Rolex Trafin Private Limited Vs ITO (ITAT Kolkata)
Kolkata ITAT: Section 68 Cannot Apply to Mere Journal Entries Where Share Capital Was Received in a Subsequent Year
The Kolkata ITAT held that no addition under section 68 can be made in respect of mere journal entries recording share capital/share premium when no money was actually received during the relevant previous year. The Tribunal observed that although the assessee had credited share capital and share premium in its books during AY 2012-13, the actual funds were received only in the subsequent assessment year (AY 2013-14), and the entries in the impugned year merely represented accounting adjustments. Relying on the decisions in CIT v. Prameshwar Bohra (Rajasthan High Court), CIT v. Usha Stud Agricultural Farms Ltd. (Delhi High Court) and DCIT v. Global Mercantiles (P.) Ltd. (Kolkata ITAT), the Tribunal reiterated that section 68 can be invoked only in respect of credits arising during the relevant previous year, and not for opening balances or journal entries where no fresh funds have been introduced. Accordingly, it directed the Assessing Officer to delete the addition of ₹6.55 crore made under section 68, while leaving the assessee’s jurisdictional grounds open for adjudication, if required, at a later stage.
