The Kolkata Bench of the Income Tax Appellate Tribunal (ITAT) has held that addition under Section 68 of the Income Tax Act cannot be sustained merely because directors of investor companies failed to appear in response to summons issued under Section 131, when the assessee had already furnished complete documentary evidence establishing the identity, creditworthiness, and genuineness of the transactions. 

The bench of Pradip Kumar Choubey (Judicial Member) and Rajesh Kumar (Accountant Member) observed that addition under Section 68 solely on the basis of non-compliance with summons under Section 131 was unsustainable in law where documentary evidence remained unrebutted. It emphasized that the Assessing Officer neither disproved the documents filed nor identified any deficiency in them before proceeding to make the addition. 

The assessee had filed its return declaring an income of ₹10,352. During scrutiny assessment, the Assessing Officer noticed that the company had received share capital of ₹5,53,500 and share premium of ₹5,47,95,500. The department issued summons under Section 131 requiring production of directors of the shareholder companies. Since the summons were allegedly not complied with, the Assessing Officer treated the entire amount of ₹5,53,50,000 as unexplained cash credit under Section 68. 

Before the appellate authorities, the assessee contended that it had already produced extensive documentary evidence relating to the investor companies, including PAN details, income tax returns, audited balance sheets, confirmations, addresses, and bank statements. It was argued that once such evidence was placed on record, the initial burden under Section 68 stood discharged. 

The CIT(A) accepted the assessee’s contention and held that non-appearance of directors by itself could not invalidate otherwise documented transactions. The appellate authority recorded a factual finding that the assessee had successfully established the identity and creditworthiness of the investors as well as the genuineness of the transactions. Since the Assessing Officer did not point out any defect in the documentary evidence or conduct further investigation, the addition was deleted. 

Affirming the CIT(A)’s order, the ITAT observed that the Assessing Officer had failed to conduct any meaningful inquiry despite availability of complete records. The Tribunal noted that the assessee had furnished all primary evidences relating to the shareholders, including PANs, ITRs, audited financial statements, confirmations, and bank statements. 

The Tribunal relied heavily on several recent Calcutta High Court judgments dealing with share capital and share premium additions under Section 68. The Bench referred to the decision in PCIT vs. Bright Commodeal Pvt. Ltd., where the High Court held that once investors respond to notices and documentary evidence is furnished, additions cannot be made merely due to alleged non-appearance in response to summons. 

The Tribunal also relied on the Calcutta High Court’s ruling in PCIT vs. Shipra Enclave Pvt. Ltd., where the Court distinguished the Supreme Court judgment in PCIT vs. NRA Iron & Steel Pvt. Ltd. The High Court clarified that NRA Iron & Steel applies to “phantom” or non-existent entities and cannot be mechanically invoked where investors are traceable taxpayers who have responded to statutory notices and transactions are routed through banking channels. 

The High Court in Shipra Enclave had stated that “documented traceability” through PAN, ITR acknowledgments, audited financial statements, and bank statements carries greater evidentiary value than mere suspicion of the Assessing Officer. It also held that the “test of human probability” cannot override verified documentary evidence without any contrary material. 

The ITAT concluded that the assessee had discharged the burden cast upon it under Section 68 and that the Revenue had failed to rebut the evidence placed on record. 

The Tribunal therefore upheld the deletion of the ₹5.53 crore addition and dismissed the department’s appeal.

Case Details

Case Title: ITO Versus Blackpool Vinimay Private Limited 

Citation: JURISHOUR-1449-ITA-2026(KOL) 

Case No.: ITA No.1163/KOL/2025

Date: 22.05.2026

Counsel For Appellant: Miraj D. Shah, AR

Counsel For Respondent: Manoj Kumar Pati, DR

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