DCIT Vs Cabcon India (P) Ltd. (ITAT Kolkata)
Mere reliance on retracted statements without corroborative evidence and denying cross-examination rights cannot justify additions for share capital and share premium under Section 68.
The Income Tax Appellate Tribunal (ITAT) Kolkata recently issued a significant ruling in the case of DCIT vs. Cabcon India (P) Ltd. This case revolved around the addition of unexplained cash credits under Section 68 of the Income Tax Act for Assessment Years (AY) 2014-15 and 2015-16. The dispute arose from the assessment of equity shares issued at a premium, where the Assessing Officer (AO) alleged these transactions were accommodation entries. The ITAT’s decision to delete these additions underscores the importance of due process and the necessity for the revenue authorities to substantiate their claims with concrete evidence.
Detailed Analysis
Background and Dispute: Cabcon India, engaged in manufacturing conductors and aluminum wires, issued equity shares during AY 2014-15 and AY 2015-16 at a premium. Specifically, for AY 2014-15, equity shares of face value ₹10 were issued at a premium of ₹70, totaling ₹6,73,00,000. For AY 2015-16, shares were issued at a premium of ₹90 per share, amounting to ₹2,50,00,000. The AO disputed these transactions, treating them as unexplained cash credits under Section 68, based on statements from individuals allegedly involved in providing accommodation entries.
