Baba Metalics Private Limited Vs ITO (ITAT Kolkata)
In a combined ruling involving reassessment proceedings and addition under Section 68 of the Income-tax Act, the Kolkata Bench of the Income Tax Appellate Tribunal (ITAT) allowed both appeals filed by the assessee for Assessment Year 2012-13. The Tribunal held that reassessment proceedings initiated on the basis of incorrect and mechanically recorded reasons were invalid, and further ruled that additions towards share capital and share premium could not be sustained where the assessee had furnished documentary evidence establishing the identity, creditworthiness, and genuineness of investors.
In ITA No. 455/KOL/2025, the dispute concerned the reopening of assessment under Sections 147 and 148 of the Income-tax Act. The assessee had originally filed its return declaring nil income, and an assessment under Section 143(3) was completed assessing total income at ₹7.84 crore. Subsequently, reassessment proceedings were initiated and an addition of ₹10 lakh was made as unexplained money.
During appellate proceedings, the assessee argued that the reasons supplied for reopening did not relate to it but instead pertained to another company, M/s Balaji Polytex Industries Pvt. Ltd. The assessee informed the Assessing Officer that the reopening had been initiated on the basis of incorrect reasons. Thereafter, fresh reasons were supplied. The Tribunal observed that the reasons had been recorded by one officer, while the notice under Section 148 was issued nearly a year later by another officer. The Tribunal held that the notice issued after such delay, following recording of reasons and approval, was bad in law and unsustainable.
