EPS FINANCIAL SERVICES PVT. LTD.,KOLKATA vs. I.T.O., WARD - 13(1), KOLKATA

Per Rajesh Kumar, AM:

These are appeals preferred by the assessee against the orders of the National Faceless Appeal Centre, Delhi (hereinafter referred to as the “Ld. CIT(A)”]vide even dated 09.01.2026 for A.Ys. 2016-17 and 2019-20.

A.Y. 2016-17 ITA No. 228/KOL/2026 2. The issue raised in Ground No.1 is against the order of Ld. CIT(A) confirming the addition of ₹2,25,55,000/- as made by the

2.1. The facts in brief are that the assessee filed the return of income on 10.01.2018, disclosing the total income at ₹ 4,610/-. The case of the assessee was selected for scrutiny and statutory notices along with questionnaires were duly issued and served upon the assessee.The assessee company is an NBFC and engaged in the business of non-banking financing company. This assessee complied with the notices/questionnaire issued by the Ld. AO by filing documents/ evidences, return of income, audited balance sheets, etc.The Ld. AO observed from the same documents that the assessee had advances of ₹16,73,14,286/- during the preceding financial year which remains static. The Ld. AO also noted that the assessee has shown substantial shareholding in companies like M/s Himalaya Vyapaar Pvt. ltd. and M/s Maroon Infrastructure Pvt. Ltd., whose registrations have been cancelled by MCA. Accordingly, the assessee was required to explain the same by the AO. Finally, the Ld. AO noted from the balance sheet of the assessee that assessee has shown share capital to the tune of ₹4,94,15,000/- out of which the assessee received capital from M/s Himalaya Vyapaar Pvt. ltd. and M/s Maroon Infrastructure Pvt. Ltd. to the tune of ₹1,94,15,000/- and ₹1,06,000/- respectively. After taking into account the submissionS of the assessee, the Ld. AO treated the

2.2. In the appellate proceeding the Ld. CIT(A)simply affirmed the order passed by the Ld. AO.

2.3. After hearing the rival contentions and perusing the materials available on record including the copies of audited balance sheets as at 31,3,2015 vis a vis 31.3.2016. We observe that during the year there is no change in the share capital. In other words, the share capital as on 31.03.2015 and 31.03.2016 was the same i.e. ₹4,94,15,000/-. We also note that there is no change in the current liabilities. Therefore the addition made by the AO on account of share application money received during the year u/s 68 of the Act, is just on the basis of imagination of the AO whereas the records before us proved otherwise. We even note that while issuing the notice dated 05.12.18, the Ld. AO noted that the assessee had shown substantial shareholding in M/s Himalaya Vyapaar Pvt. ltd. and M/s Maroon Infrastructure Pvt. Ltd. However, while making the addition, the AO has made an addition on account of money received which is totally at variance to what was stated in the notice. We also note that in the same manner the Ld. CIT(A) sustained the addition.

A.Y. 2019-20 ITA No. 229/KOL/2026 7. At the time of hearing, the Learned Council pressed Ground No. 5, which is against the notice issued u/s 148 of the Act, without jurisdiction, and therefore, entire assessment is bad in law.

9.1. After hearing the rival contentions and perusing the materials available on record, we find merit in the argument of the ld. AR that notice u/s 148 of the Act, was issued by the ITO Ward 13(1), Kolkata, which is in violation of pecuniary jurisdiction of the CBDT instruction No.1/2011 (F. No. 187/12/2010-IT(A-1), Dated 31.01.2011. According to the said instruction, the ITO has pecuniary jurisdiction where the income is upto 20 lacs in the Metro Cities and 15 lacs in Mofussil areas whereas the DC/AC have jurisdiction above 20 lacs in Metro cities and above 15 lacs in the Mofussil areas. The said instructions reads as under:-

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9.2. In the present case, the assessee filed the return of income u/s 139(1) of the Act on 17.06.2020, disclosing total income of ₹34,23,650/-. We note that notice u/s 148 was issued on by ITO Ward 13(1), Kolkata which is in violation of the CBDT Instruction No.1/2011 (F. No. 187/12/2010-IT(A-1), Dated 31.01.2011. Therefore, the said notice has been issued by non-jurisdictional AO which is invalid and cannot be sustained. The case of the assessee find support from the decision of the Hon'ble Calcutta High Court in the case of PCIT vs. M/s Shree Shoppers Ltd. in ITAT 39/2023, IA No. GA/1/2023, dated 15.03.2023, wherein the Hon'ble Court has decided the issue in favour of the assessee by upholding the order of the Tribunal. The Tribunal in ITA No. 865/KOL/2018 for A.Y. 2012-13 in case of M/s Shree Shoppers Ltd. Vs. DCIT has held that notice issued by ITO, Ward 39(4),

9.3. Considering the facts and circumstances of the case and also relying on the above decisions, we hold that the notice issued u/s 148 of the Act and also the consequent assessment framed are invalid and are accordingly quashed.

Order pronounced in the open court on 20.05.2026.

Sd/- Sd/- (PRADIP KUMAR CHOUBEY) (RAJESH KUMAR) (JUDICIAL MEMBER) (ACCOUNTANT MEMBER) Kolkata, Dated: 20.05.2026 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