ROOPREKHA VYAPAAR PVT. LTD.,KOLKATA vs. D.C.I.T., CIRCLE - 4(1), KOLKATA

Per Rajesh Kumar, AM:

These are the appeals preferred by assessee against the orders of the Commissioner of Income-tax (Appeals) Kolkata- 27, (hereinafter referred to as the “Ld. CIT(A)”] even dated 19.01.2026for the AYs2008-09, 2015-16.

2.1. The facts in brief are that the assessee filed the return of income on 22.08.2008, declaring loss of ₹39,080/-. The case of the assessee was reopened u/s 147 of the Act and accordingly, the assessment was framed u/s 147 /143(3) of the Income-tax Act, 1961 (the Act) on 30.06.2010, assessing the total income at ₹26,010/-. Thereafter, the ld. PCIT vide order passed u/s 263 of the Act vide dated 07.03.2013, set aside the assessment and sent the issue to the file of the ld. AO for conducting fresh enquiry and doing necessary verification into the share capital with compulsory appearance of the directors of the said assessee company as well as the directors of the subscriber companies, who had invested in the share capital in the assessee company during the said assessment year by issuing summons u/s 131 of the Income- tax Act, 1961 (the Act). Subsequently, the order u/s 263/ 147/143(3) of the Act was passed on 26.03.2014, wherein the ld. AO added the said amount of share capital/ share premium of ₹20,04,00,000/- to the income of the assessee by stating that the share capital/ share premium is nothing but assessee’s own money. Thereafter, the assessment order was

2.1.1. The ld. AO again issued notice u/s 142(1) of the Act on 16.02.2023, along with questionnaire to the assessee which was duly served. In Para no. 4, of the assessment order , the ld. AO noted that upon perusal of the financial parameters, it was noted that assessee had no substantial business activity during the relevant assessment year and despite the same huge share capital / share premium had been raised and credited into the books of account of the assessee to create high value balance sheet on paper which is balanced with high value investments in unquoted equities as its main assets without real/ tangible assets. The ld. AO extracted the table on page no.3 and 4 in Para no. 4 in the assessment order and thereafter, noted that it is clear from the said table that the entire assets of the assessee company were in the form of unquoted equities by way of share capital/ share premium purchased out of share capital/ share premium raised by the assessee which were liquidated in the subsequent years. The ld. AO noted that assessee raised huge share capital/ premium of ₹20,04,00,000/- receiving funds from those 18 allottee companies/entities lacking creditworthiness. The ld. AO extracted the details of shareholders on page no.5 and 6 of the assessment order.

2.2. In the appellate proceedings, the ld. CIT (A) dismissed the appeal of the assessee by upholding the order of the ld. AO on the ground that assessee has not filed cogent evidences of the loan creditors, whereas the money was received by issuing of share capital/ share premium. Finally,

2.3. The ld. AR vehemently submitted before us that the assessee was incorporated on 17.01.2008, and has been engaged in the business of manufacturing iron and steel, telecom and power transmission, TMT bars etc. During the year the assessee raised share capital / share premium of ₹20,04,00,000/- by issuing equity shares to 18 subscribers. The ld. AR submitted that pursuant to the order of the ITAT, restoring the issue to the file of the ld. AO, the AO issued notice u/s 142(1) of the Act, dated 16.06.2023, and further issued notice on 06.01.2024. The same were replied on 06.03.2024, filing the ITRs audited accounts, bank statements, master data of the allottee companies.Thereafter, the ld. AO issued show cause notice on 20.03.2024, and treated the amount of share capital/ share premium as unexplained cash credit. The ld. AR submitted that the assessee filed the ITR on 22.08.2008, declaring total income as NIL as this was the first year after incorporation. The ld. AR, referred to the order of ld. PCIT, who specifically directed the ld. AO in the order passed u/s 263 of the Act to investigate the shareholders with compulsory appearance of the directors of the subscribing companies as well as the directors of the assessee company by issuing summons u/s 131 of the Income-tax Act, 1961 (the Act). However, the ld. AO has failed to carry out any enquires as per the direction of ld. PCIT given in the order passed u/s 263 of the Act. Thus,

2.3.2. The ld. AR stated that the ld. AO has not recorded any finding that notices were not served to those non-existent companies. The ld. AR submitted that these shareholders were not associated with the assessee company since long. The ld. AR referred to the balance sheet for F.Y. 2014-15 and submitted that it is evident that shareholders were not shareholders of the assessee company in F.Y. 2013-14 and 2014-15 and now since, more than 10 years have elapsed, those companies are not the shareholders of the assessee company. The ld. AR referred to the master data along with summary of those shareholders with MCA records which are available at page no.30 to 67 of the Paper Book. The ld. AR submitted that it is evident from the said details that some of the shareholders have ceased and some shareholders have shifted from to another places. The ld. AR then referred to MCA data and submitted that most of the companies are active and have filed their balance sheets for the year ended 31.03.2025 with ROC and status is active. The ld. AR therefore submitted that on what basis the ld. AO has held

2.3.4. The ld. AR further submitted that non-compliance to notices u/s 133(6) of the Act by the creditors cannot be a basis for treating the share capital/ share premium as unexplained cash credit or non-genuine. In defense, the ld. AR relied on the decision of Deputy Commissioner of Income- tax vs. Rohini Builders [2003] 127 Taxman 523 (Gujarat)/[2002] 256 ITR 360 (Gujarat)/[2003] 182 CTR 373

2.4. The ld. DR, on the other hand, relied heavily on the order of the authorities below. The ld. DR submitted that the ld. AO during the course of set aside proceedings by the co-ordinate bench issued notice u/s 142(1) of the Act and all the evidences comprising names, addresses, confirmations, bank statements, audited balance sheets, etc., were filed by the assessee qua share subscribers. However, the fact remains that the letters issued u/s 133(6) of the Act for enquiring into the issue of raising share capital /share premium by the assessee company remained unverified as nobody responded. Therefore, the ld. AO has rightly made the addition which was

2.5. The ld. AR in the rebuttal submitted that the subscribing companies were having a sufficient resource to advance money to the assessee company. The ld. AR further submitted that when the co-ordinate Bench found that the ld. AO had not complied with the direction of the ld. PCIT as contained in the order passed u/s 263 of the Act, the Tribunal restored the

2.6. After hearing the rival contentions and perusing the materials available on record, including the written submissions filed by the parties, we note that in this case the assessment was framed by the ld. AO u/s 143(3) / 147 of the Act, assessing the income at ₹26,010/- as against the returned loss of ₹31,088/-.Thereafter, the ld. PCIT exercised the revisionary jurisdiction u/s 263 of the Act and passed the order accordingly, setting aside the assessment order passed u/s 143(3)/ 147 of the Act directing the ld. AO to conduct a

“6. A perusal of this assessment order would reveal that in the original assessment order passed u/s 143(3)/147 of the Act no addition was made. This was set aside by the ld. Commissioner in the order passed u/s 263. Thereafter, the ld. Assessing Officer has commenced the

2.6.2. So far as the non-reply of the letters issued u/s 133(6) of the Act are concerned, we note that some shareholders who subscribed to the shares of the assessee company were not existing on that date or have ceased to be the shareholders. We have examined the balance sheet of the assessee for A.Y. 2013-14 and A.Y. 2014-15, we find that some of the shareholders were not even shareholders of the assessee and now, more than 10 years have passed since then and the assessee cannot keep track about the whereabouts of these subscribing companies. We also observe from the MCA/ Master data furnished before us that some shareholders who ceased to be shareholders of the assessee company , have changed their addresses. Therefore, the observations of the ld. AO that these are shell companies or non-existing companies are wrong and cannot be sustained. The case of the assessee is squarely covered by the decision of CITVs STL Extrusion (P) Ltd. (2011)333ITR269(MP). Further, we are also of the considered view that no addition can be made merely for the non-compliance of notices issued

A.Y. 2015-16 ITA No. 896/KOL/2026 4. At the outset, the ld. counsel of the assessee brought to our notice the additional grounds moved by the assessee vide application dated 13.05.2025, which are extracted below:-

“1. That, on facts and on circumstances of the case, the reopening u/s147 of the Act vide notice u/s 148 of the Act dated 23.03.2023 is barred by limitation as the limitation provided under amended section 149(1)(b) of the Act is prospective in nature. 2. That, the notice issued u/s 148 of the Act is not in compliance with the provision of section 149(1)(b) of the Act. 3. That, there is no power to make search assessment under section 147 of the Act in absence of incriminating material found during course of search.”

5.1. The facts in brief are that the assessee filed the return of income on 29.05.2018, declaring total income at ₹11,087/- as stated above. The case of the assessee is covered under search u/s 132 of the Act on 24.08.2022, and on subsequent dates. Accordingly, the notice u/s 148 of the Act was issued

5.2. The ld. AR vehemently submitted before us that the notice issued u/s 148 of the Act dated 23.03.2023, is barred by limitation in consonance with the provisions of Section 149(1)(b) of the Act. The ld. AR submitted that Section 149(1)(b) provides that notice u/s 148 of the Act shall be issued beyond three years but not more than 10 years have elapsed from the end of the relevant assessment year only if the ld. AO has in his position (a) assets (b) expenditure in respect of transactions or in relation to an event or occasion (c) entry or entries in the books of account which has escaped assessment which amounts to or is likely to amounting to 50 lacs or more. The ld. AR submitted, however the first proviso to Section 149(1) of the Act provides for limitation of reopening of assessment for assessment year beginning on or before 1st April, 2021. The ld. AR submitted that the said

5.3. The ld. DR other hand relied on the orders of the authorities below by submitting that the provisions of Section

5.4. After hearing the rival contentions and perusing the materials available on record, the undisputed facts are that the impugned assessment year is 2015-16, and as per the proviso of Section 149 (1)(b) of the Act as amended by Finance Act, 2021, the notice has to be issued in terms of old proviso to Section 149(1)(b) of the Act i.e. within a period of 6 years from the end of the relevant assessment year.For the sake of ready reference, the proviso of Section 149(1) of the Act along with proviso is extracted below:-

“149. (1) No notice under section 148 shall be issued for the relevant assessment year,— ……………………………………….. [(b) if three years, but not more than ten years, have elapsed from the end of the relevant assessment year unless the Assessing Officer has in his possession books of account or other documents or evidence which reveal that the income chargeable to tax, represented in the form of— (i) an asset; (ii) expenditure in respect of a transaction or in relation to an event or occasion; or (iii) an entry or entries in the books of account, which has escaped assessment amounts to or is likely to amount to fifty lakh rupees or more:] Provided that no notice under section 148 shall be issued at any time in a case for the relevant assessment year beginning on or before 1st day of April, 2021, if 28[a notice under section 148 or section 153A or section 153C could not have been issued at that time on account of being beyond the time limit specified under the provisions of clause (b) of sub-section (1) of this section or section 153A or section 153C, as the case may be], as they stood immediately before the commencement of the Finance Act, 2021:

“49. The first proviso to Section 149(1)(b) requires the determination of whether the time limit prescribed under section 149(1)(b) of the old regime continues to exist for the assessment year 2021-2022 and before. Resultantly, a notice under Section 148 of the new regime cannot be issued if the period of six years from the end of the relevant assessment year has expired at the time of issuance of the notice. This also ensures that the new time limit of ten years prescribed under section 149(1)(b) of the new regime applies prospectively. For example, for the assessment year 2012-2013, the ten year period would have expired on 31 March 2023, while the six year period expired on 31 March 2019. Without the proviso to Section 149(1)(b) of the new regime, the Revenue could have had the power to reopen assessments for the year 2012-2013 if the escaped assessment amounted to Rupees fifty lakhs or more. The proviso limits the retrospective operation of Section 149(1)(b) to protect the interests of the assesses.” 5.4.2. Similar ratio has been laid down in case of Manju Somani vs. Income-tax Officer [2024] 165 taxmann.com 675 (Delhi)/[2024] 300 Taxman 516 (Delhi)/[2024] 466 ITR 758 (Delhi)[23-07-2024], wherein it has held as under:-

Order pronounced on 04.08.2026.

Sd/- Sd/- (DUVVURU RL REDDY) (RAJESH KUMAR) (VICE PRESIDENT) (ACCOUNTANT MEMBER) Kolkata, Dated: 04.08.2026 Sudip Sarkar, Sr.PS

Copy of the Order forwarded to: 1. The Appellant 2. The Respondent 3. CIT DR, ITAT, 4. 5. Guard file. BY ORDER, True Copy//

Asst. Registrar Income Tax Appellate Tribunal, Kolkata