TIRUPATI VESSEL PVT. LTD.,KOLKATA V. D.C.I.T.,CIRCLE-7(1), KOLKATA

ITA 51/KOL/2025

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Tirupati Vessel Pvt. Ltd., engaged in the shipping business, filed an appeal against the order of the CIT(A), National Faceless Appeal Centre, Delhi, for the assessment year 2018-2019. The original return declared an income of Rs. 43,001, which was processed under Section 143(1). Subsequently, a notice under Section 148A was issued, alleging non-payment of tax under Section 172 for goods shipped through foreign companies via Indian ports. The reassessment was based on information from the Investigation wing about tax evasion by shipping agents in Kolkata. The Tribunal found that the reassessment was improperly conducted as the addition made was not related to the reasons for reopening the case, thus invalidating the entire reassessment process.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 772240 (ITAT-KOLKATA)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-08-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Assessment Year: 2018-2019
• Other Referred Cases: Jet Airways Ltd. vs. 331 ITR 236 (Bom-HC), Ranbaxy Laboratory Ltd. vs. 336 ITR 136 (Delhi-HC), BB Poddar Foundation for Education vs. 448 ITR 695
• Laws Referred To: Income Tax Act
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S.B.CHAKARABORTHY
• Assessee Lawyers: MIRAJ D SHAH
• Keywords: Set aside; Reassessment proceedings; Deemed to accrue or arise in india
• Section: 147; 148; 142(1); 139

Judgement Text

" IN THE INCOME TAX APPELLATE TRIBUNAL “D” BENCH, KOLKATA BEFORE SHRI RAJESH KUMAR, ACCOUNTANT MEMBER AND SHRI PRADIP KUMAR CHOUBEY, JUDICIAL MEMBER आयकर अपील सं/ITA No.51/KOL/2025 (निर्धारण वर्ा / Assessment Year : 2018-2019) Tirupati Vessel Pvt. Ltd. 63/3B, Arsuday Building, 4th Floor, Sarat Bose Road, Bhawanipore, Kolkata-700025 Vs DCIT, Circle-7(1), Kolkata PAN No. :AACCT 2117 N (अपीलधर्थी /Appellant) .. (प्रत्यर्थी / Respondent) निर्धाररती की ओर से /Assessee by : Shri Miraj D Shah, AR रधजस्व की ओर से /Revenue by : Shri S.B.Chakaraborthy, Sr. DR सुनवाई की तारीख / Date of Hearing : 14/08/2025 घोषणा की तारीख/Date of Pronouncement : 28/08/2025 आदेश / O R D E R Per Pradip Kumar Choubey, JM : The assessee has filed the instant appeal against the order dated 14.11.2024, passed by the ld. CIT(A), National Faceless Appeal Centre (NFAC), Delhi for the assessment year 2018-2019. 2. Brief facts of the case of the assessee are that the assessee is a private limited company and engaged in shipping business. The assessee company filed its original return of income u/s 139 of the Act declaring income of Rs.43,001/- for the AY 2018-19. The said return was processed 143(1) of the Act. Later on, notice u/s 148A of the Act was issued alleging that the assessee company has not paid tax due u/s 172 of the Act for goods departed through foreign shipping company via Indian ports. Statutory notices u/s 143(2) & u/s 142(1) of the Act were issued. The case of the assessee company was re-opened on the basis of receipt of information from Investigation wing that the shipping agents in Kolkata are Printed from counselvise.com ITA No.51/KOL/2025 2 involved in theft/Non submission of Income tax on earning of freight which was collected from foreign shipping agent/principals and accordingly the aggregated tax liability of the assessee company for the said assessment year has according to the provision of Section 172(2) of the Act and Article 9 of Double Taxation Avoidance Agreement between India and Bangladesh was alleged to have been arrived at Rs.49,69,671/- Thereafter, show cause notice were also issued and the same were duly complied. The assessee company vide its show cause reply objected to the proposed addition and stated that total tax amounting to Rs.40,26,836/- in respect of income of Rs. 1,91,63,984/- against total freight earning of Rs.25,55,19,769/- of non resident principals/ship-owners in respect of ships/vessels booked through the assessee company had been paid by the exporters. The Assessing Officer going over the document submitted by the assessee concluded that total freight in INR is Rs.25,55, 19,769/- on which deemed income at the rate 7.5 per cent comes to 1,91,63,984/- and on the same tax had not been paid. Aggrieved by the said order, the assessee preferred appeal before the ld. CIT(A) wherein the ld. CIT(A) has set aside the order of the ld.AO and directed to make a de novo assessment after taking into account the submission filed by the assessee. 3. Being aggrieved and dissatisfied the assessee preferred appeal before us on the legal ground. 4. Ld. AR by taking the legal ground i.e. challenging the very validity of the reopening of the assessment u/s.148A of the Act r.w.s.147 of the Act has submitted that the case of the assessee was reopened and an order Printed from counselvise.com ITA No.51/KOL/2025 3 u/s.148A(d) was passed in which it has been dealt that the assessee had undertaken suspicion transaction to the tune of Rs.49,69,671/-, however, there was no addition made on the aforesaid ground, in stead of that the AO brought to tax of Rs.1,91,63,984/- as deemed income u/s.172(2) of the Act in respect of freight of Bangladesh based shipping line. According to him this fact goes to the root of the matter and the entire assessment proceedings become bad hence it ought to be quashed. In this regard, ld. AR relied on the following case laws :- i) Jet Airways Ltd., reported in 331 ITR 236 (Bom-HC) ii) Ranbaxy Laboratory Ltd., reported in 336 ITR 136 (Delhi-HC) iii) BB Poddar Foundation for Education, reported in 448 ITR 695 5. Contrary to that, ld.Sr. DR. relied on the orders of authorities below and submitted that the impugned order cannot be said to be prejudicial to the interest of the assessee as CIT(A) did not dismiss the appeal of the assessee rather he set aside the assessment order and directed the AO to make fresh assessment after hearing the assessee. 6. Upon hearing the submissions of the counsel of the respective parties, we have perused the facts of the case and submission made by the ld.AR. The fact is that the assessee company filed its return of income for the assessment year 2018-2019 and the said return was duly processed and regular assessment u/s.143(3) of the Act was completed. The case of the assessee was reopened in terms of Section 148 r.w.s.148D of the Act and the order u/s.148D was passed and consequent thereto a notice u/s.148 of the Act was issued to the assessee. On Printed from counselvise.com ITA No.51/KOL/2025 4 perusal of the order passed u/s.148 D of the Act we find that the sole reason cited for the reopening of the assessment was as under :- \"In the light of the analysis of the information, followed by complete non-compliance by the assessee, it is established beyond doubt that the assessee had undisclosed suspicious transactions to the tune of Rs. 49,69,671/- during the F.Y. 2017-18 which represented unexplained transaction and undisclosed income in the hands of the assessee and had escaped assessment as envisaged in the provisions of section 147 of the Act. Hence, I am of considered opinion that this is a fit case for issuing notice u/s 148 and reopening of the proceedings under section 147 of the Income Tax Act 1961.\" 7. It is evident from the order u/s.148D of the Act that the case was reopened solely to examine and making an addition of Rs.49,69,671/- on account of alleged undisclosed suspicious transaction. While going over the assessment order dated 18.03.2023 we find that there was no addition made on the aforesaid ground, instead of that, the AO brought to tax of Rs.1,91,63,984/- as deemed income u/s.172(2) of the Act in respect of freight of Bangladesh based shipping line. It is pertinent to mention here that where no addition is made on the very ground forming the reasons recorded for reopening the assumption of jurisdiction u/s.147 of the Act fails. Going over the cited decision, we find that the Hon’ble Calcutta High Court in the case of BB Poddar Foundation for Education, reported in (2022) 448 ITR 695 (Cal-HC) has held as under :- Though the Explanation 3 inserted by the amendment empowers the assessing officer to assess the income in respect of any issue which has escaped assessment when such issue comes to his notice subsequently in the course of the proceedings under Section 147 notwithstanding that the reasons for such issue have not been included in the reasons recorded under Sub-Section 2 of Section 148, the prerequisite is there should be a valid notice. Admittedly, in the case on hand, the notice was held to be not sustainable. If that be so, the assessing officer cannot be stated to be empowered to make a roving enquiry into other issues which according to him came to his notice during the reassessment proceedings. The Printed from counselvise.com ITA No.51/KOL/2025 5 foundation of a reassessment proceeding ITAT NO. 143 OF 2021 is a valid notice and if this notice is held to be invalid the entire edifice sought to be raised on such foundation has to collapse. 8. The Hon’ble Delhi High Court in the case of Ranbaxy Laboratories Limited, reported in(2011) 336 ITR 136 had held as under :- 18. We are in complete agreement with the reasoning of the Division Bench of Bombay High Court in the case of Jaganmohan Rao (supra). We may also note that the heading of Section 147 is \"income escaping assessment\" and that of Section 148 \"issue of notice where income escaped assessment\". Sections 148 is supplementary and complimentary to Section 147. Sub-section (2) of Section 148 mandates reasons for issuance of notice by the Assessing Officer and sub-section (1) thereof mandates service of notice to the assessee before the Assessing Officer proceeds to assess, reassess or recompute escaped income. Section 147 mandates recording of reasons to believe by the Assessing Officer that the income chargeable to tax has escaped assessment. All these conditions are required to be fulfilled to assess or reassess the escaped income chargeable to tax. As per explanation (3) if during the course of these proceedings the Assessing Officer comes to conclusion that some items have escaped assessment, then notwithstanding that those items were not included in the reasons to believe as recorded for initiation of the proceedings and the notice, he would be competent to make assessment of those items. However, the legislature could not be presumed to have intended to give blanket powers to the Assessing Officer that on assuming jurisdiction under Section 147 regarding assessment or reassessment of escaped income, he would keep on making roving inquiry and thereby including different items of income not connected or related with the reasons to believe, on the basis of which he assumed jurisdiction. For every new issue coming before Assessing Officer during the course of proceedings of assessment or reassessment of escaped income, and which he intends to take into account, he would be required to issue a fresh notice under Section 148. 9. Keeping in view the facts of the case as discussed above and going over the decisions brought into notice by the ld.AR, we hold that the reopening u/s.148(d) r.w.s.147 of the Act is invalid in law. Accordingly, the reassessment order dated 18.03.2023 is hereby set aside/ quashed and appeal of the assessee is allowed on legal ground. Printed from counselvise.com ITA No.51/KOL/2025 6 10. In the result, appeal of the assessee is allowed. Order pronounced in the open court on 28/08/2025 Sd/- (RAJESH KUMAR) Sd/- (PRADIP KUMAR CHOUBEY) लेखा सदस्य/ ACCOUNTANT MEMBER न्यधनयक सदस्य / JUDICIAL MEMBER कोलकाता Kolkata; ददनाांक Dated 28/08/2025 Prakash Kumar Mishra, Sr.P.S. आदेश की प्रनतललपप अग्रेपर्त/Copy of the Order forwarded to : आदेशधिुसधर/ BY ORDER, (Assistant Registrar) Income Tax Appellate Tribunal, Kolkata 1. अपीलार्थी / The Appellant- 2. प्रत्यर्थी / The Respondent- 3. आयकर आयुक्त(अपील) / The CIT(A), 4. आयकर आयुक्त / CIT 5. विभागीय प्रविविवि, आयकर अपीलीय अविकरण, कोलकाता / DR, ITAT, Kolkata 6. गार्ड फाईल / Guard file. सत्यापपत प्रतत //True Copy// Printed from counselvise.com "