ROSHAN AGENCIES PRIVATE LTD.,,KOLKATA vs. ITO, WARD 4(1),, KOLKATA

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ITA 1635/KOL/2025Status: DisposedITAT Kolkata21 April 2026AY 2011-20129 pages
AI SummaryRemanded

What did the Tribunal hold?

The Tribunal condoned the delay in filing the appeal due to sufficient cause. The Tribunal found that the AO had not properly examined the genuineness of the transaction and the creditworthiness of the parties involved. Therefore, the matter was remanded back to the AO for fresh assessment.

What were the facts?

The assessee's appeal was delayed by 53 days due to the official order being sent to the spam folder and the concerned person's ill health. The appeal concerns an addition of Rs. 10,00,000/- made by the AO on account of unexplained cash credit.

What were the issues?

Whether the addition on account of unexplained cash credit was justified, and whether the reassessment proceedings were validly initiated and conducted.

Which sections of the Income-tax Act were involved?

Section 147,Section 148,Section 68,Section 151,Section 143(3),Section 250

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, KOLKATA ‘SMC’ BENCH AT KOLKATA

Before: SHRI SONJOY SARMA & SHRI RAKESH MISHRA

PER RAKESH MISHRA, ACCOUNTANT MEMBER:

This appeal filed by the assessee is against the order of the Commissioner of Income Tax (Appeals)-NFAC, Delhi [hereinafter referred to as Ld. 'CIT(A)'] passed u/s 250 of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’) for AY 2011-12 dated 10.03.2025. 1.1 The Registry has informed that the appeal is barred by limitation by 53 days. The assessee has filed a petition for condonation of delay explaining the reasons that the delay occurred as the order was directed to the spam folder of the official email account and the concerned person remained unaware of the order being passed and the concerned person was also not well in terms of his health as he had been suffering from HOCM heart failure and had been undergoing treatment for which he had to stay out of town for a considerable period and consequently the assessee was unaware of ITA No(s). 1635/KOL/2025 Assessment Year(s) 2011-12 the appeal order and as soon as the assessee became aware of the order, the same was referred to the consultant and the appeal was drafted and filed. The assessee has relied upon the decision of Hon'ble Madras High Court in the case of Sreenivas Charitable Trust vs. DCIT (2006) 280 ITR 357 (Mad) and the judgment of the Hon'ble Apex Court in the case of Vedabai alias Vaijayanatabai Baburao Patil vs. Shantaram Baburao Patil (2002) 253 ITR 798 and also the decision of the Hon'ble Calcutta High Court in the case of CIT vs. Orissa Concrete and Allied Industries Ltd. (2003) 264 ITR 186 (Cal) and other decisions and has requested to condone the delay. The assessee has also submitted the medical certificate regarding illness of the concerned person Shri Vinod Agrawal. After perusing the same, we are satisfied that the assessee had a reasonable and sufficient cause and was prevented from filing the instant appeal within the statutory time limit. We, therefore, condone the delay and admit the appeal for adjudication.

2.

The assessee is in appeal before the Tribunal raising the following grounds of appeal:

“1. That on the facts and circumstances of the case the initiation of impugned proceedings in our case under section 148/147 of the said Act in respect of Financial Year 2010-11 corresponding to the Assessment Year 2011-12 is arbitrary, excessive, perverse, illegal, invalid, bad in law and void ab-initio.

2.

That on the facts and circumstances of the case the Notice under section 148 of the Act 1961 as issued to the Appellant Company is invalid, bad in law and without any juri iction. The said notice issued by the Ld. AO is defective in as much as the AO had failed to point out as to whether he want to assess/re-assess our income or loss by not striking off the irrelevant portion in the said notice which makes the said notice illegal and void-ab initio.

3.

That on the facts and circumstances of the case Non furnishing of approval / sanction from appropriate authority u/s 151: The Ld. AO has not furnished the copy of the standard form for obtaining sanction under section 151 of the said Act and the sanction letter and satisfaction note of the PCIT, approving the issue of notice under section 148 of the Act./granting sanction under section 151 of the said Act.

4.

That on the facts and circumstances of the case the Appellant Company has not been given an opportunity of Cross Examination of that Third Party whose statement has been relied upon as an evidence for reopening proceedings u/s 148. 5. That on the facts and circumstances of the case the Statement of Third Party which has been relied and used as a tool for reopening had not been furnished by the Ld. AO to the assessee during the assessment proceedings.

6.

That on the facts and circumstances of the case the Appellant Company had not been supplied the Copy of the Order Sheet so as to ascertain whether the same has been approved by the appropriate authority or not.

7.

That on the facts and circumstances of the case during the assessment proceedings the Ld. AO had never issued / furnished recorded reasons to the appellant company. The Appellant Company could not see the reasons and therefore the Appellant Company failed to file its objections. Thus the entire proceedings u/s 147 was void ab initio, illegal, lacks juri iction, based on surmises, conjectures and presumptions. And the Assessment Order u/s 147/143(3) passed by the Ld. AO is liable to be quashed.

8.

That on the facts and circumstances of the case, the Ld. Assessing Officer (A.O.) erred in law as well as in fact by adding back a total amount of Rs. 10,00,000/- allegedly on the ground of "Unexplained Cash Credit u/s 68" of the Income Tax Act, 1961. The aforesaid addition is totally bad in law and unjustified.

9.

That on the facts and circumstances of the case, the Ld. AO was not justified in making additions on account of "Unexplained Cash Credit u/s 68" of the I.T. Act, 1961 merely based on conjectures and surmises without any finding or any evidence to that effect even when the assessee duly discharged the onus to prove the sale proceeds received by the appellant Company from its Sundry Debtors on account of Sale of Investments received during the normal course of business and the AO failed to bring any material on record to controvert the same.

10.

That on the facts and circumstances of the case the Assessing Officer, in absence of any legal and acceptable evidence in his possession in ITA No(s). 1635/KOL/2025 Assessment Year(s) 2011-12 respect of Appellant's involvement, connection or relation of any kind or nature whatsoever with the alleged transaction for receiving unaccounted money, the Assessing Officer erred in alleging that the Appellant is the beneficiary of unaccounted money.

11.

That on the facts and circumstances of the case The Ld. AO had not followed the CBDT Instructions and Judicial Discipline laid down by Hon. Supreme Court while proceeding to issue "Show cause Notice" in time barring assessments.

12.

That on the facts and circumstances of the case the "Show Cause Notice" issued by the Ld. AO must be issued with an open mind. The "SCN" issued to the Appellant Company is copy pasted in the Assessment Order dated 21.12.2018. The Ld. AO has completely made up his mind and reached definite conclusion about the alleged allegations of the appellant. This has rendered the subsequent proceedings an empty ritual and an idle formality.

13.

That on the facts and circumstances of the case that the Assessment Order passed by the Ld. AO is completely cryptic, non-detailed and non- speaking making thereby AO has not applied his mind before passing the Order.

14.

That on the facts and circumstances of the case That the Ld. A.O of Income Tax erred in charging interest under Section 234B of the Income Tax Act, 1961. 15. For that the Order of the Ld. AO should, accordingly, be quashed and your appellant be given such relief(s) as prayed for.

16.

For that the appellant craves for further Grounds of Appeal to be submitted at the time of hearing, given an opportunity of being heard and leave to add, alter and modify any ground of appeal at or before the hearing of the appeal.”

3.

Brief facts of the case are that the assessee company M/s. Roshan Agencies Pvt. Ltd. had furnished the return of income for the AY 2011-12 u/s 139(1) of the Act declaring total income of ₹68,027/- . The case was processed u/s 143(1) of the Act. On verification of the bank statement of a/c no. 627905013743 maintained with ICICI Bank of M/s. Kalyan Merchants Pvt. Ltd., it was observed that the assessee company had received ₹10,00,000/- during the FY 2010-11. To verify the nature of transaction and the source of such fund of ITA No(s). 1635/KOL/2025 Assessment Year(s) 2011-12 ₹10,00,000/- received by the assessee company, the case was reopened u/s 147 of the Act by issuing notice u/s 148 of the Act. In response to the said notice, the assessee filed its return of income. Accordingly, the assessment proceedings were concluded by passing the assessment order u/s 147 r.w.s. 143(3) of the Act on 21.12.2018 and after assessing the total income of the assessee at ₹10,68,030/- by making an addition of ₹10,00,000/- on account of cash credit u/s 68 of the Act. Aggrieved with the assessment order, the assessee filed an appeal before the Ld. CIT(A), who considered the supplementary grounds of appeal as well as the grounds of appeal, the written submission of the assessee and dismissed the appeal by giving his findings as under:

“6. Decision: I have considered the facts of the case, written submission and case laws relied upon by the appellant as against the observations and findings of the AO in the assessment order. The submissions and contentions of the appellant are discussed and decided as under:

6.

1 Ground No.1 to 14: The appellant has filed various grounds of appeal in Form 35 and also supplementary grounds of appeal. They all are adjudicated here. In these grounds the appellant has challenged the addition worth Rs. 10,00,000 as unexplained cash credit u/s 68 of the Income Tax Act. In this case, the notice u/s 148 was issued as the AO found that the appellant was one of the beneficiaries of unaccounted sale proceeds of shares from M/s Kalyan Merchants Pvt Ltd. After enquiry from the ROC, the AO found that the unaccounted cash was routed through the concerns like M/s Kalyan Merchants Pvt Ltd and finally deposited in M/s Roshan Agencies Ltd. Shri. Vinod Agrawal and Shri Amit Gupta are the two directors of M/s Roshan Agencies Ltd. Hence, the grounds raised by the appellant on the assumption of juri iction are dismissed as the AO had got valid satisfaction and prior approval was taken from PCIT-2 Kolkata. 6.1.1 Now before me in the appellate proceedings, the appellant has filed written submission. The appellant has made submission that the genuine transaction has taken place. Copy of sale bill of M/s Kalyan Merchants Pvt Ltd has been filed. The copy of bank statement and audited balance sheet has also been filed. I have gone through the show cause notice of the AO and the assessment order. In the show cause notice and the assessment order, the AO has clearly made out the case that M/s. Kalyan Merchants Pvt Ltd is a jamakharchi company and is giving entry to various beneficiaries. The AO in his submission had admitted that the name of M/s. Kalyan Merchants Pvt Ltd has been struck off from the records of ROC. I don't agree with the submission of the appellant. The genuineness of the transaction and the creditworthiness has not been proved before the AO and before me in the appellate proceedings. Hon. SC in the famous decision of PCIT vs NRA Iron and Steel has held that mere transfer by banking channel and quoting of the PAN of the shell company will not prove the genuineness of the transaction and the creditworthiness of the transaction. Time and again the appellant has written in the submission before me that the onus has been discharged, but it is not correct because in the assessment proceeding and in the appellate proceedings nowhere the onus has been discharged of proving the genuineness of the transaction and the creditworthiness of the transaction. Reliance is also made on the judgment of Hon. Delhi HC in the case of M/s. NR Portfolio vs. CIT. This decision has been confirmed by Hon. SC. Hon. SC has upheld the stand of the revenue in making addition in the cases of shell companies in both the judgements. Hence the addition of the AO is confirmed and appeal of the appellant is dismissed.

7.

The appeal of the appellant is Dismissed.”

4.

Aggrieved with the order of the Ld. CIT(A), the assessee has filed the appeal before the Tribunal.

5.

None appeared on behalf of the assessee and the case was heard with the assistance of the Ld. DR. The Ld. DR relied upon the order of the Ld. CIT(A) and requested that the same may be upheld.

6.

We have considered the facts and circumstances of the case, the grounds of appeal and the order of the Ld. CIT(A). The assessee has raised several legal issues relating to approval of the appropriate authority required u/s 151 of the Act and non-supply of the order sheet to ascertain as to whether the same had been approved by the appropriate authority was granted. It was also stated that the Ld. AO had never issued/furnished the recorded reasons to the assessee company and therefore, the assessee failed to file its objections. As regards the amount received, it is stated that there was no acceptable evidence in the possession of the Ld. AO that the assessee is beneficiary of the unaccounted money and the Ld. AO’s order was cryptic and not detailed.

7.

We have considered the submissions made. The assessee contended before the Ld. CIT(A) that it had sold 10,000 equity shares of Phoenix Tea and Agricultural Farm Pvt. Ltd. at the face value of ₹100/- per equity share to M/s. Kalyan Merchants Pvt. Ltd. and had raised invoice dated 21.03.2011 for a sum of ₹10 Lakh being invoice no. 005 dated 21.03.2011 and the shares were purchased at ₹100/- each and there was no income which was arising. The amount was received on 25.03.2011 through RTGS and a copy of the Bank Statement evidencing the payment of ₹10 Lakh by M/s. Kalyan Merchants Pvt. Ltd. was filed. It was stated that a director can be common between two companies as per the provisions of the Companies Act. The supplementary grounds of appeal regarding the validity of section 147 of the Act were also raised before the Ld. CIT(A). It was stated that the transaction was between the companies having a common director. All these details have not been examined properly by the Ld. AO as the notices issued u/s 133(6) of the Act to M/s. Kalyan Merchants Pvt. Ltd. were returned unserved, it was stated before the Ld. CIT(A). Since the assessee could not produce any satisfactory evidence before the Ld. AO, the addition was made. Before us, it is not mentioned as to when these shares were purchased. Therefore, the Bench was of the view that in the interest of justice and fair play, one more opportunity may be provided to the assessee to justify that the transactions are genuine. Hence, we deem it appropriate to set aside the order of the Ld. CIT(A) and remand the issue to the Ld. AO. The assessee shall produce necessary evidences for the purchase of shares as well as the sale of shares and also produce the directors of the purchaser and the seller companies for examination before the Ld. AO. The Ld. AO after providing an opportunity of being heard to the assessee shall thereafter consider the submission of the assessee and make the assessment order de novo in accordance with law. Hence, the grounds of appeal are partly allowed for statistical purposes

8.

In the result, the appeal filed by the assessee is partly allowed for statistical purposes. Order pronounced in the open Court on 21st April, 2026. [Sonjoy Sarma] [Rakesh Mishra] Judicial Member Accountant Member Dated: 21.04.2026 Bidhan (Sr. P.S.)

Copy of the order forwarded to:

1.

Roshan Agencies Private Ltd., 444, Marshall House, 33/1, N.S. Road, Dalhousie Square, Kolkata, West Bengal, 700001. 2. ITO, Ward-4(1), Kolkata.

3.

CIT(A)-NFAC, Delhi.

4.

CIT-

5.

CIT(DR), Kolkata Benches, Kolkata.

6.

Guard File. //// By order

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