2018 (2) TMI 676 - HC - Income Tax

Reopening of assessment - booking of losses through NMCE platform operating through the proper M/s. R. P. Jambuwala - Held that - There is nothing on the record that the said sum of ₹ 16.51 lacs was a loss claimed by the assessee. In fact, the balance sheet would show that the said figure was the assessee s receipt through sales. If the case of the Revenue was that after showing the sale of the commodities at ₹ 16.51 lacs, the assessee had claimed artificial losses. No such ground has come on record in the reasons recorded. The Revenue is bound by the reasons recorded by the Assessing Officer for reopening assessment which reasons are shown to be palpably incorrect. On the basis of the reasons recorded, it would not be possible to allow the Revenue to carry out fresh assessment. Facts are similar in all cases. Respective impugned notices are set aside. - Decided in favour of assessee

Summary

Issues:
1. Validity of reopening assessment based on contrived losses.
2. Objections raised by the petitioner against the notice of reopening.
3. Decision on the objections and subsequent appeal.

Detailed Analysis:
1. The judgment dealt with the validity of reopening the assessment based on alleged contrived losses by the petitioner. The Assessing Officer issued a notice based on information received regarding contrived losses by commodity traders and the petitioner's involvement in booking such losses. The petitioner contended that the information was incorrect, stating that there was actually a profit included in the accounts and original return of income. The court noted discrepancies in the reasons recorded for issuing the notice, as the petitioner had received the sum in question and not suffered a loss as alleged. The court emphasized that the Revenue is bound by the reasons recorded, and if those reasons are found to be incorrect, fresh assessment cannot be carried out.

2. The petitioner raised objections to the notice of reopening, highlighting that the information forming the basis of the opinion was factually incorrect and lacked validity. The objections pointed out that there were no contrived losses in the petitioner's case and that the reasons for reopening were recorded without independent judgment. Despite the objections, the Assessing Officer rejected them, leading the petitioner to approach the court for redress.

3. After hearing arguments from both parties and examining the documents, the court found that the petitioner had not claimed the alleged contrived losses and had actually received the sum mentioned. As a result, the court allowed all petitions, setting aside the impugned notices of reopening assessment. The judgment emphasized the importance of accurate and valid reasons for reopening assessments and upheld the petitioner's contentions regarding the lack of contrived losses in the case.