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

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ITA 956/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 and remand the issue to the CIT(A) for de novo decision. The Tribunal noted that the CIT(A) had merely reproduced the findings of the Assessing Officer and that the issue relating to the sale proceeds of shares and the validity of the Section 148 notice, including the approval by the competent authority, had not been adequately addressed. The assessee was granted liberty to raise all objections, including legal grounds, before the CIT(A). The CIT(A) was directed to either call for a remand report from the AO or grant an opportunity under Rule 46A. For statistical purposes, this appeal was partly allowed. Regarding ITA No. 955/KOL/2025, the Tribunal also set aside the order of the CIT(A) and remanded the matter for granting the assessee one more opportunity to submit justifications for the non-imposition of penalty, specifically concerning a reasonable cause for the delay. The CIT(A) was to pass an order as per law after providing this opportunity. For statistical purposes, this appeal was also partly allowed. The Tribunal did not expressly leave any issue undecided, but the remands indicate that the merits of several grounds were not finally adjudicated by the Tribunal itself.

What were the facts?

The assessee, Tigerhill Tradelink Private Limited, filed an appeal against two orders of the Commissioner of Income Tax (Appeals)-NFAC, Delhi. The first appeal (ITA No. 956/KOL/2025) challenges the assessment order dated 29.05.2023 passed under Section 147 read with Section 144B of the Income Tax Act, 1961, for Assessment Year 2014-15. The second appeal (ITA No. 955/KOL/2025) challenges the penalty order dated 20.02.2024 passed under Section 271B of the Act, also for AY 2014-15. The original return for AY 2014-15 declared a loss of Rs. 13,346/-. The reassessment involved an addition of Rs. 2,31,00,000/- under Section 68 as unexplained cash credit, based on information from DDIT (Inv.) regarding funds received from shell entities. The penalty under Section 271B was levied for not furnishing the audit report under Section 44AB.

What were the issues?

The Tribunal had to decide the following 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 (Section 147, Section 151A, Section 144B, Section 148). 2. Whether the notice issued under Section 148 is invalid due to non-adherence to the faceless reassessment scheme and routing through the National Faceless Assessment Centre (NFAC) (Section 151A, Section 144B, Section 148). 3. Whether the notice issued under Section 148 is invalid for being issued manually without a Document Identification Number (DIN), violating CBDT Circular No. 19/2019 (Section 148, CBDT Circular No. 19/2019). 4. Whether the approval obtained under Section 151 for the notice under Section 148 was granted mechanically without due application of mind, rendering it invalid (Section 151, Section 148). 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 (Section 148A). 6. Whether the addition of Rs. 2,31,00,000/- under Section 68 is erroneous, based on unverified third-party reports, and disregarding the assessee's documents (Section 68). 7. Whether the assessee was denied an opportunity for cross-examination of third parties whose statements were relied upon, violating principles of natural justice (Section 144B). 8. Whether the penalty proceedings under Sections 271(1)(c) and 271B are baseless without a valid assessment. 9. Whether the penalty under Section 271B is bad in law and erroneous on facts, and whether the CIT(A) erred in upholding it (Section 271B, Section 44AB). 10. Whether the CIT(A) erred in treating Rs. 2,31,00,000/- from share sales as business turnover liable for tax audit under Section 44AB, and failing to distinguish between shares held as investments and stock-in-trade (Section 44AB). Assessee's Contentions: The assessee argued that the reopening of assessment was time-barred and suffered from jurisdictional defects (Rajeev Bansal & Ors. v. Union of India). The notice under Section 148 was invalid due to non-compliance with the faceless assessment scheme and the absence of a DIN. Approval under Section 151 was mechanical. Material relied upon was not provided, and cross-examination was denied. The addition under Section 68 was based on unverified reports. The penalty under Section 271B was baseless, and the Rs. 2,31,00,000/- was not business turnover. Revenue's Contentions: The revenue's contentions are not explicitly detailed in the provided text, but it is implied that the Assessing Officer and CIT(A) upheld the assessment and penalty based on their findings regarding the unexplained cash credit and the failure to furnish the audit report.

Which sections of the Income-tax Act were involved?

Section 147,Section 144B,Section 68,Section 271B,Section 148,Section 151A,Section 143(2),Section 142(1),Section 151,Section 148A,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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