DCIT, CC-1(3), KOLKATA, KOLKATA vs. M/S NAVIN CONSTRUCTION & CREDIT PVT. LTD., KOLKATA

The Revenue has taken seven grounds of appeal. However, in Ground No. 3, it has pleaded the jurisdictional issue that ld. CIT(Appeals) has erred in holding that jurisdiction to make re- assessment under section 147 has not been correctly invoked and, therefore, re-assessment order deserves to be quashed. In other grounds, Revenue has taken peripheral arguments as well as pleading that ld. CIT(Appeals) has erred in deleting the addition of Rs.3,75,00,000/-, which was added by the ld. Assessing Officer under section 68 of the Income Tax Act.

Brief facts of the case are that the assessee has filed its return of income electronically on 30.09.2013 declaring total income of Rs.6,08,000/-. This return was processed under section 143(1) of the Income Tax Act and a refund of Rs.2.01,760/- was issued. The ld. Assessing Officer thereafter reopened the assessment and passed a re-assessment order under section 147 read with section 143(3) on 20.09.2016 vide which income of the assessee was determined at Rs.65,13,893/-. The ld. Assessing Officer reopened the assessment by issuance of a notice under section 148 on 01.05.2017. The assessee filed e- return under section 148 on 09.05.2017. The ld. Assessing Officer has passed the re-assessment order afresh under section 147 read with section 143(3) on 26.12.2017. The ld. Assessing Officer has made addition of Rs.3,75,00,000/- and in this way determined the taxable income of Rs.4,40,13,893/-. Assessment Year: 2013-2014 M/s. Navin Construction & Credit Pvt. Limited

Dissatisfied with the assessment order, the assessee carried the matter in appeal before the ld. CIT(Appeals). It has contended that the ld. Assessing Officer has reopened on account of escapement of income on Item “A”. However, he did not make any addition of Item “A”, but added Item “B”. Therefore, on the strength of Hon’ble Bombay High Court’s decision in the case of CIT –vs.- Jet Airways (I) Limited reported in 331 ITR 236, it was contended that this addition is not sustainable because reopening of assessment is bad. The assessee further relied upon the judgment of the Hon’ble Delhi High Court in the case of Ranbaxy Laboratories Limited reported in 336 ITR page 136. It also put in service the judgment of the Hon’ble Calcutta High Court in the case of CIT –vs.- Infinity Infotech Parks Limited. The ld. CIT(Appeals) has accepted this contention of the assessee and held that assumption of jurisdiction under section 147 for making the addition under section 68 is bad and, therefore, this addition is not sustainable.

Before us, ld. D.R. relied upon the order of the ld. Assessing Officer.

On the other hand, ld. Counsel for the assessee relied upon the order of ld. CIT(Appeals) and placed on record two decisions of the Hon’ble Calcutta High Court- namely CIT-vs.- Infinity Infotech Parks Limited rendered in of 2014. He also Assessment Year: 2013-2014 M/s. Navin Construction & Credit Pvt. Limited placed on record the judgment of Hon’ble Calcutta High Court in the case of CIT (Exemption), Kolkata –vs.- B.P. Poddar Foundation for Education delivered on 13th September, 2022. He submitted that in these decisions, Hon’ble Jurisdictional High Court concurred with the view taken by the Hon’ble Delhi, Bombay and Gujarat High Courts on this point. He drew our attention towards copy of the reasons recorded for second time reopening, which is available on page 33. He submitted that this reopening was made on account of escapement of short-term capital gain and long-term capital gain from taxation. However, in the computation of income, ld. Assessing Officer has made addition of a different item. Therefore, he prayed that appeal of the Revenue be dismissed.

We have duly considered the rival contentions and gone through the record carefully. It is imperative upon us to take note the reasons recorded by the ld. Assessing Officer for second reopening of the assessment. The copy of the letter dated 29.06.2017 written to the assessee is available on page 33, which reads as under:- “To The Principal Officer/Director, M/s. Navin Constructions & Credit Pvt. Limited, 12, Government Place, East Kolkata-700069 Sir, Sub.: Supply reason recorded u/s 147 in your case M/s. Navin Constructions & Credit Pvt. Limited –PAN- AAACN9084F, AY 2013-14 matter regarding

As per your requisition, I am sending herewith reasons recorded u/s 147 in your case- Reasons for the belief that income has escaped assessment.

However, the ld. Assessing Officer thereafter issued a show- cause notice dated 25.08.2017 requiring the assessee to explain the source of unsecured loans amounting to Rs.3,75,00,000/- alleged to have been received from six entities. A perusal of the assessment order would indicate that ld. Assessing Officer has made the addition of Rs.3,75,00,000/- on account unexplained credits received as a loan. If we compare discussion available in assessment order, vis-à-vis ultimate computation of income with the reasons for reopening the assessment, then it will reveal that qua the additions made, no reasons were recorded by the ld. Assessing Officer demonstrating the escapement of income on account of unsecured loans. The Hon’ble High Courts, namely Bombay, Gujarat, Delhi and Calcutta are unanimous in propounding that expression “and also” employed in section 147 cannot be read as being in the alternative. It means that if no addition is being made on an item for which assessment was Assessment Year: 2013-2014 M/s. Navin Construction & Credit Pvt. Limited reopened, then ld. Assessing Officer cannot add any other item. In other words, he ought to have reopened the assessment again for the purpose of adding those escaped item because that creates an independent circumstance for proceeding against an assessee. There might have various aspects of limitation, etc. which would come to the rescue of assessee. Thus following the Hon’ble High Courts’ decisions, we are of the view that ld. CIT(Appeals) has rightly deleted the addition. We have no hesitation in concurring with the conclusions of the ld. 1st Appellate Authority. Accordingly, this appeal of the Revenue is dismissed.

In the result, the appeal of the Revenue is dismissed. Order pronounced in the open Court on 16th January, 2023. Sd/- Sd/- (Girish Agrawal) (Rajpal Yadav) Accountant Member Vice-President (KZ) Kolkata, the 16th day of January, 2023 Copies to :(1) Deputy Commissioner of Income Tax, Central Circle-1(3), Kolkata, Aayakar Bhawan Poorva, 3rd Floor, 110, Shantipally, E.M. Bypass, Kolkata-700107 (2) M/s.Navin Construction & Credit Pvt. Ltd. 12, Government Place East, Dalhousie, Kolkata-700069