A.C.I.T., CC - 3(3), KOLKATA vs. PAWANPUTRA ADVERTISING PRIVATE LIMITED, KOLKATA

As pointed out by the ld. Counsel of the assessee as well as the ld. DR before us that the issues involved in all these appeals and Cross Objections for various assessment years are similar and even where the cross objection is not filed by the assessee, the issue involved are identical and therefore, all these appeals & Cross Objections are being clubbed together and decided by this consolidated order for the sake of convenience and brevity. So far as the facts of the case are concerned, we are taking IT(SS)A No. 144/KOO/2024 and CO No. 2/KOL/2025 as lead case.

The facts in brief are that the assessee filed return of income u/s 139(5) of the Act on 25.02.2020, declaring total income of ₹1,21,32,880/-. A search action u/s 132 of the Act was conducted at the residential and office premises of the Alaknanda Group of companies on 01.12.2020 and on subsequent dates. A search was also conducted in the name of the assessee company. During the course of Search & Seizure operation, books of accounts and certain documents were seized and later on the cases of the group were centralized. Notice u/s 153A of the Act was issued on 21.10.2021 and the assessee filed the return of income in compliance on 19.11.2021, showing the same income as return in the revised return of income. Thereafter, the statutory notices u/s 143(2) of the Act and other notice u/s 142(1) along with questionnaire were duly issued and served upon the assessee. The ld. AO noted that on 31.03.2008, M/s Brahmaputra Advertising Pvt. Ltd. raised share capital/ share premium to

The entire funds raised was shown as investments in unlisted equities to the tune of ₹64,71,29,000/- in A.Y. 2011-12. The details of the allotment are extracted in Para no.5 from page no.2 to 7 of the assessment order. Thereafter, the ld. AO noted that during the year under consideration, the assessee has sold investments in unlisted equity shares to the tune of ₹11,56,20,000/- which were not genuine. According to the ld. AO, the value of these transactions of sale of shares were not genuine and creditworthiness of the parties were not proved and therefore, liable to be added to the income as unexplained cash credit u/s 68 of the Act. The ld. AO while deciding the issue of sale of investments relied on the circumstantial evidences. The ld. AO noted in the assessment order that on 31.03.2008, the assessee has raised share capital of ₹65,85,49,000/- by issuing 32,42,745/- equity shares of ₹10 each at a premium of ₹190/- . The ld. AO noted that the share subscribers in the assessee company were listed as shell company managed by entry operator Shri Anand Sharma & Janardhan Chokhani, in the departmental database. According to the ld. AO, out of 47 subscribers 21 were shell companies in the data base of the department. Thus, the ld. AO held that the investors who invested in the assessee company were not having any income with no fixed assets nor paying any rent and therefore, these 47 companies are not having any creditworthiness nor any physical existence because they were not paying any rent for occupying any premises to carry on their businesses. The ld. AO also noted that the equity shares of the assessee over a period of time were held by 4 persons namely M/s Skandamala Financial Consultants Pvt. Ltd, M/s Kaangdaji Marketing Pvt. Ltd., Shri Anand Kumar Saraogi and Shri Vishal Saraogi. Thereafter, the ld. AO after noting the modus operandi of rooting and utilizing of unaccounted funds and also referring to admission in the statement recorded of Shri Anand

In the appellate proceedings, the ld. CIT (A) allowed the appeal of the assessee by directing the ld. AO to delete the addition of ₹11,56,20,000/- while directing simultaneously to make an addition towards net profit at the rate of 5% of the said sale consideration, which the assessee may have earned, thereby directing the ld. AO to make an addition of ₹57,81,000/- . The ld. CIT (A) while allowing the appeal noted that the investments sold during the impugned year by the assessee of ₹11,56,20,000/- were in fact made in the preceding assessment year as has been noted by the ld. AO himself in the assessment order and the department as accepted the fund raising by the assessee as well as investment in the unlisted equity shares in the preceding assessment years. The ld. CIT (A) noted that raising of share capital/share premium during the A.Y. 2008-09 was not doubted by the department and even the assessee was selected for scrutiny proceedings for A.Y. 2008-09, A.Y. 2010-11 & A.Y. 2017-18 and the department accepted the share capital and share premium when no discrepancies were found. Similarly, the purchase of these investments in A.Y. 2011-12 were also accepted by the departments in all these years including the A.Y. 2017-18 done under scrutiny proceedings. Therefore,

The ld. CIT (A) noted that assessee had filed all the evidences of sale of shares before the ld. AO as well as the first appellate authority. Besides, the ld. CIT (A) noted that all the purchasing companies except one have filed their return of income, audited accounts, ITRS, audited records, bank statements, before the ld. Assessing Officer. The ld. CIT (A) noted that where purchasing companies were filing the ITRs and the same were being processed by the department then the ld. AO could not doubt the identities of the said concerns. The ld. CIT (A) noted that the assessee has submitted the requisite documents before the ld. AO proving the identity, creditworthiness of the share applicants and the AO failed to bring on record any substantive materials/evidences to dispute of these documents. The ld. CIT (A) while allowing the appeal of the assessee also relied on the decision of the Hon'ble Jurisdictional High Court in the case of CIT VS. Dataware Private Ltd. [ITAT No. 263 of 2011 dated 21.09.2011]. Besides, the ld. CIT (A) also relied on the decision of Hon'ble Jurisdictional Tribunal in the case of M/s Swarna Kalash Commercial Pvt. Ltd. vs ACIT, Central Circle-2(2), Kolkata in I.T.(SS)A. No.53/Kol/2022 for AY 2019-20. The ld. CIT (A) also relied on the decision this Tribunal in the case of M/s Ashtvinayak Sales Pvt. Ltd. vs ACIT, Central Circle-2(2), Kolkata for AY: 2019-20 in IT(SS)A No.54/Kol/2022 A.Y. 2019-20, wherein the identical issue has been decided in favour of the assessee. Finally, the ld. CIT (A) deleted the addition by directing the ld. AO to make an addition of ₹57,81,000/- being 5% of the total sale consideration towards assessing the net profit element embedded therein.

We have heard the rival contentions and perused the materials available on record including the written submissions dated 21.04.2025 and paper books No. 1 (page No. 1 to 357), paper book no. 2 (page No. 1 to 354 and

We observe that the ld. CIT (A) also noted that the department has accepted all these investments in the earlier assessment years, even in the scrutiny assessments and had not drawn any adverse interference. Therefore, we do not find any infirmity/anomaly in the appellate order of the ld. CIT (A), who has passed a very reasoned and speaking order after following the decision of Hon'ble Jurisdictional High Court in case of CIT VS. Dataware Private Ltd. (supra) as well as the decision of the co-ordinate benches on the same issue namely; M/s Swarna Kalash Commercial Pvt. Ltd. vs ACIT (supra) & M/s Ashtvinayak Sales Pvt. Ltd. vs ACIT (supra). We have perused the decisions in the above referred two decisions of the coordinate benches followed by the ld. CIT (A) and find that the issue is exactly similar as before us in the present case. The operative part of M/s Ashtvinayak Sales Pvt. Ltd. vs ACIT (supra) extracted below: - 9. We have heard the rival contentions and perused the materials as placed before us. The issue for adjudication before us is in respect of confirmation of addition by ld CIT(A) as made by the AO on the ground that the identity and credentials of the purchasers are suspicious. We observe that the assessee has been in the regular business of purchase and sales of investments over the years as corroborated by the materials placed before us. Even the sales proceeds received during the current financial year were in respect of sale of shares /investments partly out of opening balance and partly out of current purchases as is apparent from the following chart placed before us:-

So far as the Cross Objection is concerned, we note that the assessee has challenged the direction of the ld. CIT (A) to the ld. AO to make an addition at the rate of 5% of the total sales consideration towards the net profit embedded in the sales consideration.

After hearing the rival contentions and perusing the materials available on record, we find that the ld. CIT (A) has not given any basis for such direction to the ld. Assessing Officer. In other words, the ld. CIT (A) has just acted on the presumptions and surmises and thus, presumed that the assessee might have made some profits from sale by investments. In our opinion, the said direction by the ld. CIT (A) is without any substantive basis and therefore cannot be sustained. Accordingly, we set aside the order of ld. CIT(A) to the extent of this direction of making addition @ 5%. Accordingly, the cross objection of the assessee is allowed.

The ld. Counsel for the assessee therefore submitted that the appeals of the Revenue are not maintainable as orders passed by the ld. CIT (A) attained finality on the legal issue that the ld. AO has no jurisdiction to make the addition u/s 153A of the Act in case of unabated assessments, where there is no incriminating material found and seized during the course of search. We have perused the assessment orders as well as the appellate orders for all the above assessment years and found that there is no even whisper of any incriminating material seized during the course of search qua the additions made. Therefore, we do not find any infirmity in the order of the ld. CIT (A) and accordingly, uphold the same. The case of the assessee is also squarely covered by the decision of Hon'ble Apex court in the case of PCIT v. Abhisar Buildwell P. Ltd. (2023)454 ITR 212(SC) wherein it has been

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