M/s. Eastern Trade Centre, Kolkata V. ACIR, Cir-34, Kolkata. , Kolkata

ITA 692/KOL/2023

• Counselvise Citation: [2024] 100 COUNSELVISE.COM (IT) 3110 (ITAT-KOLKATA)
• Duration Of Justice: 8 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-04-2024
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 12-03-2024
• Assessment Year: 2013-2014
• Appeal Filed On: 09-07-2023
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Reopening of assessment; Borrowed satisfaction; Set aside
• Section: 147; 148; 143(3); 143(1)

Judgement Text

आयकर अपील य अ धकरण, कोलकाता पीठ “ए’’, कोलकाता IN THE INCOME TAX APPELLATE TRIBUNAL “A” BENCH: KOLKATA ी राजेश क ु मार, लेखा सट य एवं ी संजय शमा या यक सद य के सम [Before Shri Rajesh Kumar, Accountant Member & Shri Sonjoy Sarma, Judicial Member] I.T.A. No. 692/Kol/2023 Assessment Year: 2013-14 M/s Eastern Trade Centre (PAN: AAAEF 7183 N) Vs. ACIT, Circle-34, Kolkata Appellant / )अपीलाथ ( Respondent / !"यथ Date of Hearing / स ु नवाई क% त'थ 13.03.2024 Date of Pronouncement/ आदेश उ*घोषणा क% त'थ 05.04.2024 For the Appellant/ नधा 0रती क% ओर से Shri Ravi Tulsiyan, FCA For the Respondent/ राज व क% ओर से Shri B. K. Singh, JCIT, SR.DR ORDER / आदेश Per Rajesh Kumar, AM: This is an appeal preferred by the assessee against the order of the Ld. Commissioner of Income Tax (Appeals)-NFAC, Delhi (hereinafter referred to as the Ld. CIT(A)”] dated 25.05.2023 for the AY 2013-14. 2. The assessee has challenged the appellate order on two counts. First the assessee has challenged the appellate order on legal issues that the reopening of assessment u/s 147 of the Act was made by the AO without recording proper reasons to believe and has merely relied on the assessment order for AY 2014-15. Second issue on which the assessee has also challenged the appellate order on merits is 2 I.T.A. No.692/Kol/2023 Assessment Year: 2013-14 M/s Eastern Trade Centre covered as the similar loan transactions from the same parties were deleted in the A.Y. 2014-15 and therefore even on merit the appellate order deserves to be set aside and AO may be directed to delete the addition. 3. We would like to take first legal issue raised by the assessee which is against the reopening of assessment. 4. Facts in brief are that the assessee filed return of income on 29.09.2013 showing total income of Rs. 39,12,250/- which was processed u/s 143(1) of the Act on 28.04.2014. The AO noted in the second para of the reasons recorded u/s 148(2) of the Act that the re-opening u/s 147 of the Act has been done on the basis of assessment order for AY 2014-15 wherein it has been noted that transactions with 12 companies were held to be bogus and accordingly the case was reopened u/s 147 of the Act for AY 2013-14 also by issuing notice u/s 148 of the Act on 17.03.2017. The said notice was complied with by the assessee by filing return of income on 24.07.2017. Finally the assessment was framed u/s 147 read with Section 143(3) of the Act after making an addition of Rs. 65,45,938/- u/s 68 of the Act in respect of loans taken during the year as well as interest paid thereon and also on the loans taken in preceding years the details whereof is given at page no. 2 of assessment order. The AO added the said amount to the income of the assessee on the ground that these parties were not found in the given addresses. Pertinent to state that during the year the assessee has raised loan funds from two entities namely Maheswari Merchants Pvt. Ltd. of Rs. 10,00,000/- and M/s Stardox Vinimay Pvt. Ltd. of Rs. 25,00,000/- while interest was paid to twelve parties including ones from whom the loans were taken during the year aggregating to Rs. 30,41,938/-. In other words the interest was also paid to the loan parties which were coming over from the earlier years. 5. At the outset the Ld. Counsel for the assessee stated that the reopening of assessment has been made invalidly without satisfying conditions precedent for reopening the assessment u/s 147 of the Act. The Ld. counsel for the assessee took us through the reasons recorded u/s 148 of the Act a copy of which is filed at page 1 of 3 I.T.A. No.692/Kol/2023 Assessment Year: 2013-14 M/s Eastern Trade Centre PB. The Ld. A.R stated that the reopening of assessment has been done on the basis of assessment proceedings and assessment order for AY 2014-15. The counsel stated that in the said assessment year the loans taken as well as interest paid thereon by the assessee were added to the income of the assessee on the ground of being bogus. The Ld. A.R therefore prayed that reopening of assessment was made only on the basis of borrowed satisfaction without recording any objective satisfaction/reasons to believe by the AO in the current assessment year and therefore the reopening of assessment is bad in law. The Ld. A.R also pointed out that the Hon’ble Tribunal has quashed the reopening of assessment in AY 2014-15 in ITA No. 2427/Kol/2017 vide order dated 6.9.2019. Therefore the basis of reopening is itself bad in law on two counts: i) it is based on borrowed satisfaction without recording independent findings in the current year and ii) the very basis on which the reopening was made has been demolished by the Tribunal. Besides the ld. Counsel of the assessee submitted that even on merit the issue has been decided in favour of the assessee by the Co-ordinate Bench in the above decision. The ld AR therefore prayed that the assessment may kindly be quashed by allowing the appeal of the assessee. 6. The Ld. D.R on the other hand relied on the order of authorities below by submitting that on the date of reopening the assessment , the decision of Co-ordinate Bench for A.Y. 2014-15 was not available and AO was well within his jurisdiction to reopen the assessment on the basis of assessment year for AY 2014-15. The Ld. D.R therefore prayed that the issue raised by the assessee may kindly be dismissed. 7. After hearing the rival contentions and perusing the material on record including the reasons recorded for reopening of assessment u/s 148(1) of the Act a copy of which is available at page no. 1 of PB, we observe that the only finding given by the AO in the reasons recorded that on the basis of assessment order for AY 2014- 15 ,the case is reopened as the income has escaped income as these loans are same as in A.Y. 2014-15 which were decided to be bogus in AY 2014-15 itself and added to the income. Thus it is clear from the reasons recorded that there is no independent application of mind in the current assessment year at the time of recording the 4 I.T.A. No.692/Kol/2023 Assessment Year: 2013-14 M/s Eastern Trade Centre reasons.Besides the case of assessee is further strengthen by the fact that in AY 2014- 15, the issue of reopening of assessment has been decided in favour of the assessee by Co-ordinate Bench of Kolkata as stated above beside deciding the merit of case too. Considering these facts and circumstances , we are inclined to quash the reopening of assessment by AO by setting aside the order of Ld. CIT(A). 8. In the result appeal of the assessee is allowed. Order is pronounced in the open court on 5 th April, 2024 Sd/- Sd/- (Sonjoy Sarma /संजय शमा ) (Rajesh Kumar/राजेश क ु मार) Judicial Member/ या यक सद य Accountant Member/लेखा सद य Dated: 5 th April, 2024 SM, Sr. PS Copy of the order forwarded to: 1. Appellant- M/s Eastern Trade Centre, 1 st Floor, 5, Commercial Building, 23, N.S. Road, Kolkata-700001. 2. Respondent – ACIT, Circle-34, Kolkata 3. Ld. CIT(A)-NFAC, Delhi 4. Ld. Pr. CIT- , Kolkata 5. DR, Kolkata Benches, Kolkata (sent through e-mail) True Copy By Order Assistant Registrar ITAT, Kolkata Benches, Kolkata