ITAT Kolkata Sustains Rs. 84 Lakh Addition Under Section 68, Dismisses Assessee's Challenge to Reassessment Validity Over Section 143(2) Notice

The Income Tax Appellate Tribunal (ITAT), Kolkata, recently delivered a comprehensive ruling in the case of Nisha Projects Private Limited Vs DCIT, dismissing the appeal preferred by the assessee for the Assessment Year (AY) 2016-17. The tribunal upheld an addition of Rs. 84,00,000/- made by the Assessing Officer under Section 68 of the Income Tax Act 1961. The core of the dispute revolved around the legal validity of the reassessment proceedings, specifically the assessee's contention that a mandatory notice under Section 143(2) was never served, thereby rendering the entire assessment void.

This decision, pronounced on 13.07.2026, provides critical insights into the procedural prerequisites of reassessment, the consequences of filing a delayed return in response to a Section 148 notice, and the evidentiary weight of an assessee's own admissions during appellate proceedings.

Factual Matrix of the Case

The procedural history of the case involves a sequence of filings, notices, and reassessment actions that ultimately culminated in the present appeal before the ITAT.

Original Return and Initiation of Reassessment

The assessee, Nisha Projects Private Limited, originally filed its income tax return for AY 2016-17 on 13.09.2016. In this initial filing, the assessee declared a total loss amounting to Rs. 29,177/-.

Subsequently, the income tax department initiated reassessment proceedings against the assessee under Section 147 of the Income Tax Act 1961. After securing the necessary administrative approval from the Additional Commissioner of Income Tax, Range-7, Kolkata, the Assessing Officer issued a notice under Section 148 of the Act. This statutory notice was issued and duly served upon the assessee on 29.03.2021.

The Delayed Compliance by the Assessee

The notice issued under Section 148 explicitly mandated the assessee to furnish its return of income within a strict timeframe of 30 days from the date of receipt. However, the assessee failed to comply with this deadline. Instead of adhering to the 30-day window, the assessee filed its return of income on 06.08.2021. In this delayed return, the assessee declared a NIL income while continuing to claim the original loss of Rs. 29,177/-.

Crucially, the assessee did not file any formal application seeking an extension of time from the Assessing Officer to file the return beyond the stipulated 30-day period.

Assessment Proceedings and the Section 68 Addition

During the course of the assessment proceedings, the Assessing Officer scrutinized the financial transactions of the assessee. The primary focus was on a specific loan transaction. The assessee, claiming to be a loss-making entity, had received a loan amounting to Rs. 84,00,000/- from Babylon Trading and Investment Private Limited. The records indicated that this exact amount was subsequently transferred to OTREM ESTATES Pvt. Ltd. on 06.04.2016.

After evaluating the submissions and the documentary evidence provided by the assessee, the Assessing Officer concluded that the transaction lacked satisfactory explanation. Consequently, the AO invoked Section 68 of the Income Tax Act 1961, treating the entire loan amount of Rs. 84,00,000/- as an unexplained cash credit.

An assessment order was subsequently framed under Section 147 read with Section 144 and Section 144B of the Act on 30.03.2022, assessing the total income of the assessee at Rs. 84,00,000/-.