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Facts
The assessee's case for AY 2013-14 was reopened under Section 147 of the Income Tax Act based on information that ₹25 lacs received from M/s Pramodanah Goods Pvt. Ltd. constituted unexplained cash credit under Section 68. The Ld. CIT(A) upheld the assessment order after the assessee failed to respond to opportunities during appellate proceedings.
Held
The Tribunal held that the Assessing Officer reopened the assessment on borrowed satisfaction without independent application of mind or recording a clear finding as to the escapement of income. Citing precedents, it was decided that the reopening was invalid and a nullity in law, thus quashing the assessment order.
Key Issues
Whether the reopening of assessment under Section 147/148 was valid when the Assessing Officer failed to apply an independent mind and acted solely on borrowed information without establishing a clear link to escaped income.
Sections Cited
147, 148, 68, 148(2)
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, “SMC” BENCH, KOLKATA
Before: SHRI RAJESH KUMAR, AM Shri Somnath Ghosh & Shri Sarnath Ghosh, ARs
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 15.01.2024 for the AY 2013-14.
At the outset, I observe that there is a delay of 196 days in filing the appeal by the assessee for which condonation petition was filed. It was stated in the condonation petition that Registered office of the company was transferred from Kolkata to Mumbai and thereafter the income tax jurisdiction was also transferred from Kolkta to Mumbai and the taxation matters were assigned to Chartered Account Shri Pawan Mallawat, when the CIT passed the order. The said counsel of the assessee suggested that appeal has to be filed in Mumbai Beeches. However, another counsel suggested that the appeal has to be filed in Kolkata as
After considering the reasons stated before us and rival contentions of the parties, I am of the view that the delay in filing the appeal is genuine and for bonafide reasons and therefore, the same is condoned.
The only issue raised at the time of hearing by the counsel of the assessee is against the order of ld. CIT (A) upholding the order of ld. AO where the jurisdiction u/s 147 of the Act was invalidly exercised.
The facts in brief are that the assessee filed the return of income on 27.09.2013, declaring total income at ₹7,760/-. The case of the assessee was reopened u/s 147 of the Act by issue of notice u/s 148 of the Act on 10.3.2021, but there was no compliance to the said notice pertinent to state that the assessee’s case was reopened u/s 147 of the Act after a specific information was received by the ld. AO that assessee has ploughed back his own funds through accommodation entries from M/s Pramodanah Goods Pvt. Ltd., from whom the assessee has received ₹25 lacs. Accordingly, the statutory notices including the questionnaire were issued. There was no compliance on the part of the assessee and finally, the amount received from the said company was treated as unexplained cash credit u/s 68 of the Act.
In the appellate proceedings, the ld. CIT (A) dismissed the appeal of the assessee when the assessee failed to respond on various opportunities granted by the ld. CIT (A).
After hearing the rival contentions and perusing the materials available on record, I find that the assessee has received ₹25 lacs from the above said party in liew of sale of shares during the year. Pertinent to state that these shares were brought in the preceding assessment year. The “9. We have heard the rival submissions and perused the material on record and the reason recorded u/s 148(2) of the Act a copy of which is placed at page 28 of PB. We find from the perusal of the reasons that AO has simply discussed the issue that information was received from ADIT (Inv), Unit-4(1), Kolkata vide letter dated 26.03.2018 and the fact that the assessee has received Rs. 10,00,000/- from Surya Commotrade Pvt. Ltd. through its bank account. We note that the AO has discussed in reason the transaction in the bank account of third party and no where recorded a satisfaction that the amount which is received by the assessee of Rs. 10,00,000/- has escaped assessment. Thus, we find merit in the contentions of the Ld. A.R. that reason recorded are based upon presumption and surmises without recording a clear cut finding as to escapement of income. The case of the assessee finds support from the decision of Co-ordinate Bench of Gauhati in the case of MLB Commerical Pvt. Ltd. (supra). The operative part is reproduced as under: “8. I have heard the rival contentions and gone through the records. In this case as noted above, the Assessing Officer received some information from the Investigation Wing that the assessee had brought back some unaccounted income to the tune of Rs.4,00,000/- through shell companies. However, which
In the result, the appeal of the assessee is allowed on legal issue.
Order pronounced in the open court on 24.04.2025.