ALCHEMIST MULTITRADE PVT. LTD.,MALAD WEST MUMBAI vs. ITO 12 (1) (1), MUMBAI

The assessee has challenged the said orders on following grounds in all the four years:-

On the facts and under the circumstances of the case and in law the Ld. Commissioner of Income Tax (Appeals) has erred in confirming the reopening the assessment merely on the basis of vague information received from the Investigation Wing and no independent inquiry was made by him. Therefore impugned re- assessment order is bad in law and void abinitio.

On the facts and under the circumstances of the case and in law the Ld. Commissioner of Income Tax (Appeals) has erred in confirming the impugned reassessment order passed by the Ld. Α.Ο. without issuing 143(2) the notice u/s of the Act, though the appellant filed the return of income in response to notice u/s 148 and therefore the impugned assessment order is bad in law and void abinitio.

On the facts and under the circumstances of the case and in law the Ld. Commissioner of Income Tax (Appeals) has erred in confirming the conclusion of ld. A.O. that income chargeable to tax has escaped assessment without appreciating the reply submitted in response to show cause notice alongwith Draft Assessment Order during assessment proceedings.

On the facts and under the circumstances of the case and in law the Ld. Commissioner of Income Tax (Appeals) has erred in confirming the addition made of Rs. 66,83,00,000/- u/s 69A on account of unexplained money.

On the facts and under the circumstances of the case and in law the Ld. Commissioner of Income Tax (Appeals) has erred on account of preference dividend warrants / shares allotted by Sharon Bio Medicine Ltd. of Rs. 66,83,00,000/- ignoring the fact that no such warrants were allotted to appellant company.

The assessee has raised following additional ground on 26.11.2024 in all the years :

The facts relating to the case are stated in brief. The Assessing Officer received information from the DDIT (Investigation Wing), Unit-III (1), Mumbai with regard to circular movement of funds between certain concerns without carrying out any actual trade. It is noticed that the assessee herein was identified as one of the concerns involved in circular movement of funds. On the basis of said information, the Assessing Officer reopened the assessment of all the four assessment years under consideration by recording identical reasons for reopening. The reasons recorded for assessment year 2013-14 are extracted below :-

Information has been received from DDIT(Inv.), Unit-3(1), Mumbai regarding Circular movement of funds without having any actual trade with the assessee during AY 2013-14. The details are as under :

As per the above information, it is apparent that the assessee has earned an income to the tune of Rs. 66,83,00,000/- during the relevant previous year. Since the assessee has not included this amount in the income while filing return of income for AY 2013-14, this income has escaped assessment. M/s. Alchemist Multitrade Pvt. Ltd. 4. In this case return of income was filed by the assessee for the year under consideration. However, in this case no assessment was made and the only requirement to initiate proceedings u/s. 147 is to record reason to believe that income chargeable to tax has escaped assessment.

In view of the above, the provisions of clause (b) of Explanation 2 to Section 147 are applicable to facts of this case and it is deemed to be a case where income chargeable to tax has escaped assessment.

In view of the above, I have reason to believe that income amounting to Rs.66,83,00,000/- chargeable to tax has escaped assessment by reason of failure on the part of the assessee to disclose fully and truly all material facts within the meaning of section 147 of the Income-tax Act, 1961 for the A.Y. 2013-14. Hence, it is a fit case for issue of notice u/s. 148 of the I.T. Act, 1961. 7. In view of the "Taxation and other laws" (Relaxation of certain provisions) ordinance 2020 and notification no. 35/2020 dated 24.06.2020, the applicability of provisions of sub section (1) of section 151 of the IT Act, 1961 stands extended from 31.03.2020 to 31.03.2021. 8. In accordance with the provisions of section 151(1) of the Income-tax Act, 1961, the Pr. Commissioner of Income Tax - 4, Mumbai may kindly accord approval for reopening the case in the case of assessee for A.Y. 2013-14.”

Before the Assessing Officer, the assessee did not furnish any details. Hence, the Assessing Officer completed the assessment of all the four years to the best of his judgement u/s 144 of the Act by making very same addition of Rs.66.83 crores as unexplained money in all the four years under Section 69A of the Act.

Before the learned CIT(A), the assessee raised various contentions, both on legal issues and on merits. The learned CIT(A) dismissed all the appeals of the assessee with the following observations :-

We heard the parties and perused the record. We noticed that the assessee did not appear before the Assessing Officer and hence he was constrained to pass the order ex parte to the best of his judgment u/s 144 of the Act. We also noticed that the M/s. Alchemist Multitrade Pvt. Ltd. Assessing Officer has made the very same addition in all the four years and he did not refer to any material that would support his case that the funds of Rs.66.83 crores identified as circular movement of funds would constitute income in the hands of the assessee.

The contention of the assessee is that the alleged circular movement of funds per se cannot constitute ‘income’ in the hands of the assessee. It was also submitted that the Assessing Officer has not cited any material, except the information received from the Investigation Wing, which formed the basis for making the impugned addition. We notice that the AO has referred to the action taken in the hands of another company named M/s Sharan Bio-Medicines Ltd and implicated the assessee herein. We also notice that the learned CIT(A) has also passed a cryptic order without dealing with the various grounds contested by the assessee on the legal points as well as on merits.

Thus, we notice that both the authorities have not referred to the materials that actually refer to the assessee and the escapement of income in the hands of the assessee. Hence, in the absence of material which formed the basis for making the impugned order in all the four years, it would be difficult for the Tribunal to adjudicate the grounds, both legal and merits, raised by the assessee. Accordingly, we are of the view that all the issues contested before us require fresh examination at the end of the Assessing Officer. Accordingly, we set aside the order passed by the learned CIT(A) in all the four years under consideration and restore all the issues to the file of the Assessing Officer for examining them afresh. The Assessing Officer is also directed to furnish the material which formed the basis for making the addition to the assessee. We also direct the assessee to fully co-operate with the Assessing Officer for the expeditious completion of the assessment. After affording adequate opportunity of being heard to the assessee, the AO may take appropriate decision in accordance with law. M/s. Alchemist Multitrade Pvt. Ltd.

In the result, all the four appeals filed by the assessee are partly allowed.

The Appellant 2. The Respondent 3. The PCIT/CIT 4. DR, ITAT, Mumbai 5. Guard File.