Income Tax Appellate Tribunal - Kolkata
Deputy Commissioner Of Income Tax ... vs Auxinite Suppliers Private Limited, ... on 2 April, 2026
IN THE INCOME TAX APPELLATE TRIBUNAL " A" BENCH, KOLKATA
BEFORE SHRI RAJESH KUMAR, AM
AND
SHRI PRADIP KUMAR CHOUBEY, JM
ITA No.139/KOL/2025
( Assessment Year: 2019-20)
Dy. Commissioner of Income
Auxinite Suppliers Private
Tax (CC)-3(1)
t h Limited
4 Floor, Aaykar Bhawan
Poorva, 110 Shantipally, Kolkata - Vs. 44/2A Jain Tower, Hazra Road,
Kolkata-700019, West Bengal
700017, West Bengal
(Appellant) (Respondent)
PAN No. AAECB3974H
CO No. 11/KOL/2025
(Arising in ITA No. 139/KOL/2025 for A.Y. 2019 -20)
Dy. Commissioner of Income
Auxinite Suppliers Private
Tax (CC)-3(1)
Limited t h
4 Floor, Aaykar Bhawan
44/2A Jain Tower, Hazra Road, Vs. Poorva, 110 Shantipally, Kolkata -
Kolkata-700019, West Bengal
700017, West Bengal
(Appellant) (Respondent)
Assessee by : S/Shri Rajeeva Kumar &
Giridhar Dhelia, ARs
Revenue by : Shri V. Vidhyadhar, DR
Date of hearing: 11.02.2026
Date of pronouncement: 02.04.2026
ORDER
Per Rajesh Kumar, AM:
These are appeals preferred by the Revenue and CO by the assessee against the order of the Commissioner of Income-tax (Appeals), Kolkata-21 (hereinafter referred to as the "Ld. CIT(A)"] dated 28.10.2024 for the AY 2019-20.
Page | 2 ITA No. 139/KOL/2025 & CO No. 1/KOL/2025 Auxinite Suppliers Private Limited; A.Y. A.Y. 2019-20
2. At the outset, we note that the CO of the assessee is barred by limitation by 355 days. At the time of hearing the counsel of the assessee explained the reasons for delay in filing the cross objection by submitting that the delay was due to the serious kidney and heart illness of the Director of the assessee Shri Bijon Haider who was looking after the day today affairs of the assessee. The Ld. D.R did raise objections to the condoning of 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 ₹4,68,45,000/- as made by the ld. AO u/s 68 of the Act of ₹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 ₹5% of the total sales consideration of ₹19,01,00,000/- which comes to ₹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 ₹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 conducted on the assessee, but on its directors. Therefore, proceedings were initiated u/s 153C of the Act. The notice was issued to the assessee on 05.01.2022, u/s 153C of the Act, which complied with by the Page | 3 ITA No. 139/KOL/2025 & CO No. 1/KOL/2025 Auxinite Suppliers Private Limited; A.Y. A.Y. 2019-20 assessee by filing the return of income on 28.01.2022, declaring total income at ₹56,21,400/-. Thereafter notice u/s 143(2) and 142(1) of the Act, along with questionnaire were issued and duly served upon the assessee. The ld. AO upon perusal of the details/ information filed by the assessee observed that during the year, the assessee has received ₹19,01,00,000/- from sale of shares of unlisted companies. The ld. AO issued notice u/s 133(6) of the Act to those parties who purchased the shares from the assessee company. The ld. AO on the basis of such replies found that certain purchases were dubious from whom the consideration of ₹5,63,50,000/- was received (12 entities). Consequently, the ld. AO treated the sale consideration received from these entities to be bogus and non-genuine and treated the same as cash credit u/s 68 of the Act and addition was made to the income of the assessee in the assessment framed u/s 153C of the Act dated 27.12.2022.
5. In the appellate proceedings, the ld. CIT (A) deleted the addition made by the ld. AO after taking into consideration the reply and contentions of the assessee by observing and holding as under:-
"This ground agitates against the action of the Ld. AO in making addition of sale proceeds of shares amounting to Rs.5,63,50,000/-as unexplained cash credit under section68 of the Act. On perusal of the assessment order, it is observed that the Ld. AO has recorded that during the relevant F.Y., the appellant company received an amount of Rs.19,01,00,000/- from sale of shares. The Ld. AO has however made an addition of Rs.5,63,50,000/-out of the total sale proceeds of Rs.19,01,00,000/-.
The details of the proceeds received by the appellant company on sale of shares to the tune of Rs.19,01,00,000/- is being reproduced below:
AUXINITE SUPPLIERS PVT. LTD. : FY 2018-2019 SL NAME OF NAME OF PARTIES TO WHOM SCRIP WAS SOLD NO OF RATE TOTAL DATE NO SCRIP SHARE PER CONSIDERATIO . OF N S SHAR SALE SOLD E 1 Acumen LcharajVinimay Pvt. Ltd. 4/11/18 1,600 250 4,00,000.00 VyapaarPvt.Ltd Gyaneshwar Agencies Pvt.Ltd. 5/4/18 4,400 250 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 Lifewood Advisory Pvt.Ltd. 4/4/18 16,000 100 16,00,000.00 Page | 4 ITA No. 139/KOL/2025 & CO No. 1/KOL/2025 Auxinite Suppliers Private Limited; A.Y. A.Y. 2019-20 Pvt.Ltd. 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 Deserve Solutions Pvt.Ltd. 4/4/18 10,000 250 25,00,000.00 Properties Everstrong Enclave Pvt.Ltd. 4/4/18 6,000 250 15,00,000.00 Pvt.Ltd Coolhut Enterprises Pvt.Ltd. 5/5/18 4,800 250 12,00,000.00 Everstrong Enclave 5/5/18 18,000 250 45,00,000.00 Pvt.Ltd.
KalashdhanBlo-Fuel Pvt.ltd. 10/3/18 9,200 250 23,00,000.00 SnowblueNirmanPvt.Ltd. 10/6/18 6,800 250 17,00,000.00 10/12/1 AstaniranjanVincomPvt.Ltd. 32,600 250 81,50,000.00 8 10/12/1 Deobhumi Distributors Pvt.Ltd. 63,000 250 1,57,50,000.00 8 10/13/1 AvyayanPvt.Ltd. 5,600 250 14,00,000.00 8 4 Luxury Vyapar Pvt. Ltd. RoscoVanijya Pvt. Ltd. 4/4/18 8,400 250 21,00,000.00 Softlink Securities Pvt.Ltd. 4/4/18 10,800 250 27,00,000.00 RitudhanDealmark Pvt. Ltd. 4/14/18 21,200 250 53,00,000.00 RitudhanDealmark Pvt. Ltd. 5/5/18 20,000 250 50,00,000.00 MangalsudhaDealcomPvt.Ltd. 5/17/18 15,600 250 39,00,000.00 5 Muskan Business Pvt. Ltd. Softlink Securities Pvt.Ltd. 4/4/18 7,200 250 18,00,000.00 Softlink Securities Pvt.Ltd. 5/7/18 30,000 250 75,00,000.00 PremkunjCommotrade Pvt. Ltd. 10/1/18 56,800 250 1,42,00,000.00 PremkunjCommotrade Pvt. Ltd. 10/10/18 11,200 250 28,00,000.00 6 Overall Realtors Pvt.Ltd. PremkunjCommotrade Pvt. 10/10/18 72,000 250 1,80,00,000.00 7 PrathamVyapaarPvt.Ltd. AviskarComputechPvt.Ltd. vt 4/3/18 7,920 250 19,80,000.00 Sigma Enclave Pvt.Ltd. 4/3/18 5,668 250 14,17,000.00 Destiny Mansions Pvt.Ltd. 4/3/18 14,664 250 36,66,000.00 Viewmore Real Estate 4/3/18 9,816 250 24,54,000.00 Pvt.Ltd.
Coolhut Enterprises Pvt.Ltd. 4/3/18 1,600 250 4,00,000.00
Everstrong Enclave Pvt.Ltd. 4/5/18 7,932 250 19,83,000.00
Subhkari Design Pvt.Ltd. 4/19/18 18,000 250 45,00,000.00
Subhkari Design Pvt.Ltd. 5/8/18 40,000 250 1,00,00,000.00
10/10/18 2,000 250 5,00,000.00
Premkunjcommotrade Pvt.
Ltd.
8 RakshamataTextilesPvt.Ltd. AviskarCornputechPvt.Ltd. 4/3/18 20,300 10 2,03,000.00
Gyaneshwar Agencies 5/17/18 29,700 10 2,97,000.00
Pvt.Ltd.
9 Sanskar Business Pvt.Ltd. Analytical Dealer Pvt.Ltd. 10/12/18 12,500 400 50,00,000.00
AstaniranjanVincomPvt.Ltd. 10/12/18 15,250 400 61,00,000.00
10 Coolhut Enterprises Pvt.Ltd. 4/3/18 20,000 25 5,00,000.00
Snowbird Computers Pvt.Ltd.
Deserve Solutions Pvt.Ltd. 4/4/18 80,000 25 20,00,000.00
11 Starlite Realtors Pvt.Ltd. NeelgaganCommodeal Pvt. 4/16/18 400 500 2,00,000.00
Ltd.
12 NeelgaganCommodeal Pvt. 4/16/18 2,000 500 10,00,000.00
Starwlse Agency Pvt.Ltd.
Ltd.
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
Page | 5
ITA No. 139/KOL/2025 & CO No. 1/KOL/2025
Auxinite Suppliers Private Limited; A.Y. A.Y. 2019-20 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 of shares to the tune of Rs.5,63,50,000/- has been treated as bogus. The concerns to whom such sale was made are as follows:
Sl Name of parties Amount
i) M/s. Softlink Securities (P) Ltd Rs.1,20,00,000/-
ii) M/s. Avyayan (P) Ltd Rs.14,00,000/-
iii) M/s. Analytical Dealer (P) Ltd Rs.50,00,000/-
iv) M/s. Lifewood Advisory (P) Ltd Rs.16,00,000/-
v) M/s. ManikalaVyapaar (P) Ltd Rs.25,00,000/-
vi) M/s. AstaniranjanVincom(P) Ltd Rs.1,42,50,000/-
vii) M/s. Coolhut Enterprises (P) Ltd Rs.21,00,000/-
viii) M/s. RoscoVanijya (P) Ltd Rs.25,00,000/-
ix) M/s. Parampita Tie-up (P) Ltd Rs.50,00,000/-
x) M/s. NeelgaganCommodeal (P) Ltd Rs.63,00,000/-
xi) M/s. Neelgagan Suppliers (P) Ltd Rs.14,00,000/-
xii) M/s. Kalashdhan Bio Fuel (P) Ltd Rs.23,00,000/-
Total Rs.5,63,50,000/-
It is observed from the above table that the shares have been sold at par. It is also evident from the details of sale of shares made to the tune of Rs.19,01,00,000/- that the scrip or the share of the company held by the appellant as investment has not been doubted. For example, the appellant company has received an amount of Rs.81,50,000/- from M/s. AstaniranjanVincom(P) Ltd in respect of sale of shares of M/s Gemini InfrapropertiesPvt Ltd. Now the shares of M/s Gemini InfrapropertiesPvt Ltd was sold in the following manner:
SL NO. NAME OF SCRIP DATE OF NO OF RATE PER TOTAL
SALE SHARES SOLD SHARE CONSIDERATION
Gemini Infra Deserve Solutions Pvt.Ltd. 4/4/18 10,000 250 25,00,000.00
Properties Pvt.Ltd
Everstrong Enclave 4/4/18 6,000 250 15,00,000.00
Pvt.Ltd.
Coolhut Enterprises 5/5/18 4,800 250 12,00,000.00
Pvt.Ltd.
Everstrong Enclave 5/5/18 18,000 250 45,00,000.00
Pvt.Ltd.
KalashdhanBlo-Fuel 10/3/18 9,200 250 23,00,000.00
Pvt.ltd.
SnowblueNirmanPvt.Ltd. 10/6/18 6,800 250 17,00,000.00
AstaniranjanVincomPvt.Ltd. 10/12/18 32,600 250 81,50,000.00
Page | 6
ITA No. 139/KOL/2025 & CO No. 1/KOL/2025
Auxinite Suppliers Private Limited; A.Y. A.Y. 2019-20 Deobhumi Distributors 10/12/18 63,000 250 1,57,50,000.00 Pvt.Ltd.
AvyayanPvt.Ltd. 10/13/18 5,600 250 14,00,000.00 In this case the sale of shares of M/s Gemini InfrapropertiesPvt Ltd made to some other companies such as M/s Deserve Solutions Pvt Ltd, 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 Coolhut Enterprises Pvt Ltd 17.08.2021
3. M/s Softlink Securities Pvt Ltd 01.11.2019
It is evident that these companies were struck off from ROC much later than FY: 2018- 19 and therefore these companies were present and active during the FY: 2018-19, the year during which the transactions were made.
Another contention of the Ld. AO was that the Departmental Inspector could not locate the existence of M/s Astaniranjan Vincom Pvt Ltd in the address available on records. In this regard, it is evident from the above table that the said company was struck off from ROC on 11.02.2022, whereas the assessment in the appellant`s case was completed by the Ld. AO on 27.12.2022. The said company was nevertheless in existence during the FY: 2018-19, the year in which transactions were made. Therefore merely because one of the share purchasing company was non-existent during the course of assessment proceedings, or 3 companies were in strike off status, the entire sale of shares to the above mentioned 12 companies amounting to 5.63 crores cannot be treated as bogus.
In respect of the other 9 companies which have also been treated as dubious by the Ld. AO, it is observed that the appellant during the course of assessment proceedings as well as appeal proceedings has submitted that the notices under section133(6) Page | 7 ITA No. 139/KOL/2025 & CO No. 1/KOL/2025 Auxinite Suppliers Private Limited; A.Y. A.Y. 2019-20 issued by the AO were served and therefore, the existence of these 9 companies cannot be doubted. During the course of assessment proceedings as well as appeal proceedings, the appellant submitted various documents such as copies of audited books of account of the share purchasing companies, the ITR`s filed by them for the relevant A.Y, relevant bank statements showing the said transactions of sale of shares. These documents have neither been discussed by the Ld. AO nor have not been disputed by him.
The facts that emerge are that the purchase of the said shares made by the appellant company during FY: 2010-11 have not been doubted by the Department since the appellant was subject to scrutiny assessment for AY 2011-12. Since the purchase is bonafide, and the subsequent sale of such shares has also been held to be bonafide by the same AO to the extent of Rs.13,37,50,000 (Rs.19,01,00,000 - Rs.5,63,50,000) during the F.Y: 2018-19, and that also at par i.e. the sale being made at the same cost of acquisition of shares, no adverse 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 Delhi in the case of Brij Resources Pvt Ltd vs ITO in ITA No. 8835/Del/2019 dated 07.07.2021 also took the same view where it was held as under:-
"I find, the assessee, during the year, has sold the investment and has received the amount by cheque and, therefore, in my opinion, provisions of section 68 of the Act cannot be applied to realization of investment which was duly reflected in the balance sheet of the assessee company in the preceding assessment year. In my opinion, if the sale of share is bogus, then the purchase of the same shares is also bogus. If the case of the Revenue is that assessee's own money has come back to the assessee in shape of accommodation entry, then, the money of the assessee had gone in the preceding year in shape of purchase of the shares which were sold during the year. No action appears to have been taken in the preceding assessment year treating the purchase of the shares as bogus. Therefore, once such bogus purchase is sold then the entire amount, in my opinion, cannot be added u/s 68 of the IT Act, 1961. I, therefore, set aside the order of the CIT(A) on this issue and direct the AO to delete Page | 8 ITA No. 139/KOL/2025 & CO No. 1/KOL/2025 Auxinite Suppliers Private Limited; A.Y. A.Y. 2019-20 the addition. Similarly, the commission of Rs.20,000/- disallowed by the AO and sustained by the CIT(A) is also deleted in view of the discussion above. The grounds raised by the assessee challenging the addition on merit are accordingly allowed."
Therefore in my considered opinion, since purchases were never disputed by the Ld. AO in earlier years, the Ld. AO cannot doubt the sale & its proceeds.
The share purchasing companies, it is seen, in most cases have duly filed their return of income and audited accounts before various statutory authorities & details of the same such as the ITR, Audit Reports, relevant bank statements were also produced before the Ld. AO by the appellant and most of the companies had also complied with the notices under section133(6). It is further observed from the ITR filed by the share purchasing companies for AY: 2019-20, the reserves and surplus as well as turnover of most of the companies run into crores of rupees and therefore, their creditworthiness cannot be placed under doubt. In this case, therefore, the assessee submitted the requisite documents to prove the identity, creditworthiness of the share applicants, the genuineness of transactions, and the Ld. AO has not brought 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 statements which would establish that funds transferred to the appellant company by these share purchasing companies through banking channels were the appellant's own unaccounted money. There is singular absence of anything in this regard in the assessment order. All the above details when kept together, there remains nothing to cast any doubt on the sale transaction of shares held by the assessee as investments which it undertook in the ordinary course of its business. Further, the opening balance of investment in shares and the purchases made during the year have also not been disputed or doubted by the Ld. AO so as to bring the entire sale consideration to tax. It is also worthwhile to mention that the case of the appellant was also subject to regular assessment for the AY: 2017- 18, apart from AY: 2011-12 discussed earlier in this order, and the reason description of the scrutiny for AY: 2017-18 as recorded by the Ld. AO was "Low income in comparison to high loans/advances/investment in shares appearing in balance sheet and expenses debited to P&L A/c for earning exempt income as per Schedule BP of ITR is significantly lower as compared to investments made to earn exempt income". It Page | 9 ITA No. 139/KOL/2025 & CO No. 1/KOL/2025 Auxinite Suppliers Private Limited; A.Y. A.Y. 2019-20 is evident as per the reasons that the investments were again subject to verification in such assessment for AY: 2017-18 and in the assessment order passed on 19.10.2019, no adverse inferences were drawn by the Ld. AO. Therefore, the value of the investment appearing in the balance sheet of the appellant for the AY: 2017-18 was accepted by the Ld. AO and the sales in the AY: 2019-20 were made at par by the appellant. In this regard, the following judicial precedents deserve to be discussed:
The Hon'ble Jurisdictional High Court in the case of CIT VS. Dataware Private Ltd. [ITAT No. 263 of 2011 dated 21.09.2011] while examining the issue of addition of share application money received by the assessee therein under section68 of the Act, held that after getting the PAN number and getting the information that the creditor is assessee under the Act, the Assessing Officer should enquire from the Assessing Officer of the creditor as to the genuineness of the transaction and whether such transaction has been accepted by the Assessing Officer of the Creditor but instead of adopting such course, the Assessing Officer himself could not enter into the return of the creditor and brand 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 - Assessee provided various documents in form of PAN card, income-tax acknowledgement, copy of bank statement, certification of incorporation, master data from register of companies, certificate of incorporation and annual account to prove FGD's identity and creditworthiness and genuineness of transaction - However, Assessing Officer by relying on statement of one AKA, who was alleged operator of such bogus companies, brushed aside these documents on mere ground that they did not absolve assessee from his responsibility of proving nature of transaction - It was noted that statement of AKA was not recorded in presence of assessee nor an opportunity of crossexamination was provided to it - Whether where there was no evidence brought on record by Assessing Officer to connect statement of AKA with loan transaction of assessee, said statement was of little avail and could not be basis of allegations - Held, yes - Whether, further, since assessee had discharged its initial burden by providing documentary evidences and burden had now shifted to Assessing Officer, who Page | 10 ITA No. 139/KOL/2025 & CO No. 1/KOL/2025 Auxinite Suppliers Private Limited; A.Y. A.Y. 2019-20 failed to bring on record any reason in writing as to why these documents did not establish identity of lender or proved genuineness of transaction, impugned assessment order passed by casually brushing aside these evidences was utterly perverse and liable to be quashed - Held, yes [Paras 4 and 5] [Matter remanded]"
In CIT vs. Roseberry Mercantile (P) Ltd, ITAT 241 of 2010, the Hon'bleCalcutta High Court had followed the decision of the Hon'bleSupreme Court in the case of Lovely Export (2008) 216 CTR 195 that if the share subscription was received from alleged bogus shareholders, the Revenue can reopen their individual assessment and addition cannot be made in the hands of the recipient company:
"On the facts and in the circumstances of the case, Ld. CIT(A) ought to have upheld the assessment order as the transaction entered into by the assessee was a scheme for laundering black money into white money or accounted money and the Ld. CIT(A) ought to have held that the assessee had not established the genuineness of the transaction.
It appears from the record that in the assessment proceedings it was noticed that the assessee company during the year under consideration had brought Rs. 4, 00, 000/- and Rs.20,00,000/- towards share capital and share premium respectively amounting 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 the case of CIT. vs. M/s. Lovely Exports Pvt. Ltd. [supra], we are at one with the Tribunal below that the point involved in this appeal is covered by the said Supreme Court decision in favour of the assessee and thus, no substantial question of law is involved in this appeal. The appeal is devoid of any substance and is dismissed."
I find that a very similar issue has been addressed by the Hon. Jurisdictional Tribunal, "A"Bench, in the case of M/s SwarnaKalash Commercial Pvt. Ltd. vs ACIT, Central Circle-2(2), Kolkata for AY: 2019-20 in I.T.(SS)A. No.53/Kol/2022. In Page | 11 ITA No. 139/KOL/2025 & CO No. 1/KOL/2025 Auxinite Suppliers Private Limited; A.Y. A.Y. 2019-20 the said case also, the assessee during the year had received Rs.17,05,60,000/- on account of sale of shares/investments. The Assessing Officer in this case held that the assessee failed to prove the genuineness of the transaction and creditworthiness of the entities purchasing the investment. He, accordingly, added the entire amount received by assessee on sale of investments as unexplained income of the assessee under section 68 of the Act. In this case it was observed by the Hon. Tribunal that the assessee had filed all the details of sale of investments and the bank statements. Buyers were identifiable persons/concerns and assessed to income tax. They had made the payments through proper banking channel and copies of sale bills, other related documents, copy of ITR, copy of audited accounts, copy of relevant bank statements of the buyers were submitted before the Ld. AO. There was no cash deposit before payment made by the buyer through their bank accounts. The assessee company had raised share capital (including premium) amounting to Rs.69,77,00,000/- in financial year 2005-06, relevant to AY 2006-07. The capital so raised in AY 2006-07 was lying as investment in shares and during the year under consideration, and a further investment of Rs.66.47 crores was also made. Assessee sold investments worth Rs.17.05 crores during the F.Y: 201819.
The Hon. Tribunal in its decision deleted the additions made by the AO and held the following:
"All the above details when kept in juxtaposition, there remains nothing to cast an iota of doubt on the sale transaction of shares held by the assessee as investments which it undertook in the ordinary course of its business, more importantly, purchases having made in the current year also. Further, as rightly pointed out by the learned 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 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."
A similar view has also been taken by the Hon. Tribunal, "B" Bench in the case of M/s Ashtvinayak Sales Pvt. Ltd. vs ACIT, Central Circle-2(2), Kolkata for AY: 201920 in IT(SS)A No.54/Kol/2022.
Page | 12 ITA No. 139/KOL/2025 & CO No. 1/KOL/2025 Auxinite Suppliers Private Limited; A.Y. A.Y. 2019-20 In the instant appeal being adjudicated, it has already been discussed in detail earlier that the appellant submitted the requisite documents to prove the identity, creditworthiness of the share applicants, the genuineness of transactions, and the Ld. AO has not pointed out any specific defects in such evidences filed. 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 along with counter evidences if he does not agree with the evidences submitted by the appellant. In this scenario, when the appellant has discharged its onus and the purchase of the shares have not been disputed or doubted by the Ld. AO during the course of assessment for A.Y: 2011-12 and AY: 2017-18, the action of the Ld. AO in considering the entire proceeds to the tune of Rs.5,63,50,000/- from sale of shares to the 12 companies as unexplained cash credit under section 68 therefore, is not sustainable and stands deleted. However, following the decision of the Hon. Jurisdictional Kolkata Tribunal in the case of M/s SwarnaKalash Commercial Pvt. Ltd. vs ACIT, Central Circle-2(2), Kolkata for AY: 2019-20 in I.T.(SS)A. No.53/Kol/2022 when the assessee had held these shares for past several years and subsequently sold them during the F.Y: 2018-19, there ought to be certain element of profit embedded in the sale transaction executed which must be brought to tax.
Therefore respectfully following the judicial precedents, with a view to plug the leakage of revenue, the Ld. AO is directed to make an addition of the net profit element @ 5% of the entire sale consideration of investments made during the year i.e. 5% of Rs.19,01,00,000/- which comes to Rs.95,05,000/- as the appellant`s business profits. In the result the ground is partly allowed.
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 Page | 13 ITA No. 139/KOL/2025 & CO No. 1/KOL/2025 Auxinite Suppliers Private Limited; A.Y. A.Y. 2019-20 ₹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 been doubted by the department and since the date of purchase these private equity shares continued to be shown in the successive balance sheets of the assessee. Even during the instant year, the assessee sold these shares to several parties however, only the sale consideration received from 12 entities, the details whereof is given at page no.22 and 23 of the appellate order, were doubted by the ld. Assessing Officer on the ground that these companies were dubious and their existence could not be ascertained however, as per the information available on record, we find that on the date of sale of equity shares ,these companies were available and very much in existence on that date. We also note that the assessee has furnished all the information and details qua the purchasing companies, which were also placed before the ld. CIT (A) and the ld. CIT (A) by passing a very comprehensive order has accepted the sale of shares during the year made to the private entities qua which the assessee has filed all the evidences. Therefore the same cannot be doubted at the time of sale and cannot be added u/s 68 of the Act particularly when the purchase of shares was not doubted in the earlier assessment years. The ld. CIT (A) relied on a series of decisions as extracted hereinabove while deleting the addition. The ld. CIT (A) noted that the shares were purchased by the assessee company during the financial year 2010-11 and have not been doubted by the department since then even in the scrutiny proceedings for A.Y. 2011-12 and even the sale of shares to the tune of ₹13,37,50,000/- was treated as genuine and bonafide by the ld. AO during the instant financial year and only sale of shares to 12 parties were doubted on Page | 14 ITA No. 139/KOL/2025 & CO No. 1/KOL/2025 Auxinite Suppliers Private Limited; A.Y. A.Y. 2019-20 the ground of existential issues. Considering these facts, we are inclined to hold that the ld. CIT (A) has passed a speaking and reasoned order while deleting the addition to the tune of ₹ 5,63,50,000/-. Thus we do not find any infirmity in the appellate order which is otherwise a well reasoned and speaking order. Therefore, we are inclined to uphold the same so far as the deletion of addition to the tune of ₹5,63,50,000/- is concerned. The appeal of the revenue is dismissed.
8. So far as the cross objection is concerned, the assessee has challenged the direction of the CIT (A) to the ld. AO to assess the profit element embedded in the total sale consideration at the rate of 5% thereby making addition of ₹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 21.04.2025 and paper books No. 1 Page | 15 ITA No. 139/KOL/2025 & CO No. 1/KOL/2025 Auxinite Suppliers Private Limited; A.Y. A.Y. 2019-20 (page No. 1 to 357), paper book no. 2 (page No. 1 to 354 and paper book 3 (Case Laws). We find that the only dispute is sale of part unlisted equity shares to various parties thereby realizing total sales consideration of ₹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 ₹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 as before the ld. CIT (A) all the evidences qua the purchases and sale of shares. The assessee has filed all the evidences qua the purchasers such as ITRs, names, addresses, audited balance sheets, bank statements, confirmations, etc. 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 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 in respect of confirmation of addition by ld CIT(A) as made by the AO on the ground that the identity and credentials of the purchasers are suspicious. We observe that the assessee has been in the regular business of purchase and sales of investments over the years as corroborated by the materials placed before us. Even the sales Page | 16 ITA No. 139/KOL/2025 & CO No. 1/KOL/2025 Auxinite Suppliers Private Limited; A.Y. A.Y. 2019-20 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:-
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 dated 17.03.2014 a copy of which is placed at page no. 276 and 277 of PB Vol.-1 and the neither the sharecapital/share premium nor the investments out of that source were doubted by the AO.
9.2. We also note that similar issue 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 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.
Page | 17 ITA No. 139/KOL/2025 & CO No. 1/KOL/2025 Auxinite Suppliers Private Limited; A.Y. A.Y. 2019-20
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 the said order in a mechanical manner without any discussion on merits and without pointing out any justifying material warranting such additions. Therefore, the additions made by the Assessing Officer by way of such an cryptic 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/non- corporate. 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:
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 of investment. We also look at the movement of investment held by the assessee, which is tabulated below:
FY AY Opening Purchase Sales Amount Closing Balance byA.O.
2014-15 2015-16 63,42,00,000 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 Opening Purchases Sales Closing
No Name of the Script Balance 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
Page | 18
ITA No. 139/KOL/2025 & CO No. 1/KOL/2025
Auxinite Suppliers Private Limited; A.Y. A.Y. 2019-20 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 1,57,32.00 5 CimmcoVinimay Pvt. Ltd. 13,32,04,353 53,71,44,701 0 0 67,03,49,0 6 Festive Vincom Pvt Ltd 28,01,625 0 0 54 28,01,625 7 GreenHillDealmark Pvt Ltd 26,14,850 0 0 26,14,850 8 SwabhimanCommosales 26,15,900 0 0 26,15,900 9 Pvt Ltd 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 0 74,49,572 74,49,572 0 13 Ltd Financial Services Alok 0 8,10,000 8,10,000 0 14 Pvt Ltd 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 & 0 1,26,37,632 1,26,37,632 0 17 Marketing Alok Pvt Ltd Pattanayak 0 3,00,000 3,00,000 0 Total 20,40,10,245 66,47,63,507 17,05,60,00 69,82,13,6 0 34 11.4. Based on the analysis of the above details, it is evident 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 Sold out of Investment Purchased During the Year 11,18,86,806 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:
Page | 19 ITA No. 139/KOL/2025 & CO No. 1/KOL/2025 Auxinite Suppliers Private Limited; A.Y. A.Y. 2019-20
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 Higher Courts of the country, the retracted statement can not be made sole basis for making the additions. The Jurisdictional Calcutta High Court in the case of Principal Commissioner of Income Tax Vs. 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 Page | 20 ITA No. 139/KOL/2025 & CO No. 1/KOL/2025 Auxinite Suppliers Private Limited; A.Y. A.Y. 2019-20 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 reference to any other material discovered during search and seizure operation, would not empower the AO to make a block assessment merely because any admission was made by the assessee during search operation. In the case of "Commissioner of Income Tax vs. Sunil Agarwal" (2015) 64 taxman.com 107 (Delhi-HC), the assessee therein, during the course of search, made a categorical admission under section 132(4) that the cash amount seized belonged to him and it represented undisclosed income not recorded in the books of accounts. The assessee did not immediately retract from the above admission but only during the assessment proceedings at a belated stage. In his retraction, the assessee stated that the surrender was made under a mistaken belief and without looking into books of account and without understanding law and that he had been compelled and perturbed by events of search and that the pressure of search was built so much that he had to make the surrender without having actual possession of the 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 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 department was that the admission was 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 Page | 21 ITA No. 139/KOL/2025 & CO No. 1/KOL/2025 Auxinite Suppliers Private Limited; A.Y. A.Y. 2019-20 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 proceedings is to be judged by reference to the existing facts and circumstances, human conduct and preponderance of possibilities. During the search proceedings, record relating thereto being in exclusive custody of the searching officers, it is their wish and will which prevails during the fateful period. That it is almost impossible for the assessee to adduce demonstrative evidence of exerting such pressure. The co-ordinate bench of the Tribunal (supra) while holding so, apart from relying upon various decisions of the higher courts has also relied upon the decision of the Tribunal in the case of "Dy CIT vs. Pramukh Builders" (2008) 112 ITD 179 (Ahd.) wherein it has been held that even in the absence of proof of coercion or pressure, the statement by itself cannot be taken as conclusive. Therefore, merely in the absence of proof of pressure, threat, coercion or inducement the statement cannot be held as conclusive and additions cannot be made by solely relying on a statement or a letter.
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 information on what has not Page | 22 ITA No. 139/KOL/2025 & CO No. 1/KOL/2025 Auxinite Suppliers Private Limited; A.Y. A.Y. 2019-20 been disclosed or is not likely to be disclosed before the Income Tax Departments. Similarly, while recording statement during the course of search it seizures and survey 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 remains nothing to cast an iota of doubt on the sale transaction of shares held by the assessee as investments which it undertook in the ordinary course of its business, more importantly, purchases having made in the current year also. Further, as rightly pointed out by the learned 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 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.
Page | 23 ITA No. 139/KOL/2025 & CO No. 1/KOL/2025 Auxinite Suppliers Private Limited; A.Y. A.Y. 2019-20
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. GA/2/2024 vide order dated 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. Pratyush Jhunjhunwalla, 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 through cash trail. The CIT(A) in course of hearing the appeal called for a remand report from the Assessing Officer and in the said remand report the Assessing Officer has in no uncertain terms accepted the receipt of the impugned sum on account of sale proceeds of investment. The Assessing Officer verified the investment sold which are shown in the balance-sheet for the financial year 2010-11 in Schedule-4 of the balance-sheet and after considering these facts it was stated that the assessee had sold shares held by way of the investment during the year to M/s. Shivshakti Communications and Investment Pvt. Ltd. and Carnation Tradelink Pvt. Ltd. and it is not a receipt of unsecured loan. This fact, apart from other factual details, were considered by the CIT(A) and by an elaborate order dated 10.5.2023 the appeal filed by the assessee was allowed. The tribunal on its part re-examined the factual position and took note of the findings rendered by the CIT(A) and concurred with the same. We also find that the tribunal has also examined the factual position and took note of the remand report as called for by the CIT(A) which confirmed the alleged sum is on account of sale of investment and not otherwise.
Thus, we find no question of law much less substantial question of law arises for consideration in this appeal. Accordingly, the appeal fails and the same is dismissed. Consequently, the connected application stands closed.
Page | 24 ITA No. 139/KOL/2025 & CO No. 1/KOL/2025 Auxinite Suppliers Private Limited; A.Y. A.Y. 2019-20
10. Since, the facts of the case before us vis-à-vis, facts of the decisions cited above are substantially similar and therefore, we respectfully following the ratio laid down in the above decisions upheld the order of ld. CIT (A) on this issue by dismissing the appeal of the Revenue.
11. So far as the Cross Objection is concerned, we note that the assessee has challenged the direction of the ld. CIT (A) to the ld. AO to make an addition at the rate of 5% of the total sales consideration towards the net profit embedded in the sales consideration.
12. After hearing the rival contentions and perusing the materials available on record, we find that the ld. CIT (A) has not given any basis for such direction to the ld. Assessing Officer. In other words, the ld. CIT (A) has just acted on the presumptions and surmises and thus, presumed that the assessee might have made some profits from sale by investments. In our opinion, the said direction by the ld. CIT (A) is without any substantive basis and therefore cannot be sustained. Accordingly, we set aside the order of ld. CIT(A) to the extent of this direction of making addition @ 5%. Accordingly, the cross objection of the assessee is allowed.
9. We note that the facts of the assessee are materially similar vis a vis the decisions as discussed above. Therefore, respectfully following the same , we set aside the direction of the d. CIT(A) to the AO to estimate the income @ 5% on sale of investments. The cross objection of the assessee is allowed.
10. In the result, the appeal of the Revenue is dismissed and CO of the assessee is allowed.
Order pronounced in the open court on 02.04.2026.
Sd/- Sd/-
(PRADIP KUMAR CHOUBEY) (RAJESH KUMAR)
(JUDICIAL MEMBER) ( ACCOUNTANT MEMBER )
Kolkata, Dated: 02.04.2026
Sudip Sarkar, Sr.PS
Page | 25
ITA No. 139/KOL/2025 & CO No. 1/KOL/2025
Auxinite Suppliers Private Limited; A.Y. A.Y. 2019-20 Copy of the Order forwarded to:
1. The Appellant
2. The Respondent
3. CIT
4. DR, ITAT,
5. Guard file.
BY ORDER, True Copy// Asst. Registrar Income Tax Appellate Tribunal, Kolkata