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Income Tax Appellate Tribunal, “B” BENCH, KOLKATA
Before: SHRI RAJESH KUMAR, AM & SHRI PRADIP KUMAR CHOUBEY, JM
O R D E R Per Rajesh Kumar, AM:
These are the appeals preferred by the assessee against the order of the National Faceless Appeal Centre, Delhi (hereinafter referred to as the “Ld. CIT(A)”]even dated 19.06.2024 for AY 2013-14 & 2014-15.
The only ground pressed by the ld. Counsel for the assessee is against the order of ld. CIT (A) upholding the reopening assessment as made
4. At the time of hearing, the assessee has only pressed ground no. 2 of revised grounds filed before the Bench, which read as under:-
2For that the re-assessment order dated 29.05.2023 is vitiated in law in asmuchas as there was absolutely no independent application of mind and no independent enquiry on the part of the AO in respect of the purported information allegedly received by the him . .
The brief facts of the case are that the assessee filed its return of income for A.Y. 2013-14 on 30.09.2013 by declaring total income of Rs.73,68,200/-. The ld. AO after receiving information from Revenue Audit Party that during the year under consideration, M/s. Vivog Commercial Ltd. has made transactions through broker namely M/s. Pace Commodity Brokers Pvt. Ltd. via Client Code Modification during the F.Y. 2012-13. The ld. AO further noted that it is apparent from the information that Client Code was modified hundred times during the said financial year which is abnormal and thus, assessee has reduced its taxable income to the tune of Rs.93,53,400/- by client code modification. Accordingly, the case of the assessee reopened u/s 147 by issue of notice u/s 148 of the Act on 19.04.2021, after obtaining the approval from the competent authority. In the meantime , the judgement of Hon'ble Supreme Court in Civil Appeal No. 3005/2022 in the case of Ashish Agarwal & others, vide order dated 04/05/2022 was delivered , wherein the Hon'ble Supreme Court held that the impugned notices issued u/s 148 of the Act shall be deemed to have
6. In the appellate proceedings ,the issue raised by the assessee against the reopening of the assessment was summarily dismissed by the CIT (A) and now, aggrieved assessee is in appeal before the Tribunal.
The ld. AR vehemently submitted before us that the case of the assessee has been invalidly re-opened by the ld. AO without any independent application of mind and without any enquiry. The ld AR argued that the AO has acted on the borrowed satisfaction. The ld. AR referred to the notice issued u/s 148A(b) of the Act a copy of which is attached at page no.1 of the Paper Book and submitted that in Para 3, the AO has mentioned that according to information
8. The ld. DR on the other hand relied on the orders of the ld. authorities below and submitted that though there is a mistake while issuing of notice u/s 148A(b) of the Act in Para 3 in mentioning the name of the broker which was stated asa Pace Commodity Brokers Pvt. Ltd.,
9. After hearing the rival contentions and perusing the information available on record, including the notice issued u/s 148A(b) of the Act dated 29.05.2022, we note that the ld. AO has wrongly stated in para 3 of the notice issued u/s 148A(b )that the assessee has transacted in commodity transfer through Pace Commodity Brokers Pvt. Ltd. As a matter of fact the commodities transactions were carried out through Anand Rathis Commodities Ltd. We note that the information available with the assessee, copy of which is attached from page no.3 to 9 of the Paper Book, which states that the assessee has made a fictious profit in trade. We note that the assessee replied the said notices vide letter dated 11.06.2022, wherein the assessee specifically stated that it is not transacted any transaction through broker Pace Commodity Brokers Pvt. Ltd. and will be filed an affidavit duly signed by Director. However, the ld. AO without considering these information’s passed the order u/s 148A(d) dated 27.07.2022 and also issued notices u/s
The appellant/assessee was issued notice under section 148A(b) of the Act dated 22nd March, 2022. The sum and substance of the allegation in the notice was that the appellant/assessee has done fictitious derivative transactions with M/s. BlueviewTradecom Pvt. Ltd. The assessee submitted their detailed reply to the said notice enclosing all relevant documents in support of their claim to justify that they have not indulged in any fictitious derivative transaction. The procedure contemplated under section 148A requires the assessing officer to consider the reply and thereafter pass a reasoned order, if in opinion of the assessing officer, the information furnished by the assessee in their reply is satisfactory, then nothing more requires to be done. On the other hand, if the assessing officer is of the view that the reply furnished by the assessee is not acceptable, then he is to pass a speaking order in terms of clause (d) of Section 148A of the Act. In the instant case, the assessing officer has passed the order under section 148A(d) dated 7th April, 2022. On a reading of the said order, we find that the assessing officer has indirectly accepted the explanation given by the appellant/assessee that they have not indulged in fictitious derivative transaction. We say so because in the order dated 7th April, 2022 in paragraph 4 therein, the assessing officer alleges that prima facie the appellant/assessee has taken accommodation entry by way of fund transfer from M/s. Brightmoon Suppliers Pvt. Ltd. which is a different company. Thus, the order passed under clause (d) of Section 148A of the Act is not based on the reason for which notice dated 22nd March, 2022 was issued under section 148A(b) of the Act. Therefore, the order dated 7th April, 2022 is illegal and has to be held to be wholly unsustainable. In such factual position, the necessity to remand the matter back to the assessing officer does not arise.
5. Further, we take note of the Circular issued by the Central Board of Direct Taxes (CBDT) dated 22nd August, 2022 giving instruction to the departmental officers with regard to the uploading of data on functionality/portal of the "(3). Further, it is re-emphasized that -
(i) Before initiating proceedings under section 148/147 of the Act, any information available on data-base/portal of the Income-tax Department shall be verified before drawing any adverse inference again the taxpayers. It is not out of place to mention here that the information made available/data uploaded by the reporting entities may not be fully accurate due to inter alia, error of human nature technical nature, etc. Therefore, due verification may be carried out and opportunity of being heard be given to the taxpayer before initiating proceedings under section 148/147 of the Act.
(ii) The supervisory authorities are hereby advised to keep an effective supervision so as to ensure that all extant Instructions/Guidelines/Circulars/SOPs are duly followed by the Assessing Officers in their charge."
From the above it is clear that it has come to the notice of CBDT that in several cases information made available/data uploaded by the reporting entries are not fully accurate due to error of human nature, technical nature etc. Therefore, the department was advised to effect due verification and opportunity of being heard given to the tax payers before initiating proceedings under section 148/147 of the Act. Thus, in the preceding paragraph we have pointed out the factual position in the case on hand and it appears that proper verification was not done on the information which was available with the assessing officer at the time of issuance of notice under section 148A(b) of the Act which has led to an erroneous order dated 7th April, 2022 being passed.
7. In Divya Capital One (P.) Ltd. v. Asstt. CIT [2022] 139 taxmann.com 461/445 ITR 436 (Delhi), the Court had considered the new re-assessment claim and held as follows:
"7. This Court is of the view that the new re-assessment scheme (vide amended sections 147 to 151 of the Act) was introduced by the Finance Act, 2021 with the intent of reducing litigation and to promote ease of doing business. In fact, the legislature brought in safeguards in the amended re-assessment scheme in accordance with the judgment of the Supreme Court in GKN Driveshafts (India)
8. This Court is further of the view that under the amended provisions, the term "information" in Explanation 1 to section 148 cannot be lightly resorted to so as to re-open assessment. This information cannot be a ground to give unbridled powers to the Revenue. Whether it is "information to suggest" under amended law or "reason to believe" under erstwhile law the benchmark of "escapement of income chargeable to tax" still remains the primary condition to be satisfied before invoking powers under section 147 of the Act. Merely because the Revenue-respondent classifies a fact already on record as "information" may vest it with the power to issue a notice of re-assessment under section 148A(b) but would certainly not vest it with the power to issue a re-assessment notice under section 148 post an order under section 148A(d)."
As pointed out in the aforesaid mentioned decision, the term "information" in Explanation-1 under section 148 cannot be lightly resorted to so as to reopen assessment and this information cannot be a ground to give unbridled power to the revenue. In fact, in the case on hand, the information has been lightly used which resulted in issuance of notice. As pointed out earlier, the assessee had submitted the explanation to the notice along with documents in support of their claim. The assessing officer has given up the said allegation which formed the basis of the notice and proceeded on a fresh ground for alleging that the transaction with some other company was an accommodation entry. Therefore, on that score also the order dated 7th April, 2022 is liable to be set aside in its entirety without giving any opportunity to reopen the matter on a different issue.
For the above reasons, the appeal filed by the assessee (APOT/132/2022) is allowed and the order dated 7th April, 2022 under section 148A of the Act is set aside and the direction issued by the learned Single Bench remanding the matter to the assessing officer is also set aside. Consequently, no further action can be taken by the department against the appellant/assessee on the subject issue.
In the result, the connected application for stay (IA No. GA/1/2022) also stands disposed of.” for A.Y. 2014-15 is concerned, since the issue raised and facts are verbatim, except the change in figures and this fact being not controverted by the learned Departmental Representative, we apply our decision of for A.Y. 2014-15 and allow the appeal of the assessee by quashing the re- opening of assessment.
In the result, the appeals of the assessee are allowed on legal issue.
Order pronounced in the open court on 27.11.2024.