ITO Vs Panel Commerce Pvt. ltd. (ITAT Kolkata)
ITAT Kolkata held that the transaction cannot be treated as unexplained cash credit under section 68 of the Income Tax Act since the transaction of the shares were shown as stock in trade in assets side of the balance sheet and sale as revenue in profit & loss account.
Facts- AO received information that assessee had transacted with shell company M/s Brahma Tradelinks Pvt. Ltd., who was not having any real business activity at all. AO further noted that the genuineness of the transactions and identity, creditworthiness of the party from whom the assessee company received money could not be verified and therefore, transactions could not be treated as genuine.
Accordingly, the case of the assessee was reopened u/s 147 of the Act by issuing notice u/s 148 on 16.03.2020, after obtaining approval from the competent authority. Finally, an addition of ₹6,19,60,000/- crores were made on account of sale of shares by the assessee company to M/s Brahma Tradelinks Pvt. Ltd besides making addition of Rs. 6,55,000/- on account of cash deposits.
CIT (A) partly allowed the appeal of the assessee by confirming the addition to the extent of 1,25,00,000/- addition made on account of sale of shares, whereas the remaining addition of ₹4.94 crores has been deleted. Now, the Revenue is in appeal before us against the order of ld. CIT (A) partly deleting the addition, whereas the assessee filed the cross objection supporting the order of ld. CIT (A).
