Ramchandra Ingot India Private Limited Vs DCIT (ITAT Kolkata)
Investments Accepted in Earlier Scrutiny Cannot Be Treated as Bogus u/s 68 on Sale—5% Profit Estimation by CIT(A) Deleted;
The assessee and the Revenue filed twelve cross-appeals for AYs 2016-17 to 2021-22 against separate orders of CIT(A)-27, Kolkata. The central dispute arose from additions made u/s 68 treating sale proceeds of unlisted equity shares (originally held by two amalgamating companies—M/s Jyani Agencies Pvt Ltd & M/s Jyani Dealers Pvt Ltd) as unexplained cash credits, on the allegation that these were shell entities used to route accommodation entries.
The assessee argued that both amalgamating companies had undergone regular scrutiny u/s 143(3) in earlier years (AYs 2013-14, 2017-18 etc.), where the investments in private equity shares were fully examined and accepted. Notices u/s 143(2)/142(1) specifically raised queries about share investments, and assessments were completed after full verification. No proceedings u/s 263 were ever initiated. These companies later amalgamated with the assessee under NCLT order dated 26.12.2022.
During reassessment after a search on the Kanodia Group, AO treated ₹7.33 crore (AY 2016-17) and similar sums in later years as unexplained, relying on the NRA Iron & Steel Pvt Ltd judgment. Though summons u/s 131 were duly served on purchasers of shares, who filed confirmations and supporting documents, AO doubted the transactions without bringing any contrary material.
CIT(A), after detailed examination, deleted the major portion of additions but estimated 5% profit on total sale consideration as embedded business income, relying on certain Kolkata ITAT search cases (Swarna Kalash, Ashtvinayak Sales). Against this, the assessee filed cross-objections.
Tribunal carefully analysed the earlier assessments (pages 7–10), NCLT-approved amalgamation, scrutiny findings of amalgamating companies, and confirmations filed by purchasers. It relied heavily on the binding precedents:
