INCOME TAX OFFICER, KOLKATA V. RAMESWARPUR COLD STORAGE PVT. LTD. , KOLKATA

ITA 1843/KOL/2024

AI Insights

The case involves an appeal by the Income Tax Officer (ITO), Ward-4(1), Kolkata against Rameswarpur Cold Storage Pvt. Ltd. concerning the reopening of an income tax assessment for the assessment year 2014-15. The ITO had reopened the assessment based on a transaction amounting to Rs. 52,13,824, which was allegedly from suspicious sources. The CIT(A) found the reopening to be invalid, leading to the ITO's appeal to the Income Tax Appellate Tribunal. The Tribunal upheld the CIT(A)'s decision, agreeing that the notice for reopening was issued beyond the permissible time limit and that the income in question had already been declared in the previous year.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 298586 (ITAT-KOLKATA)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-04-2025
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2014-2015
• Other Referred Cases: Union of India and Ashish Agrawal and others, Kankanala Ravindra Reddy Vs. ITO, Hexaware Technologies Ltd Vs ACIT
• Laws Referred To: Income Tax Act
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Unexplained cash credit; Reopening of assessment; Source of fund
• Section: 147; 148; 143(1)

Judgement Text

"आयकर अपीलȣय अͬधकरण, कोलकाता पीठ “A”, कोलकाता IN THE INCOME TAX APPELLATE TRIBUNAL “ए” 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. 1843/Kol/2024 Assessment Year: 2014-15 ITO, Ward-4(1), Kolkata Vs. Rameswarpur Cold Storage Pvt. Ltd. (PAN: AABCR 3290 H) Appellant / ) अपीलाथȸ ( Respondent / Ĥ×यथȸ C.O. No. 39/Kol/2024 (A/oI.T.A. No. 1843/Kol/2024) Assessment Year: 2014-15 Rameswarpur Cold Storage Pvt. Ltd. (PAN: AABCR 3290 H) Vs. ITO, Ward-4(1), Kolkata Cross-objector Respondent / Ĥ×यथȸ Date of Hearing / सुनवाई कȧ Ǔतͬथ 03.04.2025 Date of Pronouncement/ आदेश उɮघोषणा कȧ Ǔतͬथ 24.04.2025 For the assessee / Ǔनधा[ǐरती कȧ ओर से Shri S. Jhajharia, FCA 2 I.T.A. No. 1843/Kol/2024 C.O. No. 39/Kol/2024 Assessment Year: 2014-15 Rameswarpur Cold Storage Pvt. Ltd. For the revenue / राजèव कȧ ओर से Shri Arun Kanti Dutta, Addl. CIT Sr. D.R ORDER / आदेश Per Pradip Kumar Choubey, JM: This is the appeal preferred by the revenue and the cross objection by the assessee against the order of Commissioner of Income Tax (Appeals)- NFAC, Delhi (hereinafter referred to as the Ld. CIT(A)] dated 04.07.2024 for AY 2014-15 . 2. Brief facts of the case of the assessee are that the assessee being a Private Limited Company filed its original return of income for the A.Y 2014-15 on 27.10.2024 by admitting a total income of Rs.5,63,590/- In this case the AO received some information that a transaction involving Rs 52,13,824/- in the year FY 2013-14 was utilized by suspicious sources of fund. Hence, the assessment was reopened by issuing notice u/s 148 of the IT Act dated 23.04.2021 with approval of PCIT, Kolkata. Later that notice was deemed as notice u/s 148A(b) of the IT Act as per the decision of Hon'ble SC in the case of Union of India and Ashish Agrawal and others and the AO issued another notice u/s 148 of the IT Act after passing order u/s 148A(d) of the IT Act dated: 25-07- 2022. During the course of assessment, the AO has asked the appellant to explain the transaction entered between M/s Capital First Commodities Ltd. and the appellant involving a sum of Rs.52,13,824/- The appellant has explained that this was the sum receivable from M/s Capital First Commodities and it was already offered to tax as income but AO did not accept the contention of the appellant and recorded that the transaction involved was by utilizing the appellant's own fund and this amount of Rs.52,13,824 was added as Income from undisclosed source. A sum of Rs.2,79,00,000/- was also added as unexplained cash credit and the interest attributable to that sum for Rs.5,20,240/- . The AO verified the details of opening stock sale, purchase and average cost of purchase of potatoes. Upon verification he has noticed that there were some differences in the pricing between purchase and sale for a sum of Rs.17,930/-. This sum 3 I.T.A. No. 1843/Kol/2024 C.O. No. 39/Kol/2024 Assessment Year: 2014-15 Rameswarpur Cold Storage Pvt. Ltd. was separately disallowed. The AO completed the assessment by assessing the total income at Rs.3.41,79,721/-. 3. Aggrieved by the said order the assessee preferred an appeal before the Ld. CIT(A) wherein the appeal of assessee has been partly allowed as the Ld. CIT(A) held that the reopening of assessment is bad in law. Being aggrieved and dissatisfied the assessee preferred an appeal before us. 4. The Ld. D.R challenges the very impugned order thereby submitting that the Ld. CIT(A) has erred by not giving due cognizance to the order u/s 148A(d) passed by the AO after recording proper reason for reopening of the case and also giving due opportunity to explain the issue vide show cause notice u/s 148A(d) of the Act. The Ld. D.R has further submitted that the Ld. CIT(A) erred by not giving due cognizance to the order passed u/s 147 and it was passed after making detailed discussion before taking adverse view on this issue. 5. Contrary to that the ld. A.R supports the impugned order thereby submitting that the notice issued u/s 148 beyond the time limit for AY 2014-15 and as outstanding amount cannot be said to be the income escaping as the above sum was already offered to tax. The Ld. Counsel further submits that the sum of Rs. 53,13,824/- was in fact receivable from NSEL and that was already offered to tax. The Ld. Counsel further submits that it has well-being settled by the various decisions of the Apex Court. The show cause notice should be issued only after proper enquiry/ investigation and the notice should not be exercised in deliberate ambiguity. The Ld. Counsel has further submitted that the Ld. CIT(A) has not only discussed the facts of the case of the assessee rather discussed the judgment of the Hon’ble Apex Court thereafter passed an order in favour of the assessee. 6. Upon hearing the submission of the counsel for the respective parties. We have perused the order of AO as well as the Ld. CIT(A). The main contention of the assessee is that first 148 notice was issued on 23.04.2021 beyond the time limit for AY 2014-15 4 I.T.A. No. 1843/Kol/2024 C.O. No. 39/Kol/2024 Assessment Year: 2014-15 Rameswarpur Cold Storage Pvt. Ltd. as it was issued only after 01.04.2021. The assessee has also claimed that the sum of Rs. 53,13,824/- was receivable from NSEL that was already offered to tax and AO added this amount without understanding the fact that it was already offered to tax in the previous assessment year. It admits of no doubt that return of income for AY 2014- 15 was processed u/s 143(1) accepting the income disclosed in the return. It is pertinent to mention here that for AY 2014-15 all income accrued and arisen during FY 2013-14 has been acquainted and reflected in the return of income. In the present case, facts are such that return of income was filed for Ay 2014-15 on 2710.2014 declaring total income at Rs. 5,63,587/-. An intimation u/s 143(1) of the act was received by the Income Tax Department reopening of notice u/s 148 of the Act was issued on 23.04.2021 and subsequent letter dated 25.02.2022. As per the reason for reopening request for investigation of source of fund of the traders / brokers have been exposure NSEL exchange platform. The Ld. A.R has submitted that for AY 2014-15 he traded in National Spot Exchange limited through brokers M/s Capital First Commodity Limited dealing commodity trading. The assessee entering into transaction into purchase and sale of commodities through M/s Capital First Commodity Limited and from the statement which can be seen that the amount due to the assessee was Rs. 50,45,752.21/- by M/s Capital First Commodity Ltd. and there was no trading transaction after July, 2013. The assessee has provided following documents: a) Financial statement of Rameswarpur Cold Storage Pvt. Ltd. for the FY 2013-14, highlighting the relevant transaction(s) in schedule 13. b) Full set of income tax Return for the AY 2014-15 highlighting the profit on commodity trading in other income of profit and loss account for the financial year 2013-14. c) Axis bank statement for Rameswarpur Cold Storage Pvt. Ltd. reflecting the transaction(s). d) Ledger of broker M/s Capital First Commodities Ltd. for the AY 2014-15. e) Ledger of profit on commodities Trading for the AY 2014-15. f) 5 Contract note and payment voucher of broker M/s Capital First Commodities Ltd. for the AY 2014-15. 5 I.T.A. No. 1843/Kol/2024 C.O. No. 39/Kol/2024 Assessment Year: 2014-15 Rameswarpur Cold Storage Pvt. Ltd. g) Acknowledgement and computation of income for the AY 2014-15. 7. The above documents and evidences clearly go to establish that the transaction made with M/s Capital First Commodity Limited is genuine. We have also gone through the order passed by Ld. CIT(A) and find that the Ld. CIT(A) after going over the entire documents and submission of the assessee has held thus: “1. This order passed by the AO u/s 148A(d) of the IT Act is completely silent on the objection filed by the appellant before the AO vide submission dated: 22-06-2022. The appellant prima facie contended that, notice issued u/s 148 of the IT Act on 23-04-2021 for the A.Y 2014-15 shall be clearly beyond the limitation as per first proviso to Section 149 of the IT Act. 2. As the notice issued u/s 148 of the IT Act dated 23-04-2021 on the basis of earlier provision u/s 149 of the IT Act was issued beyond the time limit, the AO cannot treat that notice as the notice issued u/s 148A(b) of the IT Act. 3. Presuming that the notice issued u/s 148 of the IT Act dated: 23-04-2021 was within the time limit, for initiating the proceeding u/s 148A of the IT Act, the AO should have in his possession books of account, other document or other evidence which reveal that the income chargeable to tax, represented in the form of Asset, which has escaped the assessment amounts to or is likely to amount to rupees fifty lakhs or more for that year. 4. The appellant in the present case filed objection before the AO, claimed that, they have entered into purchase and sale of commodities through M/s Capital First Commodities Limited and this transaction was already reflected in the return of income filed for AY 2013-14. The sum of Rs. 50,45,752/- was receivable as on 31.03.2014. As per the appellant, they have received only small amount of money and balance sum of Rs. 49,90,890/ could not be recovered. 5. If so, no income chargeable to tax in the form of asset exceeding a sum of rupees fifty lakh escaped the assessment for the AY 2014-15. 6. The appellant stated that, AO proceeded to reopen the assessment without addressing the legal issues and the factual issues brought on record by the appellant before him. 7. The appellant further contended that receivable cannot be treated as an income from undisclosed source to reopen the assessment for the AY 2014-15. 6 I.T.A. No. 1843/Kol/2024 C.O. No. 39/Kol/2024 Assessment Year: 2014-15 Rameswarpur Cold Storage Pvt. Ltd. 8. Apart from this, the appellant raised another issue that, notice u/s 148 cannot be issued by the JAO by virtue of section 151A of the IT Act and the circular notification dated 28.03.2022 and 29.03.2022. In this connection, the appellant placed their reliance on the decision of the Hon'ble High Court of Telangana in the case of Kankanala Ravindra Reddy Vs. ITO (2023) 156 Taxmann.com 178 and the decision of the Hon'ble Bombay High Court in the case of Hexaware Technologies Ltd Vs ACIT[2024] in 162 taxmann.com 225.” 8. Going over the discussion made above and the facts of the case, we do not find any infirmity in the impugned order, accordingly, the appeal of the revenue is hereby dismissed. In view of the discussion made above Cross objection filed by the assessee is also disposed of as it has been filed only to support the order. In the result, the appeal of the revenue is dismissed and the cross objection filed by the assessee is disposed of . Order is pronounced in the open court on 24th April, 2025 Sd/- Sd/- (Rajesh Kumar/राजेश क ुमार) (Pradip Kumar Choubey /Ĥदȣप क ुमार चौबे) Accountant Member/लेखा सदèय Judicial Member/ÛयाǓयक सदèय Dated: 24th April, 2025 SM, Sr. PS 7 I.T.A. No. 1843/Kol/2024 C.O. No. 39/Kol/2024 Assessment Year: 2014-15 Rameswarpur Cold Storage Pvt. Ltd. Copy of the order forwarded to: 1. Appellant- ITO, Ward-4(1), Kolkata 2. Respondent – Rameswarpur Cold Storage Pvt. Ltd., 23/24, Sethia House, Radha bazar Street, Kolkata-700001. 3. Ld. CIT(A)- NFAC, Delhi 4. Ld. PCIT- , Kolkata 5. DR, Kolkata Benches, Kolkata (sent through e-mail) True Copy By Order Assistant Registrar ITAT, Kolkata Benches, Kolkata "