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TMI Blog2021 (3) TMI 909X X X X Extracts X X X X X X X X Extracts X X X X ..... ecord, return was processed under section 143(1). On perusal of the report at Annexure R/1, it pertains to contrived losses claimed by the beneficiaries on the alleged modus operandi adopted by manipulative practices done at the NMCE. AO has failed to form his own opinion with regard to the petitioner for alleged escapement of income by merely stating that such amount pertains to profit earned for A.Y. 2011 12 though in the reasons recorded, it is mentioned for A.Y. 2010 11. No reference to approval sought from the Additional Commissioner/Commissioner of Income tax for issuance of notice under section 148 as provided in section 153 of the Act, 1961. Inspite of the fact that the petitioner raised the objections against the reopening of the assessment on the issue of approval from Additional Commissioner/ Commissioner of Income tax, the same is brushed aside in the impugned order rejecting the objections on the ground that such discrepancy is in nature of human error while typing. The impugned order rejecting the objections, the Assessing Officer has recorded that the mistake has happened in mostly all the cases reopened during the year because the cases were reopened on the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... identified who had booked contrived losses. During the investigation/enquiry statements of entry operators i.e.Shri devesh Upadhyay,Shri pankaj agarwal,Shri Prakash Jajodia etc.are recorded and they accepted in the statement that these companies which are shell/paper companies which are engaged in providing accommodation entries in various forms to the beneficiaries. These entities are engaged in sub broking business, resorted to facilitate accommodation bogus loss/profits to enable beneficiaries to set off such losses against their taxable profits to reduce their tax liability. The misuse of NMCE platform carried out by these shell companies was thus used as a systematic tool for evasion of taxes. 2. As per data received, it was found that most of the trading was done through member/broker of NMCE who was penalized/suspended because they were found to be involved in artificial trading of shares by misuse of NMCE platform. These members/brokers created dummy entities which have neither filed their return of income nor shown income earned through commodities profit,to accommodate bogus loss. 3. As per data received from the o DDIT(Inv.), Unit 3(1), Kolkata, Shri BHARAT NI ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Assessment Year 2010 2011. The learned advocate Mr. Soparkar invited the attention of the Court to paragraph no.3 of the reasons recorded which refers to the transactions with one Pinnacle commodities during the previous year relevant to A.Y. 2010 2011. It was therefore, pointed out that while in the opening part of the reasons recorded, the Assessing Officer records that the assessee had filed return of income on 28.9.2011 showing income Rs. Nil which was processed under section 143(1) of the Act on 10.11.2011 but in paragraph nos. 5 and 6, it is recorded that he has reasons to believe that the income has escaped assessment within the meaning of clause(a) to the Explanation 2 to section 147 of the Act,1961. It was submitted that clause(a) to Explanation 2 to section 147 of the Act, 1961 would be applicable when no return of income has been filed by the assessee. The learned advocate Mr. Soparkar would therefore, submit that the reasons recorded for reopening the assessment for the A.Y. 2011 2012 are without proper application of mind on the part of the Assessing Officer. 7. The learned advocate Mr. Soparkar further pointed out that the reasons have been recorded on 29.3.2018 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ial volume and suspected evasion of tax by misuse of the NMCE platform. It was found that the entities were engaged in special business resorted to facilitate the accommodation entries of bogus losses or profits to enable the beneficiaries to set off such losses against their taxable profit to reduce their tax liability. It was also found that the assessee was one of such beneficiary and had entered into transaction through one Pinnacle Commodities during the Previous Year relevant to the Assessment Year 2011 2012. 12. The learned advocate Ms. Bhatt submitted that due to inadvertent error it was stated in the reasons in paragraph no.3 that it pertained to year relevant to the A.Y. 2010 2011 and in fact, it was for the previous year relevant to Assessment Year 2011 2012 and even notice under section 148 was issued for Assessment Year 2011 2012. 13. The learned advocate Ms. Bhatt further submitted that upon receipt of information, the Assessing Officer applied its mind and recorded reasons which were forwarded to Principal CIT and the reasons were recorded by the respondent on 28.3.2018 and the approval was granted by the Principal CIT on 29.3.2018 and therefore, there is no qu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rms to its beneficiaries. 16. From the averments made in the affidavit in reply filed on behalf of the respondent, it emerges that the letter dated 12.3.2017 was received from the office of the DCIT (Investigation) Unit 3(1), Kolkatta during survey action under section 133A of the Act, 1961 at the premises of the NMCE and it was found that members/client of the NMCE were found to be involved in creating artificial volume and suspected evasion of tax by misuse of the NMCE platform. However, on perusal of the said letter which is annexed at Annexure R/1 to the affidavit in reply, it clearly states that information with respect to A.Y. 2010 11 was shared and said report is meant to disseminate the rest of data for AY 2011 12 and AY 2012 13 only. It appears that the said report is the basis for recording the reasons by the Assessing Officer to reopen the assessment for A.Y.2011 12. There is no live link between the information received and reasons recorded so as to enable the Assessing Officer to form a reason to believe that income has escaped assessment for AY 2011 12. 17. On perusal of the material on record, it also appears that the Assessing Officer has nowhere found tha ..... X X X X Extracts X X X X X X X X Extracts X X X X
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