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Facts
The assessee company, Petroqo Plastics Pvt. Ltd., filed its ITR for AY 2017-18 declaring NIL taxable income. A search operation in the Majee Group case revealed the assessee company was a beneficiary of cash trail transactions amounting to Rs. 1,23,50,000/- received from two shell companies. The Assessing Officer reopened the case and added the amount as unexplained money.
Held
The Tribunal held that the assessee company had received the amount as sale proceeds from shares it held in M/s Positive Commotrade Pvt. Ltd. since 2011, which were sold in FY 2016-17. The addition made under Section 68 of the Act was considered not applicable, as the transaction was a sale of investment, not an unexplained cash credit. The Tribunal relied on a jurisdictional High Court decision in a similar case.
Key Issues
Whether the addition of Rs. 1,23,50,000/- under section 68 of the Income Tax Act, 1961, as unexplained money, was justified when the assessee claimed it was sale proceeds from investment?
Sections Cited
250, 147, 148, 143(2), 142(1), 144B, 68
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, “D” BENCH KOLKATA
Before: Shri Rajesh Kumar & Shri Pradip Kumar Choubey
order
: February 16, 2026 ORDER
Per Pradip Kumar Choubey, Judicial Member:
This appeal filed by the assessee is directed against the order dated 30.06.2025 of the CIT(A)-20, Kolkata (hereinafter referred to as the “CIT(A)”) passed u/s 250 of the Income-tax Act, 1961 (hereinafter referred to as “the Act”) for the assessment year 2017–18.
Facts in brief are that the assessee is a company and previously known as M/s Pearl Barter Private Limited) has filed its ITR for A.Y. 2017-18 declaring NIL taxable income. As per information, a Search & Seizure operation was carried out in the case of Majee Group & related beneficiaries and the assessee company was found to be one of the beneficiaries of cash trail transactions and received amount of Petroqo Plastics Pvt. Ltd Rs.1,23,50,000/- from Shell Companies namely a) Nirjhar Kvb and b) Silverfine Kvb during the relevant A.Y. 2017-18. The Assessing Officer re- opened the case of the assessee u/s 147 of the Act by issuing notice u/s 148 of the Act. In response to notice u/s 148 of the Act, assessee company filed its Income. Then statutory notices u/s 143(2) and 142(1) were issued to the assessee along with questionnaire and the assessee submitted its replies in response to the said notices. The assessee submitted before the AO that the money was received from the two companies in lieu of sale of shares to them which were bought in financial ye4ar 2010-11 and accepted by the revenue since in all these years . After going over the submissions made by the assessee which di not find favour with /AO , the Assessing Officer made addition of Rs.1,23,50,000/- on account of unexplained money in the assessment framed u/s 147 r.w.s.144B of the /act daste4d 23.03.2022.
Aggrieved by the said order, the assessee preferred appeal before the ld. CIT(A), wherein, the appeal of the assessee has been dismissed.
Being aggrieved and dissatisfied, the assessee preferred appeal before us. The ld. AR challenges the very impugned order thereby submitting that the assessee completely unaware of the search operation in the case of Majee Group & related beneficiaries as he has no connection with the Majee Group. The ld. AR further submits that the assessee company was holding shares of M/s Positive Commotrade Pvt. Ltd. since 31.03.2011 and out of allotted shares of M/s Positive Commotrade Pvt. Ltd., following shares were sold by assessee company in parts to the two companies namely i. M/s Nirjhar Traders Pvt. Ltd., M/s Silverfine Pvt. Ltd. The ld. AR drew our attention over the statement of Shri Niraj Singh and in the statement, he has specifically asked that please explain about several documents related to the following companies such as Nirjhar Traders Private Limited, Blueland Petroqo Plastics Pvt. Ltd Commodities Private Limited, Mahamani Impex Private Limited, Bhavsakti Distributors Private Limited, Silverfine Agencies Put Ltd. Dreamlight Management Private Limited have been found at your residential premises and please explain why are these documents in your possession and state your association with these companies. In reply, Shri Niraj Singh said that all these belonged to Mr. Devesh Upadhyay and he used to handle paper work for submission and filing to RoC. The ld. AR submits that the assessee has already accounted for above- referred transactions in its books of account which is evident from balance-sheet as on 31.03.2017. The ld. AR has filed copy of details of sales of shares and copy of financial statement for the year ending on 31.03.2017.
Contrary to that, the ld. DR supports the impugned order.
We have heard the submissions of the counsels of the respective parties and on perusal of the impugned order. We find that the department viewed that the assessee company was a beneficiary of Rs.1,23,50,000/- as per cash trail detected from the search operation in Majee Group which the assessee categorically denied. We further find that the company was holding shares of M/s Positive Commotrade Pvt. Ltd. since 31.03.2011 which is apparent from the scan copy of relevant pages of Form No.2 as under:
Blank Petroqo Plastics Pvt. Ltd Petroqo Plastics Pvt. Ltd 7. We further find that out of allotted shares of M/s Positive Commotrade Pvt. Ltd., following shares were sold by assessee company in parts to two companies namely i. M/s Nirjhar Traders Pvt. Ltd. of 6150 shares for Rs.61,50,000/-, M/s Silverfine pvt. Ltd. of 6200 shares for Rs.62,00,000/-. We note that the assessee has filed ledger accounts and also uploaded the copies of separate invoices as on 31.03.2017 and it appears that both the above private companies have common address. We have also perused the profit and loss account of M/s Positive Commotrade Pvt. Ltd., which is as follows:
Now, coming to the statement of Shri Niraj Singh recorded on oath, we find the relevant Question No.16 which is as under:
In view of the aforesaid discussion, we find that the shares which have been allotted to the assessee company was in the year 2011 and the assessee sold the same in F.Y 2016-17. We further find that the Assessing Officer added the said amount u/s 68 of the Act which is at all not applicable in this case. The case of the assessee is squarely covered by the decision of the Jurisdictional High Court in the case of PCIT vs. Tulsyan and Sons (P.) Ltd. [2025] 174 taxmann.com 37 (Calcutta)[16-04- 2025], ITAT/239/2024 in IA No. GA/2/2024 vide order dated 16th April, 2025, wherein it has held as under:-
“2. 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, 6 Petroqo Plastics Pvt. Ltd 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.”
Since the facts of the case as decided by the Hon'ble Jurisdictional High Court vis-à-vis the instant appeal before us are same. We therefore, Petroqo Plastics Pvt. Ltd respectfully following the decision of the Hon'ble Kolkata High Court, set aside the order of CIT (A) and direct the ld. AO to delete the addition.
In the result, the appeal of the assessee is allowed.
Kolkata, the 16th February, 2026.
Sd/- Sd/- [Rajesh Kumar] [Pradip Kumar Choubey] Accountant Member Judicial Member Dated: 16.02.2026. RS Copy of the order forwarded to: 1. Appellant - 2. Respondent - 3. CIT(A)- 4. CIT- , 5. CIT(DR),