Income Tax Appellate Tribunal – Kolkata
Concord Infra Projects Pvt. Ltd., … vs Pcit-3, Kolkata on 13 October, 2021 1
ITA No. 174/Kol/2021
Concord Infra Projects Pvt. Ltd., AY 2010-11
आयकर अपीलीय अधीकरण, यायपीठ -“B” कोलकाता,
IN THE INCOME TAX APPELLATE TRIBUNAL “B” BENCH: KOLKATA
[Before Hon’ble Shri A. T. Varkey, JM & Shri Manish Borad, AM]
I.T.A. No. 174/Kol/2021
Assessment Year: 2010-11
Concord Infra Projects Pvt. Ltd. Vs. Principal Commissioner of Income-
(PAN: AADCC7077K) tax -3, Kolkata.
Appellant Respondent
Date of Hearing (Virtual) 15.09.2021
Date of Pronouncement 13.10.2021
For the Appellant Shri Anil Kochar, Advocate
For the Respondent Shri Sandeep Chaube, CIT, DR
ORDER
Per Shri A. T. Varkey, JM:
This is an appeal filed by the Assessee against the order of Ld. Pr. CIT-3,
Kolkata dated 10.08.2020 passed u/s 263 of Income Tax Act, 1961 (hereinafter referred
to as the ‘Act’) for Assessment year 2010-11.
2. The assessee’s appeal is time barred by 210 days and a petition seeking
condoning the delay has been filed stating that the delay in filing of the appeal was
attributable to the restrictions imposed due to Covid -19 pandemic. We have heard both
the sides and find that there is a reasonable cause for delay in filing of the appeal on
time due to Covid -19 pandemic. Hence, we condone the delay and admit the appeal for
hearing.
3. The ground of appeal of the assessee reads as under:
1. For that the assumption of jurisdiction u/s 263 of the Act by the Ld. Pr. CIT is wrong
and uncalled for.
2. For that the Ld. Pro CIT having not examined the records of the appellant and proceeded
to issue notice u/s 263 upon the proposal of the A.O. there is nothing on record to justify
the impugned proceedings which required formation of opinion by the Pr. Commissioner
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of Income Tax that the assessment framed was erroneous and/or prejudicial to the interest
of revenue.
3. For that the source relating to the receipts of share subscription having been fully explained
by the appellant supported by direct evidences and there being no adverse finding thereupon
the Ld. Pr. CIT having rightly accepted the source in the hands of the appellant but without
there being any valid reason erred in directing the A.O. to make addition @ 0.25% of the
amount involved as the income of the appellant as entry operator.
4. For that the Ld. Pr. CIT ought to have dropped the proceedings initiated u/s 263 as there was
no finding of the assessment framed being erroneous and prejudicial so as to assume
jurisdiction u/s 263.
5. For that the Ld. Pr. CIT though discussed all relevant facts and the Law applicable thereon
ought not to have held the appellant as an entry operator.
6. For that the Ld. Pr. CIT could not refer to any evidence on record so as to treat the appellant
as a name lender I the directions given by him to the A.O. to make addition @ 0.25% in respect
of the funds involved was without any basis.
7. For that further grounds of appeal may kindly be allowed to be taken at the time of hearing
of the appeal.”
4. From the grounds of appeal raised, we note that the ground no. 7 is general, so it
is dismissed. By preferring ground nos. 1 and 2 the assessee has raised the legal issue
challenging the invocation of revisional jurisdiction u/s. 263 of the Act, without
satisfying the essential pre-conditions as stipulated in section 263 of the Act.
Explaining this ground, the Ld. AR submitted that the Ld. Pr. CIT has interdicted the
order of the AO passed u/s. 144/147 of the Act dated 29.12.2017 which order itself of
the AO is bad in the eyes of law, so according to him it is a nullity. Explaining further
on this contention as to how the order of AO u/s 144/147 dated 29.12.2007 which has
been interdicted by the Ld. PCIT u/s 263 of the Act is bad in law, the Ld. A.R. pointed
out that the AO had reopened the original assessment for AY 2010-11 on the reason
that he had received information from authentic source that one company named M/s.
Miracle Commodities Pvt. Ltd. (hereinafter referred to as “M/s. Miracle”) got high
value deposits frequently in their bank account and thereafter it made immediate
transaction to some third party account and it revealed from investigation that large
value of amount has been routed to the assessee i.e. M/s. Concord Infra Projects Pvt.
Ltd. implying that the assessee has routed this money in the form of share on high
premium to the tune of Rs. 8.34 crores. According to Ld. A.R. based on this factual
information the AO formed his reason to believe escapement of income as stipulated
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Concord Infra Projects Pvt. Ltd., AY 2010-11
u/s 147 of the Act and thereafter had issued notice u/s. 148 of the Act on 17.03.2017
expressing his desire to re-open the assessment in order to examine the genuineness of
the shares issued by assessee which were valued at a face value of Rs. 10/- and at
premium to sixteen (16) Kolkata based companies total amounting to Rs.8.34 cr.; and
the AO on the aforesaid reason presuming escapement of income thereafter issued
statutory notices, but the AO records in his re-assessment order u/s 144/147 dated
29.12.2007, that there was non-compliance from the part of the assessee. So he issued
notice u/s 133(6) notice to UCO Bank in respect of two bank accounts and
acknowledges to have received KYC of those accounts on 17.11.2017. The AO
thereafter acknowledges that on 18.09.2017 assessee’s AR was present before him and
produced the details requisitioned by him in the notice and in the re-assessment
proceeding he also challenged the veracity of the claim of the Department on the issue
of issuance and service of notice upon the assessee i.e. service of notice u/s 148 of the
Act and other notices were challenged. According to the Ld. A.R, the AO in the
assessment order accepts the fact that in the month of December, 2017 the Ld. AR of
the assessee had submitted some more documents to justify the share premium and
shares worth Rs.8.23 cr. issued to the share subscribers. Thereafter according to Ld.
A.R, the AO records that due to the paucity of time, he could not conduct intensive
verification and therefore, the AO accepted the returned income submitted by the
assessee by order dated 29.12.2017, which action/order of the AO, the Ld. A.R.
contends to be a nullity/bad in eyes of law for want of jurisdiction of the AO to initiate
the re-opening of the assessment itself because the very factual basis on which the AO
based his belief of escapement of income was on erroneous factual basis, which fact
according to Ld. A.R. has been acknowledged by the Ld PCIT in his impugned order.
Explaining further on this legal & factual issue, the Ld AR pointed out that the AO has
resorted to reopening the assessment based on receipt of information about large
funds/deposit in the bank account of a third party company called M/s Miracle, which
thereafter has supposed to have transferred the same to and another party/company and
which money was routed back to assessee in the form of share capital with premium,
which fact has been held by the Ld PCIT in his impugned order as wrong/erroneous.
So, according to Ld. A.R., the very reopening of the assessment by the AO for the
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assessment year 2010-11 was on wrong assumption of facts or in other words, the re-
opening of assessment was an erroneous act for want of jurisdiction and so is a nullity.
According to the Ld. AR, since this order of AO dated 29.12.2017 was itself a nullity,
therefore, this nullity order of AO which has been interdicted by the Ld. Pr. CIT by
passing the impugned order dated 10.08.2020 is also a nullity. Consequently according
to Ld.. A.R, when the reasons recorded for reopening of assessment for AY 2010-11
was itself was on wrong assumption of fact, so the action of AO to initiate reassessment
proceedings by issue of notice u/s 148 of the Act, was, itself therefore, an act without
jurisdiction; Ergo the Re-assessment order of AO dated 29.12.2017 is non-est in the
eyes of law, so accordingly to Ld. A.R, the Ld. PCIT could not have interdicted a non-
est order, so the impugned order of Ld. PCIT is also a nullity or non-est in the eyes of
law.
5. Per contra, the Ld. CIT, DR vehemently opposing the contention of the Ld. AR,
submitted that if the AO’s reopening proceedings was bad in law it should have been
challenged by the assessee and not in this proceedings which is emanating from the
action of Ld. Pr. CIT u/s. 263 of the Act. According to Ld. CIT, DR, the assessee
having kept quiet on the reassessment order of AO cannot now in this proceedings
agitate about AO’s action in the proceeding while assailing the action of Ld. PCIT.
Further, according to Ld. CIT, DR, the Ld. Pr. CIT finding in the impugned order that
the AO’s omission not to have enquired into and levied taxes on the money routed to
the assessee in the form of share capital and premium has been an erroneous
action/omission on the part of the AO; and moreover, he pointed out that the Ld. PCIT
has held the assessee company to be provider of accommodation entry and therefore
has directed the AO to assess the income only of commission at the rate of 0.25% as
held by Hon’ble Calcutta High Court in this case of M/s Safeco Projects Pvt. Ltd. dated
07.03.2019 which is a reasonable order of Ld PCIT. So according Ld. CIT D.R., the
Ld. Pr. CIT rightly interfered in the order of AO by exercising his revisional
jurisdiction and passed a reasonable order to bring to tax only the commission income
of 0.25% which impugned action does not require our interference.
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6. In his rejoinder, the Ld. AR submitted that the assessee did not challenge the
action of reopening and order passed by the AO dated 29.12.2017 because the AO
accepted the return of income filed by the assessee and since the AO did not make any
addition/adverse view against the share capital/premium issued by the assessee there
was no grievance against the action of AO. So, the assessee did not prefer any appeal
before the Ld. CIT(A). However when the Ld. Pr. CIT through his impugned order
tried to interdict this order of AO, the assessee has raised the legal issue which assessee
is entitled to do because it is settled law that the jurisdiction can be challenged at any
stage/proceedings and even that it can be raised before the Hon’ble Apex Court for the
first time. And according to Ld. A.R, in this case, the primary proceedings is the AO’s
action of re-opening the assessment by issuance of notice u/s 148 of the Act which was
an action without jurisdiction because the factual basis on which he relied to base his
belief escapement of income was erroneous (as held by Ld. PCIT in his impugned order
itself). So the action of AO can be challenged in collateral proceedings u/s 263 of the
Act as held by the Tribunal in which several decision of Hon’ble Supreme Court has
been taken note and relied on the following decision of the Tribunal as under:
Supersonic Technologies (P) Ltd. vs. PCIT in ITA No. 2269/D/2017 dated 10.12.2018
(ITAT, Delhi Bench) ITA. No.3009 to 3012/DEL/2017
“6.1………….It is well settled Law that assessee can challenge the validity of the re-
assessment proceedings in the collateral proceedings (relating to examination of validity
of Order passed) under section 263 of the I.T. Act. We rely upon the Order of ITAT,
Mumbai Bench in the case of Westlife Development Ltd., vs. PCIT 49 ITR (Tribu.) 406 in
which it was held “allowing the appeal (i) that jurisdiction aspect of the Order passed in
the primary proceedings can be examined in collateral proceedings also. Thus, the
assessee could be permitted to challenge the validity of the Order passed under section
263 on the ground that the assessment order was non-est.” Since the reassessment order
itself is bad in law, therefore, Learned Counsel for the Assessee, rightly contended that
the same cannot be revised under section 263 of the I.T. Act. Only valid re-assessment
order can be revised under section 263 of the I.T. Act. On this ground itself the
proceedings under section 263 of the I.T. Act are bad in law and liable to be quashed.
We, accordingly, set aside the Order of Ld. Pr. CIT passed under section 263 of the I.T.
Act and quash the same.”
– M/s CharbhujaMarmo (India) (P) Ltd. vs. PCIT in ITA No. 4749/D/2019 dated 31.12.2019
(ITAT, Delhi)
“6. We have considered the rival submissions. It is well settled Law that since re-
assessment proceedings are invalid and bad in law, therefore, such proceedings could
not be revised under section 263 of the I.T. Act. It is also well settled Law that validity of
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the re-assessment proceedings are to be judged on the basis of the reasons recorded for
reopening of the assessment.”
He further placed reliance upon the following judgments: –
” M/s Westlife Development Ltd. vs. PCIT in ITA No. 688/Mum/2016 dated24.06.2016
(ITAT, Mumbai) – Krishna Kumar Saraf vs. CIT in ITA No. 4562/Del/2011 dated
24.09.2015 (ITAT, Delhi) – M/s Classic Flour & Food Processing (P) Ltd. vs. CIT in ITA
No. 764 to 766/Kol/2014 dated 05.04.2017 (ITAT, Kolkata)”
In the light of the aforesaid averments, and other decisions discussed infra, the Ld AR
wants us to adjudicate this legal issue.
7. Having heard both parties, the first aspect which needs to be examined is as to
whether the assessee is entitled to challenge the validity of initiation of proceedings by
AO u/s 147 of the Act in the present appeal in which he has challenged the validity of
order passed by Ld PCIT u/s 263 of the Act. The Ld. Counsel for the assessee
submitted before us that it is open to an assessee in an appeal against the order u/.s 263
of the Act which seeks to revise an order passed u/s 147 of the Act, to challenge the
validity of the order passed u/s.147 of the Act as well as initiation of proceedings u/s
147 of the Act. In this regard other than the case laws cited supra, the Ld. Counsel
for the assessee placed before us two decisions one rendered by Lucknow Bench of
ITAT in the case of Inder Kumar Bachani (HUF) vs ITO 99 ITD 621 (Luck) and ITAT
Mumbai ‘ G ‘ Bench in the case of M/s. Westlife Development Ltd. Vs Principal C.I.T.
in ITA NO.688/Mum/2016. In both the decisions a view has been taken by the
Tribunal that when an Assessment order passed u/s 147 of the Act was without
jurisdiction, the Ld. PCIT cannot invoke the jurisdiction u/s 263 of the Act against
such void or non-est order. In the second decision cited the Mumbai bench of the
Tribunal has specifically framed the following questions :-
” 1. Whether the assessee can challenge the validity of an assessment order during
the appellate proceedings pertaining to examination of validity of order passed u/s 263?
2. Whether the impugned assessment order passed u/s 143(3) dated 24-10-2013 was
valid in the eyes of law or a nullity as has been claimed by the assessee?
3. If the impugned assessment order passed u/s 143(3) was illegal or nullity in the eyes
of law, then, whether the CIT had a valid jurisdiction to pass the impugned order u/s
263 to revise the non est assessment order?”
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8. On question no. 1 and 3 which is relevant to the present case the Mumbai
bench of the Tribunal in the aforesaid case of M/s Westlife Development Ltd. (supra)
has taken the view that when the original assessment proceedings are null and void in
the eyes of law for want of assumption of jurisdiction, then such validity can be
challenged even in collateral proceedings. We note that the Mumbai bench took the
view that the proceedings before AO u/s 147 of the Act are primary proceedings and
proceedings before Ld PCIT u/s 263 of the Act are collateral proceedings and in such
collateral proceedings, the validity of initiation of the re-opening u/s 147 of the Act can
be challenged. The Mumbai bench of the Tribunal in this regard has placed reliance on
several decisions, the main decision being that of the Hon’ble Supreme Court in the
case of Kiran Singh & Ors. V. Chaman Paswan & Ors. [1955] 1 SCR 117 wherein the
Hon’ble Supreme Court observed as follows :-
” It is a fundamental principle well-established that a decree passed by a Court without
jurisdiction is a nullity, and that its invalidity could be set up whenever and wherever it is
sought to be enforced or relied upon, even at the stage of execution and even in collateral
proceedings. A defect of jurisdiction, whether it is pecuniary or territorial, or whether it is
in respect of the subject-matter of the action, strikes at the very authority of the Court to
pass any decree and such a defect cannot be cured even by consent of parties.”
9. The Mumbai bench of this Tribunal made a reference to another decision of the
Hon’ble Supreme Court in the case of Sushil Kumar Mehta vs Gobind Ram Bohra,
(1990) 1 SCC 193 and the decisions in the case of Indian Bank vs Manilal Govindji
Khona (2015) 3 SCC 712. The Mumbai bench also held that if order of assessment
passed u/s 147 of the Act was nullity in the eyes of law then that order cannot be
revised by invoking powers u/s 263 of the Act by CIT. The Mumbai Bench has in this
regard placed reliance on the decision of Delhi bench of the Tribunal in the case of
Krishna Kumar Saraf vs CIT in ITA NO.4562/Del/2007 order dated 24.09.2015
wherein it was held as follows :-
” 17. There is no quarrel with the proposition advanced by Id. DR that the proceedings u/s 263
are for the benefit of revenue and not for assessee.
18. However, u/s 263 the Id. Commissioner cannot revise a non est order in the eye of law.
Since the assessment order was passed in pursuance to the notice U/S 143(2), which was
beyond time, therefore, the assessment order passed in pursuance to the barred notice had no
legs to stand as the same was non est in the eyes of law. All proceedings subsequent to the said
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notice are of no consequence. Further, the decision of Hon’ble Madras High Court in the case
of CIT Vs. Gitsons Engineering Co. 370 ITR 87 (Mad) clearly holds that the objection in
relation to non service of notice could be raised for the first time before the Tribunal as the
same was legal, which went to the root of the matter.
19. While exercising powers u/s 263 Id. Commissioner cannot revise an assessment order
which is non est in the eye of law because it would prejudice the right of assessee which has
accrued in favour of assessee on account of its income being determined. If Id. Commissioner
revises such an assessment order, then it would imply extending/ granting fresh limitation for
passing fresh assessment order. It is settled law that by the action of the authorities the
limitation cannot be extended. Because the provisions of limitation are provided in the same
20. In view of above discussion ground no.3 is allowed and revision order passed u/s 263 is
quashed.”
After having considered the judicial precedent on the issue we are of the view that the
validity of the order passed by the AO which is being interdicted by the Ld. PCIT in the
impugned order assailed before us, can be examined as to whether the AO had the requisite
jurisdiction to re-open/re-assess the escaped income of the assessee. Therefore, in this case
we need to examine the action of AO dated 29.12.2017 passed u/s 147 of the Act which
action of AO depends upon the AO assuming validly the jurisdiction to pass an order of
assessment u/s 147 of the Act. It is settled law that the AO can reopen the assessment only
after fulfilling the conditions laid down in the said section (section 147 of the Act) namely
reason to believe that income chargeable to tax for that assessment year has escaped
assessment. If this essential condition is not satisfied by the AO before initiating assuming
jurisdiction u/s 147 of the Act then in such an event it cannot be said the AO has validly
assumed jurisdiction u/s 147 of the Act. As discussed even if for any reason, the assessee
had not challenged the validity of proceedings u/s 147 of the Act by filing appeal against
the order framed u/s.147 of the Act, it can be challenged in the appeal against an order
passed by the Ld. PCIT u/s 263 of the Act revising the invalid order u/s 147 of the Act. As
noted this issue has been analysed by the Mumbai Bench of the Tribunal in the case of M/s.
Westlife Development Ltd. (supra) wherein the Tribunal has equated the reopening
assessment u/s 147 to primary proceedings and the subsequent proceedings by Ld. PCIT
u/s 263 passed to be collateral proceedings. In this order the Tribunal has taken note of
several ratio’s of the Hon’ble Supreme Court wherein the Hon’ble Supreme Court held that
if the primary proceedings are non-est in law or void on the ground of lack of jurisdiction,
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then the validity of such proceedings can be challenged even in an appeal arising out of
collateral proceedings. Since we have already set out the ratio/operating portions of these
decisions we do not wish to repeat the same for the sake of brevity. In the light of the
aforesaid discussion we are of the view that the invalidity of the primary proceedings for
lack of jurisdiction can be challenged even in appellate proceedings arising out of a
collateral proceeding. In view of the aforesaid legal position we will now examine the legal
issue. For doing that first of all we have to examine whether the AO in the present case,
could have reopened the assessment of the assessee by issuance of notice u/s 148 of the Act
(which ultimate resulted in AO order dated 29.12.2017).
10. Now for examining this legal issue we need to examine whether the jurisdictional
fact and pre-conditions for re-opening an assessment as stipulated u/s 147 of the Act was
present/satisfied before the AO issued notice for re-opening dated 17.03.2017. Before we
do the factual analysis in respect of this legal issue, let us have a look at the scheme of the
Income Tax Act which gives power to the Income Tax Authorities as per Section 116 of the
Act who are appointed by the Central Government u/s 117 of the Act. The Act/Statute vest
power on certain Income Tax Authorities assigned as Assessing Officer (hereinafter the
AO) to assess/ascertain the income of the a subject/assessee and to determine the tax
payable by that subject/assessee by framing an assessment order for an Assessment year.
The concept of assessment is governed by the time barring rule and an assessee acquires a
right as to the finality of proceedings. Queitus of the completed assessment can be disturbed
only when there is information or evidence regarding undisclosed income or AO had
information in his possession showing escapement of income. So when an AO receives an
information regarding undisclosed income of an assessee in respect of an assessment year
which has escaped assessment, then the AO has to examine the information by verifying the
source of it and then also has to keep in mind that information adverse against an assessee
may trigger “reason to suspect”; then the AO to make reasonable enquiry and collect
material which would make him believe, that there is in fact an escapement of income.
And thereafter if he believes the existence of escapement of income then record his reason
to believe escapement of income and then issue notice u/s. 148 of the Act and not before
that. Let us look at the settled position of law on this issue.
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11. As noted (supra) the Parliament has given power to AO to reopen the assessment, if
the condition precedent as discussed above are satisfied, and not otherwise. It should be
kept in mind that the concept of assessment is governed by the time-barring rule and the
assessee acquires a right as to the finality of proceedings. Queitus of the completed
assessment is the Fundamental Rule and exception to this rule is Re-opening of assessment
by AO under section 147 or exercise of Revisional jurisdiction by CIT under section 263 of
the Act. Therefore, the Parliament in its wisdom has provided safeguards for exercise of the
reopening of assessment jurisdiction to AO; and revisional jurisdiction of CIT by providing
condition precedent which is sine qua non for assumption/usurpation of jurisdiction. In the
case of reopening of assessment, the reason to believe escapement of income is the
jurisdictional fact and law (mixed question of fact and law) and for revisional jurisdiction
the order of the AO should be erroneous as well as prejudicial to the revenue. Unless the
condition precedent is not satisfied, the AO or the CIT can exercise their reopening
jurisdiction or revisional jurisdiction respectively. The legislative history is that in respect
to the reopening u/s. 147 of the Act, the Parliament by Direct Tax Laws (Amendment) Act
1987 w.e.f. 01.04.1989 had substituted “for reason to believe escapement of income” to ‘for
reasons to be recorded by him in writing, is of the opinion” which gave unbridled subjective
satisfaction to the AO was later substituted back to ‘reason to believe escapement of
income”, by the Direct Tax Laws (Amendment) Act, 1989. The Hon’ble Apex Court as well
as the Hon’ble jurisdictional High Court as well as other Hon’ble High Courts have already
held in plethora of cases the test of a prudent person instructed in law in understanding
jurisdictional fact and law (mixed question of fact and law) the reason to believe
escapement of income (supra).
12. So the condition precedent as discussed above is the jurisdictional fact & law, which
is sine qua non for the AO to successfully usurp the jurisdiction u/s. 147 of the Act and it
has to be also kept in mind that the jurisdictional fact (mixed question of fact and law)
referred to in section 147 of the Act i.e Reason to believe escapement of income should be
that of AO and not that of any other authority, because then it will be against one of the
basic feature of the Constitution of India ie, the Rule of Law, wherein the Parliament has
empowered this reopening jurisdiction only to that of Assessing Officer and that is why if
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the reason to believe escapement of income is not that of AO, the assumption of jurisdiction
to re-open, has been held to be vitiated and resultantly bad in law, since it will be on the
basis of borrowed satisfaction.
13. Now coming back to the present appeal, when we examine the legal issue on the
touchstone of the settled judicial precedents on re-opening let us examine the reason
recorded by the AO to re-open the assessment of AY 2010-11 pursuant to which the AO
issued the notice u/s 148 of the Act dated 17.03.2017. According to the Ld. AR, the
premises/jurisdictional fact for reopening the assessment is discernible from the assessment
order dated 29.12.2017 itself wherein the AO in his own words have stated as under:
“Assessee submitted return on 29.07.2010, showing total income of Rs. 443/- and
the case was processed accordingly, subsequently the case was selected for scrutiny u/s
147 on the basis of an information received from the authentic source that M/s Miracle
Commodities Pvt Ltd there is frequent high value deposit in their bank accounts and
immediate transfer to some third party account. During the course of further investigation
it is found that large value of amount has been routed to M/s Concord Infra Projects Pvt.
Ltd.
From further detailed investigation and analysis of data/information it is revealed
that during the FY:2009-10 corresponding to A Y :2010-11, M/s Concord Infra Projects
Pvt Ltd has allotted shares @ Rs. 10 per share at high premium to as many as 16 Kolkata
based companies amounting to Rs. 8,34,00,000/-.
The fund so raised was invested in the shares of Kolkata based companies at very
high premium which does not commensurate with the financial position of the company in
which such investment was made. Subsequently there was change in the Directors of M/s
Concord Infra Projects Pvt Ltd. It clearly shows that the company has been sold claimed as
to real beneficiaries who channelized their unaccounted income and converted bogus
investment to real usable assets. Funds so liquidated by way of selling bogus investment in
the name of Kolkata based companies are finally converted into real assets as Short Term
Loan & advances/Cash & Bank balance as claimed. The case was supposed to be
examined whether it was bogus or unaccounted .
It is further mentioned that M/s Concord Infra Projects Pvt Ltd is a designated
jamakharchi company incorporated to launder unaccounted income as per Departmental
Database.”
16. From a perusal of the aforesaid reasons it is evident that the jurisdictional
fact/information on which the AO has based his reason to believe escapement of income
was that the department received an authentic information that huge value of deposits were
made in the bank account of one company called M/s. Miracle and thereafter the money was
transferred to some third party account and that further investigation had revealed that large
amount of money was routed to the assessee company i.e. M/s. Concord Infra Projects Pvt.
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Ltd. According to the Ld. AR, this foundational fact on the basis of which the AO had
based his “reason to believe escapement of income” is factually wrong/erroneous since the
foundation fact has been found to be absent, which fact is evident from the factual findings
of the Ld. PCIT in the impugned order wherein he has made a specific finding of fact in his
conclusion recorded at page 40 of the impugned order wherein he concludes in his own
words “in conclusion the relevant fact which constitute the present case are that the alleged
large transaction of M/s. Miracle have not been reached directly/indirectly to the assessee
company as evident from bank account of the assessee company nor through share
subscriber companies (shareholders) to whom the assessee company has allotted shares.”
Therefore, according to the Ld. AR, this finding of fact by the Ld. Pr. CIT clearly reveals
that the deposits in the bank account of M/s. Miracle has not been routed to the assessee
company which assertion of the Ld. A.R. could not be rebutted/contradicted by the Ld.
CITDR. So Ergo, we note that the foundation on which the reason to believe escapement of
income by the AO to issue notice u/s. 148 of the Act on 17.03.2017 itself was on wrong
assumption of fact as is evident from the finding of fact by the Ld. PCIT that no money
from M/s Miracle has been routed to the assessee company directly or indirectly whereas
the foundation fact on the basis of which reopened the assessment as is evident from the
reasons recorded (supra) was that high value of money was deposited in the bank account
of M/s Miracle which in-turn has been routed to the assessee through third party in the form
of share subscription to the tune of Rs. 8.34 crores which fact was found by Ld. PCIT to be
absent. So, the AO’s belief of escapement of income was on wrong assumption of facts and
so invocation of reopening jurisdiction by issue of notice u/s 148 of the Act is bad in law
and, therefore, the consequent re-assessment order dated 29.12.2017 of the AO is a nullity
and, therefore, the order of the Ld. Pr. CIT to interfere in the order of the AO dated
29.12.2017 u/s. 144/147 of the Act is also a nullity and, therefore, the action of the Ld. Pr.
CIT to invoke his jurisdiction u/s. 263 of the Act itself was without jurisdiction. Ergo, we
hold the impugned order as null in the eyes of law, so we quash it.
17. In the result, the appeal of assessee is allowed.
Order is pronounced in the open court on 13th October, 2021. 13
ITA No. 174/Kol/2021
Concord Infra Projects Pvt. Ltd., AY 2010-11
Sd/-(Manish Borad) Sd/-(A. T. Varkey)
Accountant Member Judicial Member
Dated: 13.10.2021
JD, Sr. PS
Copy of the order forwarded to:
1. Appellant- M/s. Concord Infra Projects Pvt. Ltd., 4th floor, 14, M. D. Road, Kolkata-
700 007. 2. Respondent – Pr.CIT-3, Kolkata
3. ITO, Ward-9(3), Exemption, Kolkata
4. DR, Kolkata Benches, Kolkata (sent through e-mail)
True Copy By Order
Assistant Registrar/DDO
ITAT, Kolkata Benches, Kolkata
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