VOLCANO GOODS PRIVATE LIMITED,KOLKATA vs. ACIT CIRCLE 1(1), KOLKATA

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ITA 1771/KOL/2025Status: DisposedITAT Kolkata28 April 2026AY 2013-146 pages

In favour of the assessee: the assessee's appeal was allowed. From the AI summary of this appeal.

AI SummaryAllowed

What did the Tribunal hold?

The Tribunal found that the CIT(Appeals) had not considered the merits of the case or the documentary evidence. It was also held that the reopening under Section 147 was time-barred as four years had elapsed and the Assessing Officer had acted mechanically without applying his own mind. The alleged entries did not relate to the relevant assessment year.

What were the facts?

The Assessing Officer reopened the assessment of Volcano Goods Pvt. Ltd. for AY 2013-14, alleging accommodation entries of Rs. 40 lakhs. The assessee contended that the alleged entries were not received in the relevant assessment year and that the reopening was time-barred. The CIT(Appeals) dismissed the appeal.

What were the issues?

Whether the reopening of assessment under Section 147 was valid and not time-barred, and whether the addition under Section 68 was justified based on the evidence and relevant assessment year.

Which sections of the Income-tax Act were involved?

Section 147,Section 143(1),Section 151,Section 148,Section 143(2),Section 142(1),Section 68,Section 139(1)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, ‘SMC’ BENCH, KOLKATA

Before: Shri Duvvuru RL Reddy, Vice-(KZ)

The present appeal is directed at the instance of assessee against the order of Id. Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi, dated 06.06.2025 passed for Assessment Year 2013-2014.

2.

Brief facts of the case are that the assessee-company filed its return of income for the assessment year 2013-14 on 26.03.2013

ITA No. 1771/KOL/2025 (A.Y. 2013-2014) Volcano Goods Private Limited declaring total income of Rs.4,91,460/-, which was processed by CPC, Bangalore under section 143(1) of the Income Tax Act. The case was reopened under section 147 with prior approval of appropriate authority under section 151 of the Act. Notice under section 148 was issued on 20.03.2020 to the assessee. In compliance to notice under section 148, the assessee e-filed its return of income on 16.12.2020 declaring same income as declared under section 139(1) of the Act dated 26.03.2013. Thereafter notices under sections 143(2) and 142(1) were issued to the assessee asking to explain with evidence regarding accommodation entries received of Rs.20 lakhs each from M/s. Sarvottam Sales Corporation and M/s. Sunflower Dealmark Pvt. Ltd. In reply, the assessee filed legal objections on 15.02.2021 and furnished its bank statement showing no such entries. Being not satisfied, the ld. Assessing Officer passed the assessment order under section 147 read with section 144 making additionsof Rs.40,00,000/- under section 68. Finally, ld. Assessing Officer determined the total assessed income of the assessee at Rs.44,91,960/-.

3.

Not being satisfied, the assessee preferred an appeal before the ld. CIT(Appeals). The ld. CIT(Appeals) dismissed the appeal of the assessee by upholding the order of ld. Assessing Officer.

4.

Not being satisfied with the order of ld. CIT(Appeals), the assessee preferred an appeal before the ITAT. It was the submission of the ld. Counsel for the assessee that the alleged 2

ITA No. 1771/KOL/2025 (A.Y. 2013-2014) Volcano Goods Private Limited accommodation entry, received by the assessee has reached the Bank account of the assessee through M/s. Lakshya Merchants Pvt. Ltd., M/s. Vinimay Pvt. Ltd. and M/s. Madhu Tradecom Pvt. Limited, was transferred in the Bank account of the assessee on 07.03.2012. The ld. Counsel for the assessee pleaded that no such amount has been received from any such party by the assessee. The Bank account of the assessee has already been filed at the time of filing of objections. Further the date of receipt of the alleged amount by the assessee does not relate to the relevant assessment year 2013-14. Ld. Counsel also pleaded that without giving the assessee sufficient time to file reply for objections, wherein the response of ld. Assessing Officer was made on 27.09.2021 asking the assessee to file a reply on 28.09.2021, which was the very next day, which is against the spirit of law and natural justice. Ld. Counsel also pleaded that notices under section 143(2) and 142(1) were issued to the assessee asking to explain with evidence regarding accommodation entries received of Rs.20 lakhs each from M/s. Sarvottam Sales Corporation and M/s. Sunflower Dealmark Pvt. Ltd. In reply, the assessee filed legal objections on 15.02.2021 and there was no omission or failure on the part of assessee to disclose fully and truly all material necessary for assessment which is one of the primary conditions for reopening of assessment under section 147. Thus, the notice issued is time barred as four years already elapsed. Notice issued after the expiry of four years from the end of the relevant assessment year by the ld. Assessing Officer merely acting mechanically on the information supplied by the Investigation Wing about the alleged accommodation entries provided by the assessee to certain entities

ITA No. 1771/KOL/2025 (A.Y. 2013-2014) Volcano Goods Private Limited without applying his own mind was led to be not justified. He also pleaded that no live link and nexus between the reasons recorded for reopening of assessment with the actual evidence in this regard was there. Therefore, he pleaded before the Bench to set aside the orders of lower authorities.

5.

On the other hand, at the time of hearing, ld. Departmental Representative pleaded that as the assessee did not furnish any material relating to merit and in support of grounds of appeal as well as statement of facts, the CIT(Appeals) has passed the order. He prayed before the Bench to uphold the order of ld. CIT(A).

6.

I have heard both the sides and perused the material available on record. A perusal of the impugned order clearly shows that without going into merit of the case as well the documentary evidences and submissions made by the assessee to substantiate its claim, the ld. CIT(Appeals) confirmed the addition made by the ld. Assessing Officer. It is also evident that the ld. CIT(Appeals) has not discussed the issue on merits and dismissed the appeal. I also find that there was no omission or failure on the part of assessee to disclose fully and truly all material facts necessary for assessment which is one of the primary conditions for reopening of assessment under section 147. Thus, the notice issued by the ld. Assessing Officer was time barred as four years already elapsed. Notice issued after the expiry of four years from the end of the relevant assessment year by the ld. Assessing Officer merely acting mechanically on the information supplied by the Investigation Wing about the alleged accommodation entries provided by the 4

ITA No. 1771/KOL/2025 (A.Y. 2013-2014) Volcano Goods Private Limited assessee to certain entities without applying his own mind was led to be not justified and purely based on borrowed satisfaction. As there was no live link between the material available on record and the belief formed by the ld. Assessing Officer showing escaped income is purely without application of mind by reopening of assessment u/s 147, which was bad in the eyes of law. Moreover, I find that that the alleged accommodation entry, received by the assessee has reached the bank account of the assessee through M/s. Lakshya Merchants Pvt. Ltd., M/s. Vinimay Pvt. Ltd. and M/s. Madhu Tradecom Pvt. Limited, was transferred in the Bank account of the assessee on 07.03.2012 and no such amount has been received from any such party by the assessee. I also find from the record that the Bank account of the assessee has been filed at the time of filing of objections and the date of receipt of the alleged amount by the assessee does not relate to the relevant assessment year 2013-14. By considering the totality of the facts and circumstances of the case, I find infirmity in the order of ld. CIT(Appeals) and allow the appeal of the assessee by setting aside the order of ld. CIT(Appeals).

7.

In the result, appeal of the assessee stands allowed. Order pronounced in the open Court on 28/04/2026.

Sd/- (Duvvuru RL Reddy) Vice-President (KZ) Kolkata, the 28th day of April, 2026

ITA No. 1771/KOL/2025 (A.Y. 2013-2014) Volcano Goods Private Limited

Copies to :(1) Volcano Goods Private Limited, Room No. 406, Kamalalaya Centre, Lenin Sarani, Kolkata-700013 (2) Assistant Commissioner of Income Tax, Circle-1(1), Kolkata (3) CIT(A), NFAC, Delhi; (4) CIT - , Kolkata; (5) The Departmental Representative; (6) Guard File TRUE COPY By order

Assistant Registrar, Income Tax Appellate Tribunal, Kolkata Benches, Kolkata Laha

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