BUDDHA COTTON MILLS PRIVATE LIMITED,GAYA vs. INCOME TAX OFFICER, WARD 3(1), GAYA, GAYA

Per Sonjoy Sarma, Judicial Member: The present appeal filed by the assessee is directed against the order dated 14.07.2023 passed by the NFAC, Delhi [hereinafter referred to as the ‘Ld. CIT(A)] u/s 250 of the Income Tax Act, 1961 (the ‘Act’) for the assessment year 2012-13. 2. The assessee has preferred the appeal before the Tribunal with a delay of 529 days and has filed an application for condonation of delay explaining the reasons for such delay. We, after considering the reasons stated therein, are satisfied that there was a reasonable cause which prevented the assessee from filing these appeals within the prescribed time. Accordingly, the delay of 529 days is condoned and we proceed to dispose of the appeal on merits.

I.T.A. No.122/Pat/2025 Buddha Cotton Mills Private Limited ; AY: 2012-13 3. Brief facts of the case are that the assessee is engaged in the business of Powerloom Cloth and filed its return of income declaring total income of Rs. 8,240/-. The case of the assessee was selected for scrutiny assessment. During the course of the original assessment proceedings, the Assessing Officer made disallowance of purchases amounting to Rs. 1,27,750/- and depreciation amounting to Rs. 21,867/- and added the same back to the total income of the assessee. Accordingly, the Assessing Officer completed the assessment determining the total income of the assessee at Rs. 1,57,860/-. Subsequently, it was noticed that the assessee had claimed TDS amounting to Rs. 11,08,000/- during the assessment year under consideration, whereas the corresponding receipts of Rs. 1,10,80,000/- were not disclosed in the profit and loss account. Accordingly, the Assessing Officer formed a belief that income chargeable to tax had escaped assessment, and notice u/s 148 of the Act was issued to the assessee on 13.03.2019 for reopening of the assessment u/s 147 of the Act. Thereafter, notice u/s 142(1) of the Act along with a questionnaire was issued to the assessee seeking necessary details and explanation. The assessee requested the reasons recorded for reopening of the assessment proceedings, and the same were duly supplied to the assessee; however, no objection or proper explanation was filed by the assessee. In response to the reasons so supplied, the Assessing Officer consequently treated the amount of Rs. 1,10,80,000/- as undisclosed receipts corresponding to the TDS claimed in the return of income and added the same to the total income of the assessee. 4. Aggrieved by the above order, the assessee filed an appeal before the Ld. CIT(A), where the Ld. CIT(A) dismissed the appeal and sustained the addition made by the Assessing Officer.

I.T.A. No.122/Pat/2025 Buddha Cotton Mills Private Limited ; AY: 2012-13 5. Against the said order, the assessee is now in appeal before this Tribunal. At the time of hearing, the Ld. AR submitted that the order passed by the Ld. CIT(A) sustaining the reassessment is bad in law and liable to be quashed. It was specifically contended that the notice issued u/s 148 of the Act dated 13.03.2019 for assessment year 2012-13 was beyond the period of four years prescribed under the proviso to section 147 of the Act. It was submitted that the original assessment stood completed on 31.03.2013 and the limitation period of four years expired on 31.03.2017, whereas the impugned notice u/s 148 of the Act was issued only on 13.03.2019. Therefore, the entire reassessment proceedings were initiated beyond the stipulated period of limitation and are without jurisdiction and liable to be set aside. The Ld. AR further contended that during the original assessment proceedings, on the issue, the Assessing Officer issued a notice u/s 133(6) of the Act to the deductor, namely IL&FS Limited, for confirmation of the said account and TDS deducted by IL&FS Limited, and a detailed reply was submitted by the deductor to the Assessing Officer during the assessment proceedings, a copy of which has been furnished in order to substantiate that the transaction was originally examined by the Assessing Officer during the original assessment proceedings itself and order was passed on 19.01.2015. He further stated that the entire payments were made by IL&FS Limited on a cost-to-cost basis for the purpose of training to local waiver without earning any profit therefrom, and the products which were produced during the training period were sold by the assessee, from which the assessee earned negligible profit. Therefore, the training given to the various parties was only for charitable purposes, which was explained during the original assessment proceedings itself. Moreover, during the original assessment proceedings, a rectification order u/s 154 of the Act was passed by the Assessing Officer dated 30.05.2016 stating that credit of Rs. 11,08,000/- had been disallowed as gross receipts corresponding to TDS amounting to Rs. 1,10,80,000/- were not taken

I.T.A. No.122/Pat/2025 Buddha Cotton Mills Private Limited ; AY: 2012-13 into the profit and loss account, and the tax liability of the assessee was redetermined after disallowing TDS of Rs. 11,08,000/-. Therefore, he stated that the very issue on which reopening has been made was, in fact, examined during the original assessment proceedings. Therefore, all the facts were truly explained during the original assessment proceedings by the assessee itself, which clearly shows that the reopening is bad in law, since the assessee had explained all the details during the original assessment itself. Therefore, the proceedings-initiated u/s 148 of the Act are barred by limitation. The Ld. AR relied on the decision of the Hon’ble Bombay High Court judgment addressing the reopening of the assessment u/s 147 of the Act as involving Asian Paints Limited Vs. Dy. CIT & Others (308 ITR 195) where it was held that where the assessee had fully and truly disclosed all primary material facts during the course of original assessment proceedings u/s 143(3) of the Act and the Assessing Officer had sufficient opportunity to reexamine the claim of the assessee, reopening of assessment u/s 147 merely on change of opinion is not permissible in law and such proceedings are contrary to the provision of section 147 of the Act and therefore liable to be quashed. 6. On the other hand, the Ld. DR supported the decision of the authorities below. 7. We, after hearing the rival submissions of the parties and perusing the material available on record. We find that in the present case of the assessee, notice u/s 148 of the Act for assessment year 2012-13 was admittedly issued on 13.03.2019, which is beyond the period of four years from the end of the relevant assessment year. The issue relating to limitation goes to the root of the validity of the reassessment proceedings, since the notice itself has been issued beyond the permissible period prescribed under the Act. Therefore, the entire proceedings are not sustainable in law. We, after following the decision of the Hon’ble Bombay High Court as in the case of the Asian Paints Limited Vs. Deputy

I.T.A. No.122/Pat/2025 Buddha Cotton Mills Private Limited ; AY: 2012-13 Commissioner of Income Tax 308 ITR 195. We find that, in the present case of the assessee, the assessee had fully and truly disclosed all primary facts during the course of the original assessment proceedings u/s 143(3) of the Act, and the Assessing Officer had sufficient opportunity to examine the claim of the assessee. Therefore, the reopening of the assessment u/s 147 of the Act merely on a change of opinion is not permissible in law. Accordingly, such proceedings were contrary to the provisions of section 147 of the Act and are therefore liable to be quashed. Accordingly, the reassessment proceedings-initiated u/s 147 and 148 of the Act are hereby quashed, and the addition made by the Assessing Officer is deleted. 8. In terms of the above, appeal of the assessee is allowed. Kolkata, the 21st May, 2026.

Sd/- Sd/- [Laxmi Prasad Sahu] [Sonjoy Sarma] Accountant Member Judicial Member Dated: 21.05.2026. DP, 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