DCIT CC 2 2 KOLKATA, KOLKATA vs. TOP METALS LIMITED, KOLKATA

IN THE INCOME TAX APPELLATE TRIBUNAL “D” BENCH, KOLKATA Before Shri Rajesh Kumar, Accountant Member and Shri Pradip Kumar Choubey, Judicial Member ITA No 1276/KOL/2026 Assessment Year- 2012 DCIT CC 2 2 Kolkata……………………………..............................................Appellant Aayakar Bhawan Poorva, 4th Floor, 110 Shantipally, E.M. Bypass, Kolkata- 7000107 [PAN No. AADCT3662M] Vs. Top Metals Limited...........................................................……………....……….Respondent BE-77, Salt Lake Sector-1, CC Block S.O. Salt Lake, North 24 PGS, Kolkata- 700064 Appearances by: Praveen Das Chowdhury, Sr. D.R.,appeared on behalf of the Appellant. P.J. Bhide, A.R., appeared on behalf of the Respondent. Date of concluding the hearing : July 15, 2026 Date of pronouncing the order : August 21 ,2026 ORDER Per Pradip Kumar Choubey, Judicial Member: This appeal filed by the assessee is directed against the order dated 24.12.2025 of the Income Tax Department, passed under Section 143(3)r.w.s147 of the Assessment Year 2012-13 of the Income Tax Act, 1961 (hereinafter referred to as “the Act”).

At the very outset, it appears from the report of the Registry the appeal has been filed after a delay of 37 days. Revenue has filed a petition to

condone the delay. Going over the contents of the petition delay is hereby condoned.

4. Aggrieved by the said order assessee preferred appeal before the CIT(A) wherein appeal of the assessee has been allowed by the CIT(A) by observing thus: -

The assessee filed his return of income for the impugned assessment year on 28.09.2012 declaring a total income of Rs 1,83.52.430/-. The case was selected for scrutiny through CASS and assessment u/s.143(3) was completed vide order dated 27.03.2015 assessing the total income at Rs. 1,83,90,134/- and raising a demand of Rs.16,880/-

The case was reopened and notice u/s.148 dated 28.03.2019 was issued to the appellant after obtaining approval from the competent authority. In response to the same, the appellant filed the return of income on 09.10.2019 and thereafter Notice u/s. 143(2) and notices u/s. 142(1) were issued to the appellant on various dates. The appellant had furnished the required information on 12.12.2019 and 25.12.2019. Subsequently, the Assessing Officer completed the assessment u/s 143(3) r.w.s.147 vide order dated 27.12.2019 by assessing the total income of the appellant at Rs.6,85,90,134/- and raising a demand of Rs.2,19,53,210/-. In completing the assessment, the Assessing Officer has added a sum of Rs.5,02,00,000/- as unexplained cash credits u/s.68 being share application money received from M/s. Sideny Vincom Private Limited on the contention that the impugned transaction is not genuine. 3

I have carefully considered the facts of the case, the assessment order, the grounds of appeal, and the detailed written submissions filed by the appellant along with judicial precedents relied upon. The issues involved in the present appeal broadly relate to:

a) Reasons for reopening not provided to the appellant,

b) Reassessment initiated in order to review settled assessment,

c) Reopening after 4 years without satisfying conditions laid down in sec. 147

Ground Nos. 1 to 3, 7 and:

6.1. The assessee was aggrieved that the reasons recorded by the Assessing Officer to believe escapement of income from tax were not supplied to the assessee, though the assessee had made a specific written request to the Assessing Officer to supply such reasons recorded for reopening vide its letter dated 09.10.2019 filed through e-proceedings. The copy of the request letter is as under- When a notice is issued under section 148, first the assessee has to file the return of income and then he may ask for copy of the reasons recorded for issuance of such notice. Once the assessee requests for supply of reasons recorded, the Assessing Officer is bound to furnish the same within a reasonable time. On receipt of reasons recorded, the assessee is entitled to file the objection to the issuance of notice. When such objection is filed, the Assessing Officer is to dispose of the same by passing a speaking order.

In the instant case, it was found that the Assessing Officer had issued a notice under section 148 on 28-03-2019. In response to which, the assessee filed its ITR on 09-10-2019 and the assessee vide a letter, dated 09-10-2019, which was uploaded in ITBA portal on 11-10-2019, also requested for providing the reasons recorded for reopening of the assessment proceedings. The assessee made due compliance, during the course of the assessment proceedings. However, copy of reasons recorded, was not supplied. The assessee, vide letter, dated 12-12-2019 and 25-12-2019. made compliance to the queries raised during the assessment proceedings However, the reasons recorded were not supplied and the assessment proceedings were concluded by passing the assessment order under section 143(3)/147.

In the absence of receipt of the reasons, the assessee is debarred from his legal right to file objections on the issue of notice under section 148. The Hon'ble Supreme Court, in GKN Driveshafts (India) Ltd. v. ITO [2002] 125 Taxman 963/[2003] 259 ITR 19, has held that the Assessing Officer is bound to furnish the reasons within a reasonable time and on receipt thereof, the noticee is entitled to file objections to the issuance of the notice and the Assessing Officer is bound to dispose of the same by passing a speaking order.

In the present case, non-supply of the reasons to the assessee is in direct violation of GKN Driveshafts (India) Ltd's case (supra), debarring him from exercising his legal right to file objections against the issuance of the reassessment notice.

In the instant case, the assessee has requested the reasons for reopening of the assessment and the AO did not communicate the reasons in writing. Communication of reasons for reopening of assessment is not a mere formality and it is a legal requirement. When the assessee has requested for reasons, it is mandatory obligation of the AO to communicate the reasons as decided by Hon'ble Supreme Court in the case of GKN Driveshafts (India) Ltd. (supra) Hon'ble Supreme Court in the case cited held that on filing the return, the assessee has the right to request for the reasons and the AO is obliged to furnish the reasons recorded to the assessee On furnishing the reasons, the assessee has right to place the objections for reopening the assessment and the AO is bound to pass speaking order on the objections raised by the assessee. Thus, communication of reasons to the assessee has specific purpose to address the issues of reopening the assessment u/s 147. Therefore, once the assessee asks for the reasons specifically, the AO is duty bound to communicate the reasons and non-furnishing the reasons renders the assessment made u/s 147 r.w.s 143(3) as invalid.

In view of the foregoing discussion, I hold that completion of assessment u/s 143(3) r.w.s 147 of the Act, without communicating the reasons recorded to the assessee, when specifically requested is unsustainable and liable to be quashed.

Hence, appeal of the appellant on these grounds are allowed.

Ground Nos. 4 to 6:

6.2. In the appellate proceedings, the appellant submitted that although no reasons have been furnished, there is an indication in the assessment as to the objective behind reopening the instant case. Para 2 of the assessment order states as follows-

“Subsequently, it was noticed that during the year ending on 31.03.2012, the assessee had received bank credits to the tune of Rs.5,85,00,000/- from M/s. Sideny Vincom Private Limited. In order to verify these transactions, a notice u/s. 148 of the I. T Act dt 28.03.2019 was issued and served on the assessee after recording reasons and after obtaining the approval of the Principal Commissioner of Income Tax, Tirupati”

The appellant also argued that from the above paragraph, it is clear that the Assessing Officer sought to review the order passed in order to verify certain transactions. These transactions were not unknown to the Department since they were recorded in the books of account of the appellant which were

subjected to scrutiny during the original assessment proceedings. In fact, the Assessing Officer has himself noted in Para 4.1 of the assessment order as follows.

"It is also seen from the information furnished by the assessee during the original scrutiny assessment proceeding that an amount of Rs.5,02,00,000/- is shown as share application money outstanding as on 31 03.2012 of M/s Sideny Vincom Private Limited."

The appellant mentioned that it may be noted that the original assessment order also records the fact of details regarding share application money being furnished during the course of the proceedings. The relevant extract of the original assessment order is reproduced for ready reference of this respected authority:

"During the course of the assessment proceedings, the assessee was asked to produce the books of accounts along with bills, vouchers and other supporting documents, TDS details, details of the depreciation claimed, details of application money etc. All the details produced by the assessee were considered and verified carefully. A copy of the original assessment order is reproduced below –

1. Name of the Assessee M/s TOP Metals 2 Address Royal Residency, Sri Kalahasthi Bye-Pass Road, Near Govt Degree College, Nadupet. 3 P.A. No GIR No. AADCT3662M 4 District/Ward/Circle Circle-2(1), Tirupati 5 Status Company 6 Assessment Year 2012-13 7 Whether resident/resident but Resident not ordinarily resident/non- resident 8 Method of accounting Mercantile basis 31st March, 2012 9 Previous year 10 Nature of Business Manufacturing of TMT bars and Alied Products 11 Date(s) of hearing 05.01.2015, 12.02.2015, 22.01.20215. 11.02.2015 12 Date of order 27.03.2015 13 Section and sub-section under U/s 143(3) of the IT Act- 1961 which the assessment is made

ASSESSMENT ORDER

The assessee company filed its rectum of income for the Assessment year 2012- 13 on 28 09-2012, through e-ting, declaring an income of Rs. 1.83.52,430/-, The assessee sa Manufacturer of TMT bas and Allied Products. The return was processed 101) Subsequently the return was selected for scrutiny through CASS

to verify the large Interest expenses relatable to exempt investments (u/s14A) and large share application money received against unr-allotted sharps. Accordingly a notice u/s 143(2) was issued to the assessee on 19/08/2013, which was duty served on the assessee in response Sri Sheetal solanki FCA Authorized Representative of the assessee appeared from time to time and furnished all the details called

During the course of assessment proceedings, me mense was caked to produce the books of accounts along with bill, voucher and other supporting documents. 105 details, details of the depreciation came, details of application money etc. All the details produced by the assessee were considered and verified carefully Alter examining the details, produced the assessment is completed us under

Difference in Form 24A5

On verification of Form 2645 i found that the assessee is in receipt of Rs. 37.704/-os interest Income. However me assessee has not offered the amount of Rs. 37,704/- as income for the relevant assessment year. When the same was put in front of the AR he has no explanation to offer and agreed for the addition of Rs. 37,704/-AR undisclosed income of the assessee.

The AR of the assessee also agreed for the above addition

Computation of Total income

Total income retuned Rs. 1,8332430/

Add: Interest income Rs.37.704/- Total Income assessed income Rs. 1,83,90,134/-

Total Tax payable Rs.16.880/

Computation shoot enclosed

This demand should be paid as per the demand notice enclosed

Penalty proceedings u/s 271(1)(c)initiated separately..

6.2.1. Admittedly, the appellant's case for impugned assessment year was taken up for complete scrutiny During the course of scrutiny assessment, the appellant was called upon by the Assessing Officer, to provide various details including share application money which were furnished during the course of the proceedings. After considering all those documents the assessment order came to be passed.

As held by the Hon'ble HIGH COURT OF BOMBAY in Aroni Commercials Ltd. v. Dy. CIT [2014] 44 taxmann.com 304/224 Taxman 13/362 ITR 403 the settled law is once a query is raised during the assessment proceedings and the assessee has replied to it, it follows that the query raised was a subject of consideration of the

Assessing Officer while completing the assessment. It is not necessary that an assessment order should contain reference and/or discussion to disclose its satisfaction in respect of the query raised. The only requirement is that the Assessing Officer ought to have considered, the objection now raised in the grounds for issuing notice under section 148 during the original assessment proceedings. In the case al hand, the Assessing Officer having raised a query and the appellant having replied to it it follows that the query raised was subject of consideration of the Assessing of assessment by the impugned notice is merely on the basis of change of opinion of the Assessing Officer from that held earlier during the course of assessment proceedings and this change of opinion does not constitute justification and/or reasons to believe that income chargeable to tax has escaped assessment.

Even in the case at hand, the reasons recorded for reopening (as evident from the assessment order) does not dispute that during the year assessee had issued shares at premium. The Assessing Officer is only questioning the excessive bank credits to the tune of Rs.5.85 crores from Sideny Vincom Pvt. Ltd, but not doubting the transaction itself whereby the share premium had been received. On this ground alone, the impugned notice and order of assessment have to be quashed and set aside.

Hon'ble Supreme Court in the case of Assistant Commissioner of Income-tax vs. Kalpataru Land (P.) Ltd. [2022] 145 taxmann.com 77 (SC)/[2023] 290 Taxman 123 (SC)/[2022] 447 ITR 364 (SC) [18-08-2022] has decided the issue in favour of the assessee and the heading of the judgement is as under-

"Section 56, read with section 148, of the Income-tax Act, 1961 Income from other sources - Chargeable as (Change of opinion) - Assessment year 2013-14- Whether where assessee-company had duly furnished evidences called upon during initial assessment in support of increase in its authorized share-capital in form of evidence of share allotment, names and addresses of parties from whom share-premium was received, etc. and Assessing Officer after considering same had finalized assessment and passed assessment order, subsequent reopening of assessment as same issue could be said to be purely on change of opinion Held, yes - Whether, therefore, such reopening was rightly set aside by High Court and thus, SLP filed by revenue against impugned High Court order was to be dismissed-Held, yes"

Reliance is also place upon the decision of the Apex Court in the case of Deputy/Assistant Commissioner of Income-tax vs. Financial Software and Systems (P.) Ltd. [2022] 145 taxmann.com 37 (SC)/[2022] 447 ITR 370 (SC) [22- 07-2022] where it was held that-

Section 148, read with section 147 of the income-tax Act, 1961-Income escaping assessment Issue of notice for (Objections raised) Assessment year 2010-11- High court by impugned order held that since at time of original assessment under section 143, specific queries were raised by Assessing Officer which were answered by assessee and thereafter an assessment order was passed under section 143(3), it was not open for revenue to reopen assessment proceedings on same issue and, thus, impugned reassessment proceedings initiated on mere change of opinion was to be set aside - Whether since it could not be inferred that High Court had committed any error, thus, SLP filed by revenue against impugned High Court order was to be dismissed-Held, yes"

The action of the AO is not convincing and after perusing original assessment order under section 143(3) of the Act as well as recorded reason for impugned reopening of the assessment and considering the submissions of the appellant, relevant records available and judgments relied upon by theappellant, I am of the considered view that the impugned notice under section 148 of the Income- tax Act, 1961 and the proceeding under section 147 of the Act are not sustainable in law and are liable to be quashed for the reason that the Assessing-Officer has been failed to make out any case that the alleged escapement of income was due to any omission or failure on the part of the assessee in disclosing fully and truly the material facts necessary in course of

regular assessment. In the facts and circumstances of the case in my considered view it is a clear case of change of opinion since the materials which were already available at the time of regular assessment and which were already considered by the Assessing Officer at the time of regular assessment, on the basis of very same material and not on any another new material Assessing Officer wants to take a different view which is not permissible for reopening of an assessment particularly proceedings after regular assessment and after expiry of four years from the end of the relevant assessment year

The Hon'ble Supreme Court in CIT v. Kelvinator of India Ltd. (320 ITR 561) has categorically held that reassessment cannot be initiated on a mere change of opinion and that the Assessing Officer has no power to review under the garb of reassessment.

The Delhi High Court in the case of Consolidated Photo & Finvest Ltd. v. Asstt. CIT [2006] 281 ITR 394/151 Taxman 41 has explicitly taken the view that in cases where the order passed by the statutory authority is silent as to the reasons for the conclusion it has drawn, it can well be said that the authority has not applied its mind to the issue before it nor formed any opinion. The principle that mere change of opinion cannot be the basis for reopening of completed assessment would be applicable only to situation where the Assessing Officer has applied his mind and taken a conscious decision on a 17

particular matter in issue. It will have no application where the order of assessment does not address itself to the aspect which is the basis for re- opening of the assessment. The case of the assessee is duly covered by the decision in Raymond Woollen Mills Ltd. v. ITO [1999] 236 ITR 34 in which the Supreme Court has clearly laid down that in determining whether commencing of re-assessment proceedings was valid, it is only to be seen whether there was prima facie some material on the basis of which the department could reopen the case at this stage. In the instant case, it is evident from the assessment order, the AO has not mentioned any material from which he has formed his belief that there in an escapement of income.

In the present case, no new or fresh tangible material has been brought on record subsequent to the original assessment. The reopening is clearly based on re-appreciation of the same facts already examined earlier Such reopening amounts to impermissible review and is therefore bad in law. Thus, following the judicial pronouncements as stated above and the facts and circumstances of the case, these grounds of the appellant are allowed.

Hence, appeal of the appellant on these grounds are allowed.

Ground Nos. 9 to 11.

6.3. On perusal of the assessment order, it has been observed that the Assessing Officer concluded that M/s. Sideny Vincom Pvt. Ltd (SVPL) as a shell company having no business activity and only provides accommodation entries. He found that the said company is not having any fixed asset, EPS is very low and holding large Reserve & Surplus in the form of Securities Premium. Then, he straightway concluded that the transactions of the assessee company with SVPL are not genuine in nature and assessee company is a beneficiary of accommodation provided by SVPL.

On perusal of the assessment order vide para 4.2 that the appellant, during the assessment proceedings produced all the relevant documents in respect of SVPL. It is settled principle that the burden of proof is on the appellant stands discharged once the appellant establishes identity, and creditworthiness of the creditor and genuineness of transaction. Now, the onus is shifted on the Assessing Officer to disprove the documents furnished by the assessee, which was not done by the Assessing Officer. The AO's approach was mere rudimentary and mechanical. The Assessing Officer was required to make proper investigation to determine whether the money was really lent by the third party or it has come out of the resources of the assessee itself. Thus, the Assessing Officer has failed to apply his mind in all aspects of the case.

6.3.1. It is settled jurisprudence that the additions u/s 68 of the Act cannot be sustained when the appellant has discharged the initial burden and revenue has failed to bring on record any cogent material to rebut the same. In the absence of any such finding, the order passed by the assessing officer is utterly perverse. In this context, reliance is being placed in the case of Principal Commissioner of Income-tax vs. Sreeleathers [2022] 143 taxmann.com 435 (Calcutta)/[2022] 448 ITR 332 (Calcutta) (14-07-2022] where it was held that-

"Section 68, read with section 143, of the Income-tax Act. 1961-Cash credit (Loans and advances) - Assessment year 2015-16-During scrutiny proceedings. Assessing Officer noted that assessee-company had received certain unsecured loans from various companies out of which 13 were alleged paper companies having no worth and, thus, issued a show cause notice - Subsequently, assessee furnished various documents, however, same were rejected by Assessing Officer in a very casual manner and an assessment order was passed - It was noted that show-cause notice issued on assessee was only in respect of one lender company, namely, FGD-Assessee provided various documents in form of PAN card, income-tax acknowledgement, copy of bank statement, certification of incorporation, master data from register of companies, certificate of incorporation and annual account to prove FGD's identity and creditworthiness and genuineness of transaction However. Assessing Officer by relying on

statement of one AKA, who was alleged operator of such bogus companies, brushed aside these documents on mere ground that they did not absolve assessee from his responsibility of proving nature of transaction - It was noted that statement of AKA was not recorded in presence of assessee nor an opportunity of cross examination was provided to it Whether where there was no evidence brought on record by Assessing Officer to connect statement of AKA with loan transaction of assessee, said statement was of little avail and could not be basis of allegations - Held, yes - Whether, further, since assessee had discharged its initial burden by providing documentary evidences and burden had now shifted to Assessing Officer, who failed to bring on record any reason in writing as to why these documents did not establish identity of lender or proved genuineness of transaction impugned assessment order passed by casually brushing aside these evidences was utterly perverse and liable to be quashed-Held, yes"

6.3.2. Section 68 of the Income tax Act states that where any sum is found credited in the books of an assessee maintained for any previous year, and the assessee offers no explanation about the nature and source thereof or the explanation offered by him is not in the opinion of the Assessing Officer, satisfactory, the sum so credited may be charged to income tax as the income of the assessee of that previous year The crucial words in the said provision are

assessee offers no explanation" This would mean where the assessee offers no proper reasonable and acceptable explanation as regard the amount credited in the books maintained by the assessee No doubt the Income-tax Act places the burden of proof on the tax payer However, this is only the initial burden. In cases where the assessee offers an explanation to the credit by placing evidence regarding the identity of the investor or lender along with their conformations, it has been held that the assessee has discharged the initial burden and therefore the burden shifts on the Assessing Officer to examine the source of the credit so as to be justified in referring to section 68 of the Act. After the Assessing Officer puts the assessee on notice and the assessee submits the explanation with regard to the cash credit, the Assessing Officer should consider the same objectively before he takes a decision to accept or reject it. The explanation given by the assessee cannot be rejected arbitrarily or capriciously, without sufficient ground on suspicion or on imaginary or irrelevant grounds.

There is no evidence brought on record by the assessing officer that he has verified the said entity viz. SVPL with the transactions done by the assessee No notice u/s 131 or 133(6) was issued to SVPL for verification of transaction. Even, it is also apparent from assessment order that no show cause notice was issued to the assessee before making addition of such huge amount. The assessing

officer ignored the settled legal principle and in spite of the assessee having offered the explanation with regard to the transaction, no finding has been recorded as regards the satisfaction on the explanation offered by the assessee Therefore, the assessing officer ignored the basic tenets of law before invoking his power under section 68 of the Act. ME TAX DEPART

The share applicant is regularly assessed to lax. Books of accounts are duly audited and audited financial statements are altached to the income tax return and are also filed along with the annual return. The appellant contended that SVPL is a private company incorporated in 1994 and is a non- banking finance company and is registered with Registrar of Companies, Kolkata. SVPL is an associate company and already holds 22.46% of share capital in the appellant company. The share application forms have been received requesting for allotment of shares of face value Rs.10/- each at a share premium of Rs.90/- which is not extraordinary. There is no mention of any investigation report that has been relied upon to arrive at a finding that SVPL has been involved in providing accommodation entries and hence the inference drawn by the Assessing Officer is based on conjectures and surmise rather factual findings. No enquiry has been conducted or facts brought on record ton establish that the said company is a shell company. Therefore, the genuineness of the

transaction cannot be questioned is also observed that the alleged share applicant has also passed through the scrutiny proceedings for the very same assessment year i.e. A.Y. 2012-13 u/s 143(3)/147. The copy of the assessment order is reproduced below-

INCOME TAX DEPARTMENT

1 Name of the Assessee M/s Sidney Vincom Pvt. Ltd 2 Address 16, India Exchange Place, Floor, Room No.26. Brabourne Road Kolkata- 700 001 3 PAN AADCS83790 4 Ward/Circle/Range ITO Ward-5(1), Kolkata Company 5 States Assessment year 2012-13 6 Whether resident/resident but not Resident Ordinarily resident/Non-resident 7 Method of Accounting Mercantile 8 Previous Year 2011-12

9 Nature of Business Trading & Investment 10 Date(s) of hearing As per Order shee 11 Date of Order 06.11.2019 12 Section and sub-section under which 143(3)/147 of the IT Act, the assessment is made 1961

/ASSESSMENT ORDER

The assessee Company e-filed its return of income for the A.Y.2012-13 shewing totat income of Its.9.82.620/- on 28-09-2012. The return was duly processed u/s 143[1] on 07/12/2013 accepting the returned income. Later, information was received from DDITjinv.). Unit-3[2], Mumbai wherein it has been stated that during the F.Y.2011-12 the assessee invested in the share, Rockon Fintech Earlier Insutech India) BSE Scrip code:531447, total trade value of which was 8,70,799/ Since the scrip is in the list of penny stock as per departmental database, to to verify the same the case was re-opened u/s. 147 of the LT. Act. 1961 after obtaining the approval of the Pr. CIT-2, Kolkata. Accordingly notice u/s.148 of the IT Act, 1961 was issued on 29/03/2019 and duly served on the assessee asking it to file fresh return within the stipulated period. In response to the said notice assessee lifted return on 23-04-2019 at a total income of Rs. 9,02,620/ Accordingly statutory notices U/s. 143(2) & 142(1) of the 1.T. Act, 25

1961 along with requisition and also the reason for reopening the case u/s 147 were issued to the assessée in response Shri Gopal Kumar Agarwal, All of the assessee company of the company appeared and stated that he is willing to appear in hearing physically. The case has been discussed with him from time to time.

The assessee was asked vide notice u/s 142[1] dated 07/06/2019 to furnish relevant details of trading on the scrip Rockon Fintech | Earlier Insutech India) BSE Scrip code: 531447. The A/R of the assessee company has submitted on 19/06/2019 a detailed reply received from the director of the assessee wherein it has been stated that Our company is an NBFC and its main business is trading

in stocks and shares apart from advancing loans. Therefore, purchase and sale of shares are normal business activities of the company. During the year under consideration, our company had purchased shares worth Rs. 8.72.604/- which was shown in the sales under revenue from operations in the Profit & Loss A/c. Further, our company did not make any fresh investment in shares during ht assessment year 2012-13, under review. No long term/short term profit/loss had accrued to the company during the said assessment year 2012-13

Again a show cause letter was issued on 16/10/2019 and duly served on the assessee asking it to explain as to why the trading value on the said scrip would not be treated as begus in terms of report of investigation wing received from time to time and added back to the total income of the assessee. In reply the director of the assessee company submitted explanation on 24/10/2019. The relevant portion of the explanation is reproduced as under:

As you are aware that our company purchased 1,50,000 equity share of Rockan Fintech Ltd. at a cost of Rs.8,72,604/- through a reputed share broker M/s. Eureka Stock & Share Broking Services Ltd. (Trading Member Code No.0906) having SEBI Registration No. INB01006846. In normal course of trading, our company had paid purchase consideration through banking channel and shares were delivered by the broker in our depository account. Our Company had duly debited the entire purchase consideration in the Profit & Loss Account for the 27

year ending as on 31 March 2012 under the head purchase and as expenditure. The reply of the assessee is perused, considered and placed in records.

Total income as per return of income Assessed income

R:9.02.620/Rs.9.02,620/-

Income of the assessee is assessed u/s.143/31/147 of the Income Tax Act. 1961. Income tax is calculated on ITD Application. Computation sheet annexed herewith forms part of this order. Issue copy of Assessment order along with demand notice to the assessee company.

All these documents speaks loud enough that identity and creditworthiness of alleged share applicants is established beyond doubt. Genuineness of the transactions is also proved because these companies have sufficient net worth (at least 35 Cr) to make the investment and they have applied in a NBFC company for better returns. Once, the assessee has discharged his primary onus, the burden of proof shifts on to Revenue authority and observations of AO that they are not satisfied with these details will not serve the purpose.

One fails to find any justification in such observation of the Assessing Officer. Rather than mentioning his observation on the documents, he/ she should have move ahead to examine the correctness of those documents and should have discussed the same in the assessment order. General observation that the AO is not satisfied with the documents filed by the assessee cannot meet the requirement of law. On perusal of the assessment order, it is noticed that the AO himself observed about the sufficient net worth in the form of share capital and accumulated reserve and surplus and that explain the source of investment made in the assessee-company.

Thus, it is clear from the above finding that the addition is based merely on suspicion and general observations, without any independent enquiry or adverse material or on borrowed information instead of the identity of the investor was established, the transaction was routed through banking channels, the investor is an existing company holding substantial shareholding in the appellant company and confirmations and financial details were furnished and verified.

In view of the above findings in the preceding paragraphs, the addition of 5,02,00,000/- under section 68 is unsustainable on merits as well and hereby deleted.

The appeal filed by the assessee on this ground is allowed. 29

Ground No. 12:

General in nature.

Ground No. 13:

Consequential in nature.

burden to exonerate himself from the liability of section 68 of the Act and revenue failed to bring any cogent material to rebut the same.

genuineness of the transaction is in doubt. SVPL is a private company incorporated in 1994 and is a non-banking finance company and registered with Registrar of companies, Kolkata.

In the result the appeal of the Revenue is hereby dismissed.

Kolkata, the 21st August , 2026.

Sd/- Sd/-

[Rajesh Kumar] [Pradip Kumar Choubey] Accountant Member Judicial Member

DC Dated: 21.08.2026.

Copy of the order forwarded to: 1. Appellant - 2. Respondent - 3. CIT(A)- 4. CIT- 5. CIT(DR)

//True copy// By order Deputy Registrar, Kolkata Benches