Krypton Distributors LLP Vs ITO (ITAT Kolkata)
When Investments Were Accepted in Earlier Years, Sale Proceeds Cannot Be Taxed u/s 68—ITAT Kolkata Deletes ₹80 Lakhs Addition- 132(4) Retractions + No Cash Trail = No 68 Addition
Tribunal considered addition of ₹80,00,000 treated by AO as bogus unsecured loan u/s 68 based on investigation wing input alleging accommodation entries through M/s Startrack Vinimay Pvt Ltd. Assessee explained that it had purchased 40 lakh 2% non-cumulative redeemable preference shares of M/s Easter (India) Chemicals Ltd in earlier years, reflected as investment in its balance sheet, and sold them during the year for ₹80 lakhs through banking channels. AO nevertheless invoked s.68 and CIT(A) confirmed.
Tribunal observed from records that the investment in preference shares had been accepted by the Department in earlier scrutiny assessments & sale consideration was received through bank & corroborated by sale bill. Relying heavily on Kolkata HC in PCIT Vs Tulsyan & Sons Pvt Ltd and coordinate bench rulings in Pawanputra Advertising, Swarna Kalash Commercial, Ashtvinayak Sales, Tribunal held that once the investment is accepted in earlier years & assessee establishes identity, creditworthiness & genuineness of purchaser, sale proceeds cannot be taxed u/s 68. Tribunal also noted that AO relied only on retracted 132(4) statements of Rashmi Group personnel without any corroborative evidence, which, as held by Calcutta HC in Golden Goenka Fincorp Ltd, cannot sustain addition.
