Home Case Index All Cases Income Tax Income Tax + AT Income Tax - 2024 (1) TMI AT This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2024 (1) TMI 1073 - AT - Income TaxReopening of assessment u/s 147 - Reason to believe - notice issued beyond the period of 4 years - as alleged assessee was one of the beneficiary of Client Code Modification (CCM) by some broker - HELD THAT:- The assessee filed objections for the reasons recorded and these objections were not disposed of by the speaking order by the AO thereby violating the guidelines provided by the Hon’ble Supreme Court in the case of GKN Driveshafts Ltd [2002 (11) TMI 7 - SUPREME COURT]. AO had initiated the re-assessment proceedings way back on 31.3.2016 itself and had been waiting for the assessee to file a return in response to notice u/s 148 of the Act by offering the alleged profit earned by the assessee due to CCM . There is no information provided in the reasons as to in whose hands, a survey u/s 133A of the Act was conducted by Ahmedabad Investigation wing. The reason only speaks that some survey in Ahmedabad conducted revealted that some broker was involved in misusing the CCM facility of NSE and engaged in providing non-genuine losses and profits. The reason does not specify whether the broker through whom the assessee had carried out the transaction of trading of shares and securities was involved in such malpractices. Infact during the course of re-assessment proceedings, the ld. AO even sought to examine the broker of the assessee M/s S S Corporate Securities Ltd u/s 133(6) of the Act and that the said broker had duly replied directly to the ld. AO confirming the fact of CCM being carried out by them for their clients due to punching errors committed by their staff but had never confirmed that their actions had enabled the assessee to shift the losses or profits. Dispute is squarely covered by the decision of Globus Power Generation Ltd [2023 (5) TMI 215 - ITAT DELHI] as held there is no material to infer that such client code modification has been done with malafide purpose of shifting of the profit or evasion of the tax. There is no material before the Assessing Officer to form such a belief that income had escaped due to such client code modification and thus there is no live link between the material before the Assessing Officer and inference made. Hon'ble Supreme Court in the case of Rajesh Jhaveri Stock Brokers (P) Ltd [2007 (5) TMI 197 - SUPREME COURT] has held that for validity of reason recorded it is essential that there should be a relevant material on which a reasonable person could make requisite belief. Assessment cannot be reopened validly on the basis of the above reasons recorded in absence of any tangible material to infer that income escaped in the case of the assessee. Also see Coronation Agro Industries Ltd [2017 (1) TMI 904 - BOMBAY HIGH COURT] Decided against revenue.
|