DEPUTY COMMISSIONER OF INCOME TAX CENTRAL CIRCLE - 1(1), KOLKATA, KOLKATA V. VRINDA ENGINEERS PVT. LTD., KOLKATA

ITA 1284/KOL/2023

AI Insights

The case involves the Income Tax Department (Revenue) appealing against the order of the Commissioner of Income Tax (Appeals) which had partly allowed the appeal of Vrinda Engineers Pvt. Ltd., a private limited company. The original dispute centered on the assessment of income and the genuineness of loans received by the company. The Principal Commissioner of Income-tax (Central)-1, Kolkata had earlier set aside the assessment order and directed a re-examination of certain loans. The subsequent assessment order was challenged by both the company and the Revenue in separate appeals. The Tribunal's decision to quash the order under section 263, which was the basis for the reassessment, led to the dismissal of the Revenue's appeal.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 469571 (ITAT-KOLKATA)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-03-2025
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2012-2013
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Revision of order
• Section: 147; 143(3); 250; 263; 139(1); 69C

Judgement Text

"आयकर अपीलीय अधिकरण कोलकाता 'ए' पीठ, कोलकाता में IN THE INCOME TAX APPELLATE TRIBUNAL KOLKATA ‘A’ BENCH, KOLKATA श्री प्रदीप क ुमार चौबे, न्याधयक सदस्य एवं श्री राक ेश धमश्रा, लेखा सदस्य क े समक्ष Before SHRI PRADIP KUMAR CHOUBEY, JUDICIAL MEMBER & SHRI RAKESH MISHRA, ACCOUNTANT MEMBER I.T.A. No.: 1284/KOL/2023 Assessment Year: 2012-13 DCIT, Central Circle-1(1), Kolkata Vs. Vrinda Engineers Pvt. Ltd. (Appellant) (Respondent) PAN: AAACV9131E Appearances: Department represented by : Subhendu Datta, CIT-DR. Assessee represented by : Siddarth Agarwal, Advocate. Date of concluding the hearing : January 30th, 2025 Date of pronouncing the order : March 6th, 2025 ORDER PER RAKESH MISHRA, ACCOUNTANT MEMBER: This appeal filed by the Revenue is against the order of the Ld. Commissioner of Income Tax (Appeals)-20, Kolkata [hereinafter referred to as “the Ld. CIT(A)”] passed u/s 250 of the Income Tax Act, 1961 (hereinafter referred to as “the Act”) for AY 2012-13 dated 22.09.2023, which has been passed against the order u/s 147/263 of the Act, dated 29.12.2022. Page | 2 I.T.A. No.: 2298/KOL/2024 Assessment Year: 2018-19 Vrinda Engineers Pvt. Ltd. Page 2 of 6 2. The Revenue is in appeal before the Tribunal raising the following grounds of appeal: “1. That on the facts and circumstances of the case, the Ld. CIT(A) erred in allowing the appeal of the assessee violating the provisions of Rule 46A of the income Tax Rules by admitting additional documents from the assessee and relying on the same without calling for the comments of the AO on such fresh evidence admitted. 2. That on the facts and circumstances of the cases, the Ld. CIT(A) erred in accepting fresh evidence at the time of appeal proceedings without giving opportunity to the AO to examine the same and offer comments on the same. 3. That on the facts and circumstances of the case, the Ed. CIT(A) erred in deleting the addition of Rs. 2,07,00,000/- relying upon the additional documents submitted by the assessee at the stage of appellate proceedings. 4. That the revenue reserves its rights to substantiate, modify, delete supplement and/or alter the grounds at any time of the appeal proceedings.” 3. Brief facts of the case are that the assessee is a private limited company and had filed its original return of income u/s 139(1) of the Act on 29.09.2012 which was revised on 30.09.2012 declaring total income of Rs. 1,48,03,950/-. Regular assessment was made under section 143(3) of the Act on 13.11.2014 and income was assessed at Rs. 1,59,17,780/-. Subsequently, order u/s 147/143(3) of the Act dated 07.12.2018 with no adverse inference was passed and another order u/s 147/143(3) of the Act dated 30.09.2019 with no adverse inference was passed. Subsequently, the Principal Commissioner of Income-tax (Central)-l, Kolkata passed an order dated 28.03.2022 u/s 263 of the Act setting aside the assessment order passed u/ s 147/143(3) of the Income Tax Act 1961 (in short 'Act') dated 30.09.2019 with a direction to the AO to examine the genuineness & creditworthiness of loan received from M/S Rupali Financial Consultants (P) Ltd. and all other unsecured loans shown to have been received by the assessee during Page | 3 I.T.A. No.: 2298/KOL/2024 Assessment Year: 2018-19 Vrinda Engineers Pvt. Ltd. Page 3 of 6 the financial year 2011-12 and also to enquire whether interest and brokerage on unsecured loans were paid in cash out of books in view of the statement of the director and thereafter pass a fresh assessment order. The Ld. AO passed another order u/s 263/147/143(3) of the Act dated 29.12.2022 assessing the total income at Rs. 14,60,64,880/-. The assessee filed an appeal before the Ld. CIT(A) who, vide order dated 22.09.2023 partly allowed the appeal. 4. Subsequent to the passing of the order u/s 263 of the Act by the ld. Pr. CIT, the assessee filed an appeal before the Hon'ble Tribunal vide ITA No. 1274/KOL/2023. Simultaneously, the assessee also challenged before the Hon'ble Tribunal vide I.T.A. No. 1232/KOL/2023 the appellate order of the Ld. CIT(A)-20, Kolkata dated 22.09.2023, which was decided against the assessment order passed in consequence to the direction issued in the order u/s 263 of the Act. Hon'ble Tribunal, vide order in ITA No. 1274/KOL/2023 for AY 2012-13 dated 21.02.2024 held that in view of the three-fold contentions raised by the assessee, the impugned order passed u/s 263 of the Act was not sustainable and once the order u/s 263 of the Act was quashed, then the foundation to pass the impugned assessment order dated 29.12.2022 u/s 263 read with Section 147/143(3) of the Act was not sustainable and both the orders were quashed. The finding of the Tribunal is as under: 27. “In the present case, the original assessment was passed under section 143(3) on 13.11.2014. The process of computation of income commenced when assessee has filed the return of income on 29.09.2012 and it attained finality on 13.11.2014 when scrutiny assessment was passed. Thereafter all reopening would be taken up qua any escaped income. In none of the notices of reopening issued, all unsecured loans were ever taken up by the ld. Assessing Officer. Therefore, if any error has crept in the computation of income, then, it should be construed when the original assessment order under section 143(3) was passed. Ld. Commissioner should find fault in this order and should take corrective measure qua this order under section 263, but he did not and by now Page | 4 I.T.A. No.: 2298/KOL/2024 Assessment Year: 2018-19 Vrinda Engineers Pvt. Ltd. Page 4 of 6 the time limit to take action under section 263 has expired. In sub-section (2) of section 263, it has been contemplated that no order shall be made under sub- section (1) after the expiry of two years from the end of the financial year in which orders sought to be revised, was passed. The original error crept in the assessment order dated 31.11.2014. The two years from end of March, 2015 ought to be calculated. Therefore, the third fold of contention is fully covered by the decision of the Hon’ble Supreme Court and this 263 notice is not sustainable. Taking into consideration all these three fold of contentions raised by the assessee, we are of the view that the impugned order passed under section 263 is not sustainable. 28. Now we take ITA No. 1232/KOL/2023. This appeal is directed against the order of ld. Commissioner of Income Tax (Appeals), Kolkata-20 dated 22nd September, 2023. The foundation of this appellate proceeding is an assessment order, which has been passed in consequence of 263 order. Once the very 263 order has been quashed, then, the foundation to pass the impugned assessment order dated 29.12.2022 under section 263 read with sections 147 and 143(3) is not sustainable. The assessment order would be without jurisdiction and accordingly we allow this appeal also by quashing both the orders.” 5. In the appeal before us, the Ld. AR filed a copy of the order of the Hon'ble Tribunal dated 21.02.2023 in the assessee’s own case for AY 2012-13, the copy of the order u/s 263 of the Act dated 28.03.2022 and the assessment order u/s 147/143(3) of the Act dated 07.12.2018. It was informed that the appeal filed against the assessment order dated 29.12.2022, which was partly allowed by the Ld. CIT(A) vide order dated 22.09.2023 was impugned by the assessee in the ITA No. 1232/KOL/2023 and was allowed by the Tribunal and the assessment order as well as the appeal order were quashed. The Revenue has filed the appeal against the same order of the Ld. CIT(A) dated 22.09.2023 in which relief of Rs. 2.7 Crore out of the addition of Rs. 11.87 Crore was allowed as this loan was found to be genuine. The other additions of Rs. 90,73,097/- and Rs. 23,74,000/- made u/s 69C of the Act and against which relief was allowed have not been disputed. The Ld. AR informed that consequent to the passing of the order u/s 263 of the Act as well Page | 5 I.T.A. No.: 2298/KOL/2024 Assessment Year: 2018-19 Vrinda Engineers Pvt. Ltd. Page 5 of 6 as the quashing of the appellate order of the Ld. CIT(A), the grounds of appeal raised by the Revenue do not survive and the appeal is liable to be dismissed as the same has become infructuous after finding of the Hon'ble Tribunal quashing the order of the Ld. CIT(A). 6. We have considered the rival submissions. The Ld. DR did not controvert the submission of that Ld. AR. 7. After hearing both the parties, we are of the view that since the order u/s 263 of the Act has been quashed by the Hon'ble Tribunal, the consequential order u/s 147/143(3) read with Section 263 of the Act, which was partly confirmed by the Ld. CIT(A), is no longer valid as the very foundation on which the order was framed has been dislodged and the order of the Ld. CIT(A) has also been quashed by the Tribunal. Hence, in view of the facts and circumstances of the case, the appeal of the Revenue is not maintainable and same is hereby dismissed as the appeal order of the Ld. CIT(A) against which the appeal has been preferred has already been quashed by the Hon'ble Tribunal vide para 28 of the order dated 21.02.2024 in ITA No. 1232/KOL/2023 and both the revision order u/s 263 and the appellate order passed in respect of the consequential order of the Ld. AO to give effect to the order u/s 263 have been quashed. 8. In the result, the appeal filed by the Revenue is dismissed. Order pronounced in the open Court on 6th March, 2025. Sd/- Sd/- [Pradip Kumar Choubey] [Rakesh Mishra] Judicial Member Accountant Member Dated: 06.03.2025 Bidhan (P.S.) Page | 6 I.T.A. No.: 2298/KOL/2024 Assessment Year: 2018-19 Vrinda Engineers Pvt. Ltd. Page 6 of 6 Copy of the order forwarded to: 1. DCIT, Central Circle- 1(1), Kolkata. 2. Vrinda Engineers Pvt. Ltd., 181/B, Ground Floor, Chittaranjan Avenue, Kolkata, West Bengal, 700007. 3. CIT(A)-20, Kolkata. 4. CIT- 5. CIT(DR), Kolkata Benches, Kolkata. 6. Guard File. //True copy // By order Assistant Registrar ITAT, Kolkata Benches Kolkata "