TaxTMI 
TaxTMI 
2022 (9) TMI 293
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....ndis apply for the purpose of disposal of the other appeal in ITA No.215/RPR/2019 for A.Y.2011-12. Before us the assessee has assailed the impugned order on the following grounds of appeal: 1. On facts and circumstances of the case, the CIT(A) has erred in sustaining the order of the A.O. wherein the Ld. A.O. has erred in change in his opinion which was already formed during 153A assessment proceeding is not permissible for reopening of case u/s.147/148. Thus, the order passed by the A.O. and sustained the same by the CIT-A is invalid. 2. On facts and circumstances of the case, the CIT(A) has erred in sustaining the order of the A.O. wherein the Ld. A.O. has erred in forming reason mechanically based on the report received from Investigation wing without analyse the fact properly. Thus, the order passed by the A.O. and sustained the same by the CIT-A is unjustified, unwarranted and uncalled for. 3. On facts and circumstances of the case, the CIT(A) has erred in sustaining the order of the A.O. wherein the Ld. A.O. has erred in reopening of the case u/s 148 even after the case of the assessee was already assessed u/s 153A r.w.s 143(3) and the assessee has disclosed all materia....
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....on the basis of information received by the A.O from the office of Dy. Director of Income Tax (Investigation), Kolkata, that the information as was shared by the Ahmedabad Directorate, regarding systematic evasion of taxes by clients /members of M/s. National Multi-Commodity Exchange (NMCE) by misusing its platform, revealed that the assessee had booked fictitious profit of Rs.2,16,570/- by creating artificial volumes and suspected evasion of tax through a broker, viz. M/s Shine Future, the AO reopened the case of the assessee under Sec. 147 of the Act. In compliance, the assessee filed her return of income on 10.04.2018 declaring an income of Rs.7,30,160/- i.e. as originally returned. Copy of the "reasons to believe" on the request of the assessee were made available to her by the A.O. Objections filed by the assessee vide her letter dated 11.05.2018 assailing the reasons for reopening of her case u/s.147 of the Act were disposed off by the A.O vide his order dated 19.09.2018. 5. During the course of the assessment proceedings, it was observed by the A.O that the assessee had claimed to have derived a speculative income from commodity trading of Rs.8,23,352/- i.e after adjustment....
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....the AO directed that the same be carried forward for a period allowed under law. 6. Aggrieved, the assessee carried the matter in appeal before the CIT(A) but without any success. 7. The assessee being aggrieved with the order of the CIT(Appeals) has carried the matter in appeal before us. 8. We have heard the ld. Authorized representatives of both the parties, perused the orders of the lower authorities and the material available on record, as well as considered the judicial pronouncements that have been pressed into service by the ld. AR to drive home his contentions. 9. As observed by us hereinabove, the assessee had in her return of income declared speculative income from commodity trading of Rs.8,23,352/- i.e. after adjustment of loss of Rs.13,79,879/- suffered on MCX platform, as under: Particulars Profit Loss Total Shine Future ( NMCE) 16,70,927/- 0 16,70,927/- Parthvi Broking Pvt. Ltd. (MCX) 5,32,304/- (13,79,879/-) (8,56,575) Net Profit 8,23,352/- On the basis of information that the assessee had booked prearranged gains through a member/broker of NMCE, viz. M/s. Shine Future, the AO had on the basis of his exhaustive observations recorded in the assessm....
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....ce of the CBDT Circular No.11 of 2019, dated 19.06.2019, as per which setting-off of losses against additions made by the A.O, inter alia, u/s.68 of the Act was to be allowed till A.Y.2016-17 while computing the tax liability of the assessee u/s.115BBE of the Act. 11. Per contra, the Ld. Departmental Representative (for short 'DR') relied on the orders of the lower authorities. 12. After having given a thoughtful consideration to the contentions advanced by the Ld. Authorized Representatives of both the parties, we are unable to persuade ourselves to subscribe to the claim of the Ld. AR that the A.O had erroneously assumed jurisdiction and reopened the case of the assessee u/s.147 of the Act. One of the contention of the Ld. AR was that as the assessment in the case of the assessee was earlier framed u/s.153A r.w.s. 143(3), dated 28.12.2017, wherein the A.O after deliberating at length on the duly disclosed facts as regards the profit earned by the assessee on NMCE platform had after raising specific queries accepted the same, therefore, in the absence of any fresh material coming to his notice after culmination of the aforesaid assessment, the reopening of the assessee's case un....
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....ucted on the residential and business premises of the assessee on 11.03.2016. Consequently, notices u/s 153A of the Act was issued to the assessee for the A.Ys 2010-11 to 2015-16 on 27.12.2016. In response to the statutory notices issued, the assessee filed returns for the abovementioned A.Ys. She has filed return of income for the A.Y. 2011-12 u/s 153A of Act on 04.03.2017 showing his income at Rs.7,30,160/-. The assessment order u/s 153A r.w.s. 143(3) for the A.Y.2011-12 was passed on 28.12.2017 determining income of the assessee at Rs.7,30,160. An information was received from Dy. Director of Income tax(Inv.), Kolkata that systematic evasion of taxes by clients/members of the NMCE(M/s. National Multi-Commodity Exchange) during the different Financial Years by misuse of NMCE platform was shared by Ahmedabad Directorate. Based ILI4 on the information, enquiry was carried out by Kolkata Directorate and it was found that the assessee has traded through the broker Shine Futures, clients/members of NMCE and booked fictitious profit of Rs. 2,16,570/-during the F.Y.2010- 11 by creating artificial volume and suspected evasion of tax by misuse of NMCE platform at Kolkata. On verificatio....
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....ase of change of option by the AO. Considering the above facts and circumstances of the case, I have reason to believe that the above income of the assessee chargeable to tax has escaped assessment for failure on the part of the assessee to disclose fully and truly all the material facts in the return of income necessary for assessment and the case is required to be reopened u/s 147 of the Act. Sd/- (Madhulika V Satpute) Asst. Commissioner of Income Tax (Central)-2, Raipur (C.G.)" On a perusal of the aforesaid reasons which had formed the very basis for reopening of the assessee's case, we find that the A.O after culmination of the earlier assessment proceedings vide an order passed u/s.153A r.w.s. 143(3), dated 28.12.2017 was in receipt of information from the DDIT (Inv.), Kolkata about the systematic evasion of taxes by clients/members of NMCE. On the basis of the aforesaid information, it was gathered by the A.O that the assessee had traded through a tainted member/broker of NMCE, viz. M/s. Shine Future and in the garb of trading on the said platform had booked fictitious profit of Rs.16,70,293/-. As the aforesaid information was not there before the A.O in the course of ....
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.... the A.O, reject the same. Thus, the Ground of appeal No.1 raised by the assessee is dismissed in terms of our aforesaid observations. 16. As regards the claim of the Ld. AR that the A.O despite specific requests by the assessee had failed to provide a copy of the information on the basis of which adverse inferences as regards the NMCE profit earned by the assessee during the year was sought to be drawn, we are afraid that the same too does not find favor with us. Nothing has been brought to our notice by the Ld. AR which would reveal that the assessee had in the course of the proceedings before the lower authorities requested for a copy of the information that was received by the A.O from the Investigation Wing. On the contrary, we find that a careful perusal of the "reasons to believe" reveals beyond doubt the details on the basis of which the A.O had reopened the case of the assessee and thereafter proceeded with and framed the assessment in her case. Accordingly, finding no merit in the aforesaid claim of the assessee, we herein reject the same. Thus, the Ground of appeal No.4 raised by the assessee is dismissed in terms of our aforesaid observations. 17. As regards the claim....
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....of the considered view that as despite the dubbing of the impugned profit earned by the assessee from commodity trading on NMCE platform as an unexplained cash credit u/s.68 of the Act, there was no restriction on setting-off of any loss against such deemed income during the year under consideration before us i.e. A.Y.2011-12, therefore, the A.O was obligated to have allowed the claim of the assessee for set-off of the loss in question against the income deemed by him as an unexplained cash credit under Sec. 68 of the Act . At this stage, we may herein observe that the A.O vide his order passed u/s. 143(3) r.w.s.147 dated 30.12.2018 had not drawn any adverse inferences as regards the assessee's claim of loss (Rs.8,56,575/-), but on the contrary had specifically directed that the same be carried forward for the period allowed under the Act. Our aforesaid view that the assessee's claim for setting-off of MCX loss against the impugned profit earned by her from commodity trading on NMCE platform, which though had been dubbed by the A.O as an unexplained cash credit u/s.68 of the Act, is in order, is fortified by the CBDT Circular No.11/2019 dated 19.06.2019, wherein it is observed that....
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....losses against income referred to in section 115BBE. It also further mentions that the pre-amended provision of section 115BBE of the Act did not convey the intention that losses shall not be allowed to be set-off against income referred to in section 115BBE of the Act and hence, the amendment was made vide the Finance Act, 2016. 4. Thus keeping the legislative intent behind amendment in section 115BBE(2) vide the Finance Act, 2016 to remove any ambiguity of interpretation, the Board is of the view that since the term 'or set off of any loss' was specifically inserted only vide the Finance Act 2016, w.e.f. 01.04.2017, an assessee is entitled to claim set-off of loss against income determined under section 115BBE of the Act till the assessment year 2016-17. 5. The contents of this Circular may be circulated widely for information of all stakeholders and departmental officers. The pending assessments and litigations on this issue may be handled accordingly. 6. Hindi version to follow. Sd/- (Rajarajeshwari R) Under secretary (ITA.II), CBDT ( F. No.225/45/2019-ITA.II) Copy to:- i. PS to FM/OSD to FM/PS to MoS(F)/OSD to MoS(F) ii. PS to Secretary (Revenue) iii....