Jai Bhola Trading Co. Pvt. Ltd. Vs IT Ward 9(3) (ITAT Kolkata)
Income Tax Appellate Tribunal (ITAT), Kolkata bench, has set aside an addition of Rs. 1,43,00,000 made to the income of Jai Bhola Trading Co. Pvt. Ltd. under Section 68 of the Income-tax Act, 1961. The addition, initially made by the Assessing Officer (AO) and confirmed by the National Faceless Appeal Centre (NFAC), pertained to share capital and share premium received by the company.
The case for Assessment Year 2012-13 began after the assessee filed its return declaring an income of Rs. 4,16,751. The company’s case was selected for scrutiny under Computer Assisted Scrutiny Selection (CASS). During the assessment proceedings, the AO issued notices and a questionnaire, to which the assessee provided some compliance, including copies of its income tax return, audited accounts, bank statements, and replies furnished by the investor companies under Section 133(6) of the Act.
However, the AO had also issued summons under Section 131 of the Act directing the assessee company to produce the directors of the subscriber companies for cross-examination. The AO concluded that the assessee failed to comply with these summons and also failed to adequately explain the source and nature of the share capital and share premium received. Consequently, the AO treated the entire amount of Rs. 1,43,00,000 as unexplained cash credit under Section 68 and added it to the assessee’s income in the assessment order dated March 7, 2015.
