MILLENNIUM CONTRADE PVT. LTD.,KOLKATA vs. DCIT, CIRCLE- 11(1), KOLKATA

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ITA 424/KOL/2025Status: DisposedITAT Kolkata11 September 2025AY 2014-157 pages
AI SummaryPartly Allowed

What did the Tribunal hold?

The Tribunal held that the CIT(A) had not specified the amount of advance tax payable or how Section 208 was applicable. The assessee contended that no advance tax was payable as income was below the taxable limit. The CIT(A) dismissed the appeal without deciding on merits and without exercising the discretion available under the proviso to Section 249(4)(b) to exempt the assessee from advance tax payment upon application. Since the CIT(A) did not determine the advance tax liability and the assessee had an option to seek exemption, which was not exercised, and the appeal was not decided on merits, the ITAT, in the interest of justice, set aside the CIT(A)'s order. The assessee was directed to file an application for exemption from advance tax payment before the CIT(A), which would be decided in accordance with law. The assessee was also permitted to file necessary evidence, and both parties were to be given a reasonable opportunity of being heard. The grounds taken by the assessee were partly allowed for statistical purposes.

What were the facts?

The assessee, Millennium Contrade Private Limited, filed its Income Tax Return (ITR) for Assessment Year (AY) 2014-15 on 29.09.2014, declaring a loss. The assessment was completed under Section 143(3) accepting the returned loss. Subsequently, the assessment was reopened under Section 147 as the Assessing Officer (AO) had information that the assessee was a beneficiary of Rs. 90,00,000/- received from a shell entity, M/s. Tirumala Tradecom Pvt. Ltd., which had escaped assessment. The AO added this sum under Section 68 as unexplained cash credit and Rs. 2,70,000/- as commission expense under Section 69C. The assessee appealed to the Commissioner of Income Tax (Appeals) (CIT(A)), who dismissed the appeal for non-payment of advance tax before filing the appeal. The assessee is now before the Income Tax Appellate Tribunal (ITAT).

What were the issues?

1. Whether the CIT(A) erred in dismissing the assessee's appeal for failing to pay advance tax, violating principles of natural justice, and not deciding on merits, contrary to the assessee's contention that no advance tax was payable due to nil/loss income (Section 249(4)(b) read with Section 208)? 2. Whether the reassessment proceedings were validly initiated, considering the assessee's arguments that transactions were verified in regular assessment, constituting a 'change of opinion' (Section 147)? 3. Whether the notice under Section 148 for AY 2014-15 was barred by limitation, making reassessment proceedings bad in law (Section 149(1)(b))? 4. Whether the AO erred in making an addition of Rs. 90,00,000/- under Section 68 as unexplained cash credit, disregarding transaction genuineness and submitted documents? 5. Whether the AO erred in adding Rs. 2,70,000/- as commission expense under Section 69C? Assessee's Contentions: No advance tax was payable as income was nil/loss. Reassessment was initiated on a 'change of opinion'. Notice under Section 148 was barred by limitation. Cross-examination is essential for due process. Additions under Sections 68 and 69C were arbitrary, disregarding evidence. Revenue's Contentions: Relied on the CIT(A)'s order and requested it be upheld.

Which sections of the Income-tax Act were involved?

Section 147,Section 144B,Section 143(3),Section 68,Section 69C,Section 249(4)(b),Section 208,Section 209,Section 149(1)(b),Section 148

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, KOLKATA ‘C’ BENCH, KOLKATA

Before: SHRI GEORGE MATHAN

: Aayush Gupta, AR.

: Sandip Sarkar, JCIT, Sr.DR.

: 11 August, 2025 : 11 September, 2025

PER RAKESH MISHRA, ACCOUNTANT MEMBER:

This appeal filed by the assessee is against the order of the Ld.

Commissioner of Income Tax (Appeals), National Faceless Appeal Centre

(NFAC), Delhi [“the Ld. CIT(A)”] dated 28.12.2024 which has been passed against the assessment order passed u/s 147 r.w.s. 144B of the Income Tax Act, 1961 (‘the Act’) dated 27.05.2023. 2. The assessee is in appeal before the Tribunal raising the following

grounds of appeal:

“1. That on the facts and circumstances of the case, the Hon'ble CIT(A) has erroneously held that the assessee did not file valid return of income and has not paid advance tax payable by him before filing appeal. The Hon'ble CIT(A) has unilaterally rejected the appeal of the assessee in violation of principles of natural justice.

I.T.A. Nos.: 424/KOL/2025

Assessment Year: 2014-15

1.

Millennium Contrade Private Limited

2.

That on the facts and circumstances of the case, the Ld. AO has failed to appreciate that transactions as mentioned in the impugned order were verified in course of regular assessment proceedings. Therefore, the information provided constituted a ‘change of opinion’ and thus the pre- conditions for initiating reassessment proceedings were not fulfilled.

3.

That on the facts and in circumstances of the case and in law, reassessment proceedings initiated by the AO are in contravention to the provisions of Section 149(1)(b) of the Act. The issue of Notice U/s 148 for AY 2014-15 is barred by limitation and hence reassessment proceedings is bad in law. The AO acted beyond his juri iction in initiating and carrying out reassessment proceedings for AY 2014-15. 4. That on the facts and in circumstances of the case, the Ld AO has failed to appreciate that cross-examination is the sine qua non of due process of taking evidence and no adverse inference can be drawn against a party unless the party is put on notice of the case made out against him.

5.

That on the facts and in circumstances of the case, the Assessing Officer has erred in making arbitrarily addition of Rs. 90,00,000/- u/s 68 of the LT. Act, disregarding the genuineness of transactions and without taking into cognizance, documents submitted in course of reassessment proceedings.

6.

That on the facts and in circumstances of the case, the Assessing Officer has erred in making addition of Rs. 2,70,000/- being commission expense calculated 3% on amount of Rs. 90,00,000/- as unexplained expenditure u/s 69C of the Act.

7.

That the appellant craves leave to add, alter, adduce or amend any ground or grounds on or before the date of hearing of the appeal.”

3.

Brief facts of the case are that the assessee had filed its ITR for A.Y. 2014-15 on 29/09/2014 disclosing current year's loss to the tune of Rs.71,186/-. Thereafter, the ITR was selected for scrutiny and accordingly assessment in this case got completed u/s 143(3) of the Act on 29/09/2016 accepting the returned loss. Subsequently, the assessment was reopened as the Assessing Officer (“Ld. AO”) had information that the assessee was beneficiary of an amount of =

90,00,000/- had escaped assessment which was received from a Page |

I.T.A. Nos.: 424/KOL/2025

Assessment Year: 2014-15

1.

Millennium Contrade Private Limited

shell/paper entity M/s. Tirumala Tradecom Pvt. Ltd. which had furnished return with nominal income. A sum of = 90,00,000/- was accordingly added on failure to file satisfactory evidence in respect of the sum and the same was treated as unexplained cash credit under section 68 of the Act along with another sum of = 2,70,000/- as commission paid for the accommodation entry. Aggrieved with the reassessment order, the assessee preferred an appeal before the Ld. CIT(A), who vide the impugned order dismissed the appeal as the assessee had failed to pay the advance tax before filing the appeal. Aggrieved with the order of the Ld. CIT(A), the assessee has filed the appeal before the Tribunal.

4.

Rival contentions were heard and the submissions made have been examined. The assessee had sought adjournment before the Bench but the same was rejected as both before the Ld. AO as well as before the Ld. CIT(A) no proper representation was made and the assessee had not given any justification for the adjournment sought and the appeal was heard. Before us, the Ld. AR submitted that there was no liability on the part of the assessee to pay any advance tax as the income

returned was nil/loss. The Ld. DR relied upon the order of the Ld. CIT(A)

and requested that the same may be upheld.

5.

Before adjudicating the appeal, it is important to refer to the provisions of Section 249(4)(b) of the Act, which is relied upon by the Ld. CIT(A) while dismissing the appeal and which is as under:

“249(4)(b): where no return has been filed by the assessee, the assessee

has paid an amount equal to the amount of advance tax which was payable by him:

Provided that, in a case falling under clause (b) and on an application made by the appellant in this behalf, the [Joint Commissioner (Appeals) or the]

I.T.A. Nos.: 424/KOL/2025

Assessment Year: 2014-15

1.

Millennium Contrade Private Limited

Commissioner (Appeals) may, for any good and sufficient reason to be recorded in writing, exempt him from the operation of the provisions of that clause.”

6.

As per the proviso thereof, there is an option available to the assessee to file an application before the Ld. CIT(A) who may dispense with the requirement of payment of advance tax on the basis of facts. Apparently, no such application was filed by the assessee and,

therefore, the appeal was dismissed.

7.

However, the liability to pay the advance tax is determined by the provisions of Chapter XVII-C relating to advance payment of tax and is governed by the provisions of section 208 as per which advance tax shall be payable during a financial year in every case where the amount of such tax payable by the assessee during that year, as computed in accordance with the provisions in this regard is = 10,000/- or more. Further, Section 209 of the Act r.w.s. 210 specifies the manner of computation of advance tax; section 209(1) of which is reproduced as under:

“209. (1) The amount of advance tax payable by an assessee in the financial year shall, subject to the provisions of sub-sections (2) and (3), be computed as follows, namely :—

(a) where the calculation is made by the assessee for the purposes of payment of advance tax under sub-section (1) or sub-section (2) or sub- section (5) or sub-section (6) of section 210, he shall first estimate his current income and income-tax thereon shall be calculated at the rates in force in the financial year;

(b) where the calculation is made by the Assessing Officer for the purpose of making an order under sub-section (3) of section 210, the total income of the latest previous year in respect of which the assessee has been assessed by way of regular assessment or the total income returned by the assessee in any return of income furnished by him for any subsequent previous year, whichever is higher, shall be taken and income-tax thereon shall be calculated at the rates in force in the financial year;

I.T.A. Nos.: 424/KOL/2025

Assessment Year: 2014-15

1.

Millennium Contrade Private Limited

(c) where the calculation is made by the Assessing Officer for the purpose of making an amended order under sub-section (4) of section 210, the total income declared in the return furnished by the assessee for the later previous year, or, as the case may be, the total income in respect of which the regular assessment, referred to in that sub-section has been made, shall be taken and income-tax thereon shall be calculated at the rates in force in the financial year;

(d) the income-tax calculated under clause (a) or clause (b) or clause (c) shall, in each case, be reduced by the amount of income-tax which would be deductible or collectible at source during the said financial year under any provision of this Act from any income (as computed before allowing any deductions admissible under this Act) which has been taken into account in computing the current income or, as the case may be, the total income aforesaid; and the amount of income-tax as so reduced shall be the advance tax payable:

Provided that for computing liability for advance tax, income-tax calculated under clause (a) or clause (b) or clause (c) shall not, in each case, be reduced by the aforesaid amount of income-tax which would be deductible or collectible at source during the said financial year under any provision of this Act from any income, if the person responsible for deducting tax has paid or credited such income without deduction of tax or it has been received or debited by the person responsible for collecting tax without collection of such tax.”

8.

The Ld. CIT(A) has not specified as to how much advance tax was payable or how the provisions of section 208 of the Act were applicable o the assessee or not as his interpretation of the provisions is apparently not correct. On the contrary, the assessee contends that since the income was below the maximum amount not chargeable to ax, therefore, there was no question of payment of any advance tax. Further, the Ld. CIT(A) has not decided the appeal on the merits of the case. Hence, in view of the facts, since the Ld. CIT(A) has not mentioned as to how much advance tax was payable by the assessee which has not been paid, and the assessee had the option of filing an application

before the Ld. CIT(A), which however, was not filed and consequently

he discretion available to the Ld. CIT(A) to exempt the assessee from I.T.A. Nos.: 424/KOL/2025

Assessment Year: 2014-15

1.

Millennium Contrade Private Limited

the applicability of the rigours of section 249(4) could not be exercised by him and the appeal has also not been decided on merit, therefore, in the interest of justice, the order of the Ld. CIT(A) is set aside to be done afresh. The assessee may file an application for exemption from the requirement of payment of advance tax, which shall be decided by the Ld. CIT(A) in accordance with law and considering the totality of facts. The assessee shall also be at liberty to file necessary evidences in support of the relief claimed before the Ld. CIT(A) as per law. Needless to say, the assessee shall be given a reasonable opportunity of being heard and to make any further submissions he wants to make in support of the relief claimed and the Ld. CIT(A) shall also grant an opportunity of representing the case and to be heard to the Ld. AO as per rule 46A of the Income Tax Rules, 1962, if required, and thereafter pass an order in accordance with law. Accordingly, the grounds taken

by the assessee in his appeal are partly allowed for statistical purposes.

9.

In the result, the appeal filed by the assessee is partly allowed for statistical purposes.

Order pronounced in the open Court on 11th September, 2025. [George Mathan] [Rakesh Mishra] Judicial Member Accountant Member

Dated: 11.09.2025

Page |

I.T.A. Nos.: 424/KOL/2025

Assessment Year: 2014-15

1.

Millennium Contrade Private Limited

Copy of the order forwarded to:

1.

N

An Millennium Contrade Private Limited, 11/1, Jutika Apartment Sunny Park Ballygunge, Kolkata, West Bengal, 700019

DCIT, Circle-11(1), P-7, Chowringhee Square, Kolkata, West Bengal, 700069. CIT(A)-

CIT-

CIT(DR), Kolkata Benches.

Guard File.

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By order

Assistant Registrar ITAT, Kolkata Benches Kolkata

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