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2016 (9) TMI 1007 - GUJARAT HIGH COURT

2016 (9) TMI 1007 - GUJARAT HIGH COURT - [2016] 389 ITR 488 - Reopening of assessment - disallowance of loss - Held that:- Assessing Officer examined the issue at length in the original assessment order and came to the conclusion that the transactions were not off market transactions and that therefore, the loss suffered by the assessee cannot be disallowed. Whatever be the validity of such findings, surely the Assessing Officer himself cannot question the same by issuing the notice for reopenin .....

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M/s.Nitin Parikh and Co. being sister concern. In any case, in the order of assessment itself, the Assessing Officer was actually aware about the fact that M/s.Nitin Parikh and Co. was a part of the group of companies of which the assessee was also one of the members. We have reproduced the relevant portion of para 5 of the order of assessment, in which the Assessing Officer himself refers to M/s.Nitin Parikh and Co. as one of the group concerns. His consideration of the issue of allowability of .....

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Dated:- 19-9-2016 - MR. AKIL KURESHI AND MR. A.J. SHASTRI, JJ FOR THE PETITIONER : MRS SWATI SOPARKAR, ADVOCATE FOR THE RESPONDENT : MR NITIN K MEHTA, ADVOCATE ORAL JUDGMENT (PER : HONOURABLE MR.JUSTICE AKIL KURESHI) 1. The petitioner has challenged a notice dated 29.03.2011 issued by the respondent Assessing Officer for reopening the petitioner's assessment for the assessment year 2004-05. The return of the petitioner for the said assessment year was scrutinized and assessment under section .....

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show by the assessee on 31.12.2007. The Assessing Officer has disallowed a loss of ₹ 9,36,93,513/- being loss booked in off market transaction and ₹ 85,86,619/- disallowed u/s. 14A of the Act. On going through the records it is seen that a loss of ₹ 8,26,92,608 incurred while dealing with another sister concerned viz Nitin Parikh & Co, Capital Market has not been disallowed. The loss of ₹ 8,26,92,608/- deserved to be disallowed as was done in the off market transactio .....

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e for reassessment and failing in such objections, the assessee filed the present petition. Inviting our attention to the reasons recorded and other materials on record, counsel for the petitioner raised following contentions. I. There was no failure on the part of the assessee to disclose truly and fully all material facts. Reassessment beyond a period of four years therefore, could not have been done. II. The Assessing Officer had examined the entire claim which is the sole basis for reopening .....

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hand, learned counsel Shri Nitin Mehta submitted that the assessee had not disclosed that M/s.Nitin Parikh and Co. and petitioner were sister concerns. The loss on off market transaction with this company to the tune of ₹ 8.26 crores (rounded off) was required to be disallowed as it was done in case of other group concerns. 4. From the reasons recorded by the Assessing Officer for issuing notice for reopening, one can gather that the sole ground pressed in service by the Assessing Officer .....

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ull details regarding the self inflicted loss recorded in the books . 5. In the original assessment, the issue of this off market transaction by the assessee with M/s.Nitin Parikh and Co. to the tune of ₹ 9.37 crores, which resulted into loss to the assessee of ₹ 8.26 crores came up for consideration. In the assessment order dated 31.12.2007 itself, the Assessing Officer had devoted substantial space and discussion to this issue. It is not necessary to reproduce the entire discussion .....

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engaged in the business of trading in shares, securities and mutual funds. The group is headed by Shri Nitin Bhanukant Parikh, who is being assisted in this business by Shri Jolit Jaswantlal Shah, Smt. Heena Nitin Parikh and Smt. Amita Jolit Shah. Assessee M/s. Prudent Finance P Ltd is flagship concern of the group. The various concerns which are in the fold of this group are as under: Sr. No. Name of the concern Status Director/partner/propr ietor 4 Nitin Parikh & Co. Proprietary Concern S .....

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ked to furnish details as to sale and purchase transactions in shares with the following concerns. (i) … …… (iv) Nitin Parikh & Co. … … 7. In para 7 of the order of the assessment, the Assessing Officer recorded the assessee's contention regarding allowability of the off market transaction losses raised through multiple replies particularly regarding the loss of ₹ 8.26 crores in the transactions with M/s.Nitin Parikh and Co. In such replies, the a .....

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85. (Copy enclosed as annexure 1). It is stated that by aforesaid transaction, said NPC Capital market has earned only brokerage income from it and not profit through assessee as stated by your goodselves. (The copy of Profit & Loss account for relevant year is enclosed herewith as Annexure 2). As the purchase and sale transaction carried out with aforesaid firm is the market transactions and routed through stock exchange and similar to transaction with Kotak Securities Limited, same cannot .....

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ions carried out with Nitin Parikh and Co. Capital Market is concerned assessee's contentions, is accepted for the reason that it is a subbroker of Anagram Securities Ltd. and the transactions with Nitin Parikh & Co. Capital Market are routed through the platform of stock exchange and therefore those are not considered as offmarket transactions. 9. It can thus be seen that the Assessing Officer examined the issue at length in the original assessment order and came to the conclusion that .....

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