INDARSEN SHAMLAL PVT. LTD.,,KOLKATA vs. ITO, CIRCLE 1(1),, KOLKATA

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ITA 699/KOL/2025Status: DisposedITAT Kolkata01 July 2025AY 2015-165 pages
AI SummaryRemanded

What did the Tribunal hold?

The Tribunal noted that the Ld. AR requested one more opportunity to present the assessee's case before the Ld. CIT(A) due to the latter's ex parte order and the assessee's non-cooperation in appellate proceedings. While the Ld. Sr. DR opposed granting a second round, the Tribunal, in the interest of justice, decided to restore the issues to the file of the Ld. CIT(A) for fresh adjudication. This restoration is subject to the assessee paying a cost of Rs. 50,000/- to the Legal Aid Services within sixty days, with proof of payment to be produced at the first hearing. Failure to comply with this condition will result in the confirmation of the Ld. CIT(A)'s order. The assessee is also directed to cooperate with the Ld. CIT(A) in the readjudication proceedings. The appeal was allowed for statistical purposes. The Tribunal did not decide on the merits of the grounds raised by the assessee, as the matter was remanded.

What were the facts?

The assessee, Indarsen Shamlal Pvt. Ltd., filed an appeal against the order of the National Faceless Appeal Centre (NFAC), Delhi, for Assessment Year 2015-16. The NFAC's order was passed under Section 250 of the Income Tax Act, 1961, confirming additions made by the Assessing Officer (AO) under Section 147. The assessee's grounds of appeal raised several procedural objections concerning the assumption of jurisdiction, issuance of notices under Section 148A(d) and 148, approval under Section 151, and the validity of the notice under Section 143(2). Additionally, the assessee challenged the addition of Rs. 1,45,59,616 under Section 68 and alleged a violation of natural justice. The AO had relied on information from the Investigation Wing without independent inquiry. The appeal was heard on 16.06.2025 and pronounced on 01.07.2025.

What were the issues?

1. Whether the reassessment proceedings were illegal and without jurisdiction due to the absence of a DIN-generated document for the approval under Section 148A(d) and Section 151 of the Act? 2. Whether the notice under Section 148 was illegal and contrary to law for not being issued in a faceless manner as per Notification S.O. 1466(E) dated 29.03.2022? 3. Whether the reassessment proceedings were a nullity and void ab initio due to the incorrect authority granting approval under Section 151(ii) for a case beyond 3 years but less than 10 years, where the Principal Commissioner of Income Tax, Kolkata-1, was approached instead of the Principal Chief Commissioner of Income Tax, West Bengal & Sikkim? 4. Whether the notice under Section 148 was illegal and void ab initio for not being accompanied by reasons and the sanction of the competent authority, and for not being furnished to the assessee? 5. Whether the AO erred by not conducting independent inquiry before drawing adverse inferences based solely on Investigation Wing information and the Insight portal, and by refraining from conducting an inquiry under Section 148A(a)? 6. Whether the notice under Section 143(2) was invalid as it was not issued in the revised format and did not mention the type of scrutiny? 7. Whether the addition of Rs. 1,45,59,616 under Section 68 as fictitious loss from derivative/equity trading was erroneous, considering the assessee's submissions? 8. Whether the principles of natural justice were violated by not giving due cognizance to the assessee's written submissions and explanations? Assessee's Contentions: The assessee argued that the reassessment proceedings were illegal due to procedural defects, including lack of DIN for approval, manual issuance of notice under Section 148, incorrect authority for sanction under Section 151, non-furnishing of reasons and sanction, lack of independent inquiry by the AO, invalid notice under Section 143(2), erroneous addition under Section 68, and violation of natural justice. The assessee also contended that the CIT(A) passed an ex parte order without sufficient opportunity and requested one more opportunity to present its case. Revenue's Contentions: The Revenue supported the orders of the CIT(A) and AO, arguing that restoring the matter to the CIT(A) would grant the assessee a second round, which should not be permitted.

Which sections of the Income-tax Act were involved?

Section 147,Section 250,Section 148A(d),Section 151,Section 148,Section 143(2),Section 68

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, “B” BENCH KOLKATA

Before: SHRI GEORGE MATHAN & SHRI RAKESH MISHRA

For Appellant: Shri Ayush Gupta, AR
For Respondent: Shri Kapil Mandal, DR
Hearing: 16.06.2025Pronounced: 01.07.2025

Indarsen Shamlal Pvt. ltd. Income Tax Officer, 27, Sarat Bose Road Vs. Aaykar Bhavan, circle 1(1), Kolkata-700020 P-7, Chowringhee Square, West Bengal Kolkata-700069, West Bengal (PAN: AAACI6553R) (Appellant) (Respondent) Present for: Appellant by : Shri Ayush Gupta, AR Respondent by : Shri Kapil Mandal, DR Date of Hearing : 16.06.2025 Date of Pronouncement : 01.07.2025 O R D E R

PER RAKESH MISHRA, ACCOUNTANT MEMBER:

1.

1. This appeal filed by the assessee is against the order of National Faceless Appeal Centre (NFAC), Delhi (hereinafter referred to as “the Ld. CIT(A)”) passed u/s. 250 of the Income Tax Act, 1961 (hereinafter referred to as “the Act”) for AY 2015-16 dated 07.02.2025.

2.

The grounds of appeal raised by the assessee are reproduced as un- der:

“1. That the Hon'ble CIT(A) has erred in confirming the additions made by the Ld. Assessing Officer vide order U/s 147 dated 26.05.2023.

2. That the Learned Assessing Officer erred by assuming the Jurisdiction pur- suant to the order passed u/s 148A(d) of the Act with the approval/sanction of the competent authority prescribed u/s 151 of the Act. However, there was nothing on record to show that the document of communication of the said approval/sanction was DIN generated document. Hence such approval/sanction without DIN is not a legal approval and therefore the entire reassessment proceedings were illegal and without jurisdiction.

3.

That the Learned Assessing Officer erred by Issuing the notice u/s 148 manually whereas the same was required to be issued in a faceless manner through the mechanism of NFAC as directed to be issued by virtue of Notifi- cation S.O. 1466(E) [No.18/2020/F. No. 37014/16/2022-TPL(Part 1] dated 29.03.2022. Therefore, the impugned Notice issued under section 148 of the Act in this case is illegal and contrary to the provisions of law. The subsequent proceeding in pursuance to the said notice is also illegal and void ab initio.

4.

That the Learned Assessing Officer erred by issuing notice under Section 148 of the Income Tax Act, 1961 without obtaining the mandatory approval under section 151(ii) from the prescribed specified authority and thus the im- pugned reassessment proceedings are liable to be annulled. The reassess- ment proceedings initiated by the Learned Assessing Officer in the instant case is nullity, without jurisdiction and void ab-initio as at the sanction re- quired to be obtained from the appropriate/specified authority under section 151 of the Act was not obtained from the prescribed specified/appropriate authority. The impugned notice issued on 28.06.2021 under Section 148 of the Act mentions that approval was obtained from Principal Commissioner of Income, Kolkata- 1.

1.

It is respectfully submitted that Principal Commissioner of Income, Kolkata-1 has no jurisdiction to grant such approval in view of the specific provisions of Section 151 of the Act, as the case of the Assessee Com- pany for the Assessment Year 2015-16 is beyond 3 years and less than 10 years, therefore the Appropriate Authority as specified in Section 151(ii) of the Act is Principal Chief Commissioner of Income Tax, West Bengal & Sikkim and not Principal Commissioner of Income, Kolkata-1, 5. That the notice u/s 148 dated 28.06.2021 issued by the Learned ACIT, Circle 1(1), Kolkata was not accompanied by the reasons and the sanction of Learned PCIT- Kolkata - 1 and/or competent authority as specified under sec- tion 151(ii) of the Act. The same were also not furnished to the assessee Com- pany in course of assessment proceedings. Hence, the subsequent proceed- ings in pursuance to the said notice is also illegal and void ab initio.

6. That the Learned Assessing Officer erred by not making any independent enquiry before drawing the adverse inference against the assessee company that the assessee company is a beneficiary of accommodation entry provided by the alleged entry operators whose names have been repeatedly mentioned in the notices issued by the Learned Assessing Officer. The Learned As- sessing Officer solely relied on the information of the Investigation Wing. The Learned Assessing Officer ought to have conducted independent enquiry to draw any adverse inference against the assessee company and thereupon issue the notice u/s 148A(b) of the Act. The Learned Assessing Officer just accepted the Information uploaded in the Insight portal and refrained from conducting any enquiry u/s 148A(a) of the Act.

7.

That the notice u/s 143(2) of the Act was not issued as per the revised format provided by the CBDT vide F.No.225/157/2017/ITA-II dated 23.06.2017. In the notice issued u/s 143(2) of the Act dated 13.02.2023, there was no mention of the type of scrutiny under which the case of the as- sessee company was selected. Hence the notice Issued u/s 143(2) is not valid as per law accordingly all subsequent proceedings are void and invalid.

8.

That the Learned Assessing Officer has erred in law by making addition of aggregate amount of Rs.1,45,59,616/ to the total income of the assessee com- pany as addition u/s 68 of the Income Tax Act, 1961 as fictitious loss by way of trading of illiquid derivative/equity trading without considering the submis- sions made by the assessee company in course of assessment proceedings. The Hon'ble CIT(A) has also erred in confirming the said addition.

9.

That the written submissions and explanations furnished by the assessee company were not given due cognizance at the time of passing assessment order U/s 147, in gross violation of principles of natural justice.

10.

That the appellant craves leave to add, alter, delete, modify, substitute, or withdraw any ground or grounds of appeal

before or at the time of hearing.”

03. At the outset, it was the submission of the Ld. AR that the impugned order passed by the Ld. CIT(A) is an ex parte order without giving suffi- cient opportunity of being heard to the assessee. It was also submitted that the assessee may be given one more opportunity to represent its case before the Ld. CIT(A), so that the assessee could be able to provide the details to substantiate its case for the year under consideration before the Ld. CIT(A).

4. In reply, Ld. Sr. DR supported the orders of the Ld. CIT(A) and the Ld. AO. It was the submission that restoring the matter to the file of CIT(A) would be, in fact, giving the assessee a second round which should not be granted.

5. A perusal of the impugned order passed by the Id. CIT(A) at para 6, shows that the assessee has not cooperated in the appellate proceedings However, Ld. AR before us requested for one more opportunity to produce the documents before the Ld. CIT(A) to file all the details as required. In such circumstances, in the interest of justice, we restore the issues to the file of Id. CIT(A) for re-adjudicating the issues afresh after granting the assessee adequate opportunity of being heard, subject to a payment of cost of Rs.50,000/-(Rupees Fifty Thousand only) by the assessee to the Legal Aid Services, 3rd Floor of the Centenary Building, High Court, Cal- cutta-700001, within sixty days from the date of this order and receipt of the same shall be produced before the Ld. CIT(A) at the first hearing and in case the assessee fails to do so, the order of the Ld. CIT(A) shall stand confirmed. The assessee is also directed to cooperate with the Ld. CIT(A) in the readjudication proceedings, positively.

6.

In the result, the appeal of the assessee is allowed for statistical purposes.

Order pronounced in the open court on 1st July, 2025.

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