M/S. SAGUN SALES PVT. LTD.,KOLKATA V. I.T.O., WARD - 4(1), KOLKATA, KOLKATA

ITA 1194/KOL/2024

AI Insights

The case involves M/s Sagun Sales Private Limited appealing against the order of the CIT(A), National Faceless Appeal Centre, Delhi, concerning the assessment year 2011-2012. The primary issue was the reopening of the assessment by the Assessing Officer (AO) based on information from the ITO (Investigation Wing) regarding alleged tax evasion. The appellant argued that the AO did not independently verify the information nor establish a direct link to the assessee, thus lacking a valid basis for reopening the assessment. The tribunal, referencing decisions from the Hon'ble Jurisdictional High Court and other precedents, agreed with the appellant, leading to the quashing of the reassessment order.

• Counselvise Citation: [2026] 140 COUNSELVISE.COM (IT) 829020 (ITAT-KOLKATA)
• Duration Of Justice: 1 year(s) 7 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-01-2026
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: Kolkata
• Assessment Year: misc
• Appeal Filed On: 24-05-2024
• Other Referred Cases: Boothnath Vintrade Private Limited vs. ITAT/297/2024, PCIT vs. Meenakshi Overseas (P) Ltd. [2017] 82 taxmann.com 300 (Del.), CHHUGANMAL RAJPAL VS. S. P. CHALIHA (1971) 79 ITR 603 (SC), SHEO NATH SINGH VS. AAC. (1971) 82 ITR 147 (SC)
• Laws Referred To: Income Tax Act
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ABHIJIT ADHIKARY
• Assessee Lawyers: S.M. SURANA
• Keywords: Reason to believe; Tangible material
• Section: 148

Judgement Text

" आयकर अपीलीय अधिकरण, “एस.एम.सी” न्यायपीठ, कोलकाता IN THE INCOME TAX APPELLATE TRIBUNAL “SMC” BENCH KOLKATA श्री जाजज माथन, न्याययक सदस्य क े समक्ष । BEFORE SHRI GEORGE MATHAN, JUDICIAL MEMBER आयकर अपील सं/ITA No.1194/KOL/2024 (नििाारण वर्ा / Assessment Year :2011-2012) M/s Sagun Sales Private Limited, Unit 3-B, 3rd Floor 24 Anuj Chamber, Park Street, Kolkata-700016 Vs ITO Ward-4(1), Kolkata PAN No. :AALCS 0017 R (अपीलार्थी /Appellant) .. (प्रत्यर्थी / Respondent) नििााररती की ओर से /Assessee by : Shri S.M.Surana, Advocate राजस्व की ओर से /Revenue by : Shri Abhijit Adhikary, Sr. DR सुनवाई की तारीख / Date of Hearing : 13/01/2026 घोषणा की तारीख/Date of Pronouncement : 13/01/2026 आदेश / O R D E R This is an appeal filed by the assessee against the order dated 19.04.2024, passed by the ld.CIT(A), National Faceless Appeal Centre, Delhi for the assessment year 2011-2012. 2. It was submitted by the Ld.AR that the issue is in the appeal was against the reopening of the assessment. The Ld. AR drew my attention to reasons recorded copy of which is filed at page 1 of the paper book which reads as follows:- Printed from counselvise.com ITA No.1194/KOL/2024 2 3. It was submission that the reasons recorded just mentions about the information having been received from the Income Tax Officer Printed from counselvise.com ITA No.1194/KOL/2024 3 (Investigation) Unit-1 & AIU, Kolkata regarding matter of tax evasion to various through various beneficiaries. It was the submission that there is no independent application of mind by the AO nor is there live link connecting the assessee to the said information. It was submission that in view of the decision of Hon’ble Jurisdictional High Court Calcutta in the case of Boothnath Vintrade Private Limited, in ITAT/297/2024 and IA No.GA/1/2024 dated 14/11/2025, wherein the Hon’ble Jurisdictional High Court has held in para 5.2 to 6 as follows:- 5.2. It is settled that before an AO can be said to have had reasons to believe that some income has escaped assessment, he should have relevant material before him from which he could have drawn such conclusion. His vague imagination that there might have been some escapement of income from assessment is not sufficient [CHHUGANMAL RAJPAL VS. S. P. CHALIHA (1971) 79 ITR 603 (SC)]. It is emphatically settled in this regard that there can be no doubt that the words \"reason to believe suggest that the belief must be that of an honest and reasonable person based upon reasonable grounds and that the Assessing Officer may act on direct or circumstantial evidence but not on mere suspicion, gossip or rumour. The Ld. AO would be acting without jurisdiction, if the reason for the belief that the conditions required to be satisfied do not exist or is not material or relevant to the belief required by the section [SHEO NATH SINGH VS. AAC. (1971) 82 ITR 147 (SC). In the case of PCIT Vs. Meenakshi Overseas (P) Ltd. [2017] 82 taxmann.com 300 (Del.) wherein it has been held as under: \"where reassessment was resorted to on basis of information from DIT (Investigation) that assessee had received accommodation entry but and there was no independent application of mind by Assessing Officer to tangible material and reasons failed to demonstrate link between tangible material and formation of reason to believe that income had escaped assessment, reassessment was not justified.\" 5.3. Ld. AO simply based his belief on the alleged report supplied by the DCIT, (Investigation), Kolkata for assuming jurisdiction u/s. 148 of the Act without adducing on record any evidence in support thereof and without any independent application of mind on the issue. It is an inalienable principle of law that the reasons recorded u/s. 148 of the Act should be based on credible material which must have a live link or nexus with the belief that there was escapement of income. There should be an independent application of mind on such material Printed from counselvise.com ITA No.1194/KOL/2024 4 before recording the reasons and issuing notice u/s. 148 of the Act. The belief should be held in good faith and objectively; it cannot be a mere pretence, 6.Considering the facts on record and the contents of the reasons to believe recorded by the Ld. AO coupled with his general and casual observations without the conduct of any examination or verification as well as judicial precedents referred above, we hold that the crucial link between the information made available to the AO and the formation of belief is absent. There is no independent application of mind by the AO. Accordingly, the initiation of proceedings u/s. 147 r.w.s. 148 to reopen the assessment does not satisfy the requirements of the law. Ground no. 4 of appeal is on the legal issue is allowed. Since no submissions have been made by both the parties on the merits of the case and the legal issue is allowed in favour of the assessee and remaining grounds are rendered academic in nature, hence, not adjudicated upon. 4. It was submission that the reassessment proceeding is liable to be quashed. 5. In reply, the Ld.Sr DR vehemently supported the order of the AO and CIT(A). 6. I have Considered the rival submissions. Admittedly, as it is noticed that there is no independent enquiry in regard to the information received by the AO from the ITO (Investigation Wing) and as no clear live link has been shown between the said information on the assessee, respectfully following the decision of the Hon’ble Jurisdictional High Court Calcutta in the case of Boothnath Vintrade Private Limited, referred to supra, the reopening of the assessment is held to be invalid and consequently the same is quashed. The consequential assessment order also stands quashed. Printed from counselvise.com ITA No.1194/KOL/2024 5 7. In the result, appeal of the assessee is allowed. Order dictated and pronounced in the open court on 13/01/2026. Sd/- (जाजज माथन) (GEORGE MATHAN) न्यानयक सदस्य / JUDICIAL MEMBER कोलकाता Kolkata; ददनाांक Dated 13/01/2026 Prakash Kumar Mishra, Sr.P.S. आदेश की प्रनतललपप अग्रेपर्त/Copy of the Order forwarded to : आदेशािुसार/ BY ORDER, (Assistant Registrar) Income Tax Appellate Tribunal, Kolkata 1. अपीलाथी / The Appellant- 2. प्रत्यथी / The Respondent- 3. आयकर आयुक्त(अपील) / The CIT(A), 4. आयकर आयुक्त / CIT 5. विभागीय प्रविविवि, आयकर अपीलीय अविकरण, कोलकाता / DR, ITAT, Kolkata 6. गार्ज फाईल / Guard file. सत्यापपत प्रयत //True Copy// Printed from counselvise.com "