Tribunal overturns tax assessment, directs deletion of addition under Section 68. Procedural flaws highlighted.

The Tribunal allowed the appeal of the assessee, setting aside the order of the CIT(A) and directing the AO to delete the addition made under Section 68 of the Income Tax Act. The Tribunal found that the reassessment order was procedurally flawed and made without proper verification. Additionally, the Tribunal noted that the AO and CIT(A) did not adequately consider the evidence provided by the assessee, shifting the burden of proof to the AO. The jurisdictional issue regarding the assessment order was left open due to the favorable decision on the merits.

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Issues Involved:
1. Jurisdiction of the Assessing Officer (AO) to pass the assessment order.
2. Validity of the reassessment order under Section 144 read with Section 263, 147, and 143(3) of the Income Tax Act.
3. Addition of share capital and premium under Section 68 of the Income Tax Act.

Issue-wise Detailed Analysis:

1. Jurisdiction of the Assessing Officer (AO) to Pass the Assessment Order:
The assessee challenged the jurisdiction of the AO to pass the assessment order dated 25.03.2015 under Section 144 of the Income Tax Act, arguing that it was illegal and without jurisdiction as per Section 127 of the Act. The assessee contended that there was no proper order or intimation for the transfer of jurisdiction from ITO Ward 1(2)/Kolkata to ITO Ward 6(1)/Kolkata. The Tribunal noted that the jurisdiction was shifted on the plea of restructuring without following the due process under Section 127 of the Act, making the assessment order passed by ITO Ward-6(1) potentially without jurisdiction and bad in law.

2. Validity of the Reassessment Order Under Section 144 Read with Section 263, 147, and 143(3) of the Income Tax Act:
The reassessment order was passed following a revision order under Section 263 by CIT-1, Kolkata, which set aside the original assessment order dated 12.05.2011. The reassessment was conducted by ITO Ward 6(1) within 45 days, ignoring the assessee's response to the show cause notice dated 17.03.2015. The Tribunal observed that the AO did not properly consider the documents and explanations provided by the assessee, and the reassessment order was made hastily without proper verification, making it procedurally flawed.

3. Addition of Share Capital and Premium Under Section 68 of the Income Tax Act:
The main issue was the addition of Rs. 11,10,00,000/- as unexplained cash credits under Section 68. The assessee had provided substantial evidence, including income tax returns, audited accounts, share application forms, bank statements, and other documents to substantiate the identity, creditworthiness, and genuineness of the share subscribers. The Tribunal emphasized that the AO and CIT(A) did not properly examine these documents and failed to provide valid reasons for rejecting them. The Tribunal cited several judicial precedents, including the Supreme Court's decision in CIT v. Lovely Exports Pvt. Ltd., to highlight that the burden of proof shifts to the AO once the assessee provides prima facie evidence. The Tribunal concluded that the assessee had discharged its onus, and the AO's addition was based on conjectures and surmises without disproving the evidence provided by the assessee.

Conclusion:
The Tribunal allowed the appeal of the assessee, setting aside the order of the CIT(A) and directing the AO to delete the addition made under Section 68. The Tribunal also left the jurisdictional issue open, as the decision on the merits rendered it academic. The order was pronounced on 5th May 2021.

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