TaxTMI 
TaxTMI 
2024 (9) TMI 1113
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....63 of the Act revising the assessment framed by the AO u/s. 147 r.w.s. 144B of the Act, dated 24.03.2022 by upholding the assessment as erroneous and prejudicial to the interest of Revenue for verification of transactions of NSEL commodities and provision of bad debt claimed by the assessee. For this, assessee has raised various grounds which are argumentative, exhaustive and factual, hence need not be reproduced. 3. Briefly stated facts are that the assessee is a Director of SRS Cargo Logistics Pvt. Ltd., and filed his return of income for the relevant assessment year 2014-15 on 30.11.2014. The assessee's case was selected for scrutiny assessment and accordingly original assessment was completed u/s. 143(3) of the Act by the ITO, Corporate Ward 6(2), Chennai vide his order dated 26.02.2016. Subsequently as per the AO, NFAC and as per information available with the Department that there were suspicious source of funds and transactions carried out without physical possession of underlying commodities etc., trading in NSEL (National Spot Exchange Ltd) by the assessee. A notice u/s. 148 of the Act was issued to the assessee dated 30.03.2021 for the relevant assessment year 2014- 15....
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.... the details were called for in the proceedings u/s. 263, the assessee did not furnish any materials/evidence in support of the NSEL transactions done to the tune of Rs. 1.31 crores. It is a well known fact that a scam broke out in NSEL and due to the fraudulent activities of the Board, the trading through platform was suspended from 31.07.2013 and that the assessee also transacted during the period from 01.04.2013 till 31.07.2013. In the light of NSEL scam and also the claim of the bad debts by the assessee, it is necessary that the assessee should have furnished the relevant details of his transactions in the NSEL platform to prove his bonafide." Further, as regards to provision for bad debts, he noted in para 10 as under: "Further, on verification of the profit and loss account, it is seen that the assessee has claimed provision for bad debts in profit and loss account to the tune of Rs. 15,91,000/- but not disallowed the same as under the Income-tax Act, 1961, provisions are not allowed." 4.1 Accordingly, after discussing some case laws, he set aside the assessment and restored the matter back to the file of the AO for limited purpose of verification of transaction ....
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....h" In view of the above, the ld.counsel for the assessee stated that in the original assessment, the transactions through NSEL and trading carried out by assessee through this exchange was explained with transparency and accordingly, assessment was completed by the AO u/s. 143(3) vide order dated 26.12.2016. The ld.counsel for the assessee then took us through the reassessment proceedings conducted by the AO and consequent issuance of notice u/s. 142(1) of the Act dated 22.12.2021 by virtue of which, he called for information in regard to transactions entered by assessee through NSEL was enquired vide questionnaire at points 8 to 11 as under:- "8. It is reported that you have carried out transactions of commodities, etc through National Spot Exchange ltd (NSEL), which was suspended. It is reported that you have shown sales from NSEL commodities at Rs. 68,21,000/- and NSEL commodities purchases at Rs. 67,42,700/-. Thus, during the short period of four months from 1.04.2013 to 31.07.2013, the transactions in NSEL platform in sale and purchases is more than Rs. 1.31 crores. The amount receivable is reported to be Rs. 33,93,000/- from NSEL commodities. Furnish complete deta....
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....s. The ld.counsel also drew our attention to debtors of NSEL amounting to Rs. 15.91 lakhs disclosed in the balance sheet of the assessee for the year ending 31.03.2014. He also filed details of transactions entered with NSEL in the shape of ledger account wherein details of transactions are depicted and there is a debit of Rs. 33.93 lakhs being amount receivable and bad debts claimed of Rs. 15.91 lakhs which were available before the AO during the course of original assessment proceedings and subsequent reassessment proceedings. In view of these facts and above details, the ld.counsel stated that the assessee has filed complete details before the AO in the first round of assessment u/s. 143(3) of the Act and subsequent reassessment u/s. 147 r.w.s 144B of the Act as well as during the revision proceedings u/s. 263 of the Act before the PCIT. He stated that now the PCIT has only pointed out that the matter is restored back to the file of the AO for limited purpose of verification of transactions of NSEL commodities and provision of bad debts claimed by assessee. The ld.counsel also stated that the PCIT has only observed that there is patent failure on the part of the AO in not doing ....
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.... regular assessment proceedings. This submission was negatived by this Court by observing as follows :- 14. According to the Revenue, it could only be when the assessment order contains discussion with regard to particular claim can it be said that the Assessing Officer had formed an opinion with regard to the claim made by the assessee. This Court in Idea Cellular Ltd. v/s. Deputy Commissioner of Income Tax 301 ITR 407 has expressly negatived on identical contention on behalf of the Revenue. The Court held that once all the material was placed before the Assessing Officer and he chose not to refer to to the deduction/ claim which was being allowed in the assessment order, it could not be contended that the Assessing Officer had not applied his mind while passing the assessment order. Moreover in this case, it is evident from the letter dated 6^th August, 2007 addressed by the Assessing Officer to the Petitioner containing the reasons recorded for issuing the impugned notice also record the fact that during the regular assessment proceedings, the Petitioner has been asked to furnish details in support of the claim for exemption under Section 80IA/IB of the Act. The letter ....
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....s submission of no change of opinion is concerned. 11. The further submission of Mr. Walve that in the absence of the Assessing Officer adjudicating upon the issue it cannot be said that the Assessing Officer had formed an opinion during the regular assessment proceedings leading to the order dated 30 January 2018. An adjudication would only be on such issue where the assessee's submissions are not acceptable to the Revenue, then the occasion to decide a lis would arise i.e. adjudication. However, where the Revenue accepts the view propounded by the assessee in response to the Revenue's query, the Assessing Officer has certainly to form an opinion whether or not the stand taken by the assessee is acceptable. Therefore, it must follow that where queries have been raised during the assessment proceedings and the assessee has responded to the same, then the non-discussion of the same or non-rejection of the response of the assessee, would necessarily mean that the Assessing Officer has formed an opinion accepting the view of the Assessee. Thus an opinion is formed during the regular Assessment proceedings, bars the Assessing Officer to reopen the same only on account of a dif....
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.... though it may be a case of inadequate enquiry. B. D. Prithiani itxa-397.18.doc Inadequacy of enquiry as elucidated above does not give jurisdiction to the CIT to invoke provisions of Section 263 prior to the insertion of Explanation 2. In our view, the Explanation 2 does not help the revenue in as much as the same is prospective and applicable with effect from 1st June, 2015." 7. When these factual situation that the same two issues of transactions with NSEL commodities and provision for bad and doubtful debts have been considered by the AO during original assessment proceedings and subsequently in reassessment proceedings, where is error in reassessment order dated 24.03.2022 so as to make the same prejudicial to the interest of revenue, the ld.CIT-DR could not controvert the above fact situation except supporting the revision order passed by the PCIT. 8. In view of the above discussion, facts discussed, perusal of records, we are of the view that the very issue was raised in the reasons recorded for reopening of assessment u/s. 147 of the Act, relevant reasons recorded reads as under:- 2. As per the information available with the department, due to the fact that t....