Calcutta HC Confirms: Section 68 Additions Cannot Survive Valid Additional Evidence — Revenue's Appeal Raises Only Factual Questions
Background and Overview
In Principal Commissioner of Income Tax-2, Kolkata v. Shelter Infra Projects Ltd., ITAT No. 84 of 2026, judgment dated 22.09.2026, the Calcutta High Court dismissed the Revenue's appeal challenging the deletion of additions totalling ₹25.40 crore made under Section 68 of the Income Tax Act, 1961. The Court declined to frame any substantial question of law, holding that all issues raised by the Revenue were purely factual in nature and that the Income Tax Appellate Tribunal ("ITAT") had arrived at well-reasoned, evidence-based conclusions that did not suffer from any perversity.
The case also dealt with an important procedural aspect — the permissibility of additional evidence before the ITAT under Rule 18(4) of the Income Tax (Appellate Tribunal) Rules, 1963 — and reaffirmed the principle that the ITAT is the ultimate fact-finding authority in the income tax appellate hierarchy.
Delay Condonation: 393-Day Delay Excused
Before proceeding to the merits, the Court addressed GA 1 of 2026 — the Revenue's application seeking condonation of a delay of 393 days in filing the appeal. After examining the averments in the petition and the affidavits filed by both sides, the Court found sufficient grounds and condoned the delay. The condonation application was accordingly allowed without costs.
Despite condoning the delay, the Court proceeded to examine whether the proposed questions of law were genuinely substantial. Having concluded they were not, the appeal was dismissed at the threshold stage, without even requiring the assessee to respond to the Revenue's submissions.
Litigation History: A Second Round After De Novo Assessment
This matter arose from a lengthy dispute spanning multiple rounds of adjudication in relation to Assessment Year 2012-13.
Original Assessment and Revision
The assessee filed its return for AY 2012-13 on 26th December, 2012, declaring nil income. The case was selected for scrutiny, and the original assessment was completed on 16th March, 2015 under Section 143(3) of the Income Tax Act, 1961, assessing total income at ₹33,00,66,403/-.
Subsequently, the Principal Commissioner exercised revisional powers under Section 263, revising the assessed income upward to ₹33,11,79,425/-.
First Round of Appeals
The assessee appealed before CIT(Appeals)-18, Kolkata. Vide order dated 16th September, 2016, the CIT(A) upheld most of the AO's findings while granting partial relief, recomputing the income at ₹23,87,07,930/-.
On further appeal, the ITAT remanded the matter to the Assessing Officer for a de novo assessment, directing a fresh examination of all issues.
Fresh Assessment (De Novo)
Following the remand, the AO conducted fresh proceedings and passed an order dated 13th December, 2019, determining the total income at ₹23,98,20,955/- by making the following additions:
- ₹6,27,00,000/- under
Section 68— relating to transactions with M/s Growfast Realtors Private Limited - ₹19,13,40,000/- under
Section 68— relating to transactions with M/s Sarda Vanijya Private Limited - ₹20,33,817/- — on account of alleged bogus trading liabilities
The AO took the position that despite multiple opportunities, the assessee had failed to produce adequate evidence. The CIT(A), vide order dated 26th December, 2023, confirmed all three additions and dismissed the assessee's appeal, recording that the assessee had not furnished the requisite details notwithstanding several chances extended during proceedings.
The ITAT's Intervention: Additional Evidence Changes the Outcome
The assessee then approached the ITAT "B" Bench, Kolkata, which partly allowed the appeal vide its order dated 10th September, 2024 in ITA No. 421/Kol/2024.