SLT Infracon Pvt. Ltd.(Transferee Co.) [Birch Vinimay Pvt. Ltd.(Transferor Company)], Assam V. I.T.O., Ward - 12(2) now merged with Ward - 12(1), Kolkata

ITA 139/KOL/2023

AI Insights

The case involves appeals by SLT Infracon Pvt. Ltd. against the orders of the Commissioner of Income Tax (Appeals)-4, Kolkata, for the assessment year 2010-11. The primary contention was regarding the validity of the notice issued under section 148 of the Income Tax Act, 1961, and the subsequent assessment under sections 147/144. The assessee argued that the notice was not properly served and that the assessment was based on incorrect and unverified information regarding dubious cash deposits. The Tribunal noted discrepancies in the assessment year mentioned in the reasons recorded for reopening the assessment and found that the Assessing Officer did not apply his mind to the facts but merely relied on the information from the Investigation Wing.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 127393 (ITAT-KOLKATA)
• Duration Of Justice: 5 month(s) 30 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-08-2023
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Next Hearing Date: 02-08-2023
• Assessment Year: 2010-2011
• Appeal Filed On: 22-02-2023
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Reopening of assessment; Borrowed satisfaction
• Section: 147; 148; 271(1)(c)

Judgement Text

आयकर अपील य अ धकरण, कोलकाता पीठ “सी’’, कोलकाता IN THE INCOME TAX APPELLATE TRIBUNAL “C” BENCH: KOLKATA ी राजेश क ु मार, लेखा सद य एवं ी संजय शमा या यक सद य के सम [Before Shri Rajesh Kumar, Accountant Member & Shri Sonjoy Sarma, Judicial Member] I.T.A. Nos. 139 & 140/Kol/2023 Assessment Year: 2010-11 SLT Infracon Pvt. Ltd. (Transferee Company)[Birch Vinimay Pvt. Ltd. (Transferor Company) (PAN: AADCB 1065 A) Vs. ITO, Ward-12(2), Kolkata [now merged with Ward-12(1)] Appellant / (अपीलाथ ) Respondent / ( !यथ ) Date of Hearing / स ु नवाई क$ त&थ 03.08.2023 Date of Pronouncement/ आदेश उ)घोषणा क$ त&थ 22.08.2023 For the Appellant/ नधा /रती क$ ओर से Shri Manoj Kataruka, Advocate Shri Rajiv Kr. Choudhary, Advocate For the Respondent/ राज व क$ ओर से Shri Arun Kanti Dutta, Sr. DR ORDER / आदेश Per Rajesh Kumar, AM: These are the appeals preferred by the assessee against the separate orders of the Ld. Commissioner of Income Tax (Appeals)-4, Kolkata (hereinafter referred to as the Ld. CIT(A)”] dated 27.12.2019 for the AY 2010-11. 2. At the outset we note that the appeal is delayed by three days. In the condonation petition , the delay is stated to be on account of assessee being Assam based while the jurisdiction lies with Kolkata Benches and the time taken in drafting the appeal papers and sending by post and getting them back and then filing took time 2 I.T.A. No.139 & 140/Kol/2023 Assessment Year: 2010-11 SLT Infracon Pvt. Ltd.(Transferee Company)[Birch vinimay Pvt. Ltd.(Transferor Company) and hence the delay of 3 days. Considering the facts of the case , we are inclined to condone the delay by admitting the appeal for adjudication. 3. At the time of hearing the assessee’s counsel pressed ground no. 3 which is reproduced as under: 3. That under the facts and in the circumstances of the case, the Ld. CIT(A) erred in ignoring the fact the notice issued u/s 148 of the IT Act, 1961 as well as assessment proceedings is bad in law and invalid as the notice u/s 148 of the Act was not served upon the assessees. 4. Facts in brief are that the assessment was completed u/s 147/144 of the Act vide order dated 31.12.2016 when the assessee failed to appear before the AO. The appeal of the assessee was dismissed by the Ld. CIT(A). 5. The Ld. Counsel of the assessee at the outset pointed out that the assessment framed by the AO is invalid in the eyes of law as the notice issued u/s 147 of the Act dated 31.03.2016 on the basis of reasons recorded u/s 148(2) of the Act in a mechanical manner and without application of mind and on the basis of borrowed satisfaction. The Ld. Counsel of the assessee stated that the AO while recording the reasons referred to the information received from DDIT (Inv), Unit-4(1), Kolkata dated 22.03.2016 wherein it has been stated that the assessee has cash deposits in a number of dubious accounts which were operated by the accommodation entry providers. Thereafter after discussing the said letter the AO has computed cash deposits at Rs. 30,00,000/- and came to the conclusion that to that extent the assessee has undisclosed income Rs. 30,00,000/- during FY 2009-10 (AY 2010-11) and thus justified the reopening of case u/s 147 of the Act. The Ld. A.R pointed out that on the top of the reasons recorded u/s 148(2) of the Act, the AO has stated that the assessment year 2009-10 whereas in the concluding para the AO has stated that FY 2009-10 (AY 2010-11) which showed that there was a complete non-application of mind on the part of the AO as the AO has incorrectly mentioned financial year and assessment year. Thus the AO himself was not clear so to which is correct year and in 3 I.T.A. No.139 & 140/Kol/2023 Assessment Year: 2010-11 SLT Infracon Pvt. Ltd.(Transferee Company)[Birch vinimay Pvt. Ltd.(Transferor Company) which the assessee has deposited cash in its bank accounts. Thereafter the AR stated that nowhere the AO applied his mind to the information received from the Investigation Wing as to how the income of the assessee has escaped assessment and the AO has only relied on the information received and recordeda conclusion that the income has escaped income to the tune of Rs. 30,00,000/- on the borrowed satisfaction and not recording his own satisfaction. The Ld. A.R prayed that reopening of assessment on the basis of borrowed satisfaction that too without application of mind to the facts before the AO renders the proceedings as invalid and therefore prayed before the Bench that the same may kindly be quashed. 6. The Ld. D.R relied on the orders of authorities below by submitting that the assessee was not cooperated in the assessment as well as in the appellate proceedings resulting into passing of ex-parte assessment as well as appellate order respectively. 7. After hearing the rival contentions and perusing the material on record, we are not restoring the case to the file of the Ld. CIT(A) considering the smallness of amount involved. Besides we note that the reasons state the incorrect assessment year on the top of the reasons recorded as A.Y. 2009-10 whereas in the bottom the same is stated as AY 2010-11. Besides we note that the AO has only referred to letter of the Investigation wing stating that the assessee has deposited cash in a number of dubious accounts however no such accounts were brought on record in the reasons recorded . In our opinion, there is no application of mind by the AO and this is the case of borrowed satisfaction as the AO has not applied his mind to the information received from Investigation Wing. Under this circumstance, we are not in a position to sustain the re-opening of assessment and therefore the same is bad in law. Consequently the reopening of assessment is quashed. The ground no. 3 is allowed. ITA No. 140/Kol/2023 for AY 2010-11. 8. The only issue challenged by the assessee is against the imposition of penalty u/s 271(1)(c) of Rs. 3,09,000/- which has confirmed by the First Appellate Authority. 4 I.T.A. No.139 & 140/Kol/2023 Assessment Year: 2010-11 SLT Infracon Pvt. Ltd.(Transferee Company)[Birch vinimay Pvt. Ltd.(Transferor Company) Since we have quashed the reopening the assessment, the penalty imposed u/s 271(1)(c) is consequential and is accordingly directed to be deleted. 9. In the result, both the appeals of the assessee are allowed. Order is pronounced in the open court on 22 nd August, 2023 Sd/- Sd/- (Sonjoy Sarma /संजय शमा ) (Rajesh Kumar/राजेश क ु मार) Judicial Member/ या यक सद य Accountant Member/लेखा सद य Dated: 22 nd August, 2023 SB, Sr. PS Copy of the order forwarded to: 1. Appellant- SLT Infracon Pvt. Ltd. (Transferee Co.) [Birch Vinimay Pvt. Ltd. (Trasferor Company)] PO-Badarpurghat, Dist-Hilakandi, Assam-788803 2. Respondent- ITO, Ward-12(2), Kolkata [now merged with Ward-12(1)] 3. Ld. CIT(A)- 4, Kolkata 4. Ld. PCIT- 5. DR, Kolkata Benches, Kolkata (sent through e-mail) True Copy By Order Assistant Registrar ITAT, Kolkata Benches, Kolkata