IN THE INCOME TAX APPELLATE TRIBUNAL “C” BENCH, MUMBAI BEFORE SHRI PAWAN SINGH, JUDICIAL MEMBER&

SHRI ARUN KHODPIA, ACCOUNTANT MEMBER ITA No. 2639/MUM/2025 (AY: 2012-13)

(Physical hearing)

Prakash Cotton Mills Pvt Ltd DCIT, Circle 8(2)(1), Mumbai

1^st Floor, Apsara Cinema Building, Vs Room No.624, 6^th Floor, Aayakar Bhadkamkar Marg, Grant Road (E) Bhavan, M.K. Road, Mumbai Mumbai-400 007 PAN : AAACP0550H Appellant / Revenue Respondent / Assessee Assessee by Shri J.D. Mistry, Senior Advocate with Shri Tanzil Padvekar, Advocate Revenue by Shri R.A. Dhyani, CIT DR Date of Institution 17.04.2025 Date of hearing 18.09.2025 Date of pronouncement 26.09.2025 Order under section 254(1) of Income Tax Act PER PAWAN SINGH, JUDICIAL MEMBER;

1. This appeal by assessee is directed against the order of ld. CIT(A) / NFAC dated 05.03.2025for A.Y. 2012-13. The assessee has raised the following grounds:_

“I. Re-opening under Section 147 and Notice issued under Section 148 of the Act, 1961 bad in law as not meeting jurisdictional requirements:

1. On the facts and in law, proceedings initiated under Section 147 and Notice issued under Section 148 of the Income Tax Act, 1961 (in short referred as Act of 1961) are bad in law and without meeting mandatory jurisdictional requirements and hence, impugned Notice dated 18.03.2019 is liable to be set aside and quashed.

2. On the facts and in law, the formation of belief of Ld. Assessing Officer [in short Ld. A.O.] was not based on any tangible material as prima facie ascertained from the reasons recorded for issuing impugned Notice under Section 148 of the Act and hence, mandatory condition for meeting jurisdictional requirement is absent for formation of belief.

3. On the facts and in law, re-assessment proceedings are initiated for fishing and rowing enquiry by only referring to the Audited Financial Statements filed by the Appellant during regular assessment proceedings under Section 143(3) of the Act and when Appellant, in clear terms, has declared facts of dispute between the Partners of M/S. Kanha& Co. Hence, as per well settled principles of law, the impugned notice issued under Section 148 of the Act is not sustainable in law and liable to be quashed and set aside.

4. On the facts and in law, the Appellant has declared all primary facts in Directors' Report and also in Audited Financial Statements and there was no failure on part of the Appellant to disclose all primary material facts and impugned Notice under Section 148 of the Act, 1961 was issued beyond period of 4 years from end assessment year 2012-13, the Appellant is protected by proviso to Section 147 of the Act which is fetter on power of Ld.

A.O. to initiate proceeding invoking Sec. 147 of the Act.

5. That as per proviso to Sec. 147 of the Act, the Ld. A.O. has not discharged burden by specifying which fact/s was/were not disclosed by the Appellant. Merely making a bald assertion in the reasons that there was failure to disclose truly and fully material facts does not relieve Ld. A.O. from the legal burden put upon him as per proviso to Section 147 of the Act. Hence, on this ground alone, the impugned Notice issued under Section 148 of the Act has to be set aside and quashed.

6. On facts and in law, re-opening is merely based on change of opinion as Directors' report with Audited Financial Statements were considered by Ld. A.O. while passing regular assessment Order under Section 143(3) of the Act. Hence, merely assessment Order is silent on the issue, it can't be presumed that there is non-application of mind by the Ld. A.O.

7. On the facts and in law, there is no escapement of income as condition precedent in Section 147 of the Act for initiating reassessment proceeding as, till today, no asset of M/s. Kanha& Co. has been distributed as provided in Sec. 45(4) of the Act of 1961 and matter is pending and seized with Hon'ble High Court of Bombay under the Indian Arbitration Act. Hence, mere book entries unilaterally passed have no relevance unless ther