M/S. MUKESH LIFESTYLE PVT. LTD.,KOLKATA vs. I.T.O., WARD - 9(1), KOLKATA, KOLKATA
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Income Tax Appellate Tribunal, “A” BENCH, KOLKATA
Per Rajesh Kumar, AM:
This is an appeal preferred by the assessee against the order of the National Faceless Appeal Centre, Delhi (hereinafter referred to as the “Ld. CIT(A)”] dated 13.06.2024 for the AY 2010-11.
The only issue raised by the assessee at the time of hearing is against the order of ld. CIT (A) confirming the order of ld. AO without appreciating the fact that reassessment proceedings were initiated merely by relying on the information from investigation wing without any independent application of mind.
The facts in brief are that the assessee field the return of income on 26.09.2010, declaring total income at ₹966/-. The case of the
In the appellate proceedings, the ld. CIT (A) dismissed the appeal of the assessee on the ground that the assessee has failed to make a written submission in respect of its grounds of claim.
The ld. AR vehemently submitted before us that the reasons recorded are completely vague and unambiguous as no details as to the transactions such as name of the party from whom the accommodation entries were taken by the assessee were given. The ld. AR stated that the reopening of assessment is not allowed on the
The ld. DR on the other hand relied on the orders of the lower authorities by submitting that the assessee was not co-operative in the proceedings before both the authorities and therefore, the appeal of the assessee may be dismissed.
After hearing the rival contentions and perusing the materials available on record, we note that the reasons recorded by the ld. AO, it is stated that the information has been received from ITO(Investigation) unit-1, Kolkata, wherein it is mentioned that as per FIU-IND information, certain bank transactions appear suspicious. The transactions appear of circular nature and the account appears to
“Information has been received from the ITO (Inv.), Unit-1 & AIU, Kolkata wherein it is mentioned that as per FIU-IND Information certain bank transactions appeared suspicious. The transactions appear circular nature and the account appears tol have been part of a chain of accounts used for routing large funds transfer. Given the unexplained nature of large value funds and dealing with the entities that have already been reported earlier in STR, this case appears to be suspicious. In the course of verification of bank statements of number of accounts, it is observed that there are deposits of cash in the account of Individual or dummy proprietorship accounts and followed by transfers of funds to number of accounts. All the connected accounts of Individuals and private limited companies are maintained with ICICI Bank. The huge funds raised through deposit of cash were transferred to the accounts of intermediary companies. Subsequently, funds were transferred to different current accounts Including beneficiaries. So it can be inferred that out of beneficiary companies some are real working companies and remaining are initially shell companies taken over by some group with new management. M/s Mukesh Lifestyle Pvt. Ltd. is one of such companies which has received funds to the tune of Rs.25 lakhs-in the F.Y. 2009-10 relating to A.Y. 2010-11. Thus, there is reason to believe that the income has escaped assessment during the A.Y. 2010-11 to the tune of Rs.25 lakhs.” 08. On perusal of the above reasons recorded, it reveals that the ld. AO has just relied on the information supplied by the ld. ITO Investigation and there has been no independent application of mind
“7. We may point out at this juncture itself that the Tribunal did not go into the question of merits. It only examined the question of the validity of the proceedings under Section 147 of the said Act. The Tribunal, in essence, held that the purported reasons for reopening the assessments were entirely vague and devoid of any material. As such, on the available material, no reasonable person could have any reason to believe that income had escaped assessment. Consequently, the Tribunal held that the proceedings under Section 147 of the said Act were invalid. 8. The Tribunal gave detailed reasons for concluding that the proceedings under Section 147 were invalid. Instead of adding anything to the said reasons, we think it would be appropriate if the same are reproduced: — "In the case at hand, as is seen from the reasons recorded by the AO, we find that the AO has merely stated that it has been informed by the Director of Income-tax (Inv.), New Delhi, vide letter dated 16.06.2006 that the above named company was involved in giving and taking bogus entries/transactions during the relevant year, which is actually unexplained income of the assessee company. The AO has further stated that the assessee company has failed to disclose fully and truly all material facts and source of these funds routed through bank account of the assessee company. In the reasons recorded, it is nowhere mentioned as to who had given bogus entries/transactions to the assessee or to whom the assessee had given bogus entries or transactions. It is also nowhere mentioned as to on which dates and through which mode the bogus entries and transactions were made by the assessee. What was the information given by the Director of Income-tax (Inv.), New Delhi, vide letter dated 16.06.2006 has also not been mentioned. In other words, the contents of the letter dated 16.06.2006 of the Director of Income-tax (Inv.), New Delhi have not been given. The AO has vaguely referred to certain communications that he had received from the DIT(Inv.), New Delhi; the AO did not mention the facts mentioned in the said communication except that from the informations
In the result, the appeal of the assessee is allowed.
Order pronounced in the open court on 31.01.2025.
Sd/- Sd/- (PRADIP KUMAR CHOUBEY) (RAJESH KUMAR) (JUDICIAL MEMBER) (ACCOUNTANT MEMBER) Kolkata, Dated:31.01.2025 Sudip Sarkar, Sr.PS Copy of the Order forwarded to : 1. The Appellant 2. The Respondent 3. CIT DR, ITAT, 4. 5. Guard file. BY ORDER, True Copy//
Sr. Private Secretary/ Asst. Registrar Income Tax Appellate Tribunal, Kolkata
