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TMI Blog2021 (6) TMI 234X X X X Extracts X X X X X X X X Extracts X X X X ..... e reopening of the assessment was done for the reason that the assessee has not declared income of Rs. 9,62,385/-, earned by it from commodity profit from National Multi Commodity Exchange (NMCE) during the Financial Year 2010-11. The Assessing Officer in his order u/s 143(3) r.w.s. 147 of the Act, determined the total income of the assessee at Rs. 53,09,020/-. While doing so, the Assessing Officer held that the assessee had already offered to tax, the profit on commodity trading earned by the assessee of Rs. 9,62,385/- in his original return of income. In other words this income was declared by the assessee in its original return of income. He later observed that a detailed analysis of saudas, the losses booked by the assessee cannot be allowed. Thus, he disallowed the claim of loss made by the assessee from commodity trading on a platform of NMCE and he made an addition of Rs. 52,17,270/-. Aggrieved the assessee carried the matter in appeal before the ld. CIT(A) without success. 3. Further aggrieved, the assessee is in appeal before us. 4. The ld. Counsel for the assessee submitted that, the assessment order is bad in law for the reason that the Assessing Officer has not made a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ions of the assessee with NMCE and assessing the income correctly. He relies on the order of the Assessing Officer as well as the ld. CIT(A) and argued that the saudas placed by the assessee were immediately squared off by the counter party and they were synchronizing trading. He argued that by organising commodity transactions, the assessee had made huge artificial loss of Rs. 19,89,350/- from M/s. Prognosis Commodities Pvt. Ltd. and loss of Rs. 32,27,740/- by trading from M/s. Anand Resources (Bhoothnath Commodites). He prayed that the order of the ld. CIT(A) be upheld. 6.1. The ld. Counsel for the assessee submitted that just because certain allegations are made by the Department against a third party with whom the assessee has traded, no disallowance can be made in the hands of the assessee when all trades are confirmed as having been done on the platform of NMCE by NMCE itself. He prayed for relief. 7. We have heard rival contentions. On careful consideration of the facts and circumstances of the case, perusal of the papers on record, orders of the authorities below as well as case law cited, we hold as follows:-. 8. On the first issue, there is no dispute on the fact that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n understanding jurisdictional fact and law (mixed question of fact and law) the reason to believe escapement of income (supra). For reopening the assessment by the AO the condition precedent of reason to believe escapement of income is sine qua non. It must be kept in mind that reasons to believe postulates foundation based on information and belief based on reason. Even if there is foundation based on information, still there must be some reason warrant holding the belief that income chargeable to tax has escaped assessment. It has to be kept in mind that the Hon'ble Supreme Court in Ganga Saran & Sons P. Ltd. Vs. ITO (1981) 130 ITR 1 (SC) held that the expression "reason to believe" occurring in sec. 147 "is stronger" than the expression "if satisfied" and such requirement has to be met by the AO in the reasons recorded before usurping the jurisdiction u/s. 147 of the Act. We note that before the AO assumes jurisdiction to re-open it is necessary that the conditions laid down in the said section 147 has to be satisfied viz., AO should record "reason to believe" that the income chargeable to tax for that assessment year has escaped assessment. If this condition is not satisfi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and did not make any addition/disallowance on this issue for which purpose only he invoked his reopening jurisdiction u/s. 147 of the Act. So, we note that here is a case wherein the AO invoked the reopening jurisdiction for a specific purpose which issue was dropped, then according to assessee and rightly so, the condition precedent for assuming jurisdiction has disappeared/absent, then the AO lacks jurisdiction to proceed further to reassess any other income which he has not taken note in the reasons recorded to reopen. Therefore, the AO ought not to have proceeded to reassess the assessee on a new issue of artificial loss created by misusing the client's code modification. And, therefore, the jurisdictional fact which is sine qua non to assume jurisdiction is found to be lacking/absent and, therefore, the very invocation of jurisdiction to reopen itself is not existing and, therefore, when the foundation on which reopening was initiated is non-existing then the AO's assumption of jurisdiction is without jurisdiction and so all subsequent action is a nullity in the eyes of law. At the cost of repetition we say that AO without satisfying the condition precedent as stipula ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2 Act, 2009 retrospectively w.e.f. April 1, 1989 and has laid down the ratio decidendi of the issue before us. We note that the jurisdictional High Court i.e. Hon'ble Calcutta High Court in ITAT No. 60 of 2014 in GA No. 1736 of 2014 CIT Vs. M/s. Infinity Infotech Parks Ltd. has concurred with the view taken by the Hon'ble Delhi High Court judgment in Ranbaxy Laboratories Vs. CIT 336 ITR 136 (Del.) and Hon'ble Bombay High Court in CIT Vs. Jet Airways India Ltd. 331 ITR 236 (Bom.) approved the Tribunal's view on the same which is reproduced as under: "We further find that similar view was taken by the Hon'ble Bombay High Court in the case of CIT Vs. Jet Airways India Ltd. (supra) and the Hon'ble Delhi High Court in the case of Ranbaxy Laboratories India Ltd. (supra). The ratio laid down in these decisions is that reassessment must be in the first place, be in respect of income escaped assessment for which the reasons were recorded and only thereafter in respect of some other items of escaped income. If, however, the income, escapement of which was the foundation for recording of reasons to believe, is not assessed or reassessed in the order under section 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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