PAWANPUTRA ADVERTISING PRIVATE LIMITED,KOLKATA V. ACIT CENTRAL CIRCLE 3.3, KOLKATA

CO 2/KOL/2025

AI Insights

The case involves multiple appeals and cross objections by the assessee, Pawanputra Advertising Private Limited, and the Revenue against the orders of the Commissioner of Income-tax (Appeals) for various assessment years. The primary issue was the addition made under section 68 of the Income Tax Act, which pertained to the sale of unlisted equity shares by the assessee. The Assessing Officer (AO) had treated the sale proceeds as unexplained cash credit, suspecting the transactions to be non-genuine. However, the CIT (A) reversed this decision, leading to the Revenue's appeal. The Tribunal found that the assessee had adequately proved the genuineness of the transactions and the creditworthiness of the purchasers, thus dismissing the Revenue's appeal and allowing the assessee's cross objections.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 772454 (ITAT-KOLKATA)
• Appeal Type: Cross Objection
• Pronouncement Date: 26-08-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Assessment Year: 2019-2020
• Other Referred Cases: CIT VS. Dataware Private Ltd., M/s Swarna Kalash Commercial Pvt. Ltd. vs ACIT, M/s Ashtvinayak Sales Pvt. Ltd. vs ACIT, PCIT Vs. Tulsyan and Sons Private Limited, Principal Commissioner of Income Tax Vs. Golden Goenka Fincorp Ltd., Naresh Kumar Agarwal, Shree Chand Soni vs. DCIT, CIT vs. Harjeev Agarwal, Commissioner of Income Tax vs. Sunil Agarwal, Basant Bansal vs. ACIT, Dy CIT vs. Pramukh Builders
• Laws Referred To: Income Tax Act
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SANAT KUMAR RAHA
• Assessee Lawyers: S SOUMITRA CHOUDHURY; PRANABESH SARKAR; KRISHNA KR; ISSUING SUMMONS US OF
• Keywords: Set aside; Business income; Revised return; 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
• Section: 143(3); 142(1); 132; 153A; 68; 131; 133A; 139(5)

Judgement Text

" IN THE INCOME TAX APPELLATE TRIBUNAL “D” BENCH, KOLKATA BEFORE SHRI RAJESH KUMAR, AM AND SHRI PRADIP KUMAR CHOUBEY, JM IT(SS)A No. 144 & 145/KOL/2024 (AYs: 2019-20 & 2020-21) IT(SS)A No. 157,158,159/KOL/2024 (AYs: 2015-16, 2017-18 & 2018-19) IT(SS)A No. 1/KOL/2025 (AYs: 2016-17) Asst. Commissioner of Income Tax, 110, Shantipally, Aaykar Bhavan, Poorva, Kolkata-700107 West Bengal Vs. Pawanputra Advertising Private Limited 2nd Floor, Room No.213, diamond Prestige, 41a Acharya Jagdish Chandra Bose Road, Kolkata-700017, West Bengal (Appellant) (Respondent) PAN No. AAECP3568B CO Nos. 02 & 03/KOL/2025 (Arising in IT(SS)A No. 144 & 145/KOL/2025 for A.Ys. 2019-20 & 2020-21) Pawanputra Advertising Private Limited 2nd Floor, Room No.213, diamond Prestige, 41a Acharya Jagdish Chandra Bose Road, Kolkata-700017, West Bengal Vs. Asst. Commissioner of Income Tax, 110, Shantipally, Aaykar Bhavan, Poorva, Kolkata-700107 West Bengal (Appellant) (Respondent) Assessee by : S/Shri Soumitra Choudhury& Pranabesh Sarkar & Krishna Kr. Chhaparia, Nirav Sheth, ARs Revenue by : Shri Sanat Kumar Raha, DR Date of hearing: 30.07.2025 Date of pronouncement: 26.08.2025 Printed from counselvise.com Page | 2 IT(SS)A No. 144, 145, 157,158,159/KOL/2024 & 1/KOL/2025 A.Ys. 2015-16 to 2020-21; Pawanputra Advertising Private Limited O R D E R Per Rajesh Kumar, AM: These are appeals preferred by the assessee as well as Revenue against different the orders of the Commissioner of Income-tax (Appeals) (hereinafter referred to as the “Ld. CIT(A)”] for A.Ys. 2015- 16 to 2020-21. 2. As pointed out by the ld. Counsel of the assessee as well as the ld. DR before us that the issues involved in all these appeals and Cross Objections for various assessment years are similar and even where the cross objection is not filed by the assessee, the issue involved are identical and therefore, all these appeals & Cross Objections are being clubbed together and decided by this consolidated order for the sake of convenience and brevity. So far as the facts of the case are concerned, we are taking IT(SS)A No. 144/KOO/2024 and CO No. 2/KOL/2025 as lead case. 3. The facts in brief are that the assessee filed return of income u/s 139(5) of the Act on 25.02.2020, declaring total income of ₹1,21,32,880/-. A search action u/s 132 of the Act was conducted at the residential and office premises of the Alaknanda Group of companies on 01.12.2020 and on subsequent dates. A search was also conducted in the name of the assessee company. During the course of Search & Seizure operation, books of accounts and certain documents were seized and later on the cases of the group were centralized. Notice u/s 153A of the Act was issued on 21.10.2021 and the assessee filed the return of income in compliance on 19.11.2021, showing the same income as return in the revised return of income. Thereafter, the statutory notices u/s 143(2) of the Act and other notice u/s 142(1) along with questionnaire were duly issued and served upon the assessee. The ld. AO noted that on 31.03.2008, M/s Brahmaputra Advertising Pvt. Ltd. raised share capital/ share premium to Printed from counselvise.com Page | 3 IT(SS)A No. 144, 145, 157,158,159/KOL/2024 & 1/KOL/2025 A.Ys. 2015-16 to 2020-21; Pawanputra Advertising Private Limited the tune of ₹64,85,49,000/- through allied concerns most of whom are found to be shell / paper companies. 4. The entire funds raised was shown as investments in unlisted equities to the tune of ₹64,71,29,000/- in A.Y. 2011-12. The details of the allotment are extracted in Para no.5 from page no.2 to 7 of the assessment order. Thereafter, the ld. AO noted that during the year under consideration, the assessee has sold investments in unlisted equity shares to the tune of ₹11,56,20,000/- which were not genuine. According to the ld. AO, the value of these transactions of sale of shares were not genuine and creditworthiness of the parties were not proved and therefore, liable to be added to the income as unexplained cash credit u/s 68 of the Act. The ld. AO while deciding the issue of sale of investments relied on the circumstantial evidences. The ld. AO noted in the assessment order that on 31.03.2008, the assessee has raised share capital of ₹65,85,49,000/- by issuing 32,42,745/- equity shares of ₹10 each at a premium of ₹190/- . The ld. AO noted that the share subscribers in the assessee company were listed as shell company managed by entry operator Shri Anand Sharma & Janardhan Chokhani, in the departmental database. According to the ld. AO, out of 47 subscribers 21 were shell companies in the data base of the department. Thus, the ld. AO held that the investors who invested in the assessee company were not having any income with no fixed assets nor paying any rent and therefore, these 47 companies are not having any creditworthiness nor any physical existence because they were not paying any rent for occupying any premises to carry on their businesses. The ld. AO also noted that the equity shares of the assessee over a period of time were held by 4 persons namely M/s Skandamala Financial Consultants Pvt. Ltd, M/s Kaangdaji Marketing Pvt. Ltd., Shri Anand Kumar Saraogi and Shri Vishal Saraogi. Thereafter, the ld. AO after noting the modus operandi of rooting and utilizing of unaccounted funds and also referring to admission in the statement recorded of Shri Anand Printed from counselvise.com Page | 4 IT(SS)A No. 144, 145, 157,158,159/KOL/2024 & 1/KOL/2025 A.Ys. 2015-16 to 2020-21; Pawanputra Advertising Private Limited Kumar Sarogi on 1st and 2nd December, 2020, wherein he stated that he could not explain the rationale behind buying the assessee for a very meagre sum and also admitted to have introduced unaccounted funds in the guise of sale of investments. Finally, the ld. AO issued show cause notice on 23.12.2021, pointing out these facts and calling upon the assessee to show cause as to why the sale value of the shares should not be treated as unexplained cash credit and added to the income of the assessee u/s 68 of the Act which was duly replied by the assessee. Finally, the ld. AO, after taking into consideration the reply, evidences filed and other contentions made by the assessee, treated the sale of investments to the tune of ₹11,56,20,000/- as unexplained credit u/s 68 of the Act and added the same to the income of the assessee. 5. In the appellate proceedings, the ld. CIT (A) allowed the appeal of the assessee by directing the ld. AO to delete the addition of ₹11,56,20,000/- while directing simultaneously to make an addition towards net profit at the rate of 5% of the said sale consideration, which the assessee may have earned, thereby directing the ld. AO to make an addition of ₹57,81,000/- . The ld. CIT (A) while allowing the appeal noted that the investments sold during the impugned year by the assessee of ₹11,56,20,000/- were in fact made in the preceding assessment year as has been noted by the ld. AO himself in the assessment order and the department as accepted the fund raising by the assessee as well as investment in the unlisted equity shares in the preceding assessment years. The ld. CIT (A) noted that raising of share capital/share premium during the A.Y. 2008-09 was not doubted by the department and even the assessee was selected for scrutiny proceedings for A.Y. 2008-09, A.Y. 2010-11 & A.Y. 2017-18 and the department accepted the share capital and share premium when no discrepancies were found. Similarly, the purchase of these investments in A.Y. 2011-12 were also accepted by the departments in all these years including the A.Y. 2017-18 done under scrutiny proceedings. Therefore, Printed from counselvise.com Page | 5 IT(SS)A No. 144, 145, 157,158,159/KOL/2024 & 1/KOL/2025 A.Ys. 2015-16 to 2020-21; Pawanputra Advertising Private Limited once the purchase of investments was not doubted by the ld. AO in the earlier assessment years, then the sale of investments/equity shares and its sale proceeds could not be doubted in the current year. 6. The ld. CIT (A) noted that assessee had filed all the evidences of sale of shares before the ld. AO as well as the first appellate authority. Besides, the ld. CIT (A) noted that all the purchasing companies except one have filed their return of income, audited accounts, ITRS, audited records, bank statements, before the ld. Assessing Officer. The ld. CIT (A) noted that where purchasing companies were filing the ITRs and the same were being processed by the department then the ld. AO could not doubt the identities of the said concerns. The ld. CIT (A) noted that the assessee has submitted the requisite documents before the ld. AO proving the identity, creditworthiness of the share applicants and the AO failed to bring on record any substantive materials/evidences to dispute of these documents. The ld. CIT (A) while allowing the appeal of the assessee also relied on the decision of the Hon'ble Jurisdictional High Court in the case of CIT VS. Dataware Private Ltd. [ITAT No. 263 of 2011 dated 21.09.2011]. Besides, the ld. CIT (A) also relied on the decision of Hon'ble Jurisdictional Tribunal in the case of M/s Swarna Kalash Commercial Pvt. Ltd. vs ACIT, Central Circle-2(2), Kolkata in I.T.(SS)A. No.53/Kol/2022 for AY 2019-20. The ld. CIT (A) also relied on the decision this Tribunal in the case of M/s Ashtvinayak Sales Pvt. Ltd. vs ACIT, Central Circle-2(2), Kolkata for AY: 2019-20 in IT(SS)A No.54/Kol/2022 A.Y. 2019-20, wherein the identical issue has been decided in favour of the assessee. Finally, the ld. CIT (A) deleted the addition by directing the ld. AO to make an addition of ₹57,81,000/- being 5% of the total sale consideration towards assessing the net profit element embedded therein. 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 Printed from counselvise.com Page | 6 IT(SS)A No. 144, 145, 157,158,159/KOL/2024 & 1/KOL/2025 A.Ys. 2015-16 to 2020-21; Pawanputra Advertising Private Limited paper book 3 (Case Laws). We find that the only dispute is sale of part unlisted equity shares to various parties thereby realizing total sales consideration of ₹11,56,20,000/-. We note that the assessee raised money by issue of equity shares in A.Y. 2008-09 of Rs. 64,85,49,000/- . We also note that entire funds raised were invested in unlisted equity shares in AY 2011-12. We note that the case of the assessee was selected for scrutiny only for this reason and the money raised by the assessee was accepted by the department and no adverse interference was drawn. We note that in A.Y. 2010-11 also, the case of the assessee was selected for scrutiny and all the money share capital /share premium was accepted. Thereafter the investments were made in private equity shares which were unlisted in A.Y. 2011-12. Similarly 2017-18 the case of the assessee was selected for scrutiny and investments were not doubted at all. Thus it is clear that over all these years the investments were not doubted by the department. These investments made in the A.Y. 20111-12 were partly sold at cost by the assessee during the instant assessment year which realized ₹11,56,20,000/- which were accepted by the Revenue right from A.Y. 2011-12 till the instant assessment year. We have also noted that the assessee has filed before the ld. AO as well as before the ld. CIT (A) all the evidences qua the purchases and sale of shares. The assessee has filed all the evidences qua the purchasers such as ITRs, names, addresses, audited balance sheets, bank statements, confirmations, etc. proving the identity, creditworthiness of the purchasers and genuineness of the transactions. We note that even the purchasing companies have filed their evidences as called for by the ld. AO comprising all the evidences as stated above. The ld. CIT (A) has recorded a finding of fact that apart from the assessee , purchasing companies had also filed all the evidences before the ld. AO however the ld. AO had not brought on record any independent and substantive evidences pointing out any defect or deficiency in the said evidences. The ld. CIT (A) finally noted that the assessee has proved the identity and creditworthiness of the parties and also the genuineness of Printed from counselvise.com Page | 7 IT(SS)A No. 144, 145, 157,158,159/KOL/2024 & 1/KOL/2025 A.Ys. 2015-16 to 2020-21; Pawanputra Advertising Private Limited 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 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 Printed from counselvise.com Page | 8 IT(SS)A No. 144, 145, 157,158,159/KOL/2024 & 1/KOL/2025 A.Ys. 2015-16 to 2020-21; Pawanputra Advertising Private Limited 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 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: Printed from counselvise.com Page | 9 IT(SS)A No. 144, 145, 157,158,159/KOL/2024 & 1/KOL/2025 A.Ys. 2015-16 to 2020-21; Pawanputra Advertising Private Limited 11.2. The shares were held by the assessee as investments and were sold at the cost of acquisition by the assessee. Hence, there is no profit/loss on such sale of investment. We also look at the movement of investment held by the assessee, which is tabulated below: FY AY Opening Purchase Sales Amount Closing Balance byA.O. 2014-15 2015-16 63,42,00,000 63,42,00000 2015-16 2016-17 63,42,00,000 42,44,960 18,344,960 62,01,00,000 1,83,44,960 2016-17 2017-18 62,01,00,000 56,27,44,459 468,499,459 71,43,45,000 46,84,99,459 2017-18 2018-19 71.43.45,000 1,55,17,29,538 2,062,064,910 20,40,09,628 2,06,20,64,910 2018-19 2019-20 20,40,09,628 66, 47, 64, 007 170,560,000 69,82,13,635 17,05,60,000 Total 2,71,94,69,239 11.3. We also refer to the details of opening stock, purchases, sales and closing stock during the year, placed on record by the assessee: SI 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 Jewelers Pvt ltd 38,45,323 0 38,45,323 0 3 Rozela Tie Up pvt. Ltd. 3,64,33,053 0 3,64,33,053 0 4 Rashmi Cement Ltd. 0 1,57,32,000 0 1,57,32.00 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 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 17,05,60,00 0 69,82,13,6 34 11.4. Based on the analysis of the above details, it is evident that entire sales is made from purchases & opening stock as under: Breakup of Sale of Shares Amount(Rs.) Breakup of Sale of Shares Amount(Rs.) Sold out of Opening Investment 5,86,73,194 Sold out of Opening Investment 5,86,73,194 Sold out of Investment Purchased During the 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 Printed from counselvise.com Page | 10 IT(SS)A No. 144, 145, 157,158,159/KOL/2024 & 1/KOL/2025 A.Ys. 2015-16 to 2020-21; Pawanputra Advertising Private Limited 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 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. Printed from counselvise.com Page | 11 IT(SS)A No. 144, 145, 157,158,159/KOL/2024 & 1/KOL/2025 A.Ys. 2015-16 to 2020-21; Pawanputra Advertising Private Limited 12.1. We find force in the above contentions of the ld. Counsel in the facts and circumstances of the case. As laid down by the various Higher Courts of the country, the retracted statement can not be made sole basis for making the additions. The Jurisdictional Calcutta High Court in the case of Principal Commissioner of Income Tax Vs. Golden Goenka Fincorp Ltd. [2023]148 taxmann.com 313(Calcutta) has held that where assessing officer solely based on statement of assessee’s director recorded during search operation treated share application money received by assessee company as undisclosed income and made additions u/s 68 of the Act, since said statement was retracted and there was no cash trail or any other corroborative evidence or investigation brought on record by AO, impugned additions were liable to be deleted. Even the Hon’ble A.P. High Court in the case of “Naresh Kumar Agarwal” (2015) 53 taxmann.com 306 (Andhra Pradesh) has observed that where, in the absence of any incriminating material etc. found from the premises of the assessee during the course of search, statement of assessee recorded under section 132(4) would not have any evidentiary value. Similar view has been adopted by the Jaipur bench of the Tribunal in the case of “Shree Chand Soni vs. DCIT” (2006) 101 TTJ 1028 (Jodhpur). The Hon’ble Delhi High Court in the case of “CIT vs. Harjeev Agarwal” in ITA No.8/2004 vide order dated 10.03.16 has observed that a statement made under section 132(4) of the Act on a stand-alone basis, without reference to any other material discovered during search and seizure operation, would not empower the AO to make a block assessment merely because any admission was made by the assessee during search operation. In the case of “Commissioner of Income Tax vs. Sunil Agarwal” (2015) 64 taxman.com 107 (Delhi-HC), the assessee therein, during the course of search, made a categorical admission under section 132(4) that the cash 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 Printed from counselvise.com Page | 12 IT(SS)A No. 144, 145, 157,158,159/KOL/2024 & 1/KOL/2025 A.Ys. 2015-16 to 2020-21; Pawanputra Advertising Private Limited 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 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 Printed from counselvise.com Page | 13 IT(SS)A No. 144, 145, 157,158,159/KOL/2024 & 1/KOL/2025 A.Ys. 2015-16 to 2020-21; Pawanputra Advertising Private Limited 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, 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 Printed from counselvise.com Page | 14 IT(SS)A No. 144, 145, 157,158,159/KOL/2024 & 1/KOL/2025 A.Ys. 2015-16 to 2020-21; Pawanputra Advertising Private Limited 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 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 Printed from counselvise.com Page | 15 IT(SS)A No. 144, 145, 157,158,159/KOL/2024 & 1/KOL/2025 A.Ys. 2015-16 to 2020-21; Pawanputra Advertising Private Limited 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. IT(SS)A No. 145/KOL/2024 & CO No.3/KOL/2025 13. The issues raised in IT(SS)A No. 145/KOL/2024 and CO No.3/KOL/2025 are similar to ones as decided by us in IT(SS)A No. 144/Kol/2024 & CO No. 2/KOL/2025. Accordingly, our decision would, mutatis mutandis, apply to the appeal of Revenue in IT(SS)A No. 145/KOL/2024 and CO of assessee in CO No.3/KOL/2025 as well. Hence, the appeal of Revenue is dismissed and CO of the assessee is allowed. Printed from counselvise.com Page | 16 IT(SS)A No. 144, 145, 157,158,159/KOL/2024 & 1/KOL/2025 A.Ys. 2015-16 to 2020-21; Pawanputra Advertising Private Limited IT(SS)A Nos.01/KOL/2025 & 157 to 159/KOL/2024 14. At the outset, the ld. Counsel for the assessee submitted that the above appeals are filed by the Revenue challenging the appellate orders for deleting the additions on merits whereas the ld. CIT (A) has adjudicated all these above appeals on legal issue that assessments being unabated on the date of search in all these assessment years as there was no pending assessments on the date of search as well as the time period for issuing notice u/s 143(2) of the Act had already expired. The ld. Counsel for the assessee furnished before us a table containing the various dates as under: - 15. The ld. Counsel for the assessee therefore submitted that the appeals of the Revenue are not maintainable as orders passed by the ld. CIT (A) attained finality on the legal issue that the ld. AO has no jurisdiction to make the addition u/s 153A of the Act in case of unabated assessments, where there is no incriminating material found and seized during the course of search. We have perused the assessment orders as well as the appellate orders for all the above assessment years and found that there is no even whisper of any incriminating material seized during the course of search qua the additions made. Therefore, we do not find any infirmity in the order of the ld. CIT (A) and accordingly, uphold the same. The case of the assessee is also squarely covered by the decision of Hon'ble Apex court in the case of PCIT v. Abhisar Buildwell P. Ltd. (2023)454 ITR 212(SC) wherein it has been Printed from counselvise.com Page | 17 IT(SS)A No. 144, 145, 157,158,159/KOL/2024 & 1/KOL/2025 A.Ys. 2015-16 to 2020-21; Pawanputra Advertising Private Limited finally settled that no additions can be made by the AO in assessments u/s 153A without seized incriminating materials. Accordingly, the appeals by the revenue are dismissed. 16. In the result, the appeals of the Revenue are dismissed and the COs of the assessee are allowed. Order pronounced in the open court on 26.08.2025. Sd/- Sd/- (PRADIP KUMAR CHOUBEY) (RAJESH KUMAR) (JUDICIAL MEMBER) (ACCOUNTANT MEMBER) Kolkata, Dated: 26.08.2025 Sudip Sarkar, Sr.PS 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 "