TaxTMI 
TaxTMI 
TaxTMI 
2018 (7) TMI 59
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.... account of share transactions from one client to the other. The losses/profits were shifted to reduce the tax liability in the hands of either the original client or modified client. The information received in the case of the assessee is as under: PAN of BeneficiaryClient Name of the Beneficiary Client Address of Beneficiary Name of Broker F.Y.2008-09 When Original Client (Ascertained Profit Shifted Out) (In Rs.) When Modified Client (Ascertained Losses Shifted In) (In Rs.) Net Reduction in Income due to CCM (In Rs.) ACBPA0069J PRABHU DAYAL AGGARWAL G-47, PREET VIHAR, DELHI- 110092 AMRAPALI AADYA TRADING & INVESTMENT PVT. LTD. 1,37,86,298.4 -24,89,527.5 1,62,75,825.9 The information received was examined with reference to the return of income filed by the assessee. On perusal of the ITR filed by the assessee and from the examination of the above information, it is evident that through client code modification a net reduction of income to the true of Rs. 1,62.75,826/- has taken place in the case of the assessee, reducing tax liability in F.Y.2008-09. In view of the above mentioned facts and evidences gathered, I h....
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....er thorough scrutiny and there is no allegation of any failure on the part of the assessee to disclose fully and truly all material facts necessary for completion of the assessment. It was submitted that there was no rational connection or live link between the message as received and the reasons of conclusion as to escapement of any income as recorded. It was argued that the information as communicated was not based on any evidence and was in the nature of an obiter. Relying on various decisions, it was argued that the reopening being bad in law and void ab-initio should be quashed. 5. So far as merit of the case is concerned, it was submitted that the conclusion drawn by the Assessing Officer are misconceived, erroneous and untenable. He has not taken a holistic view of the transactions. While keying mistakes are inevitable in this type of business, the Assessing Officer has lost sight of the fact of the end where such mistakes originally occurred. In terms of the organization of business activity, the broker has decentralized the trading operations. Consequently the data feeding errors are not isolated incidents confined to the end of the main broker. They spill over to others ....
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.... assessment for any assessment year. The Act requires the AO to carry out this action of reopening of assessment proceedings in such matters. There is no fallacy or error in this conduct nor is any procedural infirmity pointed out by the Ld AR during the detailed submission made during the hearing by Ld AR. Appellant has sought to challenge the reopening on very specious grounds. The issue has now been clearly settled by Hon'ble Supreme Court of India in case of CIT versus PVS Beedis Private limited in 237 ITR 13 (1999), Jt 1998 (9) SC 118, 1998 9 SCC 27. Besides, there are plethora of rulings in this regard and the AO is supposed to process the information and examine the assessee record per proper scrutiny process. It is also pertinent to refer to the ruling of Hon'ble ITAT Delhi where in ITA No.4738/Del./2009 (ASSESSMENT YEAR: 2001-02) ITO, Ward 5 (2), New Delhi. (APPELLANT) Vs. M/s. Kautilya Monetary Services Pvt. Ltd., 10, Local Shopping Complex, Kalkaji, New Delhi. (PAN: AAACK3995P) (RESPONDENT), the Hon'ble Bench have allowed the revenue's appeal. I am also supported by the ruling of Hon'ble Delhi High Court the case of CIT v. Usha International Ltd. repo....
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....nt of Rs. 1.62 crores determined by the Assessing Officer is not based on any concrete or credible evidence or tangible material. 11. He submitted that nothing is found from body of the assessment order that the original assessment was completed u/s 143(3) of the I.T. Act. Copy of the order passed u/s 143(3) is placed at page 43 of the Paper Book. Referring to the assessment order passed u/s 143(3)/147, he submitted that the Assessing Officer simply mentions that the return was processed u/s 143(1) of the I.T. Act. Had he applied his mind he could have found that the original assessment was completed u/s 143(3) and the assessee had furnished the requisite details called for during the course of original assessment proceedings. There is no allegation of any failure on the part of the assessee to disclose fully and truly all material facts for necessary for completion of the assessment. He submitted that the Approving Authorities have also mechanically approved the reopening of the assessment without any independent application of mind. Relying on various decisions, he submitted that non-application of mind by the Superior Authorities while giving approval for reopening of the asses....
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....uld not have been made by the Assessing Officer in the reassessment proceedings. 15. Ld. DR on the other hand heavily relied on the order of the ld. CIT(A). Referring to the decision of the Hon'ble Supreme Court in the case of PCIT vs. Paramount Communication (P.) Ltd. reported in 2017-TIOL-253-SC-IT, he submitted that the Hon'ble Supreme Court in the said decision has held that information regarding bogus purchase by assessee received by DRI from CCE which was passed on to revenue authorities was 'tangible material outside record' to initiate valid reassessment proceedings. 16. Referring to the decision of the Hon'ble Delhi High court in the case of Indu Lata Rangwala vs. DCIT reported in 286 CTR 474, he submitted that the Hon'ble High Court in the said decision has held that where initial return of income is processed u/s 143(1), it is not necessary in such a case for Assessing Officer to come across some fresh tangible material to form 'reasons to believe' that income has escaped assessment. 17. Referring to the decision of the Hon'ble Supreme Court in the case of Thakorbhai Maganbhai Patel vs. ITO reported in 78 taxmann.com 201, he submitted that the Hon'....
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....has held that where subsequent to completion of original assessment, Assessing Officer on the basis of search carried out in case of another person, came to know that loan transactions of assessee with a finance company were bogus as said company was engaged in providing accommodation entries, it being a fresh information, he was justified in initiating reassessment proceedings in case of assessee. 22. Referring to the decision of the Hon'ble Supreme Court in the case of Raymond Woollen Mills Ltd. vs. ITO reported in 236 ITR 34, he submitted that the Hon'ble Supreme Court in the said decision has held that in determining whether commencement of reassessment proceedings was valid it has only to be seen whether there was prima facie some material on the basis of which the department could reopen the case. The sufficiency of correctness of the material is not a thing to be considered at this stage. 23. Referring to the decision of the Hon'ble Supreme Court in the case of ITO vs. Kasturbhai Lalbhai reported in 109 ITR 537, he submitted that the Hon'ble Supreme Court in the said decision has held that the intimation which the Income-tax Officer received from the audit ....
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....ra) and in the case of P.V.S. Beedies (P.) Ltd. (supra) reopening was on the basis of audit objection and therefore is not applicable to the facts of the present case. 29. In the case of Ankit Financial Services Ltd. (supra), it was a search case and the material was recovered during the search which is not the case here. He submitted that the various other decisions relied on by the ld. DR are also distinguishable and not applicable to the facts of the present case. In none of those cases, there was assessment u/s 143(3) and reopening has been made beyond a period of 4 years from the end of the relevant assessment year and there is no allegation of any failure on the part of the assessee to disclose fully and truly all material facts necessary for completion of the assessment. He accordingly submitted that grounds raised by the assessee should be allowed. 30. We have considered the rival arguments made by both the sides, perused the orders of the authorities below and the Paper Book filed on behalf of the assessee. We have also considered the various decisions cited before us. We find the original assessment in the instant case was completed u/s 143(3) on 24.12.2011 copy of whic....