KAILASH REGENCY PVT. LTD.,KOLKATA V. I.T.O., WARD - 12(3), KOLKATA

ITA 2514/KOL/2024

AI Insights

Kailash Regency Pvt. Ltd. appealed against the order of the National Faceless Appeal Centre, Delhi, which upheld the reopening of their assessment for the Assessment Year 2009-10 under section 147 of the Income Tax Act, 1961. The reopening was based on information from the investigation wing regarding client code modifications that allegedly resulted in income escaping assessment. The Tribunal scrutinized the reasons provided by the AO for reopening the assessment and found them to be insufficiently detailed and vague, leading to the decision to quash both the reopening and the subsequent assessment order.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 126284 (ITAT-KOLKATA)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-04-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2009-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MADHUMITA DAS
• Assessee Lawyers: B.C. JAIN
• Keywords: Reopening of assessment; Competent authority; Reason to believe; Dismissed; National Faceless Appeal; Transactions
• Section: 147; 148; 143(3)

Judgement Text

" IN THE INCOME TAX APPELLATE TRIBUNAL “SMC” BENCH, KOLKATA BEFORE SHRI RAJESH KUMAR, AM ITA No.2514/KOL/2024 (Assessment Year:2009-10) Kailash Regency Pvt. Ltd. 2, Ashutosh Mukherjee Road, 4th Floor, Kolkata, West Bengal, 700020 Vs. I.T.O., Ward - 12(3) Aayakar Bhawan, P-7, Chowringhee Square, Kolkata, West Bengal, 700069 (Appellant) (Respondent) PAN No. AACCK2122Q Assessee by : Shri B.C. Jain, AR Revenue by : Ms. Madhumita Das, DR Date of hearing: 16.04.2025 Date of pronouncement : 21.04.2025 O R D E R Per Rajesh Kumar, AM: This is an appeal preferred by the assessee against the order of the National Faceless Appeal Centre, Delhi (hereinafter referred to as the “Ld. CIT(A)”] dated 06.11.2024 for the AY 2009-10. 02. The assessee has challenged in ground nos.1 and 2, the order of ld. CIT (A) in not deciding the legal issue raised by the assessee which is against the reopening of assessment u/s 147 of the Act in violation of provisions of the Act. 03. The facts in brief are that the assessee filed the original return of income on 21.09.2009, showing total income at ₹nil. The case of the assessee was reopened u/s 147 of the Act on the basis of report / information made by the investigation wing, Ahmedabad, in respect of client code modification after recording the reasons to believe and obtaining the permission from the competent authority. The statutory Page | 2 ITA No.2514/KOL/2024 Kailash Regency Pvt. ltd; A.Y. 2009-10 notices were duly issued and served upon the assessee which were also complied with by filing the necessary reply along with evidences. Finally, the addition was made by the ld. AO of ₹11,76,345/- by rejecting the loss in future and option. 04. In the appellate proceedings also, the appeal of the assessee was dismissed by the appellate authority. 05. After hearing the rival contentions and perusing the materials available on record, I find that the reopening was made by the ld. AO after recording reasons to believe, copy of which is available at page no. 1 and is extracted below for the sake of ready reference:- “Name of the Assessee: M/s. Kailash Regency Pvt. Ltd. PAN: AACCK2122Q, Assessment Year: 2009-10 This office has received information vide letter F.No.Search-15-16/13/Misc. Correspondence(Inv.)/Pr.CIT-2/Kol/9095-96 dt.21.03.2016 from DCIT, Hqrs.-2, Kolkata. In the information it is stated that in connection to Survey Report in respect of Client Code Modification (CCM) some assessee have taken losses and shifted out profits. As per the disseminated information of beneficiary client who have taken losses and shifted out profits have been provided financial year wise. The aforementioned assessee company's name also appears. The net reduction in income due to CCM is Rs.(-) 8,45,730/-which has been booked by the assessee during the F.Y-2008-09. In view of the above I have reason to believe that income of Rs.8,45,730/- has escaped assessment hence, notice u/s 148 of the Income-tax Act, 1961 is being issued after obtaining necessary approval from Ld.Pr.CIT-2, Kolkata. Sd/- ITO Ward 4(4), Kol” 06. On perusal of the above reason it is observed that the ld. AO has merely reproduced in Para no.2, the information received from the investigation wing qua client code modification and in para 3, he concluded that he has reason to believe that the income has escaped assessment to the extent of ₹8,45,730/-. In our view the reasons are Page | 3 ITA No.2514/KOL/2024 Kailash Regency Pvt. ltd; A.Y. 2009-10 cryptic and there is no detail of the transactions as entered into by the assessee. There is total non-application of mind on the part of the ld. AO to the information received. Therefore, reopening of assessment on the basis of such cryptic and vague reasons cannot be sustained. Accordingly, I quash the reopening of assessment u/s 147 of the Act as well as the order framed u/s 143(3) of the Act dated 09.08.2016. 07. In the result, the appeal of the assessee is allowed. Order pronounced in the open court on 21.04.2025. Sd/- (RAJESH KUMAR) (ACCOUNTANT MEMBER) Kolkata, Dated: 21.04.2025 Sudip Sarkar, Sr.PS Copy of the Order forwarded to : 1. The Appellant 2. The Respondent 3. CIT 4. DR, ITAT, 5. Guard file. BY ORDER, True Copy// Sr. Private Secretary/ Asst. Registrar Income Tax Appellate Tribunal, Kolkata "