SILKINA COMMODEAL PVT. LTD.,KOLKATA V. I.T.O., WARD - 3(1), KOLKATA

ITA 2081/KOL/2025

AI Insights

The case revolves around the addition of 21,39,80,400 to the income of Silkina Commodeal Pvt. Ltd. as unexplained cash credit under section 68 of the Income-tax Act, 1961, concerning share capital and share premium received. The Income Tax Officer (ITO) initially added this amount after the assessee failed to prove the identity and creditworthiness of the shareholders and the genuineness of the transactions. The Commissioner of Income Tax (CIT) later set aside the original assessment, directing a re-assessment, which still resulted in the same addition. The Tribunal, however, found that the assessee had provided sufficient evidence to substantiate the transactions, and the failure to produce directors for personal appearance was not a valid ground for the addition.

• Counselvise Citation: [2026] 140 COUNSELVISE.COM (IT) 831503 (ITAT-KOLKATA)
• Duration Of Justice: 4 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-01-2026
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Assessment Year: misc
• Appeal Filed On: 11-09-2025
• Other Referred Cases: CIT v. Nova Promoters and Finlease (P) Ltd. (342 ITR 169), Sumati Dayal v. CIT (214 ITR 801), CIT v. N.R. Portfolio Pvt. Ltd. (263 CTR 456), CIT v. Precision Finance Pvt. Ltd. (208 ITR 465), CIT v. Empire Buildtech Pvt. Ltd. (366 ITR 110), CIT v. Sophia Finance Ltd. (205 ITR 98), Durga Prasad More (82 ITR 540)
• Laws Referred To: Income-tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SANAT KUMAR RAHA
• Assessee Lawyers: S.M. SURANA
• Keywords: Set aside; Unexplained cash credit; Income from undisclosed sources; Onus to prove; Capital receipt; Accommodation entries; Assessment record; Bogus Share capital; Revision of order; Non compliance
• Section: 147; 148; 143(3); 142(1); 263; 68; 131; 133(6)

Judgement Text

" IN THE INCOME TAX APPELLATE TRIBUNAL D” BENCH, KOLKATA BEFORE SHRI RAJESH KUMAR, AM AND SHRIPRADIP KUMAR CHOUBEY, JM ITA No. 2081/KOL/2025 (Assessment Year: 2008-09) Silkina Commodeal Pvt. Ltd. 6, Waterioo Street, Esplanade, Kolkata-700069, West Bengal Vs. ITO, Ward 3(1) Aaykar Bhawan, P-7, Chowringhee Square, Kolkata- 700069, West Bengal (Appellant) (Respondent) PAN No. AAECS5627C Assessee by : Shri S.M. Surana, AR Revenue by : Shri Sanat Kumar Raha, DR Date of hearing: 07.01.2026 Date of pronouncement: 20.01.2026 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 26.07.2025 for the AY 2008-09. 2. The only issue raised in the various grounds of appeal is against the confirmation of addition of ₹21,39,80,400/- as made by the Ld. AO in respect of share capital/ share premium treated as unexplained cash credit u/s 68 of the Income-tax Act, 1961 (the Act). 3. The facts in brief are that the assessee filed the original return of income on 10.02.2010, declaring total income at ₹29,480/- which was processed u/s 143(1) of the Act. The assessee derived income from share dealing and investments during the year. The case of the Printed from counselvise.com Page | 2 ITA No. 2081/KOL/2025 Silkina Commodeal Pvt. Ltd.; A.Y. 2008-09 assessee was reopened u/s 147 of the Act by issuing notice u/s 148 of the Act. The assessment u/s 147/ 143(3) of the Act was framed vide order dated 02.07.2010, assessing the total income at ₹1,33,770/-. 3.1. The Ld. PCIT upon perusal of the assessment records observed that the Ld. AO has not made proper enquiries and examination of evidences during the course of assessment proceedings to verify the genuineness and source of capital as well as identity and creditworthiness of the share holders which has rendered the assessment order as erroneous and prejudicial to the interest of the Revenue. Accordingly, the revisionary jurisdiction was invoked. The revisionary order u/s 263 of the Act was passed on 30.03.2013, setting aside the assessment and directing the Ld. AO to make the assessment afresh by taking into account all these directions and making inquiries as directed in the order passed u/s 263 of the Act. The Ld. AO accordingly issued notice u/s 142(1) of the Act along with questionnaire to the assessee asking to furnish certain details and documents in respect of share capital/ share premium. The Ld. AO observed from the balance sheet that the Ld. AO has raised ₹1,78,52,900/- as share capital and ₹19,61,27,500/- as share premium. The assessee furnished before the Ld. AO all the details and evidences comprising names, addresses, PANs, audited accounts, confirmations etc. Besides, the Ld. AO issued notices u/s 133(6) of the Act to the shareholders/ share subscribers beside issuing the summons u/s 131 of the Act to the director of the assessee company as well as these subscribers to appear on 24.03.2014. Thereafter the Ld. AO issued show cause notice on 21.03.2014, giving a show cause as . The Ld. AO finally noted that the identity of the share holders and the assessee could not be Printed from counselvise.com Page | 3 ITA No. 2081/KOL/2025 Silkina Commodeal Pvt. Ltd.; A.Y. 2008-09 proved beyond doubt due to lack of co-operation on the assessee’s part as well as on the part of shareholders and also the creditworthiness of the shareholder could not be verified. Therefore, the share capital/ share premium is added in the hands of the assessee as undisclosed cash credit u/s 68 of the Act. 4. The assessee preferred an appeal before the Ld. CIT (A), who dismissed the appeal after taking into account the submissions and contentions of the assessee by observing and holding as under:- “5. Discussion and Decision: I carefully considered the submission of the appellant with reference to the impugned assessment order. Also perused and considered the details and documents uploaded by the appellant on ITBA portal during the appellant proceedings. Considered the case laws referred by the appellant and the AO. This appeal emanates from the order passed by the Assessing Officer u/s 143(3)/147/263 of the Income-tax Act, 1961 (hereinafter referred to as \"the Act\") for A.Y. 2008-09 wherein an addition of Rs. 21,39,80,400/- was made under section 68 on account of unexplained share capital and share premium. The appellant challenged this addition primarily on the ground that all requisite evidences were furnished to prove the identity, creditworthiness of the share applicants and the genuineness of the transaction. 5.1. Ground no. 4 of the appeal is consequential in nature and covered by other grounds of appeal, thus, need not to be discussed and decided separately. 5.2. Ground no. 5 of the appeal has become infructuous as no additional ground of appeal has been filed by the appellant during the appellate proceedings. 5.3.1. Ground no. 1, 2 and 3 of the appeal are against the addition of Rs. Rs.21,39,80,400/- made by the AO u/s 68 of the Act on account of share capital and share premium received by the appellant company in the financial year relevant to the assessment year under reference. Since all these grounds of appeal are interrelated and pertain to different aspects of a single issue, all of them are taken together for discussion and decision. 5.3.2. Section 68 of the Act places the initial onus on the assessee to satisfactorily explain the nature and source of any credit found in its books. In the case of private limited companies, especially those with closely held shareholding structures, the requirement extends to establishing: • The identity of the share applicant; • The creditworthiness of the share applicant, and • The genuineness of the transaction Printed from counselvise.com Page | 4 ITA No. 2081/KOL/2025 Silkina Commodeal Pvt. Ltd.; A.Y. 2008-09 The jurispruderice evolved over years clearly lays down that mere submission of certain documents like PAN, bank statement, or ITR is not conclusive proof. The Hon'ble Delhi High Court in the case of CIT v. Nova Promoters and Finlease (P) Ltd. (342 ITR 169) held that the existence of a company on paper does not absolve the assessee from further proving the genuineness of the transaction and the creditworthiness of the investor 5.3.3. From the assessment records, it is evident that the appellant company raised a massive sum of Rs. 21.39 crores, comprising Rs. 1.78 crores as share capital and Rs. 19.61 crores as share premium, despite being a relatively unknown entity with negligible business activity. The AO issued notices u/s 133(6) to the shareholder companies and also summons u/s 131 to their directors, but neither the parties responded meaningfully nor did anyone appear before the AO. Such non-compliance despite repeated opportunities casts serious doubt on the genuineness of the transactions. The Hon'ble Supreme Court in the case of Sumati Dayal v. CIT (214 ITR 801) has held that the test of human probabilities must be applied in such circumstances. It defies logic and commercial prudence that obscure companies would invest such significant sums with huge premium in a company lacking demonstrable business potential. 5.3.4. The appellant contended that they had furnished PANS, ITRs, bank statements, and confirmations. However, the Hon'ble Delhi High Court in CIT v. N.R. Portfolio Pvt. Ltd. (263 CTR 456) clarified that the onus on the assessee does not end by furnishing some documents. The AO is entitled to make deeper enquiries, and if the assessee fails to respond to such queries or facilitate meaningful verification, adverse inference is justified. Further, the Hon'ble Calcutta High Court in CIT v. Precision Finance Pvt. Ltd. (208 ITR 465) observed that furnishing bank statements of creditors without showing the capacity to lend is not sufficient. The burden is on the assessee to prove the capacity and the genuineness of the transaction. 5.3.5. The order passed u/s 263 by the Ld. CIT, which set aside the earlier assessment, rightly highlighted the widespread practice prevalent in Kolkata jurisdiction involving accommodation entries and paper companies. The Hon'ble Delhi High Court in CIT v. Nova Promoters (supra) and CIT v. Nipun Builders andDevelopers Pvt. Ltd. (350 ITR 407) has endorsed the finding that paper companies are often used to launder unaccounted money under the garb of share capital/premium. The CIT's finding that the companies were not traceable, and that notices served were through affixture, along with non-compliance, fits squarely into the modus operandi of accommodation entries as observed in CIT v. NR Portfolio (supra) and Devangi Dhirajlal Shah v. ITO (ITA No. 1662/Mum/2014). 5.3.6. The appellant's reliance on the judgment of the Hon'ble Supreme Court in CIT v. Lovely Exports Pvt. Ltd. (216 CTR 195) is misplaced. That decision held that where the assessee furnishes names and addresses of the share applicants, the Revenue is free to proceed against the shareholders under section 69. However, in the present case, the AO attempted to verify the identity and creditworthiness of the share applicants and received no cooperation. Therefore, the principle laid down in Nova Promoters and NR Portfolio-which qualify the ratio of Lovely Exports -would prevail. Printed from counselvise.com Page | 5 ITA No. 2081/KOL/2025 Silkina Commodeal Pvt. Ltd.; A.Y. 2008-09 5.3.7. The AO rightly noted that while some documents were filed, they were inadequate to establish real financial strength or creditworthiness. Most bank statements furnished were merely transactional and limited to the specific credit entry, and not for the entire financial year. This effectively made it impossible to assess whether the funds were genuinely available with the investor companies. The Hon'ble Supreme Court in CIT v. P. Mohankala (291 ITR 278) observed that where the explanation offered by the assessee is not supported by satisfactory evidence, the addition under section 68 is justified. Similarly, the Hon'ble Calcutta High Court in CIT v. Nivedan VanijyaNiyojan Ltd. (263 ITR 623) held that in absence of clear proof of creditworthiness and genuineness, the AO is justified in making addition 5.3.8. In the case of Gee Vee Enterprises v. Addl. CIT (99 ITR 375), it was held that the AO is not only an adjudicator but also an investigator. A stereotyped assessment based on unverified submissions is erroneous in law. Thus, in light of the directions issued u/s 263, the AO made concerted efforts to verify the transactions, but the non- cooperation by the assessee and the share applicants hampered the process. Further, the Hon'ble ITAT, Kolkata in ITO v. M/s Savera Suppliers Pvt. Ltd. (ITA No. 12/K/2010) observed that mere production of documents is not sufficient, if directors or shareholders fail to appear or if companies are not traceable, the AO's doubts become credible. 5.3.9. The appellant's alternative argument that share premium is a capital receipt and hence not taxable also cannot be accepted. While share premium is a capital receipt, the same cannot be accepted as genuine where it is found to be colorable device to introduce unaccounted income The Hon'ble Delhi High Court in CIT v. Empire Buildtech Pvt. Ltd. (366 ITR 110) held that when the transactions are sham, even share premium can be taxed under section 68. 5.3.10. As held in CIT v. Sophia Finance Ltd. (205 ITR 98), the AO is entitled to lift the corporate veil and examine whether the funds introduced are genuine or are simply accommodation entries. If the investor companies have no real business or infrastructure and merely exist on paper, then identity alone is not enough. In this case, the so-called investor companies failed to appear or provide reliable confirmation, and the assessee did not aid the AO's investigation 5.3.11. The Hon'ble Supreme Court in Durga Prasad More (82 ITR 540) and reiterated in Sumati Dayal v. CIT (supra) laid down the principle that courts and tax authorities are not required to put on blinkers. In the present case, it is wholly improbable that little-known companies would subscribe to shares at exorbitant premium in a company with negligible commercial activity. The appellant has failed to rebut this improbability with cogent evidence. 5.3.12. In view of the facts and legal position discussed above, I hold that the AO rightly made the addition of Rs. 21,39,80,400/- under section 68 of the Act. The appellant failed to discharge its onus to prove the creditworthiness of the share applicants and the genuineness of the transactions. The documents furnished were superficial and not corroborated by third-party confirmations or physical verification The conduct of the appellant, particularly the failure to produce key persons and the evasive approach in complying with statutory notices, further substantiates the conclusion drawn by the AO. Accordingly, the addition of Rs. 21,39,80,400/- made by Printed from counselvise.com Page | 6 ITA No. 2081/KOL/2025 Silkina Commodeal Pvt. Ltd.; A.Y. 2008-09 the AO is upheld and the ground no. 1, 2 and 3 of the appeal are dismissed and not allowed.” 4.1. The Ld. Authorised Representative vehemently submitted before us that the order passed by the Ld. CIT (A) upholding the order of the Ld. AO and confirming the disallowance is totally wrong and against the facts on record. The Ld. Authorised Representative argued that during the course of assessment proceedings the assessee has submitted all the documents comprising confirmation letters of the subscribers , ITRs, final account, copies of bank statements of the assessee as well as that of the subscribers to prove the share capital/ share premium raised by the assessee. The Ld. Authorised Representative submitted by referring to the assessment order that in the current assessment proceedings the Ld. AO specifically asked the details in respect of share capital/ share premium which were complied with by the assessee by filing all the details and documents as called for which can also be sent from the order sheet note dated 23.12.2014. The Ld. Authorised Representative also referred to the Para no.4 of the assessment order and submitted that the Ld. AO issued notices u/s 133(6) of the Act to the share holders and even after expiry of 6 to 7 years from the end of the of their subscription by the shareholders in the assessee company. The Ld. Authorised Representative submitted that the shareholders furnished their replies in compliance to the notices issued u/s 133(6) of the Act before the Ld. AO. The Ld. Authorised Representative submitted that the assessee has fully discharged its onus to prove the share capital/ share premium. The Ld. Authorised Representative further submitted that as against furnishing all evidences by the assessee as well as by the share subscribers, the Ld. AO has not made any further enquiry nor has brought on record Printed from counselvise.com Page | 7 ITA No. 2081/KOL/2025 Silkina Commodeal Pvt. Ltd.; A.Y. 2008-09 any material to prove to the contrary. The ld AR also referred to the order sheet entries and submitted that the Ld. AO issued notices/summons on 18.03.2014 for personally appearing on 23.04.2014, but even before that the Ld. AO issued show cause notice to the assessee on 21.03.2014, as to why the share capital/ share premium should not be added to the income of the assessee as unexplained cash credit. 4.2. The Ld. Authorised Representative submitted that the Ld. AO simply made the addition by treating the share capital/ share premium as undisclosed cash credit (stated in the assessment order) on the ground that the directors did not appear and therefore the assessee has failed to prove the identity of the shareholders and genuineness of the transactions and creditworthiness of the parties. The Ld. Authorised Representative therefore prayed that the addition made by the Ld. AO is without basis and deserved to be deleted. In defense of his arguments, the Ld. Authorised Representative relied on the following decisions:- i. PCIT Vs. Goodview Marketing P Ltd. in ITAT/114/2025, GA/2/2025 dated 03.09.2025 ii. PCIT Vs. K/s Kunjal Synergies Private Limited in ITAT/42/2025, IA No.GA/2/2025 vide order dated 01.12.2025 iii. PCIT Vs. M/s Jealous Commercial Private Limited in ITAT/138/2025, IA No. GA/2/2025 vide order dated 28.10.2025 Printed from counselvise.com Page | 8 ITA No. 2081/KOL/2025 Silkina Commodeal Pvt. Ltd.; A.Y. 2008-09 iv. PCIT Vs. Rajshree Integrated Cold Chain Pvt. ltd. in ITAT/286/2024, IA No.GA/2/2024 vide order dated 17th July, 2025. v. PCIT Vs. True Man Consultants Pvt. Ltd. in ITAT/203/2024, IA No.GA/1/2024, vide order dated 25.04.2025. vi. PCIT Vs. Atlantic Dealers Pvt. ltd. in ITAT/41/2024, IA No.GA/2/2024 vide order dated 03.05.2024. 4.3. The Ld. Authorised Representative therefore prayed that the order of Ld. CIT (A) may be set aside and the Ld. AO may be directed to delete the addition. 4.4. The Ld. DR on the other had relied heavily on the orders of the authorities below by submitting that the directors of the assessee company as well as the share subscribers did not appear personally in compliance to the summons issued u/s 131 of the Act. Therefore, the necessary verification could not be carried out and the creditworthiness of the parties could not be judged. Therefore, the addition was rightly made by the Ld. AO and confirmed by the Ld. CIT (A). 5. After hearing the rival contentions and perusing the materials available on record, we find that the assessee has raised share capital of ₹1,78,52,900/- and share premium of ₹19,61,27,500/- from private corporate entities. The original assessment was framed u/s 147/ 143(3) of the Income-tax Act, 1961 (the Act) on 02.07.2010, wherein the issue of raising of share capital/ share premium was examined by the Ld. AO by calling upon the assessee to prove the identities and creditworthiness of the investors and genuineness of the transactions. The assessee even filed Printed from counselvise.com Page | 9 ITA No. 2081/KOL/2025 Silkina Commodeal Pvt. Ltd.; A.Y. 2008-09 confirmation letters, ITRs, final accounts and bank statements of the assessee as well the share applicants. We note that the said order was revised by the Ld. PCIT u/s 263 of the Act on the ground that the Ld. AO has not made proper enquiries in respect of share capital and share premium raised during the year and directed the Ld. AO accordingly to frame the assessment afresh after conducting the enquiries. Again, in the set aside assessment proceedings, the Ld. AO issued notice u/s 142(1) of the Act along with questionnaire and the assessee filed all the details/ evidences before the Ld. AO on 23.12.2013. We note that the Ld. AO again did not pin point out any discrepancy in the said evidences filed nor raised any query. We also note that the Ld. AO issued notices u/s 133(6) of the Act to all the subscribers again and the share subscribers filed their replies along with evidences on confirming the transactions of investments in the assessee company even after 6 to 7 years after the date of subscriptions in the assessee company . Thereafter the Ld. AO issued summon u/s 131 of the Act to the Directors of the assessee company as well as to the subscribers for personal appearance which according to the Ld. AO were not complied with. Thus we note that the primary reason for making addition was non compliance to summons u/s 131 of the Act. We note that the Ld. AO issued notices/summons on 18.03.2014 for personally appearing on 23.04.2014, but even before that the Ld. AO issued show cause notice to the assessee on 21.03.2014, as to why the share capital/ share premium should not be added to the income of the assessee as unexplained cash credit. Finally, the Ld. AO added the amount as undisclosed cash credit to the income of the assessee. In our opinion, when the assessee has filed all the evidences before the Ld. AO as well as before the Ld. CIT (A) and no further enquiry was carried out by either of them nor any Printed from counselvise.com Page | 10 ITA No. 2081/KOL/2025 Silkina Commodeal Pvt. Ltd.; A.Y. 2008-09 defect was pointed out , then the addition can not be made merely on the ground of non-compliance to the summons by making physical appearance before the Ld. AO. The case of the assessee is squarely covered by a series of decisions of the Hon’ble Jurisdictional High Court in cases of PCIT Vs. Goodview Marketing P Ltd. (supra), PCIT Vs. M/s Jealous Commercial Private Limited (supra), PCIT Vs. Rajshree Integrated Cold Chain Pvt. ltd. (supra) ,PCIT Vs. True Man Consultants Pvt. Ltd. (supra), PCIT Vs. Atlantic Dealers Pvt. ltd.(supra) and PCIT Vs. K/s Kunjal Synergies Private Limited (supra). 5.1. Considering the ratio laid down in the above decisions and also the fact that the Ld. AO in the second round did not make any independent enquiry to verify the genuineness of the transactions despite the assessee having furnished all the details and documents. That apart AO has not pointed out any defect or deficiency in the evidences filed by the assessee. Therefore, we are inclined to set aside the order of Ld. CIT (A) and direct the Ld. AO to delete the addition. 6. In the result, the appeal of the assessee is allowed. Order pronounced in the open court on 20.01.2026. Sd/- Sd/- (PRADIP KUMAR CHOUBEY) (RAJESH KUMAR) (JUDICIAL MEMBER) (ACCOUNTANT MEMBER) Kolkata, Dated: 20.01.2026 Sudip Sarkar, Sr.PS Printed from counselvise.com Page | 11 ITA No. 2081/KOL/2025 Silkina Commodeal Pvt. Ltd.; A.Y. 2008-09 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 "