SHREE NATH JEE BAKERS PVT. LTD.,VARANASI vs. DC/ACIT (2), GORAKHPUR

IN THE INCOME TAX APPELLATE TRIBUNAL VARANASI BENCH, VARANASI BEFORE SH. SUDHANSHU SRIVASATVA, JUDICIAL MEMBER AND SH. NIKHIL CHOUDHARY, ACCOUNTANT MEMBER ITA No.17/VNS/2025 A.Y.-2011-12 Shree Nath Jee Bakers Private Limited, vs. DC/ACIT-(2), Gorakhpur Plot No. B1-B4, Karkhiyaon Agro Park, Industrial Area, Babatpur Road, Varanasi-221002 (UP) PAN: AALCS0542F (Appellant) (Respondent) Assessee by: Sh. Arvind Shukla, Adv Revenue by: Sh. Deepak Yadav, Sr. DR Date of hearing: 05.08.2026 Date of pronouncement: 16.10.2026 O R D E R PER NIKHIL CHOUDHARY, A.M.: This is an appeal filed by the assessee against the order of the ld. CIT(A), NFAC dated 14.01.2025, wherein the ld. CIT(A) has dismissed the appeal of the assessee that was filed against the orders of the ld. Assessing Officer passed under section 147 r.w.s. 144, for the assessment year 2011- 12 on 27.12.2018. The grounds of appeal are as under: - “1. Because the Learned CIT (Appeal) has erred in law as well as on facts in not adjudicating the First Ground of appeal whereby the assumption of jurisdiction was challenged as the case was barred by limitation. 2. Because the Learned CIT (Appeal) has erred in law as well as on facts in not appreciating that the reopening was sought to be done beyond the period of four years against an order passed U/s 143(3) without any charge of not disclosing full and correct facts necessary for computation of Income. 3. Because the Learned CIT (A) has erred in law as well as on facts in not appreciating the facts as well as the legal position correctly in dismissing the appeal. 4. Because the Learned CIT (Appeal) as well as the AO have erred in law as well as on facts in grossly mis-appreciating the facts on record because the 1

ITA No.17/VNS/2025 Shree Nath Jee Bakers Pvt. Ltd. A.Y. 2011-12 loss of Rs. 73,49,019.00 was not adjusted at all against the profit rather it was added back to the income while filing the original return. 5. Because the Learned CIT (Appeal) has erred in arriving at a totally erroneous finding that the capital loss could be adjusted against capital gains only when no such adjustment was made as apparent from the computation of Income on record.”

ITA No.17/VNS/2025 Shree Nath Jee Bakers Pvt. Ltd. A.Y. 2011-12 per return and the amount added as per the earlier order dated 143(3) to determine the total income of the assessee company at Rs. 1,19,47,589/-. After such computation, he worked out that the assessee was required to pay tax of Rs. 38,76,392/- on its income as compared to Rs. 28,42,246/- under MAT and therefore, the assessee was charged tax on the assessed income of Rs. 1,19,47,589/- instead of the book profit. 3. Aggrieved with the said assessment order, the assessee went in appeal before the ld. CIT(A). Before the ld. CIT(A), it was submitted that the assessee had debited a sum of Rs. 73,39,019/- to the profit and loss account for the A.Y. 2010-11 on account of loss on fixed assets. But this loss was added back to the income while making the computation of income. Accordingly, the returned income was arrived at, as were the taxes. In response to the reopening notice, the assessee’s representative appeared before the ld. Assessing Officer and pointed this out but the ld. Assessing Officer ignored the submission and added a sum of Rs. 73,49,019/- back to the income of the assessee, though the assessee had already added back Rs. 73,39,019/-. Before the ld. CIT(A), it was submitted that the assessment was bad in law because the earlier assessment had been done under section 143(3) and four years had passed and there was no finding that the assessee had failed to disclose fully and materially all facts necessary for his assessment. The ld. Assessing Officer had erred in passing the order under section 144 because the assessee had duly attended the case and filed written submission which had even been referred to in the assessment order. The addition had been made on surmises and conjectures and since the loss on sale of fixed assets had already been added back by the assessee while filing the return of income for the A.Y. 2011-12 and this aspect had been duly considered in the original assessment order passed under section 143(3) of the Act on 22.03.2013, the order passed by the ld. Assessing Officer 3

ITA No.17/VNS/2025 Shree Nath Jee Bakers Pvt. Ltd. A.Y. 2011-12 under section 147 r.w.s. 144 was passed without application of mind. The ld. CIT(A) considered such submissions of the assessee. The ld. CIT(A) noted that the loss on sale of fixed assets was incorrectly adjusted against the business income in violation of section 74 of the Income Tax Act. The ld. Assessing Officer was correct in adding the amount back as it represented a capital loss and the ld. Assessing Officer was also right in applying the higher tax in applying the regular provisions. He held that the long-term capital losses in capital gains could only be set off against Long Term Capital Gains and could not be adjusted against business profits. Accordingly, he upheld the additions made by the assessee. 4. The assessee is aggrieved at this dismissal of its appeal by the ld. CIT(A) and has accordingly come before us. Sh. Arvind Shukla, Advocate (hereinafter referred to as the ld. AR) submitted that the ld. CIT(A) was incorrect in refusing to adjudicate upon the first ground of appeal of the assessee that the reopening was flawed because of a lack of finding of failure on the part of the assessee to disclose truly and fully all material facts necessary to its assessments. Accordingly, he prayed that since this finding was not there, the assessment order was required to be quashed. The ld. AR further submitted that no new material had come into the possession of the ld. Assessing Officer and therefore, the change in stance essentially represented a change of opinion which was not permissible in law. Finally, he submitted that since the amount had already been added back, and placed a computation of income in page 2 of his paper book showing that a sum of Rs. 73,39,019/- had already been added back to the income before claiming depreciation, no further addition could be made under section 147 r.w.s. 144. Accordingly, he prayed for relief in the instant case.

ITA No.17/VNS/2025 Shree Nath Jee Bakers Pvt. Ltd. A.Y. 2011-12 5. On the other hand, Sh. Deepak Yadav, Sr. DR (hereinafter referred to as the ld. DR) submitted that the assessee was attempting to claim capital loss against regular business income and after adding back the same, since the tax on regular income after including cess and surcharge exceeded the amount of tax on book profit, the assessee was liable to pay to tax on the regular income as assessed by the ld. Assessing Officer. He pointed out that the failure to disclose all materials facts was evident in the reasons because it had been pointed out that the assessee had claimed capital loss against business income which was not permissible. Accordingly, he prayed that since the ld. CIT(A) had considered this aspect it should be held that he had decided this grounds and the appeal must not be entertained on this technical issue. 6. We have duly considered the facts and circumstances of the case and the arguments advanced by both the parties. It appears from a perusal of the written submissions that were filed by the assessee before the ld. Assessing Officer that the assessee specifically pointed out that in paragraph 2 of the same, that it had incurred a loss of Rs. 73,39,019/- in respect of sale of fixed assets which had been added back to its income as shown in the computation of income for the assessment year 2011-12. It had also filed copies of ITR and the computation of income for the A.Y. 2011-12 as annexure 2. It follows that where the amounts had already been added back by the assessee, the case could not be reopened for adding the same back again. However, the ld. Assessing Officer had failed to take cognizance of this submission or the assessee’s computation and completed the assessment by adding back the amount of Rs. 73,49,019/- on the grounds that capital losses could not be adjusted against business income and the ld. CIT(A) has confirmed the action of the ld. Assessing Officer in this regard without observing that since the assessee had suo moto disallowed this amount in the computation of its 5

ITA No.17/VNS/2025 Shree Nath Jee Bakers Pvt. Ltd. A.Y. 2011-12 income, and calculated the taxes on regular income thereafter, it could not be subjected to the same addition again and was therefore, liable to pay taxes on the basis of the Minimum Alternative Tax (MAT) calculated under section 115JB. The failure of the lower authorities to consider this basic fact had resulted in case of double addition of the same to the income of the assessee. In view of the same, the addition made is deleted. Furthermore, since the entire reopening is based upon an incorrect appreciation of the facts without recording any failure on the part of the assessee to fully and truly disclose all material facts necessary to its assessment, the reopening is vitiated in the eyes of law and the proceedings are in otherwise rendered void ab initio. In view of the above, it is held that the addition of Rs. 73,49,019/- made in the hands of the assessee and the imposition of tax at regular rates upon the assessee in contradistinction to the MAT payable by it under section 115JB is unsustainable in law and therefore, the addition and such computation is quashed. 7. In the result, the appeal of the assessee is allowed. Order pronounced on 16.10.2026 in the Open Court. Sd/- Sd/- Sd/- [SUDHANSHU SRIVASTAVA] [NIKHIL CHOUDHARY] JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 16/10/2026 Sh SHAMSHA Digitally signed by Copy forwarded to: SHAMSHAD HUSAIN 1. Appellant – D HUSAIN Date: 2026.10.21 2. Respondent – 15:17:09 +05'30' 3. CIT DR, ITAT 4. CIT, 5. The CIT(A) By order Sr. P.S.