Loading judgment…
Facts
The assessee's income was reassessed under Section 147, adding Rs. 1.6 crore under Section 68 for alleged bogus transactions based on intelligence regarding fund rotation in a linked account. The assessment order was passed ex-parte under Section 144, and the CIT(A) dismissed the assessee's appeal. The assessee contended that they could not make proper representation due to their company's merger and shifting of its registered office.
Held
The Tribunal found that the assessee was not properly represented before the AO and CIT(A). In the interest of justice, it set aside the CIT(A)'s order and remanded the matter back for fresh adjudication, providing the assessee with an opportunity to be heard and present proper evidence, allowing the AO to respond under Rule 46A of the Income Tax Rules, 1962.
Key Issues
Key legal issues include the validity of reassessment proceedings and the addition of income under Section 68, specifically regarding whether the assessee was afforded adequate opportunity to present their case due to company merger.
Sections Cited
250, 147, 144, 143(1), 154, 148, 68, Rule 46A
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, KOLKATA ‘D’ BENCH, KOLKATA
Before: SHRI PRADIP KUMAR CHOUBEY & 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 2012-13 dated 17.02.2025, which has been passed against the order u/s 147 r.w.s. 144 of the Act, dated 26.11.2019. I.T.A. No.: 868/KOL/2025 Assessment Year: 2012-13 Peaceful Agencies Private Limited (Now merged with Nirmiti Realties Private Limited).
The assessee is in appeal before the Tribunal raising the following grounds of appeal: “1) That the learned Assessing Officer has erred in making addition of income without granting proper opportunity of being heard. 2) That the re-opening is bad in the eyes of law since no incriminating material has been found against the appellant. 3) That the re-opening is bad in the eyes of law since there cannot be any prima facie reason to believe that the income of the appellant has escaped assessment. 4) That the addition is mainly on the basis of Investigation Report of the Department without going to facts of the case, which is bad in eyes of law and hence such addition deserves to be deleted. 5) That the Assessee is regular income tax payee and the allegation that the appellant has engaged in any bogus transaction is completely erroneous and baseless. 6) That assessment order be quashed since the company was already merged w.e.f. 01/04/2022 and therefore the order passed in the name of the non-existent entity is invalid, and void ab-initio. 7) That the Assessing officer erred in assuming juri iction for reassessment without properly serving the notice under Section 148 on the assessee. 8) That the assessee craves to leave, add, alter or amend any of the grounds on or before the time of hearing of appeal.”
Brief facts of the case are that the assessee had filed the return of income electronically declaring total income at Rs. 1,57,040/-. The return was processed under section 143(1) at the total income of Rs. 1,69,780/- and was subsequently rectified under section 154 on 28/05/2015 at the total income of Rs. 1,69,070/-. On the basis of information received from the DDIT (INV), unit-3 (one), Kolkata that a company named M/s Sarda Vanijya Pvt. Ltd was having an account with ICICI Bank at Kolkata whereby huge transactions in the forms of RTGS transfers, NEFT etc. took place and on the basis of the I.T.A. No.: 868/KOL/2025 Assessment Year: 2012-13 Peaceful Agencies Private Limited (Now merged with Nirmiti Realties Private Limited). information prima facie it appeared that the account was used for rotation of funds without any business rationale. The funds credited in the account were subsequently transferred to another company M/s Parmeshwar Merchandise Pvt. Ltd. The directors of the companies were found to be non-filers. On analysing the information, there was prima facie reason to believe that the assessee’s income chargeable to tax had escaped assessment, therefore, the proceedings for assessment under section 147 were initiated and a notice under section 148 was issued after taking the requisite approval. There was no compliance in respect of the notice issued and, therefore, the assessment order was passed under section 144 read with section 147 vide order dated 26/11/2019. A sum of Rs. 1,60,00,000/- was added under section 68 and the total income was assessed at Rs. 1,61,69,780/-.
Aggrieved with the assessment order, the assessee preferred an appeal before the Ld. CIT(A), who vide order dated 17/02/2025 dismissed the appeal. Aggrieved with the order of the Ld. CIT(A), the assessee has filed the appeal before the Tribunal.
Rival submissions were heard and the record and the submissions made have been examined. It was submitted by the Ld. AR that both before the Ld. AO as well as before the Ld. CIT(A), proper representation could not be made and the notices issued could not be complied with and, therefore, the appeal was decided against the assessee and the addition was confirmed. It was submitted that the registered office of the assessee had shifted on account of the merger of the company and, therefore, the proceedings could not be attended properly. The Ld. AR made a request to remand the appeal back to the Ld. CIT(A) so that proper representation could be made. The Ld. DR was fair enough not I.T.A. No.: 868/KOL/2025 Assessment Year: 2012-13 Peaceful Agencies Private Limited (Now merged with Nirmiti Realties Private Limited). to seriously oppose the request of the assessee but relied upon the order of the Ld. CIT(A) and requested that the same may be upheld.
We have considered the submissions made, gone through the facts of the case and perused the record and the order of the Ld. CIT(A). We find that at both the stages of assessment order before the Ld. AO as well as before the Ld. CIT(A) in the appeal, proper representation was not made on behalf of the assessee. The Ld. AR requested that the matter may be remitted to the Ld. CIT(A) while the Ld. DR supported the order of the Ld. CIT(A). Therefore, we deem it appropriate in the interest of justice and fair play that another opportunity needs to be provided to the assessee to represent his case properly before the Ld. CIT(A). We, therefore, set aside the order of the Ld. CIT(A) and remit the appeal to him to be decided afresh, who shall allow an opportunity of being heard to the assessee and 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. For statistical purposes, the appeal of the assessee is allowed.
In the result the appeal of the assessee is allowed for statistical purposes. Order pronounced in the open Court on 30th June, 2025. [Pradip Kumar Choubey] [Rakesh Mishra] Judicial Member Accountant Member Dated: 30.06.2025 Bidhan (P.S.) I.T.A. No.: 868/KOL/2025 Assessment Year: 2012-13 Peaceful Agencies Private Limited (Now merged with Nirmiti Realties Private Limited). Copy of the order forwarded to:
Peaceful Agencies Private Limited (Now merged with Nirmiti Realties Private Limited), Lock No. 503, 6th Floor, B Wing, Shriram Shyam Tower, Near NIT Building, Kingsway Sadar, Nagpur, Maharashtra, 440001. 2. ITO, Ward-10(1), Kolkata.
CIT(A)-NFAC, Delhi.
CIT-
CIT(DR), Kolkata Benches, Kolkata.
Guard File. //// By order