DCIT, CENTRAL CIRCLE - 4(2), KOLKATA, KOLKATA vs. JEENMATA REAL ESTATE ADVISORS PRIVATE LIMITED, MUMBAI
Before: SHRI RAJESH KUMAR, AM & SHRI SONJOY SARMA, JM DCIT, Central Circle-4(2), Kolkata Aaykar Bhavan Poorva, 5th Floor, Room No.506, 110, Shantipally, Kolkata-700107, West Bengal Vs. Jeenmata Real Estate Advisors Private Limited 21 & 22, 2nd Floor, Plot No.230, Sakhar Bhawan, Ramnath Goenka Marg, Nariman Point, Mumbai-400021, Maharashtra (Appellant) (Respondent) PAN No. AACCJ0774D
Per Rajesh Kumar, AM:
This is an appeal preferred by the Revenue against the order of the Commissioner of Income-tax (Appeals), Kolkata (hereinafter referred to as the “Ld. CIT(A)”] dated 19.02.2024 for the AY 2017-18. 02. At the outset, we note that there is a delay of 12 days in filing the appeal. After hearing both the parties and after perusing the reasons as stated in the condonation petition duly supported with affidavit, the bench considered the delay to be attributable to the reasons which were cogent ,bonafide and genuine. Accordingly, the delay for 12
days is condoned and appeal is taken for adjudication.
Jeenmata Real Estate Advisors Private Limited; A.Y. 2017-18
The Revenue has challenged the order of ld. CIT (A) on the following grounds:- “1. That on the facts and in the circumstances of the case and in law, Ld. CIT(A) has erred in deleting the addition made u/s. 68 on account of sale consideration from sale of shares amounting to Rs. 7,85,95,921/- as unexplained cash credit without appreciating the material brought on record and facts evaluated by the A.O. in the assessment order. 2. That on the facts and in the circumstances of the case and in law, the Ld. CIT(A), Kolkata has erred in deleting the addition u/s. 69C r.w.s. 115BBE of the Act amounting to Rs. 39,29,796/-. 3. That the Ld. CIT(A) has erred in deleting the additions made u/s.68 & 69C of the I.T. Act, 1961 without appreciating that the Assessing Officer had rightly made the additions in accordance with explanation 3 to section 147 which was inserted by the Finance Act, 2009 with effect from 01.04.1989. 4. The on the judgment of the case law as cited by the Ld. CIT(A) cannot be accepted as it does not squarely applicable to the grounds of appeal filed by the assessee. 5. That the Department craves leave to add, modify or alter any of the ground(s) of appeal and / or adduce additional evidence at any time during the appeal proceedings.” 04. The only issue raised at the time of hearing was whether the addition made by the ld. AO was valid which not subject matter of the reasons recorded u/s 148(2) of the Act and since no addition has been made in respect of the item which was subject matter of reasons recorded, therefore, whether the ld. AO has juri iction to make any other addition which the ld. AO has noticed during the course of hearing. 05. Facts in brief are that the assessee filed its return of income on 26.10.2017, declaring total income of ₹10 and book profit u/s 115JB of the Act at ₹44,918/-. The return was processed u/s 143(1) of the Act and thereafter, the ld. AO received information from DCIT (Investigation), Wing-4(1), Kolkata, vide letter dated 12.09.2018, that the assessee company has received funds from Jamakharchi/ paper companies, operated by Praveen Agarwal, a Kolkata based entry Jeenmata Real Estate Advisors Private Limited; A.Y. 2017-18
operator. Accordingly, the case of the assessee was reopened u/s 147
of the Act by issuing notice u/s 148 of the Act on 7.03.2019. The assessee complied with the said notice by filing return of income on 12.03.2019, declaring same income as was declared in the original return filed u/s 139(1) of the Act. Thereafter, statutory notices were issued along with questionnaire, which were responded and complied by the assessee during the course of assessment proceedings. During the course of assessment proceedings, the ld. AO accepted the contention of the assessee with regard to the transaction with Kamaldhan Merchandise Pvt Ltd., for which the income was stated to have a escaped assessment in the reasons recorded. Accordingly, no addition was made qua the said amount of ₹81 lacs. However, during the course of assessment proceedings, the ld. AO noted that the assessee has received share consideration from sale of unlisted shares to the tune of ₹7,85,95,921/- of Jamakharchi/ paper companies operated by Praveen Agarwal and Mukesh Kumar Agarwal and treated the same as unexplained u/s 68 of the Act and added to the total income of the assessee. Similarly, an addition of ₹39,29,796/- was made towards commission for arranging this accommodation entries at the rate of 5%.
06. The assessment was challenged before the ld. CIT (A), who allowed the appeal of the assessee on legal issue on the ground that no addition was made in respect of ₹81 lacs the alleged transactions made by the assessee with Kamaldhan Merchandise Pvt Ltd. In the reasons recorded for which the income has escaped assessment, and therefore, the ld. AO has no juri iction to make other additions which he came across during the course of assessment proceedings. The ld.
CIT (A) while allowing the appeal of the assessee relied on series of decision namely; Ranbaxy Laboratories Ltd. Vs. CIT[2011] 12
Jeenmata Real Estate Advisors Private Limited; A.Y. 2017-18
taxmann.com 74 (Delhi),CIT Vs. Jet Airways (I) Ltd.[2021] 133
07. While the ld DR relied on the assessment order heavily and prayed for restoring the same by allowing the appeal of the revenue, the ld. AR prayed that the order passed by the ld. CIT (A) is reasoned and speaking one passed after following the ratio laid down in the above decisions and therefore , the appeal of the revenue may kindly be dismissed.The ld AR argued that it is settled legal position that no addition can be made by the AO for the items of income which he came accross during re-assessment proceedings when he accepted the plea of the assessee with regard to the items of income which were subject matter of the reasons u/s 148(2) of the Act. The ld AR contended that that once the addition is not made in respect of the item of income which was subject matter of the reasons recorded by the AO then no other addition could be made to the income of the assessee. The Ld. AR relied on the decision of Hon’ble juri ictional
High Court decision in the case of CIT Vs. M/s. Infinity Infotech Parks
Ltd. in GA No. 1736 of 2014 dated 15.11.2022 and the decision of Coordinate Bench in the case of Ganesh Steel & Alloys in ITA No.
929/Kol/2023 dated 11.06.2024. The Ld. AR, therefore, prayed that the reopening of assessment may kindly be quashed that no addition was made for the reasons recorded in the assessment framed.
08. We have heard the rival contentions and perused the materials available on record and observe that the AO has re-opened the assessment u/s 147 read with section 148 of the Act after recording reasons to believe qua the income which has escaped assessment. We
Jeenmata Real Estate Advisors Private Limited; A.Y. 2017-18
further note that the AO having convinced after examining the evidences filed by the assessee during assessment did not make any addition for while framing the assessment did not make any addition for in the re-assessment order in respect of funds of Rs. 81.00 Lacs alleged to be received from shell companies operated by Shri Praveen
Kumar which was the subject matter of the reasons recorded. The AO however made two additions one sale consideration from sale of unlisted shares to the tune of ₹7,85,95,921/- of Jamakharchi/ paper companies operated by Praveen Agarwal and Mukesh Kumar Agarwal and second of ₹39,29,796/- towards commission for arranging this accommodation entries at the rate of 5%. We note that both these items were not part of the reasons recorded u/s 148(2) of the Act.
Therefore, when no addition is made for the escaped income as per the reasons recorded , then the AO has no juri iction to make any other addition in respect of item of income which has escaped assessment as discovered by the AO during the assessment. Therefore we do not find any reason to interfere with the appellate order.The case of the assessee finds support from the decision of Hon’ble juri ictional High Court in the case of M/s. Infinity Infotech Parks Ltd.
(supra) wherein the Hon’ble Calcutta High Court has held by following the decision of Hon’ble Bombay High Court in the case of CIT Vs. Jet
Airways (I) Ltd. (supra) and also Hon’ble Delhi High Court decision in the case of Ranbaxy Laboratories Vs. CIT (supra) that where the income the escapement of which was the foundation for recording of reasons to believe, is not assessed or reassessed in the order u/s.
147, then it is not opened to the AO to independently assess any other income, which comes to his notice subsequently during the course of re-assessment proceedings. The similar ratio has been laid down by the Coordinate Bench in Ganesh Steel & Alloys (supra) after
Jeenmata Real Estate Advisors Private Limited; A.Y. 2017-18
following the decision of the Hon’ble Bombay High Court in the case of CIT Vs. Jet Airways (I) Ltd. (supra). Accordingly, we are inclined to uphold the order of ld CIT(A) by dismissing the appeal of the revenue.
09. In the result, the appeal of the Revenue is dismissed.
Order pronounced in the open court on 17.01.2025. (SONJOY SARMA)
(RAJESH KUMAR)
(JUDICIAL MEMBER)
(ACCOUNTANT MEMBER)
Kolkata, Dated: 17.01.2025
Sudip Sarkar, Sr.PS
Copy of the Order forwarded to :
The Appellant 2. The Respondent 3. CIT 4. DR, ITAT, 5. Guard file. BY ORDER,//
Sr. Private Secretary/ Asst.