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2023 (6) TMI 207 - ITAT MUMBAIValidity of Reopening of assessment - reason to belief - Bogus share transactions - independent application of mind by AO v/s borrowed satisfaction - certain information from Investigation Cell where statement of President Anand Rathi Commodities recorded there were client code modifications of transactions in which there was no physical delivery of the goods on NSEL platform and that the said scam was investigated by DDIT(Inv) - HELD THAT:- The basis of the belief should be discernible from the material on record, which was available with the Assessing Officer, when he recorded reason and there should be a link or close nexus between material obtained and formation of belief. From the perusal of the reasons recorded by the Assessing Officer, it is noticed that the Assessing Officer though, has given a detailed description of information received from DDIT(Inv), he has not recorded any finding with respect to the alleged transactions entered into by the assessee and the basis on which the income of Rs. 17,40,120/- is found to be undisclosed. AO has described the overall nature of the fraud committed but failed to record how the same to be related to the assessee. On perusal of records, it is noticed that there is a gap in understanding of facts with regard to the speculative losses incurred by the assessee, which, according to the AO, cannot be set off against the normal business income. A perusal of the P&L Account evidences that the assessee had only income from non speculative business and does not have any speculative loss which he has set off against any income. Therefore, we see merit in the contention of AO while recording the reasons, has not applied his mind and has not brought out any factual finding with regard to the impugned addition. It is also noticed that the assessee’s request with regard to the workings of the impugned addition and the statements recorded from President Anand Rathi Commodities was not shared with him by the lower authorities. Reopening u/s 147 has been done without recording any specific reasons pertaining to the assessee and without linking the information received from DDIT (Inv) specifically to the assessee - Decided in favour of assessee.
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