DEPUTY COMMISISONER OF INCOME TAX, KOLKATA V. SRMB SRIJAN PRIVATE LIMITED, KOLKATA

ITA 1683/KOL/2024

AI Insights

The case involves an appeal by the Revenue against the order of the Commissioner of Income-tax (Appeals) which held the proceedings under section 147 of the Income-tax Act, 1961 as invalid. The Revenue contended that the AO had concrete evidence and reasons to believe that income had escaped assessment. However, the CIT(A) found that the commodity profit of \\u20b91,61,92,645/- was already disclosed in the Profit and Loss Account filed by the assessee and accepted by the AO in the reasons recorded. The ITAT upheld the CIT(A)'s decision, citing several precedents that support the view that mere change of opinion by the AO does not justify reopening of assessment after four years from the end of the relevant assessment year.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 772201 (ITAT-KOLKATA)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-08-2025
• Appeal Filed By: Department
• Order Result: Dismissed
• Assessment Year: 2011-2012
• Other Referred Cases: Wel Intertrade (P) Ltd. v. ITO, Commissioner of Income-tax-5, Mumbai vs. Jet Airways (I) Ltd., Ranbaxy Laboratories Ltd. vs. Commissioner of Income-tax, ACIT Vs. Major Deepak Mehta
• Laws Referred To: Income-tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SANDEEP LAKRA
• Assessee Lawyers: AMIT AGARWAL
• Keywords: Business income; Difference of opinion; Change of opinion; Unexplained investment
• Section: 147; 148; 143(3); 271(1)(c); 133(6)

Judgement Text

" IN THE INCOME TAX APPELLATE TRIBUNAL “C” BENCH, KOLKATA BEFORE SHRI RAJESH KUMAR, AM AND SHRI PRADIP KUMAR CHOUBEY, JM ITA No.1683/KOL/2024 (Assessment Year:2011-12) DCIT 110, Shantipally, Aaykar Bhavan Poorva, West Bengal-700107 Vs. SRMB Srijan Private Limited West Bengal-700012 (Appellant) (Respondent) PAN No. AAHCS0616C Assessee by : Shri Amit Agarwal, AR Revenue by : Shri Sandeep Lakra, DR Date of hearing: 30.07.2025 Date of pronouncement: 26.08.2025 O R D E R Per Rajesh Kumar, AM: This is an appeal preferred by the Revenue against the order of the Commissioner of Income-tax (Appeals)(hereinafter referred to as the “Ld. CIT(A)”] dated 08.12.2023 for the AY 2011-12. 02. The only issue raised by the Revenue is against the order of ld. CIT (A) holding the proceeding u/s 147 of the Income-tax Act, 1961 (the Act) as bad in law despite the ld. AO having concrete evidence and reasons to believe that income has escaped assessment.. 03. The facts in brief are that the assessee filed the return of income on 24.09.2011, declaring total income of ₹5,00,99,209/- which was selected for scrutiny. Statutory notices were duly issued and served upon the assessee. The assessee also complied with the questionnaire issued by the ld. Assessing Officer. Finally, the ld. assessment was completed vide order dated 24.03.2014, passed u/s 143(3) of the Act, Printed from counselvise.com Page | 2 ITA No.1683/KOL/2024 SRMB Srijan Private Limited A.Y. 2011-12 for which there was no addition made for the item of income stated to be escaped in the reasons recorded and some other additions were made which were not subject matter of the reasons recorded. 04. In the appellate proceedings, the ld. CIT (A) allowed the appeal of the assessee by holding the proceedings u/s 147 of the Act, were invalidly initiated by observing and holding as under: - “In view of the material placed on record, it is therefore observed that the commodity profit to the tune of Rs.1,61,92,645/- was shown in the Profit and Loss A/c filed by the assesseealong with the return of income. The AO having himself accepted the said facts in the reasons recorded, there is no reason to say that assessee has failed to disclose fully and truly all material facts, Hon'ble Delhi High Court in the case of Wel Intertrade (P) Ltd. v. ITO [2009] 308 truly and fully all material facts necessary for the purpose of assessment, an action under s. 147 cannot be taken after expiry of four years from the end of the relevant assessment year on the basis of mere change of opinion of the AO that a large sum ought to have been disallowed in original assessment. In the instant case since the AO in his reasons recorded, has himself certified that the commodity profit of Rs. 1,61,92,645/- (the quantum of the information as recorded by the AO) was already disclosed as business income in the assessee's books, I find that as per the provisions of Section 149(1), the AO could not have initiated the proceedings u/s 147 and the same is bad in law. Since the initiation of proceedings u/s 147 is held to be bad in law, the actions of the AO in the resultant assessment order u/s 147 in initiating penalty u/s 271(1)(c) and the addition of Rs. 50,00,000/-as unexplained investment automatically stand deleted. Even otherwise, it is worthwhile to mention that in his assessment order u/s 147 dated 22.01.2018 also, the AO has accepted that the commodity profit of Rs.1,61,92,645/- was already disclosed as business income and accordingly no addition was made. Therefore, there arises no question of furnishing inaccurate particulars on the part of the assessee. These grounds are therefore allowed.” After hearing the rival contentions and perusing the materials available on record, we find that the case of the assessee has been reopened u/s 147 of the Act by issuing notice u/s 148 of the Act on 28.03.2018, to the assessee for the reason that commodity profit of ₹1,61,92,645/- has not been disclosed by the assessee and thus, has escaped assessment. The copy of the reasons recorded is available at page no.3,4 and 5 of the Paper Book of the assessee. Whereas, as a matter of fact while making the assessment the ld. AO did not make Printed from counselvise.com Page | 3 ITA No.1683/KOL/2024 SRMB Srijan Private Limited A.Y. 2011-12 any addition with regard to commodity profit of ₹1,61,92,645/- which was already disclosed by the assessee in the return filed. However, the ld AO made the addition in respect of other incomes which were not subject matter of the reason s recorded i.e. ₹50 lacs paid by the assessee company to Pushkar Trading and Holding Pvt. Ltd. to which notice u/s 133(6) of the Act was issued and also replied by the said company vide reply dated 05.10.2018. The ld. AO finally held that the entire amount is an unexplained investment and added to the income of the assessee. In our view, the reopening as envisaged in the reason recorded u/s 148(2) of the Act i.e. the escapement of commodity of ₹1,61,92,645/- was not made in the assessment order. Therefore, no other additions would be made as the very foundation of the reopening is gone. The case of the assessee find support from the decision of Hon'ble Bombay High Court in case of Commissioner of Income-tax-5, Mumbai vs. Jet Airways (I) Ltd. [2011] 331 ITR 236 (Bombay) dated 12-04-2010, Ranbaxy Laboratories Ltd. vs. Commissioner of Income-tax[2011] 336 ITR 136 (Delhi) vide order dated 03-06-2011 and ACIT Vs. Major Deepak Mehta 344 ITR 641 (Chhattisgarh). Therefore, respectfully following the ratio laid down in the above decisions, we are inclined to uphold the order of the ld. CIT (A) by dismissing the appeal filed by the Revenue. 05. In the result, the appeal of the Revenue is dismissed. Order pronounced in the open court on 26.08.2025. Sd/- Sd/- (PRADIP KUMAR CHOUBEY) (RAJESH KUMAR) (JUDICIAL MEMBER) (ACCOUNTANT MEMBER) Kolkata, Dated:26.08.2025 Sudip Sarkar, Sr.PS Printed from counselvise.com Page | 4 ITA No.1683/KOL/2024 SRMB Srijan Private Limited A.Y. 2011-12 Copy of the Order forwarded to: BY ORDER, True Copy// Sr. Private Secretary/ Asst. Registrar Income Tax Appellate Tribunal, Kolkata 1. The Appellant 2. The Respondent 3. CIT 4. DR, ITAT, 5. Guard file. Printed from counselvise.com "