RAHUL PREMIER INDIA AGENCY PVT. LTD.,KOLKATA V. D.C.I.T., CIRCLE - 4(), KOLKATA, KOLKATA

ITA 1414/KOL/2024

AI Insights

The case involves Rahul Premier India Agency Pvt. Ltd., which appealed against the order of the Commissioner of Income Tax (Appeals)-NFAC, Delhi, concerning the reopening of its assessment for the Assessment Year 2013-14. The AO had reopened the case under Section 147 of the Income Tax Act, based on information that the company had received an unsecured loan from M/s Nikhil Holding Pvt. Ltd., identified as a shell company involved in providing accommodation entries. The Tribunal found that the AO's reopening of the assessment was not based on a proper application of mind and lacked specific details about the transactions that allegedly escaped assessment.

• Counselvise Citation: [2024] 140 COUNSELVISE.COM (IT) 35886 (ITAT-KOLKATA)
• Duration Of Justice: 3 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-10-2024
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2013-2014
• Appeal Filed On: 26-06-2024
• Other Referred Cases: SFIL Stock Broking 325 ITR 285 (Del), Signature Hotel Pvt Ltd VS ITO 338 ITR 51 (Del), CIT Vs Insecticide India Ltd. 357 ITR 330(Del)
• Laws Referred To: Income Tax Act
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Reopening of assessment; Accommodation entries; Competent authority; Tangible material; Bogus
• Section: 147; 148; 143(3); 153A

Judgement Text

"आयकर अपीलȣय अͬधकरण, कोलकाता पीठ “एसएमसी’’, कोलकाता IN THE INCOME TAX APPELLATE TRIBUNAL “SMC” BENCH: KOLKATA Įी राजेश क ुमार, लेखा सटèय एवं Įी Ĥदȣप क ुमार चौबे, ÛयाǓयक सदèय क े सम¢ [Before Shri Rajesh Kumar, Accountant Member &Shri Pradip Kumar Choubey, Judicial Member] I.T.A. No. 1414/Kol/2024 Assessment Year: 2013-14 Rahul Premier India Agency Pvt. Ltd. (PAN: AABCR 2687 L) Vs. DCIT, Circle-4(1), Kolkata Appellant / ) अपीलाथȸ ( Respondent / Ĥ×यथȸ Date of Hearing / सुनवाई कȧ Ǔतͬथ 08.08.2024 Date of Pronouncement/ आदेश उɮघोषणा कȧ Ǔतͬथ 09.10.2024 For the Appellant/ Ǔनधा[ǐरती कȧ ओर से Shri S.M. Surana, Advocate For the Respondent/ राजèव कȧ ओर से Shri Supriya Pal, Addl. CIT (D.R) 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 07.06.2024 for the AY 2013-14. 2. Issue raised in ground no. 1 is not pressed and there is dismissed as not pressed. 2 I.T.A. No.1414/Kol/2024 Assessment Year: 2013-14 Rahul Premier India Agency Pvt. Ltd. 3. Issue raised in ground no. 2 is against the confirmation of reopening of assessment by the Ld. CIT(A) even when the pre-conditions as laid down u/s 147 of the Act were not satisfied. 4. Facts in brief are that the assessee filed return of income on 26.09.2013 declaring a loss of Rs. 7,04,798/-. The case of the assessee was reopened u/s 147 of the Act after recording a reasons to believe u/s 148(2) of the Act. The AO noted that the assessee has taken unsecured loan from M/s Nikhil Holding Pvt. Ltd. which is a shell company as accepted by the director of the company Mr. Murlidhar Lahoti in his statement recorded u/s 132(4) of the Act on 17.08.2017 during the course of search proceeding on him. The AO noted that the unsecured loan was nothing but an accommodation entry and it was intended only to disguise its own black money. The AO issued notice u/s 148 of the Act after taking approval from the competent authority and the assessee complied with the said notice by filing return of income on 31.07.2020. Thereafter, a statutory notices were duly issued and served on the assessee. During the course of assessment proceedings, the assessee furnished before the AO the details/documents as called for from time to time and finally the assessment was framed by the AO by brushing aside the reply of the assessee by making the addition of Rs. 40,00,000/- u/s 68 of the Act. 5. The said order was challenged before the Ld. CIT(A) , however, the Ld. CIT(A) dismissed the appeal of the assessee on legal issue as well as on merit by observing and holding as under: “4.1 Considered the material evidence and the records as well as the satisfaction recorded in the PCIT’s Approval u/s 151, the above judicial decisions. From the above discussion it is evident that the information available with the AO was sufficient and specific in its nature and the same was duly analyzed by the AO with the statement of accounts of the appellant and records available with the Assessing Officer. Vide Para 5 of the Annexure to the Approval u/s 151 and in the light of transaction details of the appellant with M/s Nikhil Holdings Pvt. Ltd. (NHPL, in short), it has been validly established that M/s NHPL is a bogus/shell company which is carries on transaction only on paper for the purpose of providing accommodation entries in various forms in lieu of commission. The same has also been corroborated from statement given by Shri Murari Dhar Lahoti, Director in NHPL in his reply to various query including question no. 9,11,15 & 19 in course of statement u/s 132(4) dated 17.08.2017. The contention of the appellant that the case was reopened on vague and intangible material is therefore devoid of merits and unsustainable. Thus, ground no. 1 of the appellant is disposed and accordingly dismissed.” 3 I.T.A. No.1414/Kol/2024 Assessment Year: 2013-14 Rahul Premier India Agency Pvt. Ltd. 6. After hearing the rival contentions and perusing the material on record, we note that the case of the assessee was reopened u/s 147 of the Act by issuing notice u/s 148 of the Act on 20.03.2020 after recording a reasons to believe and after obtaining approval from the competent authority. The reasons as recorded u/s 148(2) of the Act for reopening of assessment are extracted below for the sake of ready reference: 4 I.T.A. No.1414/Kol/2024 Assessment Year: 2013-14 Rahul Premier India Agency Pvt. Ltd. 5 I.T.A. No.1414/Kol/2024 Assessment Year: 2013-14 Rahul Premier India Agency Pvt. Ltd. 6 I.T.A. No.1414/Kol/2024 Assessment Year: 2013-14 Rahul Premier India Agency Pvt. Ltd. 6.1. A perusal of the above reasons reveal that the AO had received information from DCIT, Central Circle-2, Kolkata that the assessee company has received Rs. 50,00,000/- from M/s Nikhil Holding Pvt. Ltd. during FY 2012-13 relevant to AY 2013-14. It was also noted that the assessment proceedings u/s 153A for AY 2012-13 to 2018-19 in the case of M/s Nikhil Holding Pvt. Ltd., which belonged to East India Group, were initiated and conducted after search action u/s 132(1) of the Act and director of M/s Nikhil Holding Pvt. Ltd. Mr. Murali Dhar Lahoti in his reply to question no. 11 of the 7 I.T.A. No.1414/Kol/2024 Assessment Year: 2013-14 Rahul Premier India Agency Pvt. Ltd. statement recorded on 17.08.2017 u/s 132(4) of the Act accepted that M/s Nikhil Holding Pvt. Ltd. was a shell bogus company which was engaged in providing accommodation entries. The AO has also referred to the list of beneficiaries to whom the accommodation entries were provided in which the name of the assessee appeared. The AO noted that upon perusal of the said list it was observed that the assessee company had received Rs. 50,00,000/- in the form of loan and advances which was nothing but accommodation entry. Then in para 6 of the reasons recorded , the AO affirmed his belief wherein he stated that the lender company M/s Nikhil Holding Pvt. Ltd. was not having real estate business at all and therefore identity, genuineness and creditworthiness of the parties were not genuine. Therefore, there was prima facie reasons to believe that the source of Rs. 50,00,000/- remained unexplained and in view of the above he had reasons to believe that Rs. 50,00,000/- has escaped assessment. We also note that the assessments in the case of M/s Nikhil Holding Pvt. Ltd. were framed u/s 143(3) read with Section 153A of the Act in all the assessment years consequent to search and it was accepted that the said company was genuine. Further even the loan confirmation was filed by the assessee. We even observe that the AO straightaway re- opened the assessment which is clear from the fact that the loan received was of Rs. 40.00 lacs and not Rs. 50.00 as noted by the AO in the reasons recorded and therefore there was no independent application of mind by the AO. In our opinion the AO is duty bound to first enquire into the issue after receiving information otherwise the re-opening can not be sustained. The case of the assessee is squarely covered by a series of decisions namely SFIL Stock Broking 325 ITR 285 ( Del), and Signature Hotel Pvt Ltd VS ITO 338 ITR 51 ( Del) . In both the above decisions , the Hon’ble court has held that the AO has to apply his mind to the information received and independently arrive at a belief that income has escaped. In the case of CIT Vs Insecticide India Ltd. 357 ITR 330(Del) the Hon’ble Court has held that the re-opening can not be made on the reasons which did not mention the details of transaction which have escaped assessment and is vague and uncertain . We therefore respectfully following the above decisions , quash the re-opening of assessment as well as the consequent order. Accordingly, ground raised by the assessee is allowed. 8 I.T.A. No.1414/Kol/2024 Assessment Year: 2013-14 Rahul Premier India Agency Pvt. Ltd. 7. In the result, the appeal of the assessee is allowed. Order is pronounced in the open court on 9th October, 2024 Sd/- Sd/- (Pradip Kumar Choubey /Ĥदȣप क ुमार चौबे) (Rajesh Kumar/राजेश क ुमार) Judicial Member/ÛयाǓयक सदèय Accountant Member/लेखा सदèय Dated: 9th October, 2024 SM, Sr. PS Copy of the order forwarded to: 1. Appellant- Rahul Premier India Agency Pvt. Ltd., 234/3A, FMC Fortuna, A.J.C. Bose Road, Suite No. 4A, 5th Floor, Kolkata-700020 2. Respondent – DCIT, Circle-4(1), 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 "