchandise Pvt Ltd that the company had own fund of Rs. 15.79 crores. The company also did not have borrowed fund outstanding in the books during the year. This very clearly shows that the company had utilized its own fund for investment purpose. Hence, the credit worthiness of the company is duly established. vi. Varahi Commercial Pvt Ltd The company during the year had paid share application money amounting to Rs.5,00,000/-10 the assessee company. The copy of Balance sheet, assessment order and bank statement highlighting the transaction is enclosed at page 198- 219 of the Paper Book. Hence, the identity of the company can be evident from the assessment order. The Source of the share application money received during the year is enclosed at page 3 of the paper Book. The share application of Rs.5,00,000/- was paid from refund of share application money received from Sreenath House Pvt Ltd.. Bank statement of Varahi Commercial Pvt Ltd is enclosed at page 216-219 of the paper Book. Further source of source is also established (Refer page 3). Copy of documents enclosed at page 220-234 of the paper Books. It is evident from the financial statement of Varahi Commercial Pvt Ltd that the company had own fund of Rs.49.54 crores. The company also did not have borrowed fund outstanding in the books during the year. This very clearly shows that the company had utilized its own fund for making investment. Hence, the credit worthiness of the company is duly established. Further, the aforementioned investor companies are duly registered under companies Act, 1956. Hence, the identity of the investor company is undisputed and cannot be questioned since it is an existing company duly registered with Registrar of Companies, having valid permanent account number and submitting their financial statements regularly and are assessed to tax. It is evident from the balance sheet of the investors that the investors had made investment in the assessee company. Further the share capital and reserves of the aforesaid investor companies are in several crores of rupees whereas the investment is only a small part of their capital. This very clearly shows the high creditworthiness of the investors to make investment in the share capital of the assessee company.” 012. We observe from the evidences filed before us that the identity and creditworthiness of the subscriber companies and genuineness of the Printed from counselvise.com Page | 9 ITA No.1787/KOL/2025 Shri Satabdi Developers Pvt. ltd.; A.Y. 2012-13 transactions are specifically proved by the assessee with reference to evidences which are available in the Paper Book. In our opinion the addition made by the AO cannot be sustained. 013. Therefore, Considering the facts of the assessee in the light of the above decisions , we hold that the share application received in earlier assessment years cannot be added as unexplained cash credit during the year. We also hold that the money received during the year has been fully explained and therefore no addition is called for u/s 68 of the Act. Consequently we are inclined to set aside the order of ld. CIT (A) and direct the ld. AO to delete the addition. 014. In the result, the appeal of the assessee is allowed. Order pronounced in the open court on 11.11.2025. Sd/- Sd/- (DUVVURU RL REDDY) (RAJESH KUMAR) (VICE PRESIDENT) (ACCOUNTANT MEMBER) Kolkata, Dated:11.11.2025 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 "
Other Referred Cases
COLLECTOR, LAND ACQUISITION v. Mst. KATIJI (1987) 167 ITR 471 (SC), Senior Bhosale Estate (HUF) vs. ACIT [2019] 419 ITR 732 (SC), CIT v. Prameshwar Bohra (2008) 301 ITR 404 (Raj), Commissioner of Income-tax, Delhi-VI vs. Usha Stud Agricultural Farms Ltd. [2008] 301 ITR 384 (Delhi)
Laws Referred To
Income Tax Act
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