Principal Commissioner Of Incometax-2, Kolkata v. M/S. Coal Sale Co. Ltd

ITAT/71/2022IA NO.GA/1/2022 IN THE HIGH COURT AT CALCUTTASpecial Jurisdiction (Income Tax)ORIGINAL SIDE PRINCIPAL COMMISSIONER OF INCOMETAX-2, KOLKATA -Versus- M/S. COAL SALE CO. LTD. Appearance:Mr. Soumen Bhattacharyya, Adv....for the appellant.Mr. Abhratosh Majumdar, Sr. Adv.Mr. Soumitra Chowdhury, Adv.Mr. Avra Mazumdar, Adv.Md. Sk. Billawal Hossain, Adv.Mr. Kausheyo Roy, Adv.Mr. Binayak Gupta, Adv....for the respondent. BEFORE: The Hon’ble JUSTICE T.S. SIVAGNANAM -And- The Hon’ble JUSTICE BIVAS PATTANAYAK The Court : This appeal filed by the revenue underSection 260A of the Income Tax Act, 1961 (the ‘Act’ for brevity)is directed against the order dated 17[th] December, 2021 passed bythe Income Tax Appellate Tribunal, “A” Bench, Kolkata (in shortthe ‘Tribunal’) in ITA No.2364/Kol/2019 and CO No.46/Kol/2019 forthe assessment year 2014-15. The revenue has raised the following substantial questionof law for consideration: We have heard Mr. Soumen Bhattacharyya, learned standingcounsel for the appellant/revenue and Mr. Abhratosh Majumdar,learned senior counsel assisted by Mr. Avra Majumdar, learnedAdvocate appearing for the respondent/assessee.The short question involved in the instant case iswhether the reopening of the assessment as done by the assessingofficer was justified. The reasons for reopening, according to the assessing officer, was that the assessee, on earlier bogusbill, has made accommodation entry through M/s. Bridge & BuildingConstruction Co. Ltd. via bank account in IDBI Bank. The saidallegation was made based upon a statement recorded from one EntryOperator, Mr. Ajit Kumar Jindal. The assessing officer, afterreferring to the statement, came to the conclusion that incomeassessable to tax has escaped assessment. Aggrieved by the same,the assessee preferred appeal before the Commissioner of IncomeTax (Appeals)-II, Kolkata [CIT(A)]. By order dated 17[th] July, 2018the appeal was allowed. Aggrieved by the same, the revenuepreferred appeal before the tribunal which was dismissed.Challenging the same the revenue has filed the present appeal.At the first blush, one gets an information and say thatthe respondent/assessee had transactions with the said company.However, on scrutiny of the facts it appears to be otherwise.This has been clearly brought out by the CIT(A) in its order. Wequote the relevant portion of the said order which reads asfollows: “I find that the assessee complied with all therequisitions vide letter dated 20.12.2018. The assesseealso enclosed the coy of the agreement with the saidBridge and Building Construction Co. Ltd. along with theweekly reports, dispatch advises of the Railways and thecopies of the bills raised by the said Bridge andBuilding Construction Co. Ltd. The name of the parties to whom dispatches of coal was made was also mentioned inthe agreement. Therefore, the AO was wrong in observingthat no third-party involvement/evidence was produced bythe assessee. The assessee duly gave the name of thethird party for whom services were rendered. It was alsomentioned in the letter dated 20.12.2018 that one Mr.Purushottam Vyas along with his team was supervising thework at Colliery and liaison work with the principles onbehalf of Bridge and Building Construction Co. Ltd. TheAO did not controvert the submissions of the assessee.The appellant, in reply to the show cause notice i.e.22.12.2018, also submitted a confirmation from M/s.Ultratech Cement Ltd. wherein they confirmed thatPurushottam Vyas used to visit the plant as Supervisorfor dispatch of Coal from Collieries. The AO hascompletely ignored the said evidence but also by passingthe same by observing that no “Single” from anybody apartfrom the assessee itself and the purported serviceprovider was produced. This observation itself isincorrect because service providers also charged 12%service tax on such services. The required TDS was alsomade and paid and evidence whereof was filed. The AO hasalso mentioned the voluminous papers were filed but noneof the evidences have been controverted.” Further, the CIT(A) held that the assessing officer madean addition only on the basis of the statement of Shri Jindal andthe same does not relate to the transaction of the assessee. Theassessee provided services to the railways and other big companieswere involved and confirmed that services were actually provided. Further, the CIT(A) noted that there is no evidence to show thatagents were related to the assessee and the commission paid hascome back to the assessee and, therefore, concluded that it cannotbe said that the commission paid was not genuine. With regard tothe correctness of the reopening proceedings, after elaboratingtaking note of the facts, the CIT(A) pointed out that in thestatement recorded from Shri Jindal on 29[th] October, 2014, herefers only to account of Axis Bank for the purpose of accounting;whereas the account from which the bank transactions were made bythe assessee with M/s. Bridge & Building Construction Co. Ltd. wasmaintained with IDBI Bank. The factual position was re-examinedby the tribunal. The tribunal pointed out that the investigationwing on the strength of the admission made by Shri Jindal, jumpedto the conclusion that since the assessee had transacted with M/s.Bridge & Building Construction Co. Ltd., the assessee is abeneficiary of bogus bills. The tribunal pointed out that in thereasons recorded for reopening, nowhere the assessee’s name hasbeen specifically mentioned by Shri Jindal nor there is anythingadverse against the assessee. The assessee was found to havetransacted with the said company through banking channel andfaulted the assessing officer for reopening the assessment basedon the statement of Shri Jindal which was a general statement andthat the assessing officer assumed that the assessee is abeneficiary of the account. Furthermore, the tribunal pointed out that the just because the assessee had transaction with M/s.Bridge & Building Construction Co. Ltd. it cannot be a ground tobelieve that the assessee’s income escaped assessment. It wasfurther held that without any other material as discussed, theconclusion drawn by the assessing officer, merely on receipt ofthe aforesaid information does not master the requirement of lawto validly form the reason to believe escapement of income.Accordingly, the appeal filed by the revenue was dismissed. After considering the submissions made on either side andcarefully perusing the materials placed before us, we find thatthe entire matter is factual and the reopening itself was made onwrong presumption of facts. Thus, we find there is no question of law much lesssubstantial question of law arising for consideration in thisappeal. Accordingly, the appeal filed by the revenue(ITAT/71/2022) fails and is dismissed.Consequently, the connected application for stay(GA/1/2022) also stands closed. (T.S. SIVAGNANAM, J.) (BIVAS PATTANAYAK, J.)