M/S. MUSE ADVERTISING AND MEDIA PVT. LTD.,KOLKATA vs. I.T.O., WARD - 10(3), KOLKATA, KOLKATA

PER RAJESH KUMAR, ACCOUNTANT MEMBER The present appeal has been preferred by the assessee against the order dated 25.09.2024 passed by the Commissioner of Income-tax (Appeals), NFAC, Delhi [hereinafter referred to as the "CIT(A)"] u/s 250 of the Income Tax Act, 1961 [hereinafter referred to as the "Act"] for the AY 2011-12. 2. In Ground Nos. 1 to 4 of the appeal, the assessee has challenged the validity of the reopening of assessment u/s 147 of the Act.

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3,97,80,000/- into their regular books of accounts through circuitous transactions.
In view of the above, the undersigned has reason to believe that the income chargeable to tax of at least Rs. 3,97,80.000 has escaped assessment.”
3. According to the recorded reasons, M/s Realtime Consultants
Private Limited (‘RCPL’) had made investment of Rs.3,97,80,000/- in AY
2010-11, which represented undisclosed income of the assessee brought back into with their regular books of accounts through circuitous transactions. The AO is noted to have passed the assessment order u/s 147 / 143(3) of the Act, wherein he observed that the source of amount received from RCPL had already been added and assessed to tax in the hands of RCPL u/s 143(3) / 147 of the Act. The AO accordingly did not make any addition in relation to the investment received from RCPL.
Instead, the AO is noted to have made addition on account of estimated income from movement of funds of Rs.20,59,400/- and also added sum of Rs.3,97,80,000/- which was received from M/s Finelink Suppliers Private
Limited by way of unexplained cash credit u/s 68 of the Act.
4. Aggrieved by the action of the AO, the assessee preferred an appeal before the Ld. CIT(A) who confirmed the AO’s order. Now, the assessee is in appeal before us.
5. Assailing the action of lower authorities, the Ld. AR submitted that, the AO did not make any addition on account of the investment of Rs.3,97,80,000/- received from RCPL and therefore, the ld. AO has no juri iction to make other additions which he came across during the course of assessment proceedings. In defense the ld AR relied on series

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of decisions namely, PCIT Vs Lark Chemicals Pvt Ltd [2018] 99
taxmann.com 312 (SC); Infinity Infotech Parks Ltd. in GA No. 1736 of 2014 dated 15.11.2022 (Cal); Ranbaxy Laboratories Ltd. Vs. CIT[2011] 12
taxmann.com 74 (Delhi) and CIT Vs. Jet Airways (I) Ltd.[2021] 133
taxmann.com 233 (Bom). He further took us through the notice(s) issued by the AO’s predecessor in the course of original assessment and pointed out that the AO had specifically called for the details of share capital raised by the assessee during the year and after making enquiries u/s 133(6) of the Act from these shareholder(s) including RCPL and Fine Link
Suppliers Pvt Ltd, the original assessment was completed u/s 143(3) of the Act. According to the Ld. AR therefore, all the primary facts and particulars relating the purported reasons recorded for reopening was fully and truly disclosed at the time of original assessment and therefore the notice issued u/s 148 of the Act dated 27.03.2018 which was beyond four years was invalid as the condition precedent in the proviso to Section 147 was not satisfied. The Ld. AR relied on a series of decisions in support of this contention as well namely, PCIT v. GRD Commodities Ltd
(149 taxmann.com 223) [Cal HC], Amiya Sales & Industries v. ACIT (274
ITR 25) [Cal HC], Uni VTL Precision (P.) Ltd. v. DCIT (113 taxmann.com
533) [Bom HC], Haryana Acrylic Manufacturing Co. v. CIT (175
taxmann.com 262) [Del HC], PCIT v. South Delhi Promoters Ltd. (150
taxmann.com 58) [Del HC]&Gujrat Natural Resources Ltd. v. ACIT (148
taxmann.com 476) [Guj HC] wherein on similar facts and circumstances it was held that, where there was no failure on part of the 5
M/s Muse Advertising and Media Pvt. Ltd.

assessee to disclose truly and fully all material facts in course of original assessment, then the concluded assessment u/s 143(3) could not be reopened simply based on information provided by investigation wing.
5. The Ld. AR also invited our attention to the letter for approval obtained by the AO u/s 151 from the Principal Commissioner of Income- tax-4, Kolkata dated 26.03.2018, which was placed at Pages 37 to 38 of paper book and showed that the PCIT had not even signed or accorded any approval and that the letter only bore the signature of the AO. He thus claimed that, the impugned reassessment ought to be declared void for want of valid sanction under Section 151 of the Act. On the other hand, the Ld. DR supported the order of lower authorities and reiterated the reasons given by the Ld. CIT(A) for rejecting the legal challenge raised by the assessee.
6. We have heard the rival contentions and perused the materials available on record and observe that the AO has re-opened the assessment u/s 147 read with section 148 of the Act after recording reasons to believe that the investment received from RCPL of Rs.3,97,80,000/- had escaped assessment. We further note that the AO was convinced after examining the evidences filed by the assessee that the source of investment had already been assessed to tax in the hands of RCPL and therefore did not make any addition while framing the re- assessment order in respect of the same which was the subject matter of the reasons recorded. The AO however made two separate additions one being estimated income of Rs.20,59,400/- and second being addition on 6
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account of similar amount of Rs.3,97,80,000/- received from M/s Fine
Link Suppliers Pvt Ltd. We note that both these items were not part of the reasons recorded u/s 148(2) of the Act. Therefore, when no addition is made for the escaped income as per the reasons recorded, then the AO has no juri iction to make any other addition in respect of item of income which has escaped assessment as discovered by the AO during the assessment. The case of the assessee finds support from the decision of Hon'ble juri ictional High Court in the case of M/s. Infinity Infotech
Parks Ltd. (supra) wherein the Hon'ble Calcutta High Court has held by following the decision of Hon'ble Bombay High Court in the case of CIT
Vs. Jet Airways (I) Ltd. (supra) and also Hon'ble Delhi High Court decision in the case of Ranbaxy Laboratories Vs. CIT (supra) that where the income the escapement of which was the foundation for recording of reasons to believe, is not assessed or reassessed in the order u/s. 147, then it is not opened to the AO to independently assess any other income, which comes to his notice subsequently during the course of re- assessment proceedings. The similar ratio has been laid down by the Coordinate Bench in Ganesh Steel & Alloys in ITA No. 929/Kol/2023
dated 11.06.2024following the decision of the Hon'ble Bombay High Court in the case of CIT Vs. Jet Airways (I) Ltd. (supra).
7. Similarly, we find that, in order to reopen the concluded assessment for AY 2011-12 beyond four years, the AO was required to obtain sanction from the PCIT-4, Kolkata u/s 151 of the Act. In our opinion, the PCIT has to record his reasons and satisfaction for having granted such approval.

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In the present case, it is seen that, the PCIT had neither signed the approval nor recorded any reasons in the Form ITNS-10 prescribed for according approval u/s 151 of the Act. The relevant letter for approval, which was placed before us, is reproduced hereunder:-

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

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By order