TRINITY ENCLAVE P. LTD.,,KOLKATA vs. ITO, WARD 4(1),, KOLKATA

The present appeal filed by the assessee arises from order dated
02.05.2025passed u/s 250 of the Income Tax Act, 1961 (hereafter “the Act”) by the Ld. Commissioner of Income Tax (Appeals), National Faceless
Appeal Centre (NFAC), Delhi [hereafter “the Ld. CIT(A)].
2. The assessee’s ground No. 4 is against the order of Ld. CIT(A) upholding the validity of notice u/s 148 of the Act issued by ITO Ward
4(1), Kolkata without any valid approval u/s 151 of the Act.
3. The facts in brief are that the assessee filed return of income on 28.03.2018 declaring total income of Rs. 17,640/-. Thereafter, incredible information was received from DDIT(Inv.) Unit 1(3) that the assessee

2
Trinity Enclave Pvt. Ltd.

company had deposited cash of Rs. 12,20,000/- into the bank account during demonetisation period. Accordingly, the case was reopened u/s 147 by issuing notice u/s 148 of the Act on 31.03.2021. The assessee did not file any return of income in compliance. Thereafter the AO issued questionnaire along with notice u/s 142(1) of the Act to the assessee on 23.12.2021 which was replied by the assessee by submitting that he was real estate business in Kolkata which is main source of income. The assessee furnished a copy of balance sheet, Profit & Loss Account, bank statement etc. and also other details desired by the AO. Thereafter, the AO noted that the assessee has deposited into corporation bank cash of Rs. 12,20,000/- during demonetization period and noted that no income corresponding to the said cash deposited was offered to tax. The AO also noted that from the bank statement, it is observed that the assessee has not made any withdrawal of cash before demonetisation period.
4. The Ld. CIT(A) dismissed the appeal of the assessee for non- prosecution when the assessee failed to response to the various opportunities granted by the Ld. CIT(A).
5. After hearing the rival contention and perusing the material on record, we find that the case of the assessee was reopened u/s 147 by issuing notice u/s 148 of the Act on 31.03.2021. We observed from the notice issued u/s 148 of the Act that the notice was issued after obtaining in satisfaction of range-4, Kolkata. For the sake of ready reference, the notice is extracted below:
“Notice Under Section 148 Of The Income Tax Act, 1961
Sir/Madam/M/s,
Whereas I have reasons to believe that your Income chargeable to Tax for the Assessment Year 2017-18 has escaped Assessment within the meaning of section 147 of the Income Tax Act, 1961. I, therefore, propose to assess/ re-assess the income/loss for the said Assessment
Year and I hereby require you to deliver to me within 30 days from the service of this notice, a return in the prescribed form for the said Assessment Year

3
Trinity Enclave Pvt. Ltd.

This notice is being issued after obtaining the necessary satisfaction of the RANGE
4, KOLKATA.”
6. Thereafter, we observe from the reasons to believe that the approval has been obtained by the AO for issuing notice u/s 148 of the Act from CCIT-2, Kolkata. For the sake of ready reference, the said reason recorded are extracted below:
“The assessee company has filed its return of income for the A.Y. 2017-18 on 28-
03-2018 declaring total income/ loss at Rs.17,640/- In was observed that no regular assessment was done u/s. 143(3) of the Act in this case.
2. Credible information was received from DDIT(Inv.), Unit-1(3), Kolkata vide letter dated 07.09.2018 that the assessee M/s. Trinity EncavePvt. Ltd. had made cash deposits of Rs.12,20,000/- in its bank account during the demonetization period from unknown source of income. The assessee was not able to explain the source of the said cash deposit during Investigation/enquiry.
3. Considering the facts brought on record and ITR and Balance Sheet of the Assessee-company were examined. On examination of the Balance Sheet/ P&
La/c. filed, it is found that there is no rationale behind such transactions which is the actual infusion of assessee's own money. Generated through unaccounted source of income. As no scrutiny assessment was made in this case, the transaction remained as unexplained.
Findings and Basis of Reason to believe: The undersigned has examined all the documents/data from ITBA portal, 360-degree profiling and Insight portal and analysed the information in the possession of the Department and after applying mind, have reasons to believe that the assessee-company has deposited cash amounting to Rs.12,20,000/- during the demonetization period(between
09/11/2016 to 31/12/2016) remained to be unexplained which was required to brought to tax.
Applicability of the provisions of Section 147/151 of the Income Tax act, 1961:
In this case, a return of income was filed by the assessee for the year under consideration; however, no assessment as stipulated u/s. 2(40) of the Act was made and the ROI was only processed u/s. 143(1) of the Act. In view of the above, provisions of clause (b) of explanation 2 to section 147 of the Act are applicable to the facts of this case and that income of the assessee M/s. Trinity
Enclave Pvt. Ltd. to the extent of Rs.12,20,000/- has escaped assessment for the A.Y. 2017-18. The information was received before 01.04.2019. Following the Instructions regarding selection of cases for issuance of notice u/s. 148 of the Act dated 4%
March, 2021 and dated 12th March, 2021, issued by the CBDT, New Delhi, this case has been considered as potential case for issue of notice u/s. 148 of the Act. The kind approval of the CCIT-2, Kolkata has been received in this case for issuance of notice u/s. 148 of the Act vide letter no. CCIT-2/Kol/Approval of 148
cases/182/2020-21/1464 dated 30.03.2021.”
7. Therefore, there are two different sactioning authorities mentioned for the approval u/s 151 of the Act in the notice issued u/s 148 of the 4
Trinity Enclave Pvt. Ltd.

Act and in reasons recorded. It is mentioned that the CCIT(A) has accorded approval in the reasons whereas in the notice issued u/s 148 of the Act it is rangehead-4, Kolkata. Therefore, the re-opening on the basis of said approval cannot be allowed. The ld DR when confronted with the issue could controvert the arguments of the Ld. AR. Thus, we note that there was complete and total non application of mind by the AO.
Therefore, we are inclined to quash the notice u/s 148 of the Act as well as the consequent assessment framed u/s 147 of the Act.
8. The second limb of the arguments at the time of hearing by the counsel of the assessee was that notice was issued on 15.03.2022 by the National Faceless Assessment Centre, Delhi to show cause as to why proposed addition should not be made. However, we note that the National Faceless Assessment Centre was not having juri iction prior to 29.03.2022 to issue any notice as the provisions of section 151A of the Act were notified vide Notification No. 18/2022 on the e-assessment of income escaping assessment scheme-2022. Therefore, the assessment framed finally by the AO dated 30.03.2022 is also invalid and cannot be sustained. For the sake of ready reference the show cause notice is extracted below:
“1. We appreciate the anxiety and uncertainty that is facing all of communication is to assist you for the Assessment Year 2017-18 assist you in ending one uncertainty, which is which is pending e-Assessment in your case for the Assessment Year 2017-18. 2. The variations as per the draft assessment order may be seen which are proposed to be made in your case.
Draft Assessment Order
Assessee company has filed its return of income for the A.Y 2017-18 on 28.03.2018 vide acknowledgement number 526544381280318 declaring income of Rs. 17,640/-. Some credible information was received from DDIT(Inv.), Unit
1(3), Kolkata vide letter dated 07.09.2018. From the perusal of the same it was noticed that the assessee company has made cash deposit of Rs. 12,20,000/- in its bank account during the demonetization period.
2. On examination of ITR and Balance Sheet of the assessee company it is found that there is no rationale behind such transactions which is actual infusion of assessee's own money, generated through unaccounted source of income.

5
Trinity Enclave Pvt. Ltd.

6
Trinity Enclave Pvt. Ltd.

Blank

7
Trinity Enclave Pvt. Ltd.

8
Trinity Enclave Pvt. Ltd.

9
Trinity Enclave Pvt. Ltd.

10
Trinity Enclave Pvt. Ltd.

Copy of the order forwarded to:
1. Appellant
2. Respondent
3. Pr. CIT
4. CIT(A)

////
By order