BRIDHAM DEAL TRADE PVT. LTD.,KOLKATA V. I.T.O., WARD - 1(1), KOLKATA, KOLKATA

ITA 1353/KOL/2024

AI Insights

The case involves Brijdham Deal Trade Pvt. Ltd., which appealed against the order of the Commissioner of Income Tax (Appeals)-NFAC, Delhi, concerning the assessment year 2013-14. The primary contention was the addition of Rs. 58,20,000 as unexplained income, alleged to be received as an accommodation entry from M/s. Panghat Vincom Pvt. Ltd. The assessee contested both the merits of the addition and the legal validity of the reopening of the assessment under section 147 of the Income Tax Act. The Tribunal examined the procedures followed by the AO in reopening the assessment and found them lacking in substantive basis, leading to the quashing of the reassessment order.

• Counselvise Citation: [2024] 140 COUNSELVISE.COM (IT) 36285 (ITAT-KOLKATA)
• Duration Of Justice: 3 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-10-2024
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2013-2014
• Appeal Filed On: 19-06-2024
• Other Referred Cases: CIT v. Indo Arab Air Services (2016) 130 DTR 78/ 283 CTR 92 (Delhi)(HC), PCIT Vs. Shbdiman Investments (P) Ltd. (2018) 93 taxmann.com 153 (Bom), Nu Power Renewables (P) Ltd. Vs. DCIT [2018] 94 taxmann.com 29 (Bombay), PCIT Vs. Meenakshi Overseas Ltd. 395 ITR 677(Del.), Devansh Exports Vs. ACIT, Kolkata [ITA NO.2178/KOL/2017], DCIT Vs. Great Wall Marketing Pvt. Ltd. ITA No.660/Kol/2011, Shri Raj Kumar GoeI Vs. ITO ITA No. 1028/Kol/2017, Classic Flour & Food Processing Pvt. Ltd. Vs. CIT ITA Nos. 764 to 766/Kol/2014, KSS Petron Pvt. Ltd. Vs. ACIT ITA No. 224/Mum/2014, PCITVs. Tupperware India Pvt. Ltd. (2016) 236 Taxman 494, DCIT Vs. National Bank for Agriculture and Rural Development ITA No.4964/Mum/2014
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Unexplained cash credit; Reason to believe; Tangible material; Borrowed satisfaction; FORM 26AS
• Section: 147; 142(1); 250; 153

Judgement Text

"आयकर अपीलीय अधिकरण कोलकाता 'बी' पीठ, कोलकाता में IN THE INCOME TAX APPELLATE TRIBUNAL KOLKATA ‘B’ BENCH, KOLKATA श्री संजय गगग, न्याधयक सदस्य एवं श्री राक ेश धमश्रा, लेखा सदस्य क े समक्ष Before SRI SANJAY GARG, JUDICIAL MEMBER & SRI RAKESH MISHRA, ACCOUNTANT MEMBER I.T.A. No.: 1353/KOL/2024 Assessment Year: 2013-14 Brijdham Deal Trade Pvt. Ltd.…………………………………………Appellant [PAN: AAECB 2315 E] Vs. ITO, Ward-1(1), Kolkata........................................................Respondent Appearances: Assessee represented by: S.K. Pransukha, AR. Department represented by: P.P. Barman, Addl. CIT, Sr. DR. Date of concluding the hearing : September 12th, 2024 Date of pronouncing the order : October 18th, 2024 ORDER Per Sanjay Garg, Judicial Member: The present appeal has been preferred by the assessee against the order of the Commissioner of Income Tax (Appeals)-NFAC, Delhi [hereinafter referred to as ld. ‘CIT(A)’] passed u/s 250 of the Income Tax Act, 1961 (hereinafter the ‘Act’) dated 30.04.2024 for the AY 2013-14. 2. The assessee in this appeal is aggrieved by the action of the lower authorities in making/confirming the addition of Rs. 58,20,000/- alleging I.T.A. No.: 1353/KOL/2024 Assessment Year: 2013-14 Brijdham Deal Trade Pvt. Ltd. Page 2 of 5 that the assessee has received the accommodation entry of the said amount thereby treating the same as unexplained income of the assessee. 2.1. The assessee has not only contested the validity of the addition on merits but has also raised the legal ground regarding the validity of the reopening of the assessment u/s 147 of the Act. 2.2. At the outset, ld. Counsel for the assessee has brought our attention to page 93 of the paperbook, which is a copy of reasons recorded for reopening of the assessment. In the reasons, it has been mentioned that there was information with the Department that the assessee has received Rs. 58,20,000/- from M/s. Panghat Vincom Pvt. Ltd. as an accommodation entry. The Assessing Officer (hereinafter referred to as ld. 'AO') accordingly issued notice u/s 142(1) of the Act asking the assessee to furnish the details of the receipts of Rs. 58,20,000/- from M/s. Panghat Vincom Pvt. Ltd. during the year under consideration with supporting documents like copy of bank statement, copy of relevant bills & vouchers, nature of transaction and copy of relevant ledger account statement etc. The ld. Counsel for the assessee has, further, invited our attention to page 44 & 45 of the paperbook to submit that in response to the notice issued u/s 142(1) of the Act dated 07.09.2021, the assessee had duly replied that the assessee did not carry out any transaction of Rs. 58,20,000/- with M/s. Panghat Vincom Pvt. Ltd. during the year under consideration. The assessee, however, furnished the copies of the audited balance sheet, profit and loss account with schedules for the year ended 31.03.2013, copy of computation of income, copy of Form 26AS and copy of bank statement for the year under consideration. The ld. Counsel for the assessee, thereafter, has further invited our attention to page 67 of the paperbook which is the copy of another show cause notice dated 20.09.2021 whereby, the ld. AO has again called upon the assessee that the assessee had received an amount of Rs. 58,20,000/- from M/s. Panghat Vincom Pvt. Ltd. and that why the said amount be not treated as unexplained cash credit into the bank account/books of accounts of the assessee. The ld. Counsel for the assessee has, further, invited our attention to page 71 of the paperbook I.T.A. No.: 1353/KOL/2024 Assessment Year: 2013-14 Brijdham Deal Trade Pvt. Ltd. Page 3 of 5 whereby, in response to the said show cause notice, the assessee has uploaded its reply, wherein it was reiterated that during the year no transaction whatsoever, was carried out by the assessee with the said M/s. Panghat Vincom Pvt. Ltd. 2.3. However, the ld. AO, despite the aforesaid reply of the assessee that no alleged transaction was carried out by the assessee with M/s. Panghat Vincom Pvt. Ltd., reopened the assessment and made the impugned addition. The ld. Counsel for the assessee in this respect, has submitted that there was no tangible material available with the ld. AO to form the belief that the assessee has received the alleged accommodation entry from M/s. Panghat Vincom Pvt. Ltd. That the reopening has been done merely on the basis of suspicion, without the ld. AO having in his possession any reliable information for forming the belief that the income of the assessee has escaped assessment. He, therefore, submitted that the reopening of the assessment in this case, was bad in law, therefore, the consequential assessment was liable to be quashed. For this proposition, the ld. A/R has relied upon the following case laws: i) CIT v. Indo Arab Air Services (2016) 130 DTR 78/ 283 CTR 92 (Delhi)(HC). ii) PCIT Vs. Shbdiman Investments (P) Ltd. (2018) 93 taxmann.com 153 (Bom) iii) Nu Power Renewables (P) Ltd. Vs. DCIT [2018] 94 taxmann.com 29 (Bombay). iv) PCIT Vs. Meenakshi Overseas Ltd. 395 ITR 677(Del.) v) Devansh Exports Vs. ACIT, Kolkata [ITA NO.2178/KOL/2017], vi) DCIT Vs. Great Wall Marketing Pvt. Ltd. ITA No.660/Kol/2011. vii) Shri Raj Kumar GoeI Vs. ITO ITA No. 1028/Kol/2017. viii) Classic Flour & Food Processing Pvt. Ltd. Vs. CIT ITA Nos. 764 to 766/Kol/2014. ix) KSS Petron Pvt. Ltd. Vs. ACIT ITA No. 224/Mum/2014. x) PCITVs. Tupperware India Pvt. Ltd. (2016) 236 Taxman 494. xi) DCIT Vs. National Bank for Agriculture and Rural Development ITA No.4964/Mum/2014. I.T.A. No.: 1353/KOL/2024 Assessment Year: 2013-14 Brijdham Deal Trade Pvt. Ltd. Page 4 of 5 3. The ld. D/R, on the other hand, relied on the findings of the lower authorities. 4. We have considered the rival submission and gone through the record. We find from the perusal of the reasons recorded for the reopening of the assessment that though, the ld. AO had received some information that the assessee had received an accommodation entry amounting to Rs. 58,20,000/- from M/s. Panghat Vincom Pvt. Ltd., however, the ld. AO did not bother to corelate the said information with the accounts of the assessee. Even, the ld. AO himself was not sure about the said information as he had written to the assessee to provide the necessary details relating the aforesaid transaction including the copy of the relevant bank statement, copy of the relevant bills & vouchers, nature of transaction, copy of relevant ledger account statement etc. The aforesaid calling of the information by the ld. AO, in itself, shows that the ld. AO, in fact, was not having any sufficient or reliable information to form the belief that the income of the assessee has escaped assessment. Moreover, the assessee has given reply to the two show cause notices issued by the ld. AO stating that the assessee did not carry out any transaction, whatsoever, during the year with the said party M/s. Panghat Vincom Pvt. Ltd. However, despite this reply by the assessee, the ld. AO did not bother to corelate the said information with the information received by him vis-à-vis the accounts of the assessee/return of income. The ld. AO, therefore, reopened the assessment on the basis of borrowed satisfaction in a mechanical manner without application of mind, which is not sustainable in the eyes of law. It has been held time and again that for reopening of the assessment, the ld. AO must have sufficient reason to believe that the income of the assessee has escaped assessment. That the reasons to believe does not mean reason to suspect. That the reopening cannot be made merely for making fishing and roving enquiries and that there should be some information which establishes the live nexus between the material possessed by the ld. AO vis-à-vis formation of the belief that income has escaped assessment. However, all these aspects are missing in this case. I.T.A. No.: 1353/KOL/2024 Assessment Year: 2013-14 Brijdham Deal Trade Pvt. Ltd. Page 5 of 5 4.1. In view of this, the reopening in the case of the assessee is held to be bad in law and, therefore, the consequential assessment is hereby quashed. 5. In the result, the appeal of the assessee stands allowed. Order pronounced in the open Court on 18th October, 2024. Sd/- Sd/- [Rakesh Mishra] [Sanjay Garg] Accountant Member Judicial Member Dated: 18.10.2024 Bidhan (P.S.) Copy of the order forwarded to: 1. Brijdham Deal Trade Pvt. Ltd., 135, Canning Street, 1st Floor, Kolkata, West Bengal, 700001. 2. ITO, Ward-1(1), Kolkata. 3. CIT(A)-NFAC, Delhi. 4. CIT- 5. CIT(DR), Kolkata Benches, Kolkata. //True copy // By order Assistant Registrar ITAT, Kolkata Benches Kolkata "