9911796707
TMI Blog2024 (3) TMI 1075X X X X Extracts X X X X X X X X Extracts X X X X ..... issue before the Ld. CIT(A), therefore, the same should be remanded back to the file of the Ld. CIT(A) for his adjudication. However, after considering the rival submission on admission of this ground of appeal, we find that it is a legal issue. And even though it is being raised for the first time before this Tribunal, we are inclined to admit the same as held by the Hon'ble Supreme Court in the case of NTPC Vs. CIT (supra), and therefore, we are proceeding to hear the appeal on the legal issue. 3. Brief facts related to the legal issue are that the assessee company had filed its return of income on 29.09.2015 declaring total income of Rs. 57,65,270/- which was processed u/s 143(1) of the Act and the returned income was accepted. However, thereafter, the case of the assessee has been re-opened by issuance of notice u/s 148 of the Act dated 29/30.03.2017 which action of the AO has been challenged before us. 4. Assailing the action of the AO to have re-opened the assessment, the Ld. AR drew our attention to Para No.1 of the "Reasons recorded" (Infra) and pointed out that the only material on the basis of which the AO has resorted to re-opening of the assessment is seen as an ex-p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... one (1) and Para (IV) of the "reasons recorded" wherein the AO has alleged escapement of income to the tune of Rs. 12.50 cr. According to the Ld. AR, the assessee while objecting to the re-opening of assessment, contested the figure of Rs. 12.50 cr escaping assessment and asked the AO how he computed escapement of income of Rs. 12.50 cr. In this regard, the Ld. AR pointed out that AO kept silent on this issue, i.e, while disposing/rejecting the objections raised by assessee. In this regard, it was pointed out by the Ld. AR that AO in the re-assessment order has disallowed only Rs. 6 cr and not Rs. 12.50 cr, which difference in escapement of income according to Ld. AR itself goes on to show that AO ought to have conducted preliminary enquiry and not resorted to re-opening in the case. Further, according to the Ld. AR, the Hon'ble Bombay High Court decision in the case of Hindustan Lever Ltd (268 ITR 332) has held that while examining the validity of the re-opening of the assessment, the Appellate Authorities ought to consider the reasons recorded on standalone basis. According to him, nothing can be added nor anything be deleted from the reasons so recorded by the AO. The Hon'ble Hi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cessary for re-opening the assessment u/s Section 147 of the Act i.e. Firstly whether AO has recorded the reasons before reopening the assessment. And if so, whether the reasons recorded fulfil the requirement of law or not. The fundamental requirement of law as stipulated u/s 147 of the Act is that before reopening an assessment, the AO has to record the reasons wherein he has to spell out the "Reasons to believe, escapement of income". It is well settled that "Reasons to believe" postulate foundation based on information and belief based on reason. After a foundation based on information is made, there still must be some reason, which should warrant the holding of a belief that income chargeable to tax has escaped assessment. In addition, one should bear in mind the fine distinction between "Reason to Suspect" and "Reason to believe". Information adverse may trigger "Reason to Suspect" which is not sufficient to reopen an assessment because as per section 147 of the Act, AO should have "Reasons to believe", escapement of income" and not Reasons to suspect escapement of income. Therefore, when AO receives adverse information against an assessee, he should make preliminary inquiry ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he information, it is observed that the assessee company is also one of the suspected entities indulged in availing fictitious profit/loss amounting to Rs. 12,50,00,000/- by executing reversal trades in illiquid stock options on the BSE for the purpose of facilitating tax evasion. (II). The following observations were made by SEBI in its order: a) The loss-making entities were trading mainly in options on individual stocks which were thinly traded. The trades by these loss-making. entities, in many cases, contributed to 70% to 100% of total traded volume for the contracts on those days. b) On majority of occasions, the quantity of stock options bought and sold by the loss making entities for a contract was identical, however, there was a significant difference m the sell value and buy value of the transactions resulting into significant loss to the loss making entities. c) Substantial number of transactions were squared up and a major percentage of transactions thereof were trade reversals i.e. if the stock options were sold first to an entity, they would be bought back in exact quantity from the same entity or vice. versa. d) As the first leg of these reversal trades, th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... raudulent' as defined under regulation 2(1)(c) of the SEBI (Prohibition of Fraudulent and Unfair Trade Practices relating to Securities Market) Regulations, 2003 ("PFUTP Regulations") and prohibited under the provisions of section 12A(a), (b) and (c) of the SEBI Act, 1992 and regulations 3(a), (b), (c) and (d) and 4(1) and 4(2)(a) thereof. (IV). In view of the findings, as highlighted by SEBI in its order cited above, and the claim of non-genuine profit/loss, and after perusing the details available on record and duly applying my mind, have reason to believe that the assessee has failed to disclose fully and truly all material facts necessary for assessment for relevant AY. Hence, I have reasons to believe that the income chargeable to tax of the assessee company M/S. Priyasha Meven Finance Ltd, PAN: AADCP2042F for A.Y. 2015-16 has escaped assessment. Thus, in view of Section 147 of the Income Tax Act, 1961 income of Rs. (-)12,50,00,000/- escaping assessment is required to be re-assessed. (V). Issue notice u/s 148 of the Income Tax Act, 1961 after seeking prior approval of Jt. Commissioner of Income Tax-4(2), Mumbai vide her letter No. JCIT-4(2)/Approval as required u/s. 151 of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... I, it is found that assessee company's name (M/s. Priyasha Meven Finance Ltd.) is not figuring in the fifty nine (59) persons/entities named therein at page no. 35 & 36 of the said SEBI order. However, we note that at item no. twenty six (26) the name of Shri Nikhil Jalal is there, who is one of the director of the assessee company, who was also restrained from accessing the security market until further orders. The main thrust of contention of Assessee Company is that this interim ex-parte order (which has been challenged by Shri Nikhil Jalan before the SAT) could not have been foundational/relevant material on the basis of which AO could have formed the belief that income has escaped assessment in the hands of assessee company for various reasons stated infra. Firstly, because assessee-company's name doesn't figure in the list of 59 persons/entities prohibited as it is by SEBI order; and secondly, merely because name of Shri Nikhil Jalan (director in assessee) was seen figuring in the list, could not have been the basis to reopen the assessment of assessee-company; and thirdly, Shri Nikhil Jalan is an independent person and files return in his individual capacity; and Fourthly, a ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
