TIRUMANI INVESTMENT PVT. LTD.,KOLKATA vs. ACIT, CIRCLE 13(2), KOLKATA

Per Rajesh Kumar, AM:

This is an appeal preferred by the assessee against the order of the National Faceless Appeal Centre, Delhi (hereinafter referred to as the “Ld. CIT(A)”] dated 27.03.2025 for the AY 2011-12.

“That the ld. CIT (A) has erred in upholding the order of the ld. AO which is passed in violation of CBDT instruction no.1 /2011 (F No. 187/12/2010/IT (i)

Ita No. 980/KOL/2025 Tirumani Investment Pvt. ltd.; A.Y. 2011-12 a-1) dated 31.01.2011) and therefore, the assessment framed by the ld. AO is nullity and bad in law.” 2.1. After hearing the rival contentions and perusing the material on record, we find that the assessee has raised the above additional ground of appeal challenging the jurisdiction of the AO to make addition. In our opinion the issued raised in the additional ground is a purely a legal issue qua which all the facts are available in the appeal folder and no further verification of facts are required from any quarter whatsoever. In our considered view the assessee is at liberty to raise any legal issue before any appellate authority for the first time even when the same has not been raised before the lower authorities. The case of the assessee is squarely covered by the decisions of the Apex court in the case of i) Jute Corporation of India Ltd. Vs CIT in 187 ITR 688 , ii) National Thermal Power Co. Ltd v. CIT [1998] 229 ITR 383 and also by the decision of Hon’ble Calcutta High Court in PCIT vs. Britannia Industries Ltd. [2017] 396 ITR 677 (Cal). Therefore, respectfully following the ratio laid in the above decision, we are inclined to admit the additional ground for adjudication.

Ita No. 980/KOL/2025 Tirumani Investment Pvt. ltd.; A.Y. 2011-12 DCIT, Circle 13(12), Kolkata. Therefore, we find merit in the argument of the ld.AR that since the income returned was ₹10,69,003/-, therefore the notice issued u/s 148, 143(2), were to be issued by ITO instead of DCIT, Circle 13(2), which is in violation of the CBDT instruction No.1/2011 (F. No. 187/12/2010-IT(A-I), Dated 31.01.2011. According to the said instruction, the ITO has pecuniary jurisdiction where the income is upto 20 lacs in the Metro Cities and 15 lacs in Mofussil areas whereas the DC/AC has jurisdiction above 20 lacs in Metro cities and above 15 lacs in the Mofussil areas. The said instructions reads as under:-

3.1. We note that the notice u/s 148 & 143(2) of the Act were issued by ACIT, Circle 13(2), Kolkata, which are without jurisdiction as he did not have any pecuniary jurisdiction over the assessee company & the assessment framed thereby AO, NFAC in violation of the CBDT Instruction No.1/2011 (F. No. Page | 3

Ita No. 980/KOL/2025 Tirumani Investment Pvt. ltd.; A.Y. 2011-12 187/12/2010-IT(A-1), Dated 31.01.2011. Therefore, the said notice has been issued by non-jurisdictional AO and thereby the assessment is also invalid and cannot be sustained. The case of the assessee find support from the decision of the Hon'ble Calcutta High Court in the case of PCIT vs. M/s Shree Shoppers Ltd. in ITAT 39/2023, IA No. GA/1/2023, dated 15.03.2023, wherein the Hon'ble Court has decided the issue in favour of the assessee by upholding the order of the Tribunal. The Tribunal in ITA No. 865/KOL/2018 for A.Y. 2012-13 in case of M/s Shree Shoppers Ltd. Vs. DCIT has held that notice issued by ITO, Ward 39(4), Kolkata, u/s 143(2) of the Act was without valid jurisdiction and therefore the consequent assessment framed by the DCIT, circle 9(2), Kolkata is invalid. The Hon'ble Tribunal followed the decision of jurisdictional High Court in case of PCIT vs. Nopany & Sons (2022) 136 taxmann.com 414 (Cal), while passing the order. The Hon'ble court vide order dated 15.03.2023, has held as under:-

“We have heard Ms. Smita Das De, learned standing counsel for the appellant/revenue. Though the respondent has been served and affidavit of service filed, none appears for the respondent. The short issue which falls for consideration in the instant case is whether there is valid notice issued under Section 143 (2) of the Act for commencing the scrutiny assessment. The Tribunal has noted the facts and rendered a finding that on the date when the case was selected for scrutiny, the authority who issued the notice namely, the Income Tax Officer, Ward No.9(4), Kolkata did not have jurisdiction and the jurisdiction. was with the Deputy Commissioner of Income Tax. The following factual finding has been recorded by the Tribunal: "Therefore, the legal ground stands to be admitted and the same relates to invalid notice issued u/s. 143 (2) of the Act. It is a settled position of law that for carrying out the assessment proceedings u/s. Page | 4

Ita No. 980/KOL/2025 Tirumani Investment Pvt. ltd.; A.Y. 2011-12 143 (3) of the Act, the statutory requirement of serving of valid notice u/s. 143 (2) of the Act is must and in absence thereof the subsequent proceedings become invalid. In the case of assessee, the facts are that the assessee has declared income of Rs.48,47,180/- in the e-return filed on 26.09.2012. For selecting the case for scrutiny notice u/s. 143 (2) of the Act was issued by ITO, Ward-9(4), 23.09.2013. The Central Board of Direct Taxes (CBDT vide Instruction No.1/2011 supra) revised the monetary limit for issuing notice by ITO/DCS/ACs. Through this instruction it stated that in case of metro cities in case of corporates declare income above Rs.30 lakh the jurisdiction of such corporate assessee will lie with the DCs/ACs. It is not in dispute that as on the date of selecting the case for having Kolkata dated scrutiny, the very basis for jurisdiction over the assessee is the returned income which was more than Rs.30 lakhs and the same was lying with the DCs/Acs but the notice u/s. 143 (2) of the Act has been issued by ITO, Ward-9(4), Kolkata. It is true that subsequently the assessment has been framed by DCIT, Circle-9(2), Kolkata but the point in dispute is that on date of issuing a notice u/s. 143 (2) of the Act, whether the ITO, Ward-9(4), Kolkata was having a valid jurisdiction to issue such notice u/s. 143 (2) of the Act." The above factual position recorded by the Tribunal is not in dispute. Therefore, we are of the clear view that the Tribunal rightly allowed the assessee's appeal and quashed the scrutiny proceedings as defect in issuance of notice is incurable as it goes to the root of the matter. Thus, we find no ground to differ with the findings recorded by the learned Tribunal. In the result, the appeal filed by the revenue (ITAT/39/2023) is dismissed and the substantial questions of law are answered against the revenue. Consequently, the connected application for stay (IA No.GA/2/1/2023) also stands closed.” 3.2. Similarly, the case of the assessee also find support from the decision of Hon'ble Jurisdictional High Court Calcutta in case of PCIT Vs. Mintu Das in ITAT/167/2025, IA No. GA/1/2025, GA/2/2025 vide order dated 14.01.2026, wherein it has held as under:-

“We, after hearing the rival submissions of the parties and perusing the materials available on record note that the return of income of the assessee was of Rs.16,50,920/ which falls under the jurisdiction of the ITO, Ward- 28(2), Kolkata but notice u/s 143(2) of the Act was issued by ACIT, Circle-28, Kolkata and also the assessment order was duly framed by ACIT, Circle-28. Page | 5

Ita No. 980/KOL/2025 Tirumani Investment Pvt. ltd.; A.Y. 2011-12 Kolkata, which is clearly a violation of the jurisdictional mandate under CBDT Circular No. 1/2011 dated 31.01.2011. We note that this procedural irregularity rendered the assessment proceedings invalid and bad in law." This Court observes that the jurisdictional issue has rightly been determined by the learned Tribunal and no substantial questions of law arises in this appeal. In view of the above, we dismiss the appeal. Accordingly, the stay petition (GA/2/2025) is also dismissed.” 3.3. Considering the facts and circumstances of the case and also relying on the above decisions, we quash the assessment framed by the ld. AO as invalid. Additional ground is allowed.

4.1. The facts in brief are that the assessment was reopened u/s 147 of the Act as stated above after recording reasons to believe u/s 148(2) of the Act which are available at page no.33 of the Paper Book. We find from the said reasons that the ld. AO has not recorded his own satisfaction and merely extracted information received from the DDIT (Investigation), Unit 4(2), Kolkata and re-opened the case. We note that the ld. AO while recording the reasons u/s 148(2) of the Act has not investigated or enquired into the matter as to the escapement of income. We note that the reasons recorded are very vague and only mentioned the modus operandi for laundering money through shell companies and there is no specific finding or material directly attributable to the assessee. We note that the reasons recorded did not mention Page | 6

Ita No. 980/KOL/2025 Tirumani Investment Pvt. ltd.; A.Y. 2011-12 the details as to the date of transactions, nature of transactions with the appellant, specific rate received, how fund flowing to and from the assessee and income escaping the assessment. We observe from the said reasons that in the first para it is stated that the assessee is a beneficiary of ₹50 lacs and thereafter in the last para of page no.33 of the paper book(first page of the reasons) it is mentioned that assessee is a beneficiary of the share application money from Chandra Ghanta Traders Pvt. ltd. of ₹2,25,00,000/- and the ld. AO also noted that the assessee is a beneficiary of ₹70 lacs received from Jagmangal Sales Pvt. ltd. Finally, the ld. AO noted that the income to the tune of ₹3,65,00,000/- has escaped assessment. Therefore, the reasons have been recorded without application of mind and without verifying the details and giving facts as to the assessee’s case. We note that in the assessee’s case, the addition has been made in respect of sale of investments u/s 68 of the Act of ₹41,11,50,000/-. We also note that there is no details given of dates, amount received /borrowed, from whom the amounts were received and how the income has escaped assessment. Therefore, this is a case of borrowed satisfaction without application of mind to the information received by the AO. We find that there is no tangible material before the ld. AO for reopening the case u/s 147 of the Act. Mere reproduction of the investigation report in the reasons recorded does not satisfy the jurisdictional requirement of reasons to believe. Thus this is a appropriate case of borrowed satisfaction. The case of the assessee is covered by the following decisions:-

Ita No. 980/KOL/2025 Tirumani Investment Pvt. ltd.; A.Y. 2011-12 i. ITO v. Lakhmani Mewal Das, [1976] 103 ITR 437 (SC)

ii. Calcutta Discount Co. Ltd. v. ITO, [1961] 41 ITR 191 (SC)

iii. Pr. CIT v. G&G Pharma India Ltd., [2017] 384 ITR 147 (Del HC)

iv. Pr. CIT v. RMG Polyvinyl (1) Ltd., [2017] 396 ITR 5 (Del HC)

v. Pr. CIT v. Meenakshi Overseas (P.) Ltd., [2017] 82 taxmann.com 300 (Del HC)

vi. Signature Hotels Pvt. Ltd. v. ITO, [2011] 338 ITR 51 (Del HC)

vii. Pr. CIT v. Shodiman Investments (P.) Ltd., [2018] 93 taxmann.com 153 (Bom HC)

viii. South Yara Holdings vs. ITO, [2019] 104 taxmann.com 216 (Bom HC)

ix. Hindusthan Lever Ltd. v. R.B. Wadkar, [2004] 268 ITR 332 (Bom HC)

x. Devansh Exports v. ACIT, ITA No. 2178/Kol/2017 dt. 15.10.2018 (ITAT Kol)

4.2. We accordingly following the ratio laid down in the above decisions, quash the reopening as well as the assessment framed.

Ita No. 980/KOL/2025 Tirumani Investment Pvt. ltd.; A.Y. 2011-12 5. The third issue raised by the assessee is against the incorrect, vague and sanctity reasons recorded by the ld. AO without application of mind and therefore, the reassessment is bad in law.

5.1. After hearing the rival contentions and perusing the materials available on record, we find that the reasons were mechanically recorded after the ld. AO received information from the DDIT (investigation), without verifying the same as to the correctness. We note that in the said reasons it is alleged that the assessee received ₹2,25,00,000/- from Chandra Ghantra Traders Pvt. ltd. on account of share application money. However, as a matter of fact in the same reasons recorded, the ld. AO noted neither new shares were issued nor any in the form of share premium was received by the assessee and thus, there is contradiction in the reasons recorded by the ld. AO. Similarly, in the reasons recorded the ld. AO noted that the assessee had received ₹70 lacs from M/s Jagmangal Sales Pvt. ltd., whereas the appellant has stated that ₹50 lacs from the said entity was received which has been accepted by the ld. AO in the assessment proceedings. Therefore, the amount is factual incorrect. In the concluding part also, we not that the ld. AO has mentioned that the income has escaped assessment of ₹3,65,00,000/-, whereas the actual amount was arrived at after summing up the three amounts worked out to ₹3,45,00,000/-. Thus, the reasons recorded by the ld. AO do not meet the requirement of reasons to believe on the basis of which the assessment can

Ita No. 980/KOL/2025 Tirumani Investment Pvt. ltd.; A.Y. 2011-12 be opened. The case of the assessee is supported by the following decisions:-

i. CIT v. Kamdhenu Steels & Alloys Ltd., [2014] 361 ITR 220 (Del HC)

ii. Pr. CIT vs. SNG Developers Ltd., [2018] 404 ITR 312 (Del HC)

iii. Shamshad Khan vs. ACIT, [2017] 395 ITR 265 (Del HC)

iv. CIT v. Suren International, (Del HC)

v. M/s Ganesh Ganga Investments P. Ltd. vs. ITO, ITA No. 1579/Del/2019 07.11.2019

5.2. We accordingly following the ratio laid down in the above decisions, quash the reopening of assessment as well as the assessment framed.

6.1. The facts in brief are that the assessee sold the unlisted equity shares of private limited companies namely Bearbull Commodities Pvt. Ltd., Jagdamba Designers Pvt. Ltd., Brajeshwar Dealers Pvt. Ltd., Rajshree Tradecom Pvt. Ltd., Komal Merchants Pvt. Ltd. The assessee during the course of assessment proceedings furnished before the ld. AO all the evidences/ documents as called for by the ld. AO comprising Page | 10

Ita No. 980/KOL/2025 Tirumani Investment Pvt. ltd.; A.Y. 2011-12 copies of sale bills reflecting PANs, addresses of the buyer companies, bank statements reflecting the receipt of sale consideration, ledger accounts, audited financial statements reflecting the investment in the preceding year and sale proceeds in the current year. The ld. AO has not pointed out any defect or deficiency in the documents furnished by the assessee. The said investments were purchased in the earlier assessment years in A.Y. 2009-10 and were duly disclosed in the balance sheet. We also note that the return of income was filed and even the assessment has been framed u/s 143(3) of the Act read with section 147 of the Act vide order dated 27.10.2011, and the ld. AO accepted the investments made by the assessee without any adverse interference. The ld. AO however, treated the amount of sale of investments as unexplained cash credit u/s 68 of the act and added the same to the income of the assessee.

6.2. In the appellate proceedings, the ld. CIT (A) confirmed the order of the lower authority on merit by holding that the assessee has failed to prove the receipt of huge share capital by observing and holding as under:-

“6.9 In view of the above, I am of the considered view that, the appellant company has engaged in suspicious financial transactions by way of receipt of huge share capital and making investment of the said capital in the equity shares with high premium immediately on the receipt of the such share capital with other entities, which does not match with the financials of the said companies. Subsequently, these shares were liquidated and the receipts were shown as 'loan and advances' in the financials upon the takeover of the appellant company by the new directors as it was brought by the AO in the para 8.1 & 8.2 of the assessment order. It is further notable that, the AO has issued Summons u/s.131 of Act to the directors of the purchase entities namely, M/s. Deergold Suppliers Pvt Ltd, M/s.Chandra Ghanta Traders Pvt Ltd and M/s. Jagmangal Sales Pvt Ltd and requested to appear before him and also requested to furnish relevant information like source of fund utilized for Page | 11

Ita No. 980/KOL/2025 Tirumani Investment Pvt. ltd.; A.Y. 2011-12 the purchase transaction, total income offered to taxation in the Return of income for the last three assessment years, details of bank accounts, etc. Whereas, there was no compliance from the said concerns, which indicates that the above said persons are mere exit providers to the appellant company. Further, the appellant did not furnish complete details of the persons from whom the sale proceeds were received amounting to Rs.41,11,50,000/- during the year and also the details of the loan and advances given to various persons amounting to Rs.36,66,80,960/- and current assets shown in the balance sheet amounting to Rs.3,00,00,000/- during the course of the assessment proceedings before the AO and also during the appellate proceedings. Itis also notable that the said receipt was shown by the appellant as receivable in its books in the current year (AY 2011-12) and also in the subsequent assessment year Le AY 2012-13 and in the AY 2013-14 to AY 205-16, the said amount was shown as other short- term loan and advances' in its balance sheet and no income was earned thereon. 6.10 Accordingly, it is inferred that the said shares were liquidated through the exit providers as observed by the AO, whose identity has not been traceable immediately after the completion of the said transactions and accordingly, it is inferred that, the appellant company has received back the money routed through various layers as sale proceeds of the equity shares. Accordingly, the financial transactions entered by the appellant company with the exit providers is falls under the ambit of accommodation transactions as it was brought out by the AO and also by way of the investigation carried out by the Investigation wing of the department. Since the said sale credit has not been satisfactorily explained by the appellant, the same is taxable u/s. 68 of the Act. 6.11 Further, the appellant contention that once the introduction of the share capital is accepted, the subsequent sale proceeds cannot be added as undisclosed income is not tenable due to the fact that, taxability of the share capital u/s. 68 of the Act was enabled only by way of insertion of the proviso to section 68 of the Act by way of Finance Act 2012 w.e.f 01.04.2013. 6.12 It is also settled legal position that, the AO can bring to tax any income which has escaped assessment other than the items, which led to issuance of notice u/s 148 of the Act. In the instant case, the AO has initiated the reassessment proceedings on account of availing accommodation entries for the alleged sale of shares amounting to Rs.3,65,00,000/-, whereas, the AO has found during the reassessment proceedings that, the entire sale proceeds of Rs.41.11 Cores are found to be of similar in nature. Hence, the addition made by the AO on the entire transactions is sustainable. Reliance in this regard is placed on the decision of the Honourable Apex court in the case of CIT vs Sun Engineering Works P ltd (198 ITR 297) and the Honourable Keral High Court in the case of CIT vs Best wood Industries & saw mills (Ker-FB) 331 ITR 63.

Ita No. 980/KOL/2025 Tirumani Investment Pvt. ltd.; A.Y. 2011-12 6.13 In view of the above facts and circumstances of the case and legal positions. discussed, I am of the considered view that the addition made by the AO u/s 68 of the Act as cash credit on the accommodation entries received by the appellant by way of alleged sale of shares during the year to the tune of Rs.41,11,50,000/- is sustainable and accordingly, the grounds of appeal filed by the appellant on the ment of this case are dismissed.” 6.3. After hearing the rival contentions and perusing the materials available on record, we find that in this case the assessee has sold unlisted equity shares in private limited companies as stated hereinabove for a consideration of ₹41,11,50,000/-. During the course of assessment proceedings, we note that the assessee has furnished all the details and evidences qua the purchasing companies comprising their names, addresses, PAN numbers, Bank statements, audited balance sheets, etc. and the ld. AO has not pointed out any defect order or deficiency in the said documents. We note that the shares sold during the year were the purchased in the earlier year i.e. A.Y. 2009-10 and were duly disclosed in the audited balance sheets and the return of income. We also note that the assessment for A.Y. 2009-10, the assessment has been completed u/s 143(3) of the Act, read with Section 147 vide order dated 27.10.2011, and the investments were duly accepted without any adverse interference. In our opinion, once the investments are accepted by the ld. AO in the earlier years, the same cannot be treated as unexplained cash credit u/s 68 of the Act. We also note that the ld. AO has not pointed out any defect or deficiency in the documents field by the assessee. Considering these facts, we are of the view that the addition made by the ld. AO as confirmed by the ld. CIT (A) is wrong and cannot be sustained. The case of the assessee is squarely covered by Page | 13

Ita No. 980/KOL/2025 Tirumani Investment Pvt. ltd.; A.Y. 2011-12 the decision of Hon'ble jurisdictional High Court in case of PCIT vs. Tulsyan and Sons (P.) Ltd. [2025] 174 taxmann.com 37 (Calcutta)[16-04-2025], ITAT/239/2024 in IA No. GA/2/2024 vide order dated 16th April, 2025, wherein it has held as under:-

“2. 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. 3. The short issue which falls for consideration is whether the learned tribunal was right in affirming the order passed by the Commissioner of Income Tax (Appeals)-21, Kolkata [CIT(A)] dated 10.5.2023 by which the assessee's appeal was allowed and the addition made under section 68 of the Act was deleted. The Assessing Officer made the addition by invoking section 68 of the Act on the ground that the assessee failed to discharge its onus to establish identity, creditworthiness and genuineness of the transaction in respect of the money received through cash trail. The CIT(A) in course of hearing the appeal called for a remand report from the Assessing Officer and in the said remand report the Assessing Officer has in no uncertain terms accepted the receipt of the impugned sum on account of sale proceeds of investment. The Assessing Officer verified the investment sold which are shown in the balance-sheet for the financial year 2010-11 in Schedule-4 of the balance-sheet and after considering these facts it was stated that the assessee had sold shares held by way of the investment during the year to M/s. Shivshakti Communications and Investment Pvt. Ltd. and Carnation Tradelink Pvt. Ltd. and it is not a receipt of unsecured loan. This fact, apart from other factual details, were considered by the CIT(A) and by an elaborate order dated 10.5.2023 the appeal filed by the assessee was allowed. The tribunal on its part re-examined the factual position and took note of the findings rendered by the CIT(A) and concurred with the same. We also find that the tribunal has also examined the factual position and took note of the remand report as called for by the CIT(A) which confirmed the alleged sum is on account of sale of investment and not otherwise. 4. 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. 6.3.1. We note that the said decision has been followed by the co-ordinate bench in a series of decisions. The co-ordinate Bench in case of ACIT vs Pawanputra Advertising Private Limited, in IT(SS)A No. 144 & 145/KOL/2024 (AYs: 2019-20 & Page | 14

Ita No. 980/KOL/2025 Tirumani Investment Pvt. ltd.; A.Y. 2011-12 2020-21) and others order dated 26.8.2025, while deleting the same issue as observed and held as under:-

“7. We have heard the rival contentions and perused the materials available on record including the written submissions dated 21.04.2025 and paper books No. 1 (page No. 1 to 357), paper book no. 2 (page No. 1 to 354 and paper book 3 (Case Laws). We find that the only dispute is sale of part unlisted equity shares to various parties thereby realizing total sales consideration of ₹11,56,20,000/-. We note that the assessee raised money by issue of equity shares in A.Y. 2008-09 of Rs. 64,85,49,000/- . We also note that entire funds raised were invested in unlisted equity shares in AY 2011- 12. We note that the case of the assessee was selected for scrutiny only for this reason and the money raised by the assessee was accepted by the department and no adverse interference was drawn. We note that in A.Y. 2010-11 also, the case of the assessee was selected for scrutiny and all the money share capital /share premium was accepted. Thereafter the investments were made in private equity shares which were unlisted in A.Y. 2011-12. Similarly 2017-18 the case of the assessee was selected for scrutiny and investments were not doubted at all. Thus it is clear that over all these years the investments were not doubted by the department. These investments made in the A.Y. 20111-12 were partly sold at cost by the assessee during the instant assessment year which realized ₹11,56,20,000/- which were accepted by the Revenue right from A.Y. 2011-12 till the instant assessment year. We have also noted that the assessee has filed before the ld. AO as well as before the ld. CIT (A) all the evidences qua the purchases and sale of shares. The assessee has filed all the evidences qua the purchasers such as ITRs, names, addresses, audited balance sheets, bank statements, confirmations, etc. proving the identity, creditworthiness of the purchasers and genuineness of the transactions. We note that even the purchasing companies have filed their evidences as called for by the ld. AO comprising all the evidences as stated above. The ld. CIT (A) has recorded a finding of fact that apart from the assessee , purchasing companies had also filed all the evidences before the ld. AO however the ld. AO had not brought on record any independent and substantive evidences pointing out any defect or deficiency in the said evidences. The ld. CIT (A) finally noted that the assessee has proved the identity and creditworthiness of the parties and also the genuineness of the transactions by filing all these documents and thus, discharged its initial burden. Besides, we note that nothing incriminating was found and seized during the course of search. 8. We observe that the ld. CIT (A) also noted that the department has accepted all these investments in the earlier assessment years, even in the scrutiny assessments and had not drawn any adverse interference. Therefore, we do not find any infirmity/anomaly in the appellate order of the ld. CIT (A), who has passed a very reasoned and speaking order after following the decision of Hon'ble Jurisdictional High Court in case of CIT VS. Dataware Private Ltd. (supra) as well as the decision of the co-ordinate benches on the same issue namely; M/s Swarna Kalash Commercial Pvt. Ltd. vs ACIT (supra) Page | 15

Ita No. 980/KOL/2025 Tirumani Investment Pvt. ltd.; A.Y. 2011-12 & 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 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 Page | 16

Ita No. 980/KOL/2025 Tirumani Investment Pvt. ltd.; A.Y. 2011-12 vide order dated 01.09.2023 involving the same issue of addition of sale of shares/investments by the AO on the ground that identity and credentials of the purchasers of shares/investments were suspicious. The operative part of the order is extracted as under: “6.We have considered the rival contentions and gone through the record. First we deal with the issue relating to the undated detailed order passed by the Assessing Officer even after the prescribed date of limitation for passing the assessment order for the assessment year under consideration which is other than the short cryptic order as reproduced above and which did not even bear any Document Identification Number, (in short “DIN”)as mandated vide CBDT Circular No.19 of 2019. 6.1. As mentioned in the said CBDT circular no. 19 of 2019 and as also further held by the Hon’ble Delhi High Court in the case of CIT vs. Brandix Mauritius Holdings Ltd. [2023[ 149 taxmann.com 238 (Del), any communication without mentioning of the DIN in its body is to be treated as non-est. Therefore, the subsequent undated assessment order and without any DIN mentioned in the order, and passed after the limitation period prescribed for passing of the assessment order cannot be taken cognisance of. 7. So far as the original order (extracted above) passed by the Assessing Officer is concerned, we are in agreement with the contentions of the Ld. Counsel for the assessee that the same is a small and cryptic order and the additions have been made by the Assessing Officer in the said order in a mechanical manner without any discussion on merits and without pointing out any justifying material warranting such additions. Therefore, the additions made by the Assessing Officer by way of such an cryptic order are not sustainable as per law. …….. ----------------------- 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 Page | 17

Ita No. 980/KOL/2025 Tirumani Investment Pvt. ltd.; A.Y. 2011-12 AO in scrutiny assessment under section 143(3). The capital so raised was invested in shares of Pvt. Ltd. of various companies. These shares were sold during the year under consideration to different parties, corporate/non-corporate. The sale proceeds have come in assessee’s bank account through banking channel. 11.1. In its normal course of business, the assessee had made purchases and sale of investments as under which is tabulated as under:

11.2. The shares were held by the assessee as investments and were sold at the cost of acquisition by the assessee. Hence, there is no profit/loss on such sale of investment. We also look at the movement of investment held by the assessee, which is tabulated below:

FY AY Opening Purchase Sales Amount Closing By A.O. Balance 2014-15 2015- 63,42,00,000 63,42,00000 16 2015-16 2016- 63,42,00,000 42,44,960 18,344,960 62,01,00,000 1,83,44,960 17 2016-17 2017- 62,01,00,000 56,27,44,459 468,499,459 71,43,45,000 46,84,99,459 18 2017-18 2018- 71.43.45,000 1,55,17,29,538 2,062,064,910 20,40,09,628 2,06,20,64,910 19 2018-19 2019- 20,40,09,628 66, 47, 64, 007 170,560,000 69,82,13,635 17,05,60,000 20 Total 2,71,94,69,239 11.3. We also refer to the details of opening stock, purchases, sales and closing stock during the year, placed on record by the assessee:

SI Opening Purchases Sales Closing No Name of the Script Balance Balance

Amount Amount Amount Amount I Bellona Supply Pvt. Ld. 1,24,57,344 0 1,24,57,344 0 2 P N Jewelers Pvt ltd 38,45,323 0 38,45,323 0 Page | 18

Ita No. 980/KOL/2025 Tirumani Investment Pvt. ltd.; A.Y. 2011-12 3 Rozela Tie Up pvt. Ltd. 3,64,33,053 0 3,64,33,053 0 4 Rashmi Cement Ltd. 0 1,57,32,000 0 1,57,32.000 5 CimmcoVinimay Pvt. Ltd. 13,32,04,353 53,71,44,701 0 67,03,49,05 4 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 26,15,900 0 0 26,15,900 Ltd 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 0 8,10,000 8,10,000 0 Ltd 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 & 0 1,26,37,632 1,26,37,632 0 Marketing Pvt Ltd 17 Alok Pattanayak 0 3,00,000 3,00,000 0 Total 20,40,10,245 66,47,63,507 17,05,60,000 69,82,13,63 4 11.4. Based on the analysis of the above details, it is evident that entire sales is made from purchases & opening stock as under:

11.5. It is also important to note that the AO has made enquiries from the buyers of the shares sold by the assessee by issuing summons u/s 131 of the Act who have responded and furnished the required details. Summary Statement of the replies made in response to notice u/s 131 by various buyers (Sale of Shares) is tabulated below:

Ita No. 980/KOL/2025 Tirumani Investment Pvt. ltd.; A.Y. 2011-12

Ita No. 980/KOL/2025 Tirumani Investment Pvt. ltd.; A.Y. 2011-12 cognizance in fact can be taken for the purpose of the addition. 12.1. We find force in the above contentions of the ld. Counsel in the facts and circumstances of the case. As laid down by the various Higher Courts of the country, the retracted statement can not be made sole basis for making the additions. The Jurisdictional Calcutta High Court in the case of Principal Commissioner of Income Tax Vs. Golden Goenka Fincorp Ltd. [2023]148 taxmann.com 313(Calcutta) has held that where assessing officer solely based on statement of assessee’s director recorded during search operation treated share application money received by assessee company as undisclosed income and made additions u/s 68 of the Act, since said statement was retracted and there was no cash trail or any other corroborative evidence or investigation brought on record by AO, impugned additions were liable to be deleted. Even the Hon’ble A.P. High Court in the case of “Naresh Kumar Agarwal” (2015) 53 taxmann.com 306 (Andhra Pradesh) has observed that where, in the absence of any incriminating material etc. found from the premises of the assessee during the course of search, statement of assessee recorded under section 132(4) would not have any evidentiary value. Similar view has been adopted by the Jaipur bench of the Tribunal in the case of “Shree Chand Soni vs. DCIT” (2006) 101 TTJ 1028 (Jodhpur). The Hon’ble Delhi High Court in the case of “CIT vs. Harjeev Agarwal” in ITA No.8/2004 vide order dated 10.03.16 has observed that a statement made under section 132(4) of the Act on a stand-alone basis, without reference to any other material discovered during search and seizure operation, would not empower the AO to make a block assessment merely because any admission was made by the assessee during search operation. In the case of “Commissioner of Income Tax vs. Sunil Agarwal” (2015) 64 taxman.com 107 (Delhi-HC), the assessee therein, during the course of search, made a categorical admission under section 132(4) that the cash 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 Page | 21

Ita No. 980/KOL/2025 Tirumani Investment Pvt. ltd.; A.Y. 2011-12 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 “Basant Bansal 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 Page | 22

Ita No. 980/KOL/2025 Tirumani Investment Pvt. ltd.; A.Y. 2011-12 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

Ita No. 980/KOL/2025 Tirumani Investment Pvt. ltd.; A.Y. 2011-12 Instances have come to the notice of the Board where assessee have claimed that they have been forced to confess the undisclosed income during the course of the search & seizure and survey operations. Such confessions, if not based upon credible evidence, are later retracted by the concerned assessee while filing returns of income. In these circumstances, on confessions during the course of search & seizure and survey operations do not serve any useful purpose. It is, therefore, advised that there should be focus and concentration on collection of evidence of income which leads to information on what has not been disclosed or is not likely to be disclosed before the Income Tax Departments. Similarly, while recording statement during the course of search it seizures and survey operations no attempt should be made to obtain confession as to the undisclosed income. Any action on the contrary shall be viewed adversely. Further, in respect of pending assessment proceedings also, assessing officers should rely upon the evidences/materials gathered during the course of search/survey operations or thereafter while framing the relevant assessment orders. Yours faithfully, 12.5. A perusal of the above circular also shows that it is in the notice of the statutory controlling body of the Income Tax Authorities that the revenue officials are used to take confessional statements from the person searched under force, pressure or threat and that is why they have made it mandatory that additions solely on the basis on such statements should not be made and that corroborative evidences should be collected or obtained before making such additions. The circular of the CBDT is binding on the revenue officials. In the facts and circumstances of this case, when seen in the light of above case laws and CBDT circular, additions in this case cannot be said to be justifiably made. 13. All the above details when kept in juxtaposition, there remains nothing to cast an iota of doubt on the sale transaction of shares held by the assessee as investments which it undertook in the ordinary course of its business, more importantly, purchases having made in the current year also. Further, as rightly pointed out by the learned Counsel, both opening balance of investment in shares and the purchases made during the year have not been Page | 24

Ita No. 980/KOL/2025 Tirumani Investment Pvt. ltd.; A.Y. 2011-12 disputed or doubted by the authorities below so as to bring the entire sale consideration to tax. 14. At this stage, the ld. DR has submitted that the assessee has claimed that it has undertaken this sale transaction by selling the shares at the cost at which it had acquired them in AY 2006-07. At the same time, assessee submits that it has undertaken this transaction in the ordinary course of its business. The ld. DR has submitted that the conduct of business is always with a profit motive, more particularly when the assessee had held these shares for past several years and had also made purchases during the year, deploying its funds. There ought to be certain element of profit embedded in the sale transaction executed which must be brought to tax. 15. Considering the above submission of the ld. DR and taking a holistic view of the facts and circumstances of the case, we find it proper to consider net profit element @ 5% of the sale consideration i.e. 5% of Rs.17,05,60,000/- which comes to Rs.85,28,000/- be subjected to tax. We, accordingly delete the addition to the extent of Rs.16,20,32,000/- made u/s 68 of the Act and sustain the balance of Rs.85,28,000/- towards profit element on the impugned sale transaction of shares undertaken by the assessee. 16. In the result, appeal of the assessee is partly allowed. 9.4. It is clear from the above that the facts in the instant case before us are materially same vis a vis the facts in the case decided by the coordinate bench supra in group concern. We, therefore, respectfully following the same set aside the order of ld CIT(A) and direct the AO to apply profit of 5% on the sales proceeds of Rs. 99,72,36,896/- which comes to Rs. 4,98,61,845/- and delete the remaining addition of Rs. 94,73,75,051/-. 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

Ita No. 980/KOL/2025 Tirumani Investment Pvt. ltd.; A.Y. 2011-12 the order of the ld. Assessing Officer. The Hon'ble High Court while deciding the issue held as under: - We have heard Mr. Aryak Dutta, learned standing counsel assisted by Mr. Soumen Bhattacharjee, learned standing counsel for the appellant and Mr. J. P. Khaitan, learned senior advocate assisted by Mr. Pratyush Jhunjhunwalla, learned advocate for the respondent. The short issue which falls for consideration is whether the learned tribunal was right in affirming the order passed by the Commissioner of Income Tax (Appeals)- 21, Kolkata [CIT(A)] dated 10.5.2023 by which the assessee’s appeal was allowed and the addition made under section 68 of the Act was deleted. The Assessing Officer made the addition by invoking section 68 of the Act on the ground that the assessee failed to discharge its onus to establish identity, creditworthiness and genuineness of the transaction in respect of the money received through cash trail. The CIT(A) in course of hearing the appeal called for a remand report from the Assessing Officer and in the said remand report the Assessing Officer has in no uncertain terms accepted the receipt of the impugned sum on account of sale proceeds of investment. The Assessing Officer verified the investment sold which are shown in the balance-sheet for the financial year 2010-11 in Schedule-4 of the balance-sheet and after considering these facts it was stated that the assessee had sold shares held by way of the investment during the year to M/s. Shivshakti Communications and Investment Pvt. Ltd. and Carnation Tradelink Pvt. Ltd. and it is not a receipt of unsecured loan. This fact, apart from other factual details, were considered by the CIT(A) and by an elaborate order dated 10.5.2023 the appeal filed by the assessee was allowed. The tribunal on its part re-examined the factual position and took note of the findings rendered by the CIT(A) and concurred with the same. We also find that the tribunal has also examined the factual position and took note of the remand report as called for by the CIT(A) which confirmed the alleged sum is on account of sale of investment and not otherwise. Thus, we find no question of law much less substantial question of law arises for consideration in this appeal. Accordingly, the appeal fails and the same is dismissed. Consequently, the connected application stands closed. 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.

Ita No. 980/KOL/2025 Tirumani Investment Pvt. ltd.; A.Y. 2011-12 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.” 6.3.2. Even otherwise, we note that the addition of ₹41,11,50,000/- is far more than the amount mentioned in the show cause of ₹3,65,00,000/-. A perusal of the show cause notice dated 10.12.2018, reveals that the ld. AO proposed to treat the transactions amounting to ₹3,65,00,000/- as bogus. However, the ld. AO added u/s 68 of the Act as unexplained investment of ₹41,11,50,000/- by treating the same as accommodation entries. We note that the appellant was never put to cross examination or afforded any opportunity whatsoever to explain or rebut the allegation with respect thereto . In our opinion, the ld. AO has grossly erred in making addition of an amount which is not subject matter of the show cause notice without affording opportunity to the assessee. The case of the assessee is squarely covered by the decision of Hon'ble Supreme Court in case of Andaman Timber Industries vs. Commissioner of Central Excise, Kolkata-II [2015] 62 taxmann.com 3 (SC)/[2016] 38 GSTR 117 (SC)/[2015] 52 GST 355 (SC)/[2015] 314 ELT 641 (SC)[02-09-2015] and in case of New Delhi Television Ltd. vs. Deputy Commissioner of Income Tax [2020] 116 taxmann.com 151 (SC)/[2020] 271 Taxman 1 (SC)/[2020] 424 ITR 607 (SC)[03-04-2020 wherein it has been held that the addition beyond the scope of notice and show cause notice Page | 27

Ita No. 980/KOL/2025 Tirumani Investment Pvt. ltd.; A.Y. 2011-12 is without jurisdiction and entire assessment is liable to be quashed on this ground alone. Consequently, relying on the above decisions, we set aside the order of ld. CIT (A) and direct the ld. AO to delete the addition.

Order pronounced on 07.09.2026.

Sd/- Sd/- (PRADIP KUMAR CHOUBEY) (RAJESH KUMAR) (JUDICIAL MEMBER) (ACCOUNTANT MEMBER) Kolkata, Dated: 07.09.2026 Sudip Sarkar, Sr.PS Copy of the Order forwarded to: 1. The Appellant 2. The Respondent 3. CIT DR, ITAT, 4. 5. Guard file. BY ORDER, True Copy//

Manish Bhoi Dy. Registrar Income Tax Appellate Tribunal, Kolkata