DCIT, CENTRAL CIRCLE 3.1,, KOLKATA vs. ACTION TIE-UP PRIVATE LIMITED, PURULIA

The brief facts of the case are that the assessee company was engaged in the business of trading and investment activities. The assessee had raised share capital/share premium during the financial year 2011-12. The money raised was utilized for investmentsin shares of other companies. The case of the assessee was selected for scrutiny for the assessment year 2012-13. During the course of assessment proceedings, the ld. AO issued notices u/s 133(6) of the Act, which were complied with by subscribers with supporting evidences. After due verification, the assessment was framed u/s 143(3) of the Act on 29.09.2014 with no addition in respect of share capital/share premium and thus accepting the returned income. The assessee purchased the investments during F.Y. 2011-12, which were sold during F.Ys. 2012-13 to 2013-14 and invested in quoted shares through stock exchange and small portion of investments was sold in F.Y. 2014-15, i.e. impugned assessment year. Due to change in shareholdings on March, 2019, the assessee became the part of

In the appellate proceedings, the ld. CIT (A) confirmed the reopening of assessment by dismissing the appeal of the assessee by holding that the ld. AO has in his possession the information for issuance of show cause notice u/s 148A(b) of the Act and the same was based upon the investigation report uploaded by DDIT/ ADIT (Investigation) along with attachments in the insight portal of the Department which contained information relating to the assessee. The assessee submitted before the ld. CIT(A)that the re-assessment proceedings and the consequent order passed by the AO were bad in law since the notice referred to survey proceedings u/s 133A of the Act whereas no incriminating material was found during the said survey. The assessee also referred to survey documents available at page no.738 to 741 of the paper book. The assessee also raised the issue of approval u/s 148B of the Act being combined and consolidated approval and not the separate approval for each year. The assessee also submitted that notices u/s 148A(b)/148 of the Act were for sale of investments which were held by the assessee since earlier years and can not be subject matter of proceedings under section 148 of the Act.The ld. CIT (A) brushed aside the contention of the assessee that the assessee was not provided with complete information relied upon by the ld. AO by stating that copy of statement of Shri Abhishek Munka u/s 132(4) of the Act being substantial evidence was provided to the assessee and thus, dismissed the appeal on the legal issue by upholding the reassessment notice u/s 148 of the Act as well as the consequent assessment framed.

After hearing the rival contentions and perusing the material on record, we find that the assessee has challenged the issuance of notice u/s.148 of the Act and also the assessment framed u/s.147/143(3) of the Act on the ground that the AO has failed to provide copy of the reasons recorded in the proceedings u/s.147 of the Act and also the addition made by the AO are not arising out of the survey conducted u/s.133A of the Act on the assessee.We have perused the provisions under old scheme vis a vis under new scheme in the Act and find that under the new scheme of search/survey, the AO has to issue notice u/s 148 of the Act. In other words, there need not be any incriminating materials and whether there is any materials warranting additions that has to be examined by the AO during proceedings u/s 147 of the Act. Therefore, we do not find any merit in the contentions of the assessee that the provisions of Section 148 of the Act for search conducted on or after 1.4.2021 cannot be considered in total oblivion of the fact that no incriminating material was found from the assessee during the course of survey u/s.133A of the Act. We note that the plea of the assessee does not have force or merit as in this case as the requirement of any incriminating material is not there for re-opening the assessment and

The appellant has raised at Ground Nos. 4 &5 regarding the validity of the notice u/s 148A(b) and subsequent notice u/s 148 on the premise that notices and the consequent order in respect of the amalgamating companies for A.Y 2015-16 Pure VanijyaPvt. Ltd. & Attraction Tie Up Pvt. Ltd. and for A.Y 2016-17 Pure VanijyaPvt. Ltd., Attraction Tie Up Pvt. Ltd.& Kavya Deal Trade Pvt. Ltd. is in violation of sec. 170 and such ground was raised by stating that the said amalgamating companies had independent existence during the year relevant to A.Y 2015-16 before its amalgamation w.e.f 01.04.2020. In such respect, the appellant contended that in terms of sec. 170 (2A) only where assessment or re-assessment is "pending" then only such proceedings can be in the hands of successor company i.e. name of Action Tie Up Pvt. Ltd. whereas in the case of the appellant company particularly the amalgamating companies (as mentioned above) no proceedings were pending on the date of amalgamation and hence proceedings initiated in the hands of the successor is bad in law.

We have considered the submissions of the appellant, however we find no substance in such argument particularly the appellant's argument hinges on a narrow reading of "pendency" -suggesting that

The issue raised in ground no 6 of the assessee’s appeal is against the part confirmation of addition of ₹ 18,09,250/- by ld. CIT(A) by way of commission on accommodation entries @.5% on the total amount of ₹ 36,18,50,000/-. The revenue has also filed cross appeal raising 9 grounds challenging deleting the addition of ₹ 36,18,50,000 and ₹ 9,04,625/- by the ld. CIT(A) by wrongly holding that assessee to be accommodation entry provider as made by the AO u/s 68 and 69C of the Act respectively.

The facts qua these additions made by the AO in the assessment framed have already been narrated and discussed in para 3 supra and are not being re-iterated.

In the appellate proceedings, the ld. CIT (A) partly allowed the appeal of the assessee by taking into account the submission of the

Now, the assessee has challenged the direction of ld. CIT (A) to apply .5% of the total sale considerations in the hands of the assessee treating the same as accommodation entries while the Revenue has challenged the deletion of 99.5% of the total sale consideration as deleted by the ld. CIT (A).

After hearing the rival contentions and perusing the materials available on record, we find that the assessee is a company which belongs to Agarwal group and a search has been conducted on 17.09.2021 as noted herein above on the Aggarwal group. However, the assessee was subjected to survey action u/s 133A of the Act simultaneously. We note that the assessee had purchased some private equity shares of unlisted companies in F.Y. 2011-12 relevant to A.Y. 2012-13 part whereof were sold for a total consideration of ₹10 lacs during the impugned financial year. We also note that the assessment in the case of the assessee company for A.Y. 2012-13

We also note that the amalgamating companies namely; Pure Vanijya Private Limited and Attraction Tie-Up Private Limited also sold unlisted equity shares during the impugned financial year which were purchased by them in F.Y. 2011-12 relevant to A.Y. 2012-13. These amalgamating companies have been selling the unlisted equities in all the financial years and the department has accepted the sale of investment as genuine in the summary assessment proceedings. We

We note that the ld. CIT (A) has treated all these companies including the assessee as shell companies and deleted the addition on the ground that these were only pass through entities and directed the AO to make addition towards the commission income only. However, it was argued before us that these companies were doing genuine business of purchase and sale of shares/investments which was in the normal course of business and can not be treated as accommodation entries in any manner. We also find that the AO noted that many of the purchaser companies were struck off and in many cases the addresses were not known. However, on the other hand, the counsel of the assessee argued that on the date of occurrence of transactions of purchases/ sale of shares, these companies were very much intact and subsisting. Therefore, the assessee is not responsible for what has happened in future to these companies.

We note that the money has transferred through banking channel into the hands of the assessee and similar was the position with regard to amalgamating companies and it is also undisputed that these investments had come from the earlier assessment years and were not disputed by the department in the year of purchases. Moreover, the consistent sale of investments of these companies are

We also note that no evidence in the form of any incriminating nature has been brought on records by the revenue to corroborate the statements of Shri Abhishek Munka or Shri Sunit Sharma . Mere statement has no sanctity and revenue reliance on the same is misplaced and therefore we do find substance in the statement of Mr Munka and Mr. Sharma. Further such statements has no legal relevance for the reason that no cross examination was provided to the assessee despite the specific request to provide cross examination of Shri Abhishek Kumar Munka and Shri Sunit Sharma , we note that the ld. AO relied on the third party statement,without providing cross examination which is a clear violation of principal of natural justice as has been held by the Hon'ble Apex Court in the 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]. The case of the assessee is also squarely covered by the decision of Kishinch and Chellaram vs. Commissioner of Income-tax [1980] 4 Taxman 29 (SC)/[1980] 125 ITR 713 (SC)/[1980] 19 CTR 360 (SC)[16-09-1980]. Therefore, the addition made by the ld. AO and sustained by the ld. CIT (A) cannot be sustained.

The case of the assessee is also covered by the decision of the co- ordinate Bench in case of DCIT Vs. Pawanputra Advertising Private Limited, in IT(SS)A No. 144 & 145/KOL/2024, vide order dated 26.08.2025, wherein it has held as under:-

The issue raised in these cross appeals are similar to one as decided by us ITA No. 1416/KOL/2025 in Assessee’s appeal and ITA No. 1731/KOL/2025 in Revenue appeal. Accordingly, our decision would, mutatis mutandis, apply to these appeals of assessee and Revenue in

In the result, the appeals of the assessee are allowed and the appeals of the Revenue are dismissed.