TaxTMI 
TaxTMI 
2026 (4) TMI 344
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.... the delay as the reasons were not sufficient. After hearing the rival contentions and perusing the materials available on record, we find that the delay is for bonafide and genuine reasons and hence, we condone the delay and adjudicate the appeal in the ensuing paras. 3. The Revenue has challenged the order of ld. CIT (A) deleting the addition in respect of sale of shares to the tune of Rs.4,68,45,000/- as made by the ld. AO u/s 68 of the Act of Rs.5,63,50,000/- in respect of sale of shares. In the Cross Objection, the assessee has challenged the direction of ld. CIT (A) to make addition to the tune of Rs.5% of the total sales consideration of Rs.19,01,00,000/- which comes to Rs.95,05,000/-, while the addition made by the ld. AO in respect of bogus sale of shares was deleted by the ld. CIT (A). 4. The facts in brief are that the assessee filed the return of income on 21.02.2020, declaring total income of Rs.36,21,400/-. A search action u/s 132 of the Income-tax Act, 1961 was conducted on 'Halder Group' and its key personnel on 13.01.2021, and subsequent dates. During the course of said search, it was found that the assessee has made sale of shares though the search was not c....
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.... 250 11,00,000.00 Gyaneshwar Agencies Pvt.Ltd. 5/8/18 20,000 250 50,00,000.00 Gyaneshwar Agencies Pvt.Ltd. 5/17/18 14,000 250 35,00,000.00 2 Dignity Exim Pvt.Ltd. Lifewood Advisory Pvt.Ltd. 4/4/18 16,000 100 16,00,000.00 Madhurashi Shoppers Pvt. Ltd. 4/4/18 28,000 100 28,00,000.00 ManikalaVyapaarPvt.Ltd. 4/4/18 25,000 100 25,00,000.00 Marubhumi Enclave Pvt.Ltd. 4/4/18 21,000 100 21,00,000.00 Rosco Vanijya Pvt. Ltd. 4/4/18 4,000 100 4,00,000.00 RitudhanDealmarkPvt.Ltd. 4/10/18 24,000 100 24,00,000.00 IcharajVinimay Pvt. Ltd. 4/11/18 26,000 100 26,00,000.00 Parampita Tie-Up Pvt.Ltd. 4/11/18 50,000 100 50,00,000.00 NeelgaganCommodealPvt.Ltd 4/14/18 45,000 100 45,00,000.00 Subham Sales Pvt.Ltd. 4/14/18 23,000 100 23,00,000.00 Neelgagan Suppliers Pvt. Ltd. 4/19/18 14,000 100 14,00,000.00 3 Gemini Infra Properties Pvt.Ltd Deserve Solutions Pvt.Ltd. 4/4/18 10,000 250 25,00,000.00 Everstrong Enclave Pvt.Ltd. 4/4/18 6,00....
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....Ltd. 10/12/18 12,500 400 50,00,000.00 AstaniranjanVincomPvt.Ltd. 10/12/18 15,250 400 61,00,000.00 10 Snowbird Computers Pvt.Ltd. Coolhut Enterprises Pvt.Ltd. 4/3/18 20,000 25 5,00,000.00 Deserve Solutions Pvt.Ltd. 4/4/18 80,000 25 20,00,000.00 11 Starlite Realtors Pvt.Ltd. NeelgaganCommodeal Pvt. Ltd. 4/16/18 400 500 2,00,000.00 12 Starwlse Agency Pvt.Ltd. NeelgaganCommodeal Pvt. Ltd. 4/16/18 2,000 500 10,00,000.00 13 Zenstar Business Solution Pvt.Ltd. MangalsudhaDealcomPvt.Ltd. 4/3/18 16,800 250 42,00,000.00 RitudhanDealmarkPvt.Ltd. 4/3/18 6,000 250 15,00,000.00 Deserve Solutions Pvt.Ltd. 4/4/18 2,000 250 5,00,000.00 NeelgaganCommodealPvt.Ltd. 4/16/18 7,200 250 18,00,000.00 19,01,00,000 It has already been mentioned that out of the total proceeds of Rs. 19,01,00,000/-, sale o....
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....M/s Everstrong Enclave Pvt Ltd, M/s SnowblueNirmanPvt Ltd to name a few, have not been doubted. It is the same case with the other 11 share purchasing companies, where the scrip has not been doubted by the Ld. AO, but the purchasing company has been doubted. Since the scrips have not been doubted, it is evident that the purchase of these scrips have not been doubted, all of which were purchased by the appellant during the earlier FY`s and not during the current FY: 2018-19. It is further perused from the assessment order that the Ld. AO while treating the sale of shares to the afore-mentioned share purchasing companies, has stated that the existence of these companies were dubious and that 3 companies out of these viz. M/s. AstaniranjanVincom(P) Ltd, M/s Coolhut Enterprises Pvt Ltd and M/s Softlink Securities Pvt Ltd were in strike-off status. The appellant during the course of appeal proceedings has filed copies of Form STK-7 in respect of these companies from which it is observed that the companies were struck off in the following dates from ROC: SI. No. Name of the company Date of Strike off 1. M/s. AstaniranjanVincom(P) Ltd 11.02.2022 2. M/s Coo....
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....dverse inferences can be drawn out of such transactions. The decision of Hon'ble Gujarat High Court in the case of PCIT vs RamniwasRamjivanKasat [2017] 82 taxmann.com 458 (Gujarat) is very pertinent here wherein it was held that once purchase of shares have been accepted as genuine in earlier assessment years, sales out of such shares could not be subjected to addition under section 68 of the Act in subsequent years, treating the transaction to be bogus. Relevant extract of the judgement is provided hereunder for easy reference: "Having heard learned counsel for the Revenue on this issue, we are in agreement with the Tribunal. As facts recorded by the Tribunal would suggest, the shares were purchased by the assessee during the period relevant to the Assessment Year 2005- 2006. The return for the said year was scrutinized by the Revenue. The Assessing Officer did not disturb the investment. It would therefore later on not be open to the Assessing Officer to make addition with the aid of Section 68 of the Act when such shares were sold on the premise that the purchasers themselves were bogus. No question of law therefore arise on this issue." The Hon. ITAT, New Delh....
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....any evidences to dispute these documents submitted by the appellant.Once the appellant has discharged its onus to submit the requisite documents to prove the identity, creditworthiness of the share applicants, the onus shifts upon the Ld. AO to verify the same and bring on record details of the enquiry conducted by him as well as the results of such enquiry alongwith counter evidences if he does not agree with the evidences submitted by the appellant. The Ld. AO's contentions that three of the share purchasing companies are in strike off status and that the Departmental Inspector could not locate one company M/s AstaniranjanVincomPvt Ltd are insufficient in treating the entire sale of shares as bogus.It also has to be to be kept in mind that the in this case a search was conducted on the Halder Group and the appellant's case has been assessed under section153C, but the Ld. AO has not referred to any incriminating material discovered during search, pertaining to such sale of shares, which points to the fact that no such material which would place such sale of shares under doubt was unearthed during search. The Ld. AO has also not brought into record any fund flow or cash flow statem....
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....nd the same as unworthy of credence. The Hon'ble High Court further held that so long as it is not established that the return submitted by the creditor (subscriber shareholder) has been rejected by its Assessing Officer, the Assessing Officer of the assessee is bound to accept the same as genuine when the identity of the creditor and the genuineness of transaction through account payee cheque has been established. The Hon. Jurisdictional High Court in PCIT v. Sreeleathers [2022] 143 taxmann.com 435 (Calcutta)took a similar view: "Section 68, read with section 143, of the Income-tax Act, 1961 - Cash credit (Loans and advances) - Assessment year 2015-16 - During scrutiny proceedings, Assessing Officer noted that assessee-company had received certain unsecured loans from various companies out of which 13 were alleged paper companies having no worth and, thus, issued a show cause notice - Subsequently, assessee furnished various documents, however, same were rejected by Assessing Officer in a very casual manner and an assessment order was passed - It was noted that show-cause notice issued on assessee was only in respect of one lender company, namely, FGD - Asses....
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.... to Rs. 24,00,000/- from four shareholders being private limited companies. The Assessing Officer on his part called for the details from the assessee and also from the share applicants and analyzed the facts and ultimately observed certain abnormal features, which were mentioned in the assessment order. The Assessing Officer, therefore, concluded that nature and source of such money was questionable and evidence produced was unsatisfactory. Consequently, the Assessing Officer invoked the provisions under Section 68/69 of the Income Tax Act and made addition of Rs. 24,00,000. On appeal the Learned CIT (A) by following the decision of the Supreme Court in the case of CIT. vs. M/s. Lovely Exports Pvt. Ltd., reported in (2008) 216 CTR 195 allowed the appeal by holding -that share capital/premium of Rs. 24,00,000/- received from the investors was not liable to be treated under Section 68 as unexplained credits and it should not be taxed in the hands of the appellant company. As indicated earlier, the Tribunal below dismissed the appeal filed by the Revenue. After hearing the learned counsel for the appellant and after going through the decision of the Supreme Court in....
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....earned Counsel, both opening balance of investment in shares and the purchases made during the year have not been disputed or doubted by the authorities below so as to bring the entire sale consideration to tax. 14. At this stage, the ld. DR has submitted that the assessee has claimed that it has undertaken this sale transaction by selling the shares at the cost at which it had acquired them in AY 2006-07. At the same time, assessee submits that it has undertaken this transaction in the ordinary course of its business. The ld. DR has submitted that the conduct of business is always with a profit motive, more particularly when the assessee had held these shares for past several years and had also made purchases during the year, deploying its funds. There ought to be certain element of profit embedded in the sale transaction executed which must be brought to tax. 15. Considering 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 additi....
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.... Ground 3 agitating against the interest charged under section234A, 234B and 234C is consequential in nature and is disposed off with directions to the Ld. AO to re-compute these interests as per law at the time of giving effect to this order. Ground 4 is against initiation of penalty under section271AAC. This ground is premature and cannot be adjudicated at this juncture. This ground is, therefore, rejected. Ground 5 is general in nature and needs no adjudication. In the result, the appeal is partly allowed." 6. The Revenue is in appeal against the part deletion of addition by ld. CIT(A) as made by the ld. AO and the assessee has raised the Cross Objection against the order of ld. CIT (A) directing the ld. AO to make the addition at the rate of 5% of total sale consideration. 7. After hearing the rival contentions and perusing the materials available on record, we find that during the year the assessee has shown the sale of shares to various parties, thereby realizing Rs. 19,01,00,000. The details are given by the ld. CIT (A) on page no.18 to 22. We note that these shares were purchased by the assessee in the earlier financial years and have not ....
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....ideration at the rate of 5% thereby making addition of Rs.95,05,000/-, wherein the ld. CIT (A) has acted on the presumptions and surmises without there being any material or evidences on record to show that the assessee has, in fact, made any profit on the sale of these investments. We observe that there is no basis for the ld. CIT(A) to give the direction to make addition at 5% of the total sales consideration and consequently, the decision of the ld. CIT(A) cannot be sustained on this issue. The case of the assessee is squarely covered by the decision of Hon'ble Jurisdiction High Court in case of Principal Commissioner of Income-tax Vs. Tulsyan and Sons (P.) Ltd. [2025] 174 taxmann.com 37 (Calcutta)[16-04-2025]. We further find that the said decision of the Hon'ble Jurisdictional High Court has been followed in the case of ACIT v. Pawanputra Advertising (P.) Ltd. [IT (SS) Appeal Nos. 144 & 145 (Kol.) of 2024, dated 26-8-2025], wherein the addition of 5% sustained by the CIT (A) was deleted. The operative part of the same is as under:- "7. We have heard the rival contentions and perused the materials available on record including the written submissions dated 21.0....
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....ed 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 and speaking order after following the decision of Hon'ble Jurisdictional High Court in case of CIT VS. Dataware Private Ltd. (supra) as well as the decision of the co-ordinate benches on the same issue namely; M/s Swarna Kalash Commercial Pvt. Ltd. vs ACIT (supra) & M/s Ashtvinayak Sales Pvt. Ltd. vs ACIT (supra). We have perused the decisions in the above referred two decisions of the coordinate benches followed by the ld. CIT (A) and find that the issue is exactly similar as before us in the present case. The operative part of M/s Ashtvinayak Sales Pvt. Ltd. vs ACIT (supra) extracted below: - 9. We have heard the rival contentions and perused the materials as placed before us. The issue for adjudication before us is....
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.... 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 of 2019 and as also further held by the Hon'ble Delhi High Court in the case of CIT vs. Brandix Mauritius Holdings Ltd. [2023[ 149 taxmann.com 238 (Del), any communication without mentioning of the DIN in its body is to be treated as non-est. Therefore, the subsequent undated assessment order and without any DIN mentioned in the order, and passed after the limitation period prescribed for passing of the assessment order cannot be taken cognisance of. 7. So far as the original order (extracted above) passed by the Assessing Officer is concerned, we are in agreement with the contentions of the Ld. Counsel for the assessee that the same is a small and cryptic order and the additions have been made by the Assessing Officer in ....
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....s Closing Balance Amount Amount Amount Amount I Bellona Supply Pvt. Ld. 1,24,57,344 0 1,24,57,344 0 2 P N Jewelers 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 CimmcoVinimay Pvt. Ltd. 13,32,04,353 53,71,44,701 0 67,03,49,054 6 Festive Vincom Pvt Ltd 28,01,625 0 0 28,01,625 7 GreenHillDealmark Pvt Ltd 26,14,850 0 0 26,14,850 8 SwabhimanCommosales Pvt Ltd 26,15,900 0 0 26,15,900 9 Topline Business Pvt Ltd 41,00,205 0 0 41,00,205 10 VidyaBuildcon Pvt Ltd 0 2,50,00,000 2,50,00,000 0 11 BadrinathMinning Pvt Ltd 59,36,974 75,250 60,12,224 0 12 Sankul Retailers Private Ltd 0 74,49,572 74,49,572 0 13 Alok Financial Services Pvt Ltd 0 8,10,000 8,10,000 0 14 Asankul Cosmetics Pvt Ltd 0 6,55,26,090 6,55,26,090 0 15 Daffodil Plaza Pvt Ltd 0 88,198 88,198 0 16 NAT Communication & Marketing Pvt Ltd 0 1,26,37,632 ....
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.... Rs. 1,64,00,000 21 Bhagwati Trading 1614-1616 Rs. 57,90,000 22 Om Sai Enterprise 1617-1619 Rs. 24,90,000 23 Simplex Xallolloy 1620-1622 Rs. 78,05,000 24 Others-Non- Corporate Rs. 4,17,35,000 Total Rs. 7,42,20,000 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 K K 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 Highe....
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.... assets or unexplained investments or expenses incurred and that there was no such income as undisclosed. The Hon'ble Delhi High Court, after considering the fact 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 contende....
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.... 12.3. The case of the assessee, before us, is on better footing as in this case, there is no delay in retraction of the statement which was done on the very 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 assessees 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 assessees 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 infor....
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....year, deploying its funds. There ought to be certain element of profit embedded in the sale transaction executed which must be brought to tax. 15. Considering 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. I....