ORDER
Manish Agarwal, Accountant Member. – This appeal filed by the Assessee is directed against the order of the Ld. Commissioner of Income Tax (Appeals-3), Noida [hereinafter referred to as “CIT(A)”] dated 29.07.2025 arising out the assessment order 24-12-2019 u/s 143(3) r.w.s. 147 of the Income Tax Act, 1961 (in short “the Act”) pertaining to A.Y. 2012-13.
2. The solitary issue involved in this appeal is Ground No. 1 which read as under:-
“That the Ld. CIT(A) has erred in law in upholding the addition made u/s. 147 of the Act, ignoring the fact that the reasons recorded for reopening the assessment u/s. 147 did not pertain to the issue on which the addition has been made. That since the reassessment has been made on a ground unrelated to the recorded reasons, the reopening and the consequential addition are without jurisdiction and void ab initio.
3. Brief facts of the case are that the assessee company M/s AKC Retailers Private Limited filed its return of income for AY 2012-13 on 23.9.2012 declaring an income of Rs. 5,509/-. Thereafter, the return was processed u/s. 143(1) of the Act. However, the case of the assessee was picked up for scrutiny. An information received from the Investigation Wing, Kolkata that M/s Topstar Marketing Pvt. Ltd. was involved in providing accommodation entries through a large number of dummy companies floated by it or its associates. The name of the assessee company i.e. M/s AKC Retailers Pvt. Ltd. figures in the list of beneficiaries of bogus share application money /long term capital gain/unsecured loans in lieu of commission. The assessee company as reported, has taken accommodation entries amounting to Rs. 5,15,00,392/- from M/s Pyramid Vincom Pvt. Ltd. and M/s Gliter Deal Marketing Pvt. Ltd. firms managed and controlled by M/s Topstar Marketing Pvt. Ltd. AO noted that the assessee has taken accommodation entries in the form unsecured loans from the entry providing companies being controlled by M/s Topstar Marketing Pvt. Ltd., the case was reopened for assessment u/s. 148 of the Act. AO noted that on perusal of the bank statement of the assessee company and bank statement of M/s Pyramid Vincom Pvt. Ltd. and M/s Gliter Deal Mark Pvt. Ltd. relevant to FY 2011-12 and AY 2012-13, it transpires that the assessee company did not receive any unsecured loan during the year under consideration from such entities. Further, upon information received from Investigation Wing, Kolkata, it was noted by the AO that assessee has taken accommodation entry in the form of share application money from M/s Pushpanjali Commotrade Pvt. Ltd. amounting to Rs. 2,00,00,000/- on 13.9.2011 and from M/s Skylight Distributors Pvt Ltd. amounting to Rs. 1,95,00,000/- on 13.92.2011. Accordingly, assessee was asked to furnish the details of the transactions, who accepted that the said money was received, but the Board of the Directors of assessee company decided not to allot the shares to these company and subsequently refunded the same to them. AO noted that since assessee took entry in the form of share application money from the said entity and after utilization of such fund as per its requirement portrayed that said funds were returned back, however, as per information of the Investigation Wing, Kolkata it is mentioned that these companies have no actual business transactions and have indulged in providing accommodation entries only. Hence, he added the amount of Rs. 3,95,00,000/- in the hands of the assessee. Against the above action of the AO, assessee appealed before the Ld. CIT(A) who vide his impugned order dated 29.7.2025 dismissed the appeal of the assessee by upholding the action of the AO. Aggrieved, assessee is in appeal before us.
4. With respect to the action of the AO of exceeding jurisdiction u/s. 147 of the Act, whereby the AO has recorded the satisfaction on a ground for which no addition was made in the reassessment order. Before us, Ld. AR for the assessee submits that in terms of the reasons recorded dated 13.3.2019 available at pages 3-5 of the Paper Book. The AO recorded the satisfaction of escapement of income to the extent of Rs. 5,15,00,392/-of loan taken from M/s Pyramid Vincom Pvt. Ltd. and M/s Gliter Deal Mark Pvt. Ltd. firms managed and controlled by M/s Topstar Marketing Pvt. Ltd. The said satisfaction was recorded on the basis of information received from the Investigation Wing, Kolkata that AO in para 5 of the reasons recorded forms the belief of escapement of income whereby AO has observed that assessee has received total loan of Rs. 11,32,00,000/- out of which the accommodation entries were of Rs. 5,15,00,392/- received from the entries received from the entities controlled by M/s Topstar Marketing Pvt. Ltd. However, from the perusal of the assessment order, it is observed that the additions have been made on account of loans taken from M/s Pushpanjali Commotrade Pvt. Ltd. amounting to Rs. 2,00,00,000/- and M/s Skylight Distributors Pvt Ltd amounting to Rs. 1,95,00,000/-. Ld. AR drew our attention to the assessment order para 3.2 wherein, after verifying the bank statement, AO observed that assessee has not received any unsecured loan from the companies referred in the reasons recorded. Ld. AR submits that even though the AO proceeded further and made the additions on account of loan taken from other companies by observing that assessee has unexplained credit ignoring the fact that no such loan taken from these companies. Ld. AR thus requested that the AO has exceeded his jurisdiction and therefore, the addition made be deleted. For this, he placed reliance on the judgements of the Hon’ble Jurisdictional High Court in the case of
Ranbaxy Laboratories Ltd. v.
CIT 336 ITR 136 (
Delhi);
PCIT v.
Naveen Infrodevelopers & Engineers (P) Ltd. [2025] (
Delhi) and Hon’ble Allahabad High Court judgmenent in the case of
Prakhar Tandon v.
AO 448 ITR 177 (Allahabad).
5. On the other hand, Ld. CIT(DR) vehemently supported the orders of the lower authorities and submitted that the Ld. CIT(A) has dealt this issue in para 5.2 of the order wherein, CIT(A) has observed that the unsecured loan taken from other two entities which was not found placed in the reasons recorded were also identified by the AO from the information provided by the Investigation Wing, Kolkata from which the assessee has received share application money and therefore, the AO has rightly made the addition in this issue. Ld. CIT(DR) prayed accordingly.
6. We have heard both the parties and perused the material on record. At the outset, from the reasons recorded, it is observed that the AO forms the belief of escapement of income of Rs. 5,15,00,392/- being loan received from two companies viz. M/s Pyramid Vincom Pvt. Ltd. and M/s Gliter Deal Mark Pvt. Ltd. managed and controlled by M/s Topstar Marketing Pvt. Ltd. which was based on the information provided by the Investigation Wing, Kolkata. Thereafter, in para 6 of the reasons recorded AO has recorded the satisfaction of escapement of income to the extent of Rs. 5,15,00,392/-received from two companies. It is nowhere stated in the reasons about the loans taken from two companies namely Pushpanjali Commotrade Pvt. Ltd. of Rs. 2 crore and M/s Skylight Distributors Pvt Ltd of Rs. 1.95 crore. It appears that the AO exceeded the jurisdiction alleging that the loans taken from these two companies as accommodation entries. Though no satisfaction was recorded for reopening the assessment. Hon’ble Delhi High Court in the case of Ranbaxy Laboratories Ltd. (supra) in the head notes has observed as under:-
“Section 147 of the Income-tax Act, 1961 – Income escaping assessment – General – Whether if during course of reassessment proceedings, Assessing Officer comes to conclusion that some items have escaped assessment, then notwithstanding that those items were no included in reasons to believe as recorded for initiation of proceedings and notice, he would be competent to make assessment of those items – Held, yes – Whether, however, Legislature could not be presumed to have intended to give blanket powers to Assessing Officer that of assuming jurisdiction under section 147 regarding assessment or reassessment on escaped income, he would keep on making roving inquiry and thereby including different items of income not connected or related with reasons to believe, on basis of which he assumed jurisdiction – Held, yes – Whether for every new issue coming before Assessing Officer during course of proceedings of assessment or reassessment of escaped income, and which he intends to take into account, he would be required to issue a fresh notice under section 148 – Held, yes – Assessing Officer reopened assessee’s assessment on ground that items, viz., club fees, gifts and presents and provision for leave encashment had escaped assessment – During reassessment proceedings, Assessing Officer was satisfied with justifications given by assessee regarding aforesaid items but found deduction under sections 80HH and 80-I as claimed by assessee to be not admissible – He, consequently, while not making additions on items of club fees, gifts and presents, etc., reduced claim deduction under sections 80HH and 80-I – Whether Assessing Officer had jurisdiction to reassess issues other than issues in respect of which proceedings were initiated -Held, yes, items of club fees, gifts and presents and, thus, reasons for initiation of reassessment proceedings ceased to survive, there was no justification in reducing claim of deduction under section 80HH and 8—I – Held, yes.”
7. Similarly, in the case of Naveen Infrodevelopers & Engineers (P.) Ltd. (supra), the Hon’ble Jurisdictional High Court has followed its earlier judgement as given in the case of Ranbaxy Laboratories Ltd. (Supra.).
8. Keeping in view of the aforesaid facts and circumstances and respectfully following the judgements of the Hon’ble jurisdictional High Court, we are of the considered view that the AO has exceeded his jurisdiction in making the additions on the loan taken from companies which are not forming part of the reasons recorded and therefore, the additions made on the issue which are not the subject matter of the satisfaction recorded for reopening are not tenable and thus the same is deleted. Accordingly, the Ground No. 1 raised by the assessee is thus allowed. Since the solitary addition has been deleted, the other grounds have become academic and thus need not be adjudicated.
9. In the result, appeal of the assessee is allowed.
