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TMI Blog2021 (2) TMI 935X X X X Extracts X X X X X X X X Extracts X X X X ..... u/s 147 of the Act. The Tribunal while deciding the issue [ 2020 (2) TMI 1455 - ITAT MUMBAI ] following the decision of Hon ble Bombay High Court in case of M/s Coronation Agro Industries Ltd. vs. DCIT. [ 2017 (1) TMI 904 - BOMBAY HIGH COURT ], held the reopening of assessment as invalid and accordingly, quashed the assessment orders. Reopening of assessment is invalid - Decided in favour of assessee. - SHRI SAKTIJIT DEY (JM) Assessee by: Shri Rakesh Joshi (AR) Revenue by: Shri Sanjay Sethi (DR) ORDER PER SAKTIJIT DEY, JM Captioned appeals by two different assessees arise out of three separate orders, all dated 21.08.2018, of learned Commissioner of Income Tax (Appeals) 21, Mumbai for the Assessment Years 2009-10 and 2011-12. 2. In ground No. 1, of all these appeals the assessee has challenged the validity of reopening of assessment u/s 147 of the Act. 3. Briefly the facts which are common in all these appeals are, the assessees are resident companies and are dealing in shares and securities in both derivative and forward and option (F O) segments. For the assessment years under dispute the assessees, in regular course, have filed the return of income as per section 139(1) of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... covered by the decision of the Tribunal in assessee s own case. 5. The learned Departmental Representative, though, agreed that the identical issue has been decided by the Tribunal in assessee s own case in Assessment Year 2010-11, however, he submitted that department might have filed appeal against the decision of the Hon ble jurisdictional High Court relied upon by the Tribunal. 6. I have considered rival submissions and perused the material on record. Undisputedly, reopening of assessment in all these cases are on the basis of information received by the Assessing Officer that the assessee had indulged in client code modification from which it has provided fictitious loss to different clients as well as fictitious profit to other clients. The reasons recorded by the Assessing Officer for reopening the assessments, which are common in all these years, are as under:- In this case Information has been received from DDIT (Inv.) Unit-1 (3), Ahmedabad, through email dated 11.03.2016 that fictitious profits and losses were created by some brokers by misusing the client code modification facility in F O segment on NSF during the FY. 2008-09. The brokers were alleged to be indulging in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cal reasoning in assessee s own case for the assessment year 2010-11, assessment was reopened u/s 147 of the Act. The Tribunal while deciding the issue in ITA No. 7003/Mum/2018 dated 28.02.2020, following the decision of Hon ble Bombay High Court in case of M/s Coronation Agro Industries Ltd. vs. DCIT Writ Petition No. 2627 of 2016, held the reopening of assessment as invalid and accordingly, quashed the assessment orders. The relevant observations of the Bench is reproduced hereunder for better appreciation: 6. We have heard the rival submissions of the parties and perused the material on record including the cases relied upon by the Ld. counsel for the assessee and the authorities below in the light of the rival contentions. The reasons recorded for reopening the assessment read as under: Information has been received from DIT (Intell. CR. Inv.), Mumbai, vide letter No. DIT (I CI)/CCM/2014-15 dated 27.02.2015 that fictitious profits and losses were created by some brokers by misusing the client code modification facility in F O segment on NSE during March, 2010. The brokers were alleged to be indulging in transferring the fictitious losses to different clients to reduce their tax ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dings were completed on 28th December, 2011 under Section 143 (3) of the Act. 3. The reasons in support of the impugned notice relies upon the information received from the Principal Director of Income Tax that the petitioner has benefitted from a client code modification by which a profit of ₹ 22.50 lakhs was shifted out by the petitioner s broker resulting in reduction of the petitioner s taxable income. The only basis for forming the belief is the report from the Principal Director of Income Tax and the application of mind to the report of the Assessing Officer along with the record available with him. This information and application of mind has led the Assessing Officer to form a reasonable belief that there is not only an escapement of income but there has been failure to truly and fully disclose all material facts and information as the modus operandi of shifting profits was not known to the Revenue as not disclosed by the petitioner when the Assessing Officer passed the order in regular assessment proceedings. 4. We note that the reasons in support of the impugned notice accept the fact that as a matter of regular business practice, a broker in the stock exchange make ..... X X X X Extracts X X X X X X X X Extracts X X X X
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