PCIT Vs Express Tradelink Pvt. Ltd. (Calcutta High Court)
This appeal was filed by the Revenue under Section 260A of the Income Tax Act, 1961, challenging the order of the Income Tax Appellate Tribunal (ITAT), Kolkata, dated 8 February 2024 for Assessment Year 2009-10. The dispute concerned deletion of an addition of ₹7,26,50,000 made by the Assessing Officer under Section 68 on account of alleged unexplained share capital and share premium.
The Revenue contended that the assessee failed to prove the identity, creditworthiness, and genuineness of nine subscriber companies. It argued that the Tribunal erred in holding that the assessee had discharged its initial onus under Section 68. The Revenue also relied on the “test of human probability,” pointing out that the subscriber companies had declared meagre income disproportionate to the high share premium paid. Further reliance was placed on the non-appearance of directors of the subscriber companies in response to summons issued under Section 131. The Revenue also cited a High Court decision and referred to the doctrines of “source of source” and “origin of origin.”
The Court examined the records and noted that the assessee had submitted extensive documentary evidence, including PAN details, share application forms, allotment advices, bank statements, income tax return acknowledgments, and audited financial statements of all nine corporate subscribers. It observed that once an assessee provides reasonable explanation supported by documentary evidence establishing identity and banking flow, the initial statutory onus under Section 68 stands discharged. The burden then shifts to the Revenue.
