DCIT, CC-1(3), Kolkata, Kolkata V. M/S Navin Construction & Credit Pvt. Ltd., Kolkata

ITA 571/KOL/2022

AI Insights

The case involves the Deputy Commissioner of Income Tax, Central Circle-1(3), Kolkata (Appellant) against M/s. Navin Construction & Credit Pvt. Ltd. (Respondent) concerning the assessment year 2013-2014. The primary issue was the validity of the re-assessment under section 147 of the Income Tax Act, which the CIT(Appeals) found to be improperly invoked. The Assessing Officer had reopened the assessment and added Rs.3,75,00,000 as unexplained credits, which was contested by the assessee. The Tribunal agreed with the CIT(Appeals) and dismissed the Revenue's appeal, citing precedents from various High Courts that supported the assessee's position.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 129114 (ITAT-KOLKATA)
• Duration Of Justice: 3 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-01-2023
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 27-12-2022
• Assessment Year: 2013-2014
• Appeal Filed On: 10-10-2022
• Other Referred Cases: CIT \\u2013vs.- Jet Airways (I) Limited, Ranbaxy Laboratories Limited \\u2013vs.- CIT, CIT \\u2013vs.- Infinity Infotech Parks Limited, CIT (Exemption), Kolkata \\u2013vs.- B.P. Poddar Foundation for Education
• Laws Referred To: Income Tax Act
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Reopening of assessment
• Section: 147; 68; 148; 143(3); 143(1)

Judgement Text

ITA No. 571/KOL/2022 Assessment Year: 2013-2014 M/s. Navin Construction & Credit Pvt. Limited 1 IN THE INCOME TAX APPELLATE TRIBUNAL, ‘A’ BENCH, KOLKATA Before Shri Rajpal Yadav, Vice-President (KZ) & Shri Girish Agrawal, Accountant Member I.T.A. No. 571/KOL/2022 Assessment Year: 2013-2014 Deputy Commissioner of Income Tax,..........Appellant Central Circle-1(3), Kolkata, Aayakar Bhawan Poorva, 3 rd Floor, 110, Shantipally, E.M. Bypass, Kolkata-700107 -Vs.- M/s.Navin Construction & Credit Pvt. Ltd.,Respondent 12, Government Place East, Dalhousie, Kolkata-700069 [PAN:AAACN9084E] Appearances by: Shri Akkal Dudhewala, A.R., appeared on behalf of the assessee Shri P.P. Barman, Addl. CIT, appeared on behalf of the Revenue Date of concluding the hearing : December 28, 2022 Date of pronouncing the order : January 16, 2023 O R D E R Per Rajpal Yadav, Vice-President (KZ):- The Revenue is in appeal before the Tribunal against the order of ld. Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi dated 28.04.2022 passed for Assessment Year 2013-14. ITA No. 571/KOL/2022 Assessment Year: 2013-2014 M/s. Navin Construction & Credit Pvt. Limited 2 2. The Revenue has taken seven grounds of appeal. However, in Ground No. 3, it has pleaded the jurisdictional issue that ld. CIT(Appeals) has erred in holding that jurisdiction to make re- assessment under section 147 has not been correctly invoked and, therefore, re-assessment order deserves to be quashed. In other grounds, Revenue has taken peripheral arguments as well as pleading that ld. CIT(Appeals) has erred in deleting the addition of Rs.3,75,00,000/-, which was added by the ld. Assessing Officer under section 68 of the Income Tax Act. 3. Brief facts of the case are that the assessee has filed its return of income electronically on 30.09.2013 declaring total income of Rs.6,08,000/-. This return was processed under section 143(1) of the Income Tax Act and a refund of Rs.2.01,760/- was issued. The ld. Assessing Officer thereafter reopened the assessment and passed a re-assessment order under section 147 read with section 143(3) on 20.09.2016 vide which income of the assessee was determined at Rs.65,13,893/-. The ld. Assessing Officer reopened the assessment by issuance of a notice under section 148 on 01.05.2017. The assessee filed e- return under section 148 on 09.05.2017. The ld. Assessing Officer has passed the re-assessment order afresh under section 147 read with section 143(3) on 26.12.2017. The ld. Assessing Officer has made addition of Rs.3,75,00,000/- and in this way determined the taxable income of Rs.4,40,13,893/-. ITA No. 571/KOL/2022 Assessment Year: 2013-2014 M/s. Navin Construction & Credit Pvt. Limited 3 4. Dissatisfied with the assessment order, the assessee carried the matter in appeal before the ld. CIT(Appeals). It has contended that the ld. Assessing Officer has reopened on account of escapement of income on Item “A”. However, he did not make any addition of Item “A”, but added Item “B”. Therefore, on the strength of Hon’ble Bombay High Court’s decision in the case of CIT –vs.- Jet Airways (I) Limited reported in 331 ITR 236, it was contended that this addition is not sustainable because reopening of assessment is bad. The assessee further relied upon the judgment of the Hon’ble Delhi High Court in the case of Ranbaxy Laboratories Limited reported in 336 ITR page 136. It also put in service the judgment of the Hon’ble Calcutta High Court in the case of CIT –vs.- Infinity Infotech Parks Limited. The ld. CIT(Appeals) has accepted this contention of the assessee and held that assumption of jurisdiction under section 147 for making the addition under section 68 is bad and, therefore, this addition is not sustainable. 5. Before us, ld. D.R. relied upon the order of the ld. Assessing Officer. 6. On the other hand, ld. Counsel for the assessee relied upon the order of ld. CIT(Appeals) and placed on record two decisions of the Hon’ble Calcutta High Court- namely CIT-vs.- Infinity Infotech Parks Limited rendered in ITA No. 60 of 2014. He also ITA No. 571/KOL/2022 Assessment Year: 2013-2014 M/s. Navin Construction & Credit Pvt. Limited 4 placed on record the judgment of Hon’ble Calcutta High Court in the case of CIT (Exemption), Kolkata –vs.- B.P. Poddar Foundation for Education delivered on 13 th September, 2022. He submitted that in these decisions, Hon’ble Jurisdictional High Court concurred with the view taken by the Hon’ble Delhi, Bombay and Gujarat High Courts on this point. He drew our attention towards copy of the reasons recorded for second time reopening, which is available on page 33. He submitted that this reopening was made on account of escapement of short-term capital gain and long-term capital gain from taxation. However, in the computation of income, ld. Assessing Officer has made addition of a different item. Therefore, he prayed that appeal of the Revenue be dismissed. 7. We have duly considered the rival contentions and gone through the record carefully. It is imperative upon us to take note the reasons recorded by the ld. Assessing Officer for second reopening of the assessment. The copy of the letter dated 29.06.2017 written to the assessee is available on page 33, which reads as under:- “To The Principal Officer/Director, M/s. Navin Constructions & Credit Pvt. Limited, 12, Government Place, East Kolkata-700069 Sir, Sub.: Supply reason recorded u/s 147 in your case M/s. Navin Constructions & Credit Pvt. Limited –PAN- AAACN9084F, AY 2013-14 matter regarding Kindly refer to the above ITA No. 571/KOL/2022 Assessment Year: 2013-2014 M/s. Navin Construction & Credit Pvt. Limited 5 As per your requisition, I am sending herewith reasons recorded u/s 147 in your case- Reasons for the belief that income has escaped assessment. “As per the information received by this office from O/o DGI (Inv.), Kolkata on 13.07.2015, the assessee company has made bogus LTCG/STCG perpetrated through accommodation entries operators from Blue Circle. Tuni Textile of STCG amounting to Rs.81,68,000/- and LTCG amounting to Rs.6,14,500/- during the AY 2013-14 which was detected by DGIT(Inv), Kolkata. In view of the above, I have reasons to believe that income of approximately Rs.87,82,500/- has escaped assessment for the AY 2013- 14 and hence needs to be reassessed”. 8. However, the ld. Assessing Officer thereafter issued a show- cause notice dated 25.08.2017 requiring the assessee to explain the source of unsecured loans amounting to Rs.3,75,00,000/- alleged to have been received from six entities. A perusal of the assessment order would indicate that ld. Assessing Officer has made the addition of Rs.3,75,00,000/- on account unexplained credits received as a loan. If we compare discussion available in assessment order, vis-à-vis ultimate computation of income with the reasons for reopening the assessment, then it will reveal that qua the additions made, no reasons were recorded by the ld. Assessing Officer demonstrating the escapement of income on account of unsecured loans. The Hon’ble High Courts, namely Bombay, Gujarat, Delhi and Calcutta are unanimous in propounding that expression “and also” employed in section 147 cannot be read as being in the alternative. It means that if no addition is being made on an item for which assessment was ITA No. 571/KOL/2022 Assessment Year: 2013-2014 M/s. Navin Construction & Credit Pvt. Limited 6 reopened, then ld. Assessing Officer cannot add any other item. In other words, he ought to have reopened the assessment again for the purpose of adding those escaped item because that creates an independent circumstance for proceeding against an assessee. There might have various aspects of limitation, etc. which would come to the rescue of assessee. Thus following the Hon’ble High Courts’ decisions, we are of the view that ld. CIT(Appeals) has rightly deleted the addition. We have no hesitation in concurring with the conclusions of the ld. 1 st Appellate Authority. Accordingly, this appeal of the Revenue is dismissed. 9. In the result, the appeal of the Revenue is dismissed. Order pronounced in the open Court on 16 th January, 2023. Sd/- Sd/- (Girish Agrawal) (Rajpal Yadav) Accountant Member Vice-President (KZ) Kolkata, the 16 th day of January, 2023 Copies to :(1) Deputy Commissioner of Income Tax, Central Circle-1(3), Kolkata, Aayakar Bhawan Poorva, 3 rd Floor, 110, Shantipally, E.M. Bypass, Kolkata-700107 (2) M/s.Navin Construction & Credit Pvt. Ltd. 12, Government Place East, Dalhousie, Kolkata-700069 ITA No. 571/KOL/2022 Assessment Year: 2013-2014 M/s. Navin Construction & Credit Pvt. Limited 7 (3) Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi (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.