INCOME TAX OFFICER, WARD - 11(1), KOLKATA, KOLKATA V. OSCAR MERCANTILES PRIVATE LIMITED, KOLKATYA

ITA 3183/KOL/2025

AI Insights

The case involves Oscar Mercantiles Private Limited, which was assessed for the year 2013-2014. The Income Tax Officer (ITO) made several additions to the assessee's income, which were contested. The CIT(Appeals) partly allowed the appeal, particularly deleting an addition of Rs.10,00,000 which was treated as unexplained cash credit under section 68. The Revenue appealed against this decision, arguing that the reassessment was justified due to non-disclosure by the assessee. However, the Tribunal found that the reassessment was based on the same material as the original assessment and there was no new tangible material to justify the reopening of the case.

• Counselvise Citation: [2026] 140 COUNSELVISE.COM (IT) 846130 (ITAT-KOLKATA)
• Duration Of Justice: 3 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-03-2026
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: Kolkata
• Assessment Year: 2013-2014
• Appeal Filed On: 22-12-2025
• Other Referred Cases: Raymond Woollen Mills Ltd. v. ITO, ACIT v. Rajesh Jhaveri Stock Brokers (P) Ltd., ITO v. Lakhmani Mewal Das, CIT v. Lovely Exports (P) Ltd., Orchid Industries Pvt. Ltd. v. DCIT, CIT v. Divine Leasing & Finance Ltd., CIT -vs.- Foramer France, CIT -vs.- Tamil Nadu Transport Development Finance Corpn. Limited, Google India (P.) Ltd. -vs.- Assistant Commissioner of Income Tax
• Laws Referred To: Income Tax Act
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Set aside; Difference of opinion; Change of opinion; Reassessment proceedings; Unexplained cash credit; Depreciation; Onus to prove; Competent authority; Reason to believe; Tangible material
• Section: 147; 148; 142(1); 68; 133(6); 14A

Judgement Text

" ITA No. 3183/KOL/2025 (A.Y. 2013-2014) & C.O. No. 10/KOL/2026 (in ITA No. 3183/KOL/2025) (A.Y. 2013-14) Oscar Mercantiles Private Limited 1 IN THE INCOME TAX APPELLATE TRIBUNAL, ‘SMC’ BENCH, KOLKATA Before Shri Duvvuru RL Reddy, Vice-President (KZ) I.T.A. No. 3183/KOL/2025 Assessment Year: 2013-2014 Income Tax Officer,………………………...……Appellant Ward-11(1), Kolkata, Aayakar Bhawan, 6th Floor, Room No. 20, P-7, Chowringhee Square, Kolkata-700069 -Vs.- Oscar Mercantiles Private Limited,……..Respondent 10A, Rabindra Sarani, Kolkata-700001 [PAN: AAACO3451A] - A N D – C.O. No. 10/KOL/2026 (in ITA No. 3183/KOL/2025) Assessment Year: 2013-2014 Oscar Mercantiles Private Limited,…..Cross Objector 10A, Rabindra Sarani, Kolkata-700001 [PAN: AAACO3451A] -Vs.- Income Tax Officer,………………………...……Respondent Ward-11(1), Kolkata, Aayakar Bhawan, 6th Floor, Room No. 20, P-7, Chowringhee Square, Kolkata-700069 Printed from counselvise.com ITA No. 3183/KOL/2025 (A.Y. 2013-2014) & C.O. No. 10/KOL/2026 (in ITA No. 3183/KOL/2025) (A.Y. 2013-14) Oscar Mercantiles Private Limited 2 Appearances by: Shri Kallol Mistry, Sr. D.R., appeared on behalf of the Revenue Shri Devesh Poddar, Advocate, appeared on behalf of the assessee Date of concluding the hearing: February 25, 2026 Date of pronouncing the order: March 27, 2026 O R D E R The present appeal is directed at the instance of Revenue against the order of Id. Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi dated 06.11.2025 passed for Assessment Year 2013-2014. 2. Facts in brief are that the assessee filed its return of income on 30.09.2013 declaring total income of Rs.28,335/-. The case was selected for scrutiny through ‘Computer Assisted Scrutiny Selection’ (CASS). Notices under section 143(2) of the Act was issued on 03.09.2014 which was duly served upon the assessee. Subsequently notice under section 142(1) along with questionnaire was issued on 03.07.2015, which was duly served upon the assessee. During the year under consideration, the assessee was engaged in investment in share and financing etc. Letters were issued to all the shareholders calling for information under section 133(6) of the Income Tax Act and the replies received from the shareholders were verified. During the course of assessment proceedings, various discrepancies were found, i.e. Car running & Printed from counselvise.com ITA No. 3183/KOL/2025 (A.Y. 2013-2014) & C.O. No. 10/KOL/2026 (in ITA No. 3183/KOL/2025) (A.Y. 2013-14) Oscar Mercantiles Private Limited 3 maintenance, filing fees, depreciation on motor car and disallowance under section 14A of the Income Tax Act. As the assessee did not furnish any plausible explanation in support of claim, the ld. Assessing Officer added the amount of Rs.4,214/- in respect of car running & maintenance, Rs.2,03,500/- in respect of filing fees, Rs.49,577/- in respect of depreciation on motor car and Rs.33,430/- in respect of disallowance under section 14A of the Act. Finally, ld. Assessing Officer determined the total taxable income of the assessee at Rs.3,19,556/- . 3. On being aggrieved, the assessee preferred an appeal before the ld. CIT(Appeals). The ld. CIT(Appeals) partly allowed the appeal of the assessee by observing as under:- “5.5 Ground No.1 relates to the initiation of proceedings under section 147 of the Act in a case where assessment had already been completed under section 143(3). The reasons recorded for reopening indicate that the Assessing Officer had received specific information from the Investigation Wing regarding the alleged accommodation entry of Rs.10,00,000/– received by the appellant. Based on such information, and after obtaining due approval from the competent authority, the Assessing Officer initiated reassessment proceedings. 5.6. The Hon’ble Supreme Court in Raymond Woollen Mills Ltd. v. ITO [(1999) 236 ITR 34 (SC)] held that the sufficiency or correctness of the material cannot be gone into at the stage of reopening and that it is sufficient if there exists some material on which the belief of escapement could be formed. Similarly, in ACIT v. Rajesh Jhaveri Stock Brokers (P) Ltd. [(2007) 291 ITR 500 (SC)], it was held that the existence of “reason to believe” must be based on tangible material and not mere suspicion, but its adequacy is not to be examined at this stage. The principle was also explained in ITO v. Lakhmani Mewal Das [(1976) 103 ITR 437 (SC)], where it was held that the belief must be in good faith and based on relevant information. 5.7. Considering these legal principles and the facts of the case, it is evident that the Assessing Officer possessed tangible material in the form of external information suggesting potential escapement of income. Such information was sufficient to form a prima facie Printed from counselvise.com ITA No. 3183/KOL/2025 (A.Y. 2013-2014) & C.O. No. 10/KOL/2026 (in ITA No. 3183/KOL/2025) (A.Y. 2013-14) Oscar Mercantiles Private Limited 4 belief for initiation of proceedings under section 147. Accordingly, the initiation of reassessment is found to be in accordance with the provisions of law. Therefore, Ground No. 1 is dismissed. 5.8. Ground No. 2 relates to the addition of Rs.10,00,000/– made under section 68 of the Act. The appellant has submitted documentary evidence in support of the transaction, including the investor’s confirmation, PAN, ITR, and bank statement reflecting the transfer of Rs.10,00,000/– through RTGS. The identity of the investor is thus established, and the transaction has been carried out through verifiable banking channels. 5.9. The Hon’ble Supreme Court in CIT v. Lovely Exports (P) Ltd. (216 CTR 195) held that if the identity of the share applicant is established, no addition can be made in the hands of the company under section 68. The appellant has also placed reliance on Orchid Industries Pvt. Ltd. v. DCIT (88 taxmann.com 502, Bom.) and CIT v. Divine Leasing & Finance Ltd. (299 ITR 268, Del.), wherein it was held that once the assessee discharges the initial burden of proof, the onus shifts to the department to prove otherwise. 5.10. Considering the evidences furnished and the legal position emerging from the above decisions, the share application money received from M/s Ankhe Commercial Pvt. Ltd. cannot be treated as unexplained cash credit. Accordingly, Ground No. 2 is allowed and the addition of Rs.10,00,000/– is deleted. 5.11. Ground No.3 pertains to the contention that the addition under section 68 was made without conducting any third-party verification of the share subscriber. It is noted that the appellant had provided all relevant details of the investor, including the bank statement evidencing the RTGS transfer, which are sufficient to establish the identity and genuineness of the transaction. In view of the settled judicial position that transactions supported by verifiable documentation and bank records cannot be disregarded merely in the absence of further enquiry, the addition made on this account does not merit sustenance. Ground No. 3 is therefore allowed. 5.12. Ground No. 4 is general in nature where the appellant craves leave to add, amend any or all the grounds of appeal before or at the time of the hearing of the appeal. However, as the appellant did not exercise this option during the appellate proceedings, this ground of appeal is disposed as infructuous. 6. Conclusion: In view of the above discussion and based on the facts and records, the appeal filed by the appellant is Partly Allowed. Printed from counselvise.com ITA No. 3183/KOL/2025 (A.Y. 2013-2014) & C.O. No. 10/KOL/2026 (in ITA No. 3183/KOL/2025) (A.Y. 2013-14) Oscar Mercantiles Private Limited 5 4. On being aggrieved, the Revenue preferred an appeal before the Tribunal. It was the submission of the ld. Counsel for the assessee that the re-assessment proceedings have been initiated and notice under section 148 dated 19.03.2020 was issued, which was beyond four years and within six years. He further submitted that the ld. Assessing Officer has categorically committed to mention the failure on the part of the assessee to truly and fully disclose the relevant details in ITR at the time of original assessment. Therefore, the ld. Assessing Officer has violated the provisions of section 147 and thus the proceedings initiated were void ab initio. The ld. Counsel also relied on the decision of Hon’ble Apex Court in the case of CIT -vs.- Foramer France (SC) 264 ITR 566, wherein it was held that “whether since admittedly there was no failure on part of petitioner to make return or to disclose fully and truly all material facts necessary for assessment, proviso to new section, which bars issue of notice under section 148 after expiry of four years from end of relevant assessment year”. 4.1. The ld. Counsel also relied on the decision of the Hon’ble Madras High Court in the case of CIT -vs.- Tamil Nadu Transport Development Finance Corpn. Limited reported in 306 ITR 136, wherein it was held that “in the original assessment proceedings, the Assessing Officer had considered all the details filed by the assessee and only thereafter had completed the assessment under section 143. Based on those details and other documents filed along with the return, the assessment was completed. There was no Printed from counselvise.com ITA No. 3183/KOL/2025 (A.Y. 2013-2014) & C.O. No. 10/KOL/2026 (in ITA No. 3183/KOL/2025) (A.Y. 2013-14) Oscar Mercantiles Private Limited 6 failure on the part of the assessee to disclose fully and truly all material facts”. 4.2. The ld. Counsel for the assessee also relied on the decision in the case of Google India (P.) Ltd. -vs.- Assist4ant Commissioner of Income Tax [2025] 172 taxmann.com 378 (Karnataka)[24.02.2025], wherein it was held that “where Assessing Officer issued reopening notice after period of four years on ground that while computing section 10A deduction, assessee allocated certain amount solely on one unit, t4hereby reducing taxable income and boosting profit of other units, since reasons did not indicate failure of assessee to disclose any information or that he had not disclosed true and full material facts. It was a case of mere change of opinion and thus, such reopening was not permissible”. 4.3. Ld. Counsel further submitted that admittedly it is a case of reopening beyond four years and within six years and there is no fresh material. Therefore, the ld. CIT(Appeals) also relied on the decisions of various Hon’ble High Courts and Supreme Court and passed the order in favour of assessee. He also further submitted that during the assessment proceedings, the ld. Assessing Officer has categorically mentioned that “during the year under consideration, the assessee company was engaged in investment in shares, financing etc. Letters were issued to all the shareholders calling for information under section 133(6) of the Act and the replies received and verified. Therefore, the assessment was Printed from counselvise.com ITA No. 3183/KOL/2025 (A.Y. 2013-2014) & C.O. No. 10/KOL/2026 (in ITA No. 3183/KOL/2025) (A.Y. 2013-14) Oscar Mercantiles Private Limited 7 completed under section 143(3). There is no tangible fresh material to issue the reassessment proceedings. I, therefore, confirm the order passed by the ld. CIT(Appeals). 5. On the other hand, ld. Departmental Representative submitted that there is a material to show that the assessee has not fully and truly disclosed the transactions. Therefore, the ld. Assessing Officer has issued notice under section 148 of the Act. He pleaded to set aside the order passed by the ld. CIT(Appeals) and uphold the order passed by the ld. Assessing Officer. 6. I have heard both the sides and perused the material available on record. It is an admitted fact that the case was reopened beyond four years and even during the assessment proceedings, the ld. Assessing Officer has categorically mentioned that he has issued notices to all the shareholders and investors and there is no tangible fresh material available to ld. Assessing Officer to issue notice under section 148 of the Act. Therefore, considering the various decisions of the Hon’ble High Courts and Hon’ble Supreme Court, (referred supra), I delete the addition made by the ld. Assessing Officer. I do not find any infirmity in the order of ld. CIT(Appeals). Therefore, the grounds raised by the Revenue are dismissed. 7. The Cross Objection bearing C.O. No. 10/KOL/2026 arising out of ITA No. 3183/KOL/2025 is in support of the order of ld. CIT(Appeals). Since I upheld the order passed by the ld. Printed from counselvise.com ITA No. 3183/KOL/2025 (A.Y. 2013-2014) & C.O. No. 10/KOL/2026 (in ITA No. 3183/KOL/2025) (A.Y. 2013-14) Oscar Mercantiles Private Limited 8 CIT(Appeals), and dismissed the appeal of the Revenue, the issues raised by the assessee in its Cross Objection have become infructuous. I accordingly dismiss the Cross Objection filed by the assessee as infructuous. 8. In the result, the appeal of the Revenue and the Cross Objection of the assessee both are dismissed. Order pronounced in the open Court on 27/03/2026. Sd/- (Duvvuru RL Reddy) Vice-President (KZ) Kolkata, the 27th day of March, 2026 Copies to :(1) Income Tax Officer, Ward-11(1), Kolkata, Aayakar Bhawan, 6th Floor, Room No. 20, P-7, Chowringhee Square, Kolkata-700069 (2) Oscar Mercantiles Private Limited, 10A, Rabindra Sarani, Kolkata-700001 (3) CIT(Appeals), NFAC, Delhi; (4) CIT - , Kolkata; (5) The Departmental Representative; (6) Guard File TRUE COPY By order Assistant Registrar, Income Tax Appellate Tribunal, Kolkata Benches, Kolkata Laha/Sr. P.S. Printed from counselvise.com "