PCIT Vs Jealous Commercial Private Limited (Calcutta High Court)
The Calcutta High Court considered an appeal under Section 260A of the Income Tax Act, 1961 filed by the revenue against the order of the Income Tax Appellate Tribunal (“A” Bench, Kolkata) in ITA No.424/Kol/2020 relating to the assessment year 2012-13 of a company. The appeal concerned the addition of share premium to the income of the assessee under Section 68 of the Act.
The Assessing Officer (AO) had raised an addition of Rs.9,00,00,360, representing share capital and share premium received by the assessee from seven shareholders, on the ground that the identity and creditworthiness of the shareholders were not established. The AO relied on the non-appearance of the Directors of the assessee in response to summons issued under Section 131 of the Act, asserting that the absence cast doubt on the genuineness of the transactions. Accordingly, the AO treated the share premium as unexplained cash credit and added it to the income of the assessee under Section 68.
The assessee contended that the identity of the share applicants was duly established, the source of funds was verified, and all transactions were properly recorded in the company’s books of accounts. The assessee produced a detailed record of share allotment, including return filing acknowledgements, audited balance sheets, bank statements, and confirmation of sources of funds from the subscribers, as well as Form No.2 filed with the Ministry of Corporate Affairs. It was emphasized that the explanation provided to the AO was complete and satisfactory under the provisions of Section 68.
