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TMI Blog2023 (2) TMI 922X X X X Extracts X X X X X X X X Extracts X X X X ..... orrigendum. The whole basis for deriving the belief from the information is thus substantially changed. AO, in the instant case, has formed the belief qua the material attributable to transactions with S.S. Corporate Securities Ltd., if it is to be assumed that the action was taken with application of mind. The assessee however pointed out in the course of the assessment that no transactions have been carried out in the capital market segment or in the currency derivative segment through the said broker. Thus, at the stage of recording reason, the Assessing Officer was not privy to the exact nature of information at all for alleged formation of believe or in the alternative he has casually and perfunctorily exercised power of reopening dehors the material supplied to him. Both the situations disempowers the Assessing Officer to exercise the drastic powers conferred under Section 147 of the Act. Reasons are required to be read as they were recorded by the Assessing Officer. No substitution or deletion is permissible. No additions can be made to those reasons. No inference can be allowed to be drawn based on reasons not recorded. It is for the AO to disclose and open his mi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the assessee against the order of the Ld. Commissioner of Income Tax (Appeals)-IX, New Delhi [ CIT(A) in short], dated 15.10.2018 arising from assessment order by the Assessing Officer dated 16.10.2019 passed u/s 143(3) r.w. Section 147 of the Income Tax Act, 1961 ( the Act ) concerning Assessment Year 2010-11. 2. The grounds of appeal raised by the assessee reads as under: 1. That on facts and in the circumstances of the petitioner company s case, the learned Commissioner of Income tax (Appeals)-9, New Delhi erred in law and on facts in upholding the order of the learned assessing officer in initiating the reassessment proceedings under section 147 by issuing notice under section 148 of the Income tax Act, 1961, without there being any application of mind by the learned assessing officer and further his such action was based just on suspicion, surmises and conjectures. 2. That on facts and in the circumstances of the petitioner company s case, the learned Commissioner of Income tax (Appeals)-9, New Delhi erred in law and on facts in upholding the order of the learned assessing officer firstly for issuing undated reasons for reopening of assessment and then issuin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has under-reported its taxable income to the extent of Rs.21,31,154/- for Assessment Year 2010-11 by misusing the client code modification (CCM) facility available for correction of punching mistakes. Consequently, the case was reopened under Section 147 after recording of reasons and obtaining necessary approval from the superior authority. A notice under Section 147 was issued on 27.03.2017 and duly served on the assessee in this regard. The Assessing Officer subsequently issued corrigendum on 14th December, 2017 to rectify certain mistakes occurred in the reasons originally recorded. 4.2 The reasons for issuance of notice under Section 148(1) for reopening of assessment under Section 147 of the Act for Assessment Year 2010-11 as recorded under Section 148(2) of the Act is reproduced hereunder: The assessee is a company filed its return of income on 30.09.2010 declaring income of Rs.28,95,190/-. The details of the directors of the assessee company obtained from records are hereunder: 2. Thereafter, the return was processed under 143(1) of the I.T. Act. Subsequent to the processing completed U/s 143(1), information through email was received on 14/03/2016 from Asst ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s clients have crystallized. This is done with an intention to impact the tax liabilities of the pair of clients whose codes are modified. 1 have examined the 1TR and the record of the assessee in respect of F Y 2009-10 relevant to A.Y. 2010-11 and the following facts are noted: a) The return of the assessee shows that during the year it has undertaken transactions in sale/purchase of shares, and its turnover could have included the transactions contrived by way of COM. In the relevant period, the assessee Uasnotclaimed any current year losses. During the period 01.04.2009 to 31.03.2010, it has undertaken transactions through M/s. SS Corporate Securities Limited. b) The transactions which involved CCM, as per information received under the report of the Investigation Wing are as under: Name of the Beneficiary Client Address of Beneficiary Name of Broker When OC (Ascertained profit shifted out) When MC (Ascertained Losses Shifted In) Net reduction in Income due to CCM M/s Vishwanathan Securities Pvt. Ltd. A-10/2, Vas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... office through e-mail on 14/03/2016 from Asstt. Director of Income Tax (Investigation), Unit 1(3), Ahmedabad by which a Survey Report was disseminated in case of beneficiary clients who have taken contrived losses shifted out profits using Client Code Modification. While recording the reasons for reopening of above mentioned case, except the name and address of the Beneficiary Client all other data got copy paste from the next column of the excel sheet In this regard, the correct data for the above mentioned case is as mentioned below: Name of the Beneficiary Client Address of the beneficiary Name of the Broker When OC (Ascertained profit shifted out) When MC (Ascertained Loss shifted in) Net reduction in Income due to CCM M/s Vishwanathan Securities Pvt. Ltd. A-10/2, Vasant Vihar, New Delhi- 110057 M/s A to Z Stock Trade Pvt. Ltd. 20,81,710.4 (-)49,443.75 (-)21,31,154.15 In view of the above, assessee has shifted in ascertained loss of ( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cording reasons. 7.1 As pointed out on behalf of the assessee, the reasons furnished to the assessee-company do not bear any date. Furthermore, name of the broker mentioned in the reasons originally recorded under Section 148(2) is S.S. Corporate Securities Ltd. Also, the alleged profit shifted out and allegedly escaped assessment was stated in such reasons to be Rs.15,78,004.95. Based on such reason recorded in writing, the proceedings under Section 147 were initiated and set in motion. In the course of the re-assessment proceedings, the Assessing Officer however issued a corrigendum dated 14.12.2017 quoted in para 4.3 above to modify the very basis of so called believe formed earlier towards escapement of assessment. The Corrigendum was also issued beyond the limitation period provided under Section 149 to enable the reopening of the assessment. By the Corrigendum, two important changes have been carried out; firstly, the name of broker was amended from S.S. Corporate Services Ltd. to broker namely A to Z Stock Trade Pvt. Ltd. ; secondly, the amount of alleged escapement was modified from Rs.15,78,004.95 to Rs.21,31,154/-. 7.2 At the first blush, we find the action of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... supplemented by issue of corrigendum or by filing the affidavit or by making oral submissions etc. as viewed in the judicial precedents such as Hindustan Lever vs. R.B. Wadkar (2004) 268 ITR 332 (Bom); NDTV System vs. ITO (2013) 255 CTR 113 (Bom) etc. When a statutory functionary makes order on certain grounds, it cannot be supplemented by fresh reason as observed Kakrala Krishna Murthy Another vs. CIT 216 ITR 206 (AP). Thus, the reasons are required to be read as they were recorded by the Assessing Officer. No substitution or deletion is permissible. No additions can be made to those reasons. No inference can be allowed to be drawn based on reasons not recorded. It is for the Assessing Officer to disclose and open his mind through reasons recorded by him. He has to speak through his reasons. While the Revenue is entitled to elaborate on briefly recorded reasons, the Revenue cannot give new ground for reopening, genesis of which is not traceable to such recorded reasons. Hence, the supplementation made by the AO by way of corrigendum is totally contrary to the plethora of judicial pronouncement holding the field in this regard. 7.3 We now advert to the plea of the Assessee wi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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