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Income Tax Appellate Tribunal, “A” BENCH, KOLKATA
Before: Shri Rajesh Kumar, AM& Shri Sonjoy Sarma, JM]
IN THE INCOME TAX APPELLATE TRIBUNAL “A” BENCH, KOLKATA [Before Shri Rajesh Kumar, AM& Shri Sonjoy Sarma, JM]
I.T.A. Nos. 1467& 1468/Kol/2023 Assessment Years: 2012-13& 2013-14 Sapna Agarwal Vs. Assistant Commissioner of Income-tax, Flat No. 2B, Bhagwati Apartment, Circle-2, Siliguri. Sevoke Road, Shivmandir, Siliguri, Darjeeling-734001 (PAN: ACQPA3286L) Appellant Respondent
Date of conclusion of Hearing 01.05.2024 Date of Pronouncement 20.05.2024 For the Assessee Shri Soumitra Choudhury, Advocate & Shri Pranabesh Sarkar, Advocate For the Respondent Shri Abhijit Adhikary, Addl. CIT
ORDER Per Shri Rajesh Kumar, AM Both the appeals filed by the assessee are against the separate orders of Ld. CIT(A), National Faceless Appeal Centre (NFAC), Delhi dated 23.11.2023and 20.11.2023 for AYs 2012-13 and 2013-14 respectively. 2. First we take up ITA No. 1467/Kol/2023. In this appeal, the only issue raised at the time of hearing is against the order of Ld. CIT(A) upholding the reopening of assessment u/s. 147 of the Income-tax Act, 1961 (hereinafter referred to as the “Act”) read with sec. 148 of the Act which was invalid and may be quashed.
Brief facts of the case are that the assessee filed the return of income on 29.09.2012 declaring total income of Rs.3,70,750/-. The said return was selected for scrutiny and assessment u/s. 143(3) of the Act has been completed on 13.03.2015 assessing the income at Rs.12,07,120/-. Subsequently, the AO received information that assessee has taken accommodation entry in the form of unsecured loan and accordingly, the case was reopened u/s. 147 of the Act by issuing notice u/s. 148 of the Act on 31.03.2019. Needless to state that in the original assessment proceeding which culminated u/s. 143(3) the AO has called for all the information of as regards the unsecured loan of Rs.25 lakh and that the assessee has filed all the information/details concerning the said loan before the AO in the assessment proceedings. Besides, the AO issued notice u/s. 133(6) of the Act and even the lender has responded to the said notice by furnishing all the requisite information/details as
ITA No. 1467& 1468/Kol/2023 Sapna Agarwal, AYs 2012-13& 2013-14 called for by the AO and noted at page no. 4 of the assessment order. The assessee has furnished before the AO the details of loan raised and interest paid thereof which has been extracted at page 4 para 2 of the assessment order and finally, the disallowance on account of interest has been made by the AO at Rs.8,36,368/- which were added to the income of the assessee in the assessment framed u/s. 143(3) vide order dated 13.03.2015.
The Ld. AR vehemently argued and submitted before the Bench that the AO has sought to review his order by resorting to the reopening of assessment u/s. 147 of the Act because of the same facts/records as were subject matter of reasons recorded u/s. 148(2) of the Act were before the AO. In the original assessment proceeding, AO has carried out detailed examination of the loans taken and discussed the same in the assessment order. Finally the disallowance at Rs.8,36,368/- on account of interest was made after examining the unsecured loan and also the details furnished by the assessee. The Ld. AR, therefore, prayed that reopening is nothing but a change of opinion on the part of the AO which is not permissible in law. He relied on the decision of CIT Vs. Kelvinator India Ltd. (2010) 320 ITR 561 (SC).
In the second limb of the argument, the Ld. AR submitted that the approval u/s. 151 was granted by the office of Pr. CIT on 31.03.2019, a copy of which is placed at page 70 of the paper book whereas the annexure thereto reveals that an information has been received from DDIT (Inv.)-3, Kolkata vide his e-mail dated 29.03.2019 at 6.09 PM in respect of Smt. Sapna Agarwal and the DDIT has attached a report listing beneficiaries and their PAN Nos. The Ld. AR submitted that 29.03.2019 happened to be Friday and corroborated the same by placing a calendar of the relevant year. The further submitted that 30th was Saturday and the date when the approval was accorded on 31.03.2019 was Sunday. The Ld. AR, therefore, prayed that the approval granted by the office of Pr. CIT, Siliguri is itself bad in law as this is not practically possible to give approval in such a short span of time which too happened to be holidays in the department and, therefore, the assessment so framed may kindly be quashed as no proper application of mind by Ld. Pr. CIT as it is not humanly possible to give approval within such a short span that too on Saturday and Sunday when the information was received by the AO on Friday evening at 6.09 PM.
ITA No. 1467& 1468/Kol/2023 Sapna Agarwal, AYs 2012-13& 2013-14 6. On the third limb of his arguments , the ld AR vehemently contended that there was no failure of any kind whatsoever on the part of the assessee to disclose these information in the original assessment proceedings and in order to reopen the assessment beyond the period of four years has to be subject to the satisfaction of the conditions as laid down in the first proviso to section 147 of the Act. The ld. AR stated that the said proviso provides that where an assessment has been framed u/s. 143(3) of the Act , then action shall be taken after expiry of four years from the end of relevant assessment year if the income has escaped assessment because of failure of the assessee to disclose truly all material facts necessary for the assessment of income for the said assessment year. The Ld. AR contended that it is not the case in the instant assessment year as the assessee has fully disclosed all the material facts and information qua the above loan during the original assessment proceedings and , therefore, the reopening of assessment is also bad in law and may be quashed. In defense of his argument, the Ld. AR relied on the decision of Hon’ble Apex Court in the case of ACIT Vs. CEAT Ltd. reported in [2022] 449 ITR 171 (SC).
The Ld. DR, on the other hand, relied on the orders of the authorities below.
After hearing the rival contentions and perusing the material available on recorded, we find that the assessment has been reopened on the ground that assessee is a beneficiary of accommodation entry by way of unsecured loan of Rs. 25 lakh. The said fact came in the light during the survey conducted on Mr. Anil Kumar Khemka & Companies operated and controlled by him. Accordingly, notice under sec. 148 was issued on 31.03.2019. We note that even in the original assessment proceeding, the issue has been examined by the AO when the assessee furnished the details of unsecured loan and interest thereon and the AO extracted the details of the unsecured loans and interest in para 2 page 4 and thereafter, after considering all the contentions and arguments of the assessee a net disallowance of interest was made amounting to Rs.8,36,368/- in the assessment framed u/s 143(3) of the Act. The facts before us evidently revealed that the AO has sought to revisit his own order by on the basis of same facts as were available before him in the original assessment proceedings
ITA No. 1467& 1468/Kol/2023 Sapna Agarwal, AYs 2012-13& 2013-14 which is not permissible in the Act. Accordingly, we set aside the order of Ld. CIT(A) and quash the assessment by following the decision of Kelvinator India Ltd. (supra).
On the second pleas that the approval has been granted in intimation used and without application of mind and that too on a short span of time is also not sustainable in the eyes of law and, therefore, the proceeding conducted on the basis of such approval and also bad in law. We observe from the approval granted by the PCIT, Siliguri that the AO has received all the information from DDIT (Inv.) Wingh-3(1), Kolkata vide e-mail on 29.03.2019 at 6.09 PM that Smt. Sapna Agarwal is beneficiary of accommodation entry. We note that 29.03.2019 happened to be Friday and the said material was received in the evening at the closing of working hour and from the approval granted u/s. 151, we note that the same was granted on 31.03.2019 which happened to be on Sunday. We have failed to understand as to how the process has been completed on a public holiday and even if it is assuming that the department has functioned on the public holidays how in such a short span of time satisfaction which ought to have been raised by the Ld. Pr. CIT and AO has been recorded. In our view, the settled assessment cannot be disturbed in such a hasty manner. Accordingly, we are inclined to quash the assessment.
The undisputed facts are that the assessment in the instant assessment year was framed u/s 143(3) of the Act and the issue of unsecured loan was specifically asked by the AO and replied to by the assessee with all evidences as filed vide written submission. The AO discussed these loans in the assessment order and thereafter made a disallowance of interest of Rs. Rs.8,36,368/- in the assessment framed u/s 143(3) of the Act. Therefore the assessee has furnished all the evidences qua the said loan before the AO in original assessment proceedings and thus the assessee has disclosed all the information qua the loan. I considering the factual matrix of the case , in our considered opinion, the re-opening has not been made in terms of the first proviso to Section 147 of the Act and therefore, cannot be sustained. The case of the assessee is squarely covered by the decision of Hon'ble Apex Court in the case of CEAT Ltd. (supra) wherein the Hon'ble Apex Court has held as under:
“1. The petitioner is impugning the notice dated March 27, 2019 issued under section 148 of the Income-tax Act, 1961 (the Act) for assessment
ITA No. 1467& 1468/Kol/2023 Sapna Agarwal, AYs 2012-13& 2013-14 year 2012-13 and the order dated October 31, 2019 rejecting the petitioner’s objections. Since the notice issued is after expiry of four years from the end of the relevant assessment year and assessment under section 143(3) of the Act was completed, the proviso to section 147 of the Act shall apply. The respondent has to first show that there was failure on the part of the petitioner to fulfill and there are non-disclosure of material facts required for assessment. 2. We have considered the reasons annexed at exhibit F to the petition. In our view, the respondent has miserably failed to disclose any facts, material or otherwise which has not been disclosed. In our view, first of all the reasons indicated change of opinion which is impermissible in law and secondly, the entire basis for reopening is due to mistake of the Assessing Officer that resulted in under-assessment. 3. The hon’ble apex court in Indian and Eastern Newspaper Society v. CIT [1979] 119 ITR -996 (SC) has held that an error discovered on a reconsideration of the same material (and no more) does not give power to the Assessing Officer to reopen the assessment. Paragraph 14 of the said judgment read as under (page 1004 of 119 ITR): 'Now, in the case before us, the Income-tax Officer had, when he made the original assessment, considered the provisions of sections 9 and 10. Any different view taken by him afterwards on the application of those provisions would amount to a change of opinion on material already considered by him. The Revenue contends that it is open to him to do so, and on that basis to reopen the assessment under section 147(b). Reliance is placed on Kalyanji Mavji and Co. v. CIT [1976] 102 ITR 287 (SC), where a Bench of two learned judges of this court observed that a case where income had escaped assessment due to the “oversight, inadvertence or mistake” of the Income-tax Officer must fall within section 34(1)(b) of the Indian Income-tax Act, 1922. It appears to us, with respect, that the proposition is stated too widely and travels farther than the statute warrants in so far as it can be said to lay down that if, on reappraising the material considered by him during the original assessment, the Income-tax Officer discovers that he has committed an
ITA No. 1467& 1468/Kol/2023 Sapna Agarwal, AYs 2012-13& 2013-14 error in consequence of which income has escaped assessment, it is open to him to reopen the assessment. In our opinion, an error discovered on a reconsideration of the same material (and no more) does not give him that power. That was the view taken by this court in Maharaj Kumar Kamal Singh v. CIT [1959] 35 ITR 1 (SC), CIT v. A. Raman and Co. [1968] 67 ITR 11 (SC) and Bankipur Club Ltd. v. CIT [1971] 82 ITR 831 (SC) and we do not believe that the law has since taken a different course. Any observations in Kalyanji Mavji and Co. v. CIT [1976] 102 ITR 287 (SC) suggesting the contrary do not, we say with respect, lay down the correct law.’ 4. This view has been followed by a Full Bench of the Karnataka High Court in Dell India (P.) Ltd. v. Joint CIT (LTU) [2021] 432 ITR 212 (Karn). 5. The petition therefore is allowed in terms of prayer clause (A) which reads as under: (A) that this hon'ble court may be pleased to issue a writ of cer tiorari or any other writ, order or direction under article 226 of the Constitution of India calling for the records of the case leading to the issue of the impugned notice and passing of the impugned order and after going through the same, and examining the question of legality thereof, quash, cancel and set aside the impugned notice (exhibit C) dated March 27, 2019 and the impugned order (exhibit H) dated October 31, 2019. 6. The petition disposed of.” Balbir Singh, Additional Solicitor General, (Rupesh Kumar, Naman Tandon, Rupinder Singhmar and Raj Bahadur Yadav, Advocates, with him) for the petitioners. Vanita Bhargava, Ajay Bhargava, Shantanu Chaturvedi, Ms. Prerna Singh and M/S. Khaitan and Co., Advocates, for the respondent. JUDGMENT Page No: 173 1. We have heard Mr. Balbir Singh, learned Additional Solicitor General appearing on behalf of the petitioners. 2. It is not in dispute that the assessment was sought to be reopened beyond four years. Therefore, all the conditions under section 148 of the
ITA No. 1467& 1468/Kol/2023 Sapna Agarwal, AYs 2012-13& 2013-14 Income-tax Act, 1961 for reopening the assessment beyond four years are required to be satisfied. Having gone through the reasons recorded for reopening, we are of the opinion that the conditions precedent for reopening of the assessment beyond four years are not satisfied. The reassessment was on change of opinion. There are no allegations of suppression of material fact. Under the circumstances, no error has been committed by the High Court in setting aside the reopening notice under section 148 of the Income-tax Act. We are in complete agreement with the view taken by the High Court. The special leave petition stands dismissed.” 8.1 Since the facts of the instant case are materially same as that of the decision taken by the Hon'ble Apex Court in the above decision, even on third plea the assessment has to go. Accordingly, we are inclined to quash the re-opening of assessment.
Now, we take up ITA No. 1468/Kol/2023. The only issue raised and pressed at the time of hearing was with respect to confirmation of addition of Rs.49,88,943/- by Ld. CIT(A) as made by the AO on account of speculation business by determining the profit from speculation business at Rs.1,54,17,652/- as against the correct speculation profit of Rs.1,04,28,508/- returned by the assessee.
Brief facts of the case are that assessee filed the return of income on 29.07.2013 disclosing total income of Rs.45,37,954/- which was selected for scrutiny under CASS and statutory notices were duly issued and served upon the assessee. The assessee is engaged in the business of share trading and commodity derivatives and future and options. The AO calculated the suppressed speculative profit at Rs.49,88,943/- and issued show cause notice on 09.12.2015 to show cause the reasons of discrepancies beside giving a copy of information provided by MCX to the assessee for reconciliation purpose. The assessee filed submission submitting details of MCX transactions through ITI financial Ltd. and details of commodity transactions through R. K. Global commodity Broking Ltd. The AO observed that during verification made by the assessee the said statement did not tally and suppressed profits were consequently computed at Rs.49,88,943/- and added to the income of the assessee inter alia making other additions.
ITA No. 1467& 1468/Kol/2023 Sapna Agarwal, AYs 2012-13& 2013-14 11. The Ld. CIT(A) partly allowed the appeal of the assessee by deleting some additions made in the assessment order while the impugned addition of Rs.49,88,943/- has been sustained which is under challenge before us. The Ld. CIT(A) called for the remand report from the AO during the appellate proceeding, a copy of which is available at page 1 to 5 of the paper book. The Ld. AR submitted that on page 4 of the remand report , the addition of Rs.49,88,943/- in the income from MCX through R. K. Global Broking Ltd. has been dealt with by the AO. In the said remand report the AO stated that R. K. Global Broking Ltd. has revised its earlier reply submitted during the course of scrutiny assessment. In the interim remand report dated 11.05.2017 as per the revised reply of the R. K. Global , the profit was Rs.9169.05 and thus the assessee has shown excess profit of Rs.18,282.07 . Further, the AO noted in the said remand report that the reasons for not accepting the fresh evidences filed by the assessee were not considered as ample opportunity has been provided during the course of assessment proceedings. The Ld. AR, therefore, submitted that when the AO himself recorded a finding that R. K. Global has filed a reply in remand proceeding certifying that the income of the assessee at only Rs.9169.05 and not Rs.49,88,943/- as computed by the AO while the assessee has shown excess profit of rs.18,288.07, the Ld. AR prayed that considering all these facts on record, the addition so confirmed may kindly be deleted as the same is attributed to the wrong confirmation by the R. K. Global abd assessee can not be penalized and punished for the same.
The Ld. DR on the other hand, relied on the orders of the authorities below.
After hearing the rival submissions and also the appellate order and remand report filed by the AO before the appellate authority dated 11.04.2018, a copy of which is available at pages 1 to 5, we observe that in para 5, the AO has dealt with this issue. In the said report the AO has categorically stated that R.K .Global has filed a revised reply stating that profit earned by the assessee was only Rs.9169/- and assessee has shown excess profit of Rs.18,282.07. Considering this factual matrix, we are inclined to hold that the addition made by AO and as sustained Ld. CIT(A) of Rs.4,88,943/- is devoid of any merit and substance and accordingly, we set aside the order of Ld. CIT(A) on this issue and direct he AO to delete the addition. The ground is allowed.
ITA No. 1467& 1468/Kol/2023 Sapna Agarwal, AYs 2012-13& 2013-14 14. In the result, both the appeals of the assessee are allowed.
Order is pronounced in the open court on 20th May, 2024 Sd/- Sd/- (Sonjoy Sarma) (Rajesh Kumar) Judicial Member Accountant Member Dated: 20th May, 2024 JD, Sr. PS Copy of the order forwarded to: 1. Appellant– 2. Respondent . 3. CIT(A), NFAC, Delhi 4. CIT, 5. DR, ITAT, Kolkata, True Copy By Order Assistant Registrar ITAT, Kolkata Bench, Kolkata