M/S. BNA COMMERCE PVT. LTD.,,KOLKATA vs. ITO, WARD 5(1), KOLKATA

The issue raised in the first ground of appeal is against the order of ld. CIT (A) confirming the re-opening of assessment made by the ld. AO after four years from the end of the assessment year where the assessment has been framed u/s 143(3) of the Act and there is no whisper in the recorded reasons about the failure of the assessee to

The facts in brief are that the assessee filed the return of income on 28.09.2014, declaring total income of ₹1,22,350/-. The case of the assessee was selected for scrutiny and assessment was accordingly framed u/s 143(3) vide order dated 16.12.2016 accepting the returned income. Thereafter, the assessment was reopened u/s 147 of the Act by issuing notice u/s 148 of the Act on 13.03.2020. The assessee complied the said notice issued u/s 148 of the Act by filing the return of income on 08.08.2020. Thereafter, the statutory notices along with questionnaire were issued. Though, the notices were not replied on a couple of occasions but there after the assessee duly complied with the notices by filing all the requisite details qua the unsecured loans raised by the assessee. finally, the assessment was framed by the ld. AO u/s 147 read with section 144B of the Act dated 23.09.2021, wherein the amount of unsecured loan of ₹4,33,00,000/ was treated as unexplained cash credit and added to the income of the assessee.

In the appellate proceedings also the ld. CIT (A) partly allowed the appeal of the assessee sustaining the addition to the extent of ₹3,57,00,000/- and deleting the remaining amount thereby partly allowed the appeal of the assessee.

After hearing the rival contentions and perusing the materials available on record, we find that undisputedly the case of the assessee was reopened after a period of four years from the end of relevant assessment year. We also note that the assessment in this case was also framed u/s 143(3) of the Act vide order dated 16.12.2016. We have perused the reasons recorded by the ld. Assessing Officer for re- “The information is in possession of the department in respect of M/S. BNA Commerce Pvt. Ltd PAN-AABCB0727D for the A.Yr. 2014-15 received fund amounting to Rs.4,33,00,000/- from various shell companies managed and controlled by Shri Dilip Kumar Gupta, an entry operator. The same was received from the Office of ADIT(Inv), Unit-3(4), Kolkata vide No. 3047 dated 02.08.2018 A search and seizure operation u/s. 132 was conducted in the residence and various office premises of Shri Dilip Kumar Gupta on 15/12/2016. During the course of search and seizure operation, statements of Shri Dilip Kumar Gupta was recorded on oath and vide statement he admitted to be involved in the activities of providing accommodation entries in the guise of Shares purchase, unsecured loans and bogus billing in lieu of commission. He facilitated the meeting of parties who need bogus bills and parties who provided the entry of bogus bills without involving himself or his dummies in the process in lieu of commission. M/s BNA Commerce Pvt. Ltd. PAN-AABCB0727D is one of the beneficiary received Rs.3,30,00,000/- from M/s Shivhari Distributors Pvt. Ltd, Rs.65,00,000/- from M/s. Dolphin Shoppers Pvt. Ltd., and Rs.38,00,000/- from M/s. Pearltree Dealmark Pvt. Ltd. managed and controlled by Shri Dilip Kumar Gupta. Under the circumstances, I have reason to believe that the above income of the assessee has escaped assessment within the meaning of provisions of sec. 147 of the 1.T. Act, 1961.”

Therefore, reopening of assessment beyond four years has been made in violation of first proviso to Section 147 of the Act which provides that where assessment has been framed u/s 143(3) of the Act, no reopening of assessment can be made u/s 147 of the Act if there is no failure on the part of the assessee to disclose fully and truly all material facts qua the assessment of income. On perusal of the reasons recorded u/s 148(2) of the Act as extracted above reveals that there is no whisper of failure of the assessee. Therefore, reopening is invalid and against the provisions of the Act. The case of the assessee find support from the decision of the Hon'ble Apex Court in the case of ACIT Vs. CEAT Ltd. reported in [2022] 449 ITR 171

In the result, the appeal of the assessee is allowed on legal issue.

The issue raised in first ground of appeal is against the order of ld. CIT (A) confirming the reopening of assessment despite the fact that the reopening was made on vague reasons without any intangible material and application of mind and is in fact based on the borrowed satisfaction.

The facts in brief are that the assessee filed the return of income on 20.09.2013, declaring total income at ₹37,470/-. The case of the assessee was reopened u/s 147 of the Act by issue of notice u/s 148 of the Act on 30.03.2020 after recording the reasons to believe u/s 148(2) of the Act. Thereafter, the assessee complied with the said notice by fling the return of income on 08.08.2020. The ld. AO issued statutory notices along with questionnaire which were duly served and complied with during the assessment proceedings by the assessee. The reasons recorded by the ld. AO mentioned that assessee is a beneficiary of ₹1,05,00,000/- by way of accommodation entry received from M/s Shivahari Distributors Pvt. Ltd. managed and controlled by Shri Dilip Kumar Gupta, an entry operator. The assessee submitted before the ld. AO vide letter dated 16.09.2021, that assessee received only ₹35,00,000/- from the said company namely M/s Shivahari Distributors Pvt. Ltd. and not ₹1,05,00,000/- as noted by the ld. AO in the reasons recorded for reopening the assessment. Finally, the ld. AO, after rejecting the contentions of the assessee, treated the said amount as unexplained cash credit u/s 68

In the appellate proceedings, the ld. CIT (A) partly allowed the appeal by deleting the addition to the extent of ₹70,00,000/- while sustaining the addition to the extent of ₹35,00,000/- by observing and holding that the assessee has only received ₹35,00,000/- from sale of shares of Dhankuber Infra P. Ltd. and Modakpriya Merchandise P. Ltd. for a consideration of ₹15,00,000/- and ₹20,00,000/- respectively. The ld. CIT (A) also recorded that since the assessee received ₹35,00,000/- from M/s Shivahari Distributors Pvt. Ltd., which remained unexplained and thus partly justified the addition made by the ld. Assessing Officer. The ld. AR vehemently submitted before us that this is a case of total non-application of mind by the ld. AO at the time of recording of reasons and a patent case of borrowed satisfaction. The ld. AR stated that the ld. AO received the information that the assessee is a beneficiary of ₹1,05,00,000/- from various shell companies, managed and controlled by Shri Dilip Kumar Gupta an entry operator vide letter dated 02.08.2018. Thereafter in second para the ld. AO noted that as per the seizure and search action u/s 132 of the Act conducted in the residence and office premises of Shri Dilip Kumar Gupta on 15.12.2016, statement of Shri Dilip Kumar Gupta was recorded and he admitted to have been engaged in providing accommodation entries in the guise of share purchase or unsecured loans and bogus billing in lieu of commission. The ld. AO stated that M/s BNA Commerce Pvt. Ltd. is one of the beneficiaries who received ₹1,05,00,000/- from M/s Shivahari Distributors Pvt. Ltd. managed and controlled by Shri Dilip Kumar Gupta. Thereafter in para 3, the ld. AO noted that he has reasons to believe that above income has escaped

The ld. DR on the other hand relied on the order of the lower authorities by submitting that the information received was acted upon and the case was reopened u/s 148 of the Act. The ld. DR submitted that in the reasons recorded the amount received was shown at ₹1,05,00,000/-. In the assessment proceeding the same was verified and the exact amount of ₹35,00,000/- was added to the income and therefore there was no anomaly or deficiency in the reasons recorded. Therefore, reopening of assessment may kindly be upheld by dismissing the ground raised by the assessee.

We have heard the rival contentions and perusing the materials available on record. We find that in this case notice u/s 148 of the Act was issued on 13.03.2020, which was complied with by the assessee by filing the return of income on 08.08.2020. We note that during the year the assessee has received ₹35,00,000/- from M/s Shivahari Distributors Pvt. Ltd. as sale proceed for sale of shares of two “Notice under Section 142(2).read with section 147 of the Income tax Act. 1961C Act Dear Taxpayer, Thank you for filing your return of income for Assessment Year 2 for Assessment Year 2013-14 in response to notice under section 148 of the Act, vide Ack no 450805111080820 on 08/08/2020 2. While acknowledging the care and diligence you have taken in preparing the return, there are certain issues as mentioned below which need further clarification- Issues as per reasons recorded for reopening The information is in possession of the department in respect of M/S. BNA Commerce Pvt. Ltd PAN-AABCB0727D for the A.Yr. 2013-14 received fund amounting to Rs. 1,05,00,000/- from various shell companies managed and controlled by Shri Dilip Kumar Gupta, an entry operator. The same was received from the Office of ADIT(Inv). Unit- 3(4), Kolkata vide No. 3047 dated 02.08.2018 A search and seizure operation u/s. 132 was conducted in the residence and various office premises of Shri Dilip Kumar Gupta on 15/12/2016, During the course of search and seizure operation, statement of Shri Dilip Kumar Gupta was recorded on oath and vide statement he admitted to be involved in the activities of providing accommodation entries in the guise of Shares purchase, unsecured loans and bogus billing in lieu of commission. He facilitated the meeting of parties who need bogus bills and parties who provided the entry of bogus bills without involving himself or his dummies in the process in lieu of commission. M/s BNA Commerce Pvt. Ltd. PAN-AABCB0727D is one of the beneficiary received Rs.1,05,00,000/- from M/s Shivhari Distributors Pvt. Ltd managed and controlled by Shri Dilip Kumar Gupta. Under the circumstances, I have reason to believe that the above income of the assessee has escaped assessment within the meaning of provisions of sec. 147 of the I.T. Act, 1961.

On perusal of the above reasons, it is clear that the ld. AO has simply reproduced the information received from the investigation Wing has been used as it was for re-opening the assessment and

In the result, the appeal of the assessee is allowed.