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Facts
The assessee filed a revised return declaring income. The Assessing Officer (AO) initiated reassessment proceedings under Section 147/148 based on information about alleged transactions with Mahalaxmi Marketing. The AO made an addition of Rs.26,32,178/-.
Held
The Tribunal held that the reassessment proceedings were not invalid as the assessee did not object to the notice under Section 148. Regarding the merits, the Tribunal found that the impugned sum represented sales of Turmeric recorded in the assessee's books, and the profit was already declared.
Key Issues
Whether the reassessment proceedings were validly initiated and whether the addition made on account of alleged transactions was justified.
Sections Cited
143(3), 147, 148
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Income Tax Appellate Tribunal, PUNE BENCHES “B”, PUNE
Before: DR.MANISH BORAD & SHRI VINAY BHAMORE
आदेश / ORDER
PER DR. MANISH BORAD, ACCOUNTANT MEMBER :
The captioned appeal at the instance of assessee pertaining to A.Y. 2010-11 is directed against the order dated 28.03.2024 framed by ld.Addl/JCIT(A)-1, Kolkata arising out of Assessment order dated 30.11.2017 framed u/s.143(3) r.w.s.147 of the Income-tax Act, 1961 (in short ‘the Act’).
This is a recalled matter in as much as earlier order dated 27.09.2024 passed by the Tribunal has been recalled vide M.A.No.66/PUN/2024 dated 07.02.2025.
Assessee has raised following grounds of appeal :
“1. The learned CIT(A) erred both in law and in facts in initiating reassessment proceedings based on the information relating to some other person and resorted to reassess income on the basis of incorrect information.
2. The learned CIT(A) erred both in law and in facts in making an addition of Rs.26,32,178/- without appreciating the facts of the case.
3. The appellant prays that addition of Rs.26,32,178/- made to the income of the appellant be deleted.
4. The appellant craves leave to add, alter, modify or substitute any ground of appeal at the time of hearing.”
Brief facts of the case are that the assessee is an individual and income of Rs.29,46,300/- declared in the return filed for A.Y. 2010-11 on 24.05.2010 which was subsequently revised on 22.11.2010 declaring income at Rs.29,53,302/-. Based on the information about the alleged transactions of the assessee with Mahalaxmi Marketing amounting to Rs.26,32,178/- assessee was issued notice u/s.148 of the Act followed by carrying out of re-assessment proceedings u/s.147 of the Act. During the course of assessment proceedings, assessee submitted that the alleged transactions are forming part of the regular books of account and the profit from trading activities have already been disclosed. However, ld. Assessing Officer was not satisfied and concluded the proceedings by making addition of Rs.26,32,178/- assessing income at Rs.55,85,480/-.
Aggrieved assessee preferred appeal before ld.CIT(A) but failed to succeed. Now the assessee is in appeal before this Tribunal.
Ld. Counsel for the assessee vehemently argued referring to the paper book running into 77 pages and firstly contended that the re-assessment proceedings are bad in law and on merits she stated that the transactions are duly recorded in the books of account and therefore no addition was called for.
On the other hand, ld. DR supported the orders of the lower authorities.
We have heard the rival contentions and perused the record placed before us. So far as the legal issue raised by the assessee challenging the validity of notice u/s.148 of the Act and the assessment proceedings, we fail to find any merit because the information was received by the ld. AO for the transaction between the assessee and Mahalaxmi Marketing. However, after recording of reasons, assessee failed to raise any objection challenging the reasons recorded and it left no option with the AO except to proceed for the re-assessment proceedings. Assessee could have challenged the validity of notice u/s.148 of the Act by requesting for the reasons recorded but in absence thereof the assessee has accepted the notice u/s.148 of the Act and then re-assessment proceedings have been carried out validly. Therefore, Ground No.1 raised by the assessee challenging the validity of the assessment proceedings is hereby dismissed.
Coming to the merits of the issue raised by the assessee in Ground Nos. 2 and 3, we find that the transactions in question amounting to Rs.26,32,178/- comprises of following three amounts :
Sr.No. Date Amount 1 29.05.2009 Rs.12,83,071/- 2 14.10.2009 Rs.8,78,000/- 3 21.10.2009 Rs.4,71,107/- Total Rs,26,32,178/- We note that assessee during the course of re-assessment proceedings has submitted that the above referred sum is against sale of Turmeric to Mahalaxmi Marketing. It is also submitted that the sales are forming part of the gross turnover and approx. 10% the net profit has been declared in the income-tax return. To verify this contention, we have gone through the paper book and also gone through the ledger account of Mahalaxmi Marketing placed at pages 27 to 38 of the paper book. We have also examined the dates of cheques referred above in the said ledger account and find that the same forms part of the total transactions carried out during the year and the cheques received by the assessee are against the sales made to Mahalaxmi Marketing. We have also gone through the Turmeric trading account as well as Balance sheet and Profit and Loss account. We find merit in the contention of ld. Counsel for the assessee that the alleged sum of Rs.26,32,178/- is the sale consideration received against the sales recorded in the books of account towards sale of Turmeric to Mahalaxmi Marketing. We also notice that the assessee has duly offered the tax on the income earned from the said transactions. Therefore, since the transactions have been duly recorded in the books and net profit of approx. 10% has been declared by the assessee, we fail to find any merit in the addition made by the Assessing Officer. Finding of ld.CIT(A) is set aside and the impunged addition of Rs.26,32,178/- is hereby deleted. Ground Nos. 2 and 3 raised by the assessee are allowed.
Ground No.4 raised by the assessee is general in nature which requires no adjudication.
In the result, appeal filed by the assessee is partly allowed.
Order pronounced on this 03rd day of September, 2025.