TaxTMI 
TaxTMI 
2024 (11) TMI 424
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....o be quashed. 2 That on the facts and in the circumstances of the case and in law the Ld. Pr. CIT erred in setting aside the Assessment order as passed by Ld. A.O. u/s 147 of the Act just to verify the claim of Short term Capital Loss from M/s Xpro Securities even when the reason for reopening the case of the appellant was to examine the loss of Rs. 32745549/- from M/s Xpro Securities only and more so when the entire documents related to the said loss were duly filed by the appellant during the course of Assessment Proceedings and have duly been verified by Ld. AO after full application of mind. The present order so passed by the Pr. CIT by invoking the provision of section 263 of the Act is therefore illegal and bad-in-law. It is prayed that the same requires to be quashed." 2. The assessee is an individual and filed his return of income on 25th September 2016 declaring total income of Rs. 5,35,510/-. The case was selected for limited scrutiny through CASS and assessment was completed u/s 143(3) on 09.12.2018 accepting return income. Subsequently, the assessment was reopened by issuing notice u/s 148 of the Act on 26.03.2021 to assess the income assessable to tax has e....
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....n response to notice u/s 148 of the Act declaring the same income as declared in the original return of income after setting of business loss of Rs. 3,56,04,837/-. Ld. AR has referred to the reasons recorded by the AO for reopening of the assessment and submitted that the only point of reopening of the assessment is the claim of loss of Rs. 3,56,04,837/- from the F&O transactions carried out through M/s Xpro Securities was to be assessed tax by treating the same as fictitious entries of loss obtained by the assessee. During the reassessment proceedings the AO issued show cause notice u/s 142(1) dated 09.03.2022 which was replied by the assessee vide reply dated 15.03.2022. The assessee also produced the relevant supporting documents including copy of account of derivative transactions, ledger account of M/s Xpro Securities (broker) in the books of assessee, copy of contract note issued by M/s Xpro Securities during the reassessment proceedings. The AO after considering reply as well as documentary evidences was satisfied and again accepted the return income while passing order u/s 147 r.w. section 144B of the Act on 28.03.2022. Thus, Ld. AR has submitted that this issue was examine....
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.... (i) Malabar Industrial Co. Ltd. v. CIT reported in [2000] 243 ITR 83 (SC) (ii) CIT (Central), Ludhiana v. Max India Ltd. reported in [2008] 166 Taxman 188 (SC) (iii) CIT v. Sunbeam Auto Ltd. reported in [2011] 332 ITR 167 (Delhi) (iv) DIT v. Jyoti Foundation reported in [2013] 357 ITR 388 (Delhi) 3.2 Ld. AR has submitted that when the AO during the course of original assessment as well as reassessment proceedings made extensive inquiries and was satisfied with the correctness of the claim of the assessee then the order passed by the AO cannot be held as erroneous so far as prejudicial to the interest of the revenue for want of inquiry. Once the AO has already conducted inquiry twice during the original assessment as well as reassessment proceedings then the explanation (2) to section 263 cannot be interpreted in a manner to make inquiries unending. Ld. AR has thus contended that when the AO has examined the issue, applied his mind and reached to a conclusion which is legally possible view then the commissioner cannot be invoke the provisions of section 263 merely, because he does not agree with the view of the AO. Hence, the AR has submitted that t....
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.... carried out either through your e-mail account or manually (if e-mail is not availablo). e) In cases where order has to be passed under section 153A/153C of the Income Tax Act, 1961 read with section 143(3), assessment proceedings would be conducted manually. Sd/- Yours faithfully, SHRIPRAKASH SHARMA ITO, BURHANPUR ANNEXURE 1. Please furnish details of all bank accounts mentioning account numbers, branch address along with bank statements. 2. You have claimed short term capital loss of Rs. 3,56,04,837/- on transfer of units equity oriented (through stock exchange). Please furnish details of cost of acquisitions of units with broker's notes in respect of purchase of these securities. Please also furnish evidence with regard to the transfer of these units. 3. Please furnish copy of sale deeds (both side) in respect of immovable properties sold during the year. You are also requested to submit evidence regarding cost of acquisition and improvement of properties as claimed in your computation of income. Please state whether there is any difference in guideline value of the properties and sale value of the same. If yes, pleas....
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....AT INCOME HAS ESCAPED ASSESSMENT Assessee: NARENDRA KUMAR AGRAWAL The assessee had filed his return of income for the AY 2016-17 declaring total income of Rs. 5,35,510/-. The case was selected for limited scrutiny and assessment was completed u/s 143(3) on 09.12.2018 accepting the returned income. In this connection, information available in Insight portal shows that in pursuance to survey action u/s 133A by Investigation Unit Mumbai under Project Falcon, it was found that various brokers are engaged in facilitating fictitious losses through coordinated and premeditated trading in illiquid stock options. One of such stock brokers admitted in his statement that he was engaged in providing fictitious losses/profit through BSE equity/derivative trading through his concern M/s Xpro Securities. As per information, the above assessee had booked fictitious losses through the concerned entity M/s Xpro Securities. On perusal of records with this office, it is observed that the assessee had booked fictitious losses from M/s Xpro Securities during the subject year aggregating to Rs. 3,27,45,549/-. Thus, I am satisfied that the income of the assessee has been under-a....
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....evant AY. 2 Details of all trading in stocks carried out by you during the financial year. Also furnish account statement of the demat account held by you for the relevant AY. 3. With respect to the reasons for re-opening communicated to you viz. notice u/s 143(2) of the Act, it is established that you have booked loss amounting to Rs. 3,27,45,549/- pertaining to an entity named 'XPRO SECURITIES PVT LTD. You are requested to show cause as to why the amount of Rs. 3,27,45,549/- should not be added to your returned income. 4. In ITR, you have shown capital loss of Rs. 3,56,04,837/-. Please furnish the computation of the capital loss along with documentary evidences. 5.5 The Only issue raised by the AO in the reassessment proceedings is regarding the loss booked by the assessee on derivative transactions through broker M/s Xpro Securities. The assessee filed its reply dated 15.03.2022 placed at page no.15 to 17 as under: "Sub Reply to Notice u/s 142(1) of the Income Tax Act, 1961. ITBA/AST/F/142(1)/2021-22/1040493159(1) dated 09th March 2022 Ref: Assessee: Shri Narendra Kumar Agrawal 203,C.K. Campus Bahadarpur Road, Burhanpur(MP) ....
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.... is re-opened and it's a fact finding process wherein all the facts will be gathered. Here, We have submitted all the facts and the documentary evidences for the Losses claimed. Further, the Losses were also verified by the Assessing Officer and all records were submitted at the time of earlier Original Assessment. Though it was limited scrutiny but the Capital Gains where set off with the Losses of the Future and Options. Now as the Losses are proposed to be disallowed it is the duty of the Department to prove how and on what basis/facts the losses are not allowable and addition is proposed. Just by stating that in Project falcon it is found that the entity with which the Assessee has dealt with is providing ficticious losses with M/s Xpro Securities. Further, stating that various brokers are engaged in facilitating fictitious losses through coordinated and premeditated trading in illiquid stock options. The information or belief is one sided and now you can verify our records which clearly shows that all payments are made from normal banking channels and losses are paid for to the broker. There are no facts that the losses are provided to the Assessee. The A....
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....L, had filed his return of income for the AY 2016- 17 declaring total income of Rs. 5,35,510/-. The case was selected for limited scrutiny and assessment was completed u/s 143(3) on 09.12.2018 accepting the returned income. 02. The case was re-opened for assessment u/s 147 of the Act by ITO, BURHANPUR by issue of notice u/s 148 of the Act dated 26.03.2021. Thereafter, the case was transferred to ReFAC (Regional Faceless Assessment Centre) on 11.11.2021. Accordingly, notice u/s 148 of the Act was issued and duly served upon the assessee. In compliance, the assessee filed his ITR for the Α.Υ. 2016-17 on 08.04.2021 and declared total income of Rs. 5,35,510/-. Notice u/s 143(2) of the Act was served to the assessee on 29.06.2021. In response, the assessee raised objections to the re-opening of assessment u/s 147 of the Act, which were disposed on 15.12.2021. Notice u/s 142(1) of the Act was issued and served upon the assessee on 09.03.2021 wherein assessee was asked to furnish details of the capital loss of Rs. 3,56,04,837/- as per ITR filed by assessee. In compliance, the assessee has submitted reply on 15.03.2022. 03. In view of the above facts and cir....
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....ncome Tax Act 1961 (hereinafter referred as "Act") was passed on 28/03/2022 accepting the returned income. 3. As per facts of the case, the notice u/s 148 of the Act was issued on 26/03/2021. In response to the notice, the assessee filed his ITR on 08/04/2021 declaring the total income at Rs. 5,35,510/-. Further, notices u/s 142(1) of the Act were issued on 09/03/2022. In response to aforesaid notices, the assessee submitted his response alongwith the information/documents/evidences requisite for. Accordingly, considering the facts of the case as well as replies submitted by the assessee, on the basis of documents available on records, the assessment order u/s 147 r.w.s. 144B of Act was passed on 28/03/2022 accepting the returned income. 4. On perusal of the case records, it is observed that the assessee had sold three properties on 24/11/2015, 09/02/2016 and 31/03/2016 at the cost of Rs. 1,57,00,000/-, 1,81,50,000/- and 1,24,70,353/- respectively. He earned Long Term Capital Gain (LTCG) of Rs. 1,19,57,593/-, 1,21,96,669/- and Rs. 1,15,79,071/- respectively thereon, totaling to Rs. 3,57,33,333/-. It is observed from the contract notes of Xpro Securities a....
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.... stated that the AO has not at all verified these issues and relevant facts involved and completed assessment without any application of mind, without conducting proper inquiries and due verification. Therefore, the assessment was found to be erroneous and prejudicial to the interest of the revenue. The Pr. Commissioner has referred the claim of short term capital loss as manipulated to reduced tax liability of long term capital gain. It is pertinent to note that in the return of income filed in response to notice u/s 148 the assessee has declared this loss as business loss arising from derivative transactions on stock exchange. Even in the reasons recorded by the AO for reopening of the assessment it is alleged that the broker M/s Xpro Securities is found engaged in in facilitating fictitious losses through coordinated and premeditated trading in illiquid stock options. However, from the details of the transaction resulting loss in question as placed at page no.22 to 42 of the paper book it is found that most of the transactions are in the well-known scripts like Exide Industries, HCL technology, RECL, Voltas, BEML, Just Dial, Infosys, ACC Cement Ltd, Balaji Tally Films, Bata Indi....
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....ing evidences then the order of the AO cannot be held as erroneous so far as prejudicial to the interest of the revenue on the ground of lack of inquiry or lack of proper inquiry. It is settled proposition of law that when the AO has adopted one of the courses permissible and available to him and this has resulted in loss to revenue or two views were possible and the AO has taken one view which the commissioner may not agree then the said order cannot be treated as erroneous or prejudicial to the interest of the revenue unless the view taken by the AO is unsustainable in law. In the case in hand the Pr. CIT observed in para 6 of the impugned order as under: "6. It is worth to mention here that on perusal of the order sheet nothings, it can be observed that the AO has not neither conducted any enquiry to verify the aforesaid issue nor made any addition on the aforesaid issue to the total income of the assessee. Hence, the above referred issue related to claim of bogus short term capital loss through M/s Xpro Securities remained to be examined. Accordingly, the assessment order passed is erroneous in so far as it is prejudicial to the interest of the revenue." 5.9 The abo....
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....e, the submission of learned counsel for the revenue was that while passing the assessment order, the Assessing Officer did not consider this aspect specifically whether the expenditure in question was revenue or capital expenditure. This argument predicates on the assessment order which apparently does not give any reasons while allowing the entire expenditure as revenue expenditure. However, that by itself would not be indicative of the fact that the Assessing Officer had not applied his mind on the issue. There are judgments galore laying down the principle that the Assessing Officer in the assessment order is not required to give detailed reason in respect of each and every item of deduction, etc. Therefore, one has to see from the record as to whether there was application of mind before allowing the expenditure in question as revenue expenditure. Learned counsel for the assessee is right in his submission that one has to keep in mind the distinction between "lack of inquiry" and "inadequate inquiry". If there was any inquiry, even inadequate, that would not by itself, give occasion to the Commissioner to pass orders under section 263 of the Act, merely because he has differen....