Income Tax Appellate Tribunal - Kolkata
M/S. Pearl Tracom Pvt. Ltd., ,Kolkata vs Dcit, Central Circle 3(1), , Kolkata on 2 April, 2026
IN THE INCOME TAX APPELLATE TRIBUNAL " D" BENCH, KOLKATA
BEFORE SHRI RAJESH KUMAR, AM
AND
SHRIPRADIP KUMAR CHOUBEY, JM
ITA No.1201/KOL/2025
( Assessment Year: 2019-20)
M/s Pearl Tracom Pvt. Ltd. DCIT, Central Circle 3(1)
C/o M/s SalarpuriaJajodia& Co.7, Aaykar Bhawan, P -7,
C.R. Avenue, 3 r d Floor, Vs. Chworinghee Square, Kolkata -
Kolkata-700072, West Bengal 700069, West Bengal
(Appellant) (Respondent)
PAN No. AABCP9934G
Assessee by : Shri Siddarth Jhaj haria, AR
Revenue by : Shri Sanat Kumar Raha, DR
Date of hearing: 02.04.2026
Date of pronouncement: 02.04.2026
ORDER
Per Rajesh Kumar, AM:
This is an appeal preferred by the assessee against the order of the Commissioner of Income-tax (Appeals), Kolkata-21, (hereinafter referred to as the "Ld. CIT(A)"] dated 31.03.2025 for the AY 2019-20.
2. The assessee has raised following grounds of appeal:-
"1. For that in view of the facts and in the circumstances, Ld. CTT(A) erred in affirming the validity of the notice u/s 148 and the consequent order u/s 143(3) 147 and in view of the facts and in the circumstances the action of Ld. CIT(A) is wholly unjustified and not in accordance with the law and the facts in the matter and in view of the facts and in the circumstances it may be held accordingly.
2. Without prejudice to Ground No. 1 above, Ed. CIT(A) erred in affirming the validity of the impugned notice u/s 148 and the consequent order u's 143(3)/ 147 without appreciating the facts that the notice u/s 148 was issued under Clause (ii) to Explanation-2 to sec. 148 and the alleged documents impounded/found during survey u/s 133A documents did not indicate any alleged fund trail or cash deposit relating to share capital or sale of investment and as such the impugned notice and the Page | 2 ITA No. 1201/KOL/2025 M/s Pearl Tracom Pvt. Ltd.; A.Y. 2019-20 consequent order is bad in law and in view of the facts and in the circumstances it may be held accordingly.
3. Without prejudice to Grounds No. 1 & 2 above, Ld. CIT(A) erred in not appreciating the facts that notice u/s 148 should have been under Clause (iv) to Explanation -2 to sec. 148 and as such the assumption of jurisdiction by AO (vide issue of notice u/s 148 under Clause (ii) to Expl. -2) is incorrect and the entire proceedings and the consequent order is bad in law and it may held accordingly.
4. For that in view of the facts and in the circumstances, Ld. CIT(A) erred in affirming the addition made by AO of Rs. 47,12,62,150/- u's 68 and Rs. 11,78,155/- towards alleged unexplained expenditure u/s 69C and in view of the facts and in the circumstances the additions so affirmed by Ld. CIT(A) is wholly bad and illegal and has not legal sanctity as well as facts and the additions so affirmed is liable to be deleted and it may be held accordingly.
5. Without prejudice to Ground No. 4 above, Ld. CIT(A) erred in not appreciating the facts that notices were issued u/s 133(6) to purchase of investment and the same were duly responded by such purchaser and as such the Ld.CIT(A) 's action in merely relying on the AO's contention that such companies were "shell company" is devoid of law and in view of the facts and in the circumstances it may be held accordingly.
6. Without prejudice to Grounds No. 4 to 5 above, Ld. CIT(A) erred in relying upon the alleged seized documents (having ID Mark AKM 42) allegedly seized from the premises of alleged accommodation entry provider, Mr. Abhishek Kumar Munka and also relied upon the alleged statement of another alleged accommodation entry provider, Mr. Mukesh Pansari, although such alleged document and the alleged statement had no relevance for making such addition in the hands of the appellant company towards the sale of shares held and sold by appellant company and in view of the facts and in the circumstances it may be held accordingly.
7. Without prejudice to Grounds No. 4 to 6 above, the Ld. CIT(A) erred in affirming the action of AO in relying upon the alleged statement of Mr. Mukesh Pansari (u's 131 dt. 9.3.2022 in the search of Jain Group) or Mr. Abhishek Munk (u's 131 dt. 24.9.2021 in case of Agarwal Group) since the alleged statement nowhere mentions the name of the appellant company and in view of the facts and in the circumstances the entire action of AO and Ld. CIT(A)is bod in law and it may be held accordingly.
8. Without prejudice to Grounds No. 4 to 7 above. Ld. CIT(A) erred in affirming the action of AO and not appreciating the facts that the said alleged document, AKM 42 did not mention receipt of any cash from the appellant company and as such the entire action in such respect is bad in law and it may be held accordingly.
9. Without prejudice to Grounds No. 4 to 8 above, Ld. CIT(A) erred in affirming the action of AO in relying upon the alleged document, AKM 42 without appreciating the facts that the said "Vinay/Vinay Agarwal" has nowhere been examined in the statement u's 131 or even the said statement been obtained from Mr. Abhishek Munka and even from Mr. Mukesh Pansari nowhere mentions the appellant in any manner and in view of the facts and in the circumstances it may be held accordingly.
Page | 3 ITA No. 1201/KOL/2025 M/s Pearl Tracom Pvt. Ltd.; A.Y. 2019-20
10. Without prejudice to Grounds No. 4 to 9 above, the alleged receipt of cash in such document, AKM 42 from "Vinay/Vinay Agarwal" is unsubstantiated and in any case even any cash has been received from such person then the addition should have been made in the hands of such person only and not in the hands of the appellant company and in view of the facts and in the circumstances it may be held accordingly.
11. Without prejudice to Grounds No. 4 to 10. Ld. CIT(A) erred in not appreciating the facts that AO has not brought any evidence on record for the alleged cash has been utilized by Mr. Abhishek Munka or Mr. Mukesh Pansari to finance the entire transaction and AO has nowhere shown alleged cash has been deposited in any of the alleged bank account under operation on said alleged accommodation entry provider and as such the entie allegation is bad in law and is may be held accordingly.
12. Without prejudice to Grounds No. 4 to 11 above, AO had merely relied upon the alleged statement of Mr. Abhishek Munka & Mr. Mukesh Pansari without granting any opportunity to cross examine them and as such the alleged statements are unverified and as such has no legal senetity and hence the addition so made by AO and the relevance of such statement is bad in law and is liable to be deleted and it may be held accordingly.
13. For that in view of the facts and in the circumstances action of the AO in charging Interest of Rs. 73,70,460/-, Rs. 21,37,43,340/- & Rs.4,88,563/- u/s 234A, 2348 & 234D respectively and the appellant completely denies the liability to pay such interest. Even otherwise, interest charged u/s 234B is consequential and hence the AO may kindly be directed to delete the same
14. For that your petitioner craves the right to put additional grounds and/or to alter/ amend modify the present grounds at the time of hearing."
3. The issue raised in ground nos.1 to 3 is against the order of ld. CIT (A) upholding the reassessment proceedings u/s 147 of the Act by issuing notice u/s 148 of the Act which was initiated by the ld. AO without fulfilling the conditions precedent as provided in the section itself.
3.1. The facts in brief are that the assessee filed the return of income on 31.10.2019, declaring total income at ₹6,27,780/-. A search action u/s 132 of the Act was conducted on Agarwal Group and its associates by the director of Investigation, Kolkata on 17.09.2021, and on the subsequent dates. The assessee being one of the group companies was also covered under the search. The findings of the search team during search and post search proceedings of groups Page | 4 ITA No. 1201/KOL/2025 M/s Pearl Tracom Pvt. Ltd.; A.Y. 2019-20 were disseminated and CRIU-VRIU report were uploaded in insight portal in respect of present assessee. The ld. AO observed from the flagged information that the assessee has received funds which prima facie appeared to be the transactions in the nature of cash credit u/s 68 of the Act and accordingly, assessee was issued show cause notice u/s 148A(b) of the Act and thereafter the order u/s 148A(d) of the Act was passed. The notice u/s 148 of the Act was issued on 21.04.2023. The ld. AO noted that the assessee has not provided the factual details except filing the return of income and objections to the re-opening. The assessee filed the return of income in response to notice u/s 148 of the Act declaring total income of ₹6,27,780/- on 22.06.2023. Thereafter, the statutory notices along with questionnaire were issued and duly served upon the assessee. The assessee submitted before the ld. AO the details as called for along with evidences from time to time. The ld. AO noted that the assessee has raised funds from selling of investments during the year under consideration to the tune of ₹47,12,62,150/-. The notices u/s 133(6) of the Act were also issued to the purchasing parties, which were duly replied along with evidences by the said parties. Thereafter, the ld. AO referred to the search/ survey operation in Jain group, and the premises of Shri Mukesh Pansari, who were covered under search. The statements were recorded u/s 131 of the Act on 09.03.2022 of the shri Mukesh Pansariand in the said statement he admitted to have engaged in providing of accommodation entries in the form of sale of shares including the present assessee M/s Pearl Tracom Pvt. Ltd. Thereafter, the ld. AO accepted that the assessee received the consideration from sale of shares from three parties namely; Astha Merchants Pvt. Ltd. ₹14,96,62,150/-, Monark Vinimay Pvt. Ltd. of ₹14,10,00,000/-, Pixel Traders Pvt. ltd. ₹18,07,00,000/-, Page | 5 ITA No. 1201/KOL/2025 M/s Pearl Tracom Pvt. Ltd.; A.Y. 2019-20 aggregating to ₹47,12,62,150/-. These parties responded to the notices issued u/s 133(6) of the Act with all evidences. Thereafter, the ld. AO discussed the fund trails in the hands of the purchasing companies and thereafter, finally AO held that the assessee company has indulged through Abhishek Kumar Munka in non-genuine transactions with companies having doubtful existence and creditworthiness and thus, the assessee has failed to discharge its onus in proving that receipt is from verified and legitimate sources. Finally, the ld. AO treated the sale of investments as non-genuine and added the same u/s 68 of the Act to the income of the assessee. Besides, the ld. AO also added the commission paid by the assessee for arranging such accommodation entries at the rate of 0.25% as stated by the Abhishek Kumar Munka in his statement dated 24.09.2021 u/s 69C of the Act as unexplained expenditure thereby making an addition of ₹11,78,155/-
3.2. In the appellate proceedings, the ld. CIT (A) confirmed the reopening of assessment by dismissing the appeal of the assessee by holding that the ld. AO has in his possession the information during the course of issuance of show cause notice u/s 148A(b) of the Act and the same is based upon the investigation report uploaded by DDIT/ ADIT (Investigation) along with attachments in the insight portal of the Department which contained information relating to the assessee. Finally, the ld. CIT (A) brushed aside the contention of the assessee that the assessee was not provided the complete information relied upon by the ld. AO by stating that copy of statement of Shri Mukesh Pansari u/s 132(4) of the Act being substantial evidences provided to the assessee and thus, dismissed the appeal on the legal issue by upholding the reassessment notice u/s 148 of the Act as well as the consequent assessment framed.
Page | 6 ITA No. 1201/KOL/2025 M/s Pearl Tracom Pvt. Ltd.; A.Y. 2019-20 3.3. After hearing the rival contentions and perusing the material on record, we find that the assessee has challenged the issue of notice u/s.148 of the Act and also the assessment framed u/s.147/143(3) of the Act on the ground that the AO has failed to provide copy of the reasons recorded in the proceedings u/s.148 of the Act and also the addition made by the AO are not arising out of the search conducted u/s.132 of the Act on the assessee.We have perused the provisions under old scheme vis a vis under new scheme in the Act and find that under the new scheme of search, the AO has to issue notice u/s 148 of the Act for the number of assessment years as provided in the Act. In other words, there need not be any incriminating materials and whether there is any materials warranting additions that has to be examined by the AO during proceedings u/s 147 of the Act. Therefore, we do not find any merit in the contentions of the assessee that the provisions of Section 148 of the Act for search conducted on or after 1.4.2021 cannot be considered in total oblivion of the fact that no incriminating material was found from the assessee during the course of search u/s.132 of the Act.We also find no force in the contentions of the assessee that the impugned assessment was unabated and hence no addition can be made. We note that the plea of the assessee does not have force or merit as in this case as the requirement of any incriminating material is not there for re-opening the assessment issuing notice u/s 148 of the Act. In our opinion, the assessment can be reopened because the provisions of Section 148 of the Act are analogous to Section 153A of the Act as applicable in the case of search pertaining to search prior to 1.4.2021. In our opinion, the AO is under obligation to reopen such assessment years prior to the date of search even if there is no incriminating material and then frame the assessment accordingly. In Page | 7 ITA No. 1201/KOL/2025 M/s Pearl Tracom Pvt. Ltd.; A.Y. 2019-20 other words the existence of incriminating materials has to be examined during the assessment proceedings and not at the stage of issuance of notice u/s 148 of the Act. Ld. AR also relied on the decision of the Chandigarh Bench of the Tribunal in the case of Rosha Alloys (P) Ltd., reported in 2025 (7) TMI 238 (Chd) dtd. 28.05.2025, however, with, utmost humility and respect, we disagree with the conclusion drawn by the coordinate bench of the Tribunal and, therefore, the ground Nos.1 to 3 raised by the assessee have no merit and accordingly the same are dismissed by upholding the appellate order on this issue.
4. The issue raised inground no.4 is against the confirmation of additions of ₹47,12,62,150/- as made by the ld. AO u/s 68 of the Act in respect of sale of investments and ₹11,78,155/- u/s 69C of the Act in respect of commission paid which was treated as unexplained expenditure. The other ground raised in 5 to 12 are connecting to ground no.4.
4.1. As stated above the assessee has sold the investments in private equities to three parties during year thereby collecting ₹47,12,62,150/-. The facts qua this issue has already been discussed while deciding the legal issue hereinabove. The ld. AO treated this amount as unexplained cash credit u/s 68 of the Act on the ground that the assessee has failed to prove the three ingredients i.e. existence and creditworthiness of the parties and genuineness of the transactions. The ld. AO also added the commission at the rate of 0.25% on the above said amount which come to ₹11,78,155/- u/s 69C of the Act.
4.2. In the appellate proceedings, the ld. CIT (A) dismissed the appeal of the assessee after taking into consideration the submission Page | 8 ITA No. 1201/KOL/2025 M/s Pearl Tracom Pvt. Ltd.; A.Y. 2019-20 of the assessee/ evidences furnished during the appellate proceedings and the findings in assessment framed by the ld. AO. The ld. CIT (A) observed that the assessee has sold the investments during the impugned financial yearwhich were purchased in A.Y. 2011-12. The ld. CIT (A) also noted that all along these investments were shown in the balance sheet year after year. The ld. CIT (A) noted that the companies namely; Astha Merchants Pvt. Ltd., Monark Vinimay Pvt. Ltd. and Pixel Traders Pvt. ltd. were in the struck off status and all these three companies have common address. Therefore, the identity of these companies was in doubt. The ld. CIT (A) noted that the PAN, ROC, registration, audited accounts are not sacrosanct to prove the identity of the creditor entities. Thereafter, the ld. CIT (A) by doubting the creditworthiness of these companies noted that none of the companies have reported any revenue from operations and therefore, they are incapable of paying the sale consideration. The ld. CIT (A) noted from the bank statements that there was fixed pattern observed in deposit, withdrawals. The ld. CIT (A) further noted the fact that these companies were not genuine was strengthened from the documents found from the premises of Abishek Kumar Monka marked as AKM 42, which showed the receipt of cash against cheque amounts issued by the three companies for purchases of investments. The ld. CIT (A) also noted that besides the statement recorded of Shri Mukesh Pansari u/s 132(4) of the Act on 09.03.2022, also proved the fund trail. Further admission by Shri Abhishek Kumar Monka in the statement recorded on 24.09.2021, that he was providing accommodation entries to the companies of Shakambhari Group and Gagan Group and therefore, held that these were shell companies. The ld. CIT (A) also noted violation of principle of natural justice for not providing opportunity to cross examine of Page | 9 ITA No. 1201/KOL/2025 M/s Pearl Tracom Pvt. Ltd.; A.Y. 2019-20 Shri Mukesh Pansari and also observed that the matter has been dealt with by the Hon'ble Jurisdictional HC in case of Principal Commissioner of Income-tax vs. Swati Bajaj [2022] 139 taxmann.com 352 (Calcutta)/[2022] 288 Taxman 403 (Calcutta)/[2022] 446 ITR 56 (Calcutta)[14-06-2022]. The ld. CIT (A) thereafter noted that though the assessee company was assessed u/s 143(3) of the Act during the A.Y. 2012-13 and the share capital raised were verified, however, thereafter the investments made in private equities were not verified whether they are worth fetching impugned consideration during F.Y. 2018-19 relevant to A.Y. 2019- 20 when these investments were liquidated. The ld. CIT (A) further noted that before payment proceeds and consideration for sale of shares, there were cash infusion in the bank accounts of the purchasers and therefore the addition was rightly made by the ld. AO. Similarly, the addition of ₹11,78,165/-, was confirmed by the ld. CIT (A) by holding that Shri Abhishek Kumar Munka has accepted that he used to charge commission at the rate of 0.25 to 0.35 and therefore, the addition was rightly made by the ld. AO.
4.3. We have heard the rival contentions and perused the materials placed before us. We find that the assessee is engaged in the business of financing and investment activity and during the year sold certain unlisted equity shares held as capital assets/ investments which were purchased in F.Y. 2011-12 relevant to A.Y. 2012-13. We find that these investments were disclosed in the audited balance sheets of the assessee in successive years and were subjected to detail scrutiny u/s 143(3) / 263 of the Act for A.Y. 2012- 13, wherein the entire share capital and investments were accepted by the department. We note that the sale consideration of ₹47,12,62,150/- were received by the assessee from three purchaser Page | 10 ITA No. 1201/KOL/2025 M/s Pearl Tracom Pvt. Ltd.; A.Y. 2019-20 companies through banking channels. Thus, this is mere conversion of one asset into another. We note that these investments were accepted by the Revenue even during the scrutiny proceedings. Therefore, once these are accepted as genuine how they could be treated as non-genuine as and when these are sold by the assessee. We note that the assessment has been made by the ld. AO by relying heavily on the statements of Shri Abhishek Munka and Shri Mukesh Kumar Pansari. We note that in the statement as recorded of Shri Munkain search proceeding, there is no mention of assessee's name or its directors name and no such query was ever put to Mr. Munka regarding the appellant transactions.
4.3.1. We also note that the assessee has made similar transactions in the earlier assessment years .i.e. A.Y. 2013-14 to 2015-16 & A.Y. 2017-18 qua sale and purchase of shares which were never doubted and accepted by the Department through in the summary assessments and the same are extracted below for ready reference:
4.3.2. Appellant's A/R drew our attention to the alleged documents stated to have been found from Mr. Abhishek Munka (ie.
AKM-42) and submitted that AO has observed and concluded that Page | 11 ITA No. 1201/KOL/2025 M/s Pearl Tracom Pvt. Ltd.; A.Y. 2019-20 said AKM-42 contained cheque entries for which equivalent cash was deposited as per said AKM-42 alleged to be a ledger and which was also incomplete and irrelevant. Ld. CIT(A) affirmed the view of AO on the basis of such AKM-42 by holding that fund trails find support from sworn statement of Sri Mukesh Pansari. Ld. A/R pointed out that such AKM-42 has no legal sanctity and same cannot be a basis for such affirmation of AO's action by Ld. CIT(A). Ld. A/R pointed out that:-
i. alleged document AKM-42 was not found at appellant's premises and rather it was at a 3rd party premises having neither any link with appellant nor any corroborative evidence in respect of such AKM-42 was brought on record by AO.
ii. no questions have been raised in the sworn statement of Mr. Mukesh Pansari regarding such AKM-42. If revenue believed it to be "transaction" reflecting document revenue should have raised query about it at least in such statement of Mukesh Pansari. Indeed Ld. A/R took us through statement of Mr. Mukesh Pansari as well as Mr. Abhishek Munka nowhere appellant company has been named as beneficiary of any alleged accommodation entities. It was also observed that no questions have been raised about such AKM-42 raising serious doubt about it's corroborative value.
iii. no corresponding evidences of cash deposit with any alleged shell co. etc. were found/discovered during such search at Jain Group / Mr. Mukesh Pansari/ Mr. Abhishek Page | 12 ITA No. 1201/KOL/2025 M/s Pearl Tracom Pvt. Ltd.; A.Y. 2019-20 Munka. Neither any evidence of cash given by appellant has been found.
iv. such alleged documents AKM-42 does not mention appellant's name in any place and rather it mentions "Vinay" and rather allegation of any transaction should have been against such persons and not against appellant.
v. appellant's A/R also drew attention to the fact that at the buyer companies were very much active for which it submitted master data of ROC and also assessment orders of such buyer companies for A.Y 2015-16 showing the genuineness of such transactions. Also, the fact that such companies duly responded to notices u/s 133(6) of the Act issued by the ld. AO which were also placed on record.
vi. from all the above it is clear that the assertion by revenue regarding such alleged involvement of Abhishek Munka Mukesh Pansari and reliance particularly on AKM-42 is misplaced, misleading and self-servient. Revenue failed to conduct the necessary enquiries in respect of such AKM-42 at any stage earlier and indeed no reference of such document (ie. AKM-42) is found in such statement of that alone persons. Without such enquiry and corroborating evidences, such AKM-42 has no evidentiary value and hence the same deserves to be rejected. Moreover, no evidence of any cash exchange has been placed by revenue on record. Further the buyer companies were very much alive as seen from master data of ROC and they have also responded with regard to notice u/s 133(6). Therefore, AO's addition and action of CTT(A) are devoid of any truth.
Page | 13 ITA No. 1201/KOL/2025 M/s Pearl Tracom Pvt. Ltd.; A.Y. 2019-20 4.3.3. We also note that no cross examination was provided to the assessee despite the specific request to provide cross examination of Shri Abhishek Kumar Munka and Shri Mukesh Pansari, we note that the ld. AO relied on the third party statement,without providing cross examination which is a clear violation of principal of natural justice as has been held by the Hon'ble Apex Court in the case of Andaman Timber Industries vs. Commissioner of Central Excise, Kolkata-II [2015] 62 taxmann.com 3 (SC)/[2016] 38 GSTR 117 (SC)/[2015] 52 GST 355 (SC)/[2015] 314 ELT 641 (SC)[02-09-
2015]. The case of the assessee is also squarely covered by the decision of KishinchandChellaram vs. Commissioner of Income-tax [1980] 4 Taxman 29 (SC)/[1980] 125 ITR 713 (SC)/[1980] 19 CTR 360 (SC)[16-09-1980]. Therefore, the addition made by the ld. AO and sustained by the ld. CIT (A) cannot be sustained.
4.3.4. The case of the assessee is also covered by the decision of the co-ordinate Bench in case of DCIT Vs. Pawanputra Advertising Private Limited, in IT(SS)A No. 144 & 145/KOL/2024, vide order dated 26.08.2025, wherein it has held 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 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 Page | 14 ITA No. 1201/KOL/2025 M/s Pearl Tracom Pvt. Ltd.; A.Y. 2019-20 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 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 Page | 15 ITA No. 1201/KOL/2025 M/s Pearl Tracom Pvt. Ltd.; A.Y. 2019-20 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 share capital/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.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.
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. ........
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Page | 16 ITA No. 1201/KOL/2025 M/s Pearl Tracom Pvt. Ltd.; A.Y. 2019-20
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
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 67,03,49,05
6 Festive Vincom Pvt Ltd 28,01,625 0 0 4
28,01,625
7 GreenHillDealmark Pvt Ltd 26,14,850 0 0 26,14,850
8 SwabhimanCommosales Pvt 26,15,900 0 0 26,15,900
9 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
Page | 17
ITA No. 1201/KOL/2025
M/s Pearl Tracom Pvt. Ltd.; A.Y. 2019-20
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 0 8,10,000 8,10,000 0
14 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 17,05,60,000 69,82,13,63
4
11.4. Based on the analysis of the above details, it is evident that entire sales is made from purchases & opening stock as under:
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 | 18 ITA No. 1201/KOL/2025 M/s Pearl Tracom Pvt. Ltd.; 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 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 Page | 19 ITA No. 1201/KOL/2025 M/s Pearl Tracom Pvt. Ltd.; A.Y. 2019-20 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 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 Page | 20 ITA No. 1201/KOL/2025 M/s Pearl Tracom Pvt. Ltd.; A.Y. 2019-20 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 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, Page | 21 ITA No. 1201/KOL/2025 M/s Pearl Tracom Pvt. Ltd.; A.Y. 2019-20 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.
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/-.
Page | 22 ITA No. 1201/KOL/2025 M/s Pearl Tracom Pvt. Ltd.; A.Y. 2019-20
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 thefactual 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.
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.
4.3.5. The issue is also squarely covered by the decision of Hon'ble Jurisdictional High Court in case of Principal Commissioner of Page | 23 ITA No. 1201/KOL/2025 M/s Pearl Tracom Pvt. Ltd.; A.Y. 2019-20 Income-tax Central 1 vs. Tulsyan and Sons (P.) Ltd. [2025] 174 taxmann.com 37 (Calcutta)[16-04-2025] which has been followed by the coordinate bench while deciding the case in the case of DCIT Vs. Pawanputra Advertising Private Limited,(supra). We therefore, respectfully following the ratio laid down in the above decisions set aside the order of ld. CIT (A) and direct the ld. AO to delete the addition.
5. In the result, the appeal of the assessee is allowed.
Order pronounced on 02.04.2026.
Sd/- Sd/-
(PRADIP KUMAR CHOUBEY) (RAJESH KUMAR)
(JUDICIAL MEMBER) ( ACCOUNTANT MEMBER )
Kolkata, Dated: 02.04.2026
Sudip Sarkar, Sr.PS
Copy of the Order forwarded to:
1. The Appellant
2. The Respondent
3. CIT
4. DR, ITAT,
5. Guard file.
BY ORDER,
True Copy//
Sr. Private Secretary/ Asst. Registrar
Income Tax Appellate Tribunal, Kolkata