IN THE HIGH COURT OF JUDICATURE AT CALCUTTA SPECIAL JURISDICTION (INCOME TAX)

ORIGINAL SIDE RESERVED ON: 25.04.2025 DELIVERED ON:06.05.2025 CORAM:

THE HON’BLE THE CHIEF JUSTICE T.S. SIVAGNANAM AND THE HON’BLE JUSTICE CHAITALI CHATTERJEE (DAS)

ITAT/238/2024 (IA NO: GA/2/2024)

THE PRINCIPAL COMMISSIONER OF INCOME TAX CENTRAL 1, KOLKATA VERSUS WISE INVESTMENT PRIVATE LIMITED Appearance:-

Mr. Soumen Bhattacharjee, Adv.

Mr. Ankan Das, Adv.

Ms. Shradhya Ghosh, Adv.

…..For the Appellant.

Mr. Abhratosh Majumdar, Sr. Adv.

Mr. Avra Mazumdar, Adv.

Mr. Kausheyo Roy, Adv.

Ms. Alisha Das, Adv.

Mr. Suman Bhowmik, Adv.

Mr. Samrat Das, Adv.

Ms. Elina Das, Adv.

Mr. Soumendra Nath Banerjee, Adv.

.….For the Respondent.

JUDGMENT (Judgment of the Court was delivered by T.S. Sivagnanam, CJ.)

1. This appeal filed by the revenue under Section 260A of the Income Tax Act, 1961, (the Act) is directed against the order dated 19.11.2023 passed by the Income Tax Appellate Tribunal “B” Bench, Kolkata (tribunal) in ITA No. 161/Kol/2023 for the assessment year 2012-2013. The revenue has raised the following substantial question of law for consideration:-

(1) Whether the Learned Tribunal has committed substantial error in law, in upholding the action of the CIT(A) in deleting the addition made u/s 68 of the Act on account of bogus share capital & premium amounting to Rs. 32,50,42,000/- ignoring the Assessing Officer’s remand report dated 20/07/2022 wherein it had been categorically stated that the share applicant companies had no credit worthiness to invest in the assesse company.

(2) Whether the Learned Income Tax Appellate Tribunal has committed substantial error in law in ignoring the fact that the CIT(A) had not taken cognizance of the fact that the investor companies had filed their income tax returns showing negligible taxable income and their reserve and surplus mostly consisted of share capital?

(3) Whether the Learned Income Appellate Tribunal has substantially erred in law in ignoring that CIT(A) held that assesse had established the identity and creditworthiness of the share applicants and genuineness of transaction merely based on the fact that transaction were through banking channels, when it been held by the Jurisdictional High Court in the case of CIT vs Precision Finance Pvt Ltd that mere payment by account payee cheque is neither sacrosanct nor can it make a non- genuine transaction genuine which view has also been endorsed by the Hon’ble Court again in the case of PCIT vs M/s. BST Infratech Ltd?

(4) Whether the Learned Tribunal has committed substantial error in law in upholding the deletion of the addition u/s 68 of the Act by the CIT(A) while observing that the investing companies were body corporates registered with the Registrar of Companies and individually assessed to income tax ignoring that, is the same was not the litmus test to discharge the burden on the assesse to establish creditworthiness of the investing companies as well as the genuineness of the transaction?

2. We have elaborately heard Mr. Soumen Bhattacharyya, learned senior standing counsel assisted by Mr. Ankan Das and Ms. Shradhya Ghosh, learned advocates appearing for the appellant revenue and Mr. Abhratosh Majumdar, learned Senior Advocate assisted by Mr. Avra Mazumder, learned advocates appearing for the respondent.

3. The revenue is aggrieved by the order passed by the learned tribunal in affirming the order passed by the Commissioner of Income Tax (Appeals), Kolkata (CIT(A)) dated 26.12.2022 setting aside the addition made by the assessing officer under Section 68 of the Act vide assessment order dated 26.03.2020. The assessee filed its return of income for the assessment year under consideration, 2012-2013, declaring a total income of Rs. 42,000/-. The case was selected for scrutiny and notice under Section 143(2) of the Act was issued on 12.08.2013, the assessing officer heard the assessee in person. Subsequently notice under Section 142(1) of the Act was issued with a questionnaire on