Abhiruchi Marketing Pvt. Ltd. Vs ITO (ITAT Kolkata)
Share Capital Addition u/s 68 Fails in Pre-2013 Years: Kolkata ITAT Deletes ₹4.28 Cr
Pre-2013 Share Capital Can’t Be Touched on “Source of Source” Theory- Once Identity Is Proved, Revenue Must Chase Shareholders—Not Company- Low Income & High Premium Not Enough: ₹4.28 Cr 68 Addition Deleted
Kolkata ITAT ‘A’ Bench in Abhiruchi Marketing Pvt. Ltd. Vs. ITO [ITA No. 934/KOL/2025, AY 2008-09, order dated 31.12.2025] allowed Assessee’s appeal and deleted addition of ₹4,28,70,000 made u/s 68 towards share capital/share premium. Case arose in second round of litigation pursuant to revision u/s 263, where AO again treated share capital received from 14 private companies as unexplained on grounds of low taxable income of investors, alleged round-tripping of funds and high share premium. Tribunal noted that Assessee had discharged its onus by furnishing complete details including names, addresses, PAN, audited financials, bank statements and confirmations of all subscribers, many of whom were regularly assessed u/s 143(3)/147. Mere non-response of some investors to notices u/s 133(6), low returned income or suspicion over high premium could not justify addition. Tribunal held that proviso to s.68 (requiring source of source) inserted by Finance Act 2012 is prospective and inapplicable to AY 2008-09. Relying on Lovely Exports (SC), Orissa Corporation (SC), Mayawati (Delhi HC), Gagandeep Infrastructure (Bom HC) and Crystal Networks (Cal HC), Tribunal reiterated that once identity, creditworthiness & genuineness are established, AO must examine investors’ cases and cannot tax amount in Assessee’s hands. Accordingly, order of CIT(A) was set aside and entire addition was deleted
