Kishore Trading Company Vs ITO (ITAT Kolkata)
Income Tax Appellate Tribunal (ITAT) Kolkata has set aside the reassessment of Kishore Trading Company for the Assessment Year 2012-13. The case arose when the Assessing Officer (AO) reopened the assessment under Section 147, based on information from the Investigation Wing that the assessee allegedly received accommodation entries disguised as commodity profits. The Tribunal found that the reassessment was initiated without independent verification and merely relied on borrowed satisfaction, making it legally untenable.
Kishore Trading Company had initially filed its income tax return declaring ₹48,600, which was processed under Section 143(1). The AO reopened the assessment in March 2019, citing undisclosed income of ₹20 lakh through bogus commodity transactions. However, during assessment proceedings, the assessee demonstrated that the declared profits already included the disputed ₹20 lakh, rendering the reassessment unjustified. The AO further questioned the assessee’s transactions with Kali Commodity Pvt. Ltd. and Shree Krishna Bhatter, treating them as unexplained cash credits under Section 68. The appellate authority upheld the AO’s findings, rejecting set-offs against speculative losses.
Before the ITAT, the assessee argued that the reassessment was void since it was solely based on third-party information without independent application of mind. The Tribunal referenced multiple judicial precedents, including Meenakshi Overseas (395 ITR 677) and G&G Pharma (384 ITR 147), which emphasized that reopening based on borrowed satisfaction is impermissible. The Tribunal held that since the reassessment was initiated without due diligence, it was legally unsustainable.
