L.R. Agro Product Pvt. Ltd. Vs ITO (ITAT Kolkata)
Sec 68 Addition on Share Application Loans Deleted – Documentary Evidence Ignored by AO CIT(A) – Identity, Creditworthiness Genuineness Established – ITAT Kolkata
ITAT Kolkata deleted addition of ₹86.90 lakh u/s 68 holding that assessee had furnished complete documentary evidence including PAN, ITR, balance sheets, confirmations & bank statements proving identity, creditworthiness & genuineness of subscribers and lenders. Tribunal observed that both AO & CIT(A) failed to point out any defect in documents and made addition without proper enquiry, merely alleging accommodation entries. Relying on multiple Calcutta HC rulings, ITAT held that once transactions are through banking channels and sources are explained, Sec 68 addition cannot survive and directed AO to delete entire addition. Appeal allowed in favour of assessee.
FULL TEXT OF THE ORDER OF ITAT KOLKATA
The present appeal filed by the assessee arises from order dated 16.09.2025passed u/s 250 of the Income Tax Act, 1961 (hereafter referred to as “the Act”) by the Ld. Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi [hereafter referred to as “the Ld.CIT(A)].
2. The assessee has raised the following grounds:
“1. That the order passed by the Ld. CIT(A) u/s 250 of the Act dated 16.09.2025 read with assessment order u/s 143(3)/ 144B of the Act dated 17.04.2021 is contrary to the law and the facts of the appellant’s case.
2. That, the assessment order u/s 143(3) r.w.s 144B of the Act was passed on 17.04.2021 without issuing show cause notice leading to violation of provision of section 142(3) of the Act and therefore order u/s 143(3) of the Act is ab-initio-void and bad in law.
3. That, the assessment order u/s 143(3) r.w.s 144B of the Act was passed on 17.04.2021 without issuing draft order u/s 144B(1)(xiv) of the Act and therefore the order passed u/s 143(3) r.w.s 144B of the Act is in violation to the provision of section 144B of the Act which was introduced and mandatorily made applicable w.e.f. 01.04.2021 and so the order passed is without the mandate of law and unmaintainable.
4. That, the Ld.CIT(A) erred in upholding the order passed u/s 143(3) r.w.s 144B of the Act rejecting the plea of the assessee that the assessment order passed without a show cause notice or draft order is bad in law.
5. That the Ld. CIT(A) erred in confirming the addition made u/s 68 of the Act of Rs.86,90,575/ – although the appellant has established identity, creditworthiness and genuineness of transactions.
6. That, the case of the assessee was selected for limited scrutiny under CASS for verification of business loss and so the additions made in the assessment order u/s 68 of the Act is without jurisdiction.
7. That, the appellant craves leave to amend. alter, modify. substitute, add to, abridge and/ or rescind any or all of the above grounds.”
3. The Ld. Counsel of the assessee argued at length the grounds challenging the validity of the assessment framed u/s 143(3) r.w.s. 144B of the Act dated 17.04.2021 and submitted that the assessment framed by the AO is bad in law and may be quashed. We are not inclined to decide these grounds on legal issue as argued by the Ld. AR and these are left open to be adjudicated at later stage if the need raised from the same.
