Suman Forwarding Agency Private Ltd. Vs DCIT (ITAT Kolkata)
ITAT Kolkata Deletes ₹4.46 Cr Addition – Share Capital & Premium Held Genuine- Commission & Accommodation Entry Additions Quashed
Assessee, a clearing & forwarding agent of Railways, appealed against the order of NFAC confirming additions made u/s 68 and 69C in respect of share capital, commission, and cash credits.
Facts
Assessee issued 74,332 equity shares at ₹600 (FV ₹100 + premium ₹500) to M/s Gajmurti Agency Pvt. Ltd., a group company, raising ₹4.46 crore. AO doubted genuineness, noting inspector could not trace the investor and that its financial capacity was low compared to the investment. AO also held that funds were routed through multiple entities with circular transactions and treated the sum as unexplained cash credit u/s 68, along with an estimated commission of ₹8.92 lakh u/s 69C. Further, AO made addition of ₹5 lakh u/s 68 and ₹35,000 u/s 69C in respect of receipt from Shree Shyam Trading Pvt. Ltd., treating it as accommodation entry.
CIT(A) upheld these additions relying on principles laid down in P. Mohanakala, Lovely Exports, Precision Finance, and N.R. Portfolio.
Assessee’s Contentions:
- Submitted full evidences including ITR, financials, bank statements, share application forms, ROC filings, and valuation report.
- Investor responded to notice u/s 133(6) and explained source of source.
- Valuation certificate placed share value at ₹565.36; issue price of ₹600 was within permissible 10% variation as per CBDT notification dated 25.09.2023 (GSR 685(3)).
- Receipt of ₹5 lakh from Shree Shyam Trading Pvt. Ltd. was trade receipt for freight charges, supported by bills.
Tribunal’s Findings:
- Noted that Assessee had filed valuation report, evidences of share subscription, and investor’s reply u/s 133(6).
- Since investor explained the source and the price variation was within 10%, the addition of ₹4.46 crore and ₹8.92 lakh commission could not be sustained.
- As regards ₹5 lakh from Shree Shyam Trading, Tribunal accepted it as trade receipt towards freight charges, supported by bills. Consequently, addition of ₹5 lakh and ₹35,000 commission also deleted.
Final Holding
- Addition of ₹4.46 crore u/s 68 – Deleted
- Addition of ₹8.92 lakh u/s 69C (commission) – Deleted
- Addition of ₹5 lakh u/s 68 – Deleted
- Addition of ₹35,000 u/s 69C – Deleted
- Entire appeal allowed in favour of Assessee
FULL TEXT OF THE ORDER OF ITAT KOLKATA
