Income Tax Appellate Tribunal - Kolkata
Veshnawy Vyapaar Pvt. Ltd., ,Kolkata vs Ito, Ward 14(4), , Kolkata on 20 March, 2026
IN THE INCOME TAX APPELLATE TRIBUNAL "SMC" BENCH, KOLKATA
SHRI LAXMI PRASAD SAHU, ACCOUNTANT MEMBER
ITA No. 557/KOL/2025
Assessment Year : 2012-2013
Veshnawy Vyapaar Pvt. Ltd., Vs. Income Tax Officer,
C/o Jain Vinod K & Associates, Ward-14(4), Kolkata,
41A, AJC Bose Road, Suite No. Aayakar Bhawan, P-7,
613, 6th Floor, Kolkata - Chowringhee Square,
700017 Kolkata - 700069
[PAN: AAACV9354P]
APPELLANT RESPONDENT
Assessee by : Vinod Kumar Jain, FCA
Revenue by : Manas Mondal, Sr. DR
Date of hearing : 11.03.2026
Date of Pronouncement : 20.03.2026
ORDER
This is an appeal filed by the assessee against the order passed u/s 250 of the Income Tax Act, 1961 (hereinafter referred to as "the Act") by the Ld. Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi [hereinafter referred to as "the Ld. CIT(A)] dated 21.01.2025, DIN & order No. ITBA/NFAC/S/250/2024- 25/1072381309(1) on the following grounds of appeal:
"1. The Ld. CIT(A) erred in law to upheld that the assumption of jurisdiction to reopen the assessment u/s. 147 of the Act by Jurisdictional Assessing Officer is not bad in law, null and void.
2. The Ld. CIT(A) erred in law as well as on facts that the AO had failed to appreciate the fact that the assessment of Income of the assessee was subject to scrutiny and the reopening of case has failed to satisfy the first provision of section 147 of the Act.2 ITA No. 557/KOL/2025
Veshnawy Vyapaar Pvt. Ltd.
3. The Ld. CIT(A) erred in law as well as on facts to affirm the addition made u/s 68 by Assessing Officer us 68 of the Act as commission on alleged accommodation entries treating the bank transactions of the assessee as accommodation entries, merely on surmise and presumption.
4. The Ld. CIT(A) eared in law as well as on facts not to consider that the AO had failed to provide the copy of information, sanction u/s. 151 of the Act by higher authority and did not pass the speaking order on the objection filed by the assessee, so the order passed on such improper action be quashed
5. That the appellate craves leave to add, modify or amend the ground of appeal and to adduce additional evidence in support of ground of appeal at the time of hearing of the case."
2. Briefly stated the facts of the case are that the assessee engaged in trading activity and filed return of income on 13.12.2012 declaring total income of Rs. 24,312/- and assessment was completed u/s 143(3) on 14.09.2018 as per the information available with the income tax department. It was noted that the M/s Veshnawy Vyapaar Pvt. Ltd. is one of the beneficiaries of financial activities as it has transacted to a sum amounting to Rs. 1,67,50,000/- with Oasis Complex Pvt. Ltd. during financial year 2011-12 relevant to AY 2012-13 the source of which remained unexplained. According to inputs received, it has come to light that bank account was opened with UCO bank, in the name of M/s Dhankalash Vanijya Pvt Ltd (A/c по.695105105114073). In course of verification it appears, Emkay Construction operated upon by Pawan kr Khandenwal & Dinesh Kr. Borar, wherein certain bank account transactions appeared circular in nature and the account appeared to have been part of a chain of accounts used for routing large fund transfers. These types of transactions were applied to obtain fictitious entries in the form of share capital which included sale of investments and for obtaining unsecured loans. As part of this methodology, investments in unquoted equities were sometimes reduced and loans & advances were increased proportionately. In this process investments of the company was sold out gradually and the unaccounted cash was brought back in the books without paying any tax. The cash deposits made in jama-kharchi accounts of individuals as well as shell companies having no business activities / fixed assets were routed back to the 3 ITA No. 557/KOL/2025 Veshnawy Vyapaar Pvt. Ltd.
beneficiaries. M/s Veshnawy Vyapaar Pvt. Ltd. is one such entity where such routed transaction took place. An Inquiry was made in terms of running data-analytics from e-records available in the ITBA database. As the financial analysis of the 360 degree profile of the assessee in question shows the final accounts of the company indeed underwent a change in terms of share capital share premium reserve / investments vis-à-vis loans and advances without any perceptible reason and corroborates with auxiliary information received as above. The analysis of the ITR also does not provide any business or other activity in proportion to the huge transaction of Rs Rs:1,67,50,000/-with Oasis Complex Pvt. Ltd.
3. The case was reopened u/s 147 of the Act by issuing notice on 30/03/2019 electronically, after taking necessary u/s 148 on 30 necessary approval from competent authority, which was duly delivered on registered E-Mail Address of the assessee. In response to the notice 48 of Act filed return on 03.05.2019 declaring total Income of Rs.24,312/- Subsequently, as per PAN address of the assessee i.e, 5, Dobson Lane Howrah the PAN was transferred to the ITO, ward-13(4), Kolkata on 20.08.2019. After that Notice u/s 143(2) was issued and served to the assessee. Subsequently order U/s 120(5) vide no.311 dated 22.11.2019 issued by Ld.Pr.CIT-5, Kolkata the case was transferred to the present charge. Afterwards notice u/s 142(1) of the Act was issued and served to the assessee.
4. After the show cause notice, the assessee filed objection on the reason to belief dated 13.12.2019 was duly disposed vide order dated 15.12.2019 which was duly recorded in the assessment order for the sake of convenience. I am reproducing the relevant part of the order as under:
"The reason to believe was recorded by the ITO, Ward-9(2), Kolkata and with the approval of PR.CIT-3, Kolkata notice u/s 148 of I.T. Act was issued and served to the assessee on 30.03.2019, since PAN jurisdiction at that time was with ITO, Ward-9(2), Kolkata. Subsequently as per PAN address of the assessee ie, 5, Dobson Lane Howrah the PAN was transferred to the 4 ITA No. 557/KOL/2025 Veshnawy Vyapaar Pvt. Ltd.
ITO, ward-13(4), Kolkata on 20.08.2019. Subsequently under order U/s 120(5) vide no.311 dated 22.11.2019 the case was transferred to the present charge.
Since at the time issue the notice u/s 148 the Jurisdiction of the assessee was with ITO, 9(2), Kolkata. Due to that with the approval competent authority, PR.CIT-3, Kolkata notice u/s 148 issued and served In view of the above, your objection regarding jurisdiction issue contained in the letter under reference seems to be not acceptable and hence, is hereby rejected.
Assessee Company has objected the merit of initiation of reassessment proceedings U/s. 147 in this case for A.Y-2012-13:
It was unearthed in the course of investigation by the directorate that Credible Information was received in the case of M/s. Dhankalash Vanijya Pvt. Ltd's current Account A/c. No. 695105105114073. The company is a private limited company account operating since April 09, 2011 and having PAN-AADCD6545K. The alert was raised due to large value cash transactions in the accounts. The transaction pattern shown customer's account is getting credited through high value transfers and immediately debited through RTGS transactions. Mostly the credits through transfers are received from Lavender Vincom Pvt. Ltd A/C No. 129005000055, Arihant Enterprise A/c. 106505500133, G.S. International A/c. 129005000011, Sunny Trading Co. A/c. 129005500002, Vista Dealcom Pvt. Ltd A/c. 129005000024. Total credit through transfer is Rs. 17 crore and total debit through transfers is Rs. 4 crore. Total credit through RTGS is Rs. 18 Crore. On further analysis, it is observed that directors of Laveder Vincome Pvt. Ltd and Vista Deal Com Pvt. Ltd. are same:
In course of verification, bank statements of the accounts have been obtained. On perusal, it is observed that there are deposits of cash in M/s. Dhankalash Vanijya Pvt. Ltd current account followed by transfers of funds to other bank accounts of different Companies namely M/s. Mangalvani Distributors Pvt. Ltd, Kasi Vishwanath Tradecom Pvt. Ltd, Dhansidhi Agency Pvt. Ltd. Janardhan Vinimay Pvt. Ltd., Oasis Complex Pvt. Ltd, Pukhraj Dealer Pvt Ltd. etc. All the connected accounts of companies are maintained with ICICI bank & other different banks also.
On verification of bank statement for the Period 09.04.2011 to 30.03.2012 relevant to the financial Year 2011-12 of all the accounts, it is observed that there were deposits of cash in the account of M/s. Dhankalash Vanijya pvt. Ltd.
Summons dated 30.08.2018 was issued by the directorate to the Principal Officer of aforementioned concern and he was asked to produced the Audited balance Sheet, profit Loss Account, bank statement and copy of ITR for the A.Y.2012-13 and explain the transaction made through subject bank accounts. But the assessee neither appeared for made any compliance.
From the ITD analysis of M/s. Dhankalash Vanijya Pvt. Ltd., it is seen that this company has low/NIL turnover and meagre Profit after tax (PAT). Prima facie, it seems that this company has been used for routing of unaccounted funds.5 ITA No. 557/KOL/2025
Veshnawy Vyapaar Pvt. Ltd.
Further, it has been found on tracing the movement of fund through that cash deposited to M/s. Dhankalash Vanijya Pvt. Ltd has been on same day transferred to an account named M/s. Mangalvani Distributors pvt. Ltd, Kasi Vishwanath Tradecom Pvt. Ltd, Dhansidhi Agency Pvt. Ltd, Janardhan Vinimay pvt. Ltd., Oasis Complex Pvt. Ltd, Pukhraj Dealer Pvt. Ltd. etc. and finally amount is transferred to beneficiary companies.
On perusal of Bank statement of the assessee company it has been noticed money was transferred through banking channels from the Bank A/c of, Oasis Complex Pvt. Ltd, by layering., The assessee company had received Rs. 16750000 during the F. Y. 2011-12 relevant to A. Y. 2012-13. During the course of investigation it is noticed that M/s. Mangalvani Distributors pvt. Ltd, Kasi Vishwanath Tradecom Pvt. Ltd, Dhansidhi Agency Pvt. Ltd, Janardhan Vinimay pvt. Ltd., Oasis Complex Pvt. Ltd are either enlisted as Shell Company in the investigation database or are having negligible financial credit worthiness Hence these huge amounts received by assessee company depicts the picture of vicious/sham transactions.
So there is direct nexus found in the investigation that fund deposited at one point finally transferred to the assesssée company from the said transferee/transferor company. So the initiation of the reopening proceeding was not faise and incorrect or not based on mere rumor suspicion or without any Jengible material. Hence It may be noted that the reasons for the reasons for the issuance of notice /s. 148 has been, properly recorded investigation by the Department.
The surety of the escapement of Income or not which was primarily believed by the AO and that is too of the basis of investigation in the relevant matter cannot be decided at the stage of reopening of assessment as at the same time the Act put bars on the AO to verify the reasons by looking into the case without following the appropriate provisions of the I.T. Act. Reasons to believe refer to reason" only and not the exact amount as well as details thereof and there is sufficiency of the reason to believe proceed as exact amount as well as details thereof and there is sufficiency of the reason to proceed as per I.T. Law in case of the assessee. The finality of the reason to believe can come only after completion of assessment proceedings. What is the ultimate result of enquiry is not material for deciding the jurisdiction of the AO to reopen assessment even, if it is found ultimately that there was been no escapement of income.
In this regard, the pronouncement of Supreme Court of India in the case of Raymond Woolen Mills Ltd., Vs. Income Tax Officer can be referred where it is held as below:-
"In this case, we do not have to give a final decision as to whether there is suppression of material facts by the assessee or not. We have only to see whether there was prima facie some material on the basis of which the Department could reopen the case. The sufficiency or correctness of the material is not a thing to be considered at this state. We are of the view that the court cannot strike down the reopening of the case in the facts of this case."
The Hon'ble Supreme Court in the case of CIT Vs. Durga Prasad More [1971] 82 ITR 540 (SC) ruled that the taxing authorities are entitled to look into the surrounding circumstances to find out the reality and the matter has to be considered by applying the test of human probabilities.
6 ITA No. 557/KOL/2025Veshnawy Vyapaar Pvt. Ltd.
The decision of Apex Court in the case of Assistant Commissioner of Income Tax Vs. Rajesh Jhaveri Stock brokers (P) Ltd., may be referred where it is held that "Section 147 authorizes and permits the Assessing officer to assess or reassess income chargeable to tax if he has reason to belief that income of any assessment year has escaped assessment. The word "reason" in the phrase "reason to believe" would mean cause or justification. If the Assessing Officer has cause or justification to know or suppose that income had escaped assessment, it can be said to have reason to believe that an income had escaped assessment. The expression cannot be read to mean that the Assessing Officer should have finally ascertained the fact by legal evidence or conclusion. The function of the Assessing officer is to administer the statute with solicitude for the public exchequer with an inbuilt idea of faimess to taxpayers. As observed by the Supreme Court in Central Provinces Manganese Ore Co. Ltd., Vs. ITO [1991] 191 ITR 662, for initiation of action under section 147(a) (as the provision stood at the relevant time) fulfilment of the two requisite conditions in that regard is essential. At that stage, the final outcome of the proceeding is not relevant. In other words, at the initiation stage, what is required is "reason to believe", but not the established fact of escapement of income. At the stage of issue of notice, the only question is whether there was relevance on which a reasonable person could have formed a requisite belief. Whether the materials would conclusively prove the escapement is not the concern at that state. In view of the above, your objection contained in the letter under reference seems to be not acceptable and hence, is hereby rejected.
You are therefore requested to cooperate with the assessment proceeding to proof your point with supporting documents."
5. The AO applying 0.25% commission on the entire transactions made by the assessee and made addition of Rs. 9,92,407/-.
6. Aggrieved from the above order, the assessee filed appeal before the Ld. CIT(A). The Ld. CIT(A) confirmed the order of AO. The Ld. Counsel reiterated the submissions made before the lower authorities and strongly submitted that the order passed by the AO dated 23.12.2019 by Income Tax Officer, Ward 14(4), Kolkata without jurisdiction wise if the ITO-13(4), Kolkata who has issued u/s 143(2) of the Act on 01.11.2019. Thereafter, no any information has been received by the assessee regarding the change of jurisdiction. He further submitted that as per the PAN address of the assessee the jurisdiction is still lying with the ITO-9(2), Kolkata and referred to page No. 105 of the paper book. Therefore, the entire reassessment order passed by the AO is beyond jurisdiction and does not survive.
7 ITA No. 557/KOL/2025Veshnawy Vyapaar Pvt. Ltd.
7. On the other hand, the Ld. DR relied on the order of lower authorities and submitted that the order has been correctly by the ITO, Ward-14(4), Kolkata.
8. Considering the rival submissions and perusing the entire material available on record and the orders of authorities below. I noted from the submissions made before the Ld. CIT(A) which is as under:
Date of Particulars of Issuing Address to Jurisdiction notice/order proceeding authority which as per notices/order address issued as per PAN data base 29.03.2019 For reason recorded ITO ward 14c M D Road, ITO Ward for reopen the 9(2) Kolkata 9(2), assessment Kolkata Kolkata 30.03.2019 Notice u/s 148 ITO ward 14c M D Road, ITO Ward 9(2) Kolkata 9(2), Kolkata Kolkata 03.05.2019 Return of income By ITO Ward 9(2), ITO Ward assessee Kolkata 9(2), as per Kolkata Registered office address 20.08.2019 Transfer of ITO Ward Not applicable Not jurisdiction 9(2), applicable Kolkata to ITO Ward 13(4), Kolkata 01.11.2019 Notice u/s 143(2) ITO Ward 14c M D Road, ITO Ward 13(4), Kolkata 9(2), Kolkata Kolkata 22.11.2019 Order u/s 120(5) Pr. CIT 5, Not applicable Not Kolkata applicable 13.12.2019 Notice u/s 142(1) ITO Ward 14c M D Road, ITO Ward 14(4), Kolkata 9(2), Kolkata Kolkata
09.12.2019 Letter informing ITO Ward 14c M D Road, ITO Ward reason recorded 14(4) Kolkata 9(2), Kolkata Kolkata 15.12.2019 Order disposing of ITO Ward 14c M D Road, ITO Ward objection 14(4) Kolkata 9(2), Kolkata Kolkata 23.12.2019 Order u/s 143(3) ITO Ward 14c M D Road, ITO Ward r.w. 147 14(4) Kolkata 9(2), Kolkata Kolkata 8 ITA No. 557/KOL/2025 Veshnawy Vyapaar Pvt. Ltd.
9. Here the dispute raised/argued is only regarding the assessee for jurisdiction of the AO, the notice u/s 143(2) of the Act has been issued by the ITO, Ward-13(4), Kolkata dated 01.11.2019, DIN & ORDER No. ITBA/AST/S/143(2)_3/2019-20/1019678310(1) and notice u/s 142(1) of the Act dated 01/11/2019 DIN No. ITBA/AST/F/142(1)/2019- 20/1019678386(1) by ITO Ward 13(4), KOLKATA. Further notice u/s 142(1) dated 09.12.2019, DIN No. ITBA/COMF/F/17/2019- 20/1021982622(1) was issued by ITO Ward 14(4) KOLKATA. Subsequently other notices u/s 142(1) were issued by ITO Ward 14(4) Kolkata a has issued notice on 13.12.2019, 13.12.2019, 09.12.2019 and 15.12.2019 also. But as per the jurisdiction classified by the CCIT, West Bengal, Sikkim is still showing ITO, Ward 9(2), but the Revenue is unable to produce the any credible documents regarding transfer of jurisdiction to ITO, Ward-14(4), Kolkata. Therefore, the order passed by the AO, Kolkata 14(4) is illegal and without jurisdiction even as per PAN data base the jurisdiction of the assessee is ITO, Ward 13(4), Kolkata, therefore, the appeal of the assessee is allowed.
10. In the result, appeal of the assessee is allowed in above terms.
Order pronounced on 20.03.2026.
Sd/-
(Laxmi Prasad Sahu) Accountant Member Dated: 20.03.2026 AK, Sr. P.S. 9 ITA No. 557/KOL/2025 Veshnawy Vyapaar Pvt. Ltd.
Copy of the order forwarded to:
1. Appellant
2. Respondent
3. Pr. CIT
4. CIT(A)
5. CIT(DR) //True copy// By order Assistant Registrar, Kolkata Benches