DRD ASSOCIATES PRIVATE LIMITED,KOLKATA vs. INCOME TAX OFFICER 7(1) , DELHI

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ITA 1133/DEL/2026Status: DisposedITAT Delhi13 July 2026AY 2017-184 pages
AI SummaryPartly Allowed

What did the Tribunal hold?

The Tribunal held that the reopening of assessment was valid as the assessee did not respond to notices and did not request the reasons for reopening. However, the addition on merits was deleted as the purchase of shares was accepted, reflected in books, and sale consideration was received through banking channels.

What were the facts?

The assessee's assessment was reopened without providing reasons, and the opportunity to cross-examine persons whose statements were used was denied. The addition was made on account of alleged accommodation entries from the sale of shares, which the assessee claimed were duly reflected in its balance sheets and the sale consideration was received through banking channels.

What were the issues?

Whether the reopening of assessment was valid and whether the sale of shares constituted a bogus transaction attracting addition under Section 68.

Which sections of the Income-tax Act were involved?

Section 68,Section 148,Section 142(1)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, DELHI

Before: SHRI VIKAS AWASTHY

For Respondent: Shri Manoj Kumar, Sr. DR

PER VIKAS AWASTHY, JUDICIAL MEMBER: This appeal by the assessee is directed against the order of Commissioner of Income Tax (Appeals), National Faceless Appeal Centre, Delhi [in short ‘the CIT(A)’] dated 01.12.2025, for Assessment Year 2017-18.

2.

Shri Devesh Poddar, appearing on behalf of the assessee submits that the assessment in the case of assessee for AY 2017-18 was reopened. The reasons for reopening were never provided to the assessee. During assessment proceedings, the assessee asked for opportunity to cross examine the persons whose statements were used by the Revenue to reopen assessment of assessee. The opportunity to cross was never allowed to the assessee.

2.1. The ld. Counsel for the assessee challenging addition on merits submits that the Revenue has alleged that the assessee is a beneficiary of accommodation entry to the tune of Rs.15,00,000/- from M/s. Akshaj Multitrade P. Ltd. The assessee had purchased 26,000 shares of M/s. Midpoint Traders P. Ltd. for a total consideration of Rs.26,00,000/- in the year 2012.

ITA 1133/DEL/2026 DRD ASSOCIATES PRIVATE LIMITED The said investment in shares is duly reflected in Balance Sheet of assessee as on 31.03.2012 and continued to be reflected in Balance Sheet as on 31.03.2016. To substantiate his submissions, he referred to Balance Sheets of assessee as on 31.03.2016 and 31.03.2017 at pages 14 and 15 of the paper book. The ld. Counsel submits that the purchase of shares were never doubted, it is only the sale of 15,000 shares @Rs.100 per share to M/s. Akshaj Multitrade P. Ltd. which is alleged to be bogus transaction. In addition to sale of shares to M/s. Akshaj Multitrade P. Ltd., the assessee had sold 11,000 shares of Midpoint Traders P. Ltd. to some other independent person @Rs.100 per share for which no dispute was raised by the Assessing Officer (AO). The sale consideration from both the parties were received by the assessee through banking channel. Once the shares purchased were duly reflected in balance sheet and sale consideration of the shares is received in the bank account, there can be no reason to hold transaction of sale of shares as bogus. In support his contention, the ld. Counsel for the assessee placed reliance on the decision in the case of Brij Resources P. Ltd. vs. ITO, in ITA No.3385/Del/2019 decided on 07.07.2021.

3.

Per contra, Shri Manoj Kumar, representing the department vehemently supported the impugned order and prayed for dismissing appeal of the assessee.

4.

Both sides heard, orders of the lower authorities examined. The assessee in appeal has challenged validity of reopening of assessment as well as addition on merit. The ld. Counsel has pointed that the reasons for reopening were not provided to the assessee. A perusal of the assessment order reveals that the assessee had filed return of income declaring NIL income for AY 2017-18 on 22.03.2018. No return of income was filed by the assessee in response to notice u/s.148 of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’). During assessment proceeding, the assessee responded to one notice issued u/s.142(1) of the Act dated 13.01.2023. The AO has reproduced reasons for reopening in assessment order. Since, the assessee did not respond to the notices by the AO including notice issued u/s.148 of the Act, there was no occasion for the AO to furnish reasons for reopening to the assessee. No document has been placed on record by the assessee to show that the assessee ever asked for reasons for reopening. In so far as, cross examination of persons on whose statement, the assessment in the case of assessee was reopened. No material is available on record, to show that the assessee ever asked the AO for cross examination. Thus, in light of above observations, I find no merit in ground no. 1 of appeal. Hence, the same is dismissed.

ITA 1133/DEL/2026 DRD ASSOCIATES PRIVATE LIMITED 5. On merits, the contention of assessee is that the assessee had purchased 26,000 shares of M/s. Midpoint Traders P. Ltd. @Rs.100 per share in 2012. The said shares were duly reflected in Balance Sheet of the assessee as on 31.03.2012 and continued to be reflected as investment up till 31.03.2016. The said shares were sold by the assessee during AY 2016-17 to two parties i.e. 15,000 shares @100 per share to M/s. Akshaj Multitrade P. Ltd. and 11,000 shares to some other independent entity. No dispute is raised by the Department in respect of sales of 11,000 shares. The AO has held sale of 15,000 shares to M/s. Akshaj Multitrade P. Ltd. as bogus transactions and made addition of Rs.15,00,000/- u/s.68 of the Act. Once, the purchase of shares have been accepted and the same have been duly reflected in books of assessee, the sale of said shares cannot be doubted especially when consideration for sale of shares has been received by the assessee through banking channel and the same is reflected in books. The AO has earned in holding part sale of shares as bogus. The Coordinate Bench in the case of Brij Resources Pvt. Ltd. (supra) in somewhat similar facts held that, if, investments are sold which are duly reflected in the books and the consideration is received by way of cheque, the provisions of section 68 of the Act cannot be applied to realization of investments. After considering facts of the instant case and the decision referred above, I find that the addition of Rs.15,00,000/- u/s.68 of the Act made by AO is without merit, hence, deserves to be deleted. The assessee succeeds on ground no. 2 to 4 of appeal.

6.

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

Order pronounced in the open court on Monday the 13th day of July, 2026.

Sd/- VIKAS AWASTHY JUDICIAL MEMBER Delhi Dated: 13-July-2026

NV/-

ITA 1133/DEL/2026 DRD ASSOCIATES PRIVATE LIMITED Copy to: DRD ASSOCIATES PRIVATE LIMITED, 56 METCALFE STREET, 1 KOLKATA-700013, WEST BENGAL INCOME TAX OFFICER 7(1) , 2 C R BUILDING NEW DELHI-110002, 3 THE PCIT / CIT, 4 THE D.R., ITAT, DELHI BENCH 5 GUARD FILE

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