ACIT Vs Pawanputra Advertising Private Limited (ITAT Kolkata)
The Income Tax Appellate Tribunal (ITAT), Kolkata, decided a batch of appeals and cross objections filed by the assessee and the Revenue for Assessment Years 2015-16 to 2020-21 involving identical issues. The lead case concerned additions made under Section 68 of the Income-tax Act in respect of sale proceeds received on sale of unlisted equity shares. The assessee had originally raised share capital and share premium in Assessment Year 2008-09, invested the funds in unlisted equity shares in Assessment Year 2011-12, and subsequently sold part of those investments during the relevant assessment year. Following a search under Section 132, the Assessing Officer treated the sale consideration as unexplained cash credit under Section 68 on the ground that the transactions were not genuine and that the purchasers lacked creditworthiness.
The Commissioner of Income-tax (Appeals) observed that the share capital, share premium and investments had already been accepted by the Department in earlier assessment years, including scrutiny assessments, and that the purchases of the investments had never been questioned. The CIT(A) further found that the assessee had produced documents relating to the sale transactions, including details establishing the identity, creditworthiness and genuineness of the purchasers. Since the Assessing Officer had not produced substantive material to discredit these documents, the CIT(A) deleted the addition under Section 68 but directed that 5% of the sale consideration be taxed as net profit.
