TaxTMI 
TaxTMI 
2025 (11) TMI 471
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....2, declaring total income at Rs.29,76,310/-. The company is a non-banking finance Company registered with RBI and is engaged in the business of investments and banking services. The case of the assessee was selected for scrutiny for the reason of 'information in verification case uploaded through CRIU'. As per the said information, the assessee has made transactions with entities who were not engaged in the business any activities. The notice u/s 143(2) and 142(1) of the Act along with questionnaires were issued. The ld. AO observed that the assessee company has sold unlisted equity shares private limited companies to the tune of Rs.31,28,75,000/-. The AO called for the information/details from the assessee of these i.e. the ITRs, balance sheets, profit and loss accounts etc. of 16 private unlisted companies whose shares were sold by the assessee and also the details of 28 entities, who had purchased these equity shares of 16 companies from the assessee. The assessee filed the written submissions/reply along with evidences before the ld. AO submitting that it had sold unlisted equity shares of private limited companies during the year which have realized Rs.31,28,75,000/-. The asse....
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....res of the 16 private limited companies held by M/s. Cogzenith Solutions Pvt. Ltd. got to be acquired by the assessee company by virtue of such amalgamation. The ld AR submitted that the order of the Hon'ble NCLT Bench is placed serial no. 4 at pages 55-71 of our Paper book. The AR also drew the attention of the bench to page 67 of paper book, wherein in the said NCLT Order at para 13-15, the Hon'ble NCLT stated had that it perused and examined representations/ observations made by the Regional Director, Official Liquidator, Reserve Bank of India and the Income Tax Department w.r.t. their respective "No Objections" for the merger of the Transferor Company (Cogzenith Solutions Pvt. Ltd.) with the Transferee Company (Alco Suppliers Pvt. Ltd.). Post such examination of the merits of the representations by the above-mentioned authorities, the NCLT approved the said amalgamation vide its Order dated 09.12.2020.4. 06. The ld AR submitted that the impugned investments in the unquoted equity shares were made by way of purchase by the erstwhile Transferee Company, Cogzenith Solutions Pvt. Ltd., in the year 2010-11. The ld. AR submitted that these investments were then recorded in....
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....t investing investigative efforts in examining the tenacity of the alleged unverified information and the facts of the assessee's own case on the identical issue of the sale of investments for A.Y. 2021-22, the Department unequivocally considered the assessee's case NOT FIT for reopening nor for issuance of the Notice u/s. 148 for the impugned preceding year. Therefore, it is humbly prayed that the Department ought not blow hot and cold in the same breath by exonerating the assessee on the identical facts towards the sale of the same investments in the preceding Assessment Year 2021-22 by dropping proceedings vide its order u/s. 148A(3) dated 26.06.2025 and incarcerating the assessee in the relevant Assessment Year 2022-23 on the identical set of facts, without application of mind. The said order u/s. 148A(3) of the Act for A.Y. 2021-22, in the assessee's own case, is available at page 72 to 77 of our Paper book. 08. The ld. AR submitted that the issue of Sale of Investments, held since prior years, is no longer Res Integra and finds binding force through pronouncements of the Jurisdictional High Court at Calcutta and Co-ordinate Benches of the Hon'ble ITAT, Kolk....
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.... the preceding assessment year i.e. 2021-22, the proceedings u/s 148A were initiated, however, an order u/s 148A(3) was passed on 26.06.2025 by holding that it is not a fit case for issuance of notice u/s 148 of the Act. The ld. DR submitted that the act of the act cannot be taken as a restrain from doubting the sale of investments in the current year when there are cogent evidences before the department to treat them bogus on the basis of evidences available on record. The ld. DR therefore prayed that the order of authorities below may be upheld. 010. We have heard the rival submissions and perused the materials available on record and find that the assessee company has sold its investments i.e. unlisted equity shares held in 16 unlisted private companies to other 24 entities/companies. The ld. AO during the course of assessment proceedings noted that the unlisted shares of private limited companies were nothing but bogus transactions and similarly, the purchasing companies were also bogus and shell entities. Coming to the background of the case, we note that M/s. Cogzenith Solutions Pvt. Ltd. was merged with the assessee company by the NCLT vide order dated 09.12.2020, who was....
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.... 26.06.2025 and thus, clearly held that it is not a fit case for issue of notice u/s 148 of the Act for A.Y. 2021-22. Therefore, department itself accepted the position with regard to sale of investments in A.Y. 2021-22 by holding that there is no escapement of income, then how the department can change its stand without there being any change in the facts and circumstances during the instant assessment year 2022-23 vis a vis assessment year 2021-22. 012. Undisputably the department accepted these investments right from A.Y. 2010-11, till date the merger in the hands of the M/s. Cogzenith Solutions Pvt. Ltd. and we even note that the assessments framed for A.Y. 2010-11 and A.Y. 2018-19 in the case of amalgamated company i.e. Cogzenith Solutions Pvt. ltd. as stated above and even in the proceeding's u/s 148A of the Act for A.Y. 2020-21 which were dropped as such. In other words, the sale of investments was treated to be genuine in A.Y. 2021-22 as the proceedings were dropped by the ld. AO as stated hereinabove. Thus, when the facts are materially same in the current assessment year, how the department could doubt the same investments to be non-genuine and unexplained. In our opin....
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....c. proving the identity, creditworthiness of the purchasers and genuineness of the transactions. We note that even the purchasing companies have filed their evidences as called for by the ld. AO comprising all the evidences as stated above. The ld. CIT (A) has recorded a finding of fact that apart from the assessee, purchasing companies had also filed all the evidences before the ld. AO however the ld. AO had not brought on record any independent and substantive evidences pointing out any defect or deficiency in the said evidences. The ld. CIT (A) finally noted that the assessee has proved the identity and creditworthiness of the parties and also the genuineness of the transactions by filing all these documents and thus, discharged its initial burden. Besides, we note that nothing incriminating was found and seized during the course of search. 8. We observe that the ld. CIT (A) also noted that the department has accepted all these investments in the earlier assessment years, even in the scrutiny assessments and had not drawn any adverse interference. Therefore, we do not find any infirmity/anomaly in the appellate order of the ld. CIT (A), who has passed a very reasoned an....
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....sue was involved in the case of M/S Swarna Kalash Commercial Pvt Ltd. Vs ACIT, Central Circle -2(2), Kolkata, a group concern of the Rashmi Group of Companies, which was also subjected to search u/s 132(1) of the Act in the same search proceedings. We note that the coordinate bench has decided the issue in favour of the assessee in ITA No. I.T.(S.S.)A.No.53/Kol/2022 A.Y.2019-20 vide order dated 01.09.2023 involving the same issue of addition of sale of shares/investments by the AO on the ground that identity and credentials of the purchasers of shares/investments were suspicious. The operative part of the order is extracted as under: "6.1. We have considered the rival contentions and gone through the record. First, we deal with the issue relating to the undated detailed order passed by the Assessing Officer even after the prescribed date of limitation for passing the assessment order for the assessment year under consideration which is other than the short cryptic order as reproduced above and which did not even bear any Document Identification Number, (in short "DIN")as mandated vide CBDT Circular No.19 of 2019. 6.1. As mentioned in the said CBDT circular no. 19 ....
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....sp; 63,42,00000 2015-16 2016-17 63,42,00,000 42,44,960 18,344,960 62,01,00,000 1,83,44,960 2016-17 2017-18 62,01,00,000 56,27,44,459 468,499,459 71,43,45,000 46,84,99,459 2017-18 2018-19 71.43.45,000 1,55,17,29,538 2,062,064,910 20,40,09,628 2,06,20,64,910 2018-19 2019-20 20,40,09,628 66, 47, 64, 007 170,560,000 69,82,13,635 17,05,60,000 Total 2,71,94,69,239 11.3. We also refer to the details of opening stock, purchases, sales and closing stock during the year, placed on record by the assessee: SI No Name of the Script Opening Balance Purchases Sales Closing Balance Amount Amount Amount Amount I Bellona Supply Pvt. Ld. 1,24,57,344 0 1,24,57,344 0 2 P N Jewellers Pvt ltd 38,45,323 0 38,45,323 0 3 Rozela Tie Up Pvt. Ltd. 3,64,33,053 0 3,64,33,053 0 4 Rashmi Cement Ltd. 0 1,57,32,000 0 1,57,32.000 5 Cimmco Vinimay Pvt. Ltd. 13,32,04,353 53,71,44,701 0 67,03,49,054 6 Festive Vincom Pvt Ltd ....
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....s. 81,00,000 11 Radhacharan Tradevin Pvt Ltd 1055-1158 Rs. 10,00,000 12 S P Udyog Pvt Ltd 1159-1161 Rs. 25,00,000 12. Further, according to the ld. Counsel, the only piece of evidence that is there in this case is the statement of Sri Sanjib Patwari who is one of the owners of the Rashmi group and Sri KK Verma is the accountant, recorded u/s 132(4) of the Act which have been relied upon by the Assessing Officer. These statements have been retracted the very next day by furnishing affidavits. Subsequent to retraction, no further cross-examination was conducted of these persons. The ld. Counsel has further submitted that even otherwise the addition made by the Assessing Officer was far more than the alleged disclosure made by these persons in their retracted statements and hence, no cognizance in fact can be taken for the purpose of the addition. 12.1. We find force in the above contentions of the ld. Counsel in the facts and circumstances of the case. As laid down by the various Higher Courts of the country, the retracted statement cannot be made sole basis for making the additions. The Jurisdictional Calcutta High Court in the case of Princ....
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....t and circumstances of the case, while dismissing the appeal of the revenue, observed that though the fact that the assessee may have retracted his statement belatedly, yet, it did not relieve the AO from examining the explanation offered by the assessee with reference to the books of account produced before him. Although, a statement under section 132(4) of the Act carries much greater weight than the statement made under section 133A of the Act, but a retracted statement even under section 132(4) of the Act would require some corroborative material for the AO to proceed to make additions on the basis of such statement. 12.2 In the case of "BasantBansal vs. ACIT" reported in (2015)63 taxmann.com 199 (Jaipur Trib.), the assessee therein, during the search and seizure action u/s 132 of the Act, offered a summary discloser of income as undisclosed and the department accepted the summary surrender of income and thereafter advance tax for the said surrendered of income was also deposited, but thereafter it was contended by the assessee that the surrender was made under threat or coercion and that no incriminating material was found during the search action. The stand of the de....
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....next day by filing affidavits before the Metropolitan Magistrate 12.4. Even the CBDT Letter No.286/2/2003-IT(Inv) dated Oct 3, 2003 in this respect read as under: "To The Chief Commissioners of Income Tax, (Cadre Contra) & All Directors General of Income Tax Inv. Sir, Subject: Confession of additional Income during the course of search & seizure and survey operation - regarding Instances have come to the notice of the Board where assessee have claimed that they have been forced to confess the undisclosed income during the course of the search & seizure and survey operations. Such confessions, if not based upon credible evidence, are later retracted by the concerned assessee while filing returns of income. In these circumstances, on confessions during the course of search & seizure and survey operations do not serve any useful purpose. It is, therefore, advised that there should be focus and concentration on collection of evidence of income which leads to information on what has not been disclosed or is not likely to be disclosed before the Income Tax Departments. Similarly, while recording statement during the course of....
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....onsidering the above submission of the ld. DR and taking a holistic view of the facts and circumstances of the case, we find it proper to consider net profit element @ 5% of the sale consideration i.e. 5% of Rs. 17,05,60,000/- which comes to Rs. 85,28,000/- be subjected to tax. We, accordingly delete the addition to the extent of Rs. 16,20,32,000/- made u/s 68 of the Act and sustain the balance of Rs. 85,28,000/- towards profit element on the impugned sale transaction of shares undertaken by the assessee. 16. In the result, appeal of the assessee is partly allowed. 9.4. It is clear from the above that the facts in the instant case before us are materially same vis a vis the facts in the case decided by the coordinate bench supra in group concern. We, therefore, respectfully following the same set aside the order of ld CIT(A) and direct the AO to apply profit of 5% on the sales proceeds of Rs. 99,72,36,896/- which comes to Rs. 4,98,61,845/- and delete the remaining addition of Rs. 94,73,75,051/-. 10. In the result the appeal of the assessee is partly allowed." 9. We have also perused decision by the Hon'ble High Court in ITAT/239/2024 in IA No....