PCIT Vs Shelter Infra Projects Ltd. (Calcutta High Court)
Additional Evidence Before ITAT Is Legally Permissible: Calcutta HC Upholds Deletion of ₹25.40 Crore Section 68 Addition
Revenue’s Appeal Involved Only Questions of Fact
In Principal Commissioner of Income Tax-2, Kolkata v. Shelter Infra Projects Ltd., ITAT No. 84 of 2026, judgment dated 22.09.2026, the Calcutta High Court upheld the order of the Kolkata ITAT deleting additions of ₹6.27 crore and ₹19.13 crore under section 68. The Court held that the Tribunal had examined the documents and additional evidence placed before it, recorded detailed factual findings and provided adequate reasons for accepting the genuineness of the transactions. Since the Revenue could not establish any perversity in those findings, no substantial question of law arose under section 260A.
The Revenue’s appeal had been filed with a delay of 393 days. The High Court found sufficient cause and condoned the delay. However, after examining the questions proposed by the Revenue, the Court found that they were essentially questions of fact and dismissed the appeal without even calling upon the assessee to address arguments at that stage.
Second Round of Litigation After De Novo Assessment
The assessee had filed its return for AY 2012-13 declaring nil income. The original assessment was completed under section 143(3), determining the income at ₹33,00,66,403. Thereafter, the Principal Commissioner exercised revisional jurisdiction under section 263, and the assessed income was revised to ₹33,11,79,425.
The CIT(A) granted partial relief and recomputed the income at ₹23,87,07,930. On further appeal, the ITAT remanded the matter to the Assessing Officer for a de novo assessment.
In the fresh assessment completed on 13.12.2019, the AO determined the income at ₹23,98,20,955. The additions included ₹6.27 crore under section 68 concerning transactions with M/s Growfast Realtors Private Limited, ₹19.13 crore under section 68 concerning transactions with M/s Sarda Vanijya Private Limited, and ₹20,33,817 in respect of alleged bogus trading liabilities.
The CIT(A) dismissed the assessee’s appeal and confirmed the additions, observing that despite several opportunities, the assessee had failed to furnish the required details. The assessee then approached the ITAT, which partly allowed the appeal after considering documents placed in a separate paper book.
Records Were Lost, Damaged or Soiled but Later Retrieved
Before the Tribunal, the assessee explained that its records for the relevant assessment year had been lost, damaged or soiled. The records were subsequently retrieved and collected from different parties and were produced to substantiate the transactions.
The Tribunal considered the account confirmations, transaction details, accountant’s certificate, TDS particulars, bank records, ledger accounts and other supporting evidence. On the basis of these materials, it deleted the additions of ₹6.27 crore and ₹19.13 crore.
The Revenue contended before the High Court that the assessee had failed to discharge the primary burden of establishing the genuineness of the transactions. It argued that the Tribunal had erred in accepting additional documents and deleting additions treated by the AO as accommodation entries and unexplained cash credits.
Payment to Growfast Realtors Established Through Records
Regarding the addition of ₹6.27 crore relating to M/s Growfast Realtors Private Limited, the Tribunal considered the confirmation of accounts and the supporting transaction records. On examining the documents, it found that the amount represented payment made by the assessee to Growfast Realtors.
The High Court observed that the Tribunal had not deleted the addition mechanically. It had specifically examined the evidence in the paper book and recorded detailed reasons supporting its conclusion.
₹19.13 Crore Was Business Payment With TDS Deducted
In respect of ₹19,13,40,000 relating to M/s Sarda Vanijya Private Limited, the Tribunal examined the transaction details and an accountant’s certificate issued under the first proviso to section 201(1). The certificate established that the payment had been made to Sarda Vanijya and that tax had also been duly deducted at source.
The Tribunal therefore found that the amount was a business payment made by the assessee and could not be characterised as an unexplained cash credit under section 68. The High Court found no perversity or legal error in this factual conclusion.
Partial Relief on Alleged Bogus Trading Liabilities
The AO had also added ₹20,33,817 in respect of alleged bogus trading liabilities. The Tribunal deleted additions of ₹3,75,799 and ₹9,00,246 concerning M/s Bharat Enterprise and M/s Nirman, holding that the preponderance of probabilities favoured the assessee after considering the relevant accounts and transaction records.
Regarding the liabilities concerning Kripa Infrastructure, Ram Naresh Singh and Swastik Engineering, the Tribunal adopted a balanced approach. It sustained the entire addition of ₹5,06,540 relating to Ram Naresh Singh and restricted the additions relating to Kripa Infrastructure and Swastik Engineering to 50% of the amounts added by the AO.
This demonstrated that the Tribunal had not accepted the assessee’s case wholesale. It examined each creditor and transaction independently and granted relief only to the extent supported by the evidence.
Rule 18(4) Permits Additional Evidence Before Tribunal
The High Court specifically rejected the Revenue’s objection regarding consideration of additional evidence. It referred to Rule 18(4) of the Income Tax (Appellate Tribunal) Rules, 1963, which permits a party to file additional evidence through a separate paper book accompanied by an application explaining the reasons for filing it.
The assessee had explained that the relevant records were initially lost, damaged or soiled and had later been retrieved. The High Court also noticed that the AO had not properly dealt with this explanation and had erroneously recorded that the assessee had produced nothing.
The Court therefore held that there was no illegality in the Tribunal permitting and considering the additional evidence. After examining those documents, the Tribunal was entitled to record factual findings regarding the correctness and genuineness of the transactions.
ITAT’s Findings Cannot Be Reopened Without Perversity
The High Court reiterated that the ITAT is the final fact-finding authority. Where the Tribunal considers the relevant evidence, gives adequate reasons and arrives at a plausible factual conclusion, the High Court cannot reappreciate the entire evidence merely because the AO or CIT(A) had taken a different view.
The Revenue failed to demonstrate that the Tribunal’s findings were unsupported by evidence, irrational or perverse. Consequently, the proposed questions concerning the genuineness of transactions and sufficiency of documents remained pure questions of fact. The Revenue’s appeal was therefore dismissed.
Author’s Comments
The judgment is important on two fronts. First, an addition under section 68 cannot survive merely because the assessee initially failed to produce complete records if those records are subsequently retrieved and validly produced before the Tribunal. The objective of appellate proceedings is to determine the correct tax liability on the basis of reliable evidence, not to perpetuate an addition merely because the evidence became available at a later stage.
Secondly, Rule 18(4) is not an unrestricted licence to introduce documents casually. The additional evidence must be filed separately, supported by an application explaining the reason for its delayed production, and must be relevant and reliable. In the present case, the explanation regarding damaged and subsequently retrieved records was accepted, and the Tribunal examined the documents transaction-wise.
The decision also confirms that once the Tribunal records a reasoned factual finding after considering banking records, confirmations, TDS evidence and ledger accounts, a section 260A appeal cannot be used as a second factual appeal. Absence of perversity closes the door to High Court interference.
Cases Discussed
- PCIT Vs Swati Bajaj — cited by the Revenue in the proposed substantial questions of law concerning the evidentiary burden and genuineness of transactions.
- Principal Commissioner of Income Tax (Central)-I, Kolkata Vs NRA Iron & Steel (P) Ltd. — cited by the Revenue in support of its challenge to deletion of the Section 68 additions.
- PCIT (Central)-2, Kolkata Vs. BST Infratech Ltd. — cited by the Revenue as a jurisdictional High Court decision while challenging the Tribunal’s findings on genuineness.
FULL TEXT OF THE JUDGMENT/ORDER OF CALCUTTA HIGH COURT
In: GA 1 of 2026
1. This is an application for condoning the delay of 393 days in preferring the appeal. The parties have filed their respective affidavits.
2. After going through the averments made in the petition, we find sufficient grounds have been made out for condoning the delay and accordingly, the delay is condoned.
3. GA 1 of 2026 stands allowed.
4. There will be no order as to costs.
In: GA 2 of 2026
1. This instant appeal has been filed by the revenue assailing the order dated 10th September, 2024 passed by the Income Tax Appellate Tribunal “B” Bench, Kolkata in ITA No. 421/Kol/2024 relating to the assessment year 2012-2013. G.A. No. 2 of 2026 is an application for stay in connection with ITAT No. 84 of 2026.
2. The appellant/revenue has raised the substantial questions of law which are stated hereinbelow:-
“i) Whether on the facts and circumstances of the case, the Learned Tribunal was justified in law to delete the addition of Rs.6,27,00,000/- and Rs.19,13,40,000/- made by the Assessing Officer under Section 68 of the Income Tax Act, 1961 on account of accommodation entries as unexplained cash credit despite the respondent assessee failing to establish the genuineness of the transactions?
ii) Whether on the facts and in the circumstances of the case, the Learned Tribunal was justified in law in not considering and appreciating that primary onus of proving the true nature and actual source of the transactions and genuineness of the transactions with cogent evidence was on the assessee but even after several opportunities being given the assessee failed to furnish cogent evidence before the Assessing Officer as well as CIT(A) to establish its claim?
iii) Whether on the facts and circumstances of the case, the Learned Tribunal was justified in law in failing to appreciate that the genuineness of the transactions has not been established by the assessee and as such addition made by the Assessing Officer was perfectly justified?
iv) Whether on the facts and in the circumstances of the case, the Learned Tribunal was justified in law to delete the addition made under Section 68 of the Income Tax Act, 1961 by not following the ratio laid down in the case of PCIT Vs Swati Bajaj reported in 2022 SCC Online 1572 (SC), in the case of Principal Commissioner of Income Tax (Central)-I, Kolkata Vs NRA Iron & Steel (P) Ltd. reported in [2019] 103 taxmann.com 48 and in the case of PCIT (Central)-2, Kolkata Vs. BST Infratech Ltd. reported in [2024] 161 taxmann.com 668 (Calcutta) by the Jurisdictional High Court?”
3. Though the appellant has raised the above mentioned substantial questions of law but we have not framed any substantial questions of law.
4. Since from the substantial questions of law as raised by the appellant, it appeared to us these are all pure questions of fact, we have invited the appellant to address us as to whether the substantial questions of law as raised by the appellant are at all substantial questions of law or not.
5. We have only heard the appellant. The respondent has not been called upon at this stage.
6. The Learned Counsel for the appellant placed the impugned order and argued that the Learned Tribunal has committed an error in law while deleting the addition of Rs.6,27,00,000/- and Rs.19,13,40,000/- under Section 68 of the Income Tax Act, 1961 on account of accommodation entries as unexplained cash credit despite the respondent/assessee failing to establish the genuineness of the transactions. It is also argued that Tribunal has committed an error in failing to appreciate that the transactions were not genuine and genuineness of the transactions had not been established by the respondent/assessee.
7. It is also argued that the respondent/assessee could not give cogent evidence despite several opportunities were given to the respondent/assessee.
8. Before we discuss about the impugned order, it is important to mention the facts of the instant case as this is a second round of litigation between the parties.
9. The respondent/assessee filed its return of income for the assessment year 2012-2013 on 26th December, 2012 declaring the total income as nil. Thereafter, the case was selected for scrutiny and the assessment was completed on 16th March, 2015 by passing the order under Section 143(3) of the Income Tax Act, 1961 which is hereinafter referred to as “the said Act”. By the said order passed under Section 143(3) of the said Act, the income of the respondent/assessee was assessed at Rs.33,00,66,403/-.
10. Thereafter, the Pr. CIT while exercising the power of revision as contemplated under Section 263 of the said Act revised the assessed income to Rs.33,11,79,425/-.
11. Being aggrieved by the said order passed in revision, the respondent/assessee preferred an appeal before the CIT (Appeals)-18, Kolkata, whereupon the CIT (Appeals) vide its order dated 16th September, 2016 upheld the majority of decision made by the Assessing Officer and deleted some additions. The CIT (Appeals) revised the total income to Rs.23,87,07,930/-.
12. Challenging the said order, the respondent/assessee preferred an appeal before the Income Tax Appellate Tribunal as contemplated under Section 253 of the said Act and after hearing the parties the Income Tax Tribunal remanded back the case to the Assessing Officer for making de novo assessment.
13. Pursuant thereto, the Assessing Officer heard the matter and invited the respondent/assessee to give cogent evidence in support of its case. It appears from the order of the Assessing Officer that despite giving opportunities, the respondent/assessee did not provide detail information and by an order dated 13th December, 2019 the Assessing Officer held that the total income of the assessee at Rs.23,98,20,955/- by making the following additions-
“a) Addition of Rs.6,27,00,000/- under Section 68 on account of transaction of assessee company with one M/s Growfast Realtors (P) Ltd.
b) Addition of Rs.19,13,40,000/- under Section 68 on account of transaction of the assessee company with M/s Sarda Vanijya (P) Ltd.
c) Addition of Rs.20,33,817/- against bogus trading liability.”
14. The respondent being aggrieved by the said order of the Assessing Officer dated 13th December, 2019, preferred an appeal before the Commissioner of Income Tax (Appeals). The Commissioner of Income Tax (Appeals) vide order dated 26th December, 2023, dismissed the appeal of the respondent/assessee and confirmed the addition made by the Assessing Officer.
15. In the said order the Commissioner of Income Tax (Appeals) had mentioned that despite giving opportunities, the respondent/assessee did not file detail information.
16. Challenging the said order of the Commissioner of the Income Tax (Appeals), the respondent/assessee filed an appeal before the Income Tax Appellate Tribunal “B” Bench, Kolkata. The Appellate Tribunal has partly allowed the appeal of the respondent/assessee.
17. While partly allowing the appeal, the Appellate Tribunal has categorically recorded that respondent/assessee has disclosed additional documents by way of paper book and reference of those documents has been mentioned in the impugned order while partly allowing the appeal as aforesaid.
18. The Appellate Tribunal has categorically mentioned the revised grounds of appeal formulated by the respondent/assessee in the impugned order which are quoted below:-
“1. For that on the facts and in the circumstances of the case. Ld. CIT(A) was not justified in passing an exparte order without dealing with the merit of the case.
2. For that on the facts and in the circumstances of the case. Ld, CIT(A) ought to have deleted the addition made by the A.O. to the tune of Rs.6,27,00,000/- wrongly invoking the provisions of section 68 in respect of the transactions with M/s Growfast Realtors (P) Ltd.
3. For that on the facts and in the circumstances of the case, Ld. CIT(A) ought to have deleted the addition made by the A.O. to the tune of Rs.19,13,40,000/- wrongly invoking the provisions of section 68 in respect of the transactions with M/s Sarda Vanijya (P) Ltd.
4. (a) For that on the facts and in the circumstances of the case, Ld. CIT(A) ought to have deleted the addition made by the A.O. to the tune of Rs.3,75,799/- holding that the said amount represented ingenuine trading liability of M/s Bharat Enterprise though there is no provision in the Act for making such addition.
4 (b) For that on the facts and in the circumstances of the case, Ld. CIT(A) ought to have deleted the addition made by the A.O. to the tune of Rs.9,00,246/- holding that the said amount represented ingenuine trading liability of M/s Nirmal though there is no provision in the Act for making such addition.
5. For that on the facts and in the circumstances of the case, Ld. CIT(A) ought to have deleted the addition made by the A.O. totaling to Rs.20,33,817/- in respect of the following parties holding the said amount represented bogus trading liability in the assessee’s books as on 31.03.2012.”
19. The Appellate Tribunal has dealt with the issues and also while allowing the appeal partly, recorded the fact that the records of the respondent/assessee for the relevant assessment year got lost/damaged/soiled but, however, the respondent/assessee retrieved the records which would demonstrate that the payment had been by the assessee.
20. In the impugned order the Appellate Tribunal deleted the amount of Rs.6,27,00,000/- and Rs.19,13,40,000/-. This apart, the Appellate Tribunal has also deleted a sum of Rs.3,75,799/- and Rs.9,00,246/- in respect of the parties, namely, M/s Bharat Enterprise and M/s Nirman which were initially treated by the Assessing Officer as bogus trading liability.
21. Relating to deletion of Rs.20,33,817/- in respect of three parties, namely, Kripa Infrastructure, Ram Naresh Singh, Swastik Engineering, the Appellate Tribunal confirmed the addition of Rs.5,06,540/- made in respect of the transactions with Ram Naresh Singh.
22. Relating to other parties, namely, Kripa Infrastructure and Swastik Engineering are concerned the Appellate Tribunal restricted the addition to 50 per cent of what had been made by the Assessing Officer.
23. This order of the Appellate Tribunal has been challenged in the instant appeal by the revenue.
24. We have gone through the impugned order of the Income Tax Appellate Tribunal passed on 10th September, 2024.
25. We find while dealing with each and every issue framed before it, the Appellate Tribunal has categorically considered the evidence which were placed before it by the respondent/assessee by filing the paper book. Detailed findings have been given relating to deleting of Rs.6,27,00,000/- and Rs.19,13,40,000/-. It appears from the impugned order that while deleting the aforesaid figures the Appellate Tribunal has categorically examined the evidence produced before it. The copy of the confirmation of the accounts made by M/s Growfast Realtors (P) Ltd. was also considered.
26. It also appears from the impugned order that Appellate Tribunal after going through the documents produced before it has recorded that respondent/assessee duly proved that the aforesaid amount (Rs.6,27,000/-) represents the payment made by the assessee to the said M/s Growfast Realtors (P) Ltd.
27. So far as deleting Rs.19,13,40,000/- as unexplained credit from M/s Sarda Vanijya Private Limited, the Appellate Tribunal has considered several documents annexed to the paper book such as details of transaction, certificate of an accountant which is a certificate under first proviso to Sub-Section 1 of Section 201 of the said Act certifying that the aforesaid payment had been made to M/s Sarda Vanijya Private Limited and TDS was also duly deducted.
28. It is the specific finding of the Appellate Tribunal that considering those documents, it had been duly proved that the respondent/assessee had paid the said amount as business payment to M/s Sarda Vanijya Private Limited.
29. We also find from the impugned order that the Appellate Tribunal has categorically referred to accounts of trading liabilities from the respective parties for proving the transaction entry by the respondent/assessee relating to the two companies namely, M/s Bharat Enterprise and M/s Nirman. The Tribunal has deleted the addition of Rs.3,75,799/- and Rs.9,00,246/- after considering that the preponderance of probabilities in this respect lies in favour of the respondent/assessee.
30. We also find that while deleting the said entries the Appellate Tribunal has categorically recorded the fact that the respondent/assessee has been able to produce evidence in respect of remaining parties and also considered the fact that the assessee has collected the records from various parties and it is only after that the aforesaid amounts were ordered to be deleted.
31. Relating to deletion of Rs.20,33,817/- in respect of Kripa Infrastructure (Rs.4,77,268/-), Ram Naresh Singh (Rs.5,06,540/-) and Swastik Engineering (Rs.10,50,009/-), the Appellate Tribunal has categorically recorded its satisfaction to the extent that respondent/assessee has been able to produce cogent evidence before it. This has also been recorded that agreement with said Ram Naresh Singh has been produced. Confirmation of Ram Naresh Singh has also been produced. This apart, the copy ledger of the respondent/assessee which reflects the books of account of the said Ram Naresh Singh has also been considered.
32. So far as the addition made relating to other companies, namely, Kripa Infrastructure and Swastik Engineering, the Appellate Tribunal has categorically recorded that most of the transactions with the said companies had been explained by the respondent/assessee. The impugned order categorically records the fact the books of account, bank account which are necessary for deciding this issue had also been produced.
33. The Appellate Tribunal after considering this has confirmed the addition of Rs.5,06,540/- relating to the transaction made with Ram Naresh Singh but reduced the addition in respect of Kripa Infrastructure and Swastik Engineering to the extent of 50 per cent of the addition made by the Assessing Officer.
34. We find that the Appellate Tribunal only after considering the evidence and documents submitted before it has allowed appeal of the respondent/assessee partly.
35. Rule 18(4) of the Income Tax Appellate Tribunal Rules, 1963 categorically permits the party to give additional evidence by filing a separate paper book containing such particulars as are referred in Sub-Rule 3 accompanied by an application stating the reasons for filing such additional evidence.
36. After going through the impugned order, we find that the respondent/assessee has categorically stated while giving additional evidence before the Appellate Tribunal that the records of the respondent/assessee for the relevant assessment year which was under consideration got lost/damaged/soiled but, however, the respondent/assessee later on retrieved records which were produced before the Assessing Officer. We also find after going through the order of the Assessing Officer which were subsequently affirmed by the Commissioner that nothing had been said on this point by the Assessing Officer. On the contrary, the Assessing Officer had erroneously recorded that nothing had been produced by the respondent/assessee. This apart, the additional evidence which were given before the Tribunal is permissible in law.
37. Rule 18 Sub-Rule 4 of the Income Tax (Appellate Tribunal) Rules, 1963 permits the respondent/assessee to give additional evidence. Rule 18 Sub-Rule 4 is quoted hereinblow:-
“(4) The additional evidenced, if any, shall not form part of the same paper book. If any party desires to file additional evidence, then the same shall be filed by way of a separate paper book containing such particulars as arc referred to in sub-rule (3) accompanied by an application stating the reasons for filing such additional evidence.”
38. Rule 18(3) contemplates as follows:-
“(3) The papers referred to in sub-rule (1) above must always be legibly written or type-written in double space or printed. If Xerox copy of a document is filed, then the same should be legible. Each paper should be certified as a true copy by the party filing the same, or his authorized representative and indexed in such a manner as to give the brief description of the relevance of the document, with page numbers and the Authority before whom it was filed.”
39. Therefore, there is no illegality in the order of the Tribunal permitting the respondent/assessee to give additional evidence before it. It is only after considering the documents which were produced by way of additional evidence, the Appellate Tribunal came to such finding.
40. This apart, from the impugned order we also find that Appellate Tribunal has given adequate reasons relating to deleting the entries and only then came to the finding about the correctness and genuineness of the transactions of the respondent/assessee.
41. The Appellate Tribunal being the last fact finding authority has correctly passed the order after taking into consideration the additional evidence. There is no perversity in the impugned order.
42. Therefore, we are of the view that issues raised by the revenue in appeal are pure questions of fact and cannot be entertained in the instant appeal. We also hold that no substantial questions of law involved in the instant appeal.
43. Accordingly, the instant appeal is dismissed.
44. There will be no order as to costs.
45. Urgent photostat certified copy of this order, if applied for, be given to the parties upon compliance with the all necessary formalities.
