Factual Examination Of Dispute Regarding 'Addition' Of Unexplained Cash Credit U/S 68 Of IT Act Is Beyond Scope Of Appeal U/S 260A: Calcutta HC

The Calcutta High Court has held that it cannot indulge in factual examination of the material produced or not produced by an assessee-company to explain the share capital and premium received by it, in an appeal filed under Section 260A of the Income Tax Act. Sivagnanam and Justice Hiranmay Bhattacharyya thus refused to interfere with an ITAT order which deleted additions made by the Assessing Officer towards “unexplained” share capital and share premium of Rs.15,51,00,000/- under Section 68. In the case at hand, the Income Tax Department was aggrieved by ITAT order deleting the addition made by the IO, by allegedly ignoring that the assessee failed to explain its non-existence at its registered address, share capital, reserves and surplus, net worth and turnover so as to justify the share premium charged by it within a short duration of seven months after its incorporation. In this backdrop the High Court observed, “examination of the factual position as sought for cannot be done in an appeal filed under Section 260A of the Income Tax Act and it is the duty of the Assessing Officer to have done such an exercise.” Significantly, the ITAT had recorded that the AO failed to controvert the evidence furnished by the share subscriber companies during the assessment proceedings.