DEPUTY COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE 1(1), KOLKATA, KOLKATA vs. AXIS OVERSEAS LIMITED, KOLKATA

“4.3.2(a) I have carefully considered the facts of the case and the submission of the appellant. The AO in the assessment order has stated that the assessee has shown unsecured loan of Rs. 31.73 crore taken from various companies of Kolkata. As per the AO enquiries were conducted in the cases of two lender parties namely; Rubycam Vyapar Pvt. Ltd. who had given 6.50 crore and M/s Limelight Dealers Pvt. Ltd. who had given Rs. 2.20 crore of unsecured loan to the assessee. But, As per AO, notices sent u/s 133(6) of the Act were returned unserved. Further, enquiry were also conducted, through ITI, and the Income Tax Inspector did not locate the office premises of these companies. The AO, further stated that another notices u/s 133(6) of the Act were issued to these two concerns to verify the transaction related to purchase of jute with the assessee company and this time the notices were duly received and submissions were made by the above companies on 21.03.2016. The AO has mentioned that on perusal of the documents for the F.Y. 2012-13 of these companies, it is found that they have not shown any loan to Axis Overseas Ltd. in their audited balance sheet for the year. So the AO held the said loan as non-genuine and bogus. Therefore, the addition of Rs. (6,50,00,000 + 2,20,00,000 =8,70,00,000) were made to the total income u/s 68 of the Act. 4.3.2(b) However, the appellant in his submission has stated that although the AO has stated that enquiry were conducted by the ITI in the assessment proceeding for the verification of addresses of the said two companies but on perusal of the order sheet of the assessment proceeding, no mention of any such enquiry report was found. The appellant has further stated that even from perusal of para 2.2 of the Assessment Order, it can be seen that request was made by the director of the company in his submission dated 22.03.2016 to the AO, to provide the opportunity to cross examine the inspector about the details of addresses where, notices u/s 133(6) were returned unserved. But the AO did not provide such opportunity and the request of the appellant was denied. Furthermore, details of the new addresses was also provided to the AO in the submission dated 22.03.2016. But no enquiry was conducted on the said addresses. 4.3.2(c) The appellant further stated that the AO has wrongly stated that both the parties have not shown any loan to the Axis Overseas Ltd. in their audited balance sheet. Whereas fact is that both the parties i.e. M/s Limelight Dealers Pvt. Ltd. and M/s Rubycam Vyapar Pvt. Ltd. have shown the transaction of loan with the assessee as their sundry debtors in their balance sheets. Further, the assessee has shown the said amount, part as unsecured loan and part as sundry creditors in the balance sheet. The details furnished by the appellant regarding the details shown in thebalance sheet of 4.3.2(d) The appellant has further stated that both the companies have confirmed the balances of the assessee. Further, with regard to the classification of sundry creditors partly as unsecured loan by the assessee company, the appellant has stated that it is quite obvious that both appears in the liability side of the balance sheet and mere act of switching of the same from current liability to unsecured loan account give rise to no income, much less undisclosed income. The appellant stated that these are merely the book entries and no new funds or any other assets have been introduced in the appellant’s accounts. Furthermore, the appellant has also contested the finding of the Assessing Officer that notices u/s 133(6) were not complied with by the parties. As per appellant, both the entities have made full compliance to the notices u/s 133(6) of the AO. This fact has been accepted by the AO in the Assessment Order itself. 4.3.2(e) Further, the appellant stated in its submission, that the assessee had furnished all the details relating to the transaction to the AO including the account confirmations from the parties. Not only that both the parties had replied to the notices

4.1. The facts in brief are that during the assessment proceedings, the learned AO observed from the reply received from M/s Rubycam Vyapar Pvt. Ltd. and M/s Limelight Dealers Pvt. Ltd. that assessee had purchased raw jute from these parties and noted that assessee has not paid any transportation cost. Accordingly, a show cause notice was given to the assessee to establish the genuineness of sales and purchases of Jute which was replied by the assessee. The learned AO observed that the assessee could not prove the genuineness of the purchases made with the documentary evidences like transportation bills, challans, gate passes, bills and vouchers and therefore, these purchases from the above parties were non- genuine. The learned AO also noted that the assessee has purchased jute amounting to ₹15,37,85,137/-, from M/s Rubycam Vyapar Pvt. Ltd. and ₹50,97,47,245/- from M/s Limelight Dealers Pvt. Ltd. The learned AO estimated the income by applying GP @ 10% on the said purchases thereby making an addition of ₹3,13,53,298/- u/s 69C of the Act read with section 115BB of the Act.

4.2. The learned CIT (A) in the appellate proceedings allowed the appeal of the assessee by observing and holding as under:-

“4.2.2(a) I have duly considered the facts of the case and the submission of the appellant. The AO in the assessment order has stated that the Assessee Company has

5.1. The learned AO during the course of assessment proceedings observed that the assessee has sold its current investments comprising share/ securities of unlisted companies to different entities. Accordingly, the assessee was called upon to explain this sale of securities and also show caused to as to why the same should not be added u/s 68 of the Act. The assessee replied on 30.06.2016, by furnishing the details of purchases and their balance sheets, copies of ITRs etc. bills etc. The learned AO noted that the purchasers of shares/ securities of these unlisted companies from the assessee did not show these purchases in the Profit and Loss 5.2. In the appellate proceedings, the learned CIT (A) deleted the addition after taking into account the reply/ submission of the assessee. The learned CIT (A) noted that in fact sales of investment were made to the tune of ₹4,70,00,000/- and the learned AO has wrongly taken the same as ₹9,20,00,000/-. The learned CIT (A) further noted that the purchasers of these shares of unlisted private companies were accepted by the department in the preceding assessment years and the learned AO has failed to prove on record as to how the purchase parties are not genuine. With these observations, the learned CIT (A) deleted the addition.

5.3. After hearing the rival contentions and perusing the materials available on record, we find that the assessee during the year has sold certain shares / securities in unlisted companies to various parties. The assessee during the course of hearing before the learned AO as well as before the learned CIT (A) provided the names, addresses, the shares sold, amount realized and received through banking channel. We note that the notice u/s 133(6) of the Act were not responded by these parties but the facts remains that these investments were purchased by the assessee in the earlier “We have heard Mr. Aryak Dutta, learned standing counsel assisted by Mr. Soumen Bhattacharjee, learned standing counsel for the appellant and Mr. J. P. Khaitan, learned senior advocate assisted by Mr. Pratyush Jhunjhunwalla, learned advocate for the respondent. The short issue which falls for consideration is whether the learned tribunal was right in affirming the order passed by the Commissioner of Income Tax (Appeals)- 21, Kolkata [CIT(A)] dated 10.5.2023 by which the assessee’s appeal was allowed and the addition made under section 68 of the Act was deleted. The Assessing Officer made the addition by invoking section 68 of the Act on the ground that the assessee failed to discharge its onus to establish identity, creditworthiness and genuineness of the transaction in respect of the money received through cash trail. The CIT(A) in course of hearing the appeal called for a remand report from the Assessing Officer and in the said remand report the Assessing Officer has in no uncertain terms accepted the receipt of the impugned sum on account of sale proceeds of investment. The Assessing Officer verified the investment sold which are shown in the balance-sheet for the financial year 2010-11 in Schedule-4 of the balance-sheet and after considering these facts it was stated that the assessee had sold shares held by way of the investment during the year to M/s. Shivshakti Communications and Investment Pvt. Ltd. and Carnation Tradelink Pvt. Ltd. and it is not a receipt of unsecured loan. This fact, apart from other factual details, were considered by the CIT(A) and by an elaborate order dated 10.5.2023 the appeal filed by the assessee was allowed. The tribunal on its part re-examined the factual position and took note of the findings rendered by the CIT(A) and concurred with the same. We also find that the tribunal has also examined the factual position and took note of the remand report as called for by the CIT(A) which confirmed the alleged sum is on account of sale of investment and not otherwise. Thus, we find no question of law much less substantial question of law arises for consideration in this appeal. Accordingly, the appeal fails and the same is dismissed. Consequently, the connected application stands closed.”

6.1. The facts in brief are that the survey u/s 133A of the Act was conducted on the premises of the assessee during which incriminating documents with ID marks AOL/1 to AOL/15 were impound. The learned AO observed from these documents that cash payments were made relating to purchases of raw jute by the assessee amounting to ₹82,00,861/- which were contained in this paper book and the vouchers did not contain the addresses of the sellers as well as details of transportations etc. According to the learned AO, the assessee could not reconcile the purchase bills with the regular books of account which prima facie showed that these are the bogus purchases having made of more than ₹20,000 in a single day to a single party in cash. Consequently, the learned AO made an addition of ₹82,00,861/- u/s 40A(3) of the Act.

6.2. In the appellate proceedings, the learned CIT (A) deleted the addition by observing and holding as under:-

“4.7.2(a) I have duly considered the facts of the case and the submission of the appellant on this ground. Vide ground no. 12 the appellant has contested the decision of AO in making addition of Rs. 82,00,861/- u/s 40A(3) of the Act, on the basis of impounded document marked as AOL/08. 4.7.2(b) Further, regarding the addition of cash purchases of Rs. 82,00,861/- u/s 40A(3), the AO has stated in para 5.2 of the Assessment Order that as per the impounded documents marked as AOL/08, it was found that the assessee has made a purchase of Raw Jute in the cash exceeding Rs. 20,000/- in a day to a single party.

8.5 Now, coming to the observations of the CIT(A), who by referring to some extracts from the website of ‘National Jute Board’ has observed that producers/sellers have to undertake a process known as retting to extract jute fibre before it is being sold in the primary market to the weaving mills concerned. We note that most of the crops are to be processed before being brought for sale in the market. Merely because the concerned growers/producers undertake some processing for making the crop fit for sale in the market, that does not change the8.5 Now, coming to the observations of the CIT(A), who by referring to some extracts from the website of ‘National Jute Board’ has observed that producers/sellers have to undertake a process known as retting to extract jute fibre before it is being sold in the primary market to the weaving mills concerned. We note that most of the crops are to be processed before being brought for sale in the market. Merely because the concerned growers/producers undertake some processing for making the crop fit for sale in the market, that does not change thenature of the crop and it does not mean that it is no more an agricultural produce. Moreover, it has not been doubted by the Assessing Officer that the assessee had purchased raw jute, the term ‘raw jute’ itself means that it is the raw crop which is brought by the farmers/producers, at the factory premises of the assessee. This observation of the CIT(A) stating that the crop brought by the farmers/producers was no more an agricultural produce, is not tenable and the same is rejected. In view of this, the raw jute produce by the assessee duly comes within the exception carved out in section 6DD(e)(i).

Order pronounced in the open court on 03.12.2025.