TaxTMI 
TaxTMI 
2023 (9) TMI 1108
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....e heard the rival submissions and perused the materials available on record. The assessee is a registered Non- Banking Finance Company ('NBFC') and is engaged in the business of purchase and sale of shares, securities, commodities and mutual funds, trading in derivatives, future & option and also derivative of commodities in commodity exchanges. The return of income for AY 2010-11 was filed by the assessee company on 13/10/2010 declaring loss of Rs. 18,43,753/-. The Original assessment was completed u/s 143(3) of the Act determining the total income of the assessee at Rs. 26,26,406/-. Before completing the assessment, the Ld. AO had issued a questionnaire together with notice u/s 142(1) of the Act dated 08/01/2013 calling for details of income from operations during the year under consideration and also directing the assessee to explain the speculation loss as shown thereon together supporting details. In this regard, the assessee, vide reply dated 21/01/2013 submitted the details of commodity trading loss (Net) of Rs. 42,47,083/- as under: Name of Broker Profit/Loss in Commodity Global Commodities Pvt. Ltd. -17,66,290.51 Smart Commodity Broker Pvt. Ltd. 93,39,115....
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....sons recorded for initiating proceedings u/s 148 of the I.T. Act, in the case of M/s Gulshan Investment Company Limited for A.Y. 2010-11- regarding. With reference to the notice u/s 148 of the I.T. Act, dated 31.03.2017 issued to you for A.Y. 2010-11, please refer to your letter dated 20.04.2017 filed in this office on 21.04.2017. In this letter you have stated that income tax return filed vide Ack.No. 170172121121010 on 30.10.2010 be treated as filed in response to the notice u/s 148 of the I.T. Act. You have further requested to provide reasons recorded for initiation of assessment proceedings u/s 147 of the I.T. Act. The reasons recorded are as under: "The assessee filed its return of income on 13.10.2010 for the assessment year 2010-11 declaring Nil Income (rather loss of Rs. 18,43,753/-). The assessment u/s 143(3) was completed by DCIT, Circle-6, Kolkata vide order dated 26.02.2013 at an income of Rs. 26,26,406/- after adjusting brought forwarded losses of Rs. 30,98,495/- 1. Based on the Forwards Market Commission (FMC) report that "clients/members of NMCE were found to be involved in creating artificial volume and suspected evasion of Incom....
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....G AMOUNT DEFFERENCE P/L BOOKED F. Y, SUB BROKER (LODOGED FILE) GULSHAN INVESTMENT COMPANY LIMITED AACCG0597R 4973250 5/52800 179550 PROFIT 2009-2010 Advent Commodates GULSHAN INVESTMENT COMPANY LIMITED AACCG0597R 26466650 27317451) 850800 PROFIT 2009*2010 Anjam Textile GULSHAN INVESTMENT COMPANY LIMITED AACCG0S97R 186473550 193929850 7456300 PROFIT 2009-2010 Foirdeal Finance Pvt. Ltd. GULSHAN INVESTMENT COMPANY LIMITED AACCG0597R 157107750 163398650 6290900 PROFIT 2009-20)0 Hemant Saraosii GULSHA N INVESTMENT COMPANY LIMITED AACCG0597R 72836300 75743500 2907200 PROFIT 2009-2010 Mahtbir Synthetic. GULSHAN INVESTMENT COMPANY LIMITED AACCG0S97R : 6173050 6610250 237200 PROFIT 2009-20IC Proficient 4. The Office of Pr. DIT(lnv.) Kolkata on the basis of its investigation has concluded that M/s Advent Commodities Pvt. Ltd, Anjani Textile Proprietorship concern of Shri Swapan Kumar Roy [AOBPR4855D], M/s Fairdeal Vincom Pvt. Ltd, Shri Hemant Sarawagi [AMVPS8048K], M/s Mahavir Synthetics Proprietorship concern of Shri Vijay....
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....8. As per the information provided by the assessee company it appears that it has not made transactions through the companies / parties appearing in the information received from the office of DDIT(Inv) Unit- 3(1), Kolkata vide letter dated 17.03.2017. In view of the information available in this office 1 have reason to believe that profit / income to the tune of the Rs. 1,79,21,950/- taken from the parties mentioned above has escaped assessment within the meaning of provisions contained in section 147 of the Act as the-assessee company has not declared its affairs correctly in the return filed by it. 9. In view of the material placed on record in the form of information received from D1T (Investigation), Kolkata and facts mentioned above, 1 have reason to believe that assessee has taken accommodation entries resulting into profit of Rs. 1,79,21.950/- which has escaped assessment. Accordingly, in order to bring to tax the income amounting to Rs. 1,79,21,950/- assessment for the A.Y. 2010-11 is proposed to be reopened u/s 147 of the I.T. Act. 10. The case pertains to a period beyond four years from the end of relevant assessment years at the time of issue of notice....
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.... " 7. The assessee had responded to this notice u/s 133(6) of the Act vide its letter dated 29/03/2017 by furnishing the entire requisite details and also enclosing the copy of the account of the broker through whom the transactions were made by the assessee on National Multi Commodity Exchange (NMCE). The reply given by the assessee in this regard as under: To, The Deputy Commissioner of Income Tax, Circle-10(2), C.R. Building, New Delhi Ref: Information U/s 133 (6) of the I.T, Act. 1961 for the Assessment Year 2010-2011 Sub: Submission "Dear Sir, With regard to the information u/s 133(6) of the Act, as desired by your good self, we are submitting herewith the following documents and submission for your kind perusal, reference and consideration:- 1. The Detailed note in respect of all sources of Income for the Asst. Year 2010 -2011 is enclosed herewith. 2. The Copy of audited Balance Sheet including P&L account, all schedules along with audit report and copy of 3CD for the A. Y. 2010- 2011 are enclosed. 3. Yes, we have made transactions in National Multi Commodity Exchang....
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....x and brokerage. In our considered opinion, (i) when the factual and legal objections were filed by the assessee, even though the Ld. AO obtains certain information from the Investigation Wing mentioning the name of the assessee as one of the beneficiaries by way of earning contrived profit of Rs. 1,79,21,950/-, it is bounden duty of the Ld. AO to at least verify the transactions from the return filed by the assessee as to whether the said sum has already been disclosed by the assessee in the return. This preliminary verification of the facts from the Income Tax Return of the assessee would have enabled the Ld. AO to accept the contentions of the assessee that income is already offered to tax. In the instant case, this preliminary verification also was not even carried out by the Ld. AO. Even though as stated earlier, the information received from the Investigation Wing would constitute fresh material in the hands of the Ld.AO, the same would only became 'reason to suspect' not 'reason to believe' that income of the assessee has escaped assessment. The Ld. AO is duty bound to examine the return of the assessee, details filed during original assessment proceedings and its supporting....
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....a-8 that assessee company had not declared its affairs correctly in the return filed by it. When the assessee had denied having any transactions with the Sub-brokers listed in the reasons and in view of the fact that assessee had already disclosed that profit earned from derivatives transactions carried out through M/s R.K. Commodities Pvt. Ltd. in the original return filed and assessed already u/s 143(3) of the Act, how can thereby any failure on the part of the assessee to disclose fully and truly all material facts that are relevant for the purposes of framing the assessment. How can the assessee be expected to prove the negative? The assessee could be expected to give explanation for the transactions carried out by it. It could not be expected to give explanation for the transactions not carried out by it, merely because some information had already been received by the Ld. AO from the Investigation Wing, Kolkata. 11. We also find that the Ld. AO in the original scrutiny assessment proceedings had examined the entire transactions of commodity/derivatives trading during the course of original assessment proceedings itself which is evident from notice u/s 142(1) dated 08/01/20....