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Income Tax Appellate Tribunal, “B” BENCH, KOLKATA
Before: SHRI SANJAY GARG, JM & SHRI RAJESH KUMAR, AM
These appeals are preferred by the assessee against the order of the Commissioner of Income-tax (Appeals) (hereinafter referred to as the “Ld. CIT(A)”] even dated 29.06.2024 for the AYs 2018-19 & 2021- 22.
In ground no. 1 to 4, the assessee has challenged the validity of reassessment proceedings on the ground that the assessee was not having any transactions with any party as mentioned in show cause notice u/s 148A(b) of the Act and that the order passed u/s 148A(d) of the Act, initiated the reassessment proceedings in respect of that
The facts in brief are that the assessee filed the return of income on 29.09.2018, declaring total income of ₹3,24,05,910/-, which was selected for scrutiny and assessment was completed vide order dated 23.04.2021 passed u/s 143(3) by assessing the total income at ₹4,75,81,150/-. Thereafter, search operation u/s 132 of the Act was conducted on 07.12.2021 on Diach Group. M/s Diach Chemicals & Pigments Pvt. Ltd. is a Kolkata based manufacturer and supplier of pure lead and lead alloys such as Antimonial Lead Alloy, Calcium Lead Ally, High Tin Lead Alloy, Lead Oxide, High Antimonial Lead and Lead tin Alloy. The notice u/s 148 of the Act was issued on 31.03.2022, after the prior approval of the competent authority the said notices were complied with by filing the return of income on 04.05.2022. Therefore, the statutory notices issued u/s 142(1) of the Act dated 29.09.2022 along with questionnaire. Finally, the assessment was completed u/s 147 of the Act vide order dated 28.03.2023, making an addition of ₹9,68,45,467/- and addition on account of PF and ESI contribution ₹ 7,34,624/-. The assessee challenged the validity of the reassessment proceedings for which CIT (A) after taking into consideration the contention and submission of the assessee, dismissed the appeal of the assessee by observing and holding as under:-
“5.2.2. The AO had passed order u/s 148A(d) saying that the ass assessee has obtained bogus bills from Mr. Deepak Upadhaya who was having more than two dozens dummy companies. However, the AO mistakenly communicated reasons u/s 148A(b) of the Act to the assessee with the facts of unrelated party which is a mistake happened inadvertently. But the AO has communicated proper reasons while passing
After hearing the rival contentions and perused the materials available on record. We find that undisputedly the notice u/s 148AB of the Act has been issued by the ld. AO on the ground that transactions worth ₹50,00,000/- with M/s Savitri Ispat India Pvt. Ltd. were made which were alleged to be bogus, therefore, order u/s 148A(d) was passed on 31.03.2022, wherein sum of ₹1,69,40,316/- as escaped assessment in the hands of the assessee and accordingly, issue notice u/s 148 of the Act was issued and finally, the ld. AO after making enquiries in the assessment proceedings made addition of ₹9,68,45,467/- u/s 69C of the Act by disallowing the entire purchase which relates to non-failure of return of income.
In the appellate proceedings, the ld. CIT (A) after examining the details and evidences furnished by the assessee came to the conclusion that the assessee had filed the copies of ledger account of the parties, copy of bill issued by them, bank statement showing “6. The details of such beneficiary which was identified from the analysis of HDFC a/c no. 00082340013465 of M/s Betastar Consultancy Services LLP and a/c по. 00082340021615 of M/s Ratnanidhi Advisory Services LLP was as under:
Sl Beneficiaries Name Amount F.Y. PAN Jurisdiction No.
Savitri Ispat India Pvt. Ltd. ₹50,00,000 2017-18 AAICS3905R Central Circle-4(2) Kolkata 7. In view of above evidences on records, it is seen that M/s Savitri Ispat India Pvt. Ltd. has taken accommodation entry and brought back their unaccounted income into their regular books of accounts in the guise of bogus share/share premium, unsecured loans etc., amounting to Rs.50,00,000/- during the F.Y. 2017-18 relevant to the A.Y. 2018-19.In view of the above, income chargeable to tax of Rs.50,00,000/-has escaped assessment in A.Y. 2018-19 in the hands ofM/s Savitri Ispat India Pvt. Ltd.
You are therefore requested to show cause as to why a notice u/s 148 of the I.T. Act should not be issued on the basis of the above narrated evidence-based information which suggests that income chargeable to tax has escaped assessment in your case for the A.Y. 2018-19 amounts to Rs.50,00,000/-.
Your reply should reach this office by 21.03.2022 positively failing which it will be presumed that you have no objection if notice u/s 148 of the Income-tax Act, 1961 (the Act) be issued on the basis of the above stated reasons.”
Therefore, the order u/s 148A(d) of the Act was passed dated 31.03.2022, wherein the ld. AO noted as under:-
(iii) A perusal of the impugned orders issued under Section 148A(d) clearly shows that these contentions of the assesses have not been addressed at all. In fact, at paragraph 6 of the order, non-disclosure of the said transactions has been noted as one reason for re-opening. It is also found that there is a definitive finding that the entire scheme of demergers, merger and amalgamation is done with a sole intention of avoiding tax liability and that the transactions were independently verified to be nothing but ‘round trip financing lacking commercial substance and not for bonafide purposes’. This finding is clearly well beyond what is contained in the notice issued under Section 148A(b) and could not have been rendered without giving the petitioners adequate opportunity to rebut the assertion. In fact, coming to a definitive conclusion that there is avoidance of tax liability through independent verification but not disclosing the reasons or materials based on which such findings could be rendered and without giving an opportunity to the petitioners to put their case clearly. Thus, there is a gross violation of the principles of natural justice. (iv) It hardly needs to be stated that the order to be passed under Section 148A(d) cannot transcend the scope of proposal notice under Section 148A(b) inasmuch as such a notice happens to be the foundation on the basis of which such an order can be passed, and not otherwise. That is how the statutory scheme is devised. Definitive conclusions as to grounds that are not indicated in the proposal notice cannot be said to be in line with the scheme and purpose of Section 148A. This apart, non- consideration of the reply relating to Section 56 and Section 47 would make the order also violative of the mandatory requirements of Section 148A. This view is supported by the latest Division Bench decision of Calcutta High Court in SOMNATH DEALTRADE PRIVATE LIMITED. VERSUS UNION OF INDIA & ORS [2023] 455 ITR 720 (Cal) wherein it has been observed as under: “…The assessing officer no doubt has referred to the assessee’s reply dated 9th April, 2022 but there is no discussion as to the objection raised by the assessee in their reply. There is no discussion on the documents, which were placed by the assessee along with the reply with soft copies uploaded in the e-proceeding. Though the assessing officer states that “in the light of the discussion and material available on record he was of the opinion that income chargeable to tax has escaped assessment , there is no discussion on any of the materials, which were placed by the assessee along with the reply dated 9th April, 2022. Thus, it can be safely held that the order dated 13th April, 2022 passed under Section 148A(d) of the Act is not sustainable and liable to be set aside.’ A bit earlier, similar view has been taken by the Division Bench decision of Gujarat High Court in SHRENIK SUDHIRVIMAWALA vs. ACIT, 2022 (5) TMI 528 - GUJARAT HIGH COURT. (v) It is true that the Statements of Objections have been filed in these petitions and they are supported by affidavits. Several contentions have been taken up by the
In the result, both the appeals of the assessee are allowed. Order pronounced in the open court on 20.12.2024.