ITO Vs Intime Vanijya Private Limited (ITAT Kolkata)
Income Tax Appellate Tribunal (ITAT), Kolkata bench, has dismissed an appeal filed by the Income Tax Officer (ITO) against Intime Vanijya Private Limited for the Assessment Year 2013-14. The dismissal, ordered on February 6, 2025, was not based on the merits of the tax dispute but on the ground that the tax effect involved fell below the monetary threshold stipulated by the Central Board of Direct Taxes (CBDT) for filing appeals before the Tribunal.
The Revenue’s appeal challenged an order dated January 9, 2024, passed by the National Faceless Appeal Centre (NFAC), Delhi, under Section 250 of the Income-tax Act, 1961. The NFAC order had arisen from an intimation dated September 22, 2021, which was issued under Section 147 read with Section 144B of the Act, indicating a reassessment proceeding.
The substantive issue in dispute centered on an addition of ₹25,80,000 made by the Assessing Officer (AO) to the income of Intime Vanijya Private Limited. This addition was made under Section 68 of the Income Tax Act, which deals with cash credits. Section 68 allows tax authorities to treat any sum found credited in the books of an assessee for which the assessee offers no satisfactory explanation about the nature and source as income. Such additions are commonly made when the source of funds introduced into a company, often in the form of share capital or loans, cannot be adequately substantiated by the assessee, sometimes suspected to be ‘accommodation entries’ (paper transactions used to introduce unaccounted funds). The CIT(A)/NFAC had deleted this addition, accepting the assessee’s contention that the transactions were not accommodation entries as alleged by the AO.
