Caravan Corporate Management Pvt. Ltd. Vs ITO (ITAT Kolkata)
Non-Appearance of Subscribers Cannot Invalidate Documented Share Transactions- ITAT Kolkata Deletes ₹7.11 Cr Share Capital Addition
Assessee challenged the order of CIT(A), NFAC, confirming addition of ₹7.11 crore u/s 68 as unexplained cash credit towards share capital & premium.
AO had framed assessment u/s 144 alleging that Assessee failed to establish the identity, creditworthiness, & genuineness of 10 share subscribers who had invested ₹7.11 crore at a premium of ₹990 per share. AO relied mainly on non-appearance of subscribers to summons u/s 131 & treated the entire share capital/premium as unexplained. CIT(A) affirmed the addition in a brief & non-speaking order, ignoring the evidences filed by Assessee.
Before Tribunal, Assessee produced copies of ITRs, audited financial statements, bank statements, share application forms, PANs, & correspondence of the subscribers in response to summons. It was submitted that several directors personally appeared before AO & filed written confirmations which were acknowledged by his office, & that all investments were through banking channels. AO did not point out any specific defect or inconsistency.
Tribunal found that Assessee had duly proved the identity, creditworthiness, & genuineness of the share subscribers by furnishing complete documentary evidence. Non-attendance of some directors to summons, it held, did not invalidate the otherwise credible evidences. AO & CIT(A) had failed to make any independent enquiry or rebut Assessee’s documentation. Referring to CIT v. Orissa Corporation Pvt. Ltd. (159 ITR 78 SC), CIT v. Orchid Industries Ltd. (397 ITR 136 Bom), Crystal Networks Pvt. Ltd. v. CIT (353 ITR 171 Cal), & ITO v. Cygnus Developers India Pvt. Ltd., the Bench reiterated that once Assessee furnishes primary evidences, the onus shifts to the Revenue. Mere non-compliance to summons cannot justify an addition u/s 68.
Accordingly, ITAT set aside the order of CIT(A) & directed deletion of the entire addition of ₹7.11 crore.
FULL TEXT OF THE ORDER OF ITAT KOLKATA
