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TMI Blog2022 (9) TMI 293X X X X Extracts X X X X X X X X Extracts X X X X ..... een reopened by the A.O on the basis of a borrowed satisfaction of the Investigation Wing i.e. in a mechanical manner and without application of any independent mind on his part - We are afraid that the said contention of his being devoid and bereft of any merit cannot be accepted. On a bare perusal of the reasons to believe , it transpires that the A.O had after referring to the information about systematic evasion of taxes by clients/members of the NMCE that was shared with him by the DDIT (Inv.), Kolkata, had after culling out the facts involved in the case of the assessee arrived at a bonafide belief that the income of the assessee chargeable to tax had escaped assessment. We, thus, finding no merit in the claim of the Ld. AR that reopening of the assessee s case was merely based on a change of opinion by the A.O, reject the same. Thus, the Ground of appeal No.1 raised by the assessee is dismissed in terms of our aforesaid observations. A.O despite specific requests by the assessee had failed to provide a copy of the information on the basis of which adverse inferences as regards the NMCE profit earned by the assessee during the year was sought to be drawn - We are af ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rofit claimed by the assessee to have been earned from commodity trading on NMCE platform as an unexplained cash credit u/s.68 of the Act, but the same would duly be entitled for set-off against the assessee s claim of loss from commodity trading on MCX platform. We, thus, in terms of our aforesaid observations modify the order of the CIT(Appeals) and direct the A.O to allow the assessee s claim for setting-off of loss - Grounds of appeal No. 5 6 allowed in terms of our aforesaid observations. Addition u/s 69C - Recharacterizing of NMCE profit as an unexplained cash credit u/s.68 of the Act, therefore, the addition made by the A.O u/s.69C of the Act towards commission which the assessee would have paid to the entry operator for obtaining accommodation entries is herein sustained. - ITA No. 212/RPR/2019 And ITA No.215/RPR/2019 - - - Dated:- 29-8-2022 - Shri Ravish Sood, Judicial Member And Shri Arun Khodpia, Accountant Member For the Assessee : Shri Amit M Jain, Advocate For the Revenue : Shri P. K Mishra, CIT-DR ORDER PER RAVISH SOOD, JM: The captioned appeals filed by the aforementioned assessees are directed against the respective orders pa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ad in law and void ab-initio. 5. On facts and circumstances of the case, the CIT(A) has erred in sustaining the order of the A.O. wherein the Ld. A.O. has erred in making addition Rs.16,70,927/- on account of Income from NMCE as unexplained credit u/s 68 irrespective of the fact that the same income was duly offered by the assessee in original return and taxes were also duly paid. Thus, the order passed by the A.O. and sustained the same by CIT-A is unjustified, unwarranted and uncalled for. 6. On facts and circumstances of the case, the CIT(A) has erred in sustaining the order of the A.O. wherein the Ld. A.O has erred in disallowing the setoff of loss of Rs.8,56,575/-against income from NMCE without mentioning any reason. Thus the disallowances of setoff of loss without mentioning any reason by the A.O. and sustained the same by the CIT-A, is unjustified, unwarranted and uncalled for. 7. On facts and circumstances of the case, the CIT(A) has erred in sustaining the order of the A.O. wherein the Ld. A.O has erred in making addition of Rs.33,420/- as commission paid for obtaining accommodation entry u/s 69C. Thus, the addition made by the A.O. and sustained the same by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d booked fictitious profit was one of the 11 tainted members/brokers of NMCE who were penalized for misconduct, disobedience and involvement in suspected non-genuine trading. It was further observed by the A.O that M/s. Shine Future (supra) on the basis of issuing fraudulent/bogus contract notes had surrendered its membership of NMCE on 08.05.2012. Observing that the assessee had booked pre-arranged gain through M/s. Shine Future, an entry operator transacting on NMCE platform, which thereafter was adjusted against the loss from commodity trading on MCX exchange, the A.O called upon it to put forth an explanation that as to why adverse inferences be not drawn in its case for carrying out pre-arranged trading on the NMCE platform. As the reply filed by the assessee did not find favour with the A.O, therefore, he held the entire amount of Rs.16,70,972/- that was claimed by her to have been received as profit from commodity trading on NMCE platform as an unexplained cash credit u/s. 68 of the Act. Resultantly, the loss of (Rs.8,56,575/-) that the assesee had claimed to have suffered on MCX platform was declined to be adjusted against the aforesaid amount of profit that was recharacter ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the Act towards cash commission which the assessee company would have paid for availing the services of the aforesaid entry operator for facilitating laundering of her money i.e @ 2% of Rs.16,70,927/-. Accordingly, the A.O after recharacterizing the impugned NMCE profit of Rs.16,70,927/- (supra) as an unexplained cash credit u/s.68 of the Act, had declined the assessee s claim for set-off of loss from commodity trading on MCX platform of (Rs.8,56,575/-) against the same, and resultantly, assessed her income at Rs.16,14,350/- under Sec. 68 of the Act a/w a direction to c/forward the loss on commodity trading on MCX platform of (Rs. 8,56,575/-) for a period allowed under law. 10. The Ld. Authorized Representative (for short AR ) for the assessee had assailed the orders of the lower authorities on the basis of multi-facet contentions before us, viz. (i) that the A.O had grossly erred in law and the facts of the case in assuming jurisdiction u/s.147 of the Act on the basis of a mere change of opinion ; (ii) that the A.O had grossly erred in law and facts of the case in reopening the concluded assessment of the assessee which was earlier framed vide order u/ss. 153A/143(3) dated ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 10) 320 ITR 561 (SC) as well as host of other judicial pronouncements. Also, it was the claim of the Ld. AR that as the report of the Investigation Wing, Ahmedabad was earlier available with the AO while framing of the assessment under Sec. 153A r.w.s. 143(3), dated 28.12.2017, therefore, it was established beyond doubt that the assessee s case was reopened merely on the basis of a change of opinion on the same set of facts as were earlier there before him. Apart from that, it was submitted by the Ld. AR that as the assessee had disclosed fully and truly material facts necessary for her assessment, therefore, as per the 1st proviso of Section 147, now when the assessment for the year under consideration had earlier been framed u/ss. 153A/143(3) of the Act, dated 28.12.2017, her case could not have been reopened beyond a period of four years from the end of the relevant assessment year. 13. We have given a thoughtful consideration to the aforesaid claim of the Ld. AR and are unable to persuade ourselves to subscribe to either of his aforesaid contentions. Case of the assessee as per the records was reopened by the A.O u/s.147 of the Act for the following reasons : WHERE REG ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it and loss account, after set-up of loss the assessee has shown profit of Rs.8,20,387/-. Thereby the assessee has suppressed his income byRs.8,49,906/-. This aspect was never brought to the notice of the AO during assessment proceedings. In this case a return of income was filed for the year under consideration and assessment u/s 153A r.w.s. 143(3) was made on 28.12.2017. Since, 4 year from the end of the relevant year has expired in this case, the requirement to initiate proceeding u/s 147 of the Act are reason to believe that income for the year under consideration has escaped assessment because of failure on the part of the assessee to disclose fully and truly all material facts necessary for his assessment for the assessment year under consideration. It is pertinent to mention here that reason to believe that income has escaped assessment for the year under consideration has been recorded above. I have carefully considered the assessment records containing the submission made by the assessee in response to various notice issued during the assessment/re-assessment proceeding and have noted that the assessee has not fully and truly disclosed the above material facts necessary ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessment proceedings were initiated by the A.O on the basis of a mere change of opinion. 14. Also, we are unable to concur with the claim of the Ld. AR that as the assessee had in her return of income disclosed fully and truly all material facts necessary for her assessment, therefore, having been assessed earlier u/s. 153A r.w.s. 143(3), dated 28.12.2017 her case as per the 1st proviso of section 147 of the Act could not have been reopened beyond a period of four years from the end of the relevant assessment year. Although, we are principally in agreement with the aforesaid proposition of law canvassed by the ld. AR before us, but do not find that the case of the assessee fits within the same. As observed by the A.O in the reasons to believe , although the assessee had a/w. her return of income filed the copy of Profit Loss account, balance sheet etc. where various information/material was disclosed, however, the requisite material facts were embedded in such a manner that the material evidence could not be discovered by the A.O with due diligence. Considering the aforesaid facts, we are of the considered view that the 1st proviso to section 147 of the Act as had been p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eady been offered by the assessee for tax in the return of income after setting-off of loss of (Rs.8,56,575/-), therefore, there could have been no reason for the AO to infer any escapement of income on her part, we are afraid that the said misconceived view had been arrived at on the basis of half baked facts. Admittedly, the impugned profit from commodity trading on the NMCE platform of Rs.16,70,927/-, which after setting-off against the loss suffered by trading on the platform of MCX exchange of (Rs.8,56,575/-) was scaled down to an amount of Rs.8,23,352/- was disclosed by the assesee in her return of income. As the A.O had reopened the case of the assessee for the reason that she had booked pre-arranged gain in the garb of commodity trading on NMCE platform, which, thus, was not entitled for set-off against the loss suffered on the platform of MCX exchange, therefore, there was clear material before the A.O for forming a view that the income of the assessee chargeable to tax for the year under consideration had escaped assessment within the meaning of section 147 of the Act. Accordingly, finding no merit in the aforesaid claim of the assessee, we reject the same. 18. Adverti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . 01.04.2017, and the assessee would be entitled to claim set-off of loss against income determined under section 115BBE of the Act till the assessment year 2016-17. For the sake of clarity the CBDT Circular No.11/2019 dated 19.06.2019 is culled out as under: Circular No. 11 /2019 Government of India Ministry of Finance Department of Revenue Central Board of Direct Taxes North-Block, New Delhi, dated the 19th of June, 2019 Subject: Clarification regarding non-allowability of set-off of losses against the deemed income under section 115BBE of the Income-tax Act, 1961 prior to assessment-year 2017-18-reg. With effect from 01.04.2017, sub-section (2) of section 115BBE of the Income-tax Act, 1961 (Act) provides that where total income of an assessee includes any income referred to in section(s) 68/69/69A/69B/69C/69D of the Act, no deduction in respect of any expenditure or allowance or set off of any loss shall be allowed to the assessee under any provisions of the Act in computing the income referred to in section 115BBE(1) of the Act. 2. In this regard, it has been brought to the notice of the Central Board of Direct Taxes (the Board) that in assessments p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... GIT v. All Joint Secretaries/CsIT, CBDT vi. C AG vii. CIT (M TP), Official Spokesperson of CBDT viii. % Pro DGIT(Systems) for uploading on official website ix. Addl.CIT (Database Cell) for uploading on the departmental website Sd/- (Rajarajeshwari R) Under secretary (ITA.II), CBDT On the basis of our aforesaid observations, we are of the considered view that though no infirmity either emerges as regards the assumption of jurisdiction by the A.O for reopening the case of the assessee u/s.147 of the Act or recharacterizing of the amount of the impugned profit claimed by the assessee to have been earned from commodity trading on NMCE platform as an unexplained cash credit u/s.68 of the Act, but the same would duly be entitled for set-off against the assessee s claim of loss of Rs.8,56,579/- from commodity trading on MCX platform. 19. We, thus, in terms of our aforesaid observations modify the order of the CIT(Appeals) and direct the A.O to allow the assessee s claim for setting-off of loss of (Rs.8,56,575/-). Thus, the Grounds of appeal No. 5 6 raised by the assessee are allowed in terms of our aforesaid observations. 20. As we have principally con ..... X X X X Extracts X X X X X X X X Extracts X X X X
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