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Additions under Sections 68, 69D, 50CA, and 271D deleted as transactions were verified and recorded.

Issue

Unsecured Loans (Section 68): Whether additions for unsecured loans under Section 68 can be sustained when the assessee provides PAN, audited financials, confirmations, bank statements, and evidence of repayment with interest after TDS.
Ad-Hoc Disallowance of Contractual Payments (Section 145): Whether an ad-hoc disallowance of 6% on contractual and labour payments is legally sustainable without rejecting the books of account under Section 145(3).
Cash Loans based on Third-Party Material (Section 69D): Whether additions for alleged cash loans under Section 69D can be made using third-party search material without direct evidence, proper questioning under Section 132(4), or cross-examination opportunity.
Jurisdiction under Section 147 vs. 153C: Whether additions based exclusively on third-party search material conducted prior to 01-04-2021 can be made under Section 147 without adhering to Section 153C procedure.
Disallowance of Genuine Purchases (Section 37(1) / Section 69C): Whether purchase disallowances and commission additions can be sustained when backed by e-way bills, invoices, lorry receipts, bank channels, and proof of direct delivery to sites.
Invocation of Section 50CA on Share Buyback: Whether Section 50CA can be invoked to compute capital gains on a share buyback where distribution tax was paid under Section 115QA and the income is exempt under Section 10(34A).
Unexplained Investments for Cash in Books (Section 69): Whether cash seized from employees can be added under Section 69 when it is duly recorded in the cash book on the date of seizure.
Penalty for Cash Transactions (Section 271D): Whether a penalty under Section 271D is leviable when the underlying Section 69D addition is deleted and the penalty show-cause notice is vague and defective.

Facts

Issue I (Unsecured Loans): Reopening additions were made under Section 68 for unsecured loans following a group search. The assessee submitted PANs, audited financials, loan confirmations, bank statements, and proof of repayment with interest after deducting TDS. The lenders’ net worth exceeded the loan amounts.
Issue II (Ad-Hoc Disallowance): The Assessing Officer (AO) disallowed 6% of contractual and labour expenses on an ad-hoc basis despite compliance with Section 133(6) notices and payment via banking channels. Books of account were not rejected under Section 145(3).
Issue III & IV (Third-Party Search Material & Section 153C): Additions under Section 69D were made under Section 147 using money receipts seized during a third-party search (conducted before 01-04-2021) based on a “two-zero suppression” theory. No seized material was found on the assessee, no opportunity for cross-examination was offered, and procedure under Section 153C was bypassed.
Issue V (Purchase Disallowance & Commission): The AO disallowed purchases of Rs. 2.11 crore under Section 37(1) and added 3% commission under Section 69C relying on third-party statements. The assessee submitted e-way bills, lorry receipts, material receipt notes, and banking records showing direct delivery to EPC project sites.
Issue VI (Section 50CA on Buyback): The assessee tendered 42.90 lakh equity shares in a buyback at Rs. 13.50 per share (sanctioned by NCLT), receiving Rs. 5.79 crores. The buyback tax was paid under Section 115QA by the issuer company, making the income exempt under Section 10(34A). The AO invoked Section 50CA, computing book value at Rs. 106.83 per share to tax a difference of Rs. 40.04 crores as capital gains.
Issue VII (Cash Seizure): Cash of Rs. 18 lakhs (belonging to the company) and Rs. 2,100 (belonging to an employee) was seized at a railway station. The AO treated it as unexplained scrap sale proceeds under Section 69 using WhatsApp chats. The assessee showed that the Rs. 18 lakhs advance was duly entered in its cash book on the seizure date.
Issue VIII (Penalty under Section 271D): A penalty of Rs. 4 crores under Section 271D was imposed based on alleged cash loans. The show-cause notice failed to specify transaction details, parties, or exact amounts, and the underlying Section 69D additions were deleted.

Decision

Issue I (Unsecured Loans): In favour of Assessee. Additions under Section 68 are unjustified since the assessee established creditworthiness, identity, and genuineness through comprehensive documentary evidence and repayment proofs [Paras 13, 14, 48, 59, 84, 85, 94, 95].
Issue II (Ad-Hoc Disallowance): In favour of Assessee. Ad-hoc disallowance of 6% on contractual payments without rejecting the books of account under Section 145(3) or proving non-genuineness is legally unsustainable [Paras 21, 26, 51, 53, 62, 63, 88, 98].
Issue III (Section 69D Additions): In favour of Assessee. Additions based on third-party statements and receipts without independent corroboration, specific interrogation, or cross-examination are invalid [Paras 34–37, 55].
Issue IV (Section 153C Jurisdiction): In favour of Assessee. Making additions under Section 147 based on material seized from a third-party search conducted prior to 01-04-2021, without complying with the mandatory requirements of Section 153C, renders the assessment jurisdictionally void [Paras 40, 41, 56].
Issue V (Purchase Disallowance): In favour of Assessee. Purchases backed by complete delivery documentation, e-way bills, and banking payments are genuine; deletion of the purchase disallowance and consequential commission addition is upheld [Para 68].
Issue VI (Section 50CA & Buyback Exemption): In favour of Assessee. Where a buyback is governed by Section 115QA and exempt under Section 10(34A), Section 50CA cannot be applied to compute deemed capital gains consideration in the shareholder’s hands [Paras 76–78].
Issue VII (Cash Recorded in Books): In favour of Assessee. Cash recorded in the books of account on the date of seizure cannot be added as unexplained investment under Section 69 [Paras 101, 102].
Issue VIII (Section 271D Penalty): In favour of Assessee. Penalty under Section 271D cannot survive when the underlying Section 69D addition is deleted and the penalty notice itself is vague and defective [Paras 111, 112].

KeyTakeaways

Diligence in Repaid Unsecured Loans: Unsecured loans backed by identity, audited financials, interest TDS, and complete repayment via banking channels satisfy the three-prong test of Section 68.
Rejection of Books Mandatory for Ad-Hoc Disallowances: The revenue cannot arbitrarily make ad-hoc disallowances on expenditure without first rejecting the books under Section 145(3).
Exclusivity of Section 153C: For search proceedings initiated prior to 01-04-2021, additions based on third-party seized material must follow Section 153C; invoking Section 147 directly is impermissible.
Section 50CA Inapplicable on Tax-Exempt Buybacks: Section 50CA is purely a machinery provision for calculating capital gains and cannot create a tax liability on share buybacks covered under Section 115QA and exempt under Section 10(34A).
Defective Penalty Notices Are Void: Penalty under Section 271D cannot be sustained if the show-cause notice fails to specify the basic transaction particulars and the primary addition has been deleted.

IN THE ITAT KOLKATA BENCH ‘B’

Deputy Commissioner of Income-tax

Laser Power & infra (P.) Ltd.

Shripradip Kumar Choubey, Judicial Member
and Rajesh Kumar, Accountant Member

IT Appeal Nos. 2790 to 2795 & 2926 (Kol.) of 2025
CO Nos. 24 to 29 (Kol.) of 2026
[Assessment years 2017-18 to 2022-23]

OCTOBER 1, 2026

Soumitra Choudhury, Nirav Sheth, K.K. Chhaparia and Ms. Nandini Sureka, ARs for the Appellant. Sanjit Kumar Das, DR for the Respondent.

ORDER

Rajesh Kumar, Accountant Member. – These appeals of the Revenue and the Cross Objections of the assessee are against the order of the Commissioner of Income-tax (Appeals), Kolkata-26 (hereinafter referred to as the “Ld. CIT(A)”] dated 02.09.2025, 26.08.2025 for the AYs 2017-18, 2018-19, 2019-20, 2020-21, 2021-22, 2022-23. The penalty was levied u/s 271D of the Act vide order dated 25.01.2025 for A.Y. 2019-20.

2. At the outset, we observe from the appeal folder that there is a delay in ITA Nos. 2793, 2794, 2795 & 2926/KOL/2025 of 24 & 02 days in filing the appeal by the department and in support of this a condonation petition was filed. It was stated in the condonation petition that the delay has occurred due to obtaining the administrative approval from the competent authorities, which took quite a long time and accordingly, the delay may be condoned. The ld. AR, on the other hand, did not oppose the condonation of delay. Considering the reasons cited before us, we are inclined to condone the delay and admit the appeal for hearing.

3. The facts in brief are that a search under section 132(1) of the Act and a survey under section 133A of the Act were conducted on 15.03.2022 upon the assessee and also on the Goel Group of cases. Notices under section 148 of the Act were issued for all six years and were complied with by filing returns of income declaring the same income as declared in the original returns of income or assessed. The assessments were also accordingly framed under section 147 read with section 143(3) of the Act. The assessee is engaged in the business of manufacturing cables and conductors, Aerial Bunch Cables and aluminum and copper wire at Dhulagarh and Domjur, Howrah and executes Engineering, Procurement and Construction contracts for rural electrification under the Central Government schemes in the States of Bihar, West Bengal, Orissa, Jharkhand and Assam. The work being labour intensive, more than 500 labourers are engaged in each shift and more than 1,000 contractors and sub-contractors are deployed at the project sites, KYC norms being observed and a Unique Identification number allotted to each contractual labourer. These facts were examined and accepted by the Ld. CIT(A) in each of the six years and are not challenged in any ground of appeal. The assessee, assessed as a private limited company, has since been converted into a public limited company and is now named “Laser Power & Infra Limited”, the Permanent Account Number remaining unchanged.First, we take up ITA No. 2790/Kol/2025 and the Cross Objection No. 24/Kol/2026 for the assessment year 2017-18, as the lead year for some common and recurring issues in all the years.

A.Y. 2017-18

ITA No. 2790/Kol/2025 and CO 24/KOL/2026

4. The issue raised in ground no. . 1 and 9 is against the order of ld. CIT(A) not giving proper opportunity to the AO during the remand proceedings and accepting the unverified submissions of the assessee without conducting any enquiry

5. The facts relating to grounds 1 and 9 are that in the course of the appellate proceedings, the Ld. CIT(A) issued requisitions \ to the Ld. Assessing Officer under section 250(4) of the Act calling for the statements relied upon, the notices issued under section 133(6) of the Act with the replies thereto and the materials / documents seized relating to the assessee. We note that no reply/documents were furnished save in a single instance. The ld. CIT(A) called for the remand report vide letter dated 12,08.2925 but no such remand report was filed by the Assessing Officer. We note that assessee has not furnished additional evidences under admitted under Rule 46A of the Income Tax Rules, 1962. The Revenue is nevertheless in appeal upon grounds 1 and 9, complaining that relief was granted without calling for a remand report and upon “unverified submissions . without conducting any specific enquiry”. In our view, since the facts have been discussed at length in the assessment order as well as in the appellate order and no fresh evidences were submitted at appellate hearing stage, therefore there is no reason for the revenue to raise these grounds. Hence, Ground nos. 1 and 9 of the Revenue are dismissed.

6. The raised in ground nos. 2,7 and 8 are against the deletion of addition of Rs. 5,17,00,000/- by CIT (A) as made by the Id. AO u/s 68 of the Act on account of unsecured loans which were treated by the ld. AO as unexplained cash credit.

7. The facts in brief are that return of income was filed on 30.10.2017 declaring Rs. 9,83,38,460/-. The case was selected for scrutiny and an assessment was originally framed under section 143(3) of the Act vide order dated 11.12.2019 at Rs. 9,86,79,080/. Thereafter a search was carried out on the assessee as stated hereinabove. The AO accordingly issued notice under section 148 on 18.03.2024 in response to which a return of income was filed on 22.04.2024 declaring the same income as assessed under section 143(3) of the Act.The AO thereafter issued notices u/s 143(2) and 142(1) of the Act were issued along with questionnaire which were duly served upon the assessee. The assessee duly furnished all the details and evidences as called for by the Assessing Officer. The AO after taking account the evidences and submissions of the assessee and after taking into account the seized materials/incriminating documents found and seized during search came to the conclusion that the assessee has been routing its own money through shell companies into the books of accounts in the form of unsecured loans and other modes.

8. The AO observed that the assessee raised unsecured loans aggregating Rs. 5,17,00,000/- from five loan creditors during the impugned financial year , namely Anmol Commerce Pvt. Ltd. Rs. 1,42,00,000/-, Mount Finvest & Leasing Pvt. Ltd. Rs. 50,00,000/-, Rareview Commercial Pvt. Ltd. Rs. 48,00,000/-, Subhrashri Retailers Pvt. Ltd. Rs. 52,00,000/- and Neutral Dealcom Pvt. Ltd. Rs. 2,25,00,000/- . The interest was also paid on these loans amounting to Rs. 32,33,151/- after deduction of tax at source. During the re-assessment proceedings, the assessee was called upon to establish the identity and creditworthiness of the lenders and the \ genuineness of the transactions. The assessee accordingly furnished the MCA master data, the ledger account, the audited financial statements, the loan confirmations and the bank statementsetc in respect of all the loans creditors. The Ld. Assessing Officer noted that during the course of search an excel file was found in the laptop of Shri Navin Kumar Saffar and on the basis of the statements of Shri Deepak Kumar Goel and of certain other persons.The Ld. Assessing Officer treated the loans as unexplained cash credit for a alleged failure to prove creditworthiness and doubting the genuineness solely upon the excel file and the statements, Besides the AO did not give finding as to why or how creditworthiness was doubted. The AO noted that unsecured loans from five lenders aggregating to Rs. 5,17,00,000/- could not proved u/s 68 to be genuine and having creditworthiness and accordingly treated the same as unexplained cash credit u/s 68 thereby making an addition of Rs. 5,17,00,000/- besides disallowing interest on unsecured loans amounting to Rs. 32,33,151/- by treating the same as bogus and non-genuine. The also made various other additions which are discussed and decided in the ensuing paras. The re-assessment was framed vide order dated 25.11.2024 passed u/s 147 read with section 143(3) of the Act assessing the income at Rs. 15,60,79,237/-.

9. In the appellate proceedings, the Ld. CIT(A) while deleting the addition discussed each and every aspect of the issue. The ld. CIT(A) discussed the facts qua each of the loan creditors in \ the appellate order from page nos. 56 to 71 of the appellate order. The ld. CIT(A) categorically recorded finding of facts that all the loan creditors have creditworthiness to advance money to the assessee and the loan transactions were genuine. The ld. CIT(A) also noted that the assessee filed all evidences qua loan creditors comprising PANs, Audited Accounts, confirmation letters and bank statements, proofs of repayment of loans in the subsequent years, etc which were also placed before the Assessing Officer. The ld. CIT(A) also dealt with at length the statements recorded on 16.3.2022 and 10.5.2022 during the course of search u/s 132(4) of the Act of Shri Deepak Kumar Goel director of the assessee company at page no. 66 to 67 and the ld. CIT(A) also dealt with the statement of Shri Navin Kumar Saffar recorded during the course of assessment proceedings of Maxcab Industries Pvt Ltd. on 2.3.2023 which was also relied by the Assessing Officer. So far as the statement of Shri Deepak Goel is concerned , the ld. CIT(A) noted that the names of the loan creditors who lent money to the assessee were not appearing in the tabular chart extracted by the ALO on page no, 17 to 30 of the assessment order. According to the AO the loan creditors appearing in the chart extracted have lent money to the assessee and group company assessee. The ld. CIT(A) also recorded a finding that the seized incriminating material has no link with the assessee.The Ld. CIT(A) recorded at page 70 that it wasundisputed that the notices u/s 133(6) were not served on the loan creditors and that the Ld. CIT(A) had also called for a remand report from the Ld. Assessing Officer vide letter dated 12.08.2025, however, no reply was submitted by the Ld. Assessing Officer.The ld. CIT(A) after taking into account the contentions and submissions of the assessee and also by relying on various decisionsdeleted the addition as wrongly made by the Assessing Officer.Aggrieved thereby, the Revenue is in appeal before us.

10. The ld. DR while strongly relying on the order of ld. AO submitted that the AO has passed a very detailed order wherein the materials found during the course of search and statements of the directors and third party Shrui Navin Kumar Saffar were taking into account. The ld. DR submitted that based on the materials gather during search and statements the AO established that the assessee has taken accommodation entries to route its own money. The ld. DR therefore prayed that the order of ld.CIT(A) maybe reversed and that of AO may be restored.

11. Per contra , the Ld. A/R on the drew our attention to the fact that both creditworthiness and genuineness have already been tested and rejected by co-ordinate benches of this Hon’ble Tribunal, upon in the same search and the same materials, in DCIT v. Dailmer Industries Pvt. Ltd. (ITA No. 276/Kol/2025, 25.07.2025), DCIT v. Maxcab Industries Pvt. Ltd. (ITA No. 2590/Kol/2024, 16.10.2025), Lumino Industries Ltd. v. DCIT (ITA No. 2083/Kol/2025, 02.12.2025), DCIT v. Dailmer Industries Pvt. Ltd. (ITA Nos. 2921 & 2922/Kol/2025, 06.03.2026) and DCIT v. Lumino Industries Ltd. (ITA Nos. 2970 & 2971/Kol/2025, 16.07.2026) — in every one of which the case of the Revenue founded upon them failed. As to the excel file, its content stands explained upon the record: as recorded at paragraph 5.3 of the appellate order dated 22.10.2024 in Dailmer, upheld in ITA No. 276/Kol/2025, Shri Navin Kumar Saffar clarified the content of each column, explaining that the entries relate to the computation of interest, to tax deducted at source and to the finance broker’s commission, that the transactions are actual loan transactions and not accommodation entries and that the commission was borne by the lender; and this Hon’ble Tribunal itself recorded at paragraph 08 of its order dated 25.07.2025 that he confirmed in his statement recorded under section 131 recorded on 02.03.2023 that the loan transactions to be actual transactions.

12. It was further submitted by the Ld. A/R that qua all the five lenders, the assessee filed the MCA master datas, the ledger copies, date of repayments, the audited financial statements of the lenders, the loan confirmations and extracts of the bank statements and the Ld. CIT(A) found upon the Paper Book that each lender had a net worth far exceeding the loan advanced. The ld. AR submitted that all five loans were repaid in the subsequent financial years. Pr. CIT v. Ambe Tradecorp (P.) Ltd. 471 (Gujarat) holds that “once repayment of the loan has been established based on the documentary evidence, the credit entries cannot be looked into isolation after ignoring the debit entries despite the debit entries were carried out in the later years”, adding that an accommodation-entry case unsupported by factual data has “only presumptive and assumptive value”; that decision has been applied upon this very search in Dailmer, Maxcab and Lumino. The Hon’ble Calcutta High Court, in a number of cases, namely PCIT, Kolkata v. Rahul Premier India Agency Private Limited, ITAT/133/2025, IA No. GA/2/2025, vide order dated 05.08.2025; PCIT v. M/s Narayan Tradecom Pvt. Ltd. , in ITAT/76/2025, IA No. GA/1/2025, dated 10.06.2025; PCIT v. Alom Extrusions Ltd., ITAT/ 268/2024, IA No. GA/1/2024, GA/2/2024, dated 17.12.2024; PCIT v. M/s Edmond Finvest Pvt. Ltd. , in ITAT/28/2024, GA/2/2024, dated 26.02.2024; and PCIT v. Parwati Lakh Udyong, ITAT/ 2/2024, IA No. GA/1/2024, dated 19.02.2024, has held that where the assessee has filed all the evidences qua the loan creditors before the learned Assessing Officer and the loans are also repaid, the same cannot be added under section 68 of the Act. The ld. AR also referred to the finding of the Ld. CIT(A) recorded at page 70 that notices u/s 133(6) were not served on the loan creditors and for the same reason the Ld. CIT(A) had also called for a remand report from the Ld. Assessing Officer vide letter dated 12.08.2025 however, no reply was submitted by the Ld. Assessing Officer.

13. We have heard the rival contentions, perused the material available on record including the orders of the authorities below as well as the decisions relied upon by the assessee. We find that the Ld. Assessing Officer has himself recorded his satisfaction as to the identity of the five loan creditors and has doubted the creditworthiness without recording any finding as to why or upon what material it was doubted. We note that the genuineness was doubted solely upon the excel file alleged to be found in the laptop of Shri Navin Kumar Saffar and on the statements of Shri Deepak Kumar Goel and of certain other persons (not recorded during the search upon the assessee). We also note that the assessee had filed all the evidences qua the lenders namely the MCA master datas, the ledger accounts, proof of repayments, the audited financial statements, the loan confirmations and the bank statements etc . We also note that the AO has not pointed out any defect in the evidences filed by the assessee. We also note that the Ld. CIT(A) has recorded a finding that all loan creditors have the net worth which were more than the loans advanced and that each of the five loans stood repaid with interest after deduction of tax at source. We also note that so far as the excel file and the statements are concerned, the materials arising out of the same search have already been considered by the co-ordinate benches of this Tribunal in the group cases of Dailmer Industries Pvt. Ltd., Maxcab Industries Pvt. Ltd. and Lumino Industries Ltd. and have been held to be having no cogent basis for making addition under section 68 of the Act. We also note that the entries in the excel file having been explained as relating to the computation of interest, to tax deducted at source and the commission of the finance brokers borne by the lender. We also note that the lenders as discussed by the AO in the statements extracted in the assessment order are different from those who lent money to the assessee.We note that the alleged excel file has been explained at length during assessment proceedings and even statement under section 131 was recorded on 02.03.2023 from the said Navin Kumar Saffar regarding the alleged excel file which has been duly clarified by him. Considering these facts on records, we are of the considered view that the assessee has discharged the onus cast upon it by section 68 of the Act and the onus shifted to the Revenue which has not been discharged.

In the present case the assessee has filed all the evidences before the AO and ld. CIT(A) qua the loans creditors and established the repayments of loans made in the subsequent financial years. The AO has not pointed out any shortcomings or defect in evidences furnished by the assessee by conducting any enquiry. Considering the factual matrix of the case, we are of the considered opinion that no addition can be made u/s.68 of the Act on the ground that the assessee has failed to meet the ingredients of Section 68 of the Act. The case of assessee is squarely covered by the decisions of the Hon’ble Calcutta High court in number of cases namely Rahul Premier India Agency Private Limited (supra) vide order dated 05.08.2025, Narayan Tradecom Pvt. ltd. (supra), Alom Extrusions Ltd(supra), Edmond Finvest Pvt. ltd. (supra), Parwati Lakh Udyong,(supra). In all the above decisions the Hon’ble court has held that where the assessee has filed all the evidences qua the loan creditors before the ld. AO and loans are also repaid then the same cannot be added us/ 68 of the Act. Similarly, the case of assessee is squarely covered by the decision of the Hon’ble Gujarat High Court in the case of Pr. CIT v. Ambe Tradecorp (P.) Ltd. (Gujarat), wherein it has been held as under :-

“3. The issue in this case arose in respect of the assessment year 2012-2013. It appears that the two loan transactions of Rs. 8,50,00,000/- and Rs. 23,70,00,000/- received by respondent assessee from one M/s. J.A Infracon Private Limited and M/s. Satya Retail Private Limited were treated by assessing officer to be sham in the sense that the creditworthiness etc. of the giver of the loan were not established. Accordingly, the assessing officer made addition under section 68 of the Act.

3.1 While the assessing officer dealt with unexplained cash credit from the M/s. Satya Retail Private Limited and from M/s. J.A Infracon Private Limited in his order in paras 5.1 and 5.2 respectively, the Commissioner of Income-tax in the appeal preferred by assessee found on facts and the material before it that the said two cash creditors had been holding there identity, creditworthiness and genuineness in respect of the loan transactions.

3.2 The appellate authority observed that, “In this regard, it has been noticed that ledger accounts and confirmations of the aforesaid two parties have been provided by the appellant to the AO in the assessment proceedings. Thereafter, the AO also carried out the independent inquiries u/s. 133(6) of the I.T. Act and in compliance thereto both the companies have submitted the requisite information.”

3.3 The information supplied by assessee was duly noticed by appellate authority and facts in that regard were recorded also to arrive at a finding that the unsecured loans to the aforesaid parties have been paid by account payee cheques from the bank account of the assessee which was not in dispute, muchless in doubt. The accounts were finally settled with the repayment of the loan to the lender companies.

3.4 When the revenue preferred appeal before the Appellate Tribunal, the Tribunal confirmed the findings recorded by the Appellate Authority. The Tribunal referred to the decision of Durga Prasad More (82) ITR 540 and also in Sumati Dayal (214) ITR 801, to further record on the basis of the facts that the assessee had furnished the details such as copy of ledger account, bank statements, income tax returns, balance sheet etc. It was also recorded that notice under Section 133(6) of the Act was issued to the said parties which were duly responded by them. The identity of the parties could not be, therefore disputed, recorded the tribunal. The aspect was also noticed that the assessee was not beneficiary of the loan received by it and the loan was repaid by the assessee in the subsequent year. It led to unacceptable conclusion that the impugned transaction was a business transaction between the assessee and the loan parties and that they could not be doubted for their genuineness.

3.5 While the revenue has tried to put up a case that the transactions were in the nature of accommodation entries, this case has only presumptive and assumptive value not supported by any factual data. On the contrary, on the basis of the material before the authorities, the transactions were found to be genuine.

4. Learned advocate for the appellant attempted to emphasize that for the purpose of application of Section 68 of the Act, three ingredients were necessary. Firstly, identity of the parties to the transaction of loan, second is the creditworthiness of such parties and thirdly the genuineness of the transaction. It was submitted in vain that neither of the ingredients were satisfied.

5. As discussed above, since the requisite material was furnished by assessee showing the identity and since the assessee was not beneficiary when the loan was repaid in the subsequent year, even the ingredients of creditworthiness and genuineness of transaction were well satisfied.

6. The Tribunal rightly recorded in para 29 of the judgment,

“Once repayment of the loan has been established based on the documentary evidence, the credit entries cannot be looked into isolation after ignoring the debit entries despite the debit entries were carried out in the later years. Thus, in the given facts and circumstances, were hold that there is no infirmity in the order of the Ld. CIT-A. ”

7. For the reasons recorded above, no question of law much less substantial questions arises in this appeal. It stands meritless and accordingly dismissed.

14. Considering the facts of the case in the light of above decisions and also the facts that the materials seized during same search having been examined and tested by the coordinate benches in other group cases to be no basis for making addition u/s 68 of the Act, we find no infirmity in the order of the Ld. CIT(A). Accordingly, we uphold the appellate order by dismissing the appeal of the revenue.The ground nos. 2, 7 and 8 of the Revenue are dismissed.

15. The issue raised in ground no.3 is against the deletion of addition of Rs. 32,33,151/- by the Id. CIT (A) as made by the Id. AO on account of interest expenses of unsecured loans received from the sheII companies.

16. The facts reIating to ground 3 are that the assessee cIaimed interest paid to its Ienders as a deduction under section 36(1)(iii) of the Act. The Ld. Assessing Officer, at pages 60 and 61 of the assessment order, heId the interest paid to the companies appearing in the seized excel sheet to be “not genuine” and disallowed Rs. 32,33,151/-, the disaIIowance being consequentiaI upon the addition made under section 68 of the Act. The Ld. CIT(A) deIeted the disaIIowance at page 71 of his order and the Revenue is in appeaI upon ground 3.

17. The issue raised in the above ground no. 3 qua disaIIowance of interest of Rs. 32,33,151/- under section 36(1)(iii) of the Act is consequential to issue in ground no. 2, 7 and 8 supra wherein we have dismissed these grounds.Consequently the ground no. 3 of the revenue appeal is also dismissed.

18. The issue raised in ground nos.4 and 5 is against the deletion of addition of Rs. 19,62,037/- by CIT (A) as disallowed and added by the AO equal to 6% of total contractual payments made to shell companies.

19. The facts relating to grounds 4 and 5 are that the assessee, being engaged in manufacturing and of execution of rural electrification contracts which is labour intensive, made payments aggregating to Rs. 3,27,00,612/- for the supply of contractual labour to Siddhi Manpower Private Limited (Rs. 2,12,67,122/-) and Vaibhav Labour Contractors Private Limited (Rs. 1,14,33,490/-) after tax having been deducted at source under section 194C of the Act and payment having been made through banking channels. The Ld. Assessing Officer, while accepting that the payments were made and the work executed, held that the payments were not “completely genuine” and made an ad-hoc disallowance of 6% thereof, being Rs. 19,62,037/-, on presumptions and surmise.

20. The Ld. CIT(A) deleted the disallowance after taking into account the submissions and contentions of the assessee by observing and holding as under:

“In my view, after analysing all the above issues and rebuttals, it can be concluded that the principle laid down in law “that suspicion, however grave may appear, cannot take the place of legal evidences”, has been overlooked by the Assessing Officer in the instant case. Though all the documents and explanations have been duly submitted by the appellant company but the Assessing Officer has not properly appreciated the same. The contractual parties have duly complied with the notice issued under 133(6) of the Act along with relevant documents. Particulars of PF/ESI payments for labour charges paid by the aforesaid two parties were submitted at the assessment hearing stage. Further, copy of Employee Master Rolls and biometric register of each labour with reconciliation of total attendance was also submitted at the assessment hearing stage. There have been no specific findings against the aforesaid documents by the Assessing Officer. There has been no specific rebuttal or objection raised by the Assessing Officer for any issue against which the appellant company had provided an explanation. Even otherwise, while passing the assessment order, the Assessing Officer had made addition on estimated basis. The Assessing Officer had not questioned the genuineness of transactions entered by the appellant company with SMPL and VLCPL but had arbitrarily made addition of 6% of total payments made to SMPL and VLCPL. On the basis of discussions above, Ground no. 2 is decided in favour of the appellant. Hence, this ground is treated as ALLOWED.”

21. We have heard the rival contentions and perused the materials on records. We note that the assessee has engaged the labour through contractors for carrying out its projects. We note that the payments were made to parties who supplied labour to the assessee after deduction of tax at source. The assessee has filed all the details and evidences before the authorities below qua the labour payments. We even note that the AO in order to independently verify the payments also issued enquiry letters u/s 133(6) of the Act which were duly responded by both the parties along with all evidences as called for by the Assessing Officer. We note that the books of account were never rejected under section 145(3) of the Act in any of the six years and no defect was found in the audited financial statements and the audited results were left undisturbed, so that an estimate is without jurisdiction. An ad-hoc disallowance made merely to guard against a supposed leakage of revenue is not permissible in law. Despite that the AO made disallowance of Rs. 19,62,037/-, being 6% of the contractual payments made to SMPL and VLCPL which in our opinion is wrong and was rightly deleted by the ld. CIT(A). Consequently, we uphold the order of ld. CIT(A) on this issue by dismissing the ground no. 3 of the revenue appeal.

22. The issue raised in ground no.6 is against the deletion of addition of Rs. 5,04,969/- by CIT (A) as made by the ld. AO on account of disallowance and addition equal to 6% of the total contractual payments made tothree persons who are non-filer stop/filers and ignoring the facts that such expenses could not be verified as no replies were received u/s 133(6) of the Act during the course of assessment proceedings.

23. The facts relating to ground 6 are that the assessee made payments aggregating Rs. 84,16,154/- to three contractors who, according to the Ld. Assessing Officer, had not filed their returns of income. The findings of the Ld. Assessing Officer appear at page 88 of the assessment order extracted as under:

“3. During the course of assessment proceedings, the assessee company has submitted evidences such as ledger copy of parties, sample bills, work orders, TDS certificate, KYC documents such as Aadhar Card, PAN Card etc. Further, the assessee has submitted copy of 206AB report downloaded from income tax portal with respect to those parties to establish that none of the parties are specified person and the assessee is engaged in EPC business and has taken the services of contractors for such business and it is not possible to carry out such business without the help of the contractors.”

24. Again, at page 89 of the assessment order, the Ld. Assessing Officer has observed that, to avoid any leakage of revenue, an ad-hoc disallowance of 6% thereof, being Rs. 5,04,969/-, was made.

25. The Ld. CIT(A) deleted the disallowance at pages 50 to 55 of his order on the ground that the adhoc disallowance was not permissible under the Act. After hearing both the parties we note that a disallowance of Rs. 5,04,969/-, being 6% of payments of Rs. 84,16,154/- made to three parties was made for the reasons that alleged parties were non-filers.We note that in his concluding paragraph, the Ld. Assessing Officer noted that the evidences, the ledgers, the sample bills, the work orders, the TDS certificates, the KYC documents and the reports under section 206AB of the Acthad been submitted and it is not possible to carry out EPC business without contractors. We note that the AO disallowed 6% towards profit element embedded in this payment. The Ld. CIT(A) after taking into account all evidences qua the three parties, recorded a finding that the disallowance made was purely on adhoc and arbitrary basis. The genuineness of the expenditure was never displaced, the Ld. Assessing Officer having accepted that the payments were made, the services received and the expenditure incurred wholly for business and having thereupon disallowed an arbitrary 6% of it. The books of account were never rejected under section 145(3) of the Act in any of the six years, no defect was found in the audited financial statements and the audited results were left undisturbed, so that an estimate is without jurisdiction. An ad-hoc disallowance made merely to guard against a supposed leakage of revenue is not permissible in law. The Ld. CIT(A) has held that “suspicion, however grave it may appear, cannot take the place of legal evidence”, that the Ld. Assessing Officer “has erred in disallowing 6% of contractual expenses on estimated basis and that the disallowance was adhoc and arbitrary.

26. We have given our careful consideration to the rival submissions upon the estimated disallowance of contractual payments. The Ld. Assessing Officer has himself recorded in the assessment order that the assessee produced the bank book, the summary of creditors with ledger copies, the agreements, the summary of sub-contracting of labour, the PF and ESI records, the attendance register and the KYC documents of the sub-contractors hired by the two labour suppliers and that “it is not possible to carry out such manufacturing and erection work without the help of the labours”, the income from that very work having been brought to tax. Having so found, he yet proceeded to disallow 6% of the payments upon an estimate. We find that the books of account were not rejected under section 145(3) of the Act, that no defect was found in the audited financial statements and that the audited turnover, gross profit and net profit were left undisturbed; and every allegation levelled against the two labour suppliers was examined by the Ld. CIT(A) and answered upon the material on record, the notices issued under section 133(6) of the Act having been duly complied with, the MCA master data evidencing the addresses, the Ld. Assessing Officer’s own show cause notice showing the directors to be regular filers and the Ld. Assessing Officer of one of the suppliers being the very same officer, who made no adverse observation in its own assessment. An estimate made in these circumstances rests upon no material at all and appears to have been made only to guard against a supposed leakage of revenue, which is not a ground known to law; an ad hoc disallowance without rejection of the books cannot be sustained. We therefore see no reason to interfere with the finding of the Ld. CIT(A) that the Ld. Assessing Officer “has erred in disallowing 6% of contractual expenses on estimated basis” and that the disallowance is “adhoc and arbitrary. The deletion of Rs. 5,04,969/- is accordingly upheld and ground no. 6 of the Revenue is dismissed.

CO No. 24/KOL/2026

27. The assessee has raised a legal issue challenging the notice u/s 148 of the Act to be invalid which is not being decided at this stage and is left open to be adjudicated if need arises for the same in future

28. The other grounds raised by the assessee are in support of the order of ld.CIT(A). Since we have upheld the order passed by the ld. CIT(A), therefore these grounds become infructuous and are dismissed. The cross objection is partly dismissed.

29. In the result, the appeal of the Revenue in ITA No. 2790/Kol/2025 is dismissed and Cross Objection is partly dismissed.

A.Y. 2018-19

ITA No. 2791/Kol/2025 &CO No. 25/KOL/2026

30. The issues raised in ground nos. 2, 3 ,4,5,6 & 8 are similar to one as decided by us in ITA No. 2790/KOL/2024. Accordingly, our decision would, mutatis mutandis, apply to these grounds in ITA No. 2791/KOL/2025 as well. Hence, the grounds no. 2, 3 ,4,5,6 & 8 of the revenue appeal are dismissed by upholding the order of ld. CIT(A) on the respective issues.

31. The issue raised in ground nos. 7 and 9 is against the order of ld. CIT (A) deleting the addition of Rs. 50.00 lacs as made by the ld. AO in respect of cash loans taken by the assessee on the basis of documents found and seized during search operation on the finance brokers corroborated by rukas and statements recorded during the course of search.

32. The facts relating to ground 7, which arises for the first time in this year, are that in a search conducted on 30.11.2018 upon the Sanwaria and Kasera group, certain money receipts were seized and the statements of Shri Praveen Kumar Kasera (02.12.2018) and of Shri Jai Bhagwan Agarwal (01.12.2018) were recorded. Upon a money receipt dated 01.08.2017 for Rs. 50,000/- bearing the initials “GB”, the Ld. Assessing Officer treated the same as Rs. 50,00,000/-, on the assumption that the alleged money receipt found in the custody of a third party represents a suppression of two zeroes. The Ld. Assessing Officer made an addition of Rs. 50,00,000/- under section 69D of the Act. The Ld. CIT(A) deleted the addition at pages 83 to 87 of his order and the Revenue is in appeal upon ground 7.

33. In the instant year, the loan was taken from Bonai Hi-Rise Private Limited (PAN: AAECB9093R), whose MCA master data, ledger copy for the financial years 2017-18 to 2021-22, financial statements, bank statement and loan confirmation were filed. The net worth of the said party was much higher than the loan advanced by it. Decisively, when the Ld. CIT(A) called for the fate of the notice issued under section 133(6) of the Act by writing to the Ld. Assessing Officer on 11.07.2024, he was informed that the lender had submitted its reply online on 15.07.2024, confirming the advance in five tranches between 20.11.2017 and 28.11.2017, interest of Rs. 1,57,562/- with tax deducted at source of Rs. 15,755/- and full repayment, enclosing its balance sheet, profit and loss account, return of income and bank statement. In view of our conclusion after detailed analysis for AY 2017-18 above, the facts being more or less similar to the instant year, the deletion of Rs. 50,00,000/- is upheld and ground nos. 2, 8 and 9 of the Revenue are dismissed.

34. The addition of Rs. 50,00,000/- under section 69D of the Act, which arises for the first time in this year, rests upon a single alleged money receipt dated 01.08.2017 for Rs. 50,000/- said to have been received from “GB”, read as Rs. 50,00,000/-upon a theory of “two-zero suppression”, together with the statements of Shri Praveen Kumar Kasera (02.12.2018) and Shri Jai Bhagwan Agarwal (01.12.2018) recorded in a search upon the Sanwaria/Kasera group on 30.11.2018. The alleged document was not found in the search upon the assessment all, but from the custody of a third party in a search upon a different group more than three years earlier. At the assessment as well as at the appellate stage, the assessee denied taking the alleged cash loan of Rs. 50,00,000/-. Reference was made to the alleged statement of Shri Praveen Kumar Kasera and Shri Jai Bhagwan Agarwal wherein there was no specific allegation against the assessee. We find that the Ld. CIT(A) called for a specific clarification from the Ld. Assessing Officer during the appellate proceedings vide letter dated 08.08.2025. In such letter, it was specifically asked whether any document was found during the search on the assessee’s premises which could lead to inference regarding cash loan taken by it. Further, some more clarifications were asked for. However, the Ld. Assessing Officer chose not to reply to the aforesaid letter of the Ld. CIT(A).

35. On examination of the records, it is observed that when the Ld. CIT(A) called for that information no reply was furnished. The name of the assessee appears nowhere in the statements. The Ld. CIT(A) having recorded that he has himself perused them and finds no specific observations against the appellant company and that the name of the appellant company does not appear in any part of the statements of the third parties and that they contain no question at all upon the alleged receipt.

36. The Ld. CIT(A) has elaborately discussed the findings made in the assessment order. It is seen that no specific question was put under section 132(4) of the Act during the search upon the premises of the assessee with respect to the alleged seized document, which was said to have been found at the premises of a third party much before the search upon the premises of the assessee. No statement was recorded during the assessment proceedings. No opportunity to cross-examine was afforded during the assessment hearing stage. The name of the assessee does not feature in the alleged statements recorded from the parties in whose custody the alleged documents were found. The Ld. CIT(A) has relied upon various judgments, including the judgment of the jurisdictional High Court in Girdhar Gopal Dalmia v. Union of India 451 ITR 320 (Calcutta), wherein it was held that it was not permissible to draw adverse inference based on presumptions. In that case also, an adverse inference regarding an alleged cash loan was drawn upon surmise and suspicion, and the entire proceedings were quashed by the Hon’ble Court. In our view, the Ld. CIT(A) has discussed the issue at length and afforded a second round of opportunity to the Ld. Assessing Officer to give any further clarification to justify the addition.

37. We have heard the rival contentions and perused the materials on records .We note that Ld. CIT(A), recorded a finding that upon a perusal of those statements, that there were “no specific observations against the appellant company”, that “the name of the appellant company does not appear in any part of the statements of the third parties”. The ld. CIT(A) also noted that no question was put to any assessee about the alleged receipt and that no opportunity of cross-examination was afforded. We even not that ld. CIT(A) called for a remand report which was not submitted by the AO and having further regard to the fact that the Ld. Assessing Officer chose not to reply to the letter of the Ld. CIT(A) as mentioned above, we find no infirmity in the appellate order passed by the Ld. CIT(A). Consequently, the order of ld. CIT(A) is upheld and the ground no. 7 of the Revenue appeal is dismissed.

38. The counsel of the assessee raised a additional legal issue which is extracted as under :

” That the addition made by the AO of F 50,000/- is based on the material found during the course of search on Sanwaria and Kasera group on 30.11.2018 and therefore the addition can only be made in assessment framed u/s 153C and not u/s 147/143(3) of the Act and not otherwise.

39. After hearing the rival contentions and perusing the material on record, we find that the assessee has raised the above additional ground of appeal challenging the jurisdiction of the AO to make addition. In our opinion the issued raised in the additional ground is a purely a legal issue qua which all the facts are available in the appeal folder and no further verification of facts is required from any quarter whatsoever. In our considered view the assessee is at liberty to raise any\ legal issue before any appellate authority for the first time even when the same has not been raised before the lower authorities. The case of the assessee is squarely covered by the decisions of the Apex court in the case of (i) Jute Corpn. of India Ltd. v. CIT [1991] 187 ITR 688 (SC), (ii) National Thermal Power Co. Ltd. v. CIT 229 ITR 383 (SC) and also by the decision of Hon’ble Calcutta High Court in PCIT v. Britannia Industries Ltd. 396 ITR 677 (Calcutta). Therefore we are inclined to admit the same for adjudication

40. We have heard the rival contentions and perused the materials as placed before us. It is undisputed that the addition of Rs. 50,00,000/- was based upon the materials found and seized during third party search i.e. the material / the statements recorded in the search of 30.11.2018 upon the Sanwaria and Kasera group. Where income is sought to be assessed upon such material, the Act provides a special and exclusive machinery in section 153C, which starts with a non-obstante clause and overrides the provisions of sections 147 and 148 of the Act. The Ld. Assessing Officer of the searched person must record his satisfaction and hand over the material and the Ld. Assessing Officer of the other person must record his own satisfaction before proceeding, neither of which is shown to have been done here. Therefore the addition made by the AO lacks lawful jurisdiction. The case of the assessee is squarely covered by a series of decisions namely (i) in DCIT v. Nawal Kumar Kanodia (ITA No. 1952/Kol/2025, A.Y. 2019-20), where a notice under section 148 issued on 30.03.2023 and the reassessment framed on 29.03.2024 adding Rs. 2.08 crores under section 69A of the Act upon the very same seized material were held to be bad, the Bench holding that the proceedings “should have been initiated under Section 153C, which is the special provision provided under the Act and overrides the other provisions” (ii) Sri Dinakara Suvarna v. DCIT [2023] 454 ITR 21 (Karnataka) (special leave petition dismissed, Dy. CIT v. Sri Dinakara Suvarna 454 ITR 27 (SC) (iii) Shyam Sunder Khandelwal v. Asstt. CIT (Rajasthan) (iv) Sejal Jewellary v. Union of India . The same view has since been taken by this Hon’ble Tribunal in Maan Steel & Power Limited v. DCIT, Central Circle-1(2), Kolkata, ITA Nos. 1167, 2354, 1096 & 2609/Kol/2025, order dated 26.06.2026, upon material emanating from a search upon another group, where it was held —

“Therefore, the re-opening of assessment under section 147 read with section 148 of the Act as well as the consequent assessment framed under section 147 are nullity and bad in law and cannot be sustained.”

41. Therefore, we are inclined to hold that the addition was without jurisdiction and has to deleted. The additional legal issued raised by the assessee is allowed.

CO No. 25/KOL/2026

42. The assessee has raised a legal issue challenging the notice u/s 148 of the Act to be invalid which is not being decided at this stage and is left open to be adjudicated if need arises for the same in future

43. The other grounds raised by the assessee are in support of the order of ld.CIT(A). Since we have upheld the order passed by the ld. CIT(A), therefore these grounds become infructuous and are dismissed. The cross objection is partly dismissed.

44. In the result, the appeal of the Revenue in ITA No. 2791/Kol/2025 is dismissed and Cross Objection No. 25/KOL/2026 is partly dismissed and additional ground is allowed.

A.Y. 2019-20

ITA No. 2792/Kol/2025 &CO No. 26/KOL/2026

45. The issue raised in grounds 2, 8 and 9 by the revenue is against the deletion of addition of Rs. 18,20,00,000/- by Id. CIT(A) as made by the AO in respect of unsecured loans by treating the same as unexplained cash credit us/ 68 of the Act.

46. The facts relating to grounds 2, 8 and 9 are that the assessee received unsecured loans aggregating Rs. 18,20,00,000/-from two loan creditors namely M/S Manish Company Pvt. Ltd. and Vikram Financial Services Ltd. The Ld. Assessing Officer treated the sum as unexplained cash credit under section 68 of the Act and the Ld. CIT(A) deleted the addition at pages 118 to 126 of his order and the Revenue is in appeal upon grounds 2, 8 and 9.

47. In the instant year, the two lenders are Manish Company Pvt. Ltd. and Vikram Financial Services Ltd, whose MCA master data, ledger copies, audited financial statements, bank statements and loan confirmations were filed. The net worth of each of the said parties was much higher than the loan advanced by it, and the said loans were repaid with interest in the subsequent financial years.

48. The above issue raised in ground nos. 2, 8 and 9 of the Revenue are similar to one as decided by us in ITA No. 2790/Kol/2025 A.Y.2017-18 wherein we have upheld order of ld. CIT(A) on this issue by dismissing the ground no. 2, 7 and 8 of the revenue appeal. Therefore, applying our decision in ITA No. 2790/Kol/2025 A.Y.2017-17, the deletion of Rs. 18,20,00,000/- by ld. CIT(A) is upheld by dismissing the ground nos. 2, 8 and 9 of the Revenue’s appeal.

49. The issue raised in ground 3, qua the deletion of disallowance of interest of Rs. 86,75,095/- under section 36(1)(iii) of the Act being consequential upon the addition under section 68 of the Act which has been deleted by ld. CIT(A) and affirmed by us supra in ground no. 2,8 and 9 by dismissing the revenue appeal on these grounds. Consequently, the deletion of Rs. 86,75,095/- is upheld and ground no. 3 of the Revenue is dismissed.

50. As regards grounds 4 and 5, the Ld. Assessing Officer has made ad-hoc disallowance of 6% of payment made to two parties namely SMPL and VLCPL amounting to Rs. 88,51,471/-, upon the same reasoning as in the lead year. The Ld. CIT(A) deleted the disallowance at pages 104 to 109 of his order and the Revenue is in appeal upon grounds 4 and 5.

51. The allegations, the material, the parties and the findings are identical to the lead year i.e., AY 2017-18. For the reasons recorded for AY 2017-18, the ad-hoc disallowance of Rs. 88,51,471/-, which has been deleted by the Ld. CIT(A), is found to be in order and ground nos. 4 and 5 of the Revenue are dismissed. Consequently following our decision in the ground no 4 and 5 in 2790/Kol/2025 A.Y. 2017-18, the ground nos. 4 and 5 are dismissed.

52. The issue raised in ground 6, the Ld. is against the deletion of ad-hoc disallowance by ld. CIT(A) as made by the AO equal 6% being Rs. 64,83,226/- aggregate payments made to thirty-three contractors alleged to be non-filers. The Ld. CIT(A) deleted the disallowance at pages 109 to 118 of his order and the Revenue is in appeal upon ground 6.

53. We note that the issue raised in this ground no. 6 is similar to one as decided by us in ground no. 6 in in 2790/Kol/2025 A.Y. 2017-18. Following our decision we uphold the order of ld.CIT(A) on this issue by dismissing ground no.6 6 of the Revenue’s appeal.

54. The facts relating to ground 7 are that two money receipts dated 23.07.2018 and 23.11.2018 for Rs. 1,00,000/- and Rs. 50,000/- were seized in the same search of 30.11.2018 upon the Sanwaria and Kasera group. The Ld. Assessing Officer treated the same as representing Rs. 1,50,00,000/-, on the assumption that the alleged money receipts found in the custody of a third party represent a suppression of two zeroes and made an addition of Rs. 1,50,00,000/- under section 69D of the Act. The Ld. CIT(A) deleted the addition at pages 126 to 132 of his order and the Revenue is in appeal upon ground 7.

55. We note that the issue is similar to one as decided by us in ground no.7 in 2791/Kol/2025 A.Y. 2018-19. The allegations and the findings are identical to those considered for AY 201819 wherein we have upheld the order of ld. CIT(A) on this issue b y dismissing the ground no. 7 in 2791/Kol/2025 A.Y. 2018-19. Therefore, our decision would the issue raised in this appeal is similar to one as decided by us in ITA No. 1034/KOL/2024. Accordingly, our decision would, mutatis mutandis, apply to this appeal of assessee in ITA No.2792/Kol/2025 A.Y. 2019-20. The ground no, 7 is accordingly dismissed by upholding the order of ld. CIT(A).

56. The additional ground on legal issue raised by the assessee qua the jurisdiction of the AO to make addition of Rs. 1,50,00,000/- based on the material found during third party search is identical to one as decided by us A.Y. 2017-18 wherein he have held that in case of third-party search prior to 1.4.2021, the addition can be made by the AO in the assessment framed u/s 153C and not otherwise.Accordingly the additional ground is admitted and allowed.

57. In the result, the appeal of the Revenue in ITA No. 2792/Kol/2025 is dismissed and Cross Objection No. 26/KOL/2026 is partly dismissed and additional ground is allowed.

A.Y. 2020-21

ITA No. 2793/Kol/2025 &CO No. 27/KOL/2026

58. The issue raised in ground Nos. 1, 8 and 9 by the revenue is against the deletion of Rs. 1,00,00,000/- as made by the AO under section 68 of the Act.In the instant year, the assessee received an unsecured loan of Rs. 1,00,00,000/- from Manish Company Pvt. Ltd., whose MCA master data, ledger copy, financial statements, bank statement and loan confirmation were filed. The net worth of the said party was much higher than the loan advanced by it. The said loan was repaid with interest.

59. Therefore issue in these grounds 1, 8 and 9 is similar to one as decided by us in grounds nos. 2, 7 and 8 in ITA No.2790/Kol/2025 A.Y. 2017-18 wherein we have upheld the order of ld. CIT(A) on the issue by dismissing the ground nos. 2, 7 and 8 raised by the revenue. Accordingly, our decision on the grounds no. 2,7, and 8 shall apply to these grounds as well. Consequently, we up hold the order of ld. CIT(A) by dismissing the ground nos.1, 8 and 9 in revenue appeal.

60. The ground no. 2 which is against the deletion of addition as made by the Assessing Officer by disallowed Rs. 2,56,43,443/- under section 36(1)(iii) of the Act. The issue is consequential to ground no. 1, 8 and 9 above and accordingly the order of ld. CIT(A) is upheld on this issue by ground no2 of the revenue appeal.

61. The issue raised in grounds 3 and 4 by the revenue is against the deletion of addition by ld. CIT(A) as made by the Assessing Officer on ad-hoc disallowance of 6% of payment made to two parties namely SMPL and VLCPL amounting to Rs. 84,22,997/-

62. The issue is similar to one as decided by us in ground no, 4 and 5 in ITA No.2790/Kol/2025 A.Y. 2017-18 . Applying our decision in ground 4 and 5 ITA No.2790/Kol/2025 A.Y. 201718 , to ground no 3 and 4 are dismissed by upholding the order of ld. CIT(A) on this issue.

63. The issue raised in ground no. 5 is similar to one as decided by us in ground no, 6 in ITA No.2790/Kol/2025 A.Y. 2017-18 . Applying our decision in ground 6 in ITA No.2790/Kol/2025 A.Y. 2017-18 to this ground , the ground no 5 is dismissed by upholding the order of ld. CIT(A) on this issue.

64. The issue raised in ground no. 6 by the revenue is against the deletion of addition by ld. CIT(A) of Rs. 2,10,74,800/- as made by the AO under section 37(1) of the Act. Further, the Ld. Assessing Officer has also added Rs. 6,32,244/- under section 69C of the Act as estimated commission at the rate of 3% on the said amount which is also under challenge before us.

65. The facts relating to ground 6 are that during the search proceedings on the assessee, some documents were found and seized, copy of which have been extracted at Page 97 of the assessment order. In the assessment order, reference has been made to the alleged statement of one Shri Krishna Pada Raut, director of Maxcab Industries Limited. Further, reference has been made to a statement recorded from Shri Navin Kumar Saffar, CFO of the assessee. In the order of the Ld. CIT(A) as well as in the order of this Tribunal in ITA No. 2380/Kol/2025, it has been held that the statement of Shri Krishna Pada Raut, director of Maxcab Industries Limited, has no relevance in the instant proceedings. The relevant seized document has a link with the transactions of the assessee with Eppeltone Engineers Pvt. Ltd. (EEPL), and there is no involvement of Maxcab Industries Limited in the instant case. This was duly clarified during the assessment proceedings as evident from Page 98 to 102 of the assessment order.

66. The assessee had purchased goods from Eppeltone Engineers Pvt. Ltd. amounting to Rs. 2,10,74,800/- during the instant year. It was submitted by the assessee that the said purchases were made for EPC projects in Ganjam, Orissa. Further, the assessee had submitted copies of invoices, copies of Lorry Receipts, copies of E-way Bills generated, copies of MRN (Material Receipt Notes), copy of bank statement etc. to establish that the transactions were genuine and not bogus. It is also evident from the records that the invoices generated contained GSTIN number of both seller (EEPL) and buyer (LPIPL) and upon generation of such invoices the consignment was delivered at the site where the assessee was engaged in doing work. All the goods were delivered on the basis of the “Bill to – Ship to” model, the invoices being raised in the name of the assessee. The goods passed through inter-state check posts vide the E-way bills generated for the transportation purposes.

67. The Ld. CIT(A), at pages 188 to 191 of his order, deleted Rs. 1,10,74,800/- and the commission and sustained Rs. 1,00,00,000/-. The Revenue is in appeal against the aforesaid deletion of Rs. 1,10,74,800/- and Rs. 6,32,244/- respectively. It has been pointed out to us that the assessee had filed an appeal against the aforesaid addition of Rs. 1,00,00,000/-which was confirmed by the Ld. CIT(A). The said addition has been deleted by this Tribunal in the assessee’s own case in ITA No. 2380/Kol/2025, which was allowed by order dated 27.03.2026.

68. We have heard the rival contentions, perused the material available on record including the orders of the authorities below as well as the decisions relied upon. In the instant case, the issue of the purchases made from Eppeltone Engineers Pvt. Ltd. and of the commission stated to have been paid thereon is covered against the Revenue by the order of this Tribunal in the assessee’s own appeal for this very year in ITA No. 2380/Kol/2025 dated 27.03.2026, whereby it was held that the transactions were carried out through banking channels, that the invoices, lorry receipts, e-way bills and material receipt notes leave no doubt that the goods were delivered at the site and that the notings in the seized documents are rough notings as to estimated site expenses from which the supplier was claiming the commission of its own agent and that the statement relied upon has no relevance;. The addition sustained to the extent of Rs. 1,00,00,000/- was thus deleted in the said order. Thus, the purchases being genuine, there is no scope for making an addition of Rs. 1,10,74,800/- forming part of the total purchase figure of Rs. 2,10,74,800/-. The purchases being genuine, the further addition of Rs. 6,32,244/- made under section 69C of the Act towards commission, being 3% of the very same purchases is held to be genuine. The deletions are upheld and ground no. 6 of the Revenue is dismissed.

69. The ground no. 7is against the deletion of addition of Rs. 40,03,85,700/- by ld. CIT(A) as made under section 50CA of the Act by the AO.

70. The facts in brief are that The AO treated the buyback of shares worth Rs. 40,03,85,700/- as a taxable transaction. The case of the assessee is that the Ld. Assessing Officer has erred in treating the buy back as a taxable transaction though any income on such buy back of shares is exempt under section 10(34A) of the Act in the hands of the person who lodges shares for buyback. The buyback distribution tax is payable by the company buying back its shares under section 115QA of the Act. Even otherwise, there is no provision for computing the deemed buy-back value under section 115QA of the Act. The assessee has further submitted before the Ld. Assessing Officer that such buyback of shares was pursuant to scheme of arrangement sanctioned by the Hon’ble National Company Law Tribunal, Kolkata and as such it is tax neutral under section 47 of the Act.

71. The assessee held 42,90,000 equity shares of Rs. 10/- each of Lumino Industries Limited, a group company. The said group company passed a Special Resolution in its Extra Ordinary General Meeting on 11.03.2020 to offer to buy back its shares at Rs. 13.50 per share. Such EGM was followed by issue of notice to all its equity share holders and the said company opened a buy back bank account titled “Lumino Industries Limited – Buyback” with Canara Bank, Corporate Branch, Kolkata. The assessee lodged all 42,90,000 equity shares held by it for buy back and received Rs. 5,79,15,000/- as buyback proceeds. Such buyback happened to be an integral part of a scheme of arrangement sanctioned by the Hon’ble National Company Law Tribunal, Kolkata. The said Lumino Industries Limited had paid the additional income tax upon the distributed income under section 115QA of the Act. Evidences of such buyback distribution tax were submitted during assessment proceedings as well as forms part of Paper Book.

72. The assessee in the instant assessment year, the profit on such buyback transactions was claimed as exempt under section 10(34A) of the Act. While passing the assessment order, the Ld. Assessing Officer observed that such buyback has not been done at the book value. He computed the book value at Rs. 106.83 per share and came to the conclusion that the difference between the buyback price and the book value, being Rs. 93.33 per share and amounted to Rs. 40,03,85,700/-, should be brought to tax under section 50CA of the Act.

73. The Ld. CIT(A) deleted the addition after taking into account the submissions of the assessee from pages 200 to 207 of appellate order.

74. The ld. DR submitted that no document had been submitted at the assessment stage to establish that buyback distribution tax was paid by Lumino Industries Limited. At this stage, the Ld. AR submitted that the said Lumino Industries Limited had paid buyback distribution tax. Copy of the confirmation of the samewas forming part of Paper Book. The Ld. AR further drew our attention to the fact that the assessment for the said Lumino Industries Limited for the instant year was framed simultaneously by the same Ld. Assessing Officer and necessary examination was done with respect to buyback of shares in the hands of Lumino Industries Limited.

75. The Ld. AR further submitted that, as far as the assessee is concerned, the provisions of section 50CA of the Act would not apply, especially in the case of a buyback of shares, for which there is a special Chapter to tax the same. It was pointed out that any income arising to an assessee being a shareholder, on account of buyback of shares by a company is exempt under section 10(34A) of the Act. It was also pointed out that section 115QA specifically provides that tax on buyback of shares has to be paid by the company which is purchasing its own shares as a buyback in accordance with the provisions of Companies Act. In other words, the tax on distributed income on buyback of shares has to be paid by the company which is purchasing its own shares and it is exempt in the hands of the shareholder who is offering such shares for buyback in terms of section 10(34A) of the Act. It was also pointed out that there is no scope of applicability of section 50CA of the Act. Reference has been made to the judgments of the Hon’ble Delhi High Court in Pr. CIT v. Globe Capital Market Ltd. [2026] 185 487 ITR 744 (Delhi), Vora Financial Services (P.) Ltd. v. Asstt. CIT 171 ITD 646 (Mumbai), VITP (P.) Ltd. v. DCIT 197/[2023] 175 SCL 181 (SC), DCIT v. Venture Lighting India Ltd. , (Chennai – Trib.) and Lupin Investments (P.) Ltd. v. DCIT, (Mumbai – Trib.).

76. We have heard the rival contentions and perused the materials on records including the decisions cited before us. Section 10(34A) of the Act, as applicable to the relevant assessment year, exempts income arising to a shareholder on account of buy-back referred to in section 115QA. Such exempt income falls in Chapter III, whereas the taxability of capital gains falls in Chapter IV. It is a cardinal principle that the same income cannot fall under both chapter. Once the Act provides by section 115QA for additional income tax upon the distributed income in the hands of the company, the receipt is taken out of charge in the hands of the shareholder and section 50CA, being a machinery provision for computing the full value of consideration, cannot operate where there is no chargeable capital gain at all.

77. There is no dispute that the said Lumino Industries Limited has paid buyback distribution tax under section 115QA of the Act. It is seen that the assessment of the said Lumino Industries Limited for the same year was framed simultaneously by the very same Ld. Assessing Officer.

78. Section 10(34A) covers within its ambit any income arising to an assessee, being a shareholder, on account of buyback of shares. Thus, even if the assessee had received any additional income on account of the buyback of shares, such additional income would also have been exempt. There is no dispute that the aforesaid transaction falls within the purview of section 115QA read with section 10(34A) of the Act. Thus, as far as the assessee is concerned, there is no scope for applying section 50CA to the impugned transaction. Accordingly, we are in agreement with the decision of the Ld. CIT(A) on this issue. Therefore, we uphold the order of ld. CIT(A) on this issue by dismissing the ground no. 7 of the Revenue’s appeal.

CO No. 27/KOL/2026

79. In the CO , the assessee has raised a legal issue challenging the notice u/s 148 of the Act to be invalid which is not being decided at this stage and is left open to be adjudicated if need arises for the same in future

80. The other grounds raised by the assessee are in support of the order of ld.CIT(A). Since we have upheld the order passed by the ld. CIT(A), therefore these grounds become infructuous and are dismissed. The cross objection is partly dismissed.

81. In the result, the appeal of the Revenue in ITA No. 2793/Kol/2025 is dismissed and Cross Objection No. 26/KOL/2026 is partly dismissed.

A.Y. 2021-22

ITA No. 2794/Kol/2025 & CO No. 28/KOL/2026

82. The issue raised in ground nos. 1, 5 and 6 by the revenue is against the deletion of Rs. 7,30,00,000/- by ld.CIT(A) as made by the AO under section 68 of the Act on account of unsecured loans. The unsecured loans were taken from Flower Trading and Investment Co. Ltd., M/S Nyctea Trading Pvt. Ltd., Indian Infotech and M/S Software Ltd. and Strategic Vincom Pvt. Ltd. The Ld. Assessing Officer treated the same as unexplained cash credit under section 68 of the Act. The Ld. CIT(A) deleted the addition at pages 52 to 64 of his order and the Revenue is in appeal upon grounds 1, 5 and 6.

83. In the instant year, the lenders are Flower Trading and Investment Co. Ltd., Nyctea Trading Pvt. Ltd., Indian Infotech and Software Ltd. and Strategic Vincom Pvt. Ltd., whose MCA master data, ledger copy, financial statements, bank statement and loan confirmation were filed. The net worth of each of the said parties was much higher than the loan advanced by it, and the said loans were repaid with interest.

84. Therefore issue in these grounds 1, 5 and 6 is similar to one as decided by us in grounds nos. 2, 7 and 8 in ITA No.2790/Kol/2025 A.Y. 2017-18 wherein we have upheld the order of ld. CIT(A) on the issue by dismissing the ground nos. 2, 7 and 8 raised by the revenue. Accordingly, our decision on the grounds no. 2,7, and 8 shall apply to these grounds as well. Consequently, we up hold the order of ld. CIT(A) by dismissing the ground nos.1, 5 and 6 in revenue appeal.

85. The issue raised in the above grounds are similar to one as decided by us in ground no. in ITA No. 2791/Kol/2025 A.Y. 2017-18.In view of our conclusion after detailed analysis for AY 2017-18 above, the facts being more or less similar to the instant year, the deletion of Rs. 7,30,00,000/- is upheld and ground nos. 1, 5 and 6 of the Revenue are dismissed.

86. The ground no. 2 which is against the deletion of addition as made by the Assessing Officer by disallowed Rs. 2,42,00,232/- under section 36(1)(iii) of the Act. The issue is consequential to ground no. 1, 5 and 6 above and accordingly the order of ld. CIT(A) is upheld on this issue by ground no2 of the revenue appeal.

87. The issue raised in grounds 3 and 4 by the revenue is against the deletion of addition by ld. CIT(A) as made by the Assessing Officer on ad-hoc disallowance of 6% of payment made to two parties namely SMPL and VLCPL amounting to Rs. 55,32,643/-.

88. The issue is similar to one as decided by us in ground no, 4 and 5 in ITA No.2790/Kol/2025 A.Y. 2017-18 . Applying our decision in ground 4 and 5 ITA No.2790/Kol/2025 A.Y. 201718 , to ground no 3 and 4 are dismissed by upholding the order of ld. CIT(A) on this issue.

CO No. 28/KOL/2026

89. In the CO , the assessee has raised a legal issue challenging the notice u/s 148 of the Act to be invalid which is not being decided at this stage and is left open to be adjudicated if need arises for the same in future

90. The other grounds raised by the assessee are in support of the order of ld.CIT(A). Since we have upheld the order passed by the ld. CIT(A), therefore these grounds become in fructuous and are dismissed. The cross objection is partly dismissed.

91. In the result, the appeal of the Revenue in ITA No. 2794/Kol/2025 is dismissed and Cross Objection No. 27/KOL/2026 is partly dismissed.

A.Y. 2022-23

ITA No. 2795/Kol/2025 & CO No.29/KOL/2026

92. The grounds 1, 6 and 7 raised by the revenue is against the deletion of Rs. 2,25,00,000/- under section 68 of the Act.

93. The facts relating to grounds 1, 6 and 7 are that the assessee received unsecured loans aggregating Rs. 2,25,00,000/- from Gannayak Commodities Trade Pvt. Ltd., Indian Infotech and Software Ltd. and Strategic Vincom Pvt. Ltd. The Ld. Assessing Officer treated the sum as unexplained cash credit under section 68 of the Act. The Ld. CIT(A) deleted the addition at pages 55 to 65 of his order and the Revenue is in appeal upon grounds 1, 6 and 7.

94. In the instant year, the lenders are Gannayak Commodities Trade Pvt. Ltd., Indian Infotech and Software Ltd. and Strategic Vincom Pvt. Ltd, whose MCA master data, ledger copy, financial statements, bank statement and loan confirmation were filed. The net worth of each of the said parties was much higher than the loan advanced by it, and the said loans were repaid with interest. In view of our conclusion after detailed analysis for AY 2017-18 above, the facts being more or less similar to the instant year, the deletion of Rs. 2,25,00,000/- is upheld and ground nos. 1, 6 and 7 of the Revenue are dismissed.

95. Therefore issue in these grounds 1, 6 and 7 is similar to one as decided by us in grounds nos. 2, 7 and 8 in ITA No.2790/Kol/2025 A.Y. 2017-18 wherein we have upheld the order of ld. CIT(A) on the issue by dismissing the ground nos. 2, 7 and 8 raised by the revenue. Accordingly, our decision on the grounds no. 2,7, and 8 shall apply aplply to these grounds as well. Consequently, we up hold the order of ld. CIT(A) by dismissing the ground nos.1, 6 and 7 in revenue appeal.

96. The ground no. 2 which is against the deletion of addition as made by the Assessing Officer by disallowed Rs. 1,06,43,587/- under section 36(1)(iii) of the Act. The issue is consequential to ground no. 1, 6 and 7 above and accordingly the order of ld. CIT(A) is upheld on this issue by ground no 2 of the revenue appeal.

97. The issue raised in grounds 3 and 4 by the revenue is against the deletion of addition by ld. CIT(A) as made by the Assessing Officer on ad-hoc disallowance @ 6% of payment made to two parties namely SMPL and VLCPL amounting to Rs.68,64,260/-,.

98. The issue is similar to one as decided by us in ground no, 4 and 5 in ITA No.2790/Kol/2025 A.Y. 2017-18 . Applying our decision in ground 4 and 5 ITA No.2790/Kol/2025 A.Y. 201718 , to ground no 3 and 4 are dismissed by upholding the order of ld. CIT(A) on this issue.

99. The issue raised in ground no. 5 by the revenue is against the deletion of addition of Rs. 18,02,100/- by ld. CIT(A) as made by the AO under section 69 of the Act.

100. The facts in brief are that cash was seized on 27.11.2021 at Howrah Railway Station from the custody of two staff of the assessee. The statement of one of whom was recorded under section 131 of the Act on 28.11.2021, wherein he deposed that Rs. 18,00,000/- belonged to his employerassessee, and that the balance of Rs. 2,100/- represented his own funds. The Ld. Assessing Officer referred to certain WhatsApp chats and came to the conclusion that the seized cash represented unexplained money of the assessee, being the proceeds of scrap sales, and made an addition under section 69 of the Act. The Ld. CIT(A) deleted the addition at pages 66 to 68 of his order and the Revenue is in appeal upon ground 5.

101. We have heard the rival parties and perused the material as placed before us. It is evident from the findings in the assessment order and in the order of the Ld. CIT(A) that the assessee was engaged in the business of executing turnkey electrification projects for State Electricity Boards including contracts with North Bihar and South Bihar Power Distribution Company Limited, entailing simultaneous work at numerous sites requiring petty cash at frequent intervals. It was submitted that the cash was carried out of the cash balance of the company to the office at Patna and then to the site offices. Thus we note that the source is proved from the books seized by the Department itself viz the Cash Day Book as on 27.11.2021 showing a cash balance of Rs. 13,36,345/- after the advance of Rs. 18,00,000/-, the cash book found in the search itself recording that advance. We note that the Ld. CIT(A) having found that there is “no linkages of the said WhatsApp messages with the seized cash” and that the Ld. Assessing Officer “could not bring on record as to how he was coming to the conclusion that the said seized cash represented undisclosed scrap sales. The scrap sales referred to in the WhatsApp chat were already forming part of the books and that Rs. 2,100/- was not the money of the assessee at all.

102. We note that cash was recorded in the books of account and here it was recorded in a cash book seized by the Department itself and in a Cash Day Book on the very date of seizure. Thereforethe very foundation of section 69 is wrong as the provisions of section 69 could be invoked if money is “not recorded in the books of account which is not the case before us. Therefore, we are in full concurrence with ld. CIT(A) on this issue that addition was based upon surmise as to undisclosed scrap sales which was rightly deleted by the Assessing Officer. The deletion is upheld and ground no. 5 of the Revenue is dismissed.

CO No. 29/KOL/2026

103. In the CO , the assessee has raised a legal issue challenging the notice u/s 148 of the Act to be invalid which is not being decided at this stage and is left open to be adjudicated if need arises for the same in future

104. The ground No 2 raised by the assessee is in support of the order of ld.CIT(A). Since we have upheld the order passed by the ld. CIT(A), therefore the ground becomes in fructuous and is dismissed.

105. The ground no. 3 of the cross objection is not pressed and is accordingly dismissed.

106. In the result, the appeal of the Revenue in ITA No. 2795/Kol/2025 is dismissed and Cross Objection No. 28/KOL/2026 is partly dismissed.

A.Y. 2019-20

ITA No. 2926/KOL/2025

107. The only issue raised by the revenue in this appeal is against the deletion of penalty of Rs. 4,00,00,000/- by ld. CIT(A) as levied by the AO under section 271D of the Act.

108. The facts in brief are that a notice under section 274 read with section 271D was issued on 12.07.2024 and a further notice on 09.12.2024, in which the Ld. JCIT recorded his satisfaction that the basis of the adverse inference was the search upon the Kasera Group on 30.11.2018. Accordingly by order dated 25.01.2025 the penalty was imposed under section 271D of the Act.

109. The Ld. CIT(A), vide his order dated 02.09.2025, allowed the appeal in its entirety after taking into account the submissions and contentions of the assessee.The Ld. CIT(A) recorded at pages 18 to 26 that the chart at page 11 of the penalty order “has not been linked with any specific statements” of the other person. The ld. CIT(A) also noted that the notice dated 12.07.2024 fails to state what transaction is alleged to contravene section 269SS, the amount, from whom and in what form it was received, or any satisfaction beside there being no reference to any circumstantial evidence seized in the search upon the assessee.

110. The Ld. CIT(A) has elaborately discussed the findings made in the assessment order. It is seen that no specific question was put under section 132(4) of the Act during the search upon the premises of the assessee with respect to the alleged seized document, which was said to have been found at the premises of a third party much before the search upon the premises of the assessee. No statement was recorded during the assessment proceedings. No opportunity to cross-examine was afforded during the assessment hearing stage. The name of the assessee does not feature in the alleged statements recorded from the parties in whose custody the alleged documents were found. The Ld. CIT(A) has relied upon various judgments, including the judgment of the jurisdictional High Court in Girdhar Gopal Dalmia v. Union of India 451 ITR 320 (Calcutta), wherein it was held that it was not permissible to draw adverse inference based on presumptions. In that case also, an adverse inference regarding an alleged cash loan was drawn upon surmise and suspicion, and the entire proceedings were quashed by the Hon’ble Court. In our view, the Ld. CIT(A) has discussed the issue at length and afforded a second round of opportunity to the Ld. Assessing Officer vide letter dated 08.08.2025 to give any further clarification to justify the addition. However, the Ld. Assessing Officer chose not to reply to the aforesaid letter of the Ld. CIT(A).

111. Thus, the foundation has fallen: section 271D of the Act is attracted only where a person “takes or accepts” a loan in contravention of section 269SS, the very receipt being the jurisdictional fact, and the corresponding additions under section 69D of the Act upon the identical material have been deleted for both years upon the finding that the receipt is not established.

112. The arithmetic is one of conjecture, the seized receipts aggregating Rs. 2,00,000/- while the penalty proceeds upon four alleged instances of Rs. 1,00,00,000/- each, with no material explaining the multiplication. The initiating notice is defective, that of 12.07.2024 disclosing neither the transaction, nor the amount, nor the counter-party, nor any satisfaction, being couched in the language “it appears to me”; and a satisfaction recorded five months later neither cures it nor puts the assessee upon notice of the case it has to meet. Without prejudice, section 273B of the Act protects the assessee where reasonable cause is shown; and where the assessee denies the transaction and the Revenue cannot establish it, the question of penalty does not arise.

113. Ground 3, which invokes the preponderance of probabilities and asserts that the rukka was signed by a key person of the company, is self-defeating. There is no alleged rukka with respect to the impugned penalty. As regards the other seized documents relied upon in the penalty order, the same have been discussed at length in the respective years, wherein the Ld. Assessing Officer made additions under section 69D of the Act which have been deleted by us.

114. Ground 5 objects to reliance upon Girdhar Gopal Dalmia (supra), but that decision is of the jurisdictional High Court and binding upon its own force, the dismissal of a Special Leave Petition filed by the Department leaving the judgment intact; the parallel upon the facts is exact; and the appellate order rests not upon it alone but upon the findings of fact set out above.

115. We accordingly uphold the deletion of the penalty of Rs. 4,00,00,000/- and grounds 1 to 5 of the Revenue are dismissed. The appeal of the Revenue in ITA No. 2926/Kol/2025 is dismissed.

116. In the result, all the appeal of revenue and the Cross Objection of the assessee are dismissed.