Income Tax Appellate Tribunal - Mumbai
Nissim Traders Pvt Ltd, Mumbai vs Acti, Circle 10(3)(1), Mumbai on 30 September, 2024
IN THE INCOME TAX APPELLATE TRIBUNAL
"B" BENCH, MUMBAI
SHRI AMARJIT SINGH, ACCOUNTANT MEMBER
SHRI RAHUL CHAUDHARY, JUDICIAL MEMBER
ITA No. 3212/MUM/2024
(Assessment Year: 2015-16)
Nissim Traders Pvt. Ltd.,
1501, Orient Height,
Rajaram Mohanrai Road,
Grant Road East, Mumbai - 400004
[PAN: AABCN3760G] ............. Appellant
Asst. CIT, Circle 10(3)(1) Vs
Aayakar Bhavan, Maharshi Karve Road,
Mumbai-400020. ............. Respondent
Appearance
For the Appellant/Assessee : Shri P. V. Desai
For the Respondent/Department : Shri Ms. Kaveeta Punit Kaushik
Date
Conclusion of hearing : 26.09.2024
Pronouncement of order : 30.09.2024
ORDER
Per Rahul Chaudhary, Judicial Member:
1. By way of the present appeal the Assessee has challenged the order, dated 19/04/2024, passed by the National Faceless Appeal Centre (NFAC), Delhi, [hereinafter referred to as the 'CIT(A)'] whereby the Ld. CIT(A) had dismissed the appeal preferred by the Assessee against the Assessment Order, dated 28/03/2022, passed by under Section 143(3) read with Section 147 of the Income Tax Act, 1961 (hereinafter referred to as 'the Act'). for the Assessment Year 2015-16.
2. The Appellant has raised following grounds of appeal:
"1.1. The Ld. CIT(A) erred in law and on facts in upholding the re-opening of the assessment u/s.147 done by the AO in contravention of the provision of law.ITA No. 3212/MUM/2024
Assessment Year: 2015-16 1.2. The Ld. CIT(A) erred in law and facts in not quashing the order u/s.144 r.w.s. 147 passed by the AO in total contravention of the provisions of law. 1.3. The appellant prays that the illegal and unlawful order passed u/s.144 r.w.s. 147 be quashed. 2.1. Without prejudice to the above:
The Ld. CIT(A) erred in law and on facts in upholding the unjustified and unwarranted addition of Rs 24,06,254/- made to the declared income.
2.2. The Ld. CIT(A) failed to appreciate that the interest income of Rs 24,06,254/- was declared by the appellant in the return of income and hence the AO has made double addition of the same income.
2.3. The Ld. CIT(A) erred in not considering the submissions made by the appellant during the course of the appeal proceedings and completely ignoring facts on record. 2.4. The appellant prays that the unjustified and unwarranted addition to the assessed income of Rs 24,06,254/- made to the assessed income in total contravention of the provision of law be deleted in toto.
3.1. The Ld. CIT(A) erred in upholding the unjustified and unwarranted addition of Rs.16,46,000/- to the declared income made by the A.O.
3.2. The Ld. CIT(A) failed to appreciate that there was no undisclosed income of Rs. 16,46,000/- having regard to the fact of the case.
3.3. The Ld. CIT(A) erred in ignoring the facts placed on record by the appellant and upholding the unjustified addition of Rs 16,46,000/- to the declared income.
3.4. The appellant prays that the unjustified and unwarranted addition of Rs. 16,46,000/- be deleted.
4. The appellant craves leave to add to or amend, vary or alter any of the above grounds of appeal before the date of hearing of the appeal."
3. Since all the grounds arise from same set of facts they are taken up together hereinafter.
4. The relevant facts as emerging from records are that the assessment was framed on the Appellant under Section 143(3) of the Act vide Assessment Order, dated 20.12.2017. Subsequently, reassessment proceedings were initiated against the Appellant 2 ITA No. 3212/MUM/2024 Assessment Year: 2015-16 which culminated into the Assessment Order, dated 28/03/2022 passed under Section 147 read with Section 144B of the Act whereby addition of INR 24,06,254/- was made in the hands of the Appellant holding the same to be undisclosed interest income of the Appellant. Further, an addition of INR 16,46,000/- was made in the hands of Appellant on the ground that the as per loan confirmation received from M/s. Servotech India Ltd. the Closing Balance was INR.19,71,432/- whereas as per the Balance Sheet of the Appellant the closing was INR.36,17,432/-. Thus, the difference of INR 16,46,000/- was also considered by the Assessing Officer to be undisclosed income of the Appellant.
5. Being aggrieved, the Appellant went in appeal before CIT(A) against the Assessment Order, dated 28/03/2022, passed under Section 147 read with Section 144B of the Act challenging the validity of reassessment proceedings as well as aggregate addition of INR.40,52,254/- made in the hands of the Appellant. The aforesaid appeal was dismissed by the CIT(A) vide order dated 19/04/2024.
6. The Appellant is now in appeal before the Tribunal on the ground reproduced in paragraph 2 above.
7. During the course of hearing the Learned Authorized Representative for the Appellant submitted that the re- assessment proceedings are bad in law since the same were initiated after the expiry of 4 years from the end of the relevant assessment year by examining the material forming part of the original assessment record. The Assessing Officer did not have any fresh tangible material to form a belief that income had escaped assessment and initiate re-assessment proceedings. Further, in the reasons recorded for re-opening the assessment the Assessing Officer has failed to allege that there was failure on 3 ITA No. 3212/MUM/2024 Assessment Year: 2015-16 the part of the Appellant to disclose fully and truly all material facts. It was further submitted that there was no escapement of income since the interest income was already offered to tax by the Appellant as Revenue from Operational which included Sales & Service Income of INR.2,56,14,005/- which in turn included aggregate interest income of INR 66,07,092/-. In this regard reliance was placed on Financial Statement for the relevant previous year, Ledger Account pertaining to interest income, Form 26AS and Break up of interest income placed before us as part of the paper-book. As regards addition of INR.17,00,000/- made by the Assessing Officer in relation to difference in the closing balance of outstanding loan pertaining to M/s. Servotech India Ltd. It was submitted by the Learned Authorized Representative of the Appellant that the addition in this count had already been made while passing Assessment Order under Section 143(3) of the Act. On the basis of the aforesaid, it was contended that the aggregate addition of INR.40,52,254/- made during the re-assessment proceedings as well as the re- assessment proceedings were bad in law.
8. Per contra the Learned Departmental Representative placed reliance on the reason recorded for reopening the assessment and the assessment order. It was submitted that the Appellant had failed to enter appearance before the Assessing Officer and file submission/documents to support its claim.
9. We have given thoughtful consideration to the rival submission and perused the records. On perusal on reasons recorded, we find that the Assessing Officer has proceeded on incorrect understanding of the factual position. The appeal before us pertains to Assessment Year 2015-16. Period of 4 years from the end of the relevant assessment year expired on 31/03/2020. The notice under Section 148 of the Act was issued on 25/03/2021.
4 ITA No. 3212/MUM/2024Assessment Year: 2015-16 Thus, the finding recorded by the Assessing Officer in the reasons recorded for re-opening assessment that 4 years from the end of the relevant assessment years has not lapsed is factually incorrect. Since the Assessing Officer has proceeded on incorrect facts the entire reassessment proceedings get vitiated as being bad in law.
9.1. It is also admitted position that the Assessment Order under Section 143(3) of the Act was passed on 20/12/2017. Therefore, re-assessment proceedings could have been initiated under Section 147 of the Act only in the case the Appellant had failed to disclose fully and truly of material facts necessary for framing assessment. On perusal of reasons recorded for re-opening the assessment, we find that there no such allegation against the Appellant. To the contrary the Assessing Officer has proceeded on incorrect understanding that in the facts of the present case, the Assessing Officer was only required to have a belief that income has escaped assessment. In our view, in the facts of the present case, it cannot even be said that there was escapement of income. On perusal of the Assessment Order passed under Section 143(3) of the Act we find that an addition of INR.17,00,000/- was made under Section 68 of the Act in respect of loan taken by the Appellant from M/s. Servotech India Ltd. on account of difference in the closing balance of amount outstanding as reflected in balance sheet and in the confirmation received from the lender. Further, on perusal of Financial Statements: Profit & Loss Account with Schedule, Details of sales, break-up of interest income, 'Interest Inco' Ledger Account and Form 26AS, we note that the Revenue from Operations aggregating to INR.22,56,14,005/- were credited to the Profit & Loss Account and the same included interest income of INR 66,07,092/- which in-turn included interest income aggregating to INR 24,06,254/- from the lender identified by the Assessing 5 ITA No. 3212/MUM/2024 Assessment Year: 2015-16 Officer.
9.2. In view of the above, we hold that there was no escapement of income in the present case. The Assessing Officer moved upon incorrect understanding of facts and initiated re-assessment proceeding is absence of any tangible material after the expiry of 4 years in contravention of provisions contained in Section 147 of the Act. There was no allegation in the reasons recorded that the Appellant has failed to disclose truly and fully all material facts necessary for framing assessment. Therefore, the re-assessment proceedings and the Assessment Order, dated 28/03/2022, passed by under Section 143(3) read with Section 147 of the Act for the Assessment Year 2015-16 are quashed. Accordingly, all the grounds raised by the Appellant in the present appeal are allowed.
10. In result, the present Appeal by the Assessee is allowed.
Order pronounced on 30.09.2024.
Sd/- Sd/-
(Amarjit Singh ) (Rahul Chaudhary)
Accountant Member Judicial Member
मुंबई Mumbai; दिन ुं क Dated : 30.09.2024
MP, LDC
6
ITA No. 3212/MUM/2024
Assessment Year: 2015-16
आदे श की प्रतितिति अग्रे तिि/Copy of the Order forwarded to :
1. अपील र्थी / The Appellant
2. प्रत्यर्थी / The Respondent.
3. आयकर आयक्त/ The CIT
4. प्रध न आयकर आयक्त / Pr.CIT
5. दिभ गीय प्रदिदनदध, आयकर अपीलीय अदधकरण, मुं बई / DR, ITAT, Mumbai
6. ग र्ड फ ईल / Guard file.
आिे श नस र/ BY ORDER, सत्य दपि प्रदि //True Copy// उप/सह यक पुंजीक र /(Dy./Asstt. Registrar) आयकर अपीलीय अदधकरण, मुं बई / ITAT, Mumbai 7