LADIOS CONSTRUCTION PRIVATE LIMITED,KOLKATA vs. ITO, WARD 6(2),, KOLKATA

PDF · subscribers
ITA 2744/KOL/2025Status: DisposedITAT Kolkata28 April 2026AY 2018-20198 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 held that the Assessing Officer's order was illegal and unsustainable because it was not based on the reason for which the notice was issued. The assessee had clearly stated that no transaction occurred with the mentioned entity.

What were the facts?

The assessee company denied receiving Rs. 20,00,000/- as an unsecured loan from M/s. Jagkarta Electricals Pvt. Ltd. (later referred to as M/s. Merrygold Mercantiles Pvt. Ltd. in some parts of the judgment) during AY 2018-19. The Assessing Officer treated this amount as income escaped assessment and initiated penalty proceedings.

What were the issues?

Whether the addition made by the Assessing Officer was valid when the notice for reassessment was based on incorrect information, and the assessee denied the transaction.

Which sections of the Income-tax Act were involved?

Section 68,Section 147,Section 148,Section 148A,Section 271AAC(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 10.10.2025 passed for Assessment Year 2018-2019.

2. Brief facts of the case are that the assessee is a Company which filed its return of income on 10.10.2018 for AY 2018-19 declaring total income of Rs.58,490/-. Thereafter specific credible information was flagged as per Risk Management Strategy formulated by the CBDT through ITBA software under the head ‘High Rish Transaction Cases’. As per specific information received from Investigation Wing, the assessee company during AY 2018- 19 received Rs.20,00,000/- in its bank accounts maintained with Canara Bank from M/s. Jagkarta Electricals Pvt. Ltd., which is a shell company with a view to benefit desirous entities by providing accommodation entries in the form of unsecured loans, share capital and share premium. The assessee was required to show- cause to furnish its reply/response/explanation with all relevant details and supporting documents and in reply through online, the assessee stated that it had not made such transactions with the abovementioned entity during the year under consideration. From the record, it is seen that the assessee company, in the instant case, through multiple accounts and finally credit the same amount to the bank accounts of the beneficiary in the form of unsecured loans. The ld. Assessing Officer issued show cause notice to the assessee asking why the amount of Rs.20,00,000/- received from M/s. Jagkarta Electricals Pvt. Ltd. in the form of bogus unsecured loan should not be treated as income chargeable to tax which had escaped assessment within the meaning of provision of section 147 of the Act. In reply, the assessee stated that the assessee-company had not made such transactions with the Merrygold Mercantile Pvt. Ltd. which remained unexplained and treated as concealment of income and finally, ld. Assessing

Officer determined the assessed income of the assessee at Rs.20,58,490/- and initiated penalty proceedings under section 271AAC(1) of the Income Tax Act for concealment of income.

3.

On being aggrieved, the assessee preferred an appeal before the ld. CIT(Appeals). The ld. CIT(Appeals) dismissed the appeal of the assessee by saying that the ld. Assessing Officer was justified in treating the amount of Rs.20,00,000/- as unexplained cash credit under section 68 of the Act as the assessee failed to provide any satisfactory explanation about the nature and source of this credit. The other issues regarding legality of notice under section 148 and procedure under section 148A, the ld. CIT(Appeals) was of the view that the action of the ld. Assessing Officer for reopening the assessment was justified and no infirmity was found in the action of ld. Assessing Officer. Regarding on the issue of jurisdiction of Assessing Officer, the ld. CIT(Appeals) was of the view respectfully following the decision of the Hon’ble Calcutta High Court in the case of Triton Overseas, wherein the Hon’ble High Court held that notices issued by JAO instead of NFAC are not invalid as JAO and units of NFAC have concurrent jurisdictions and hence notice issued under section 148 by the JAO and not by the NFAC is not invalid.

4.

On being aggrieved 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 in response to the notice issued by the ld. Assessing Officer under section 148A, wherein it was stated that the assessee-company received an

amount of Rs.20,00,000/- during the FY 2017-18 relevant to AY 2018-19 from M/s. Merrygold Mercantiles Pvt. Ltd., the Director of the assessee-company clearly stated in his reply in the letter-head that “we have not made any transaction with the said entity during the year under consideration”. Therefore, the ld. Counsel for the assessee pleaded before the Bench that as the assessee-company has not received the amount of Rs.20,00,000/- from M/s. Merrygold Mercantiles Pvt. Limited for the assessment year 2018- 19 as claimed by the ld. Assessing Officer, to set aside the order passed by the ld. CIT(Appeals).

5.

On the other hand, ld. Departmental Representative pleaded to uphold the order of ld. CIT(Appeals) as the assessee did not able to provide any credible evidence to show that M/s. Jagkarta Electricals Pvt. Ltd had the financial capacity to advance such a large sum of money and did not able to explain the nature of the investments as were allegedly sold. As the assessee failed to provide any satisfactory explanation about the nature and source of credit and on the issue of legality of notice u/s148 and jurisdiction of A.O to issue notice, JAO and units of NFAC have concurrent jurisdiction as held by the Hon’ble Jurisdictional High Court in the case of Triton Overseas. Therefore, he pleaded to uphold the order of ld. CIT(Appeals) and dismiss the appeal of assessee

6. I have heard both the sides and perused the material available on record. From the record, I find that the ld. Assessing Officer alleged that the assessee has done fictitious derivative transactions with M/s. Blueview Tradecom Pvt. Ltd. and asking the assessee to reply with supporting documentary evidences. The assessee submitted its reply in details enclosing all relevant documents in support of their claim to justify that they have not indulged in any fictious derivative transactions during the year under consideration. From the record, I find that the assessee had taken accommodation entry by way of fund transfer from M/s. Brightmoon Suppliers Pvt. Ltd., which is a different company. The Revenue authorities claimed that the assessee has received Rs.20,00,000/- from M/s. Merrygold Mercantiles Pvt. Ltd. for the assessment year 2018-19, but it was not actually received by the assessee. The Director of the assessee-company in reply to the notice issued under section 148A of the Income Tax Act dated 17.03.2022 by the ld. Assessing Officer stated that we have not made any transaction with the said entity during the year under consideration and urged that the notice under section 148 should not be issued on us as the information as claimed is not correct, which is at page 19 of the paper book and is extracted below:- Therefore, the order passed by the AO under section 148 of the Act is not based on the reason for which notice was issued. Therefore, the order passed by the ld. Assessing Officer is illegal and has to be held to be wholly unsustainable. Considering the facts and circumstances of the case, I am inclined to set aside the order passed by the ld. CIT(Appeals) and delete the addition made by the ld. Assessing Officer and as confirmed by the ld. CIT(Appeals) and allow the grounds of appeal taken by the assessee.

7.

In the result, appeal of the assessee is 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

Copies to :(1) Ladios Construction Private Limited, 27, Brabourne Road, 5th Floor, Kolkata-700001 (2) Income Tax Officer, Ward-6(2), Kolkata, Aayakar Bhawan, P-7, Chowringhee Square, Kolkata-700069 (3) CIT(A), NFAC, Delhi; (4) CIT - , Kolkata; 7 (5) The Departmental Representative; (6) Guard File TRUE COPY By order

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

More judgments on Section 68

All 29,931 judgments and leading authorities on Section 68 →

Recent GST High Court judgments

Search GST case law →