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Income Tax Appellate Tribunal, KOLKATA BENCH “A”, KOLKATA
Before: SHRI A.T. VARKEY & SHRI GIRISH AGRAWAL
O R D E R
PER GIRISH AGRAWAL, ACCOUNTANT MEMBER:
This appeal is directed against the order passed by the Ld. CIT(A)- 17, Kolkata for A.Y. 2011-12 vide order dated 16.09.2020.
None appeared on behalf of the assessee.
From the perusal of impugned order, it is observed that the appellant has taken additional grounds of appeal before the Ld. CIT(A) which are reproduced as under:
i. That the Ld. Assessing Officer was grossly erred in reopening the assessment merely on the basis of information from Investigation Wing. ii. That the reopening of assessment made by Ld. AO is not at as per law.
Saraf Silk Exports (P) Ltd. A.Y. 2011-12 iii. That Ld. Assessing Officer failed to formulate independent belief and reopened the assessment on borrowed satisfaction.” 4. In the additional grounds taken before the Ld. CIT(A) as well as before us in ground no. 1 & 2, the appellant has challenged the legality of the assessment proceedings made u/s 147 r.w.s. 148 of the Income- tax Act, 1961 (hereinafter referred to as the ‘Act’).
From the perusal of para 12 of the impugned order of Ld. CIT(A), it is noted that the appellant made submissions in respect of the additional grounds (supra) in the course of appellate proceedings before the Ld. CIT(A) which are reproduced as under for ease of reference:
“12. Ground No.3 and Additional Ground taken 12.1. Appellant Company has filed its original return of income on 18/09/2011 declaring a total income of Rs.2,44,588/-. 12.2. Assessment in this case was reopened u/s 148. Appellant applied twice to Ld. A.O. to furnish the copy of reasons recorded for reopening of the assessment by letter dated 07/09/2017 and 23.08. 2019 (copy enclosed). 12.3. Appellant sought following documents from Ld. A.O. : a) Reasons Recorded to issue notice U/s 148. b) Statement of Sri Praveen Agarwal recorded during the search (as mentioned in the assessment order). c) Ledger copy of assessee company in the books of Praveen Agarwal (as mentioned in the assessment order). d) Certified copy of the order sheet recording the proceeding of the assessment. 12.4. Despite of repealed request and personal visit to the office of La. A.O., same were not provided till date to the appellant. 12.5. Not providing the reasons recorded for reopening of assessment in itself is major irregularity in the income tax proceeding. 12.6. From the body of assessment order reasons for reopening which could be assimilated are as under: “A search and seizure operation was conducted at the business premises of Sri Praveen Agarwal and his group companies at Kolkata. In his statement recorded in course of search. Sri Agarwal accepted on oath that he had registered a large no. of paper companies with bogus share capital and premium which have subsequently been for commission. Sri Agarwal also accepted that he has given entries to bogus expenses like commission, contractual expenses, professional charge etc. Prior to sale have been subsequently been liquidated and realization have been credited in Saraf Silk Exports (P) Ltd. A.Y. 2011-12 the bank account for sold companies. The source of such realizations have not been explained. In this case, the assessee Co. has raised unexplained paid up share capital of Rs.67,37,520/- and share premium of Rs.1,69,00,000/-. Moreover on perusal of the ledger copy of the assessee Co. in the books of Sri Praveen Agarwal that the assessee Co. booked bogus property sale of Rs.85,00,000/- during the F. Y. 2010-11. In view of above, there was reason to believe that the income of the assessee has escaped assessment and notice u/s 148 was duly issued and served on the assessee. 12.7. We have already raised the ground as to legality of the reopening of assessment in the additional ground of appeal taken. 12.8. a) It could be seen that Ld. Assessing Officer merely on the basis of information from Investigation Wing proceeded to reopen the assessment without independently applying his mind and forming the belief that income has escaped assessment. b) Our this submission gets strength that Ld. AO could have simply well verified from assessment records and E-ITR filed that the same amount of share capital and share premium were coming/appearing from earlier years and thus no money was received during the year under consideration and should not have been the part of reason for reopening. c) There are catena of judgement that merely on borrowed satisfaction and merely on information from investigation wing, assessment cannot be reopened. Therefore, reopening itself is bad in law effecting the assessment too as bad in law. 12.9. It is also not clear whether Praveen Agarwal has named the appellant in the statement recorded during search and seizure or Ld. AO in a generalized way reopened the assessment whosoever had transaction with him or his companies. Reopening of assessment on the basis of generalized statement without naming the particular person/company is again improper and not as per law. 12.10. Ld. Assessing Officer has used the statement of Praveen Agarwal or documents (like ledger copy from his books) taken behind the back of the appellant which as per the decided several case laws should not have been used without making available the copies of same to the appellant and confronting such person to the appellant. This is again a big flaw in the assessment making the addition void ab-initio and not as per law.”
It is further noted that Ld. CIT(A) while giving decision in the impugned order in para 4, gave his findings on grounds of appeal
nos. 1, 2, 3 and 4. It is also noted that Ld. CIT(A) has not discussed or considered the aforesaid submissions of the appellant assailing the Saraf Silk Exports (P) Ltd. A.Y. 2011-12 action of the Ld. AO of reopening the assessment and has not given any finding thereon. In other words, the Ld. CIT(A) has not adjudicated the additional grounds taken by the appellant as reproduced (supra).
7. We find that the appellant by raising the additional grounds (supra) challenged the legality / very reopening of the assessment which if found valid, goes to the root of the matter. Since the Ld. CIT(A) has ignored or failed to adjudicate the legal issue of reopening of assessment; in the interest of justice and fair play we set aside the impugned order and restore the appeal back to the file of Ld. CIT(A) directing him to adjudicate the legal issue raised by way of additional grounds (supra) and to decide the same by passing a reasoned order in accordance with law. Needless to say that reasonable opportunity of being heard be provided to the appellant for representing its case; and the appellant is directed to be diligent and make its submissions so that the Ld. CIT(A) is able to expeditiously adjudicate the legal issue. Accordingly, the appeal of the assessee is allowed for statistical purposes.
In the result, the appeal of the assessee is allowed for statistical purposes as aforesaid.
Order pronounced in the open court on 23.02.2022.