KEDIA CARBON PVT. LTD.,KOLKATA vs. D.C.I.T., CC - 4(3), KOLKATA

Per Rajesh Kumar, AM:

This is an appeal preferred by the assessee against the order of the Commissioner of Income-tax (Appeals), Kolkata-27(hereinafter referred to as the “Ld. CIT(A)”] dated 07.01.2026 for the AY 2009-10.

“1. That on the facts and in the circumstances of the case and in law, the ld. AO erred in reopening the case of the assessee u/s 148 of the Act on incorrect reasons recorded without any verification of the actual facts and thus entire reopening on incorrect facts cannot be sustained in the eyes of law.

3.1. The facts in brief are that the assessee is engaged in the business of manufacturers of Coal Tar Pitch and its bye products. The

3.2. The learned CIT (A) affirmed the same on merit.

3.3. The learned AR submitted that reopening of assessment has been made invalidly by the AO on the basis of information received from the Investigation Wing, as the AO has not recorded his own satisfaction and relied on the satisfaction recorded by the Investigation Wing which is borrowed satisfaction. Thus, the AO has reopened the case without application of mind on the wrong facts.The learned AR submitted by referring to the audited balance sheet that during the course assessee has issued only 15,90,000 equity shares of face value at ₹10 each thereby collecting ₹1,59,00,000 against the allotment of shares. The learned AR submitted that the observations. As a matter of fact, the shares were never issued at a premium of ₹90 and thus the said satisfaction of the AO is based on wrong facts. The learned AR referred to the balance sheet to explain that opening balances of reserve and surplus and submitted that opening and the closing balances remained same. Thereafter, the ld. AR referred to the reasons recorded by the ld. AO that share allotted match with the well-known entry operator collect amounting to ₹2,09,00,000/- and submitted that the same is also imaginary and based on the presumption of the ld. AO as there is no such amount appearing in the books of accounts of the assessee or collected from any quarter. Thereafter, the ld. AR referred to the statements recorded of entry operators Shri Abhishek Chokani, Amit Dalmia, Anand Sharma/ Janardhan Chokhani, Krishna MurariNaita, Sanjoy Drolia & Manish Surekha, Shiv Kumar Khemka,

3.4. The ld. AR also submitted that reopening cannot be made merely on the statement of the directors of the assessee company. The learned AR in defense of his argument referred to the CBDT Circular No. F. No. 286/2/2003-IT (Inv.) dated 10-3-2003&CBDT vide Circular No. F. No. 286/98/2013-IT dt. 18.12.2014 wherein it has been provided that only statement is not enough to make the addition where there is no corroborating materials.

3.5. The ld. DR on the other hand relied on the orders of the authorities below by submitting that at the time of reopening correct facts need not to be brought on record. It is just point of initiation of investigation which are investigated and examined during the course

3.6. We have heard the rival arguments and perused the materials available on record. The undisputed facts are that reopening was made by the AO on the basis of wrong and incorrect facts. As has been stated herein above, there were conflicting amounts mentioned by the AO in the reasons recorded. We note that the AO has observed in the reasons recorded that shares were issued at a face value of ₹10 each at a premium of ₹90, thereby collecting ₹5,11,95,000/- from the investors, whereas as a matter of fact, the assessee has issued shares at a face value only on face value of ₹ 10/- each and no premium was ever collected. We note during the year the assessee has issued 15,90,000 equity shares at a face value of ₹10 each thereby, thereby collecting from the investors Rs.1,59,00,000/-. Therefore, the facts mentioned by the AO while forming the belief are totally incorrect. Thereafter, the learned AO also referred to ₹2,45,00,000/- and ₹ 2,09,00,000/- in the reasons recorded. Again, the facts were wrongly mentioned by the AO. The AO also recorded the reasons that assessee has received share capital / share premium from companies namely; Starpoint Distributors Pvt. ltd., M/s Suasion Finvest Pvt. ltd. and M/s Emcee Commercial Pvt. Ltd. whereas as a matter of fact, no share capital was ever allotted to these companies. Therefore, reopening of assessment made by the AO on the basis of incorrect facts is wrong, unlawful and bad in law and so is the reopening of assessment framed by the AO consequently. The case of the assessee finds support from the decisions of Hon'ble Bombay High Court in case of Tata Sons ltd. (supra), wherein it has held as under:-

"When these factual details were compared with the reasons recorded, it was found that the reasons recorded were vague and factually incorrect also. No bank instrument of Rs. 6 lakhs was received by the assessee. The CIT(A) had allowed relief to the assessee following the decision of Hon'ble Jurisdictional High Court. The facts of the assessee's case clearly show that the Assessing Officer had not examined the information received from Investigation Wing before recording his own satisfaction of escapement of income. Though he had mentioned in the reasons recorded that he had examined the information and details so available. Because had he examined the details and information, he would have certainly known that the information was factually incorrect and incomplete. The CIT(A) rightly followed the above decision of Hon'ble Jurisdictional High Court and set aside reassessment notice. CIT vs. Smt. Paramjit Kaur [2009] 311 ITR 38 (P&H).” 3.6.2. Therefore, considering the facts of the case and reasons recorded by the AO without application of mind we hold that the re- opening has been made on the basis of borrowed satisfaction which is not permissible under the Act. Accordingly we hereby quash the reopening of assessment as well as the consequent assessment framed by the AO.

CBDT Circular No. F. No. 286/2/2003-IT (Inv.) dated 10-3-2003 “Subject: Confession of additional Income during the course of search & seizure and survey operation-regarding "Instances have come to the notice of the Board where assessees have claimed that they have been forced to confess the undisclosed income during the course of the search & seizure and survey operations. Such confessions, if not based upon credible evidence, are later retracted by the concerned assessees while filing returns of income. In these circumstances, on confessions during the course of search & seizure and survey operations do not serve any useful purpose. It is, therefore, advised that there should be focus and concentration on collection of evidence of income which leads to information on what has not been disclosed or is not likely to be disclosed before the Income Tax Departments. Similarly, while recording statement during the course of search and seizures and survey operations no attempt should be made to obtain confession as to the undisclosed income. Any action on the contrary shall be viewed adversely. 3.6.4. In continuation to the above Circular, CBDT vide Circular No. F. No. 286/98/2013-IT dt. 18.12.2014 further stated that,

Order pronounced in the open court on 25.06.2026.

Sd/- Sd/- (PRADIP KUMAR CHOUBEY) (RAJESH KUMAR) (JUDICIAL MEMBER) (ACCOUNTANT MEMBER) Kolkata, Dated: 25.06.2026 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