PRISM KNIT FAB PVT. LTD.,KOLKATA vs. I.T.O., CIRCLE-11(1), KOLKATA, KOLKATA

आयकर अपीलीय अधिकरण कोलकाता 'बी' पीठ, कोलकाता में IN THE INCOME TAX APPELLATE TRIBUNAL KOLKATA ‘B’ BENCH, KOLKATA डॉ. मनीष बोरड, लेखा सदस्य एवं श्री संजय शमाा, न्याधयक सदस्य के समक्ष Before DR. MANISH BORAD, ACCOUNTANT MEMBER & SONJOY SARMA, JUDICIAL MEMBER I.T.A. No.: 515/Kol/2022 Assessment Year: 2012-13 Prism Knit Fab Pvt. Ltd...………….............................Appellant [PAN: AABCP 5969 K] Vs. ITO, DCIT, Circle-11(1), Kolkata............................Respondent Appearances by: Sh. A.K. Tibrewal, FCA, appeared on behalf of the Assessee. Sh. P.P. Barman, Addl. CIT, appeared on behalf of the Revenue. Date of concluding the hearing : November 24th, 2022 Date of pronouncing the order : November 30th, 2022 ORDER Per Manish Borad, Accountant Member: This appeal filed by the assessee pertaining to the Assessment Year (in short “AY”) 2012-13 is directed against the order passed u/s 250 of the Income Tax Act, 1961 (in short the “Act”) by ld. Commissioner of Income-tax (Appeals)-NFAC, Delhi [in short ld. “CIT(A)”] dated 14.07.2022 which is arising out of the

I.T.A. No.: 515/Kol/2022 Assessment Year: 2012-13 Prism Knit Fab Pvt. Ltd. assessment order framed u/s 143(3)/147 of the Act dated 26.12.2019. 2. The assessee is in appeal before this Tribunal raising the following grounds: “1. That the order of the Learned Commissioner of Income Tax, National Faceless Appeal Centre (NFAC) is bad in law and on facts. 2. That the Learned Commissioner of Income Tax, National Faceless Appeal Centre (NFAC) erred in disposing the appeal on the ground which is factually incorrect and dismissed the same for statistical purposes. 3. That the Learned Commissioner of Income Tax, National Faceless Appeal Centre (NFAC) may be directed for restoration of the appeal and for decision on the merit of the appeal. 4. That the Learned Commissioner of Income Tax, National Faceless Appeal Centre (NFAC) erred in not passing the order on any of the grounds taken for the appeal before him, which are as follows: a. That the impugned order dated 26th December, 2019 passed by Learned AO u/s 143(3)/147 of the Income Tax Act, 1961 (hereinafter referred to as “the Act”) is against law and facts of the case and therefore, perverse and is liable to be annulled. b. That the notice dated 29th March, 2019 issued by the Learned AO under section 148 of the Act for the Assessment Year 2012-13 is a defective notice which is issued without any application of mind as the same was issued in a printed format without striking off the irrelevant portions of the said Notice. c. That the impugned reassessment proceedings and the resultant order dated 26th December, 2019 passed under section 143(3)/147 of the Act are without jurisdiction, illegal, invalid in as much as the reasons recorded by the Learned AO does not satisfy the requirements of section 147 of the Act. d. That the Learned AO having recorded the reasons without following the directions contained in “Standard Procedure for recording satisfaction u/s 147 of the Act issued by Central Board of Direct Taxes on 10.01.2018, the impugned re-assessment proceedings as well as the impugned order dated 26th December, 2019 passed under Page 2 of 8

I.T.A. No.: 515/Kol/2022 Assessment Year: 2012-13 Prism Knit Fab Pvt. Ltd. section 143(3)/147 of the Act are without jurisdiction, perverse, illegal and void ab initio. e. That the notice dated 29th March, 2019 issued by the Learned AO under section 148 of the Act and the impugned assessment order dated 26th December, 2019 is without jurisdiction, illegal and void ab initio in absence of all mandatory conditions precedent to the issue of notice under section 148 of the Act including fresh tangible material before the Learned AO. f. That the impugned notice dated 29th March, 2019 issued under section 148 of the Act by the Learned AO is without jurisdiction, illegal and void ab-initio and bad-in-law as the same was issued prior to receipt of the mandatory approval of the appropriate authority on 31st March, 2019, which approval was admittedly granted by Learned PCIT-4, Kolkata and was informed to the Learned AO vide letter No.Pr.CIT-4/Kol/148/2018-19/14013 dated 31.03.2019. g. That, without prejudice to the Ground No.6 hereinabove, the purported mandatory approval granted by the appropriate authority under section 151 of the Income Tax Act, 1961 was a clear case of mechanical sanction. h. That the impugned notice issued under section 148 of the Act in the instant case is without jurisdiction, illegal, invalid and void ab-initio as the reasons recorded under section 148 of the Act was only the reasons to suspect and are borrowed satisfaction based on unauthentic and unverifiable information received from third parties and more so as the said reasons were vague, scanty and ambiguous and does not show any live link with the alleged escapement of income. i. That the impugned re-assessment proceedings and the resultant order dated 26th December, 2019 passed under section 143(3)/147 of the Act is without jurisdiction, illegal and void ab initio in as much as the reasons to belief recorded by the Learned AO were based on the information received from DDIT(lnv), Unit-2(2), Kolkata which is in respect of the funds received in the bank accounts of some companies and then travelled to the bank account of the appellant’s one of the debtor party namely M/s K. D. Garments Private Limited and not in the bank accounts of the assessee company. j. That the impugned re-assessment proceedings and the resultant order dated 26th December, 2019 passed under section 143(3)/147 of the Act for the Assessment Year 2012-13 is without jurisdiction, illegal Page 3 of 8

I.T.A. No.: 515/Kol/2022 Assessment Year: 2012-13 Prism Knit Fab Pvt. Ltd. and void ab initio in as much as the reasons to belief fails to record that income of more than Rs.1 lakh has escaped assessment, which is to be mandatorily mentioned in the reasons recorded where re- assessment proceedings is initiated beyond four years from the end of the relevant Assessment Year. k. That the Learned AO erred in law in ignoring all the evidences provided and submissions made by the assessee company and completed the assessment u/s 143(3)/147 of the Act by making additions of alleged accommodation entries of Rs. 1,74,97,873/- to the total taxable income as unexplained cash credit u/s 68 of the Act. The Learned AO erred in passing the order despite of receiving the confirmations of the alleged transactions from M/s K. D. Garments Private Limited that they have paid the money to the Appellant assessee company for purchase of fabric. The addition was not justified in view of the facts, documents and circumstances and hence the addition of Rs.1,74,97,873/- may please be deleted. The Learned AO ought to have considered that the assessee company had discharged its onus by furnishing all the relevant documents in connection with sale of fabrics during the year and also proved the genuineness of transactions. The Learned AO erred in not taking into consideration the evidences available on record with respect to sales made by the assessee company in its normal course of business activities. Thus, the addition was unjustified and the same be deleted. l. That the findings and observations of the Learned AO, alleging that the assessee company was engaged in taking accommodation entries are all perverse, baseless and unreliable being based only on the information received from DDIT (Inv), Unit -2(2), Kolkata and has no evidentiary value in the eyes of law. m. That the Learned AO erred in making arbitrary addition of a sum of Rs. 1,74,978/- to the total income as commission expense made from undisclosed sources by the assessee company to arrange alleged accommodation entries. The addition was not justified in view of the facts, documents and circumstances and hence the addition of Rs.1,74,978/- may please be deleted. The Learned AO erred in not taking into consideration the evidences available on record with respect to sales made by assessee company to M/s K. D. Garments Private Limited in the normal course of its business activities. Thus, the addition was unjustified and the same be deleted.

Page 4 of 8

I.T.A. No.: 515/Kol/2022 Assessment Year: 2012-13 Prism Knit Fab Pvt. Ltd. n. That the Learned AO erred in making the additions while passing the order under section 143(3)/147 of the Act without giving proper show cause notice and providing due opportunity to the appellant and therefore, same is bad in law being passed without following principles of natural justice. o. That the Learned AO erred in making addition of Rs. 1,74,97,873/- and Rs. 1,74,978/-as unaccounted income allegedly earned by the assessee company in the guise of accommodation entries from M/s K. D. Garments Private Limited without bringing on record any evidence to show movement of the cash between the assessee company and the said M/s K. D. Garments Private Limited. p. That the observations and findings made in the assessment order were irrelevant and perverse and hence the same be quashed and / or no cognizance of the same be taken. q. That the interest as computed u/s 234B and 234C of the I.T. Act, 1961 is wrongly calculated and/or is not applicable to the assessee company. Hence the interest be deleted and or correctly computed. r. That the Learned Assessing Officer was wrong in initiating the penalty proceedings u/s 271(1)(c) for the additions made u/s 143(3)/147 of the Act. s. That the Appellant assessee company craves leave to add, alter, amend, delete, modify, substitute or withdraw any ground or grounds of appeal before or at the time of hearing. 5. That the Appellant craves leave to add, alter, delete, modify, substitute or withdraw any ground or grounds of appeal before or at the time of hearing.” 3. At the outset, ld. Counsel for the assessee submitted that the issues raised in the instant appeal deserves to be set aside to ld. CIT(A) for afresh adjudication as ld. CIT(A) dismissed the assessee’s appeal observing that the appellant has opted for the Vivad Se Vishwas Scheme and has settled the dispute. However, this fact observed by ld. CIT(A) is incorrect because the assessee opted for the Vivad Se Vishwas Scheme for AY 2012-13 against the order of ld. AO framed u/s 143(3) of the Act dated 25.03.2015

Page 5 of 8

I.T.A. No.: 515/Kol/2022 Assessment Year: 2012-13 Prism Knit Fab Pvt. Ltd. whereas the impugned order is against the order of ld. AO u/s 147 r.w.s. 143(3) of the Act dated 26.12.2019. 4. On the other hand, ld. D/R failed to controvert the submissions made by the assessee. 5. We have heard rival contentions and perused the records placed before us. We find that the assessee is a private limited company and for AY 2012-13, assessment u/s 143(3) of the Act was completed on 25.03.2015 and thereafter, re-assessment proceedings were carried out and assessment u/s 147 r.w.s. 143(3) of the Act was completed on 26.12.2019. Further, from perusal of the Form no. 1, 3 & 5 filed by the assessee, we find that the assessee has opted for the settlement of dispute under the Direct Tax Vivad Se Vishwas Scheme and paid a sum of Rs. 21,88,917/- towards the full and final settlement of tax arrears arising on account of the assessment framed u/s 143(3) of the Act on 25.03.2015. To this extent there is no dispute at the end of both the parties. 6. Against the assessment proceedings carried out u/s 147 r.w.s. 143(3) of the Act dated 26.12.2019 certain additions were made and income assessed at Rs. 2,68,31,891/- the assessee preferred appeal before ld. CIT(A). However, ld. CIT(A) without issuing notice to the assessee, dismissed the appeal for statistical purposes observing that the appellant has opted for the Vivad Se Vishwas Scheme vide application dated 30.12.2020 and full and final payment of taxes of Rs. 21,88,917/- has been made as certificate in Form no. 5 dated 28.02.2022 has been issued.

Page 6 of 8

I.T.A. No.: 515/Kol/2022 Assessment Year: 2012-13 Prism Knit Fab Pvt. Ltd. 7. We observe that this finding of ld. CIT(A) is factually incorrect and ld. CIT(A) erred in dismissing the assessee’s appeal treating as infructuous by observing incorrect facts, since the assessee has not opted for the Vivad Se Vishwas Scheme for the tax arrears arising in the assessment order dated 26.12.2019 framed u/s 147 r.w.s. 143(3) of the Act ld. CIT(A) ought to have adjudicated the grounds of appeal raised before him as appearing in Form no. 35 and the same have also been raised before us also. We, therefore, under the given facts and circumstances of the case, set aside the finding of ld. CIT(A) and restore all the issues on legal as well as merits of the case as raised before us to ld. CIT(A) to be adjudicated on merits by passing a speaking order after providing reasonable opportunity of being heard to the assessee. The assessee is also directed to remain vigilant and file necessary documents, if considered, in support of its grounds of appeal and should not take adjournment, unless otherwise required for reasonable cause. In case after providing sufficient opportunity to the assessee, there is no compliance before the ld. CIT(A), then ld. CIT(A) can pass the order in accordance with law. 8. In the result, the appeal filed by the assessee is allowed for statistical purposes. Kolkata, the 30th November, 2022. Sd/- Sd/- [Sonjoy Sarma] [Manish Borad] Judicial Member Accountant Member Dated: 30.11.2022 Bidhan (P.S.)

Page 7 of 8

I.T.A. No.: 515/Kol/2022 Assessment Year: 2012-13 Prism Knit Fab Pvt. Ltd. Copy of the order forwarded to: 1. Prism Knit Fab Pvt. Ltd., 7/1, Babulal Lane, 1st Floor, Kolkata-700 007. 2. ITO, DCIT, Circle-11(1), Kolkata. 3. CIT(A)-NFAC, Delhi. 4. CIT- 5. CIT(DR), Kolkata Benches, Kolkata.