ITO Vs SGS Fashion Private Limited (ITAT Kolkata)
Revenue filed appeal with 63 days delay, which was condoned. The only issue was deletion of ₹1,93,50,000/- added u/s 68 towards share capital & share premium.
Assessee had issued 1,93,500 equity shares of ₹10 each at premium of ₹90 to four investor companies. During scrutiny, AO issued notices u/s 143(2), 142(1) and also issued summons u/s 131 to the director, who could not appear due to medical reasons. AO held that Assessee failed to prove identity, creditworthiness & genuineness, relied on Sumati Dayal (SC) & Durga Prasad More (SC), and treated the entire ₹1.93 crore as unexplained u/s 68.
Before CIT(A), Assessee filed complete documentary evidence: names and addresses of subscribers, PAN, ITRs, audited balance sheets, bank statements, and source of funds. CIT(A) noted that AO did not conduct any further enquiry, nor did he find any defect in the documents. He also observed that mere non-appearance in response to summons u/s 131 cannot be the sole ground for addition when all primary documents are available. CIT(A) relied on CIT Vs Orissa Corporation (SC), Jawahar Lal Oswal (P&H HC) and CIT Vs Navodaya Castles (Delhi HC), and deleted the addition.
Tribunal examined the facts and upheld CIT(A)’s findings. It noted that investors’ financials showed sufficient investible funds and investments ranged from 3.30% to 35.76% of their net worth, proving creditworthiness. Importantly, in the case of all four subscriber companies, separate assessments u/s 143(3) were completed by the Department, which further confirmed their existence and identity.
