Arpan Securities Pvt. Ltd., Kolkata V. ITO, Ward-4(1), Kolkata

ITA 152/KOL/2022

AI Insights

The case involves Arpan Securities Pvt. Limited, which appealed against the order of the Principal Commissioner of Income Tax, Kolkata-2, passed under section 263 of the Income Tax Act. The original assessment for A.Y. 2012-13 was conducted under section 144(1), estimating the income significantly higher than declared. This was followed by a reassessment under section 144 read with section 147, also estimating a high income based on unexplained share capital and premium. The CIT invoked section 263, citing errors in the reassessment not being addressed. However, the Tribunal found that these matters were already under appeal, and thus, the CIT's revisionary powers could not be exercised.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 129024 (ITAT-KOLKATA)
• Duration Of Justice: 10 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-01-2023
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 23-01-2023
• Assessment Year: 2012-2013
• Appeal Filed On: 27-03-2022
• Laws Referred To: Income Tax Act
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Bogus Share capital; Revision of order
• Section: 68; 148; 263; 144; 143(1); 143(2); 22

Judgement Text

ITA No. 152/KOL/2022 Assessment Year: 2012-2013 Arpan Securities Pvt. Limited 1 IN THE INCOME TAX APPELLATE TRIBUNAL, ‘B’ BENCH, KOLKATA Before Shri Rajpal Yadav, Vice-President (KZ) & Shri Rajesh Kumar, Accountant Member I.T.A. No. 152/KOL/2022 Assessment Year: 2012-2013 Arpan Securities Pvt. Limited,................Appellant 14C, M.D. Road, 4 th Floor, Kolkata-700007 [PAN: AAJCA9130H] -Vs.- Income Tax Officer,..............................Respondent Ward-4(1), Kolkata, Aayakar Bhawan, P-7, Chowringhee Square, Kolkata-700069 Appearances by: Shri Manoj Kataruka, Advocate, appeared on behalf of the assessee Shri Sudipta Guha, CIT (DR), appeared on behalf of the Revenue Date of concluding the hearing : January 24, 2023 Date of pronouncing the order : February 1 st , 2023 O R D E R Per Rajpal Yadav, Vice-President (KZ):- The assessee is in appeal before the Tribunal against the order of ld. Principal Commissioner of Income Tax, Kolkata-2 dated 21.03.2022 passed under section 263 of the Income Tax Act for A.Y. 2012-13. ITA No. 152/KOL/2022 Assessment Year: 2012-2013 Arpan Securities Pvt. Limited 2 2. The assessee has taken four grounds of appeal, but its grievances revolve around a single issue, namely ld. CIT has erred in taking cognizance under section 263 of the Income Tax Act and thereby setting aside the assessment order for passing a denovo assessment order. 3. Brief facts of the case are that the assessee has filed its return of income declaring total income at Rs.720/-. The case of the assessee was selected for scrutiny assessment under CASS i.e. Computer Assisted Selection for Scrutiny. A notice under section 143(2) was issued and served upon the assessee. A perusal of the record revealed to the ld. Assessing Officer that the assessee had received share capital from different unlisted Companies and share premium amounting to Rs.42,10,78,500/-. The assessee did not submit any details before the ld. Assessing Officer. He passed an assessment order under section 144(1) of the Income Tax Act and estimated the income of the assessee at Rs.42,15,00,717/-. This order dated 27.03.2015 is placed on record at page no. 36 of the paper book. 4. The ld. Assessing Officer thereafter recorded his reason for reopening of the assessment. The copy of the reason is available on page no. 63 of the paper book. The reason for reopening of the assessment was that there was credible information that the assessee had received ITA No. 152/KOL/2022 Assessment Year: 2012-2013 Arpan Securities Pvt. Limited 3 Rs.43,56,00,495/- as unexplained share capital including share premium from Group of Companies. Thus in the opinion of the ld. Assessing Officer, income of the assessee has escape d assessment. He reopened the assessment. The ld. Assessing Officer has passed the reassessment orde r on 27.11.2019. It is also again passed under section 144 read with section 147. In other words, it is also passed on the basis of best judgment of the ld. Assessing Officer. The assessee did not appear in this proceeding also. The assessment order is a very brief order. It reads as under:- “The assessee filed return of income on for the AY 2012-13 on 17.09.2012 through e-filing disclosing total income of Rs.717/-. The return was processed u/s 143(1) of the I.T. Act, and subsequently the case was assssed u/s 144 on 27.03.2015 an assessed income of Rs.42,15,00,720/-. The case was reopened u/s/147 against information received from Investigation Wing. Accordingly, notice u/s 148 of the I.T. Act, 1961 was issued on 30.03.2019 and served upon the assessee. On the basis of submission, it is found that total capital was added is as per order u/s 143(3). Total income assessed as per order u/s144: Rs.42,15,00,720/- Assessed as above u/s 144/147 of the I.T. Act, 1961. Copy of order, Demand Notice and Challan are being issued to the assessee-company. Sd/- [RANI KUMARI] Income Tax Officer, Ward-4(2), Kolkata” ITA No. 152/KOL/2022 Assessment Year: 2012-2013 Arpan Securities Pvt. Limited 4 5. The ld. Commissioner took cognizance under section 263 of the Income Tax Act on the ground that in the reasons, ld. Assessing Officer has worked out the income escaped from assessment at Rs.43,56,00,000/-, whereas he did not enquire this issue in the reassessment proceedings. He simply accepted the undisclosed income of the assessee at Rs.42,15,00,720/-, which was determined by the ld. Assessing Officer under section 144 of the Income Tax Act. The difference between both assessment orders Rs.1,41,00,000/- has not been dealt with in the reassessment order. Therefore, an error has crept in, which has caused prejudice to the interest of the Revenue. 6. The ld. Counsel for the assessee, at the very outset, submitted that the assessee is in appeal against the assessment order dated 27.03.2015, which was passed under section 144(1) of the Income Tax Act. In othe r words, an appeal against the original assessment orde r has been stated to be pending before the ld. CIT(Appeals). 7. The ld. Counsel for the assessee also pointed out that appeal against the reassessment order dated 27.11.2019 passed under section 144 read with section 147 is also pending. Therefore, there should not be any 263 proceeding in the case of the assessee. ITA No. 152/KOL/2022 Assessment Year: 2012-2013 Arpan Securities Pvt. Limited 5 8. We have duly considered the rival contentions and gone through the record carefully. Sub-clause (c) of section 263(1) puts an embargo on the power of the ld. Commissioner to take up an issue for revision under section 263 on an item, which is subject matter of appeal before the ld. CIT(Appeals). The relevant part of section 263, sub-clause (c) reads as under:- “Revision of orders prejudicial to revenue. 263. (1) The Principal Chief Commissioner or Chief Commissioner or Principal Commissioner or Commissioner may call for and examine the record of any proceeding under this Act, and if he considers that any order passed therein by the Assessing Officer is erroneous in so far as it is prejudicial to the interests of the revenue, he may, after giving the assessee an opportunity of being heard and after making or causing to be made such inquiry as he deems necessary, pass such order thereon as the circumstances of the case justify, including an order enhancing or modifying the assessment, or cancelling the assessment and directing a fresh assessment. .....xx xx xx xx xx xx xx xx ........ (c) where any other referred to in this sub- section and passed by the Assessing Officer had been the subject matter of any appeal filed on or before or after the 1 st day of June, 1988, the powers of the Principal Commissioner or Commissioner under this sub-section shall extend and shall be deemed always to have extended to such matters as had not been considered and decided in such appeal”. 9. We deem it appropriate to take note Clause (a) of section 251(1), which reads as under:- “Powers of the Commissioner (Appeals)- 251. (1) In disposing of an appeal, the Commissioner (Appeals) shall have the following powers- ITA No. 152/KOL/2022 Assessment Year: 2012-2013 Arpan Securities Pvt. Limited 6 (a) in an appeal against an order of assessment, he may confirm, reduce, enhance or annul the assessment”. 10. A perusal of the record would suggest that addition made in the regular assessment order i.e. dated 27.03.2015 passed under section 144 relates to an addition on account of share capital received from different unlisted companies including share premium. Similarly the subject matte r of reassessment order is also relates to addition on account of share premium and share capital received from different unlisted Companies. Both these orders are ex-parte orders. The assessee did not submit anything in both these orders. Appeals against both these orders are stated to be pending before the ld. CIT(Appeals). The ld. CIT(Appeals) has the co- terminus power with that of ld. Assessing Officer and if any error lies in the quantification of the alleged undisclosed income required to be added with the aid of section 68 that aspect can easily be gone through by the ld. CIT(Appeals) under section 251(1)(a) of the Act. Since these items are subject matter of appeal before the ld. 1 s t Appellate Authority, no action under section 263 of the Income Tax Act ought to have been taken by the ld. CIT by exercising revisionary power. We have highlighted the powers of ld. CIT(A) for deciding the appeals and the subject matter of the appeals pending before the ld. CIT(Appeals) relates to quantification of the share capital including share premium received by the assessee. The ITA No. 152/KOL/2022 Assessment Year: 2012-2013 Arpan Securities Pvt. Limited 7 details of such share premium including face value has been placed on record at page no. 22 of the paper book, which reads as under:- 11. It is not a separate issue, which has to be taken care in revisionary jurisdiction. It can easily be examined by the ld. 1 s t Appellate Authority while deciding the appeals against the above two assessment orders. Therefore, we allow this appeal of the assessee and quash 263 order. The observations made by us will not impair or injure the case of ld. Asse ssing Officer and will not cause any ITA No. 152/KOL/2022 Assessment Year: 2012-2013 Arpan Securities Pvt. Limited 8 prejudice to the defence/explanation of the asse ssee in the quantum appeals pending before the ld. CIT(Appeals). The provision of the Income Tax Act discussed by us is only with the angle to bring the point at home that no 263 action can be taken up in such type of issues. 12. In the result, the appeal of the assessee is allowed. Order pronounced in the open Court on 1 s t February, 2023. Sd/- Sd/- (Rajesh Kumar) (Rajpal Yadav) Accountant Member Vice-President (KZ) Kolkata, the 1 st day of February, 2023 Copies to :(1) Arpan Securities Pvt. Limited, 14C, M.D. Road, 4 th Floor, Kolkata-700007 (2) Income Tax Officer, Ward-4(1), Kolkata, Aayakar Bhawan, P-7, Chowringhee Square, Kolkata-700069 (3) Principal Commissioner of Income Tax, Kolkata-2, Kolkata; 4) Commissioner of Income Tax- ; (5) The Departmental Representative (6) Guard File TRUE COPY By order Assistant Registrar, Income Tax Appellate Tribunal, Kolkata Benches, Kolkata Laha/Sr. P.S.