INCOME TAX OFFICER, KOLKATA vs. M/S GREAT BARTER PRIVATE LIMITED, KOLKATA

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ITA 2136/KOL/2026Status: DisposedITAT Kolkata30 October 2026AY 2014-158 pages

In favour of the assessee: the Revenue's appeal was dismissed. From the AI summary of this appeal.

AI SummaryDismissed

What did the Tribunal hold?

The Tribunal upheld the CIT(A)'s order, dismissing the Revenue's grounds of appeal. Regarding the reassessment proceedings (Grounds 1 & 2), the Tribunal agreed with the CIT(A) that the reopening was invalid. It noted that the assessment was reopened after four years from the end of the relevant AY, requiring satisfaction of the conditions in the first proviso to Section 147, which necessitates a failure on the part of the assessee to disclose material facts. The Tribunal found no material to support such a failure and observed that the AO acted on borrowed satisfaction without independent application of mind. The Tribunal relied on decisions of the Bombay High Court in Principal Commissioner of Income-tax-5 vs. Shodiman Investments (P.) Ltd. and Delhi High Court in PCIT Vs. Meenakshi Overseas (P.) Ltd. On merits (Ground 3), the Tribunal found the assessee's case strong. The assessee had furnished all details and evidence regarding the loan creditor, and the director of the lender company had appeared and provided evidence. The loan had also been repaid. Therefore, the Tribunal agreed with the CIT(A)'s deletion of the addition under Section 68, citing decisions of the Calcutta High Court and Gujarat High Court in similar cases where loan creditors' details and repayment were established. The appeals for AY 2015-16 and 2016-17 were also dismissed as the issues were similar.

What were the facts?

These appeals by the Revenue challenge the orders of the CIT(A) for Assessment Years (AY) 2014-15, 2015-16, and 2016-17. The assessee, M/s Great Barter Private Limited, initially filed a return declaring a loss for AY 2014-15. Following a search operation on the assessee, an assessment under Section 143(3)/153A was framed, assessing income at ₹3,41,44,480/-. Subsequently, a survey was conducted on related group companies. The Assessing Officer (AO) reopened the assessment for AY 2014-15 under Section 147, alleging that the assessee received accommodation entries in the form of unsecured loans totaling ₹4,81,90,000/- from M/s Prem Sagar Traders Pvt. Ltd., which the AO believed lacked creditworthiness. Despite the assessee providing loan details, bank statements, and the director of the lender appearing for an examination, the AO treated the amount as unexplained cash credit under Section 68.

What were the issues?

1. Whether, on the facts and in the circumstances of the case, the Ld. CIT(A) erred in law in quashing the reassessment proceedings initiated u/s 147/148 of the Income-tax Act, 1961, despite the reopening being based on fresh tangible material and independent enquiry conducted by the Assessing Officer? 2. Whether the Ld. CIT(A) erred in holding that the reopening was based on borrowed satisfaction, ignoring the fact that the Assessing Officer had independently examined the information, conducted enquiries and applied his mind before recording reasons for reopening? 3. Whether the Ld. CIT(A) erred in deleting the addition of Rs. 4,81,90,000/- made u/s 68 of the Act despite the fact that M/s Prem Sagar Traders Pvt. Ltd. had no genuine business activity and lacked real creditworthiness to advance such huge loans? Assessee's Contentions (implied from CIT(A)'s findings and Tribunal's agreement): The reopening was invalid as it was initiated after four years from the end of the relevant AY without fulfilling the conditions of the first proviso to Section 147, and the AO acted on borrowed satisfaction. On merits, the assessee had provided all necessary details and evidence regarding the loan creditor, and the loan was repaid, thus the addition under Section 68 was unjustified. Revenue's Contentions (as per grounds of appeal): The CIT(A) erred in quashing reassessment proceedings despite the AO's independent enquiry and tangible material. The reopening was not based on borrowed satisfaction. The addition of ₹4,81,90,000/- under Section 68 was justified as the lender lacked creditworthiness and genuine business activity, and the CIT(A) wrongly accepted the lender's genuineness based solely on documentation without appreciating surrounding circumstances and investigation findings. The absence of cross-examination did not vitiate the assessment.

Which sections of the Income-tax Act were involved?

Section 147,Section 148,Section 143(3),Section 153A,Section 68,Section 131,Section 133A

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, “B” BENCH, KOLKATA

Before: SHRI RAJESH KUMAR, AM & SHRIPRADIP KUMAR CHOUBEY, JM

For Appellant: Shri Miraj D Shah, AR
For Respondent: Shri Ambrish Mishra, DR
Hearing: 19.08.2026Pronounced: 30.10.2026

Per Rajesh Kumar, AM:

These are the appeals preferred by the Revenue against the orders of the Commissioner of Income-tax (Appeals), Kolkata-20, (hereinafter referred to as the “Ld. CIT(A)”]even dated 31.03.2026 for the AY 2014-15, 2015-16, 2016-17 respectively.

2.

At the outset, we observe from the appeal folders that there is a delay of 4 days in filing these appeals by the department in support of which condonation petitions were filed. It was stated in the condonation petitions that the delay has occurred due to obtaining the administrative approvals from the competent authorities, which took quite a long time and

ITA No. 2136 to 2138/KOL/2026 M/s Great Barter Private Limited; A.Y. 2014-15 accordingly, the delay may be condoned for being attributable to bonafide reasons. The ld. AR, on the other hand, did not oppose the condonation of delay. Considering the reasons cited before us, we are inclined to condone the delay and admit these appeals for hearing.

A.Y. 2014-15 ITA No. 2136/KOL/2026 3. The Revenue has raised following grounds of appeal:-

“1. Whether, on the facts and in the circumstances of the case, the Ld. CIT(A) erred in law in quashing the reassessment proceedings initiated u/s 147/148 of the Income-tax Act, 1961 despite the reopening being based on fresh tangible material and independent enquiry conducted by the Assessing Officer... 2. Whether the Ld. CIT(A) erred in holding that the reopening was based on borrowed satisfaction, ignoring the fact that the Assessing Officer had independently examined the information, conducted enquiries and applied his mind before recording reasons for reopening. 3. Whether the Ld. CIT(A) erred in deleting the addition of Rs. 4,81,90,000/- made u/s 68 of the Act despite the fact that M/s Prem Sagar Traders Pvt. Ltd. had no genuine business activity and lacked real creditworthiness to advance such huge loans. 4. Whether the Ld. CIT(A) erred in accepting the genuineness and creditworthiness of the lender company merely on the basis of PAN, bank statements, financial statements and MCA records, without appreciating the surrounding circumstances and incriminating material gathered during investigation. 5. Whether the Ld. CIT(A) erred in ignoring the findings of investigation and statements recorded during search/survey proceedings as well as during assessment proceedings indicating that M/s Prem Sagar Traders Pvt. Ltd. was engaged in providing accommodation entries through paper/shell companies 6. Whether the Ld. CIT(A) erred in holding that absence of cross-examination vitiated the assessment proceedings, despite the addition being based on independent enquiries, financial analysis and corroborative material available on record. 7. The appellant craves leave to add, alter or modify any of the grounds at the time of hearing” Page 2 of 8

ITA No. 2136 to 2138/KOL/2026 M/s Great Barter Private Limited; A.Y. 2014-15 4. The issue raised in ground no.1 and 2 by the Revenue is against quashing the reassessment proceeding initiated u/s 147/148 of the Act.

5.

The issue raised in ground no. 3 by the Revenue is against the deletion of addition by the d CIT (A) of ₹4,81,90,000/- as made by the ld. AO in respect of unsecured loans taken by the assessee.

6.

The facts in brief are that the assessee filed the return of income on 29.09.2014, declaring loss of ₹2,46,075/-, which was processed u/s 143(1) of the Income-tax Act, 1961 ( hereinafter referred to “the Act”). Thereafter, the assessment u/s 143(3)/ 153A of the Act was framed by the ld. AO on 31.12.2017, assessing the income at ₹3,41,44,480/- after a search and seizure operation was conducted on the assessee. Thereafter a survey u/s 133A was conducted on the different companies/ concerns of Ghanshyam Sarda Group on 13.07.2018 and 14.07.2018 in Kolkata and other places. The ld. AO reopened the case of the assessee u/s 147 of the Act for the reasons that assessee has received accommodation entries in the form of unsecured loans and thus income of the assessee has escaped assessment to that extent. The assessee complied with the said notice by filing the return of income on 17.06.2019, declaring the same income as declared in the original return of income. The ld. AO thereafter, issued statutory notices along with questionnaire which were duly replied by the assessee. The ld. AO noted that the assessee has taken an unsecured loan of ₹4,81,90,000/- from Premsagar Traders Private Ltd. which Page 3 of 8

ITA No. 2136 to 2138/KOL/2026 M/s Great Barter Private Limited; A.Y. 2014-15 was not having any creditworthiness to advance the loan. Accordingly, the assessee was called upon to prove the identity and creditworthiness of the loan creditor and genuineness of the transaction. The assessee furnished all the details in respect of unsecured loan before the ld. Assessing Officer. The ld. AO also issued summon us/ 131 of the Act to the director of M/s Premsagar Traders Private Ltd. on 09.10.2019, for his personal appearance for examination on oath by fixing the date on 18.10.2019, which was not complied with. Thereafter, the ld. AO noted that since, the summon were not complied with and therefore, the identity and creditworthiness of the party remained unexplained. Thereafter, the ld. AO issued show cause notice as to why the entire amount should not be treated as unexplained cash credit. The assessee replied the said show cause by furnishing the copy of ledger account of Premsagar Traders Private Limited in the books of assessee along with copy of bank account, copy of confirmation from Premsagar Traders Private Limited, assessment and other documents. The assessee also produced before the ld. AO the Director Shri Dhrubjit Banerjee of Premsagar Traders Pvt Ltd for examination on oath. The said director furnished before the ld. AO all the details and evidences as required by the AO and the statement on oath was also recorded u/s 131 of the Act. Thereafter, the ld. AO after discussing the facts as to directorship of the said director and the remuneration etc. came to the conclusion that the said director is dummy director. The ld. AO held that the amount received by the assessee is nothing but assessee’s own money in the form of Page 4 of 8

ITA No. 2136 to 2138/KOL/2026 M/s Great Barter Private Limited; A.Y. 2014-15 unexplained cash credit, and thus, added the same to the income of the assessee by treating the same as unexplained cash credit u/s 68 of the Act.

7.

In the appellate proceedings, the ld. CIT (A) allowed the appeal of the assessee on legal issue as well as on merit. So far as the legal issue is concerned, the ld. CIT (A) observed that the reopening of assessment u/s 147 of the Act is invalid as the same does not satisfy the conditions as laid down in first proviso to section 147 of the Act. The ld. CIT (A) noted that in that case the assessment framed u/s 143(3) of the Act was framed by the ld. AO and the case of the assessee was reopened after expiry of four years from the end of the relevant assessment year. The ld. CIT (A) noted that there is no material to record to suggest any failure on the part of the assessee to disclose fully and truly all material facts necessary for assessment of income. The ld. CIT (A) also noted that reasons recorded by the ld. AO were factually incorrect which in fact were nothing short of borrowed satisfaction of the AO. Finally, the ld. CIT (A) held the reopening of assessment to be bad in law and thus, quashed the notice u/s 148 of the Act as well as the consequent assessment proceedings including the assessment order.

8.

After hearing the rival contentions and perusing the materials available on record, we find that the undisputed facts are that the assessment u/s 143(3) of the Act was framed in this case by the ld. Assessing Officer. We note that the reopening of assessment was made by the AO after a period of four years from the end of the relevant assessment year and therefore, Page 5 of 8

ITA No. 2136 to 2138/KOL/2026 M/s Great Barter Private Limited; A.Y. 2014-15 the reopening of assessment could only be made subject to the satisfaction conditions as laid down in first proviso to Section 147 of the Act. In other words, the reopening of assessment could only be made if there is a failure on the part of the assessee to truly disclose any material fact qua the alleged escaped income. However, we note that the material on record were not corroborating the said fact. We note that the ld. CIT (A) has very clear finding on this issue. We also note that the ld. AO has acted on the borrowed satisfaction without independent application of mind. We therefore, in agreement with the ld. CIT (A) on this issue. The case of the assessee is squarely covered by the decision of Hon'ble Bombay High Court in case of Principal Commissioner of Income-tax-5 vs. Shodiman Investments (P.) Ltd. [2018] 93 taxmann.com 153 (Bombay)/[2020] 422 ITR 337 (Bombay)[16-04-2018], PCIT Vs. Meenakshi Overseas (P.) Ltd. [2017] 395 ITR 677 (Delhi), wherein the same ratio has been laid down. Consequently, ground no.1 and 2 are dismissed.

9.

Even on merit, the case of the assessee is very strong and rightly deleted by the ld. CIT(A) as the assessee has furnished before the ld. AO all the details and evidences qua the loan creditors. Even the director of the assessee company duly appeared before the ld. AO in compliance to summon u/s 131 of the Act and his statement was also recorded by the ld. AO on oath. The said director has also filed before the ld. AO all the details and evidences qua the loan advances to the assessee. We also note that the loan has been repaid. Page 6 of 8

ITA No. 2136 to 2138/KOL/2026 M/s Great Barter Private Limited; A.Y. 2014-15 Therefore, the conclusion drawn by the ld. AO that the amount of loan is unexplained cash credit is not correct and the ld. CIT (A) deleted the addition by giving the comprehensive finding from page no.123 to 131. The case of assessee is squarely covered by the decisions of the Hon’ble Calcutta High court in number of cases namely PCIT-2, Kolkata Vs. Rahul Premier India Agency Private Limited in ITAT/133/2025, IA No.GA/2/2025 vide order dated 05.08.2025, PCIT Vs. M/s Narayan Tradecom Pvt. ltd. in ITAT/76/2025, IA No. GA/1/2025 dated 10.06.2025, PCIT Vs. Alom Extrusions Ltd. ITAT/268/2024, IA no. GA/1/2024, GA/2/2024 dated 17.12.2024, PCIT Vs. M/s Edmond Finvest Pvt. ltd., in ITAT/28/2024, GA/2/2024 dated 26.02.2024, PCIT Vs. Parwati Lakh Udyong, ITAT/2/2024, IA No.GA/1/2024 dated 19.02.2024.The case of the assessee is also covered by the decision of Hon’ble Gujarat High Court in the case of Ambe Tradecorp (P.) Ltd., reported in [2022] 145 taxmann.com 27 (Gujarat). In all the above decisions the Hon'ble court has held that where the assessee has filed all the evidences qua the loan creditors before the ld. AO and loans are also repaid then the same cannot be added us/ 68 of the Act.

. 10. Accordingly, we, respectfully following the ratio laid down by the Hon’ble Jurisdictional High Court , Hon’ble Gujarat High Court and the decisions followed by the ld. CIT(A), uphold the order of the ld. CIT(A) on this issue by dismissing the ground no.3 of the revenue appeal. Page 7 of 8

ITA No. 2136 to 2138/KOL/2026 M/s Great Barter Private Limited; A.Y. 2014-15 A.Ys. 2015-16 & 2016-17 ITA Nos. 2137 & 2038/KOL/2026 11. The issues raised in these appeals are similar to ones as decided by us in ITA No. 2136/KOL/2026. Accordingly, our decision would, mutatis mutandis, apply to these appeals of Revenue in ITA Nos. 2137 & 2138/KOL/2026. Hence, the appeals of Revenue in ITA Nos. 2137 & 2138/KOL/2026 are dismissed.

12.

In the result, the appeals of the Revenue are dismissed. Order pronounced on 30.10.2026.

Sd/- Sd/- (PRADIP KUMAR CHOUBEY) (RAJESH KUMAR) (JUDICIAL MEMBER) (ACCOUNTANT MEMBER) Kolkata, Dated: 30.10.2026 Sudip Sarkar, Sr.PS Sudip Copy of the Order forwarded to: Digitally signed by Sudip Sarkar 1. The Appellant Date: 2. The Respondent Sarkar 2026.10.30 3. CIT 09:34:50 +05'30' DR, ITAT, 4. 5. Guard file. BY ORDER, True Copy//

Dy. Registrar Income Tax Appellate Tribunal, Kolkata

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