SHRI VARDHMAN TUBE COMPANY PRIVATE LIMITED,CHENNAI vs. I.T.O.,WARD-12(1), KOLKATA

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ITA 2874/KOL/2025Status: HeardITAT Kolkata03 September 2026AY 2013-144 pages
AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that since the shares were purchased in earlier years and duly accounted for, and the assessee had furnished details of the sale and return of advance, the addition under Section 68 was not justified. The Tribunal relied on previous decisions where investments accepted in earlier years were not doubted upon sale.

What were the facts?

The assessee sold equity shares and received an advance of ₹76.00 lacs. Due to an unfortunate development, only a portion of the shares could be delivered, and the remaining advance was returned. However, the AO and CIT(A) treated the entire amount as unexplained cash credit.

What were the issues?

Whether the amount received from the sale of shares, where part of the advance was returned due to non-delivery of all shares, can be treated as an unexplained cash credit under Section 68 of the Income Tax Act.

Which sections of the Income-tax Act were involved?

Section 68,Section 147,Section 148,Section 143(2),Section 142(1),Section 143(1)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, “D” BENCH, KOLKATA

For Appellant: Shri Manish Tiwari, AR
For Respondent: Shri Praveen Das Chowdhury
Hearing: 17.08.2026Pronounced: 03.09.2026

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 23.09.2025 for the AY 2013-14.

2.

The only issue raised by the assessee is against the confirmation of addition by the ld. CIT (A) of ₹76.00 lacs as made by the ld. AO on account of sale of shares by treating the same as unexplained cash credit u/s 68 of the Act

3.

The facts in brief are that the assessee filed the return of income on 08.09.2013, declaring total income at ₹850/-,

ITA No. 2874/KOL/2025 Shri Vardhman tube company Private Limited; A.Y. 2013-14 which was processed u/s 143(1) of the Act by assessing the income at ₹55,15,880/-. Thereafter, the case of the assessee was reopened u/s 147 of the Act after the ld. AO received information from the DDIT (Investigation) unit 3(3), Kolkata, that the assessee is a beneficiary of accommodation entries by M/s Devnayagam Finance Pvt. ltd. Accordingly, notice u/s 148 of the Act was issued on 20.03.2020. The assessee filed the return of income on 10.12.2020, declaring total income of ₹54,890/-. The ld. AO issued notice u/s 143(2) and 142(1) of the Act along with questionnaire which were replied by the assessee. The ld. AO noted that the assessee has received ₹76.00 lacs from M/s Devnayagam Finance Pvt. Ltd. and has not furnished the details/evidences thereof. Finally, the ld. AO treated the said amount as unexplained cash credit and added to the income of the assessee in the assessment framed u/s 147 of the Act dated 27.09.2021.

4.

The ld. CIT (A) also dismissed the appeal of the assessee though the assessee furnished before the ld. CIT (A) all the details/evidences qua the said amount received from the said company in consideration of sales of equity shares.

5.

After hearing the rival contentions and perusing the materials available on record, we find that the assessee during the year has sold equity shares to M/s Devnayagam Finance Pvt. Ltd., which were bought during the earlier years. We note that the assessee has furnished all the details before the AO as well as before the ld. CIT (A) qua the sale of 3,800/- equity shares of Aakarshan Housing Finance Private Limited. The assessee Page 2 of 4

ITA No. 2874/KOL/2025 Shri Vardhman tube company Private Limited; A.Y. 2013-14 received advance of ₹76.00 lacs from M/s Devanayagam Finance Private Limited, a NBFC against the sale of 3800 shares of Aakarshan Housing Finance Private Limited. However, due to some unfortunate development , the assessee could deliver only 2163 shares to them and returned the advance received to the tune of ₹32,74,000/-, which was brought to the notice of the ld. AO as well as the ld. Commissioner of Income-tax (Appeals). However, both the authorities below have not taken cognizance of the same. Moreover, the shares were purchased in the earlier assessment years and duly shown in the books of account and during the year it was only these shares were sold as stated hereinabove to the said finance company. Therefore, no addition can be made u/s 68 of the Act. The case of the assessee is squarely covered by the decision of the coordinate bench in case of DCIT vs Tulsyan and Sons Pvt Ltd., in ITA No.812/Kol/2023 order dated 18.1.2024 which has been approved by the Hon’ble Jurisdictional High Court in the case of PCIT vs. Tulsyan and Sons Pvt Ltd., reported in (2025) 174 taxmann.com 37 (Cal High Court).We also find that the Co-ordinate Bench of this Tribunal in the case of ACIT vs Pawanputra Advertising Private Limited, in IT(SS)A No. 144 & 145/KOL/2024 (AYs: 2019-20 & 2020-21) and others order dated 26.8.2025, wherein, the Co-ordinate Bench has held that where the investments made by the assessee were accepted by the department in earlier assessment years which culminated u/s.143(3) of the Act in one of the assessment years, then same cannot be doubted when sold in Page 3 of 4

ITA No. 2874/KOL/2025 Shri Vardhman tube company Private Limited; A.Y. 2013-14 the subsequent assessment year and added as unexplained cash credit u/s.68 of the Act. Therefore, relying the decisions (supra), we set aside the order of ld. CIT (A) and direct the AO to delete the addition. The appeal of the assessee is allowed.

6.

In the result, the appeal of the assessee is allowed.

Order pronounced on 03.09.2026.

Sd/- Sd/- (PRADIP KUMAR CHOUBEY) (RAJESH KUMAR) (JUDICIAL MEMBER) (ACCOUNTANT MEMBER) Kolkata, Dated: 03.09.2026 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

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