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Facts
The assessee filed its return declaring a total income of ₹1,490/-. The initial assessment was ₹18,230/-. The case was later reopened u/s 147, and after the assessee's non-compliance, funds amounting to ₹1,66,98,875/- were added u/s 68, leading to a total income of ₹1,67,17,105/-.
Held
The Tribunal held that there was no reason to interfere with the order of the CIT(A) who had set aside the assessment to be framed afresh. The Tribunal directed the AO to provide the assessee an opportunity to substantiate the receipt of share capital and prove the identity, creditworthiness, and genuineness of the transactions.
Key Issues
Whether the reassessment proceedings and the subsequent assessment order were legally valid, and if the CIT(A) erred in upholding them without proper adjudication of the grounds raised by the assessee.
Sections Cited
147, 144, 144B, 250, 143(3), 148, 143(2), 68, 142(1)
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, KOLKATA ‘D’ BENCH, KOLKATA
Before: SHRI GEORGE MATHAN & SHRI RAKESH MISHRA
PER RAKESH MISHRA, ACCOUNTANT MEMBER:
This appeal filed by the assessee is against the order 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 17.12.2024, which has been passed against the assessment order u/s 147 r.w.s. 144 r.w.s. 144B of the Act, dated 30.03.2022. 2. The assessee is in appeal before the Tribunal raising the following grounds of appeal:
“1. Ld. CIT(A) erred in upholding validity of reassessment order without appreciating that the initiation of reassessment proceedings is illegal inasmuch as the failure on the part of assessee, as required by first proviso to sec. 147, does not appear to have been brought out in the reasons recorded. I.T.A. No.: 432/KOL/2025 Assessment Year: 2014-15 Suggest Vinimay Pvt. Ltd.
The assessment order passed by the AO is illegal, invalid and ab initio void inasmuch as it was passed without issuing notice u/s 143(2). The assessment order has been passed in violation of mandatory provisions of law and is liable be quashed as illegal and not sustainable. Ld. CIT(A) erred in confirming addition made in an illegal order.
Ld. CIT(A) erred in upholding validity of reassessment order without appreciating that the notice issued by AO u/s 148 is illegal, ab initio void. There was no new material before the AO for formation of belief of escapement. The AO reopened the assessment without application of mind and re-assessment proceedings were initiated on mere "change of opinion" which does not meet conditions of sec. 147. The reassessment proceeding and consequent reassessment order is illegal.
Without prejudice to the setting aside of the assessment order on merits of additions made, Ld. CIT(A) erred in not adjudicating ground taken by appellant regarding validity of assessment on legal issue. The reassessment order passed by AO is ab initio void and liable to be quashed inasmuch as same has been passed without providing copy of reasons recorded for reopening.
The appellant reserves the right to amend, modify or add any of the ground/s of appeal.”
Brief facts of the case are that the assessee is a private limited company and had filed its return of income declaring total income of ₹1,490/-. Initial assessment was made u/s 143(3) of the Act is in the total income at ₹18,230/-. Subsequently, the case was reopened u/s 147 of the Act and since the assessee did not comply with the notices issued and the Assessing Officer (hereinafter referred to as Ld. 'AO') noted that assessee had received huge payments but had shown the normal income. Therefore, the funds raised amounting to ₹1,66,98,875/- were added to the total income of the assessee u/s 68 of the Act vide order u/s 147 r.w.s. 144 r.w.s. 144B of the Act and the total income was assessed at ₹1,67,17,105/-. Aggrieved with the assessment order, the assessee filed an appeal before the Ld. CIT(A) who, in view of the amendment in section 251 of the Act empowering the Commissioner (Appeals) to set aside the assessment and refer the I.T.A. No.: 432/KOL/2025 Assessment Year: 2014-15 Suggest Vinimay Pvt. Ltd. case back to the Assessing Officer for making a fresh assessment in the appeal against an order of assessment u/s 144 of the Act, had set aside the order of the Ld. AO with the direction to the Ld. AO to frame the assessment order afresh after giving adequate opportunity of being heard to the appellant.
Aggrieved with the order of the Ld. CIT(A), the assessee has filed the appeal before the Tribunal.
None appeared on behalf of the assessee and the case was heard with the assistance of the Ld. DR. In this case, the assessee sought adjournment but the same was rejected as there was no justification for the same. The Ld. Sr. DR submitted that no prejudice is caused to the assessee and the assessment was made u/s 144 of the Act as the assessee had received huge premium from Kolkata-based paper/shell companies as well as by acquiring four companies; M/s. Vaishnomata Commercial Pvt. Ltd., M/s. Suggest Vinimay Pvt. Ltd., M/s. Amrithphal Marketing Pvt. Ltd. and M/s. Blossom Distributors Pvt. Ltd. The facts are mentioned at page 2 of the assessment order to which our attention was drawn. Since the assessment order has been set aside, the assessee shall be at liberty to raise all legal issues including the issues raised in the grounds of appeal relating to the reopening of the assessment and the assessment order being passed without issuing any notice u/s 143(2) of the Act before the Ld. AO. However, it is apparent from para 5 of the assessment order that the assessee complied with the notice u/s 142(1) of the Act dated 23.02.2022 and raised objection instead of filing any submission in response to the notices issued. The objection raised by the assessee was rejected by passing a speaking order dated 09.03.2022 and thereafter there was no cooperation by the assessee nor I.T.A. No.: 432/KOL/2025 Assessment Year: 2014-15 Suggest Vinimay Pvt. Ltd. any return of income was filed in response to the notice issued u/s 148 of the Act. Since no return of income was filed, therefore, there was no question of issuing any notice u/s 143(2) of the Act as per the provisions of section 143(2) of the Act. Hence, on the basis of the facts as they appear from the record, there is no reason to interfere in the order of the Ld. CIT(A) who has invoked his powers and has set aside the assessment to be framed afresh after giving adequate opportunity of being heard to the assessee. As regards the merits of the addition agitated in ground no. 4, the assessee will be at liberty to furnish any explanation before the Ld. AO. However, we may add in the interest of justice that the Ld. AO may provide an opportunity to substantiate the receipt of share capital along with premium and the assessee shall produce the directors of the companies/entities who have given the funds and also establish the three ingredients relating to the cash credits i.e. the identity, the creditworthiness and the genuineness of the transactions and shall produce the directors before the Ld. AO for cross examination as the assessee has received the funds and the onus lies on the assessee to produce its witnesses for cross examination before the Ld. AO. With these additional directions, the appeal of the assessee is partly allowed.
In the result, the appeal filed by the assessee is partly allowed. Order pronounced in the open Court on 11th September, 2025. [George Mathan] [Rakesh Mishra] Judicial Member Accountant Member Dated: 11.09.2025 Bidhan (Sr. P.S.) I.T.A. No.: 432/KOL/2025 Assessment Year: 2014-15 Suggest Vinimay Pvt. Ltd. Copy of the order forwarded to:
Suggest Vinimay Pvt. Ltd., Near Police Thana, Bilaspur Road, Dharsiwa, Raipur, Chhattisgarh, 493221. 2. ITO, Ward-5(1), Kolkata.
CIT(A)-NFAC, Delhi.
CIT-
CIT(DR), Kolkata Benches, Kolkata.
Guard File. //// By order