Divya Electronics Pvt. Ltd. Vs ITO (ITAT Kolkata)
Share Capital Addition Deleted Despite Non-Appearance of Subscribers: Section 68 Cannot Be Invoked on Presumptions
The Kolkata Bench of the ITAT allowed the assessee’s appeal for AY 2012-13 and deleted major additions made under Section 68 and on account of alleged inflated expenses.
On the share capital issue, the Tribunal held that the addition of ₹55 lakh towards share capital and premium was unsustainable where the assessee had discharged its initial onus by furnishing complete documentary evidence such as names, addresses, PANs, confirmations, audited accounts and bank statements of the subscribers. The Assessing Officer had issued summons under Section 131 but made the addition solely on the ground of non-appearance of subscriber directors and their comparatively low incomes, without pointing out any defect in the evidences filed. Relying on settled law, including CIT v. Orissa Corporation (SC) and CIT v. Orchid Industries (Bom), the ITAT held that mere non-compliance with summons or suspicion cannot justify an addition under Section 68 once identity, creditworthiness and genuineness are established.
On the disallowance of expenses, the Tribunal deleted an addition of ₹1 crore made on the basis of alleged abnormal increase in employee benefit and other expenses. It was noted that the assessee’s turnover had also increased and that all payments were supported by books of account and confirmations obtained by the AO under Section 133(6). The ITAT reiterated that additions based on presumptions and surmises are impermissible in law.
Accordingly, the orders of the lower authorities were set aside and the assessee’s appeal was allowed in full.
FULL TEXT OF THE ORDER OF ITAT KOLKATA
This is an appeal preferred by the assessee against the order of the National Faceless Appeal Centre, Delhi (hereinafter referred to as the “Ld. CIT(A)”] dated 09.04.2025 for the AY 2012-13.
