PCIT Vs Shipra Enclave Pvt Ltd (Calcutta High Court)
Whether addition under Section 68 for unexplained share capital and share premium can be sustained merely on the basis of high share premium and alleged lack of creditworthiness, when the assessee has furnished complete documentary evidence and the investors are identifiable, traceable, and active taxpayers.
Case Citation- Principal Commissioner of Income Tax–1, Kolkata vs. M/s Shipra Enclave Pvt. Ltd. Court: Calcutta High Court Appeal No.: ITAT 94 of 2025 with IA No. GA 2 of 2025-Assessment Year: 2012–13-Date: 4 February 2026
Facts in Brief:- The assessee is a Non-Banking Financial Company (NBFC) registered with RBI. During the relevant year, it raised share capital and share premium aggregating to Rs. 6.22 crore from fifteen corporate subscribers.
The Assessing Officer treated the amount as unexplained cash credit under Section 68, branding the subscribers as shell entities mainly due to:
(i) High share premium
(ii) Non-appearance of directors in response to summons under Section 131
CIT – Appeal :- The addition was confirmed by the CIT(A).
ITAT – The ITAT deleted the addition, holding that the assessee had discharged the onus under Section 68 through documentary evidence.
Substantial Questions Raised by Revenue
(I) Whether deletion of addition ignored the principles laid down by the Supreme Court in NRA Iron and Steel (P) Ltd.
(II) Whether the Tribunal failed to examine the creditworthiness of the investors and genuineness of transactions
(III) Whether high premium without strong business fundamentals justified addition under Section 68
Findings of the High Court
