NARAYAN SUPPLIERS PVT. LTD.,KOLKATA vs. I.T.O., WARD - 6(3), KOLKATA, KOLKATA

ITA 1077/KOL/2024Status: DisposedITAT Kolkata08 September 2025AY 2011-201228 pages
AI SummaryDismissed

What did the Tribunal hold?

The Tribunal considered the rival submissions and examined the bank accounts and ledger accounts of the assessee. It noted that while the AO had done commendable work in tracing the transactions, he had not taken them to their logical conclusion. The Tribunal found that the assessee had not been able to show market trades and that the transactions, particularly involving JMD Telefilms Industries Limited and Nouveau Multimedia Limited, appeared suspicious, with inconsistencies in the presented charts and the introduction of new information at the hearing. The Tribunal invoked its powers under Section 254(1) of the Act and directed the Assessing Officer to intimate the Enforcement Directorate and the Economic Offences Wing of the CBI for a thorough examination of the transactions, including financial dealings, involved parties, and audit procedures, to take the matter to its logical conclusion. However, the Tribunal found that the AO's order and the CIT(A)'s confirmation were liable to be upheld in the absence of the revenue being able to provide further details on the money laundering aspect. Therefore, the appeal of the assessee was dismissed.

What were the facts?

The assessee, Narayan Suppliers Private Ltd, filed an appeal against the order of the CIT(A), NFAC, Delhi, for assessment year 2011-2012. The appeal was filed 28 days late, but the delay was condoned. The Assessing Officer (AO) treated transactions in three alleged penny stock companies (JMD Telefilms Industries Limited, Unisys Softwares & Holding Industries Ltd., and Nouveau Global Ventures Limited) totaling Rs. 17,10,95,934/- as bogus. The assessee argued these were bona fide trading transactions through recognized stock exchanges, and the companies were not declared penny stocks by SEBI until 2017. The AO added the entire purchase amount to the assessee's income. The CIT(A) upheld the AO's order.

What were the issues?

1. Whether the Assessing Officer erred in treating the transactions in JMD Telefilms Industries Limited, Unisys Softwares & Holding Industries Ltd., and Nouveau Global Ventures Limited as bogus penny stock transactions and making an addition of Rs. 17,10,95,930/- to the assessee's total income, thereby violating Section 269 of the Income Tax Act, 1961. Assessee's Contentions: - The transactions were bona fide trading transactions and not bogus investments. - The companies were not declared penny stocks by SEBI at the time of the transactions (Assessment Year 2011-2012). - The AO did not obtain any additional evidence or conduct independent verification to treat the transactions as bogus. - All transactions were conducted through recognized stock exchanges, supported by contract notes. - The AO erred in re-opening the assessment based on vague information and without independent application of mind, acting on 'borrowed satisfaction'. - The AO's order under Section 269 was null and void. Revenue's Contentions: - The assessee is a shell company showing losses but with significant reserves and surplus. - The transactions were money laundering activities, designed to introduce and transfer laundered money. - The purchases and sales of penny stocks were solely for the purpose of laundering money. - The orders of the AO and CIT(A) are liable to be upheld.

Which sections of the Income-tax Act were involved?

Section 10(38),Section 143(2),Section 142(1),Section 147,Section 148,Section 250,Section 254(1),Section 269

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Income Tax Appellate Tribunal, “A” BENCH, KOLKATA

Before: SHRI GEORGE MATHAN & SHRI RAKESH MISHRA

For Appellant: Shri Avijit Ghoshal, AR, Shri Raja Sengputa, CIT-DR
For Respondent: Shri Raja Sengputa, CIT-DR
Hearing: 08/09/2025Pronounced: 08/09/2025

Per George Mathan, JM: This is an appeal filed by the assessee against the order passed by the Id.CIT(A), National Faceless Appeal Centre (NFAC), Delhi, dated 15.02.2024 for the assessment year 2011-2012. 2. Shri Avijit Ghoshal, Id. AR appeared on behalf of the assessee and Shri Raja Sengupta, CIT-DR appeared on behalf of the revenue.

3.

The appeal of the assessee is barred by 28 days. In this regard, the assessee has filed an application for condonation of delay supported with an affidavit stating therein sufficient reasons for delay, which are plausible and not found to be false. Ld. CI

The order continues below.

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