TaxTMI 
TaxTMI 
2026 (7) TMI 1084
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.... Act dated 09.02.2024 is liable to be quashed. 3. Facts in brief are that the return of income was filed u/s 139(1) of the Act declaring loss of Rs. 40,17,576/-. Thereafter the case of the assessee was selected for scrutiny and assessment was accordingly framed u/s 143(3) vide order dated 31.12.2017 accepting the returned loss. Pursuant to the amalgamation order passed by NCLT, Kolkata Bench dated 12.08.2021 three entities namely M/s Intercity Vincom Pvt. Ltd., M/s Wonderful Mercantile Pvt. Ltd. and M/s Pawanputra Merchants Pvt. Ltd. had been amalgamated with the assessee company with effect from 01.04.2019. Thereafter a search action was conducted u/s 132 of the Act on 2.3.2023. A notice u/s 148 of the Act was issued on 9.10.2023 in pursuance of search conducted on 02.03.2023 after following the necessary procedure laid down under the Act as to giving a show cause notice and passing order u/s 148A(d) of the Act. The assessee filed return of income u/s 148 of the Act on 13.10.2023 declaring the same loss. 4. The Ld. A.R vehemently submitted before us that notice u/s 148 of the Act on 09.10.2023 is hopelessly barred by limitation as per first proviso to Section 149(1) of the A....
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....rusal of the first proviso to Section 149(1)(b) and also the provision of Section 149(1)(b) as were applicable prior to the commencement of Finance Act, 2021, we observe that notice was issued u/s 148 within a period of six years from the end of relevant assessment year. However, the same was issued beyond six years and therefore is barred by limitation. Consequently the assessment framed by the AO is also invalid and nullity and is accordingly quashed. 7. Issue raised in ground no. 2 is against the order of Ld. CIT(A) sustaining the addition equal to 5% of the total sale consideration of investment merely on surmised and conjectures which is wrong and may by deleted. 8. Facts in brief are that a search action u/s 132(1) was conducted on 02.03.2023 as the assessee was a part of DECO Group of cases. The AO on perusal of the seized documents noted that the three entities namely M/s Intercity Vincom Pvt. Ltd., M/s Wonderful Mercantile Pvt. Ltd. and M/s Pawanputra Merchants Pvt. Ltd. had been amalgamated with the assessee company with effect from 01.04.2019 pursuant to the order of National Company Law Tribunal Bench dated 12.08.2021. The AO observed from the records/evidences su....
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....n the ground that the sale consideration has been received from shell companies/ bogus companies. We note that the Ld. CIT(A) has dealt with the reasons given by the AO for making addition i) non-service of notice u/s 133(6) to the purchasing entities ii) fund/cash trail prepared by the Investigation Wing last and iii) most of the purchasing companies were struck off in MCA portal. The Ld. CIT(A) rebutted all the objections by the AO that all the purchasing entities had duly responded to the notices and the same were found in assessment records. The Ld. CIT(A) also noted that the AO had not provided any alleged bank account of the purchase parties to the assessee for confrontation, whose names were used in fund/ cash deposit account. The Ld. CIT(A) also noted that AO has not provided any alleged bank account holder's statement saying that cash has been provided by the assessee or assessee's group. Lastly, the Ld. CIT(A) noted that during search and seizure operation against the assessee group not a single piece of document or paper of any type was found which could indicate that the funds were provided by the assessee to the alleged bank account holder for depositing cash. We note ....
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....ales consideration of Rs.11,56,20,000/-. We note that the assessee raised money by issue of equity shares in A.Y. 2008-09 of Rs. 64,85,49,000/-. We also note that entire funds raised were invested in unlisted equity shares in AY 2011-12. We note that the case of the assessee was selected for scrutiny only for this reason and the money raised by the assessee was accepted by the department and no adverse interference was drawn. We note that in A.Y. 2010-11 also, the case of the assessee was selected for scrutiny and all the money share capital /share premium was accepted. Thereafter the investments were made in private equity shares which were unlisted in A.Y. 2011-12. Similarly 2017-18 the case of the assessee was selected for scrutiny and investments were not doubted at all. Thus it is clear that over all these years the investments were not doubted by the department. These investments made in the A.Y. 20111-12 were partly sold at cost by the assessee during the instant assessment year which realized Rs.11,56,20,000/- which were accepted by the Revenue right from A.Y. 2011-12 till the instant assessment year. We have also noted that the assessee has filed before the ld. AO as well ....
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....d sales of investments over the years as corroborated by the materials placed before us. Even the sales proceeds received during the current financial year were in respect of sale of shares /investments partly out of opening balance and partly out of current purchases as is apparent from the following chart placed before us:- Opening Investment Purchases made during the year Investments sold during the year Closing Balance of Investments 24,81,12,740 106,69,21,561 99,72,36,896 31,77,97,405 9.1. The assessee has also filed movement of investments over the years which showed that the phenomenon of purchase and sale of shares/investments was regular feature of the assessee's business. This is also undisputed that the assessee company had raised share capital (including premium) amounting to Rs. 119,84,67,000/- in financial year 2010-11, relevant to AY 2011-12 and the capital so raised in AY 2011-12 was invested in shares/securities and accounted for in the books of accounts which were audited and audited accounts are placed at page no. 102 to 111 of PB Vol.-1. We also note that the assessment for AY 2011-12 was framed u/s 143(3) of the Act vide order d....
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....order are not sustainable as per law. ........ 11. We have considered the rival contentions and gone through the record. We find force in the submissions made by the learned Counsel of the assessee which have been discussed above in detail. We note that it is an admitted fact on record that assessee raised share capital at a premium in FY 2005-06 which was accepted by the AO in scrutiny assessment under section 143(3). The capital so raised was invested in shares of Pvt. Ltd. of various companies. These shares were sold during the year under consideration to different parties, corporate/noncorporate. The sale proceeds have come in assessee's bank account through banking channel. 11.1. In its normal course of business, the assessee had made purchases and sale of investments as under which is tabulated as under: Opening Investment Purchases made during the year Investments sold during the year Closing Balance of Investments 20,40,10,245 66,47,63,507 17,05,60,000 69,82,13,635 11.2. The shares were held by the assessee as investments and were sold at the cost of acquisition by the assessee. Hence, there is no profit/loss on such sale o....
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....that entire sales is made from purchases & opening stock as under: Breakup of Sale of Shares Amount(Rs.) Breakup of Sale of Shares Amount(Rs.) Sold out of Opening Investment 5,86,73,194 Sold out of Opening Investment 5,86,73,194 Sold out of Investment Purchased During the Year 11,18,86,806 Sold out of Investment Purchased During the Year 11,18,86,806 Total 17,05,60,000 Total 17,05,60,000 11.5. It is also important to note that the AO has made enquiries from the buyers of the shares sold by the assessee by issuing summons u/s 131 of the Act who have responded and furnished the required details. Summary Statement of the replies made in response to notice u/s 131 by various buyers (Sale of Shares) is tabulated below: SL No. CORPORATE ASSESSE Page No. FY 2018-19 1 Bhootnath Commodities Pvt Ltd 1-262 Rs. 1,71,59,300 2 Bluestar Mercantile Pvt Ltd 263-265 Rs. 5,00,000 3 Charvi Dealmark Pvt Ltd 267-356 Rs. 10,00,000 4 Daania Trading Pvt Ltd 357-359 Rs. 30,00,000 5 Elvof Trading Pvt Ltd 361-369 Rs. 1,00,000 6 Express Image Pvt Ltd 370-542 Rs. 1,11,00,000 7 Laxhmidhan Bu....
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....s. Golden Goenka Fincorp Ltd. [2023]148 taxmann.com 313(Calcutta) has held that where assessing officer solely based on statement of assessee's director recorded during search operation treated share application money received by assessee company as undisclosed income and made additions u/s 68 of the Act, since said statement was retracted and there was no cash trail or any other corroborative evidence or investigation brought on record by AO, impugned additions were liable to be deleted. Even the Hon'ble A.P. High Court in the case of "Naresh Kumar Agarwal" (2015) 53 taxmann.com 306 (Andhra Pradesh) has observed that where, in the absence of any incriminating material etc. found from the premises of the assessee during the course of search, statement of assessee recorded under section 132(4) would not have any evidentiary value. Similar view has been adopted by the Jaipur bench of the Tribunal in the case of "Shree Chand Soni vs. DCIT" (2006) 101 TTJ 1028 (Jodhpur). The Hon'ble Delhi High Court in the case of "CIT vs. Harjeev Agarwal" in ITA No.8/2004 vide order dated 10.03.16 has observed that a statement made under section 132(4) of the Act on a stand-alone basis, without refere....
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....as voluntary and was not under a mistaken belief of fact or law and that the assistance had enough time to go through the facts of their case, law applicable in their case and take advice from their counsels and advisors before filing the letter of surrender of undisclosed/unaccounted income and that the admission by them was final and binding on them; The co-ordinate Jaipur Bench of the Tribunal, after overall appreciation of the fact and evidences before it, observed that the assessee's surrender was not based on any incriminating material and that the discloser being not voluntary and extracted by the department in creating a coercive situation cannot be relied solely to be basis of addition as undisclosed income. The co-ordinate bench of the Tribunal while relying upon various case laws of the higher authorities observed that it is well settled legal position that merely on the basis of a statement which is not supported by the department with cogent corroborative material cannot be a valid basis for sustaining such ad-hoc addition. The co-ordinate Jaipur Bench of the Tribunal (supra) further observed that the issue of existence of pressure, threat, coercion during search proce....
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....y operations no attempt should be made to obtain confession as to the undisclosed income. Any action on the contrary shall be viewed adversely. Further, in respect of pending assessment proceedings also, assessing officers should rely upon the evidences/materials gathered during the course of search/survey operations or thereafter while framing the relevant assessment orders. Yours faithfully, 12.5. A perusal of the above circular also shows that it is in the notice of the statutory controlling body of the Income Tax Authorities that the revenue officials are used to take confessional statements from the person searched under force, pressure or threat and that is why they have made it mandatory that additions solely on the basis on such statements should not be made and that corroborative evidences should be collected or obtained before making such additions. The circular of the CBDT is binding on the revenue officials. In the facts and circumstances of this case, when seen in the light of above case laws and CBDT circular, additions in this case cannot be said to be justifiably made. 13. All the above details when kept in juxtaposition, there re....
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....16th April, 2025, in the case of PCIT Vs. Tulsyan and Sons Private Limited(supra) affirmed the order of the tribunal. In the said case the addition made by the ld. AO on account of sale of investment was deleted by the ld. CIT (A) and the Tribunal confirmed the order of the ld. Assessing Officer. The Hon'ble High Court while deciding the issue held as under: - We have heard Mr. Aryak Dutta, learned standing counsel assisted by Mr. Soumen Bhattacharjee, learned standing counsel for the appellant and Mr. J. P. Khaitan, learned senior advocate assisted by Mr. PratyushJhunjhunwalla, learned advocate for the respondent. The short issue which falls for consideration is whether the learned tribunal was right in affirming the order passed by the Commissioner of Income Tax (Appeals)- 21, Kolkata [CIT(A)] dated 10.5.2023 by which the assessee's appeal was allowed and the addition made under section 68 of the Act was deleted. The Assessing Officer made the addition by invoking section 68 of the Act on the ground that the assessee failed to discharge its onus to establish identity, creditworthiness and genuineness of the transaction in respect of the money received throug....