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TMI Blog2019 (2) TMI 1683X X X X Extracts X X X X X X X X Extracts X X X X ..... oss claimed by assessee is genuine loss in the above facts and circumstances of the case and therefore eligible for deduction. Accordingly, AO is directed. This ground of assessee's appeal is allowed. As we put up a specific query to the department as to whether assessee s broker carried out the relevant client code modification as per prescribed rules or not. There is no such violation pointed out during the course of hearing before me. Therefore, adopt the above detailed discussion mutatis mutandis to delete the impugned addition - Decided in favour of assessee. - I.T.A. No. 457/Kol/2018 - - - Dated:- 28-2-2019 - Shri S.S. Godara, JM For the Appellant : Shri Subash Agarwal, Advocate, ld.AR For the Respondent : Shri C.J. Singh, JCIT, ld. Sr.DR ORDER 1. This assessee s appeal for assessment year 2009-10 arises against the CIT(A)-10, Kolkata s order dated 28-12-2017 passed in case no. 448/CIT(A)-10/W-36(4)/2009-10 involving proceedings u/s 147/143(3) of the Act. Heard both the parties. Case file perused. 2. The assessee s sole instant ground raised in the instant appea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al precedents elucidate the principle involved. As regards, the much debated expression has reason to believe , the same has been held to have much larger and wider than is satisfied . The Hon'ble Courts have held that these reasons as recorded by the Assessing Officer must have a proximate and live link with the formation of belief. This I find to be true in the case at hand. Information for reopening has been explained in detail by several judicial pronouncements. Information may come from external sources or even from materials already on record or may be derived from the discovery of new and important matter or fresh facts - Word information would also include true and correct state of law derived from relevant judicial decisions either of the LT. authorities or Courts of law - Whether the ground on which the original assessment is based is held to be erroneous by Supreme Court in some other case, that will also amount to a fresh information which comes into existence subsequent to the original assessment - Taxpayer would not be allowed to take advantage of an oversight or mistake committed by the taxing authority [Kalyanji Mavji Co. Vs CIT (SC) 102 ITR 287] ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e a different method possible which the AO is precluded from adapting for arriving at the correct income, in a situation where he takes a second look on account of what appears to him a better or legally sound understanding of the applicable law. This method, could also be based on information available to the AO from an external source (return of the appellant for another assessment year) which would lead to the formation of any reason to reopen. In the case of - Yuvraj vs. Union of India (Bom.) (2009) 315 ITR 84, it has been held by the Hon'ble High Court that the points not decided while passing assessment order under section 143(3), do not lead to a case of change of opinion. In that case, it was held that the assessment was reopened validly. Moreover Hon'ble Courts have held that what is necessary to re- open an assessment is not the final verdict but a prima facie reason - Once such a reason is recorded by the Assessing Authority, he assumes jurisdiction to issue notice u/s148 - Mere fact that for earlier assessment years issue in dispute has been decided by CIT(A) in assessee's favour cannot be a fetter in exercising his jurisdiction u/s 147. 7. M ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tions in the tables already reproduced, 10. The L.d,AO has recorded that theassessee had failed to sustain his claim with proper evidence by producing any books of accounts that there was no such transaction through client code module, The Ld. Aa has reckoned that as the transaction had been made through the PAN of the assessee, he ought to be well aware of the fact of transactions being carried out through Client Code Modification, and ought to have raised objections with the Broker against such transaction, The ld. AO has recorded that as the assessee had failed to provide any evidence in the matter of raising any objections with the broker, as well as any certificate from the broker to the effect that there was no such transaction in the name of the assessee towards shifting out profit and loss of share business through client code module, Therefore the Ld,AO has reckoned that as it is quite evident on record that during the relevant assessment year the assessee had shifted out profit for Rs,1l,41,737/- and therefore this amount needs to be added back, and therefore the Ld Aa has disallowed the said amount, 11.Having examined the matter, I find th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee in connivance with the broker. The action of the Ld. AO accordingly stands confirmed, and the grounds taken by the appellant numbering 6 to 9 stand dismissed. 3. I have given my thoughtful consideration to the rival contentions. It transpires that during the course of hearing that this Co-ordinate Bench s decision in the case of M/s. Ratnabali Commodities Pvt. Ltd Vs. ITO, W 12(3), Kolkata decided on 16-06- 2017 has deleted the identical addition vide following discussion :- 3. Sole issue raised by assessee in its grounds of appeal is that Ld. CIT(A) erred in holding the loss of ₹19,76,538/- in the transactions of derivatives as bogus loss. 4. Briefly stated facts are that the assessee is a private limited company and engaged in the business of dealing in commodities. The assessee in the year under consideration has incurred loss of ₹45,23,943/- in derivatives transactions of shares. The above loss was incurred by the assessee at the fag-end of the relevant Assessment Year i.e. from 18.03.2009 to 26.03.2009. All the transactions were carried out through a broker namely M/s Ratnabali Capital Markets Ltd. (RCM ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ermitted by National Securities Clearing Corporation Ltd., (NSCCL short) which is the wholly owned subsidiary of NSE. The assessee also submitted that there is always huge rush during the marketing hours and therefore there is high possibility of human errors due to extremely high volume of orders which are placed on screens on real time basis. The assessee also submitted that all the transactions were carried out through banking channel and this was supported with the contract notes. The assessee also produced Form No.10BB which evidenced the payment of STT on the impugned transactions in recognized Stock Exchange. However, Ld. CIT(A) disregarded the contention of assessee and confirmed the order of AO by observing as under:- ... ... The facts in this case have been considered and it is apprehended that there is a possibility that the modifications might have been made to accommodate the appellant as the broker of the appellant was a sister concern. Even though apparently it has not been established that the such modification had been done in violation of rules and regulations prescribed by SEBI and the AO had proceeded on suspicion, however at the same time it al ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ated by the Authorities Below as bogus mainly due to the modification carried out in the name and code of the assessee by the broker. The director of the assessee-company and the director of the broker company listed with NSE are same person. The impugned loss was treated as bogus due to several reasons such as it was incurred at the fagend of the year, to reduce the taxable profit earned by assessee during the year and similar kind of loss was also disallowed in the immediate preceding year. 7.1 From the foregoing discussion, we find that indeed the client's code and name were modified in respect of transactions claimed by assessee. However, on perusal of record, we find that the impugned transactions were carried out through banking channel and all the supporting evidence such as contract note, payment of STT were filed at the time of assessment proceedings. We also find that Ld. CIT(A) confirmed the order of AO on the basis of his guess-work as evident from his appellate order which is reproduced below:- there is a possibility that the modifications might have been made to accommodate the appellant as the broker of the appellant was a sister ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tract notes, bills, the quoted price and other materials were produced. The transactions were made through cheques. All the shares related to the reputed companies and were quoted shares in the stock exchanges and were purchased and sold at the prevalent quoted market rates, which was verified from the statement of the stock exchanges. On these basis, the Tribunal found that the CIT(A) had proceeded on the basis of suspicion that there might be some ingenuinity in the transactions. On the basis of the materials produced, the Tribunal came to a finding of fact, which does not seem to be perverse. Whether the shares could be sold immediately on the date of purchase or not was a question of business expedience. Whether the decision was correct or wrong cannot be a question, which can be a subject-matter of decision in such a case. In order to find out whether the transaction is genuine or ingenuine, it is neither the expedience or correctness of the decision nor the business expertise of the person to be considered. It is to be considered on the basis of the materials that there was no such transaction and that these share transactions were paper transactions. The suffering of loss co ..... X X X X Extracts X X X X X X X X Extracts X X X X
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