DEPUTY COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE-1(3), KOLKATA, KOLKATA vs. M/S JKS INDIA HOLDINGS LIMITED, KOLKATA

ITA 2523/KOL/2025Status: DisposedITAT Kolkata07 October 2026AY 2007-0824 pages
AI SummaryDismissed

What did the Tribunal hold?

The Tribunal held that the reassessment proceedings were bad in law and liable to be quashed. The primary reason was that the Assessing Officer had not formed an independent belief that income chargeable to tax had escaped assessment. Instead, the AO appeared to have acted on borrowed satisfaction and instructions from the DDIT (Investigation) Unit, Kolkata, without an independent application of mind. Furthermore, the CIT(A) had noted jurisdictional issues with the officer who initiated the proceedings, as well as a lack of a live nexus between the material and the belief of escapement, citing various High Court and Supreme Court precedents. The Tribunal agreed with the CIT(A)'s finding that the reassessment proceedings were vitiated. Regarding the addition under Section 68, the Tribunal found that the CIT(A) had correctly appreciated the facts. The assessee had provided documentary evidence, including IT returns, audited accounts, bank statements, and confirmations, establishing the identity, creditworthiness, and genuineness of the share subscribers. The Tribunal noted that the alleged adverse statement of Sri Mahendra Sethia was general and not specific to the assessee, and he was not produced for cross-examination. The AO had also accepted similar share transactions with other investors. Therefore, the addition under Section 68 was not sustained. The appeal filed by the Revenue was dismissed on both legal and merit grounds.

What were the facts?

The Revenue appealed against the orders of the CIT(A) for Assessment Year 2007-08, which had allowed the assessee's appeals against reassessment proceedings initiated under Section 147 read with Section 143(3) of the Income Tax Act, 1961. The assessee had initially filed a return declaring an income of Rs. 12,341,768. Reassessment was initiated based on information from the DCIT (Investigation) Unit, Kolkata, regarding share capital received by the assessee amounting to Rs. 6.13 crore from 12 companies, four of which were allegedly involved in providing accommodation entries. The Assessing Officer added Rs. 75,00,000/- under Section 68 as unexplained money, citing the non-appearance of directors of one company, M/s Darkin Dealcom Pvt. Ltd., and the admission of Sri Mahendra Sethia regarding accommodation entries.

What were the issues?

1. Whether the reassessment proceedings initiated under Section 147 of the Income Tax Act, 1961, were valid, considering the AO's alleged lack of independent application of mind, borrowed satisfaction, and the jurisdictional issue of the issuing officer? Assessee's Contention (as per CIT(A)'s findings and Tribunal's discussion): The reassessment proceedings were bad in law due to the AO lacking jurisdiction, acting solely on instructions from a higher authority without independent belief, and the reasons recorded being vague and factually deficient, lacking a live nexus between the material and the belief of escapement. Reliance was placed on Supreme Court decisions in *CIT vs. Greenworld Corporation*, *Hindusthan Lever Ltd. v R B Wadkar*, *Mahesh Kumar Gupta v CIT*, and *Amar Nath Agarwal v CIT*, and ITAT Kolkata's decision in *K.A. Wires Ltd. vs. ITO*. Revenue's Contention (implied from appeal): The reassessment proceedings were validly initiated based on information received and the AO's belief that income had escaped assessment. The CIT(A) erred in quashing the proceedings on jurisdictional and procedural grounds. 2. Whether the addition of Rs. 75,00,000/- as share application money from M/s Darkin Dealcom Pvt. Ltd. under Section 68 of the Income Tax Act, 1961, was justified? Assessee's Contention (as per CIT(A)'s findings and Tribunal's discussion): The assessee had discharged its primary onus by providing documentation proving the identity, creditworthiness, and genuineness of the share transaction. The AO failed to provide the statement of Sri Mahendra Sethia for cross-examination, and his statement could not be relied upon. The AO also accepted similar transactions with other investors. Reliance was placed on Supreme Court decisions in *ITO v. Lakhmani Mewal Das* and *Sheo Nath Singh vs. Appellate Assistant Commissioner of Income-tax*. Revenue's Contention (implied from appeal): The addition was justified as the assessee failed to establish the genuineness of the share capital received, particularly given Sri Mahendra Sethia's admission of providing accommodation entries through the company.

Which sections of the Income-tax Act were involved?

Section 143(3),Section 147,Section 148,Section 68,Section 133(6),Section 131,Section 34

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, “D” BENCH, KOLKATA

Before: Shri Rajesh Kumar & Shri Pradip Kumar Choubey

Per Pradip Kumar Choubey, Judicial Member:

These appealshave been filed by the Revenue against the order dated 26.06.2025and 03.07.2025 of the Office of the Commissioner of Income Tax, Appeal passed under Section 143(3)r.w.s147 of the Assessment Year 2007-08 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 return of income declaring total

The order continues below.

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