Virat Tradecom Pvt Ltd Vs ITO (ITAT Kolkata)
The ITAT Kolkata allowed the assessee’s appeal against the order of the Commissioner of Income Tax (Appeals) for Assessment Year 2012-13, which had confirmed an addition of ₹1,43,35,000 under Section 68 of the Income-tax Act on account of share capital and share premium received by the assessee.
The assessee had issued 14,335 equity shares of face value ₹10 each at a premium of ₹990 per share. During scrutiny assessment, the Assessing Officer issued summons under Section 131 to the directors of the shareholder companies to verify the investments. As none of the directors appeared, the Assessing Officer treated the share application money as unexplained cash credit under Section 68. The CIT(A) upheld the addition, observing that the summons remained uncomplied with, the subscribing companies had meagre income and limited business activities, and the high share premium lacked justification. The CIT(A) concluded that the assessee had failed to establish the creditworthiness of the subscribers and the genuineness of the transactions.
The Tribunal noted that the assessee had furnished extensive documentary evidence relating to all the share subscribers, including PAN, income tax returns, names and addresses, audited financial statements, bank statements, ROC records, and confirmations. It observed that the Assessing Officer had neither pointed out any defect in these documents nor conducted any further investigation. The addition was made solely on account of non-compliance with the summons issued under Section 131.
