PARAS PALAZA PRIVATE LIMITED,BANGALURU V. INCOME TAX OFFICER, WARD 10(4), KOLKATA, GOVT PLACE

ITA 2676/KOL/2024

AI Insights

The case involves Paras Plaza Pvt. Ltd., which appealed against the order of the National Faceless Appeal Centre, Delhi, concerning the assessment year 2012-13. The primary contention was the validity of the reassessment order dated 28.12.2019, which was challenged on the grounds that the notice under section 148 of the Income Tax Act was issued before the mandatory approval from the Principal Commissioner of Income-tax (PCIT)-4, Kolkata, was obtained. The Tribunal examined the timeline of the notice issuance and the approval communication, ultimately finding that the notice was issued prematurely, leading to the quashing of the reassessment order.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 783656 (ITAT-KOLKATA)
• Duration Of Justice: 10 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 03-11-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2012-2013
• Appeal Filed On: 20-12-2024
• Other Referred Cases: Sethi Auto Service Station and Anr. Vs. Delhi Development Authority and Ors.
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MANOJ KUMAR PATI
• Assessee Lawyers: AMIT AGARWAL
• Keywords: Reassessment proceedings; Unexplained cash credit; Reopening of assessment
• Section: 147; 148; 143(3); 142(1); 133(6)

Judgement Text

" IN THE INCOME TAX APPELLATE TRIBUNAL “B” BENCH, KOLKATA BEFORE SHRI RAJESH KUMAR, AM AND SHRI SONJOY SARMA, JM ITA No.2676/KOL/2024 (Assessment Year:2012-13) Paras Plaza Pvt. Ltd. No.5, Mel Layout, bagalagunte, Bangalore, Karnataka-560088 Vs. Income Tax officer, Ward 10(4), Kolkata 3, Govt Place, Kolkata-700001 (Appellant) (Respondent) PAN No. AAECP8301N Assessee by : Shri Amit Agarwal, AR Revenue by : Shri Manoj Kumar Pati, DR Date of hearing: 10.09.2025 Date of pronouncement: 03.11.2025 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 21.10.2024 for the AY 2012-13. 02. By virtue of the following additional ground the ld. Counsel for the assessee challenged the validity of the assessment order framed u/s 147 / 143(3) of the Act dated 28.12.2019 on the ground that the notice u/s 148 of the Act on 26.03.2019 was issued even before the mandatory approval of the sanctioning authority was received i.e. PCIT-4, Kolkata, approval u/s 151 of the Act. “IV. The impugned reassessment order dated 28th December, 2019 passed 143(3) read with section 147 the Act in the case of assessee for the assessment year 2012-13 is without jurisdiction, illegal invalid and bad in law. The reassessment proceedings were wrongly initiated vide notice dated 26.03.2019 under section 148, even prior to receipt of the proforma/ form containing the mandatory approval of the sanctioning Printed from counselvise.com Page | 2 ITA No. 2676/KOL/2024 Paras Plaza Pvt. Ltd; A.Y. 2012-13 authority, i.e., the Principal Commissioner of Income-tax (PCIT)-4, Kolkata, as required to be obtained under Section 151 of the Act.” 03. The facts in brief are that the assessee filed the return of income on 11.01.2013, declaring total loss of ₹27,163/-, which was processed u/s 143(1) of the Act. The case of the assessee was reopened u/s 147 of the Act by issuing notice u/s 148 of the Act on 26.03.2019, which was duly served upon the assessee. The assessee filed the return of income in compliance on 30.03.2019, declaring total loss at ₹27,163/- . Thereafter the notice u/s 143(2) and 142(1) of the Act along with questionnaire were issued and the assessee replied and furnished the various details and information as called for by the assessee. Pertinent to note that during the impugned financial year, the assessee has received money from several companies aggregating to ₹3,80,00,000/- as found during the course of assessment proceedings. Even the companies who paid money to the assessee replied to the notices issued u/s 133(6) of the Act by the AO, however, the ld. AO rejected the contention of the assessee, without pointing out any defect or deficiency in evidences filed by the assessee and added the amount received of Rs. 3,80,00,000/- to the income of the assessee as an unexplained cash credit in the order passed u/s 147 read with section 143(3) of the Act dated 28.12.2019. The above monies were received for sale of shares which were purchased by the assessee in earlier assessment years and during the year. The order by the ld. AO was also affirmed by the ld. CIT (A). 04. After hearing the rival contentions and perusing the materials available on record, we find that in this case the notice u/s 148 of the Act was issued by the ld. AO on 26.03.2019, whereas the approval was communicated to the ld. AO, the ACIT, Circle10(2), Kolkata by ITO Ward 10(4), Kolkata for PCIT-4, Kolkata vide letter dated Printed from counselvise.com Page | 3 ITA No. 2676/KOL/2024 Paras Plaza Pvt. Ltd; A.Y. 2012-13 28.03.2019. For the sake of ready reference the same is extracted below: - “No. Pr. CIT-4/Kol/148/2018-19/13414 Dated 28.03.2019 To The DCIT, Circle-10(2), Kolkata Sir, Sub: Approval for reopening of proceedings u/s. 147 of the I.T. Act, 1961 in the case of M/s. Paras Plaza Pvt. Limited.; PAN AAECP8301N for the A.Y. 2012-13- matter regarding. Please refer to the above I am directed to inform you that Ld. Principal Commissioner of Income Tax- 4. Kolkata, has given his kind sanction for reopening of proceedings u/s. 147 of the Income Tax Act, 1961, in respect of the above-mentioned case. I am enclosing herewith the form for recording the reasons for initiating proceedings under section 148 and obtaining the approval of the Pr. Commissioner of Income Tax- 4. Kolkata, on the above-mentioned case for your information and necessary action. Encl: As stated above Yours faithfully Sd/- (Bikash Ranjan Gain) ITO, Tech-4, Kolkata For Pr. CIT-4 Kolkata Dated: 28.03.2019. 05. We note that though the approval u/s 151 of the Act was granted by the PCIT-4, Kolkata on 25.03.2019, as is apparent from the notings and signature of the ld. PCIT on the proposal as moved by the ld. AO however the same was communicated to the assessee on 28.03.2019. For the sake of ready reference, the said approval is extracted as under: - Printed from counselvise.com Page | 4 ITA No. 2676/KOL/2024 Paras Plaza Pvt. Ltd; A.Y. 2012-13 06. We note that the notice was issued by the ld. AO on 26.03.2019, meaning thereby that the same was issued prior to the communication of sanction u/s 151 of the Act. In our opinion, the notice issued u/s 148 of the Act on 26.03.2019, even before the communication of the order from the ld. PCIT to the ld. AO which was actually done on Printed from counselvise.com Page | 5 ITA No. 2676/KOL/2024 Paras Plaza Pvt. Ltd; A.Y. 2012-13 28.03.2019, therefore, the notice issued u/s 148 of the Act is invalid as the same was issued even prior to the communication of approval u/s 151 of the Act to the ld. AO thereby rendering all the consequential proceedings including the assessment framed to be nullity and invalid in the eyes of law. Therefore, we are inclined to quash the reopening of assessment and the consequent order passed by the ld. Assessing Officer. The case of the assessee find support from the decision of the Hon'ble Apex Court in the case of Sethi Auto Service Station and Anr. Vs. Delhi Development Authority and Ors. 2008 (10) TMI 659 (SC), wherein the Supreme Court has held as under: - “12. It is trite to state that notings in a departmental file do not have the sanction of law to be an effective order. A noting by an officer is an expression of his viewpoint on the subject. It is no more than an opinion by an officer for internal use and consideration of the other officials of the department and for the benefit of the final decision-making authority. Needless to add that internal notings are not meant for outside exposure. Notings in the file culminate into an executable order, affecting the rights of the parties, only when it reaches the final decision-making authority in the department; gets his approval and the final order is communicated to the person concerned. 13. In Bachhittar Singh Vs. The State of Punjab3, a Constitution Bench of this Court had the occasion to consider the effect of an order passed by a Minister on a file, which order was not communicated to the person concerned. Referring to the Article 166(1) of the Constitution, the Court held that order of the Minister could not amount to an order by the State Government unless it was expressed in the name of the Rajpramukh, as required by the said Article and was then communicated to the party concerned. The court observed that business of State is a complicated one and has necessarily to be conducted through the agency of a large number of officials and authorities. Before an action is taken by the authority concerned in the name of the Rajpramukh, which formality is a constitutional necessity, nothing done would amount to an order creating rights or casting liabilities to third parties. It is possible, observed the Court, that after expressing one [1962] Supp 3 SCR 713 opinion about a particular matter at a particular stage a Minister or the Council of Ministers may express quite a different opinion which may be opposed to the earlier opinion. In such cases, which of the two opinions can be regarded as the \"order\" of the State Government? It was held that opinion becomes a decision of the Government only when it is communicated to the person concerned. 14. To the like effect are the observations of this Court in Laxminarayan R. Bhattad & Ors. Vs. State of Maharashtra & Anr.4, wherein it was said that a right created under Printed from counselvise.com Page | 6 ITA No. 2676/KOL/2024 Paras Plaza Pvt. Ltd; A.Y. 2012-13 an order of a statutory authority must be communicated to the person concerned so as to confer an enforceable right.” 07. In the light of the above decision and considering the facts and circumcisions of the case, we are inclined to quash the re-opening of assessment as well as the consequent assessment order. 08. In the result, the appeal of the assessee is allowed. Order pronounced in the open court on 03.11.2025. Sd/- Sd/- (SONJOY SARMA) (RAJESH KUMAR) (JUDICIAL MEMBER) (ACCOUNTANT MEMBER) Kolkata, Dated: 03.11.2025 Sudip Sarkar, Sr.PS Copy of the Order forwarded to: BY ORDER, True Copy// Sr. Private Secretary/ Asst. Registrar Income Tax Appellate Tribunal, Kolkata 1. The Appellant 2. The Respondent 3. CIT 4. DR, ITAT, 5. Guard file. Printed from counselvise.com "