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2022 (8) TMI 1224
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....n up together and disposed of by this common order for the sake of convenience. ITA No.1040/Mum/2022 (A.Y.2012-13) - Assessee Appeal 2. The first ground raised by the assessee is challenging the validity of jurisdiction u/s.147 of the Act by the ld. AO for reopening the assessment. 3. We have heard rival submissions and perused the materials available on record. The primary facts as stated in the assessment order by the ld. AO are that the assessee is engaged in the business of immovable properties as owners, lessors, licensors, developers, builders and caretakers etc., The assessee is also a member /broker of various exchanges and during the previous year, company was engaged in trading, settlement and other activities of commodities exchanges for itself and its clients apart from trading in physical commodities and in derivative instruments. The assessee filed its original return of income for the A.Y.2012-13 on 29/11/2012 declaring total income of Rs.35,43,40,796/-, which was later revised on 31/03/2014 declaring total income of Rs.32,38,18,010/-. The assessment was completed u/s.143(3) of the Act on 28/03/2016 determining total income at Rs.55,73,37,763/-. A survey action u/....
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.... and Stock markets both in India and abroad. It has NBFCs in its group. Group owns a no. of subsidiaries in foreign countries mostly tax havens viz. Mauritius, Dubai, Singapore, Cyprus etc. b) Edelweiss group routed its imports through overseas subsidiaries to siphon off money abroad which was utilized for trading in overseas exchanges. It was also instrumental in manipulating prices of Chana & Castor on NCDEX. Chana prices se bench mark for other pulses in the market. c) Aster DMCC Dubai is an Associate Concern i.e. Subsidiary of Edelweiss Commodities Services Limited, as under defined u/s 92A of the Income Tax Act, 1961, which is evident from the Audit Report u/s 92E of the Income Tax Act, 1961, in Form 3CEB. d) Aster DMCC Dubai was used by the Assessee Company to over-invoice import of Pulses and reducing the profits in India, and thereby evading payment of Tax. e) The aforementioned finding of the Investigation Wing gets further corroborated by the fact that Aster DMCC merely issued back to back bills to Edelweiss Commodities Services Limited India after enhancing the rates. The goods were shipped directly from port of origin to India whereas bills were routed through D....
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....ith Aster Commodities DMCC for the year under consideration works out to Rs.91.60 crores approximately. Thus it has caused escapement of income on this account to that extent. Further, the Appraisal Report has unraveled notable surreptitious and convoluted transactions of the Assessee Company, inter-alia indicating price-rigging of pulses and agri-products by colluding Iwith other associate concerns. The modus-operandi of such malicious scheme has been touched upon in the Appraisal Report. Broadly stated, it has been indicated that the assessee company alongwith other players in this business have orchestrated synchronized transactions like purchase and storage of local produce. thereby causing a scarcity of pulses in the market, and simultaneously importing shipments of these agri-produce, and unloading this in the market, after the rates are inflated artificially. It has also been brought out therein that these anomalous profits have been siphoned out of the country by way of over-invoicing the import purchases and also by introducing fictitious expenses. In the backdrop of the above, the undersigned has reason to believe that the income has escaped assessment to the extent o....
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....ere recorded for reopening the assessment. The corrective exercise embarked upon by "Parliament in the form of Explanation 3 consequently provides that the Assessing Officer may assess or reassess the income in respect of any issue which comes to his notice subsequently in the course of the proceedings though the reasons for such issue were not included in the notice under section 148(2). The decisions of the Kerala High Court in Travancore Cements Ltd.'s case (supra) and of the Punjab & Haryana High Court in Vipan Khanna's case (supra) would, therefore, no longer hold the field. However, insofar as the second line of authority is concerned, which is reflected in the judgment of the Rajasthan High Court in Shri Ram Singh's case (supra), Explanation 3 as inserted by Parliament would not take away the basis of that decision. The view which was taken by the Rajasthan High Court was also taken in another judgment of the Punjab & Haryana High Court in CIT v. Atlas Cycle Industries [1989] 180 ITR 3191. The decision in Atlas Cycle Industries' case (supra) held that the Assessing Officer did not have jurisdiction to proceed with the reassessment, once he found that the two ....
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.... by the Revenue against this decision before the Hon‟ble Supreme Court has been dismissed vide order dated 05/10/2018 by the Hon‟ble Supreme Court reported in 259 Taxman 365 (SC). It is trite law that jurisdiction of Section 147 of the Act for the ld. AO is to be tested based on reasons recorded by the ld. AO. Reliance in this regard is placed on the decision of the Hon‟ble Jurisdictional High Court in the case of Hindustan Lever Ltd., vs. ACIT reported in 268 ITR 332 (Bom). The relevant operative portion of the said decision is as under:- "20. The reasons recorded by the Assessing Officer nowhere state that there was failure on the part of the assessee to disclose fully and truly all material facts necessary for the assessment of that assessment year. It is needless to mention that the reasons are required to be read as they were recorded by the Assessing Officer. No substitution or deletion is permissible. No additions can be made to those reasons. No inference can be allowed to be drawn based on reasons not recorded. It is for the Assessing Officer to disclose and open his mind through reasons recorded by him. He has to speak through his reasons. It is for th....
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.... and is merely decided on suspicion, surmise and conjecture not supported by any tangible material. In any case, as stated earlier, no addition has been made by the ld. AO in the re-assessment proceedings with regard to the issue for assessment has been reopened. Hence, as stated earlier, the very basic premise of the ld. AO that he had reason to believe regarding escapement of income in the hands of the assessee, miserably fails. 3.5. In view of the aforesaid observations and respectfully following the judicial precedents relied upon hereinabove, the re-assessment is hereby quashed. Since, the entire re-assessment proceedings are quashed, the ground No.2 raised by the assessee challenging the disallowance of loss on trading of jewellery, on merits, need not be adjudicated and it is left open. 4. In the result, appeal of the assessee is allowed. ITA No.1041/Mum/2022 (A.Y.2015-16) Assessee Appeal:- 5. The first ground raised by the assessee is challenging the validity of jurisdiction u/s.147 of the Act by the ld. AO for reopening the assessment. 6. We have heard rival submissions and perused the materials available on record. The original return of income for the A.Y.2015-16 wa....
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....ss profit margin earned by it on the sales made out of purchases made from Aster before the ld. TPO. The ld. TPO having accepted the revised correct gross profit of 2.58% rectified the transfer pricing adjustment figure at Rs.18,89,29,419/- vide order passed by him u/s.154 r.w.s. 92CA(5) of the Act dated 20/03/2020. It is pertinent to note that in the said rectification order, the ld. TPO did not grant the benefit of (+/-) 3% tolerance band claimed by the assessee. This order is enclosed in pages 85-87 of the paper book. 6.2. We find that assessee filed yet another 154 petition before the ld. TPO on 31/07/2021 seeking for the benefit of (+/-) 3% tolerance band. The assessee gave the complete workings to that effect before the ld. TPO. The assessee pleaded that if the benefit of (+/-) 3% tolerance band is given to it, the transfer pricing adjustment would be "Nil‟. The said plea of the assessee was duly accepted by the ld. TPO after due verification of the workings of the assessee in the rectification order passed by the ld.TPO u/s.154 r.w.s 92CA(5) of the Act dated 24/09/2021. 6.3. Now the primary basis of escapement of income as mentioned in the reasons recorded by the la.....
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....TR 828 wherein the Hon‟ble High Court by placing reliance on yet another decision of the Hon‟ble Madras High Court in the case of Vedantham Raghaviah vs. Third Additional ITO reported in 49 ITR 314 had held - "once an order of rectification is passed, the assessment itself is modified and what remains is not the order of rectification, but only the assessment as rectified." 6.6. Similar view has also been taken by the Hon‟ble Calcutta High Court in the case of Jeewanlal (1929) Ltd., vs. Additional Commissioner of Income Tax & Ors reported in 108 ITR 407 wherein it was held as under:- 3. The section gives the Commissioner the power to call for and examine the record of any proceeding under the Act and if he considers that any order passed by the Income-tax Officer, in so far as it is prejudicial to the interest of the revenue, he might after giving the assessee an opportunity of being heard and after making or causing to be made such inquiry as he deems necessary pass such order thereon as the circumstances of the case might justify. Therefore, the power that he exercises under the section is a power in respect of the order of the Income-tax Officer. He has no p....