TaxTMI 
TaxTMI 
2019 (5) TMI 1705
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....r reopened the case of the assessee after recording the following reasons:- " The assessee company had e-filed its return on 28.09.2010 with declaring income of Rs. NIL. This office has received information from Pr. CIT(OSD) in charge of Director of Income Tax (I & CI), Mumbai vide letter No. DIT/(I&CI)/CCM/2014-15 dated 27.02.2015 that some brokers were alleged to be indulging in transferring fictitious losses to different clients to reduce their tax liability and also fictitious profit to other clients. One of the clients in this list was M/s P. Rekhi Holdings Pvt. Ltd., 36, Sant Nagar. East of Kaliash, New Delhi-110065. When confronted with the client modification data and the statements of brokers, these clients admitted having taken fictitious loss from the brokers. On the basis of the information, that fictitious losses to the tune Rs. 40,25,433/- were booked by M/s Rekhi Holdings Pvt. Ltd., 36 Sant Nagar, East of Kaliash, New Delhi-110065 and the same must be adjusted from the income/ profit earned during the year losses brought forwarded in next year accordingly. In view of the above, I have reason to believe that due to failure on the part of the assessee to discl....
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....r considering the rejoinder of the assessee to the remand report, the ld.CIT(A) upheld the action of the Assessing Officer in reopening of the assessment and also sustained the addition on merit. 5. Aggrieved with such order of the CIT(A), the assessee is in appeal before the Tribunal by raising the following grounds:- "1. On the facts and circumstances of the case, the order passed by the Commissioner of Income [CIT(A)] is bad both in the eye of law and on facts. 2. On the facts and circumstances of the case the Ld. CIT(A) has erred both on facts and in law in rejecting the contention of the assessee that the order passed by the AO is without jurisdiction. 3. On the facts and circumstances of the case the Ld. CIT(A) has erred both on facts and in law in rejecting the contention of the assessee that the initiation of the reassessment proceedings and the reassessment order are bad both on facts and in law and liable to be quashed as the statutory conditions and procedure prescribed under the statute have not been complied with. 4. (i) On the facts and circumstances of the case, learned [CIT(A)] has erred in rejecting the contention of the assessee that the reassessment....
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....rejecting the contention of the assessee that the Client Code modification can only be done at the Stock Broker or Commodity Broker level and assessee neither being a stock broker nor commodity broker, Client Code modification cannot be done by it. 10. On the facts and in law confirming the action of the AO in charging interest under sections 234A, 234B, 234C and 234D of the Act. 11 .The appellant craves leave to add, amend or alter any of the grounds of appeal." 6. The ld. counsel for the assessee strongly challenged the order of the CIT(A). He submitted that after the search u/s 132 of the Act was conducted on 28th July, 2011, the case of the assessee was centralized in Central Circle No.15, vide order dated 20th/23rd July, 2012 passed u/s 127 of the IT Act. He submitted that the DCIT, Central Circle-15, issued notice u/s 153A asking the assessee to file return of income. Referring to page 15 to 17 of the paper book, he submitted that the order u/s 153A/143(3) of the Act was passed on 24th March, 2014 by the DCIT, Central Circle15, New Delhi. Referring to page 18 of the paper book, he submitted that the notice u/s 148 of the IT Act was issued by the DCIT, Circle 21(1), Ne....
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....ssessment. He accordingly submitted that mere client code modification by broker does not mean that any income has escaped assessment and consequently, the reassessment proceedings should be held as void and the subsequent addition on the basis of such reassessment has to be quashed. 8. The ld. counsel for the assessee, referring to pages 31 to 36 of the paper book, submitted that the assessee has raised objection to initiation of reassessment proceedings u/s 147 of the Act, vide letter dated 1st March, 2016 and the aforesaid objections were disposed of by the Assessing Officer vide order dated 1st March, 2016, copy of which is placed at page 37 of the paper book. The disposal of the objections on the very same day shows that the Assessing Officer did not apply his mind before rejecting the objections. He submitted that in the instant case, the action has been taken u/s 147 of the Act after completion of the assessment u/s 153A/143(3) on the basis of the report of the Investigation Wing and the Assessing Officer has not conducted any inquiry on the same. Therefore, the reassessment proceedings initiated in the instant case are not in accordance with law. For the above proposition....
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.... modification for creating artificial loss/profits which came to light on the basis of the survey conducted by the Investigation Wing. Therefore, on all counts, the order passed by the CIT(A) has to be upheld and the grounds raised by the assessee should be dismissed. 11. I have considered the rival arguments made by both the sides and perused the orders of the authorities below. I find the assessee in the instant case, filed the original return of income on 28th September, 2010. Subsequently, after the search conducted u/s 132 of the Act on 28th July, 2011, the case of the assessee was centralized in Central Circle-15, vide order dated 20th/23rd July, 2012 passed u/s 127 of the IT Act. The assessee, in response to the notice u/s 153A, filed its return of income before the DCIT, Central Circle-15, New Delhi. The assessment u/s 153A read with section 143(3) was completed on 24th March, 2014 by the DCIT, Central Circle-15, New Delhi. I find the order for decentralization of the case of the assessee was passed on 3rd August, 2017 by the CIT, Central-2, New Delhi, a copy of which is placed at page 42 of the paper book. Thus, from 20th July, 2012 to 3rd August, 2017 the jurisdiction o....
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.... is set aside on the legal issue raised by the assessee in her appeal. Ground No. raising the legal issue is decided in favour of the assessee. 12.2 I find, the Hon'ble Delhi High Court in the case of CIT vs Anil Khosla (supra) has observed as under:- "1. This is an appeal in respect of the assessment year 1994-1995 directed against the order passed by the Income Tax Appellate Tribunal on 21-9-2007. The issue sought to be raised in the present appeal pertains to the jurisdiction of the Assessing Officer in issuing the notice under section 148. The Tribunal on consideration of the facts that jurisdictional ITO did not issue any notice under section 148 to assessee in spite of objection taken by assessee before Assistant Commissioner of Income Tax. The Tribunal, therefore, concluded that there was a jurisdictional defect in notice issued under section 148 on basis of which the Assessing officer assumed jurisdiction and made assessment. In fact, this was the very view taken by the Commissioner of Income Tax (Appeals) also which has been confirmed by the Tribunal. 2. We see no reason to interfere with these findings on fact. No substantial question of law arises for our con....
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....rt of the impugned notice accept the fact that as a matter of regular business practice, a broker in the stock exchange makes modifications in the client code on sale and / or purchase of any securities, after the trading is over so as to rectify any error which may have occurred while punching the orders. The reasons do not indicate the basis for the Assessing Officer to come to reasonable belief that there has been any escapement of income on the ground that the modifications done in the client code was not on account of a genuine error, originally occurred while punching the trade. The material available is that there is a client code modification done by the Assessee's broker but there is no link from there to conclude that it was done to escape assessment of a part of its income. Prima facie, this appears to be a case of reason to suspect and not reason to believe that income chargeable to tax has escaped assessment. 5. In the above view, prima facie, we are of the view that the impugned notice is without jurisdiction as it lacks reason to believe that income chargeable to tax has escaped assessment." 15. I find the Hon'ble Bombay High Court in the case of PCIT vs....