TaxTMI 
TaxTMI 
2025 (8) TMI 1245
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.... sec. 147 are not fulfilled. 2. Ld. CIT(A) erred in upholding order u/s. 147 passed by AO without appreciating that initiation of reassessment proceedings and the issue of notice u/s. 147 is bad in law, illegal, ab initio void. Reassessment order passed by AO is illegal and unsustainable as it is opposed to law. Provisions of sec. 147 are not fulfilled in the case of appellant. 3. Ld. CIT(A) erred in upholding order u/s. 147 passed by AO without appreciating that the initiation of reassessment proceedings is illegal inasmuch as the failure on the part of appellant as required by first proviso to sec. 147 was not brought out in the reasons recorded for reopening. 4. Without prejudice to above grounds, initiation of reassessment is illegal and invalid inasmuch as approval granted u/s. 151 is not in accordance with provisions of law. There was no application of mind by the approving authority. Consequently, reassessment proceedings and the reassessment order are illegal and liable to be quashed. Ld. CIT(A) erred dismissing the plea of appellant. 5. Ld. CIT(A) erred in confirming addition of Rs. 65,24,476/- made by AO on account of loss claimed by ap....
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....r, the SEBI had been investigating cases involving reversal trades covering the period 01.04.2012 to 31.03.2013. In the interim report dated 20.08.2015, the SEBI had found that certain losses making entities for trading mainly in options on individual stocks which were thinly traded. That on majority occasions, the quantity of stock options bought and sold by the loss making entities in a contract was identical, however, there was a significant difference in the sale value and buy value of the transactions resulting into significant loss to the loss making entities. These loss-making entities at the first leg were seen to have been selling stock options at unreasonably low prices and in the second leg of the reversal trades, the options once sold by an entity at unreasonable low prices was subsequently paid back at substantially higher prices and thereby booking bogus losses. Since the AO noticed that the assessee was also beneficiary of such type of losses booked on stock options, he, therefore, formed the belief that the income of the assessee had escaped assessment and reopened the assessment u/s. 147 r.w.s. 148 of the Act. He, thereafter, in the reassessment proceedings treated....
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.... 13.08.2021 for reopening of the assessment, copy of which has been placed at paper book page 186. The Ld. Counsel has submitted that the only reason for which the reopening was made in this case was based on the report of the Investigation Wing that certain entities were indulged in bogus loss booking in derivative transactions and that the aforesaid report of the Investigation Wing was based on interim order of the SEBI dated 02.01.2015 in respect of investigation made by the SEBI involving reversal trades covering period 01.04.2012 to 31.03.2013. 8. The Ld. Counsel has submitted that in this case, the reopening has been done after four years from the end of the relevant assessment year. He has submitted that in this case, the original assessment was carried out u/s. 143(3) of the Act, hence, as per the first proviso to sec. 147 of the Act, no action could have been taken by the AO u/s. 147 of the Act after the expiry of four years from the end of the relevant assessment year unless any income chargeable to tax has escaped assessment by reason of the failure on the part of the assessee to disclose fully and truly all necessary facts necessary for his assessment for the assessm....
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....transactions. The Ld. Counsel has submitted that it is apparent from record that after receipt of information from the Investigation Wing, the AO did not carry out necessary enquiries and did not corelate the information received from Investigation Wing with the assessment records of the assessee. He, therefore, has pleaded that the belief of the AO of escapement of income for the year under consideration was not based on his own satisfaction rater the reopening in this case, has been made on the basis of borrowed satisfaction from the Investigation Wing. That there was totally non-application of mind of the AO and, therefore, the reopening of assessment was bad in law. 8.3. The Ld. Counsel has further submitted that the reopening in this case has been made on the alleged interim report of the SEBI dated 20.08.2015, whereas, the original assessment order u/s. 143(3) of the act was passed in this case on 09.03.2016. He, in this respect has submitted that the alleged report of the SEBI dated 28.08.2015 was very much available in public domain and to the Income Tax Authorities before the passing of the assessment order u/s. 143 of the Act on 09.03.2016. He has submitted that after ....
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....ions. 9. The ld. DR, on the other hand, has relied on the finding of the lower authorities. 10. After considering the rival submissions, we are of the view that the reopening of assessment in this case u/s. 147 of the act was bad in law on various counts. Firstly, original assessment in this case was carried u/s. 143(3) of the Act and reopening has been made after four years from the relevant assessment year and the AO has failed to demonstrate as to any failure on the part of the assessee to fully and truly disclose all the material facts relating to the assessment including the aforesaid transaction carried out by the assessee in the derivative segment. Moreover, the issue relating to the losses incurred from derivative transactions was duly scrutinized and verified by the AO during the original assessment proceeding u/s. 143(3) of the Act. All the necessary information, evidences and explanation, whatsoever called for by the AO during original assessment proceeding, were duly furnished by the assessee. 11. Secondly, the assessment has been reopened by the AO on the basis of borrowed satisfaction from the Investigation Wing. The AO, as observed above, did not corelate th....