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Facts
The Revenue appealed against the CIT(A)'s order deleting additions made under sections 68 and 69C. The assessee's case was reopened based on information regarding funds received from 'Jamakharchi/paper' companies. However, the Assessing Officer (AO) initially accepted the transaction with Kamaldhan Merchandise Pvt Ltd. but later made additions regarding share consideration and commission.
Held
The Tribunal held that the AO had no jurisdiction to make additions that were not part of the original reasons recorded for reopening the assessment. If the escaped income forming the basis of the reasons is not assessed, the AO cannot independently assess other income discovered later.
Key Issues
Whether the Assessing Officer has the jurisdiction to make additions beyond the scope of the reasons recorded for reopening the assessment under Section 147 of the Income Tax Act.
Sections Cited
68, 69C, 115BBE, 147, 148, 139(1), 143(1), 148(2)
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Income Tax Appellate Tribunal, “A” BENCH, KOLKATA
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.
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.
“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/-.
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.
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 jurisdiction to make any other addition which the ld. AO has noticed during the course of hearing.
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
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 jurisdiction 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
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 jurisdictional 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 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.
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
In the result, the appeal of the Revenue is dismissed.
Order pronounced in the open court on 17.01.2025.