INCOME TAX OFFICER WARD 4 1 KOLKATA, KOLKATA vs. PANEL COMMERCE PVT LTD, KOLKATA

The facts in brief are that the assessee is engaged in the business of trading in equity shares and finances. The assessee filed the return of income on 10.09.2023, declaring total income at ₹27,180/-. Thereafter, the ld. AO received information that assessee had transacted with shell company M/s Brahma Tradelinks Pvt. Ltd., who was not having any real business activity at all. The ld. AO further noted that the genuineness of the transactions and identity, creditworthiness of the party from whom the assessee company received money could not be verified and therefore, transactions could not be treated as genuine. The ld. AO noted that the assessee company was beneficiary of accommodation entries given by M/s Brahma Tradelinks Pvt. Ltd. Accordingly, the case of the assessee was reopened u/s 147 of the Act by issuing notice u/s 148 on 16.03.2020, after obtaining approval from the competent authority. The said notice was complied with by filing the return of income on 09.08.2020. Thereafter, the statutory notices were issued and served upon the assessee. Finally, an addition of ₹6,19,60,000/- crores were made on account of sale of shares by the assessee company to M/s Brahma Tradelinks Pvt. Ltd besides making addition of Rs. 6,55,000/- on account of cash deposits.

The ld. CIT (A) partly allowed the appeal of the assessee by confirming the addition to the extent of 1,25,00,000/- addition made on account of sale of shares , whereas the remaining addition of ₹4.94 crores has been deleted. Now, the Revenue is in appeal before us against the order of ld. CIT (A) partly deleting the addition, whereas

The ld. Counsel for the assessee at the outset submitted that the appeal of the assessee in the very same assessment year has been allowed by the Tribunal in for A.Y. 2013-14 vide order dated 08.02.2024, wherein the reopening of assessment has been quashed. The ld. AR therefore prayed that the appeal of the Revenue against the same appellate order passed by the ld. CIT (A) becomes infructuous and may kindly be dismissed as the very basis of the assessment has been demolished by the Tribunal.

The ld. DR on the other hand submitted that it is true that the Tribunal has decided legal issue in favour of the assessee by quashing the reopening of assessment, however, the appeal of the Department could not be clubbed with the assessee’s appeal and therefore, could not be decided together with the assessee’s appeal. The ld. DR prayed that the department has already moved a Miscellaneous Application for recalling the order of the Tribunal in assessee’s own appeal so that both the appeals could be clubbed and heard together.

After hearing the rival contentions and perusing the materials available on record, we find that the Tribunal vide order dated 08.02.2024, has quashed the reopening of assessment in this very assessment order meaning thereby that the very basis of the appeal of the Revenue has been demolished. For the sake of ready reference, the operative part of the said order of the ITAT is extracting below:-

In the result, both the appeal of the Revenue and CO of the assessee are dismissed.