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TMI Blog2023 (6) TMI 207X X X X Extracts X X X X X X X X Extracts X X X X ..... thout providing an opportunity for cross-examination. 1.2. That on the facts and circumstances of the case and in law the Ld. NFAC has failed to appreciate that the recorded reasons stated that the assessee has made a bogus loss, whereas the assessee has made a profit and offered the same to tax, as the basis of recorded reason based on wrong facts, the issue of reassessment notice and assessment order is bad in law. 1.3. That on the facts and circumstances of the case and in law the Ld. NFAC has failed to appreciate that the Ld. Assessment Centre erred in issuing a Notice under section 148 of the Act on an issue which was scrutinized during the original assessment. Therefore, no reassessment can be made based on a change of opinion. 1.4. The Ld. NFAC failed to appreciate that the case laws relied on the NFAC do not apply to the facts of the appellant and the case laws are relied on without giving an opportunity to the appellant to respond, hence the order is bad in law, , 2. Impugned addition of Rs. 17,40,120/- under section 68 of the Act is bad in law That on the facts and circumstances of the case and in law the Ld. NFAC has erred in making an addition of Rs. 17,40,120 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ins offered by the assessee and by making certain disallowances under section 14A. 3. Subsequently the assessment was reopened by issue of notice under section 148 dated 31/03/2021 for the reason that certain information was received from DDIT(Inv), Mumbai in the course of investigation in National Stock Exchange Ltd with regard to the issue of Client Code Modification in the case of few brokers and based on a statement of Shri Chetan pitamber Bharkhada, President Anand Rathi Commodities Ltd (ARCL) who did the maximum client code modification was recorded. The Assessing Officer came to the conclusion that certain losses of the assessee are speculative losses and not allowed to be set off against normal business income and that the assessee has not disclosed fully and truly all material facts in the return of income and, therefore, had a reason to believe that an income to the extent of Rs. 17,40,120/- has escaped assessment. The Assessing Officer concluded the assessment stating that the share transaction done by the assessee are bogus in nature and not genuine. The Assessing Officer made the addition of Rs. 17,40,120/- for this reason and also for the reason that the assessee has ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... entered into by him in the statement of finance which were submitted by the assessee during the course of assessment under section 143(3) and that the Assessing Officer had raised specific queries with respect to the trading in commodities transactions entered into by the assessee. Therefore, it was submitted that there cannot be a re-assessment on the basis of change of opinion. The Ld.AR also submitted that the assessee has given full and true disclosure of all materials during the original assessment and there is no failure on the part of the assessee to disclose any material facts. 7. The Ld.AR, during the course of hearing also drew our attention to the reasons recorded (page 28 of paper book) where it was pointed out that there was no specific finding recorded by the Assessing Officer with respect to the impugned transaction and how the entire scam that happened in NSEL is related to the assessee. Accordingly, the Ld.AR submitted that the reopening is done without any application of mind and on the basis of misunderstood facts and therefore not valid. 8. The Ld.DR relied on the order of lower authorities. 9. We have heard the parties and perused the materials on record. T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of clients by offering funding to extent of 80 to 90% without being concerned with the income capacity of their clients. In substantial no. of cases, the brokers assured these traders that if NSEL does not pay the money then it will be paid by the broker. The brokers have also perforrned rampant client code modification where the dummy/ghost, client code were used to book Traders and later the client codes were modified. EOW have cited that the account of Ms. Madhu Jain (relative of director at relevant time & the promoter of india Infoline-Nirmal Jain) in the case of India Infoline and Borosil in the cases of Anand Rathi were used as ghost accounts. In some cases, the brokers were found to be involved in unauthorized funding to. clients by obtaining funds from their NBRC Subsidiaries. The member client agreement between the trader and the brokers entitled the traders' to claim money from the brokers for the trades done by them through the respective broker on NSEL Exchange platform. 3. In order to understand the modus operandi summons u/s 131 of the Income tax Act, 1961 were issued to the Broker - Anand Rathi Commodities Pvt.Ltd (ARCL) as the maximum client code modification ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... refer to the source like document, statement, third party confirmation etc and "belief" refers to the conclusion. 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. In paras 1 to 3 of reasons recorded, the Assessing Officer has described the overall nature of the fraud committed but failed to record how the same to be related to the assessee. 11. Further 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 Assessing Officer, cannot be set off against the normal business income. A perusal of the P&L Account evidence ..... X X X X Extracts X X X X X X X X Extracts X X X X
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