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Facts
The assessee, Advance Commotrade (P) Ltd. (later merged), filed a belated appeal against a CIT(A) order for AY 2013-14, which upheld an addition of ₹2.50 crore as unexplained cash credit from Bholanath Trade Links Pvt Ltd. The assessment was reopened under Section 147 based on information about a high-value transaction, and the assessee challenged the validity of this reopening and the subsequent assessment framed under Section 144.
Held
The Tribunal condoned the delay in filing the appeal, accepting the reasons for the delay as bonafide due to company merger and employee changes. It then quashed the reopening of assessment, holding that the reasons recorded under Section 148(2) were vague, scanty, and ambiguous, and the approval granted by the PCIT under Section 151 was mechanical, without proper application of mind.
Key Issues
1. Validity of assessment reopening under Section 147 based on vague and scanty reasons to believe. 2. Mechanical approval granted under Section 151 without application of mind by the approving authority.
Sections Cited
147, 148, 148(2), 144, 151
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, “A” BENCH, KOLKATA
IN THE INCOME TAX APPELLATE TRIBUNAL “A” BENCH, KOLKATA BEFORE SHRI RAJESH KUMAR, AM AND SHRIPRADIP KUMAR CHOUBEY, JM (Assessment Year:2013-14) Advance Commotrade (P) Ltd. (Now merged with Kalindi Farms Private Limited) ITO, Ward-1(1), Kolkata C/o Subash Agarwal & Aayakar Bhavan, P-7, Associates, Advocates Sidha Chowringhee Square, Vs. Gibson, 1, Gibson Lane, Suite Kolkata-700069, West Bengal 213, 2nd Floor, Kolkata-700069 West Bengal (Respondent) (Appellant) PAN No. AAICA2237J Assessee by : Shri Siddarth Agarwal, AR Revenue by : Shri Manoj Kumar Pati, DR Date of hearing: 17.07.2025 Date of pronouncement: 26.08.2025 O R D E R Per Rajesh Kumar, AM:
This is an appeal preferred by the assessee against the order of the National Faceless Appeal Centre, Delhi (hereinafter referred to as the “Ld. CIT(A)”] dated 05.02.2024 for the AY 2012-13.
At the outset we note that there is a delay of 378 days in filing the appeal for which the assessee had filed condonation petition along with affidavit. We find from the condonation petition as well as supporting affidavit that the assessee company Advance Commotrade (P) Ltd. was merged with Kalindi Farms Private Limited vide NCLT order dated 31-05-2022, which became effective from 01-04-2020 with the result that Advance Commotrade (P) Ltd. was not in existence anymore. The order passed by the ld. CIT (A) dated 05.02.2024 was not received by the staff as many employees had left the job. We also observed that in Form 35 the address stated to be
The only issue raised by the assessee at the time of hearing is against the invalid reopening of assessment by the ld. AO u/s 147 of the Income-tax Act, 1961 (the Act) based on the ambiguous reasons record u/s 148 (2) of the Act and also the invalidity of assessment framed. The assessee also challenged the assessment framed u/s 147 of the Act read with section 144 of the Act, dated 29-09-2021 on the ground of invalid approval granted by the competent authority under section 151 of the Act.
The facts in brief are that the assessee filed the return of income on 27-09-2013declaring total income at ₹16,275. Thereafter, the Larned AO received information that the assessee was benefited from a high-value transaction amounting to ₹2.50 crore with Bholanath Trade Links Pvt Ltd. during the F.Y. 2012-13, the source of which remained unexplained and it was noted in Para 1.2 of the Assessment Order that it is imperative on the part of the AO to verify the said receipt along with the source thereto in the hands of the assessee company during the F.Y. 2012-13 i.e. A.Y. 2013-14. It was further mentioned that the case of the assessee was reopened u/s 147 of the Act by issuing notice u/s 148 of the Act dated 18-03-2020, after obtaining prior approval of the appropriate authority after recording
In the appellate proceedings the ld. CIT (A) dismissed the appeal of the assessee by upholding the order of the ld. AO when assessee failed to make any compliance before the learned CIT (A).
After hearing the rival contentions and perusing the materials available on record, we find that the case of the assessee was reopened by the ld. AO u/s 147 of the Act by issuing notice under section 148 of the Act on 18-03-2020. We note that the reasons to believe were recorded u/s 148(2) of the Act which were based upon the information received by the ld. AO and the reasons only stated that the assessee is a beneficiary of ₹ 2.50 crore with Bholanath Trade Links Pvt Ltd. A perusal of the said reasons reveal that there was no details of the transactions whatsoever, narrated in the said reasons and the ld. AO has simply relied on the information received from the investigation wing, whereas on the other hand the assessee has received this money from Bholanath Trade Link Pvt. Ltd. in respect of shares sold to the said company of Purba Agro Food Pvt. Ltd. Therefore, the reasons recorded by the ld. AO were totally vogue, scanty and ambiguous. The ld. AO was not having information that on account of what the assessee had high value transaction with the said company i.e. Bholanath Trade Links Pvt Ltd. Therefore, reopening on the basis of the said santy and vogue reasons cannot be sustained.The case of the assessee finds support from the decision of Capital Broadways (P.) Ltd. vs. Income-tax Officer [2024] 301 Taxman 506 (Delhi)[03-10-2024], wherein the Hon'ble High Court has held that the reopening on the basis of vogue reasons is unsustainable in the eyes of law.
In the result, the appeal of the assessee is allowed.
Order pronounced in the open court on 26.08.2025.