AI Insights
The case involves M/s Ashtvinayak Sales Pvt. Ltd., which appealed against the order of the Commissioner of Income Tax (Appeals) - 20, Kolkata, which upheld the addition of Rs. 99,72,36,986 made by the Assessing Officer (AO) on account of the sale of shares as unexplained cash credit under section 68 of the Income Tax Act. The Tribunal examined the legality of two assessment orders passed by the AO, one of which was undated and lacked a Document Identification Number (DIN), and both were challenged for being cryptic and non-speaking. The Tribunal also considered the retracted statements of key persons and the lack of corroborative evidence to support the additions made under section 68. The Tribunal's decision was influenced by the precedent set in a similar case involving a group concern of the Rashmi Group, where the Tribunal had partly allowed the appeal under similar circumstances.
Appeal Details
Counselvise Citation
[2023] 140 COUNSELVISE.COM (IT) 134604 (ITAT-KOLKATA)
Assessee PAN
Bench
Appeal Number
CRN Number
Duration Of Justice
1 year(s) 1 month(s) 3 day(s)
Appellant
Respondent
Appeal Type
Income Tax (Search & Seizure) Appeal
Pronouncement Date
13-09-2023
Appeal Filed By
Assessee
Order Result
PartlyAllowed
Bench Allotted
B
Next Hearing Date
04-07-2023
Assessment Year
2019-2020
Appeal Filed On
09-08-2022
Judgement Text
आयकर अपीलीय अिधकरण, कोलकाता पीठ ‘ ’, कोलकाता IN THE INCOME TAX APPELLATE TRIBUNAL “B” BENCH KOLKATA BEFORE SHRI RAJESH KUMAR, ACCOUNTANT MEMBER AND SHRI SONJOY SARMA, JUDICIAL MEMBER IT(SS)A No.54/Kol/2022 Assessment Year: 2019-20 M/s Ashtvinayak Sales Pvt. Ltd. 8, West Range, 3 rd Floor, Kolkata- 700017. PAN: AAKCA3651Q Vs. ACIT, Central Circle-2(2), Kolkata (Appellant) (Respondent) Present for: Appellant by : Shri A. K. Tulsiyan, FCA,Smt Khushaboo Rai A.C.A & Shri Bharat Jain A.C.A. Respondent by : Shri Biswanath Das CIT-DR on 17.11.2022 &Shri Abhijit Kundu, CIT-DR on 05.07.2023. Date of concluding Hearing : 05.07.2023 Date of Pronouncement : 14.09.2023 आदेश / ORDER PER RAJESH KUMAR, ACCOUNTANT MEMBER: The present appeal has been preferred by the assessee against the orderdated 21.07.2022 of the Commissioner of Income Tax (Appeals)- 20, Kolkata [hereinafter referred to as ‘CIT(A)’] passed u/s 250 of the Income Tax Act (hereinafter referred to as the ‘Act’). 2. The assessee in this appeal has taken the following grounds of appeal: “1. That the Ld, CIT(A) has wrongly upheld the addition of Rs. 99,72,36,986/- made by the AO on account of sale of shares held as investment by it as unexplained Cash Credit u/s 68 of the IT Act by relying on various case laws regarding penny stocks and share capital. The Ld. CIT(A) as well as the AO has ignored the fact that the sale of IT(SS)A No.54/Kol/2022 Assessment Year: 2019-20 M/s Ashtvinayak Sales Pvt. Ltd. 2 shares (investments) were made out of opening investments and purchases of investment during the year. The AO has not disputed the opening balance and purchases of investment as such. All the sale of investments were through proper banking channels. Further, most of the buyers have confirmed the purchase of shares and the purchase & sale are made in the normal course and Ld. CIT(A) & AO has not pointed out any specific defect in any reply. Assessee has not claimed any exemption or deduction of any nature and hence, the case laws relied upon by the AO &CIT(A) are not applicable in the appellant's case. Hence, the addition made & confirmed by Ld. CIT(A) is merely based upon suspicion which needs to be deleted. 2. That the appellant craves to leave, add, alter, amend or withdraw any ground or grounds of appeal before or at the time of heating.” 3. In the above grounds of appeal, the assessee has raised sole issue relating to the confirmation of addition by CIT(A) as made by the Assessing Officer in respect of sale consideration received by the assessee on account of sale of shares/investments in different companies holding that the assessee had failed to establish the identity and creditworthiness of the purchasers. 4. Facts in brief are that the assessee filed original return of income on 31.10.2019 declaring total income of Rs.6,25,93,870/-. Thereafter a search action u/s 132 of the Act was conducted at the business premises of the “Rashmi Group” of companies and residential premises the directors and key persons on 24.1.2020 including the assessee. The notice u/s 153A of the Act was issued on 18.02.2021 which was duly served on the assessee. The assessee complied with the said notice by filing return of income on 3.3.2021 declaring the same income of Rs. 6,25,93,870/-/- as was declared in the original return filed u/s 139(1) of the Act. Thereafter statutory notices were duly issued and served on the assessee. During the course of assessment proceedings, the AO observed on the basis of records as well as submissions of the assessee that the assessee has received Rs. 99,72,36,896/- on account of IT(SS)A No.54/Kol/2022 Assessment Year: 2019-20 M/s Ashtvinayak Sales Pvt. Ltd. 3 proceeds from sale of shares/investments where the identity and financial credentials of the entities purchasing the said investments were suspicious in nature. The AO, after relying on the decisions of Hon’ble Supreme Court in the case of CIT vs. Durga Prasad More [1971] 82 ITR 540 (SC), Sumati Dayal vs. CIT [1995] 214 ITR 801 (SC) and PCIT vs. NRA Iron & Steel Pvt. Ltd. (2019) 412 ITR 161 (SC), added sum of Rs. 99,72,36,896/- /- on the ground that the assessee has failed to prove the genuineness of the transactions and creditworthiness of the entities purchasing the investments in the assessment framed u/s 143(3) of the Act dated 29.09.2021.Pertinent to state that the said order contained only 7 pages and was bearing Document Identification Number( in short called DIN). 5. The AO also passed another assessment order which is undated u/s 153A r.w.s.143(3) of the Act running into 74 pages making the same addition of Rs. 99,72,36,896/- u/s 68 of the Act in respect of sales consideration of shares/investments citing the same reasons. The said order was without bearing any DIN. 6. The aggrieved assessee assailed the assessment order before the first appellate authority however, the ld. CIT(A) confirmed the impugned addition by observing as under: “5.3(a) I have carefully considered the facts of the case and submission of the appellant. Assessee's submission that it had discharged its onus by providing details of the share transactions, is not acceptable and the case laws relied by appellant are not relevant to the facts of the assessee's case. Sale of shares of Private Ltd. Companies to paper/shell companies controlled by entry operators has been misused to bring back one's own unaccounted money through a maze of jamakharchi companies and the individuals associated with it. Entire operation is shrouded in secrecy. It provides a means to bring backone's own unaccounted money in its accounts at a very cheap rate by paying small amount as commission to the persons involved in these activities. 'Sale of shares' has been found to be used as a colourable device for tax avoidance and for bringing the unaccounted income in the books of accounts /capital A/cs. IT(SS)A No.54/Kol/2022 Assessment Year: 2019-20 M/s Ashtvinayak Sales Pvt. Ltd. 4 5.3(b) In its submission assessee has laid great emphasis on the fact that the payments have been made through banking channels, documents relating to sale of shares were made available to the Assessing Officer and documents necessary for establishing identity of the buyers are also available. The buyers have been filing return of income. Appellant submits that the above mentioned supporting evidence are sufficient to establish the identity of the person who had purchased the shares, their creditworthiness and the genuineness of the transactions. However, there are several judgements, including that of Calcutta High Court in the case of PCIT-5, Kolkata vs. Swati Bajaj, IA No.GA/2/2022 in ITAT/6/2022 dated 14-06-2022 which have held that sale consideration changing hands through banking channels or the documents available for establishing the paper identity of the buyers are not good enough when the share transactions have been used as colourable device to bring back one’s own unaccounted income or to indulge in any other manipulation. Some of such judgements are briefly discussed in the succeeding para. 5.3 (c) There are instances where the Hon'ble Courts have held such share transactions as colourable device and this is not only limited to the sale of shares of Private Limited Company but, whenever found appropriate, Courts have not hesitated to hold even the share transaction through stock exchange as colourable device. In the case of CIT vs. Wipro Ltd.(2014) 50 taxman.com 421 (Karnataka), the Hon'ble Court has held the capital loss shown by the Wipro Ltd. as colourable device to evade payment of tax on Long Term Capital Gain.In this case assessee had earned Short Term Capital Gain from sale of shares in one transaction and in another transaction, it had purchased shares of its subsidiary at premium and sold them at a very small price thereby incurring Long Term Capital Loss. Transaction of subsidiary share sale resulting in Long Term Capital loss was entered on the immediate next day of accrual of Short Term Capital Gain. Subsidiary shares were sold to ex-employees. Further, after sale of subsidiary shares, assessee infused the capital of Rs.95 crores into its subsidiary company which stood repaid on the same date by the subsidiary company. Hon'ble High Court of Karnataka has held that the transactions leading to Long Term Capital Loss as 'Sham' transaction. Similarly, in the case of Premier Synthetic Industries vs. ITO, Ward-II(7), Coimbatore (2012) 22 taxman.com 333, Hon'ble Madras High Court has held that the transaction regarding purchasing share of companies at Rs.30 per share and selling it in no time at Rs.8.5 to Sister concern of said company as 'Sham' transaction. In the case of DCIT vs. Pawan Kumar Malhotra (2010) 2 ITR (T) 250, the ITAT (Delhi) has held that mere payment of security transaction tax would not make transaction genuine. In this case, assessee had purchased 50,000 shares for Rs.1,40,800/- in the year 2003-04 from two employees of that company and sold them for Rs.81,72,340/- in March, 2005 and purchaser of these shares could not be traced. Also, sale price was exorbitantly high and logically absurd. Under the circumstances, the Hon'ble ITAT has upheld A.O's action in treating such share transaction as 'sham' and making addition. Taking support from the judgement of Hon'ble Supreme Court in the case of Sumati Dayal vs. CIT (1995) IT(SS)A No.54/Kol/2022 Assessment Year: 2019-20 M/s Ashtvinayak Sales Pvt. Ltd. 5 214 ITR 801, it was held that the genuineness of transaction is to be considered on the basis of surrounding circumstances, human probabilities and the conduct of the connected parties. A transaction does not become genuine merely because paper trail has been created. The shares involved in the transaction were neither quoted nor listed in any stock exchange. The purchaser of the shares could not be traced and the sale price was exorbitant and logically absurd. Under the circumstances, Hon'ble ITAT upheld the A.O's action. Similarly, the Hon'ble Courts have upheld A.O.'s action in not allowing exemption u/s.10(38) of the I.T. Act, in respect of Long Term Capital Gain wherever it was found that the share prices were manipulated on the stock exchange. There were no real buyers of the shares sold through price manipulation in stock exchanges. In the case of ITO-19(3)(4),Mumbai vs. Shamin M. Bharwani (2016) 69 taxmann.com 65, the ITAT, Mumbai upheld the A.O.'s action in rejecting assessee's claim u/s.10(38) of the Act. Here, assessee had claimed income earned from sale of shares as exempt u/s.10(38). However, purchase transactions of these shares were not recorded in stock exchange and selling rate were artificially hiked. Further it was found that there were no real buyers of the shares sold by the assessee. In the case of Smt. M.K. Rajeswari vs. ITO, Ward-3, Raichur (2018) 99taxmann.com 339, Hon'ble ITAT, Bangalore Bench upheld A.O's action in rejecting assessee's claim u/s. 10(38). A.O. had rejected assessee's claim u/s. 10(38) because financial worth of the company, whose shares were transacted, was very small and there was abnormal rise in price of shares. Under the circumstances, it was concluded that assessee had introduced her own un- accounted money in the garb of Long Term Capital Gain. In the case of Pooja Ajmani vs. ITO, W-20(4), New Delhi (2019)106 taxmann.com65, The Delhi Bench of ITAT upheld A.O's action in making addition u/s.69A in respect of capital gain arising from sale of shares of a company on the basis of information received from Investigation Wing that said that company was engaged in providing bogus entries of capital gain or sale of shares, since assessee had failed to discharge her burden of prove that Long Term Capital Gain arising on sale of shares was genuine. In another case where Long Term Capital Gain on sale of share by the assessee was an arranged affair to convert its own un- accounted money through accommodation entries and assessee failed to prove genuineness of transaction, exemption claimed u/s.10(38) on sale of shares was disallowed. This was upheld by the Delhi ITAT as reported in Satish Kishore vs. ITO, W-47(2), New Delhi (2019) 110 taxmann.Com 307. In the case of Sandeep Bhargava vs. ACIT, Circle-60(1), New Delhi, (2019) 109 taxmann.com 174 (Delhi ITAT), assessee had claimed Long Term Capital Gain on sale of shares of 'HPC Bio Science Ltd.' as exempt u/s.10(38) of the I.T. Act, 1961. A.O., however, held that proceeds received from sale of shares on 'HPC Bio Science Ltd.' were accommodation entry only for converting unaccounted income of the assessee and bringing it in the books of accounts. Assessee has submitted documentary evidence of purchases and sale but according to A.O, assessee failed to substantiate sharp rise in price of shares which was not commensurate with the financial worth of the company. As assessee failed to IT(SS)A No.54/Kol/2022 Assessment Year: 2019-20 M/s Ashtvinayak Sales Pvt. Ltd. 6 justify the transaction leading to claim of Long-Term Capital Gain as genuine transaction and also failed to justify manifold increase in price of shares of 'HPC Bio Science Ltd.' despite weak financial of company, it was held that assessee has failed to discharge his burden of proof and explain nature and source of transaction. CIT(A) had confirmed the addition made by the A.O. which was upheld by the ITAT. In another case reported in Sanat Kumar vs. ACIT, Circle- 36(1), New Delhi (2020) 122 taxmann.com 75,the ITAT Delhi upheld A.O.'s action where assessee purchased and sold share of a company which was engaged in providing bogus entries in the form of Long Term Capital Gain and Short Term Capital Gain and assessee failed to prove genuineness of transaction. The Hon'ble ITAT upheld the addition made us 68 in respect of Long Term Capital Gain earned by the assessee on such share transaction. In the case of Sanjay Bimalchand Jain vs. PCIT-1, Nagpur (2018) 89 taxmann.com 196 (Bombay High Court), assessee had purchased shares of penny stock companies at lower amount and within a year sold such shares at much higher amount but assessee could not give cogent evidence to explain as to how shares an un-known company jumped assessee also failed to provide details of person who had purchased the shares. Under the such higher amount within a short time and circumstances, the Hon'ble High Court upheld A.O's findings that these transactions were attempt to bring in his undisclosed income in the garb of Long Term Capital Gain AO had held the transaction of sale and purchase of shares of penny stock companies as an adventure in the nature of trade and brought the gains in such transaction to tax as business income. The Hon'ble Bombay High Court has upheld the A.O's findings. In the case of Suman Poddar vs. ITO (2019) 112 taxmann.com 330 (SC), the Hon'ble Supreme Court has dismissed the SLP filed by the assessee against the order of the Hon'ble Delhi High Court. In this case, assessee had filed her return claiming exemption u/s. 10(38) in respect of capital gain arising from sale of shares, A.O. took a view that share transactions were bogus because company whose shares were allegedly purchased and sold was penny stock company. Hence, assessee's claim was rejected by the A.O. A.O.'s action was upheld by the Tribunal and the Hon'ble High Court of Delhi. 5.3(d) Assessee had cited several Courts/TAT decision which hold that provisions of section 68 are not applicable in the matter of share transactions. However, with due respect, I would like to point out that several case laws have been discussed in the preceding paras where Courts have upheld the additions u/s. 68 even in respect of share transactions. These include the decision of the Hon'ble Calcutta High Court in the case of PCIT-5 vs. Swati Bajaj (Supra). 5.3(e) In its submission, assessee has mentioned that there was no direct evidence for making additions. There is no direct evidence that assessee's unaccounted income has been routed through sale consideration and brought back in the books of accounts. In this regard I would like to refer to the decision of the Mumbai Bench of ITAT in the case of M/s. Mont Blanc Properties and IT(SS)A No.54/Kol/2022 Assessment Year: 2019-20 M/s Ashtvinayak Sales Pvt. Ltd. 7 Industries Pvt. Ltd., ITA No.614/Bom/87, wherein the Tribunal held that the word 'evidence' as used in section 143(3), covered circumstantial evidence also and cannot be confined to direct evidence only, as in tax jurisprudence the word "evidence" has much wider connotation. As is evident in the present case, A.O. has brought a number of circumstantial evidences on record which, when considered collectively, clearly establish that sale of shares is not genuine and it is used as colourable device to route its own unaccounted income. 5.3(f) Appellant has mentioned that share capital of 69.76 crores was raised in A.Y. 2006-07 and these funds were invested in the shares of Private Limited Companies. Return for AY. 2006-07 was taken up for scrutiny and order u/s. 143(3) was passed. However, while finalizing the order, Assessing Officer did not raise any objection regarding the investments made. Hence, A.O. is not justified in the current year to doubt the sale consideration received on sale of such shares, which have been carried forward since A.Y. 2006-07. I have given careful thought to objection of the appellant. Share prices of the listed equity as well as unlisted equities keep fluctuating for a variety of reasons. Even the blue- chip stocks are not immune from price fluctuation. Depending on the performance of companies, future projection about that segment and several other factors combine together to decide the price of shares of a company. There is wide variation from time to time in the price of shares of any company and price fluctuates both ways. If the share was trading at a certain level, then there is no guarantee that it will not fall below that level. Hence, assessee's assertions that shares were purchased at the certain price in the past and hence, they would always command the same price, is fallacious and not supported by facts. In assessee's own case it can be seen that shares were purchased in A.Y. 2006-07 and these were recorded at cost price in the Balance sheet. However, over the next few years, the share price must have dropped substantially which led the Rashmi Group to acquire this company at very nominal price in A.Y. 2017-18. In the current year, A.O. has raised objection at the price commanded by these shares, after taking into account various factors and the A.O. is justified in this regard. Appellant had mentioned that it had also purchased some shares in the current year and part of the shares sold were out of current year purchases. Since, Assessing Officer has not doubted the purchases, A.O. is not justified in doubting only the sale consideration. In this regard, I would like to mention that A.O. has diligently worked to gather all the circumstantial evidences which prove that the sale of shares have been used as colourable device to bring back its own unaccounted income in the books of accounts. The objective is achieved at the stage when shares are shown to be sold to different parties and money is credited in the accounts of the assessee. Sale consideration is the benefit which is assessee is trying to derive by using the colourable device of pre decided bogus sale of shares. Hence, A.O. has concentrated only on the sale consideration and I do not find any infirmity in order of the A.O. in this regard. IT(SS)A No.54/Kol/2022 Assessment Year: 2019-20 M/s Ashtvinayak Sales Pvt. Ltd. 8 5.3(g) During assessment proceedings, A.O. had prima-facie established that the share transactions were not above board. There was involvement of shell companies at various stages. In the first place, assessee company was acquired in A.Y. 2017-18 at a very nominal price by purchasing its shares held by shell companies. Then in the current year the shares held as investment by assessee company were sold to shell companies and paper entities which did not have financial wherewithal to purchase those shares and pay huge amount. These entities were not doing any genuine business and they were showing either Nil or very negligible income in their income tax return which was mainly for the purpose of establishing their paper identities through income tax returns. Assessing Officer has pointed out that most of the entities did not own physical assets and did not have any verifiable physical address. Besides, the statements of the entry operators recorded earlier had mentioned the shell companies/entities operated by them and some of such shell entities were found to be involved in purchase and sale of shares and the assessee company and/or the Rashmi Group being one party to the bilateral transactions. All these evidences combined together do cast onus on the assessee to establish the real identity of the parties which have purchased of the shares sold by the assessee company, their creditworthiness to indulge in huge monetary transaction and the genuineness of the transactions. The Hon'ble Supreme Court in CIT vs. Durga Prasad More 82 ITR 540 (SC) has pointed out that taxing authorities are entitled to look into the surrounding circumstances to find out the reality and the matter has to be considered by applying the test of Human probability. For the same proposition, the A.O. has also referred to the decision of the Hon'ble Supreme Court in Sumati Dayal vs. CIT, 214 ITR 801 (SC). Taking note of the said legal principle, A.O. has considered the surroundings circumstances and applying the test of human probabilities, coupled with the report of Directorate of Investigation which has been discussed in the assessment order, A.O. has rightly held that the assessee has been party to pre designed mode of transactions under the guise of selling its investments (in unquoted equities) and thus it has brought its unaccounted/undisclosed income in its books. 5.3(h) In the case of PCIT (Central)-1 vs. NRA Iron & Steel (P) Ltd. (2019) 412 ITR 161 (SC) the Hon'ble Supreme court has examined the scope of section 68 of the I.T. Act, 1961. Although this judgement was in respect of bogus share application money but the principle propounded by the Hon'ble Supreme court in respect of identity, creditworthiness and genuineness of the transactions are equally applicable in this case as well ...... 5.3(i) The parties which had purchased the shares, were not found at their given addresses. Perusal of the Income Tax returns showed that these entities did not have the capacity to make huge purchases. The enquiries conducted by the Investigation Wing and the A.O. established that the purchases were made by shell companies controlled by entry operators. Assessee had used these shell companies to bring back its own unaccounted money in its books in the garb of sale consideration. Thus, the transactions were not genuine. Assessee IT(SS)A No.54/Kol/2022 Assessment Year: 2019-20 M/s Ashtvinayak Sales Pvt. Ltd. 9 was controlled with all these issues but even the assessee could not provide satisfactory answer. Assessee could not even provide the current addresses of these entities. It merely said that transaction was a normal sale transaction and as such the assessee did not take any details of the party. Assessee sold the investment and received money. It did not have any further contact with the party after that. However, this explanation is not acceptable. Conduct of the assessee has to pass the test of human probabilities, as stated by the Hon’ble Supreme Court in the cases of Sumati Dayal (Supra) and Durga Prasad More (Supra). Shares of unquoted scripts are traded between relatives, business associates or other known persons. Case laws referred by the Hon'ble Supreme Court while deciding the case of Pr. CIT(Central)-I, Kolkata Vs. NRA Iron & Steel Pvt. Ltd. (Supra), clearly point out that only establishing paper identity, or transactions being made through banking channels or mere submission of confirmations by the lenders, are not enough to satisfy the provisions of section 68. As the assessee has failed to satisfy all the basic three ingredients together, viz. identity of the purchasers, capacity of purchasers and genuineness of transactions, sale consideration received on account of pre designed share transactions are hit by provisions of section 68. Hence, addition of Rs.99,72,36,896/- is confirmed.” 7. The Ld. Counsel for the assessee vehemently submitted before the bench that assessment framed by the AO by passing two assessment orders making the same addition is nullity and bad in law as two assessments are not permissible under the Act. The counsel contended that a perusal of the first assessment order reveals that the Assessing Officer has not discussed in the impugned assessment order even a single point or incriminating evidence to justify the addition made by him. The ld AR stated that That a simple one line observation has been given by the AO that the identity and financial credentials of the entities purchasing the shares/investments were suspicious in nature without discussing anything about the nature of the investments sold and how the identities of the purchasers were suspicious. The Ld. Counsel, therefore, has contended that a cryptic and non speaking assessment order is not sustainable as per law. The ld AR argued that the first assessment order which is non speaking and cryptic is bad in law and has to be quashed. In defense of his arguments, he relied on the following decisions: IT(SS)A No.54/Kol/2022 Assessment Year: 2019-20 M/s Ashtvinayak Sales Pvt. Ltd. 10 a) Vishal Ashwin Patel Vs. ACIT (2022) 136 taxmann.com 372 (SC) b) Vellaian Selvaraj Vs NFAC (2022) 138 taxmann.com 122(Mad) c) Tala Teleservices (Maharashtra) Ltd Vs DCIT(TDS) (2018) 90 taxmann.com 1(Bom) d) Indian Minerals and Granite Co. Vs DCIT (2022) 137 taxmann.com 119(Kar) 7.1. The Ld. Counsel for the assessee has further invited attention of the bench to second undated assessment order and submitted that the Assessing Officer, in order to cover up the lacunas and defects in the aforesaid first cryptic assessment order, passed another undated detailed order running into 74 which was passed even after the prescribed date of limitation for passing the assessment order for the assessment year under consideration and the said order even did not bear any DIN as mandated vide CBDT Circular No.19 of 2019. The ld. Counsel has further submitted that the ld. CIT(A), however, has taken cognizance of the said subsequent assessment order passed by the Assessing Officer, which, otherwise was liable to be treated as non-est in the eyes of law in view of the decision of the Hon’ble Delhi High Court in the case of CIT vs. Brandix Mauritius Holdings Ltd. [2023[ 149 taxmann.com 238 (Del) wherein it has been held that any communication without mentioning of the DIN in its body is to be treated as non-est. The ld AR therefore prayed before the bench that even the second assessment order without DIN is non est and may be quashed. 7.2. The ld. counsel while referring to the observations of the CIT(A) (as extracted above) has submitted that both the lower authorities i.e. AO as well as the CIT(A) have made general observations about the modus IT(SS)A No.54/Kol/2022 Assessment Year: 2019-20 M/s Ashtvinayak Sales Pvt. Ltd. 11 operandi of certain companies introducing their unaccounted income into the books of the company. However, in the case of the assessee, no specific instances or evidences have been brought on record which would prove that the sale consideration received by the assessee on sale of shares/investments was bogus or that own unaccounted money of the assessee has been routed into the system through the alleged bogus transactions. That the assessee had made sale of investments of Rs.99,72,36,896/- which were duly reflected in its books of account, hence, the sale proceeds of such investments cannot be added under deeming provisions of Income Tax Act, as this would lead to double taxation of the same. In support of its contentions, he has cited decision of Kolkata ITAT dated 29.05.2020 in the case of Bhagwant Merchant Pvt. Ltd. Vs. ITO, ITA No 2614/Kol/2019. The ld. Counsel has cited another decision of Delhi ITAT in the case of Brij Resources Pvt. Ltd. Vs. ITO. ITA No 8835/Del/2019, order dated 07.07.2021, in support of his contentions. In view of these decisions, the ld. Counsel has submitted that sale of investments once recorded in the regular books of account, if added under deeming provisions of the Act, leads to double taxation. 7.3. The ld. Counsel has further submitted that it had sold its investments to various corporate and non-corporate entities and the said sale of investments was made in the normal course of conduct of its business. The ld AR submitted that the Assessee had filed all the details of sale of investments and the bank statements and thus buyers of shares/investments were identifiable persons/concerns and were assessed to income tax. They had made the payments through proper banking channel and copies of sale bills, other related documents, copies of ITRs, copies of audited accounts, copies of relevant bank statements of the buyers were submitted before the AO. There was no IT(SS)A No.54/Kol/2022 Assessment Year: 2019-20 M/s Ashtvinayak Sales Pvt. Ltd. 12 cash deposit before payment made by the buyer through their bank accounts. The ld AR submitted that even the buyers had sufficient net worth to purchase the shares sold by the assessee. 7.4. Ld. Counsel has further contended that the lower authorities have wrongly and illegally relied upon the statements of entry operators which were general statements and otherwise recorded in search of third parties much before the search against the assessee Group. Further, ld. Counsel has further contended that the reliance of the CIT(A) on the retracted statements Shri K. K. Varma and ShriSanjib Kumar Patwari was wrong and illegal. The ld counsel of the assessee contended that even the addition cannot be made on the basis of statement recorded during search u/s 132(4) of the Act unless corroborating materials is there. The ld AR relied on the CBDT Instruction F. NO. 286/2/2003-IT (Inv. II) dated 10.03.2003 and Circular No. F No. 286/98/2013-IT (Inv. II) dated 18.12.2014 wherein it has been provided that addition can be made on the basis of statements recorded u/s 132(4) of the Act where there is corroborating material brought on records. 7.5. The ld. Counsel further submitted 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. The capital so raised in AY 2011-12 was used to make investment in shares and were duly shown in the books of accounts which were audited and audited accounts are placed at page no. 102 to 111 of PB Vol.-1. The ld Counsel submitted 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 neither the share capital/share premium nor the investments out of that source was doubted by the AO in the scrutiny proceedings. Assessee had IT(SS)A No.54/Kol/2022 Assessment Year: 2019-20 M/s Ashtvinayak Sales Pvt. Ltd. 13 explained that it had opening investment of Rs.24.81 crores. During the year under consideration, it had made further investments of Rs.106.69 crores. Besides, the assessee has sold investments worth Rs. 99.72 crores during the impugned year. Thus, assessee had made both purchases and sales of investments in the year under consideration. The ld. Counsel has submitted that these investments were sold partly out of the purchases made during the year and partly out of the opening balance of investments resulting into a closing balance of investments at Rs. 31.77 crores. The ld AR submitted that major amount of sale consideration which was received in the year was out of the shares purchased during the current year only. The AO has not disputed the purchases and the opening balance of investments in shares and therefore contended that how the sales made can be disputed for making addition of entire sale consideration. 7.6. It was also submitted that the AO had referred to the general modus operandi of shell companies and then summarily concluded that the shares have been sold to shell companies. According to assessee, the AO seemed to have made additions with predetermined mind set and further that the AO tried to make up for the lack of evidence by his general observations which had no links to the facts of the case. 7.7. The ld AR for the assessee has also cited the following case laws in support of his submissions:- 1. M/s. Majestic Commercial Pvt. Ltd. I.T.(SS).A.No.83/Kol/2018 (Kol) 2. Adbhut Vinimay Pvt. Ltd. vs. ITO in ITA No.2404/Kol./2017 (Kol) 3. Jatin Investments Pvt. Ltd. vs. Department of Income Tax in ITA No.4325 & 4326/DEL/2009 (Del) 4. PCIT vs. Ramniwas Ramjivan Kasat [2017] 82 taxmann.com 458 (Gujarat) IT(SS)A No.54/Kol/2022 Assessment Year: 2019-20 M/s Ashtvinayak Sales Pvt. Ltd. 14 5. Resources Pvt. Ltd. vs. ITO in ITANo.8835/Del/2019 dated 07-07- 2021 (Del) 6. PCIT vs. Rungta Properties P. Ltd. In[2017] 83 taxmann.com 106 (Calcutta) dated 08-05-2017 (Cal) 7. Dhakeshwari Cotton Mills vs CIT[1954] 26 ITR 775 (SC) 8. BansidharOnkarmallvs CIT [1953]23 ITR 353 (Orissa) 9. Vivek Kumar Kathoriavs DCIT [2013] 142 ITD 394 ()Kol) 10. CIT vs R.M.L Mehrotra [2010] 320 ITR 403 (All) 11. CIT vs Rajendra Prasad Gupta [2001] 248 ITR 350(Raj) 8. Per contra, the ld. DR before us has strongly relied upon the observations of the CIT(A) which are based on the subsequent undated assessment order by submitting that the assessee company was acquired the Rashmi Group at a nominal price in the earlier year with huge investments meaning thereby that the transactions of purchases and sales were tainted and suspicious. The ld DR also submitted that the assessee has failed to prove the identity and credentials of the purchasers of these investments in the current year and therefore the same was rightly added by the AO during the year. On the issue of passing two assessment orders, the ld DR submitted that only one assessment order was passed by the AO with proper mentioning of the DIN however due to some clerical confusion and mistake , the complete order could not be uploaded which was set right afterwards. The ld DR argued that the DIN was rightly generated and mentioned in the assessment order and therefore the arguments of the assessee that the second order sans DIN is nullity is devoid of any merit. The ld DR argued that the so called first and second assessment orders is one and only one as the subject matter of addition is also same. The ld DR therefore prayed that the ld CIT(A), after taking into accounts all the IT(SS)A No.54/Kol/2022 Assessment Year: 2019-20 M/s Ashtvinayak Sales Pvt. Ltd. 15 aspects and contentions, passed a very reasoned order on merit upholding the addition which may be confirmed by dismissing the appeal of the assessee. 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:- Opening Investment Purchases made during the year Investments sold during the year Closing Balance of Investments 24,81,12,740 106,69,21,561 99,72,36,896 31,77,97,405 9.1. The assessee has also filed movement of investments over the years which showed that the phenomenon of purchase and sale of shares/investments was regular feature of the assessee’s business. This is also undisputed that the assessee company had raised share capital (including premium) amounting to Rs.119,84,67,000/- in financial year 2010-11, relevant to AY 2011-12 and the capital so raised in AY 2011-12 was invested in shares/securities and accounted for in the books of accounts which were audited and audited accounts are placed at page no. 102 to 111 of PB Vol.-1. We also note that the assessment for AY 2011-12 was framed u/s 143(3) of the Act vide order dated 17.03.2014 a copy of which is placed at page no. 276 and 277 of IT(SS)A No.54/Kol/2022 Assessment Year: 2019-20 M/s Ashtvinayak Sales Pvt. Ltd. 16 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 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. ........ 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 IT(SS)A No.54/Kol/2022 Assessment Year: 2019-20 M/s Ashtvinayak Sales Pvt. Ltd. 17 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: Opening Investment Purchases made during the year Investments sold during the year Closing Balance of Investments 20,40,10,245 66,47,63,507 17,05,60,000 69,82,13,635 11.2. The shares were held by the assessee as investments and were sold at the cost of acquisition by the assessee. Hence, there is no profit/loss on such sale of investment. We also look at the movement of investment held by the assessee, which is tabulated below: FY AY Opening Amount Purchase Amount Sales Amount Closing Balance Addition made by A.O. 2014- 15 2015- 16 63,42,00,000 - - 63,42,00,000 - 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: Sl No Name of the Script Opening Balance Purchases Sales Closing Balance Amount Amount Amount Amount 1 Bellona Supply Pvt. Ltd. 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 1,57,32,000 5 CimmcoVinimay Pvt Ltd 13,32,04,353 53,71,44,701 0 67,03,49,054 IT(SS)A No.54/Kol/2022 Assessment Year: 2019-20 M/s Ashtvinayak Sales Pvt. Ltd. 18 6 Festive Vincom Pvt Ltd 28,01,625 0 0 28,01,625 7 GreenHillDealmark Pvt Ltd 26,14,850 0 0 26,14,850 8 SwabhimanCommosales Pvt Ltd 26,15,900 0 0 26,15,900 9 Topline Business Pvt Ltd 41,00,205 0 0 41,00,205 10 VidyaBuildcon Pvt Ltd 0 2,50,00,000 2,50,00,000 0 11 BadrinathMinning Pvt Ltd 59,36,974 75,250 60,12,224 0 12 Sankul Retailers Private Ltd 0 74,49,572 74,49,572 0 13 Alok Financial Services Pvt Ltd 0 8,10,000 8,10,000 0 14 Asankul Cosmetics Pvt Ltd 0 6,55,26,090 6,55,26,090 0 15 Daffodil Plaza Pvt Ltd 0 88,198 88,198 0 16 NAT Communication & Marketing Pvt Ltd 0 1,26,37,632 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 17,05,60,000 69,82,13,634 11.4. Based on the analysis of the above details, it is evident that entire sales is madefrom purchases & opening stock as under: Breakup of Sale of Shares Amount(Rs.) Sold out of Opening Investment 5,86,73,194 Sold out of Investment Purchased During the Year 11,18,86,806 Total 17,05,60,000 11.5. It is also important to note that the AO has made enquiries from the buyers of the shares sold by the assessee by issuing summons u/s 131 of the Act who have responded and furnished the required details. Summary Statement of the replies made in response to notice u/s 131 by various buyers (Sale of Shares) is tabulated below: SL No. CORPORATE ASSESSE Page No. FY 2018-19 1 Bhootnath Commodities Pvt Ltd 1-262 ₹ 1,71,59,300 2 Bluestar Mercantile Pvt Ltd 263-265 ₹ 5,00,000 3 Charvi Dealmark Pvt Ltd 267-356 ₹ 10,00,000 4 Daania Trading Pvt Ltd 357-359 ₹ 30,00,000 5 Elvof Trading Pvt Ltd 361-369 ₹ 1,00,000 6 Express Image Pvt Ltd 370-542 ₹ 1,11,00,000 7 Laxhmidhan Business Pvt Ltd 544-546 ₹ 6,00,000 8 MuditVanijya Pvt Ltd 547-597 ₹ 5,50,000 9 Outright Commodities Pvt Ltd 599-846 ₹ 2,44,90,700 10 Over Arching Impex Pvt Ltd 847-1053 ₹ 81,00,000 11 Radhacharan Tradevin Pvt Ltd 1055-1158 ₹ 10,00,000 12 S P Udyog Pvt Ltd 1159-1161 ₹ 25,00,000 IT(SS)A No.54/Kol/2022 Assessment Year: 2019-20 M/s Ashtvinayak Sales Pvt. Ltd. 19 13 SamundarTradelink Pvt Ltd 1162-1164 ₹ 34,00,000 14 Shatabdi Entertainment Pvt Ltd 1165-1193 ₹ 14,00,000 15 Spur Trading Pvt Ltd 1195-1204 ₹ 7,50,000 16 Swarnmahal Vyapaar Pvt Ltd 1205-1252 ₹ 15,00,000 17 Swetang Retails Pvt Ltd 1253-1356 ₹ 50,00,000 18 Viewpoint Advisory Pvt Ltd 1357-1490 ₹ 85,00,000 19 Yuthika Merchandise Pvt Ltd 1492-1603 ₹ 25,00,000 Total (A) 9,31,50,000 SL No. NON- CORPORATE ASSESSE Page No. FY 2018-19 20 Bengal Trade Agency 1604-1613 ₹ 1,64,00,000 21 Bhagwati Trading 1614-1616 ₹ 57,90,000 22 Om Sai Enterprise 1617-1619 ₹ 24,90,000 23 Simplex Xallolloy 1620-1622 ₹ 78,05,000 24 Others-Non- Corporate ₹ 4,17,35,000 Total ₹ 7,42,20,000 12. Further, according to the ld. Counsel, the only piece of evidence that is there in this case is the statement of Sri Sanjib Patwari who is one of the owners of the Rashmi group and Sri K K Verma is the accountant, recorded u/s 132(4) of the Act which have been relied upon by the Assessing Officer. These statements have been retracted the very next day by furnishing affidavits. Subsequent to retraction, no further cross- examination was conducted of these persons. The ld. Counsel has further submitted that even otherwise the addition made by the Assessing Officer was far more than the alleged disclosure made by these persons in their retracted statements and hence, no cognizance in fact can be taken for the purpose of the addition. 12.1. We find force in the above contentions of the ld. Counsel in the facts and circumstances of the case. As laid down by the various 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 IT(SS)A No.54/Kol/2022 Assessment Year: 2019-20 M/s Ashtvinayak Sales Pvt. Ltd. 20 the Act on a stand-alone basis, without reference to any other material discovered during search and seizure operation, would not empower the AO to make a block assessment merely because any admission was made by the assessee during search operation. In the case of “Commissioner of Income Tax vs. Sunil Agarwal” (2015) 64 taxman.com 107 (Delhi-HC), the assessee therein, during the course of search, made a categorical admission under section 132(4) that the cash amount seized belonged to him and it represented undisclosed income not recorded in the books of accounts. The assessee did not immediately retract from the above admission but only during the assessment proceedings at a belated stage. In his retraction, the assessee stated that the surrender was made under a mistaken belief and without looking into books of account and without understanding law and that he had been compelled and perturbed by events of search and that the pressure of search was built so much that he had to make the surrender without having actual possession of the assets or unexplained investments or expenses incurred and that there was no such income as undisclosed. The Hon’ble Delhi High Court, after considering the fact and circumstances of the case, while dismissing the appeal of the revenue, observed that though the fact that the assessee may have retracted his statement belatedly, yet, it did not relieve the AO from examining the explanation offered by the assessee with reference to the books of account produced before him. Although, a statement under section 132(4) of the Act carries much greater weight than the statement made under section 133A of the Act, but a retracted statement even under section 132(4) of the Act would require some corroborative material for the AO to proceed to make additions on the basis of such statement. 12.2 In the case of “BasantBansal vs. ACIT” reported in (2015)63 taxmann.com 199 (Jaipur Trib.), the assessee therein, during the search and seizure action u/s 132 of the Act, offered a summary discloser of income as undisclosed and the department accepted the summary surrender of income and thereafter advance tax for the said surrendered of income was also deposited, but thereafter it was contended by the assessee that the surrender was made under threat or coercion and that no incriminating material was found during the search action. The stand of the department was that the admission was voluntary and was not under a mistaken belief of fact or law and that the assistance had enough time to go through the facts of their case, law applicable in their case and take advice from their counsels and advisors before filing the letter of surrender of undisclosed/unaccounted income and that the admission by them was final and binding on them; The co-ordinate Jaipur Bench of the Tribunal, after overall appreciation of the fact and evidences before it, observed that the assessee’s surrender was not based on any incriminating material and that the discloser being not 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 IT(SS)A No.54/Kol/2022 Assessment Year: 2019-20 M/s Ashtvinayak Sales Pvt. Ltd. 21 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,” IT(SS)A No.54/Kol/2022 Assessment Year: 2019-20 M/s Ashtvinayak Sales Pvt. Ltd. 22 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 IT(SS)A No.54/Kol/2022 Assessment Year: 2019-20 M/s Ashtvinayak Sales Pvt. Ltd. 23 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. Order is pronounced in the open court on 14th September, 2023 Sd/- Sd/- [SONJOY SARMA] [RAJESH KUMAR] Judicial Member Accountant Member Dated:. 14.09.2023. RS Copy of the order forwarded to: 1. M/s Ashtvinayak Sales Pvt. Ltd. 2. ACIT, Central Circle-2(2), Kolkata 3.CIT(A)- 4. CIT- , 5. CIT(DR), //True copy// By order Assistant Registrar, Kolkata Benches 1. Date of Dictation.............................................. 2. Date on which the typed order is placed before the dictating Member and other Member..................................................... 3. Date of which the order came back to Sr. PS.......................................... 4. Date of which the file goes to the Bench Clerk....................................... 5. Date of which the file goes to the O.S....................................... 6. Date of dispatch of the order.............................................
Other Referred Cases
CIT vs. Durga Prasad More [1971] 82 ITR 540 (SC), Sumati Dayal vs. CIT [1995] 214 ITR 801 (SC), PCIT vs. NRA Iron & Steel Pvt. Ltd. (2019) 412 ITR 161 (SC), CIT vs. Wipro Ltd.(2014) 50 taxman.com 421 (Karnataka), Premier Synthetic Industries vs. ITO, Ward-II(7), Coimbatore (2012) 22 taxman.com 333, DCIT vs. Pawan Kumar Malhotra (2010) 2 ITR (T) 250, ITO-19(3)(4),Mumbai vs. Shamin M. Bharwani (2016) 69 taxmann.com 65, Smt. M.K. Rajeswari vs. ITO, Ward-3, Raichur (2018) 99taxmann.com 339, Pooja Ajmani vs. ITO, W-20(4), New Delhi (2019)106 taxmann.com65, Satish Kishore vs. ITO, W-47(2), New Delhi (2019) 110 taxmann.Com 307, Sandeep Bhargava vs. ACIT, Circle-60(1), New Delhi, (2019) 109 taxmann.com 174, Suman Poddar vs. ITO (2019) 112 taxmann.com 330 (SC), Sanjay Bimalchand Jain vs. PCIT-1, Nagpur (2018) 89 taxmann.com 196 (Bombay High Court), Vishal Ashwin Patel Vs. ACIT (2022) 136 taxmann.com 372 (SC), Vellaian Selvaraj Vs NFAC (2022) 138 taxmann.com 122(Mad), Tala Teleservices (Maharashtra) Ltd Vs DCIT(TDS) (2018) 90 taxmann.com 1(Bom), Indian Minerals and Granite Co. Vs DCIT (2022) 137 taxmann.com 119(Kar), Bhagwant Merchant Pvt. Ltd. Vs. ITO in ITA No 2614/Kol/2019, Brij Resources Pvt. Ltd. Vs. ITO in ITA No 8835/Del/2019, M/s Swarna Kalash Commercial Pvt Ltd. Vs ACIT ,Central Circle -2(2), Kolkata, ITA No. I.T.(S.S.)A.No.53/Kol/2022 A.Y.2019-20, Principal Commissioner of Income Tax Vs. Golden Goenka Fincorp Ltd. [2023]148 taxmann.com 313(Calcutta), Naresh Kumar Agarwal (2015) 53 taxmann.com 306 (Andhra Pradesh), Shree Chand Soni vs. DCIT (2006) 101 TTJ 1028 (Jodhpur), CIT vs. Harjeev Agarwal in ITA No.8/2004, Commissioner of Income Tax vs. Sunil Agarwal (2015) 64 taxman.com 107 (Delhi-HC), Basant Bansal vs. ACIT (2015)63 taxmann.com 199 (Jaipur Trib.)
Laws Referred To
Income Tax Act
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