BHAWNA VINIMAY PRIVATE LTD.,,KOLKATA vs. ITO, WARD 5(1),, KOLKATA

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ITA 252/KOL/2026Status: DisposedITAT Kolkata28 April 2026AY 2016-201727 pages

In favour of the assessee: the assessee's appeal was allowed. From the AI summary of this appeal.

AI SummaryAllowed

What did the Tribunal hold?

The Tribunal found that the reassessment proceedings were initiated based on suspicion and unsubstantiated information in the dissemination note. The Tribunal noted that similar cases involving the sale of investments were decided in favor of the assessee, and the addition was deleted.

What were the facts?

The assessee filed its return of income, and the AO initiated reassessment proceedings based on a dissemination note alleging unexplained cash credit from the sale of investments. The assessee provided documentation, but the AO proceeded with the addition, which was upheld by the CIT(A).

What were the issues?

Whether the reassessment proceedings were validly initiated based on the information available, and whether the addition made on account of sale of investments was justified.

Which sections of the Income-tax Act were involved?

Section 147,Section 148,Section 148A,Section 68

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, “A” BENCH, KOLKATA

For Appellant: Shri S.K. Tulsiyan &, Ms. Puja Somani, ARs
For Respondent: Shri Bonnie Deb Barma, DR
Hearing: 20.04.2026Pronounced: 28.04.2026

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 24.12.2025 for the AY 2016-17.

2.

The issue raised in ground no 1 is against the order of ld. CIT(A) upholding the reopening of assessment as made by the AO u/s 147 read with section 148 of the Act.

4.

In the appellate proceedings, the ld. CIT (A) confirmed the order of the ld. AO by dismissing the appeal of the assessee by observing and holding as under:-

“6.2.1 It is evident from the assessment order that the ld. AO reopened the case on the basis of the information available with the department. The AO found that income chargeable to tax has escaped assessment and after following the due procedure as per the provisions of Sec 147 rws 148A of the Act with the approval of the specified authority has reopened the case and issued the notice u/s 148. In response to the said notice, the appellant also filed ROI for the year under consideration. The order u/s 148A(d) passed by the AO is placed below, wherein he has recorded that on examination made by him of the information available to him and the submission of the appellant he arrived at the conclusion that the case was fit for reopening and therefore reopened and issued the notice u/s 148 with prior approval of the specified authority. Therefore, the grounds 2 to 5 are dismissed. ”

6.

The ld. AR submitted that the investments were sold during the year and assessee has advanced money to other parties in the

i. DCIT Vs. Great Wall Marketing (P) Ltd. vide order dated 03.02.2016 in ITA No. 660/KOL/2011 for A.Y. 2002-03.

ii. GKN Driveshafts India Limited reported in (2003) 259 ITR 19.

7.

The ld. AR therefore, prayed that considering the above facts in the light of the aforesaid decisions, the show cause notice u/s 148A(b) of the Act, the order passed u/s 148A(d) of the Act, the consequent notice issued u/s 148 of the Act may kindly quashed as invalid and bad in law.

8.

The ld. DR on the other hand relied heavily on the orders of the authorities below by submitting that the ld. AO has followed the

9.

After hearing the rival contentions and perusing the materials available on record, we find that in this case a show cause notice was issued on 30.03.2023, which is accompanied by annexure, verification details and dissemination note which are avaialbe on page no. 1 to 4 of the paper book. We note from the examination of the dissemination note that it mentioned that there is a suspicion mentioned in the credible information received along with that the assessee having maintained a current account with Vijaya Bank, which has been extensively used since opening of the account and there were high value of debits and credits in the said account. Thereafter, we note that the ld. AO called for statement u/s 133(6) of the Act from the Vijaya Bank, which was furnished and on the basis of perusal of such bank statement, it was further mentioned that there was

10.

Further we note from the bank certificate that there is no transaction in the Vijaya Bank, which has been noted that in the dissemination note. We, also note that similar information was received in F.Y. 2016-17 relevant to A.Y. 2017-18, where the sale of shares were stated in the dissemination note at ₹14,13,34,000/-. We note that the same has been accepted by the department. In our considered opinion, the information in the dissemination note are vague, unequivocal and scanty and in our considered opinion cannot be considered a valid basis for issuing even show cause notice u/s 148A(b) of the Act. We also note that the assessee replied the said show cause notice. We also note that the ld. AO has not considered the reply of the assessee to the show cause notice and reached a conclusion that income has escaped assessment for which no substantive and scientific basis was there. Again the show cause notice does not mention the details of transactions such as names of the

“8. We have heard the submissions of the learned counsel for the assessee both on the validity of initiation of re-assessment proceedings as well as the merits of the appeal. None appeared on behalf of the department. 8.1.We have considered the submissions of the learned counsel for the assessee. As far as the validity of initiation of re-assessment proceedings are concerned the reasons recorded by the AO for initiating proceedings u/s 148 are as follows :- “No.DCIT/Cir-6/reasons for reopening/09-10 Dated 22/04/2009 To The Principal Officer Greatwall Marketing (P) Ltd. clo Sri. S.M. Daga 11, Clive Row, Room No. 2 .z-. Fir. Kolkata- 700001. Sir.

Sub: Recorded Reasons for Reopening in the case of Greatwall Marketing (P) Ltd. for Asst. Yr. 02-03 Ref: Your letter dated 02/04/09 Please refer to the above. As per information received from investigation wing New Delhi the introduced share capital during the year. had been received from corporate bodies which are non existent and whose capacity to invest ( credit worthiness ) could not be established . Therefore I have reasons to believe that unexplained cash credit had been introduced in your books of accounts in the name of introduction of share capital and receipt of share application money. In absence of satisfactory

8.2. The submissions of the learned counsel for the assessee before us was that the reasonsrecorded by the AO were mereinformation received from D.I.T.(Investigation), New Delhi. There was no independent application of mind by the AO based on which it can be said that he arrived at the satisfaction that the income of the assessee is chargeable to tax has escaped assessment. It was submitted that information received by the AO was vague and uncertain and cannot be construed to be sufficient and relevant material on the basis of which reasonable person can form belief regarding escapement of income. Reliance was placed by the learned counsel for the assessee on the decision of the Hon’ble Delhi High Court in the case of CIT vs Insceticides (India) Ltd 357 ITR 330 and CIT vs SFIL Stock Broking Ltd. 325 ITR 285 (Delhi). In both the aforesaid decisions the reasons recorded by the AO for initiating proceedings u/s 148 of the Act the Hon’ble Delhi High Court upheld the order of the Tribunal quashing the proceedings. Reliance was also placed on the decision of ITAT, Kolkata ‘C’ Bench in the case of M/s. Controlla Electrotech (P)Ltd vs DCIT in ITA Nos.1443 & 1444/Kol/2014 wherein on identical facts the Tribunal was pleased to quash the reassessment proceedings. On merits the learned counsel for the assessee relied on the order of CIT(A). 9. We have given a careful consideration of the submissions made by the learned counsel for the assessee. It is clear from the reasons recorded by the AO that the AO acted only on the basis of a letter received from Investigation Wing , New Delhi. The reasons recorded does not give as to who has given the bogus entries to the assessee. The reasons recorded also does not mention as to on which dates and through which mode the bogus entries were made by the assessee. The reasons recorded which are extracted in the earlier part of the order does not show, what was the information given by DIT(Inv.),New Delhi. The date of the information received by the AO were not spelt out in the reasons recorded. The involvement of the assessee is also not spelt out, except mentioning the corporate bodies who had subscribed to the share capital of the assessee were non-existent and not creditworthy. On identical facts the Hon’ble Dlehi High Court in the case of CIT vs Insecticides (India) Ltd (supra) has taken a view that the reasons recorded were vague and uncertain and cannot be

11.

We also not in the order passed u/s 148A(d) of the Act , it was alleged that the assessee is a shell company with Shri Mahendra Sethia acting as entry operator however there is no sub substantiation of the same and we note that the assessee did not have any such relation with the said person.We also note that in the assessment order it was alleged that there was an entry in the name of Mahendra Sethia but as a matter of fact there was no such entry. Therefore, considering the facts of the assessee case and the ratio laid in the above decision ,we are inclined to quash the show cause notice , order u/s 148A(d) , notice issued u/s 148 and also the consequent assessment framed. The ground no 1 is allowed.

12.

So far as the merit of the case are concerned as raised in ground no. 2 , we find that the assessee has sold unlisted investments during the year qua which all the documents/ evidences, were placed before the ld. Assessing Officer. We note

13.

The assessee has filed before the ld. AO, names , addresses, PANs , confirmations, ITR acknowledgements and audited accounts of all these parties which are available from page no.

14.

The case of the assessee is squarely covered by the decision of Hon'ble Jurisdiction High Court in case of Principal Commissioner of Income-tax Vs. Tulsyan and Sons (P.) Ltd. [2025] 174 taxmann.com 37 (Calcutta)[16-04-2025]. We further find that the said decision of the Hon'ble Jurisdictional High Court has been followed in the case of ACIT v. Pawanputra Advertising (P.) Ltd. [IT (SS) Appeal Nos. 144 & 145 (Kol.) of 2024, dated 26-8- 2025], wherein the addition of 5% sustained by the CIT (A) was deleted. The operative part of the same is as under:-

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 sharecapital/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:

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 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 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 CimmcoVinimay 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 26,15,900 0 0 26,15,900 Pvt 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 0 74,49,572 74,49,572 0 Ltd 13 Alok Financial Services 0 8,10,000 8,10,000 0 Pvt 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 17,05,60,00 69,82,13,6 0 34

Breakup of Sale of Shares Amount(Rs.) Breakup of Sale of Shares Amount(Rs.) Sold out of Opening Investment Sold out of Opening Investment 5,86,73,194 5,86,73,194 Sold out of Investment Purchased During Sold out of Investment Purchased During the Year 11,18,86,806 the Year 11,18,86,806 Total 17,05,60,000 Total 17,05,60,000 11.5. It is also important to note that the AO has made enquiries from the buyers of the shares sold by the assessee by issuing summons u/s 131 of the Act who have responded and furnished the required details. Summary Statement of the replies made in response to notice u/s 131 by various buyers (Sale of Shares) is tabulated below:

12.

Further, according to the ld. Counsel, the only piece of evidence that is there in this case is the statement of Sri Sanjib Patwari who is one of the owners of the Rashmi group and Sri K K Verma is the accountant, recorded u/s 132(4) of the Act which have been relied upon by the Assessing Officer. These statements have been retracted the very next day by furnishing affidavits. Subsequent to retraction, no further cross-examination was conducted of these persons. The ld. Counsel has further submitted that even otherwise the addition made by the Assessing Officer was far more than the alleged disclosure made by these persons in their retracted statements and hence, no cognizance in fact can be taken for the purpose of the addition. 12.1. We find force in the above contentions of the ld. Counsel in the facts and circumstances of the case. As laid down by the various Higher Courts of the country, the retracted statement can not be made sole basis for making the additions. The Jurisdictional Calcutta High Court in the case of Principal Commissioner of Income Tax Vs. Golden Goenka Fincorp Ltd. [2023]148 taxmann.com 313(Calcutta) has held that where assessing officer solely based on statement of assessee’s director recorded during search operation treated share application money received by assessee company as undisclosed income and made additions u/s 68 of the Act, since said statement was retracted and there was no cash trail or any other corroborative evidence or investigation brought on record by AO, impugned additions were liable to be deleted. Even the Hon’ble A.P. High Court in the case of “Naresh

16.

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

Order pronounced on 28.04.2026.

Sd/- Sd/- (PRADIP KUMAR CHOUBEY) (RAJESH KUMAR) (JUDICIAL MEMBER) (ACCOUNTANT MEMBER) Kolkata, Dated: 28.04.2026 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// Asst. Registrar Income Tax Appellate Tribunal, Kolkata

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