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2021 (4) TMI 453 - ITAT MUMBAIReopening of assessment u/s 147 - information received from the DDIT(Inv.), Unit-1(4), Mumbai - no independent application of mind by AO - Addition of Future & Option Loss (hereinafter referred to as “F&O loss”) from certain transactions carried out through its broker - HELD THAT:- We hold a strong conviction that the A.O had mechanically acted upon the information received from the DDIT(Inv.), Unit 1(4), Mumbai, and without even doing the bare minimum i.e consulting the assessment records of the assessee for the year in question as was indispensably required on his part for arriving at a bonafide belief that the income of the assessee chargeable to tax had escaped assessment therein reopened its concluded assessment. On the basis of our aforesaid observations, we are of a strong conviction that as the A.O had failed to independently apply his mind to the ‘material’ available on his record and mechanically acting on the information supplied by the Directorate of Income-tax (Inv.) had on the basis of incomplete and incorrect facts reopened the case of the assessee u/s 147 of the Act. We, thus, not being able to persuade ourselves to subscribe to the view taken by the CIT(A) that the A.O had validly assumed jurisdiction u/s 147 of the Act therein ‘set aside’ his order to the said extent. Accordingly, in the absence of valid assumption of jurisdiction by the A.O u/s 147 of the Act, the consequential assessment framed by him u/s 143(3) r.w.s 147, dated 29.03.2015 cannot be sustained and is quashed. Genuineness and veracity of F&O transactions - We are unable to persuade ourselves to subscribe to the view taken by the A.O, wherein adopting a predetermined approach he had discarded the documentary evidences that were furnished by the assessee in support of the authenticity of the F&O transactions, and had without giving any cogent reason held the same as bogus and accommodation transactions. As is discernible from the order of the CIT(A), we find that he had taken cognizance of the fact that the assessee in the course of the assessment proceedings had on the basis of supporting documentary evidences substantiated the authenticity of the F&O transactions, which however were not accepted by the A.O without any whisper of rebuttal or dislodging of the same. Also, the view taken by the A.O that the broker, viz. M/s Alliance Intermediaries & Network Pvt. Ltd. had issued bills to the assessee during the year in question despite having been debarred from trading was found by the CIT(A) to be factually incorrect and misconceived. Accordingly, the CIT(A) after deliberating at length had found favour with the claim of the assessee that it had carried out genuine F&O transactions and suffered the resultant loss during the year in question. We would not hesitate to observe that the A.O in the course of the reassessment proceedings had not even raised any doubt as regards the authenticity of the documents that were filed by the assessee in support of the F&O transactions in question. Ac CIT(A) had rightly concluded that as the assessee had submitted complete evidences in support of its F&O transactions which had not been disputed/rebutted by the A.O thus, the addition made on the basis of the general statement of Shri Mukesh Choksi (supra) as against the specific proved transactions cannot be sustained and had rightly been vacated by the CIT(A). Our aforesaid view that an admission of the aforementioned Shri. Mukesh Choksi, key person of Mahasagar Securities Pvt. Ltd. in his statement recorded under Sec. 132(4) of the Act that his group was engaged in providing accommodation entries would not on a standalone basis suffice for concluding that every transaction carried out through the group entities of the aforesaid person were to be held as ingenuine transaction is supported by the order of the Hon’ble High Court of Gujarat in the case of PCIT-3 Vs. Vineet Sureshchandra Agarwal [2017 (9) TMI 1924 - GUJARAT HIGH COURT] We find substantial force in the claim of the ld. A.R that as the broker in question, viz. M/s Alliance Intermediaries & Network Pvt. Ltd. was debarred from trading only w.e.f 23.04.2009 therefore, no adverse inferences as regards its transactions carried out during the year under consideration i.e the period relevant to A.Y 2008-09 were liable to be drawn. On a perusal of the order of the CIT(A), we find that it was observed by him that Shri. Mukesh Choksi (supra) in his statement recorded u/s 132(4) (as reproduced in the body of the assessment order) had himself admitted that the bills were issued by him as membership was at the relevant point of time in force. In the backdrop of the aforesaid facts, we concur with the view taken by the CIT(A) that now when the broker, viz. M/s Alliance Intermediaries & Network Pvt. Ltd. was debarred from trading only w.e.f 23.04.2009 therefore, no adverse inferences as regards the bills issued by it during the year in question viz. A.Y 2008-09 were liable to be drawn. Thus as the assessee had in the course of the reassessment proceedings by drawing support from clinching documentary evidences substantiated the authenticity of the F&O transactions carried out through the aforesaid broker, viz. M/s Alliance Intermediaries & Network Pvt. Ltd., which had not been dislodged or disproved by the revenue therefore, the CIT(A) had rightly observed that no adverse inference as regards the authenticity of such F&O transactions and the resultant loss could have been drawn in the hands of the assessee. We, thus, concur with the view taken by the CIT(A) insofar the merits of the case are concerned and uphold his order to the said extent. - Decided in favour of assessee.
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