Case Law Details
City Shoppe Estates Limited Vs DCIT (ITAT Kolkata)
In a significant ruling, the Income Tax Appellate Tribunal (ITAT) Kolkata recently delivered a verdict in favor of City Shoppe Estates Limited, deleting an addition of Rs. 40 lakhs made under Section 68 of the Income Tax Act. This case, City Shoppe Estates Limited vs. DCIT, involved critical questions regarding the identity, creditworthiness of the share subscribing companies, and the genuineness of the transactions. The ITAT’s decision underscores the importance of substantive evidence in tax assessments and the necessity for tax authorities to go beyond mere suspicions when making additions.
Background and Grounds of Appeal
City Shoppe Estates Limited had filed an appeal against the order of the Commissioner of Income Tax (Appeals) [CIT(A)], Kolkata, which upheld the addition made by the Deputy Commissioner of Income Tax (DCIT), Central Circle-4(3), Kolkata. The addition pertained to share application money received from two companies, M/s. Terminal Sales Pvt. Ltd. and M/s. Vanaspati Vinimay Pvt. Ltd., which the DCIT treated as unexplained cash credit under Section 68.
The assessee contested the ex-parte order passed by the CIT(A) without proper adjudication on merits, arguing that no notice of hearing was received. Furthermore, City Shoppe Estates contended that the identity and creditworthiness of the share subscribers and the genuineness of the transactions were adequately documented and verified.
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