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2020 (12) TMI 394 - AT - Income TaxReopening of assessment u/s 147 - eligibility of reasons to believe - HELD THAT:- It is a legal necessity that a foundation based on information is a must before the AO has reason to believe escapement of income. So, here the appraisal report on which the AO builds the reason to belief was absent when he recorded the reason before invoking the reopening jurisdiction u/s. 147 by issuing notice u/s. 148 on 31.03.2016. We are inclined to uphold the contention of the Ld. AR that the foundation on which the AO based his belief that income chargeable to tax had escaped assessment was absent at the material time when he issued notice u/s. 148 of the Act on 31- 03-2016, and therefore, the basic legal requirement of reopening u/s. 148 of the Act i.e. AO’s formation of reasons to believe escapement of income prior to reopening of assessment was absent in the given facts of the present case. AO did not comply with the requirement of law set out in Section 147/148 of the Act before reopening the assessment for AY 2009-10 originally completed u/s. 153A/143(3) of the Act dated 31.03.2015, and as a consequence thereto, the order dated 29-12-2016 passed by the AO being without jurisdiction is held to be a nullity in the eyes of law. The assessee therefore, succeeds on this legal issue. The cross objections taken by the assessee for AY 2009-10, is thus allowed. As relying on Hon’ble Supreme Court in the case of NDTV Ltd. [2020 (4) TMI 133 - SUPREME COURT]and other case laws, we hold that the reopening of the assessments for AYs 2010-11 & 2011-12 are bad in law in as much as the AO did not satisfy the condition precedent in first proviso to Section 147 of the Act which was sine qua non for usurping jurisdiction u/s 147 . Bogus loss incurred in trading of commodities on the National Multi Commodity Exchange ( ‘NMCE’) - HELD THAT:- AO had simply copy-pasted his reasoning of AY 2009-10 and did not even bother to examine the assessee’s commodity transactions for AY 2014-15. Unlike AY 2009-10 to AY 2012-13, in the assessment order for AY 2014-15, there was no allegation by the AO that the assessee had engaged in synchronized trading in this year. The charts and tables extracted by the AO analyzing the trades of the assessee pertained only to FYs 2008-09 to 2011-12 and there was nothing contained in the assessment order for AY 2014-15 which would even remotely suggest that the AO had applied his mind to the assessee’s commodity transactions for AY 2014-15 and then arrived at a conclusion that it was contrived or bogus. When confronted with the aforesaid fact, even the Ld. CIT, DR could not controvert the same. We therefore, find merit in the assessee’s alternate plea for AY 2014-15 that the reasoning given by the AO to disallow the loss incurred in commodity transactions in that year, was factually perverse and therefore rightly deleted by the Ld. CIT(A).
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