DCIT, CC-1(4),, KOLKATA vs. PACEMAN SALES PROMOTION PVT LTD, KOLKATA

ITA 1642/KOL/2025Status: DisposedITAT Kolkata23 October 2026AY 2018-1925 pages
AI SummaryDismissed

What did the Tribunal hold?

The Tribunal held that the appeal filed by the Revenue is dismissed. The Tribunal observed that the order passed under Section 148A(d) clearly stated that the reopening was initiated due to an alleged escapement of income of Rs. 4,20,00,000/- from Sanwaria Vyapaar Pvt. Ltd. However, a perusal of the assessment order revealed that no addition was made on account of these specific reasons. The Tribunal found that the very foundation of the reopening had failed. Citing the principles laid down by the Hon'ble Delhi High Court in the case of Ranbaxy Laboratories Ltd., the Tribunal found no reason to interfere with the order of the CIT(Appeals). Therefore, the appeal filed by the Revenue was dismissed.

What were the facts?

The Revenue (DCIT, CC-1(4), Kolkata) filed an appeal before the ITAT, Kolkata against the order of the CIT(Appeals)-20, Kolkata for the assessment year 2018-19. The Revenue's appeal was delayed by 173 days, which was condoned by the Tribunal. The reopening of assessment was initiated based on alleged escapement of income of Rs. 4,20,00,000/- received from Sanwaria Vyapaar Pvt. Ltd. However, the Assessing Officer did not make any addition based on these reasons. Instead, an addition was made representing trading loss on penny stock. The CIT(Appeals) deleted this addition, holding that the reasons for initiating proceedings under Section 147 had ceased to survive, relying on High Court decisions. The Revenue's appeal challenges the CIT(Appeals)'s order.

What were the issues?

1. Whether the reopening of assessment under Section 147 of the Income Tax Act, 1961, is valid when the specific reasons recorded for reopening did not result in any addition to the income, and the addition made was on a different ground (trading loss on penny stock)? Assessee's Contention: The assessee argued that the CIT(Appeals) rightly deleted the addition because the primary reasons for reopening, concerning the alleged escapement of income from Sanwaria Vyapaar Pvt. Ltd., were not sustained, and no addition was made on that basis. The assessee relied on the decisions in ATS Infrastructure Ltd. Vs. ACIT and Ranbaxy Laboratories Ltd. The assessee also pointed out that the Revenue's grounds of appeal did not challenge the CIT(Appeals)'s finding on the issue of reopening. Revenue's Contention: The Revenue contended that Explanation 3 to Section 147 allows them to make additions on issues not originally included in the reasons for reopening. When questioned about the survival of reopening if the original reasons were not acted upon, the Revenue did not respond. The Revenue prayed for the reversal of the CIT(Appeals)'s order and restoration of the Assessing Officer's order.

Which sections of the Income-tax Act were involved?

Section 147,Section 148A(d)

AI-generated summary — verify with the full judgment below

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

Before: SHRI GEORGE MATHAN & SHRI RAKESH MISHRA

PER RAKESH MISHRA, ACCOUNTANT MEMBER:

In this case, a draft signed order has been sent by my brother, the Ld. JM. I have gone through the draft order prepared by the Ld. JM in this case, which is as under: IN THE INCOME TAX APPELLATE TRIBUNAL “C” BENCH, KOLKATA BEFORE SHRI GEORGE MATHAN, JUDICIAL MEMBER AND SHRI RAKESH MISHRA, ACCOUNTANT MEMBER ITA No(s). 1642/KOL/2025 Assessment Year(s) 2018-19 Paceman Sales Promotion Pvt. Ltd. Assessment Ye

The order continues below.

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