GANESHVANI TRADELINK PVT. LTD.,KOLKATA V. I.T.O., WARD - 13(1), KOLKATA, KOLKATA

ITA 1386/KOL/2024

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Ganeshvani Tradelink Pvt. Ltd. appealed against the order of the Commissioner of Income Tax (Appeals)-NFAC, Delhi, which affirmed the reassessment order for the Assessment Year 2013-14. The reassessment was initiated by the AO under Section 147 read with Section 144B of the Income Tax Act, based on information that the assessee had received unexplained cash credits from shell companies. The Tribunal examined whether the conditions for reopening the assessment after four years from the end of the relevant assessment year were met, particularly focusing on the requirement that the income must have escaped assessment due to the assessee's failure to disclose material facts fully and truly. The Tribunal concluded that the AO did not demonstrate this failure, leading to the quashing of the reassessment and the subsequent assessment order.

• Counselvise Citation: [2024] 140 COUNSELVISE.COM (IT) 469719 (ITAT-KOLKATA)
• Duration Of Justice: 3 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-10-2024
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2013-2014
• Appeal Filed On: 24-06-2024
• Other Referred Cases: ACIT vs. CEAT Ltd. (2022) 449 ITR 171(SC)
• Laws Referred To: Income Tax Act
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Reassessment proceedings; Unexplained cash credit; Reopening of assessment
• Section: 147; 148; 143(3); 131

Judgement Text

"आयकर अपीलȣय अͬधकरण, कोलकाता पीठ “एसएमसी’’, कोलकाता IN THE INCOME TAX APPELLATE TRIBUNAL “SMC” BENCH: KOLKATA Įी राजेश क ुमार, लेखा सटèय एवं Įी Ĥदȣप क ुमार चौबे, ÛयाǓयक सदèय क े सम¢ [Before Shri Rajesh Kumar, Accountant Member &Shri Pradip Kumar Choubey, Judicial Member] I.T.A. No. 1386/Kol/2024 Assessment Year: 2013-14 Ganeshvani Tradelink Pvt. Ltd. (PAN: AAECG 0399 R) Vs. ITO, Ward-13(1), Kolkata Appellant / ) अपीलाथȸ ( Respondent / Ĥ×यथȸ Date of Hearing / सुनवाई कȧ Ǔतͬथ 08.08.2024 Date of Pronouncement/ आदेश उɮघोषणा कȧ Ǔतͬथ 09.10.2024 For the Appellant/ Ǔनधा[ǐरती कȧ ओर से Shri Giridhar Dhelia, A.R For the Respondent/ राजèव कȧ ओर से Shri Supriya Pal, Addl. CIT (D.R) ORDER / आदेश Per Rajesh Kumar, AM: This is an appeal preferred by the assessee against the order of the Ld. Commissioner of Income Tax (Appeals)-NFAC, Delhi (hereinafter referred to as the “Ld. CIT(A)”] dated 25.04.2024 for the AY 2013-14. 2. The assessee has raised a legal issue before us challenging the assessment order framed u/s 147 read with Section 144B of the Act dated 30.03.2022 after a period of 2 I.T.A. No.1386/Kol/2024 Assessment Year: 2013-14 Ganeshvani Tradelink Pvt. Ltd. four years from the end of relevant assessment year without satisfying the conditions as enumerated in first proviso to section 147 of the Act and accordingly the reopening of assessment is non-est and invalid and may be quashed. 3. Facts in brief are that the assessee filed return of income on 24.09.2013 declaring total income of Rs. 9,010/-. The case of the assessee was selected for scrutiny and assessment order framed u/s 143(3) vide order dated 12.11.2015 assessing the total income at Rs. 40,416/- by making an addition of Rs. 31,406/-. Subsequently, the AO received information from DDIT(Inv), Unit-4(2), Kolkata on 18.06.2018 stating that the assessee had made transactions with M/s Karnimata Commodeal Pvt. Ltd. which is relating to M/s KCA Allied Services Pvt. Ltd. it was further stated that the suspicious transactions of large amounts were conducted through the bank account of the assessee. The AO further noted that the assessee received Rs. 10,78,000/- from shell companies of Rajesh Kumar Bhutoria and Lalit Kumar Perwal. Finally, the assessment was reopened u/s 147 by issuing notice u/s 148 of the Act on 29.04.2020 requiring the assessee to file return of income on or before 28.05.2020 which was not complied with. Finally the assessee vide letter dated 08.02.2021 stated that the return of income which was filed on 24.09.2013 may be treated as filed in response to notice issued u/s 148 of the Act. The AO after calling for necessary information /details from the assessee added a sum of RS. 10,78,000/- to the income of the assessee received as share premium by treating the same as unexplained cash credit vide assessment order dated 30.03.2022 passed u/s 147 of the Act. 4. In the appellate proceedings, the Ld. CIT(A) simply affirm the order on legal issue. 5. After hearing the rival contentions and perusing the material on record including the reasons record u/s 148(2) of the Act copies of which is placed at page no. 33 & 34 of the PB, we note that in this case the assessment was framed u/s 143(3) of the Act vide order dated 12.11.2015. We note that during the original course of proceedings, the issue of share capital/ share premium from different parties was examined and even 3 I.T.A. No.1386/Kol/2024 Assessment Year: 2013-14 Ganeshvani Tradelink Pvt. Ltd. summons u/s 131 of the Act were issued to the parties for verification of the genuineness and replies received from them which were duly placed on record. We note that Shri Gaurav Kumar Jhawar, director of M/s Karnimata Commodeal Pvt. Ltd. appeared on 05.10.2015 before the AO and filed necessary documents and accordingly the assessment was framed without making any addition . Thereafter the AO received information from DDIT(Inv), Unit-4(2), Kolkata that the assessee is beneciary of accommodation entry amounting to Rs. 10,78,000/- from the above said party and accordingly the case of the assessee was reopened u/s 147 of the Act. The reasons recorded are available at page 33-34 of the PB. Apparently the case of the assessee was reopened after a period of four years from the end of relevant year, therefore, the reopening could have been made by the AO in consonance with the first proviso to section 147 of the Act which provides that the reopening only be made by the AO beyond the four years under first proviso if the escapement of income is attributed to the failure of the assessee to disclose fully and truly all the material facts qua the said income. However, a perusal of the reasons recorded reveal that the AO has in the last para has noted that the four years have relapsed from the end of relevant assessment year 2013-14 and income chargeable to tax as escaped from more than Rs. 1 lakhs and has no whisper even as to how the income has escaped assessment because of failure of the assessee to fully and truly disclose the material facts qua the said income during the assessment proceedings. Therefore, the reopening of assessment is not in consonance with first proviso to Section 147 of the Act and is accordingly void ab-initio and cannot be sustained. The case of the assessee finds support from the decision of Hon’ble Supreme Court in the case of ACIT vs. CEAT Ltd. (2022) 449 ITR 171(SC) wherein the Hon’ble Court has held that the AO has first to demonstrate the failure on the part of assessee failing which the reopening is bad in law. Accordingly, we quash the reassessment proceedings as well as assessment order framed by the AO. 4 I.T.A. No.1386/Kol/2024 Assessment Year: 2013-14 Ganeshvani Tradelink Pvt. Ltd. 6. In the result, the appeal of the assessee is allowed. Order is pronounced in the open court on 9th October, 2024 Sd/- Sd/- (Pradip Kumar Choubey /Ĥदȣप क ुमार चौबे) (Rajesh Kumar/राजेश क ुमार) Judicial Member/ÛयाǓयक सदèय Accountant Member/लेखा सदèय Dated: 9th October, 2024 SM, Sr. PS Copy of the order forwarded to: 1. Appellant- Ganeshvani Tradlink Pvt. Ltd., 6th Floor, 7, Tara Chand Dutta Street, Burrabazar-700073. 2. Respondent – ITO, Ward-13(1), Kolkata 3. Ld. CIT(A)- NFAC, Delhi 4. Ld. Pr. CIT- , Kolkata 5. DR, Kolkata Benches, Kolkata (sent through e-mail) True Copy By Order Assistant Registrar ITAT, Kolkata Benches, Kolkata "