TIGERHILL TRADELINK PRIVATE LIMITED,KOLKATA vs. ITO, WARD 10(2), , KOLKATA

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ITA 955/KOL/2025Status: DisposedITAT Kolkata03 October 2025AY 2014-201511 pages
AI SummaryPartly Allowed

What did the Tribunal hold?

The Tribunal decided to set aside the order of the CIT(A) in ITA No. 956/KOL/2025 (assessment order) and the order in ITA No. 955/KOL/2025 (penalty order) for de novo decision. For ITA No. 956/KOL/2025, the Tribunal noted that the CIT(A) had merely reproduced the AO's findings on merits and that the issue regarding sale proceeds of shares had not been examined properly. The Tribunal also observed that the chronological sequence of events for the validity of the notice under Section 148 and the approval by the competent authority were not adequately addressed. Therefore, the appeal was partly allowed for statistical purposes, with the CIT(A) directed to decide the matter afresh, considering all objections, including legal grounds, and potentially calling for a remand report or granting an opportunity under Rule 46A. For ITA No. 955/KOL/2025, the Tribunal found that the assessee needed another opportunity to justify a reasonable cause for the non-imposition of penalty. The CIT(A)'s order was set aside to grant this opportunity, and the appeal was also partly allowed for statistical purposes. The Tribunal did not expressly leave any issue undecided, but the de novo consideration implies all issues will be re-examined.

What were the facts?

The assessee, Tigerhill Tradelink Private Limited, is in appeal before the Income Tax Appellate Tribunal (ITAT) against orders passed by the Commissioner of Income Tax (Appeals)-NFAC for Assessment Year 2014-15. The appeals challenge a penalty order under Section 271B and an assessment order under Section 147 read with Section 144B. The original assessment order, dated 29.05.2023, added Rs. 2,31,00,000/- under Section 68 as unexplained cash credit, based on information that the assessee received funds from shell entities. The assessee's return for AY 2014-15 declared a loss of Rs. 13,346/-. The penalty under Section 271B was levied for not furnishing the audit report under Section 44AB. The CIT(A) dismissed both appeals.

What were the issues?

1. Whether the reopening of assessment under Section 147 is illegal, arbitrary, and without jurisdiction, particularly concerning the prescribed time limit and jurisdictional defects, as argued by the assessee citing Rajeev Bansal & Ors. v. Union of India. 2. Whether the notice issued under Section 148 is invalid and contrary to the statutory scheme of faceless reassessment under Section 151A and the e-Assessment Scheme, 2022, which mandate automated issuance through the National Faceless Assessment Centre (NFAC), as contended by the assessee. 3. Whether the notice issued under Section 148, dated 30-07-2022, is invalid for being issued manually without a Document Identification Number (DIN), in violation of CBDT Circular No. 19/2019, as argued by the assessee. 4. Whether the approval obtained under Section 151 for the Section 148 notice is invalid due to mechanical granting without due application of mind, as the sanctioning authority used the phrase "may be approved" instead of recording reasoned satisfaction, according to the assessee. 5. Whether the reassessment proceedings are vitiated by the Assessing Officer's failure to provide material and information relied upon at the stage of issuing the Section 148A notice, violating principles of natural justice, as submitted by the assessee. 6. Whether the addition of Rs.2,31,00,000/- under Section 68 is erroneous as it is based on unverified third-party reports, despite the assessee furnishing necessary documents like confirmations and financials, as argued by the assessee. 7. Whether the AO erred in relying on third-party statements without granting the assessee an opportunity for cross-examination, violating principles of natural justice, as contended by the assessee. 8. Whether the initiation of penalty proceedings under Sections 271(1)(c) and 271B is baseless, as the primary addition is arbitrary and legally untenable, according to the assessee. 9. Whether the penalty under Section 271B is bad in law and erroneous on facts, as the CIT(A) upheld it without considering the AO's alleged biased mind and due consideration of facts, as argued by the assessee. 10. Whether the CIT(A) erred in treating Rs.2,31,00,000/- from sale of investment shares as business turnover liable for tax audit under Section 44AB, and in failing to distinguish between shares held as investments and stock-in-trade, as claimed by the assessee. 11. Whether the assessee has a reasonable cause for not furnishing the audit report under Section 44AB within the prescribed time, as argued by the assessee in the penalty appeal. The revenue did not record specific arguments for all points but generally supported the lower authorities' findings.

Which sections of the Income-tax Act were involved?

Section 271B,Section 147,Section 144B,Section 250,Section 148,Section 151A,Section 143(2),Section 142(1),Section 151,Section 148A,Section 68,Section 271(1)(c),Section 44AB,Section 273B

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Income Tax Appellate Tribunal, KOLKATA ‘D BENCH, KOLKATA

Before: SHRI GEORGE MATHAN & SHRI RAKESH MISHRA

order : 03-October-2025 ORDER PER RAKESH MISHRA, ACCOUNTANT MEMBER: Both these appeals filed by the assessee are against the separate orders of the Commissioner of Income Tax (Appeals)-NFAC, Delhi [hereinafter referred to as Ld. 'CIT(A)'] passed u/s 250 of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’) for AY 2014-15 dated 12.03.2025, which have been passed against the penalty order u/s 271B of the Act, dated 20.02.2024 and assessment order u/s 147 r.w.s.

3.

We will first take up the appeal in ITA No.: 956/KOL/2025. Brief facts of the case are that the assessee company filed the return of income for A.Y. 2014-15 on 26/09/2014 declaring loss of Rs. 13,346/-. As per information received from DDIT (Inv.), the assessee had received fund amounting to Rs. 2,31,00,000/- from various shell entities allegedly through layering of transactions in its account. The assessment was completed u/s. 147 r.w.s 144B of the Act dated 29/05/2023 wherein Rs. 2,31,00,000/- was added u/s. 68 on account of unexplained cash credit. Aggrieved with the assessment order, the assessee filed an appeal before the Ld. CIT(A) who dismissed the appeal by giving his findings as under: “5.1 I have perused the facts of the case, grounds of appeal

1.

1. raised, submissions made by the Appellant and other evidences on records. The Appellant has raised certain legal issues which I intend to dispose of first before proceeding to consider the Appeal on merits. 5.2 Ground 1, 2 and 5. The Appellant has submitted that the proceedings as initiated by the Assessing Officer under section 147 by issuing notice under section 148 of the Act are bad in law as there is no reason to believe that the income of the appellant has escaped assessment and further, the case has been reopened only on the basis of borrowed transaction. The Appellant has further submitted that the addition has been made by the AO on the basis of evidences collected behind the back of the Appellant and the same were never confronted. The Appellant has further submitted that he was not suitably heard in person although specific request was made in this regard. In this regard, I find that the same issue was raised by the Appellant in the course of assessment proceedings as well and has been discussed by the

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