THE HOOGHLY MILLS COMPANY LTD.,KOLKATA V. DCIT, CIRCLE - 1(2), KOLKATA, KOLKATA

ITA 1110/KOL/2024

AI Insights

The case involves The Hooghly Mills Company Ltd., which appealed against the order of the National Faceless Appeal Centre, Delhi, concerning the reopening of their income tax assessment for the year 2008-09. The original assessment was completed under Section 143(3) of the Income Tax Act, 1961, and later reopened under Section 147 based on information regarding unexplained cash receipts. The Tribunal examined whether the reopening was valid, given that it occurred after a period exceeding four years from the end of the relevant assessment year. The Tribunal referenced the Supreme Court's decision in ACIT Vs. CEAT Ltd. to support its conclusion that the reopening was invalid due to the absence of any failure by the assessee to disclose necessary information during the original assessment.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 25034 (ITAT-KOLKATA)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-03-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2008-2009
• Other Referred Cases: ACIT Vs. CEAT Ltd. [2022] 449 ITR 171 (SC)
• Laws Referred To: Income Tax Act
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SUBHRO DAS
• Assessee Lawyers: GIRIDHAR DHELIA
• Keywords: Reopening of assessment; Reason to believe
• Section: 147; 148; 143(3); 68

Judgement Text

" IN THE INCOME TAX APPELLATE TRIBUNAL “A” BENCH, KOLKATA BEFORE SHRI RAJESH KUMAR, AM AND SHRI PRADIP KUMAR CHOUBEY, JM ITA No.1110/KOL/2024 (Assessment Year:2008-09) The Hooghly Mills Company Ltd. 24/1/1, Alipore road, 3 rd Floor, Kolkata-700027, West Bengal Vs. DCIT, Circle-1(2), Kolkata Aaykar Bhavan, P-7, Chowringhee Square, Kolkata-700069, West Bengal (Appellant) (Respondent) PAN No. AAACT9780F Assessee by : Shri Giridhar Dhelia, AR Revenue by : Shri Subhro Das, DR Date of hearing: 12.02.2025 Date of pronouncement : 11.03.2025 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 20.03.2024 for the AY 2008-09. 02. At the time of hearing, the ld. Counsel for the assessee pressed ground no.5, which is against the reopening of assessment u/s 147 of the Act after period of four years from the end of the assessment year when the conditions precedent for reopening are not satisfied. 03. The brief facts of the case are that the assessee filed the return of income on 30.09.2008, declaring total income of ₹Nil. The case of the assessee was selected for scrutiny and assessment order u/s 143(3) / Page | 2 ITA No.1110/KOL/2024 The Hooghly Mills Company Ltd; A.Y. 2008-09 154 of the Act dated 19.06.2014, was passed, assessing the total loss of ₹10,00,66,405/-. Thereafter, the case of the assessee was reopened u/s 147 of the Act by issuing notice u/s 148 of the Act on 31.03.2015. Thereafter, there was no compliance to the various notices issued by the ld. AO and the assessment was framed as ex- parte u/s 144/147 of the Act vide order dated 31.03.2016, making an addition of ₹3,47,15,685/- on account of cash receipt from Rajesh Poddar, which according to the ld. AO remained unexplained u/s 68 of the Act. 04. Being aggrieved, the assessee preferred an appeal before the ld. CIT (A), who disposed the appeal on merits after taking into account the information/ documents available on record. 05. After hearing the rival contentions and perusing the materials available on record, we find that the case of the assessee has been reopened after a lapse of four years, from the end of the relevant assessment year. The reopening has been done u/s 147 of the Act by issuing notice u/s 148 on 31.03.2015. The original assessment u/s 143(3) was framed on 19.06.2014. We have also examined the reasons recorded by the ld. AO for reopening of the assessment u/s 148(2) of the Act which are extracted below for the sake of ready reference:- “An information was received from ITO(Inv) Unit-2, Kolkata regarding a FIU- IND STR No.1000004047 in the case of Rajesh Poddar, it is reported that there are seven accountants in different name and proprietor of these accountants is Sri Rajesh Poddar (PAN) AHIPP8412G. Large cash deposits were made in such accounts were later withdrawn by cash or transaction. Page | 3 ITA No.1110/KOL/2024 The Hooghly Mills Company Ltd; A.Y. 2008-09 Further it is also stated that major portion of such cash deposited which involves ₹3,47,15,685/- were transferred to the Hooghly Mills Co. Ltd. (PAN 111ct9708F) which is presently under this jurisdiction. Thus I have reason to believe that further investigation needs to be made on the basis of such information and accordingly notice u/s 148 may be issued in this case of the Hooghly Mills co-Ltd. for the assessment year 2008-09. ” 06. We find from the perusal of the reasons recorded u/s 148(2) that the ld. AO has , in the reasons recorded, not even whispered about the failure of the assessee to disclose materially and truly any information which was necessary for assessment of income during the course of assessment proceedings. Therefore, the reopening of assessment is in violation of first proviso to Section 147 of the Act which provides that if the reopening u/s 147 of the Act after a lapse of four years from the end of the relevant assessment year is to be made where the assessment has been framed u/s 143(3) of the Act then there has to be failure on the part of the assessee to disclose truly and materially any information/ details by the assessee during the course of original assessment. Otherwise, no reopening u/s 147 can be made. In our opinion this condition has not been satisfied, therefore, reopening of assessment has been made invalidly. The case of the assessee is squarely covered by the decision of decision of Hon'ble Apex Court in the case of ACIT Vs. CEAT Ltd. reported in [2022] 449 ITR 171 (SC), wherein similar ratio has been laid down by the Hon'ble Apex Court by holding that the reopening u/s 147 of the Act beyond four years from end of the relevant assessment year could be made subject to the satisfaction of the conditions as provided in first proviso to Section 147 of the Act, Therefore, we are inclined to quash the reopening of assessment. The ground no.5 of the appeal is allowed. Page | 4 ITA No.1110/KOL/2024 The Hooghly Mills Company Ltd; A.Y. 2008-09 07. The other legal issue raised as well as grounds on merit are not being adjudicated at this stage and are being left open for adjudication at a later stage if need arises for the same. 08. In the result, the appeal of the assessee is allowed. Order pronounced in the open court on 11.03.2025. Sd/- Sd/- (PRADIP KUMAR CHOUBEY) (RAJESH KUMAR) (JUDICIAL MEMBER) (ACCOUNTANT MEMBER) Kolkata, Dated: 11.03.2025 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 "