Income Tax Appellate Tribunal - Kolkata
Silverline Merchandise Pvt. ... vs I.T.O., Ward - 5(1), Kolkata on 28 April, 2026
IN THE INCOME TAX APPELLATE TRIBUNAL " D" BENCH, KOLKATA
BEFORE SHRI RAJESH KUMAR, AM
AND
SHRIPRADIP KUMAR CHOUBEY, JM
ITA No.3269/KOL/2025
( Assessment Year: 2010-11)
Silverline Merchandise Pvt.
Ltd.
ITO Ward 5(1)
C/o. S.N. Ghosh & Associates,
Aaykar Bhawan,
Advocates-2, Garstin Palace,
2 n d Floor, Suite No.203, off Vs. P-7, Chowringhee Square,
Kolkata -700069, West Bengal
Hare Street, Kolkata -700001,
West Bengal
(Appellant) (Respondent)
PAN No. AANCS2417H
Assessee by : Shri Somnath Ghosh, AR
Revenue by : Shri Sanat Kumar Raha, DR
Date of hearing: 23.04.2026
Date of pronouncement: 28.04.2026
ORDER
Per Rajesh Kumar, AM:
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 16.10.2025 for the AY 2010-11.
2. The only issue raised by the assessee in the various grounds of appeal is against the confirmation of addition of ₹12,05,80,000/- by the ld. CIT (A) as made by the ld. AO in respect of share capital/ share premium by treating the same as unexplained cash credit u/s 68 of the Act.
Page | 2 ITA No. 3269/KOL/2025 Silverline Merchandise Pvt. ltd; A.Y. 2010-11
3. The facts in brief are that the assessee filed the return of income on 01.04.2011, declaring total income at ₹248/- which was processed u/s 143(1) of the Act. Thereafter, the case of the assessee was reopened u/s 147 of the Act by issuing notice u/s 148 of the Act and accordingly, the assessment u/s 147/ 143(3) of the Act was framed on 30.11.2011, assessing the total income at ₹23,990/-. Thereafter, the assessment was revised by the ld. PCIT, by invoking the revisional jurisdiction u/s 263 of the Act on the ground that the ld. AO has not made requisite and proper enquiries regarding the share capital/ share premium and hence, this is the consequential assessment order passed by the ld. AO u/s 143(3) / 263 /147/143(3) of the Act vide order dated 20.03.2015. In the consequential proceedings , the ld. AO issued notice u/s 142(1) of the Act on 29.05.2014, asking the assessee to produce the details / documents in respect of directors of the assessee company, bank accounts, along with the details of branches, complete shareholding pattern along with the details of share application money received, copies of bank accounts etc. Again , notice u/s 142(1) of the Act was issued by the assessee on 08.12.2014. The summon u/s 131 of the Act were also issued to the Director of the assessee company as well as directors of the subscribing companies to appear personally. The ld. AO noted that in some cases the notices were not served, whereas in some cases notices were duly served. The ld. AO noted that the assessee has issued 2,50,750/- equity shares at a face value of ₹10 each at a premium of ₹470/-. The assessee furnished before the ld. AO the details as called for by the ld. AO comprising the names, Page | 3 ITA No. 3269/KOL/2025 Silverline Merchandise Pvt. ltd; A.Y. 2010-11 addresses, audited accounts, bank statements, etc. qua the subscribers. The notice u/s 133(6) of the Act were issued and replied by the subscribers by furnishing all the details and evidences as called for by the ld. AO. The summons were issued to the share subscribers, however, the same were served on 9 subscribers and on 3 subscribers, the summons were not served as the subscribers had changed the addresses. However, all the subscribers including the 3 subscribers filed their replies along with evidences called for by the AO in compliance. The fact has been taken cognizance and noted by the ld. AO in the assessment order. Thereafter, the ld. AO treated the share capital/ share premium as unexplained cash credit on the ground of non-compliance to the summons issued u/s 131 of the Act and therefore, the share capital/ share premium could not be verified. Consequently the addition was made to the income of the assessee u/s 68 as unexplained cash credit.
4. In the appellate proceedings, the ld. CIT (A) dismissed the appeal after taking the account the submissions and the evidences furnished by the assessee by observing and holding as under:-
"6.1 Grounds of Appeal: In these grounds the appellant has challenged the addition worth Rs.120480000/- u/s 68 of the Income Tax Act. In this case the addition was done by the AO on the ground that the appellant has received share capital along with the premium worth Rs. 120480000/- from various shell/bogus companies. The appellant failed to prove the genuineness of the transaction, the identity and the creditworthiness of the shareholders. hence AO made the addition after providing various opportunities to the appellant. The AO has discussed the modus operandi of the shell companies and the various case laws in the assessment order from pages 2 to 13 and made the addition worth Rs. 120480000/- u/s 68 of the Income Tax Act. This case was done by the AO in pursuance to the directions of the PCIT as per revision order u/s 263 of the Income Tax Act. The order of the PCIT u/s 263 of Page | 4 ITA No. 3269/KOL/2025 Silverline Merchandise Pvt. ltd; A.Y. 2010-11 thelncome Tax Act is also there in which the PCIT has discussed the modus operandi of the shell company and hence set aside the order of the AO. Hence the AO made the addition.
6.1.1 Now before me in the appellate proceedings, the appellant has filed written submission. The appellant has stated in the grounds of appeal and the statement of facts that the share application money received is genuine and is routed through bank. The appellant has stated that the share application money received is genuine and is routed through bank. The appellant has also filed the balance sheet, the P&L account and the bank statements in this regard Reliance is placed here on the judgement of Delhi HC in the case of PCIT vs NR Portfolio, in which Hon. Delhi HC has confirmed the addition of the department in the case of shall company on identical issues. This decision has been confirmed by Hon. SC. Reliance is also placed upon the decision of Hon. SC in the case of PCIT vs NRA Iron and Steel, where Hon. SC held that mere transaction through cheque and PAN and Income Tax Return will notexplain the genuineness of the transaction of the shell company. Hence relying upon these decisions, the addition of the AO is confirmed and appeal of the appellant is dismissed.
6.1.2 Another addition made by the AO is Rs. 7297/- u/s 14A of the Income Tax Act. The appellant has relied upon the judgement of Hon Kolkata Tribunal that no disallowance can be made u/s 14A if there is no exempt income in the relevant year. Hence the addition on this ground made by the AO is deleted.
7. The appeal of the appellant is Partly Allowed."
5. After hearing the rival contentions and perusing the materials available on record, we find that in this case originally the assessment was framed u/s 143(3)/ 147 of the Act, which was revised by the ld. PCIT u/s 263 of the Act and this is the consequential order passed by the ld. AO in the set aside assessment proceedings. The ld. PCIT revised the order on the ground that the ld. AO has not conducted proper and requisite enquiries into the share capital/ share premium raised by the assessee during the year from 12 subscribers during the assessment proceedings. We note that the ld. AO issued notice to the assessee along with questionnaires requiring the assessee to furnish the details and evidences qua the share capital / share premium raised during the year.
Page | 5 ITA No. 3269/KOL/2025 Silverline Merchandise Pvt. ltd; A.Y. 2010-11 Accordingly, the assessee furnished all the details comprising the names, addresses, audited accounts, bank statements, and confirmation, etc. in respect of subscribers. The ld. AO in order to independently verify the transactions also issued notices u/s 133(6) of the Act to the subscribers which were duly complied with by all the subscribers by submitting the details and information as required by the ld. Assessing Officer. We also note that summons were issued u/s 131 of the Act to the director of the assessee company as well as to the subscribers. The director of the assessee company duly complied the summons by furnishing all the details however there was no personal attendance before the ld. AO. Similarly, out of 12 subscribers, the summons issued u/s 131 of the Act were served on 9 subscribers, who furnished their replies to the summons by filing all the evidences as required by the ld. Assessing Officer. The remaining 3 subscribers also filed their replies with documents when the fact of non-service of summons u/s 131 of the Act was brought to their notice. We note that the ld. AO has made addition only on the ground that the summon issued u/s 131 of the Act were not complied with by the subscribers as well as the director of the assessee by making personal appearance. In our opinion, the addition cannot be made on the ground of non-compliance to summons when all the evidences were furnished by the ld. AO as well as subscribers before the ld. Assessing Officer. The case of the assessee is squarely covered by the decision of Hon'ble Jurisdictional High Court in case of Principal Commissioner of Income-tax vs. Ambe Tex Fab (India) (P.) Page | 6 ITA No. 3269/KOL/2025 Silverline Merchandise Pvt. ltd; A.Y. 2010-11 Ltd. [2025] 173 taxmann.com 392 (Calcutta)[07-03-2025], wherein it has held as under:-
" 5. The issue which falls for consideration is whether the learned Tribunal was justified in setting aside the order passed by the Commissioner of Income Tax (Appeals) -15, Kolkata [CIT(A)], dated 10th October, 2019, by which the CIT(A) affirmed the order passed by the Assessing Officer dated 30th March, 2015 under Section 143(3) of the Act. The learned Tribunal has elaborately considered the factual position and faulted the manner in which the assessment was completed by observing that it was a cryptic order without discussing the facts of the matter nor the submissions made by the assessee nor the documents produced by the assessee to prove the three factors, namely, identity, genuineness of the transactions and creditworthiness of the subscribers. Learned Tribunal also found that though such documents were once again produced before the CIT(A), but the same were not referred to nor any defect or discrepancy was pointed out under the said documents. Apart from that, the learned Tribunal has also pointed out that there are factual mistakes by the CIT(A) while passing the order which are contrary to the conclusion arrived at by the Assessing Officer. Learned Tribunal took note of the decision of the Hon'ble Supreme Court in Pr. CIT (Central)-1 v. NRA Iron & Steel (P.) Ltd. [2019] 103 taxmann.com 48/262 Taxman 74/412 ITR 161 (SC) and noted that the principles which were summed up in the said decision when a case is considered under Section 68 of the Act. After noting the said decision, the learned Tribunal examined the factual position and found that the initial burden casted upon the assessee has been discharged inasmuch as the assessee had produced the documents to prove the identity of the subscribers, the genuineness of the transaction and creditworthiness of the subscribers. If such was the factual position then in terms of the order passed by the Hon'ble Supreme Court, the burden shifts on the department to prove the contrary. For doing so, it is necessary that the Assessing Officer should embark upon a fact finding exercise which, unfortunately, the Assessing Officer did not do in the instant case. The revenue cannot deny the fact that the order of assessment, as observed by the learned Tribual, is a cryptic order.
6. Thus, we find no question of law, much less substantial questions of law, arising for consideration in this appeal.
7. Accordingly, the appeal fails and is dismissed."
6. Similarly, in case of Principal Commissioner of Income-tax vs. Jealous Commercial (P.) Ltd. [2025] 180 taxmann.com 199 (Calcutta)/[2026] 308 Taxman 80 (Calcutta)[28-10-2025], wherein it has held as under:-
Page | 7 ITA No. 3269/KOL/2025 Silverline Merchandise Pvt. ltd; A.Y. 2010-11 "15. In the facts and circumstances of the present case, the assessee issued allotted shares at a premium. Therefore, at the highest, the second proviso to Section 68 will come into operation, assuming though not admitting that the first part of Section 68 of the Act of 1961 stands satisfied. In the facts and circumstances of the present case, the consistent finding of the appellate authority and the income tax appellate tribunal is that, the persons who applied for the shares stand identified and that, the assessee offered sufficient explanation about the nature of the transactions in question.
16. In course of hearing before us, the appellant is not in a position to produce any additional or new materials to substantiate that, the concurrent finding of fact by the two authorities, namely, the appellate authority and the income tax tribunal with regard to the explanation offered by the assessee is perverse.
17. In Naina Distributors (P) Ltd (supra) the co-ordinate Bench, found in the facts and circumstances of that case that, the transaction in share allotment in respect of the assessee concerned, was verified independently and that, independent verification did not render any finding so as to invoke Section 68 of the Act of 1961.
18. In the facts and circumstances of the present case, the shareholders who applied for the shares in the assessee stands identified. The source of funds stands satisfied. The assessee reflected the entire issue and allotment of shares at a premium in its books of accounts and submitted the same contemporaneously to the statutory authority, namely, Ministry of Corporate Affairs.
19. Before the Assessing Officer, the assessee produced all such relevant materials with regard to the transaction in question. The absence/non-
appearance of theDirectors of the assessee before the Assessing Officer would not prompt the Assessing Officer, to render a finding that no explanation within the meaning of Section 68 of the Act of 1961 was offered by the assessee particularly in the factual matrix of the present case.
20. In such circumstances, we do not find any substantial question of law involved for the purpose of consideration by this Court as contended on behalf of the appellant."
7. Similar ratio has been laid down , in case of Principal Commissioner of Income-tax vs. Express Tradelink (P.) Ltd. [2026] 183 taxmann.com 398 (Calcutta)/[2026] 309 Taxman 369 (Calcutta)[04-02-2026]. The operative part reproduced below:-
Page | 8 ITA No. 3269/KOL/2025 Silverline Merchandise Pvt. ltd; A.Y. 2010-11 "5. We have carefully perused the records and the findings of the learned Tribunal. It is observed that the respondent-assessee had placed a voluminous "Paper Book" before the authorities, which included PAN details, share application forms, allotment advices, bank statements, ITR acknowledgments, and audited financial statements of all nine corporate subscribers.
6. The law on Section 68 is no longer res integra. Once the assessee offers a reasonable explanation supported by "Cast Iron" documentary evidence of identity and banking flow, the initial statutory onus stands discharged. The burden then shifts squarely to the Revenue. The AO cannot merely brush aside audited balance sheets and PAN details as "paper compliance" without bringing on record contrary evidence to impeach the veracity of such documents.
7. A significant portion of the Revenue's argument rests on the nonappearance of the subscribers' directors. We reiterate our settled view that personal appearance is not a statutory substitute for documented financial traceability. The AO is vested with co-terminus powers under Section
131. If the AO fails to utilize these powers to compel attendance or to seek verification from the creditors' respective Assessing Officers, the Revenue cannot visit the consequences of such investigative failure upon the assessee.
Suspicion, however strong, cannot replace evidence.
8. Regarding the Revenue's reliance on the decision of the Hon'ble Supreme Court in PCIT v. NRA Iron & Steel (P) Ltd. [2019] 103 taxmann.com 48/412 ITR 161/262 Taxman 74 (SC), we find the same to be fundamentally misplaced. That case dealt with "phantom" entities where notices were returned unserved. In the present case, the investors are traceable taxpayers who confirmed the transactions through Section 133(6) responses. To equate "traceable investors" with "phantom entities" is a leap in logic that this Court cannot countenance.
9. Furthermore, for the Assessment Year 2009-10, the "Source of Source"
doctrine remains inapplicable as the proviso to Section 68, introduced by the Finance Act, 2012, is prospective. The Tribunal noted that the subscribers possessed substantial Net Worth (Reserves and Surplus) far exceeding the investment amounts, thereby satisfying the creditworthiness test.
10. In a corporate assessment, documented traceability through legitimate banking channels carries greater evidentiary weight than the subjective suspicion of an officer. Terms like "money laundering" or "round-tripping"
should not be used casually without specific, corroborative evidence showing a "live link" that the funds originated from the assessee's own coffers. No such evidence has been brought on record by the Revenue.
11. In the result, we find no perversity in the findings of the learned Tribunal. The findings are based on a sound appreciation of facts and settled legal principles. Consequently, no substantial question of law arises for consideration."
Page | 9 ITA No. 3269/KOL/2025 Silverline Merchandise Pvt. ltd; A.Y. 2010-11
8. Considering the facts and circumstances of the case and also the ratio laid in the above decisions, we are inclined to set aside the order of learned CIT (A) and direct the AO to delete the addition.
9. In the result, the appeal of the assessee is allowed.
Order pronounced on 28.04.2026.
Sd/- Sd/-
(PRADIP KUMAR CHOUBEY) (RAJESH KUMAR)
(JUDICIAL MEMBER) ( ACCOUNTANT MEMBER )
Kolkata, Dated: 28.04.2026
Sudip Sarkar, Sr.PS
Copy of the Order forwarded to:
1. The Appellant
2. The Respondent
3. CIT
4. DR, ITAT,
5. Guard file.
BY ORDER,
True Copy//
Asst. Registrar
Income Tax Appellate Tribunal,
Kolkata