AMAR IRON UDYOG PVT. LTD.,KOLKATA vs. PCIT(CENTRAL)-2, KOLKATA

IN THE INCOMETAXAPPELLATE TRIBUNAL “A” BENCH, KOLKATA Before Shri Rajesh Kumar, Accountant Member and Shri Pradip Kumar Choubey, Judicial Member ITA No.819/Kol/2024 Assessment Year: 2014-15 Amar Iron Udyog Pvt. Ltd.………………………….………………………….Appellant C/o Subash Agrwal & Associates, Advocates, Siddha Gibson, 1, Gibson Lane, Suite 213, 2nd Floor, Kolkata- 700069 [PAN No. AACCA7898R] Vs. PCIT (Central)- 2……………………..…………….………... Respondent, Aayakar Bhawan P-7, Chowringhee Square, Kolkata- 700069 Appearances by: Shri Siddarth Agarwal, Advocate, appeared on behalf of the Appellant. Shri Manas Mondal, Addl. CIT, DR ,appeared on behalf of the Respondent. Date of concluding the hearing : March 26, 2026 Date of pronouncing the order :May 20 ,2026 ORDER Per Pradip Kumar Choubey, Judicial Member: This appeal filed by the assessee is directed against the order dated 10.03.2022 of the Office of the Commissioner of Income Tax passed under Section 147 of the Assessment Year 2014-15 of the Income-tax Act, 1961 (hereinafter referred to as “the Act”). 2. The brief facts of the case of the assessee is that assessee filed its return of income declaring total income of Rs. 41, 45,433/-. The assessment U/s 143(3) was passed determining total income of the assessee at Rs. 46, 05,820/-. Search operation U/s 132 of the Act was conducted and during the course of search and survey operation an provided accommodation entries by bogus billing /unsecured loans/shared capital etc. to various parties through the entities M/s

ITA No.819Kol/2024 Assessment Year- 2014-15 Amar Iron Udyog Pvt. Ltd. Accordingly a survey operation on 30.10.2019 was done to M/s Amar Iron Udyog Pvt. Ltd. Assessing Officers after going over the documents filed by the Assessee finds that assessee has failed to disclose fully and truly all material facts required for assessment by not disclosing the facts during the course of assessment the proceedings for the assessment year 2014-15, hence I have reasoned to believe that income of Rs. 15,00,000/- has escaped assessment during the year. The AO after disposing the objection filed by the assessee has added an amount of Rs. 15,00,000 receiving unsecured loan form Navalco Commodities Pvt. Ltd., and added in the total income of the assessee. An order U/s 263 has been passed by the PCIT Central Kolkata on the issue that the loans amounting to Rs. 45,00,000 that is Rs. 20,00,000/- from Armstrong TracomPvt. Ltd and Rs. 25,00,000/- from GiltedgeVincomPvt. Ltd were not taken into account during the assessment proceedings and thus were not added to the total assessed income by the AO. The Ld. PCIT has set aside the order passed by the Assessing Officers by exercising the powers conferred upon him U/s 263 and directed the AO to make necessary verification on this instance issue and pass a fresh assessment order and recomputed the assessee’s income after proper inquiries on the issues involved. Being aggrieved by and dissatisfied the order passed by the PCIT U/s 263 the assessee has preferred appeal before us. 3. The Ld. AR challenges the very impugned order passed U/s 263 thereby submitting that the subject matter of the revised proceedings U/s 263 for the re-assessment U/s 147 dated 10.03.2022 to tax the alleged escaped income of Rs. 15,00,000 being loan received from Novalco Commodities Pvt. Ltd which forms the basis of re-opening proceedings and as such the revised proceedings U/s 263 for the purpose of taxing loan amounting to Rs. 45,00,000/- from different 2

ITA No.819Kol/2024 Assessment Year- 2014-15 parties is not valid in the eyes of the law. The Ld. AR submits that on perusal of the reasons recorded the AO had formed believe about the statement of income in respect of loan of Rs. 15,00,000/- only received form Novalco Commodities Pvt. Ltd and there is no whisper about the loans taken from the other two companies in the reasons recorded.The Ld. AR submits that when there is no whisper about the loan taken from the other two companies the order passed U/s 147 cannot be said to be erroneous in so far as it is prejudicial to the interest of the Revenue as per section 263. The Ld. AR has cited following decision:-

i) Commissioner of Income-tax, Chennai vs. Alagendran Finance Ltd.; [2007] 293 ITR 1 (SC)

ii) Evergreen Agency (P) Ltd. vs. PCIT, Kolkata-2, ITA No. 138/Kol/2022, dated 27.06.2023

iii) Ayush Commerce (P) Ltd. vs. PCIT, ITA No. 139/K/22, dated 24.05.2023.

(iv) Charm Vincom (p) Ltd. vs. ITO, ITA No. 758/K/2019, order dated 01.01.2020

ii) PCIT vs. Badal Prakash Jindal HUF, ITA No. 8 f 2023, High Court of Orissa at Cuttack dated 02.03.2023 Contrary to that Ld. DR supports the impugned order. 4. Upon hearing the submission of the counsel of the respective parties and on perusal of the impugned order, we find that in the instant appeal the assessee has challenged the validity of the order passed U/s 263 in respect of assessment year 2014-15. Ld. PCIT has find that assessee company took unsecured loans amounting to Rs. 60,00,000/- from the following companies :-

(A) Novalco Commodities Pvt. Ltd- Rs. 15, 00,000/- 3

ITA No.819Kol/2024 Assessment Year- 2014-15 (B) Armstrong TracomPvt. Ltd-Rs.20, 00,000/- (C) GiltedgeVincomPvt. Ltd -Rs. 25,00,000/- The Ld. CIT(A) has held that loan amounting to Rs. 45,00,000/- from other two companies were not taken into account while passing the aforesaid order U/s 147. It is pertinent to mention here that assessee has furnished the written submission by reproducing the reasons recorded for re-opening the assessment and PCIT did not dispute the contents of the reasons recorded. On perusal of the reasons recorded we find that AO had formed belief about the statement of income in respect of loan of Rs. 15,00,000/- received form Novalco Commodities Pvt. Ltd and there is no whisper about the loans taken from the other two companies in the reasons recorded.Since there is no whisper about the loans taken from the other two companies in the reasons recorded the order passed U/s 147 dated 10.03.2022 cannot be said to be erroneous in so far as it is prejudicial to the interest of the Revenue. It is pertinent to note that the original assessment order was passed U/s 143(3) on 28.12.2016 and at the most the Ld. PCIT could have held that said order to be erroneous/prejudicial to the interest of the Revenue however, the limitation period as prescribed by Section 263(2) being two years from the end of the financial year in which the order sought to be revised was passed and as per the said provision the limitation for revising the said order had already expired on 31.03.2019 that is much before the issuance of notice U/s 263 i.e. 12.03.2024. In this context we have gone through the order passed by Hon’ble Apex Court in the Commissioner of Income Tax Chennai versus Alagendran Finance Ltd.; and the Hon’ble Apex Court has held thus:-

Section 263 of the Income-tax Act, 1961 - Revision - Of orders prejudicial to interests of revenue Assessment years 1994-95 to 1996-97

ITA No.819Kol/2024 Assessment Year- 2014-15 Assessee's assessment for assessment years in question was completed by Assessing Officer accepting its claim relating to certain expenses and income shown by assessee under head 'Lease equalization fund' on 27- 02-1997, 12-05-1997 and 30-03-1998, respectively Subsequently, reassessment proceedings were initiated in respect of only items relating to expenses claimed by assessee and reassessment order was passed on 28-03-2002 - Commissioner taking view that part of assessment order relating to lease equalization fund was prejudicial to interest of revenue, passed order under section 263 on 29-3-2004 -Assessee's case was that order passed under section 263 was barred by limitation with reference to orders passed under section 143(3) by Assessing Officer However, revenue's case was that in view of doctrine of merger, computation of period of limitation as provided in section 263(2) was to commence from date of passing of order of reassessment and not from date of initial assessment - Whether since only that part of order of assessment was found to be prejudicial to interest of revenue which related to lease equalization fund and proceedings for reassessment had nothing to do with said head of income, doctrine of merger would not apply in instant case - Held, yes -Whether since Commissioner in exercising its revisional jurisdiction reopened order of assessment in relation to lease equalization fund, which was not subject of reassessment proceedings, period of limitation provided for in section 263(2) would begin to run from date of order of original assessment and not from order of reassessment - Held, yes We have also gone through the order passed by the ITAT Kolkata Bench in ITA No. 38/2022 and the Hon’ble Bench has held thus:-

ITA No.819Kol/2024 Assessment Year- 2014-15 07.01.2012. A copy of the said order has been placed at page 34 of the paper-book. The reassessment order u/s 147 of the Act was passed on 05.12.2018 and thereafter the assessee had availed Vivad Se Viswas Scheme by filing application/Form I on 23.12.2020, which was accepted in the month of March 2021 and the matter was settled by that time. That the disallowance u/s 14A and other investments made by the assessee were not the subject matter of reassessment proceedings u/s 147 of the Act. He, therefore, has submitted that Id. PCIT could not have exercised his revision jurisdiction in respect of order passed u/s 147 of the Act and therefore, the revision order passed by the PCIT u/s 263 of the Act was time-barred. He in this respect has placed reliance on the decision of the Hon'ble Supreme Court in the case of 'CIT vs. Alagendran Finance Ltd. [2007] 293 ITR 1(SC)', wherein, the Hon'ble Supreme Court has categorically held that where the Commissioner has sought to revise only that part of the assessment order, the subject-matter of which had nothing to do with that item of income, in such a case, doctrine of merger did not apply and that the period of limitation would commence from the date of original assessment and not from the reassessment since the latter had not anything to do with the said item of income. In the case in hand also the assessment was reopened on a particular issue of having received of Rs. 10,00,000/- as accommodation entry from entry provider, whose statement was recorded in a search action exercised in the case of some third party. The Assessing Officer examined that particular issue and made addition in respect of the said entry received by the assessee. The issue relating to any other transaction was not the subject matter of the reassessment proceedings. The assessment in this case was reopened to examine a particular issue and that issue was examined by the Assessing Officer and the addition was made and ultimately the matter was settled by the assessee by availing Vivad Se Viswas Scheme. The items/issue on which the Id. PCIT has sought to

ITA No.819Kol/2024 Assessment Year- 2014-15 revise the order were not the subject matter of the reassessment order, therefore, in the light of the decision of the Hon'ble Supreme Court in the case of 'CIT vs. Alagendran Finance Ltd. (supra), it cannot be said that the reassessment order passed by the Assessing Officer was erroneous, therefore, the revision jurisdiction exercised by the Id. PCIT, in this case, cannot be held to be justified. In view of the discussion, the impugned revision order passed by the PCIT is hereby quashed. 5. Going over the discussion made above as considering the judicial pronouncement as discussed above, we find substance in the arguments of the Ld. AR and accordingly, the order passed U/s 263 as hereby set aside. The appeal of the assessee is allowed. Kolkata, the 20th May, 2026.

Sd/- Sd/- [Rajesh Kumar] [Pradip Kumar Choubey] Accountant Member Judicial Member Dated:.. 20. 05.2026. DC, PS

Copy of the order forwarded to: 1. Appellant - 2. Respondent - 3. CIT(A)- 4. CIT- 5. CIT(DR)

//True copy// By order Assistant Registrar, Kolkata Benches

ITA No.819Kol/2024 Assessment Year- 2014-15