ALCO SUPPLIERS PRIVATE LIMITED,GUWAHATI V. ITO, WARD 1(1), KOLKATA

ITA 933/KOL/2025

AI Insights

Alco Suppliers Private Limited appealed against the order of the National Faceless Assessment Center, which had added 3,28,75,000 to the company's income as unexplained cash credit under section 68 of the Income Tax Act. The addition was based on the sale of shares held as investments, which the Assessing Officer (AO) deemed as transactions involving shell companies. The Tribunal examined the facts, including the company's amalgamation with Cogzenith Solutions Pvt. Ltd. and the subsequent sale of shares. The Tribunal noted that similar transactions in the previous assessment year were not questioned and that the shares were sold at cost without any profit, leading to the decision to allow the appeal and delete the addition.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 783748 (ITAT-KOLKATA)
• Duration Of Justice: 6 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-11-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2022-2023
• Appeal Filed On: 30-04-2025
• Other Referred Cases: PCIT-1, Mumbai vs Tulsyan and Sons Pvt. Ltd., ACIT vs Pawanputra Advertising Private Limited, M/s Swarna Kalash Commercial Pvt. Ltd. vs ACIT, M/s Ashtvinayak Sales Pvt. Ltd. vs ACIT, Dy CIT vs Pramukh Builders, Principal Commissioner of Income Tax vs Golden Goenka Fincorp Ltd., Naresh Kumar Agarwal vs CIT, CIT vs Harjeev Agarwal, CIT vs Brandix Mauritius Holdings Ltd.
• Laws Referred To: Income Tax Act
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RAJA SENGUPTA
• Assessee Lawyers: SIDDARTH AGARWAL; VIRTUE OF AMALGAMATION. A; ISSUING SUMMONS US
• Keywords: Set aside; Business income; Question of law; Corroborative evidences; Unexplained cash credit; Unexplained investment; Cost of acquisition; Period of limitation; Retraction; Search and seizure; Block assessment; Time period of passing order; Scheme of amalgamation; Tangible material; Bogus
• Section: 148; 143(3); 142(1); 132; 68; 131; 133A

Judgement Text

" IN THE INCOME TAX APPELLATE TRIBUNAL “A” BENCH, KOLKATA BEFORE SHRI RAJESH KUMAR, AM AND SHRIPRADIP KUMAR CHOUBEY, JM ITA No.933/KOL/2025 (Assessment Year: 2022-23) Alco Suppliers Private Limited M/s Alco Suppliers (P) Ltd. C/o Subhas Agarwal & Associates (Advocate) Siddha Gibson, 1, Gibson Lane, Suit No.213, 2nd Floor, Kolkata- 700069, West Bengal Vs. National Faceless Assessment Center, Assessment Unit, Income Tax Department, New Delhi (Appellant) (Respondent) PAN No. AACCA5182E Assessee by : Shri Siddarth Agarwal, AR Revenue by : Shri Raja Sengupta, DR Date of hearing: 04.09.2025 Date of pronouncement: 04.11.2025 O R D E R Per Rajesh Kumar, AM: This is an appeal preferred by the assessee against the order of the National Faceless Appeal Centre, Delhi (hereinafter referred to as the “Ld. CIT(A)”] dated 28.04.2025 for the AY 2022-23. 02. At the time of hearing, the ld. Counsel for the assessee pressed ground no.2 only which is against the order of ld. CIT (A) confirming the addition of ₹31,28,75,000/- as made by the ld. AO on account of sale of shares held as investments by treating the same as unexplained cash credit u/s 68 of the Act. Printed from counselvise.com Page | 2 ITA No.933/KOL/2025 Alco Suppliers Private Limited; 2022-23 03. The facts in brief are that the assessee company is incorporated on 30.03.1995. The assessee filed the return of income on 16.10.2022, declaring total income at ₹29,76,310/-. The company is a non-banking finance Company registered with RBI and is engaged in the business of investments and banking services. The case of the assessee was selected for scrutiny for the reason of ‘information in verification case uploaded through CRIU’. As per the said information, the assessee has made transactions with entities who were not engaged in the business any activities. The notice u/s 143(2) and 142(1) of the Act along with questionnaires were issued. The ld. AO observed that the assessee company has sold unlisted equity shares private limited companies to the tune of ₹31,28,75,000/-. The AO called for the information/details from the assessee of these i.e. the ITRs, balance sheets, profit and loss accounts etc. of 16 private unlisted companies whose shares were sold by the assessee and also the details of 28 entities, who had purchased these equity shares of 16 companies from the assessee. The assessee filed the written submissions/reply along with evidences before the ld. AO submitting that it had sold unlisted equity shares of private limited companies during the year which have realized ₹31,28,75,000/-. The assessee also provided the details of scrips sold during the year. The ld. AO observed that the companies of whose equity shares were held by the assessee were lacking substantial value and they have reported a very low income in their ITR. The ld. AO finally issued show cause notice to the assessee as to why the same should not be treated as unexplained cash credit in the hands of the assessee which was duly replied by the assessee. Finally, the ld. AO held that investigation wing has provided information that the private limited companies of whose unlisted shares were sold by the assessee company were shell company which was further strengthen Printed from counselvise.com Page | 3 ITA No.933/KOL/2025 Alco Suppliers Private Limited; 2022-23 by the analysis of the financial statements of 16 unlisted companies whose shares were sold to 28 individuals. According to the ld. AO, the genuineness of the transactions of sale of shares could not be established by the assessee and therefore, the money received of ₹31,28,75,000/- remained unexplained u/s 68 of the Act and added accordingly to the income of the assessee in the assessment framed u/s 143(3) read with section 144B of the Act dated 29.03.2024. 04. In the appellate proceedings, the ld. CIT (A) dismissed the appeal of the assessee. 05. The ld. AR submitted that the assessee, M/s. Alco Suppliers Pvt. Ltd., incorporated on 30.03.1995, filed its Return of Income for the A.Y. 2022-23 declaring its total income of Rs. 29,76,310/-. The assessee is registered with the Reserve Bank of India as a NBFC Company, engaged in the business of Investment and Banking Services. The ld AR submitted that the Ld. A.O., based on unverified information from DDIT (Inv.), Unit-1(1), Kolkata, and his mechanical reliance on such alleged information without doing any investigative efforts nor giving opportunities of cross-examination despite repeated requests from the assessee company, treated the sale of shares of 16 unlisted private limited companies by the assessee company as bogus , which have been acquired by the assessee company by virtue of amalgamation of M/s. Cogzenith Solutions Pvt. Ltd. with the assessee through the NCLT Order dated 09.12.2020. We note that the amalgamated company and held as investments since earlier years. The ld AR submitted that by virtue of the NCLT Order dated 09.12.2020, M/s. Cogzenith Solutions Pvt. Ltd. merged with the Assessee Company and that investments in the impugned unquoted equity shares of the 16 private limited companies held by M/s. Cogzenith Solutions Pvt. Ltd. got to be Printed from counselvise.com Page | 4 ITA No.933/KOL/2025 Alco Suppliers Private Limited; 2022-23 acquired by the assessee company by virtue of such amalgamation. The ld AR submitted that the order of the Hon'ble NCLT Bench is placed serial no. 4 at pages 55-71 of our Paper book. The AR also drew the attention of the bench to page 67 of paper book, wherein in the said NCLT Order at para 13-15, the Hon'ble NCLT stated had that it perused and examined representations/ observations made by the Regional Director, Official Liquidator, Reserve Bank of India and the Income Tax Department w.r.t. their respective \"No Objections\" for the merger of the Transferor Company (Cogzenith Solutions Pvt. Ltd.) with the Transferee Company (Alco Suppliers Pvt. Ltd.). Post such examination of the merits of the representations by the above- mentioned authorities, the NCLT approved the said amalgamation vide its Order dated 09.12.2020.4. 06. The ld AR submitted that the impugned investments in the unquoted equity shares were made by way of purchase by the erstwhile Transferee Company, Cogzenith Solutions Pvt. Ltd., in the year 2010- 11. The ld. AR submitted that these investments were then recorded in the books of the Transferee company, Alco Suppliers Pvt. Ltd., post- merger. The ld AR submitted that the assessee held on to such investments for a couple of years and, then it decided to liquidate the said investments bearing no yield in order to arrange funds for its business operations as it is a registered NBFC. That the sale of these investments was made at cost and were made through proper banking channels. The copies of the Sale Bills of such Investments, made during A.Y. 2022-23, are marked and annexed at Serial No. 8 (pages 117-160) of the Paper book along with the respective Ledger Accounts of the Purchasers in the books of the assessee company, marked and annexed at Serial No. 7 (pages 89-116) of Paper book. The ITR Acknowledgements, Audited Books of Accounts, Confirmation Printed from counselvise.com Page | 5 ITA No.933/KOL/2025 Alco Suppliers Private Limited; 2022-23 of Accounts and the relevant bank account statements of the purchase parties are also marked and annexed at Serial No. 9 (pages 161-804) of our Paperbook. 07. The ld AR vehemently submitted and emphasized that the assessee company had also liquidated a portion of its investments in the unquoted private shares of the impugned companies (which were recorded as investments in the audited books of the assessee as a consequence of the amalgamation through NCLT) in the immediately preceding year as well, i.e., A.Υ. 2021-22. It was submitted that the case of the assessee for A.Y. 2021-22, based on the alleged information from the DDIT (Inv.), Unit 1(1), Kolkata, was subjected to proceedings u/s. 148A of the Act to examine the sale of such investments in that year whether it was a FIT case for issuance of Notice u/s. 148 of the Act. The ld. AR submitted that the proceedings were dropped by an order dated 26.06.2025 u/s. 148A(3) for A.Y. 2021-22 passed by Ld. I.T.O., Ward 1(1), Kolkata, exonerating the assessee by holding that the case of the assessee was \"NOT FIT CASE\" to issue a notice u/s. 148 of the Act for A.Y. 2021-22. The ld AR submitted that the Department itself examined the sale of investments held by the assessee company in the impugned private limited companies, merger related documents along with the Audit Reports and Assessment Orders for A.Y. 2010-11 (Year of Purchase of the Investments by the Transferee Company) and A.Y. 2018-19 of Cogzenith Solutions Pvt. Ltd. in proceedings u/s. 148A of the Act for the immediately preceding year, i.e., A.Y. 2021-22. That post investing investigative efforts in examining the tenacity of the alleged unverified information and the facts of the assessee's own case on the identical issue of the sale of investments for A.Y. 2021-22, the Department unequivocally considered the assessee's case NOT FIT for Printed from counselvise.com Page | 6 ITA No.933/KOL/2025 Alco Suppliers Private Limited; 2022-23 reopening nor for issuance of the Notice u/s. 148 for the impugned preceding year. Therefore, it is humbly prayed that the Department ought not blow hot and cold in the same breath by exonerating the assessee on the identical facts towards the sale of the same investments in the preceding Assessment Year 2021-22 by dropping proceedings vide its order u/s. 148A(3) dated 26.06.2025 and incarcerating the assessee in the relevant Assessment Year 2022-23 on the identical set of facts, without application of mind. The said order u/s. 148A(3) of the Act for A.Y. 2021-22, in the assessee's own case, is available at page 72 to 77 of our Paper book. 08. The ld. AR submitted that the issue of Sale of Investments, held since prior years, is no longer Res Integra and finds binding force through pronouncements of the Jurisdictional High Court at Calcutta and Co- ordinate Benches of the Hon'ble ITAT, Kolkata, which squarely cover the case of the assessee. The ld. AR placed the reliance on the judgment of the Hon'ble Jurisdictional High Court in the case of PCIT- 1, Mumbai, vs Tulsyan and Sons Pvt. Ltd., ITAT/239/2024, order dated 16.04.2025. The ld AR submitted that the assessee’s case stands on a better footing, given that the purchase of the impugned investments were made by the Transferor Company, M/s. Cogzenith Solutions Pvt. Ltd., in 2010-11, which were not doubted by the Ld. Department and that the said company got merged with the assessee company in 2020 vide an NCLT Order of Amalgamation, wherein, the Income Tax Authorities have not objected to the scheme of amalgamation before the Hon'ble NCLT and allowed the assets of the Transferor Company to be taken over by the Assessee Company by virtue of the court approved amalgamation. Therefore, the addition made by the AO without reference to verified information and evidences without any tangible material and without application of Printed from counselvise.com Page | 7 ITA No.933/KOL/2025 Alco Suppliers Private Limited; 2022-23 mind, warrants interference by the tribunal. That the Ld. CIT(A)'s mechanical affirmation of the assessment order without applying mind to the facts of the assessee's case is an aberration from the cause of justice and that our appeal against the order of the Ld. CIT(A) passed u/s. 250 of the Act, ought to be allowed, as is prayed before this tribunal. Therefore, it is humbly prayed that in light of the arguments advanced and precedents relied upon by appellant, the assessee's Appeal may please be allowed in full and the arbitrary addition made by the Ld. A.O. in the relevant year on account of sale of shares held as investments to the tune of Rs. 31,28,75,000/- be deleted in full by quashing the Ld. CIT(A)'s order and directing the Ld. A.O. in deleting the addition in full. 09. The ld. DR on the other hand vehemently opposed the argument of the ld. AR that the share of investments in the current year cannot be doubted as bogus if the investments were purchased by the amalgamating company in the A.Y. 2010-11 and those investments were accepted by the department even in the assessment proceeding which culminated under section 143(3). The ld. DR submitted that admittedly these investments were accepted in the earlier assessment years but that would not serve as a bar in the subsequent year when the sale of investments was made. It is also correct that in the preceding assessment year i.e. 2021-22, the proceedings u/s 148A were initiated, however, an order u/s 148A(3) was passed on 26.06.2025 by holding that it is not a fit case for issuance of notice u/s 148 of the Act. The ld. DR submitted that the act of the act cannot be taken as a restrain from doubting the sale of investments in the current year when there are cogent evidences before the department to treat them bogus on the basis of evidences available on record. The Printed from counselvise.com Page | 8 ITA No.933/KOL/2025 Alco Suppliers Private Limited; 2022-23 ld. DR therefore prayed that the order of authorities below may be upheld. 010. We have heard the rival submissions and perused the materials available on record and find that the assessee company has sold its investments i.e. unlisted equity shares held in 16 unlisted private companies to other 24 entities/companies. The ld. AO during the course of assessment proceedings noted that the unlisted shares of private limited companies were nothing but bogus transactions and similarly, the purchasing companies were also bogus and shell entities. Coming to the background of the case, we note that M/s. Cogzenith Solutions Pvt. Ltd. was merged with the assessee company by the NCLT vide order dated 09.12.2020, who was holding the impugned investments of these unlisted equity shares prior to the merger with the assessee company. We also observe that consequent to the said amalgamation , the investment in unquoted equity shares of 16 private companies held by M/s. Cogzenith Solutions Pvt. Ltd. came to be acquired by the assessee by virtue of amalgamation. A copy of NCLT order is available at page no.55 to 75 of the Paper Book. We also note that before passing the order of NCLT has taken into consideration the representations by the regional director, official liquidator, Reserve Bank of India (RBI) and Income Tax Department by way of no objections filed to the said merger with the assessee company and only thereafter the NCLT approved the amalgamation vide order dated 09.12.2020. We note that the amalgamating company M/s. Cogzenith Solutions Pvt. Ltd. had acquired these shares of 16 private limited company in F.Y. 2010-11 and since then these investments were being shown in the books of the amalgamating company. We note that post amalgamation these investments were accounted for and shown in the books of account of the amalgamating Printed from counselvise.com Page | 9 ITA No.933/KOL/2025 Alco Suppliers Private Limited; 2022-23 company i.e. assessee company. We note that the sale of investments were made at cost meaning thereby that there being no profit/gains made on such shares as corroborated by the copies of the sale bills of the investments which are available at page no.70 to 160 of the Paper Book. We note that during the course of assessment proceedings, the assessee furnished before the ld. AO, the copies ITRs, audited books of accounts, confirmation of accounts, relevant bank accounts of the purchase parties which are also available from page no.1612 to 1804 of the Paper Book. We note that during the year the assessee company has only liquidated and sold a part of the investments held by it and the remaining investments were continuing to be shown in the balance sheets of the assessee company as of now. 011. We observe from the facts before us and rival contentions that in the assessment year 2021-22, the AO initiated the reassessment proceeding u/s 148A of the Act to examine the sale of investments in that year pursuant to a information from the DDIT Investigation 1(1), Kolkata and the ld. ITO Ward 1(1), Kolkata, after taken into account the facts and details and after making enquiries, dropped the proceeding by passing an order u/s 148A(3) of the Act dated 26.06.2025 and thus, clearly held that it is not a fit case for issue of notice u/s 148 of the Act for A.Y. 2021-22. Therefore, department itself accepted the position with regard to sale of investments in A.Y. 2021-22 by holding that there is no escapement of income , then how the department can change its stand without there being any change in the facts and circumstances during the instant assessment year 2022-23 vis a vis assessment year 2021-22. 012. Undisputably the department accepted these investments right from A.Y. 2010-11, till date the merger in the hands of the M/s. Cogzenith Printed from counselvise.com Page | 10 ITA No.933/KOL/2025 Alco Suppliers Private Limited; 2022-23 Solutions Pvt. Ltd. and we even note that the assessments framed for A.Y. 2010-11 and A.Y. 2018-19 in the case of amalgamated company i.e. Cogzenith Solutions Pvt. ltd. as stated above and even in the proceeding’s u/s 148A of the Act for A.Y. 2020-21 which were dropped as such. In other words, the sale of investments was treated to be genuine in A.Y. 2021-22 as the proceedings were dropped by the ld. AO as stated hereinabove. Thus , when the facts are materially same in the current assessment year, how the department could doubt the same investments to be non-genuine and unexplained. In our opinion, the order of the ld. CIT (A) upholding the order of ld. AO appears to be incorrect. The case of the assessee is squarely covered by the decision of Hon'ble Jurisdictional High Court in case of PCIT-1, Vs. Tulsyan and Sons Pvt. Ltd. ITAT 239/2024 order dated 16.04.2025 and we note that the said decision of the Hon'ble High Court has been followed by the co-ordinate bench in the case of ACIT Vs. Pawanputra Advertising Private Limited in IT(SS)A No. 144 & 145, 157,158,159/KOL/2024 & IT(SS) No.1/KOL/2025 vide order dated 26.08.2025. The operative part of the same is extracted below:- “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 also noted Printed from counselvise.com Page | 11 ITA No.933/KOL/2025 Alco Suppliers Private Limited; 2022-23 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 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 Printed from counselvise.com Page | 12 ITA No.933/KOL/2025 Alco Suppliers Private Limited; 2022-23 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: “6.1.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 cognizance 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. …….. 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 Printed from counselvise.com Page | 13 ITA No.933/KOL/2025 Alco Suppliers Private Limited; 2022-23 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 By A.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 No Name of the Script Opening Balance Purchases Sales Closing Balance Amount Amount Amount Amount I Bellona Supply Pvt. Ld. 1,24,57,344 0 1,24,57,344 0 2 P N Jewellers Pvt ltd 38,45,323 0 38,45,323 0 3 Rozela Tie Up Pvt. Ltd. 3,64,33,053 0 3,64,33,053 0 4 Rashmi Cement Ltd. 0 1,57,32,000 0 1,57,32.00 0 5 Cimmco Vinimay Pvt. Ltd. 13,32,04,353 53,71,44,701 0 67,03,49,0 54 6 Festive Vincom Pvt Ltd 28,01,625 0 0 28,01,625 7 Green Hill Dealmark Pvt Ltd 26,14,850 0 0 26,14,850 8 Swabhiman Commosales Pvt Ltd 26,15,900 0 0 26,15,900 9 Topline Business Pvt Ltd 41,00,205 0 0 41,00,205 10 Vidya Buildcon Pvt Ltd 0 2,50,00,000 2,50,00,000 0 11 Badrinath Minning Pvt Ltd 59,36,974 75,250 60,12,224 0 12 Sankul Retailers Private Ltd 0 74,49,572 74,49,572 0 13 Alok Financial Services Pvt Ltd 0 8,10,000 8,10,000 0 14 Asankul Cosmetics Pvt Ltd 0 6,55,26,090 6,55,26,090 0 15 Daffodil Plaza Pvt Ltd 0 88,198 88,198 0 16 NAT Communication & Marketing Pvt Ltd 0 1,26,37,632 1,26,37,632 0 17 Alok Pattanayak 0 3,00,000 3,00,000 0 Total 20,40,10,245 66,47,63,507 17,05,60,00 0 69,82,13,6 34 Printed from counselvise.com Page | 14 ITA No.933/KOL/2025 Alco Suppliers Private Limited; 2022-23 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 Year 11,18,86,806 Sold out of Investment Purchased During the Year 11,18,86,806 Total 17,05,60,000 Total 17,05,60,000 11.5. It is also important to note that the AO has made enquiries from the buyers of the shares sold by the assessee by issuing summons u/s 131 of the Act who have responded and furnished the required details. Summary Statement of the replies made in response to notice u/s 131 by various buyers (Sale of Shares) is tabulated below: 12. Further, according to the ld. Counsel, the only piece of evidence that is there in this case is the statement of Sri Sanjib Patwari who is one of the owners of the Rashmi group and Sri KK Verma is the accountant, recorded u/s 132(4) of the Act which have been relied upon by the Assessing Officer. These statements have been retracted the very next day by furnishing affidavits. Subsequent to retraction, no further cross- examination was conducted of these persons. The ld. Counsel has further submitted that even otherwise the addition made by the Assessing Officer was far more than the alleged disclosure made by these persons in their retracted statements and hence, no cognizance in fact can be taken for the purpose of the addition. 12.1. We find force in the above contentions of the ld. Counsel in the facts and circumstances of the case. As laid down by the various Higher Courts of the country, the retracted statement cannot be made sole basis for making the additions. The Jurisdictional Calcutta High Court in the case of 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 Printed from counselvise.com Page | 15 ITA No.933/KOL/2025 Alco Suppliers Private Limited; 2022-23 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 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 Printed from counselvise.com Page | 16 ITA No.933/KOL/2025 Alco Suppliers Private Limited; 2022-23 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 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, Printed from counselvise.com Page | 17 ITA No.933/KOL/2025 Alco Suppliers Private Limited; 2022-23 Subject: Confession of additional Income during the course of search & seizure and survey operation – regarding Instances have come to the notice of the Board where assessee have claimed that they have been forced to confess the undisclosed income during the course of the search & seizure and survey operations. Such confessions, if not based upon credible evidence, are later retracted by the concerned assessee while filing returns of income. In these circumstances, on confessions during the course of search & seizure and survey operations do not serve any useful purpose. It is, therefore, advised that there should be focus and concentration on collection of evidence of income which leads to information on what has not been disclosed or is not likely to be disclosed before the Income Tax Departments. Similarly, while recording statement during the course of 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 Printed from counselvise.com Page | 18 ITA No.933/KOL/2025 Alco Suppliers Private Limited; 2022-23 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/-. 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 Printed from counselvise.com Page | 19 ITA No.933/KOL/2025 Alco Suppliers Private Limited; 2022-23 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. 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.” 013. We, therefore respectfully following the above decisions, set aside the order CIT (A) and direct the ld. AO to delete the addition. 014. In the result, the appeal of the assessee is allowed. Order pronounced in the open court on 04.11.2025. Sd/- Sd/- (PRADIP KUMAR CHOUBEY) (RAJESH KUMAR) (JUDICIAL MEMBER) (ACCOUNTANT MEMBER) Kolkata, Dated: 04.11.2025 Sudip Sarkar, Sr.PS Printed from counselvise.com Page | 20 ITA No.933/KOL/2025 Alco Suppliers Private Limited; 2022-23 Copy of the Order forwarded to: BY ORDER, True Copy// Sr. Private Secretary/ Asst. Registrar Income Tax Appellate Tribunal, Kolkata 1. The Appellant 2. The Respondent 3. CIT 4. DR, ITAT, 5. Guard file. Printed from counselvise.com "