ETC Electric Pvt. Ltd Vs ITO (ITAT Kolkata)
The Income Tax Appellate Tribunal (ITAT) in Kolkata has delivered a significant judgment, declaring a reassessment proceeding against ETC Electric Pvt. Ltd. to be void ab initio. The tribunal’s decision was based on a legal ground concerning the limitation period for issuing a reassessment notice, specifically in cases where the alleged escaped income is below the threshold of Rs. 50 lakh.
The case pertains to the assessment year (AY) 2018-19. ETC Electric Pvt. Ltd. had originally filed its return of income on October 31, 2018, declaring a total income of Rs. 23,49,490. The dispute began when the Income Tax Department received information alleging that the company had received “accommodation entries” amounting to Rs. 21,50,000 during the financial year 2017-18.
Following the procedure laid down by the Supreme Court in the case of Union of India vs. Ashish Agrawal, a notice under Section 148 of the Income Tax Act, 1961, was issued to the assessee on July 27, 2022. The Assessing Officer (AO), after considering the submissions, completed the assessment by making two additions to the company’s income: Rs. 29,00,000 for the alleged accommodation entries and Rs. 2,84,164 for interest expenditure. This resulted in a revised total income of Rs. 55,33,654.
