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TMI Blog2023 (10) TMI 390X X X X Extracts X X X X X X X X Extracts X X X X ..... AO to apply his mind on it independently, and check the information available with him so as to arrive at his own satisfaction of the income of the assessee being escaped the assessment. Therefore we are in complete agreement with the ld. counsel for the assessee that the jurisdiction assumed by the AO to reopen the case of the assessee is de hors the satisfaction of the AO of any income of the assessee having escaped the assessment and was clearly in violation of the condition prescribed under section 147 of the Act for assuming valid jurisdiction to frame assessment. The assessment order passed, as a consequence is, liable to quashed. The contention of the ld. DR that there was a separate reasons recorded by the AO which revealed the source of information or the material with the AO leading to his belief of escapement of income, is of no assistance to the validity of the re-assessment proceedings, since admittedly, this reason was never confronted to the assessee. The Hon ble Supreme Court in the case of GKN Driveshafts (India) Ltd . [ 2002 (11) TMI 7 - SUPREME COURT] has categorically laid down the procedure to be adopted during reassessment proceedings, taking note of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Delhi was grievously erred in confirming the addition of Rs. 15,61,447/- on account of stating that the data received from NSE, the appellant has evaded the tax which is patently wrong and not justifiable. The appellant submits that the Ld. A. O. could not prove that the appellant has evaded the tax and no concrete proof is given in the notice issued as well as in assessment order passed by him The appellant further submits that THE Ld. A. O. has not proved any bogus transactions with documentary evidence and also for which contract note modified, is not established. Also the Ld. CIT(A) fails to accept the order of other CIT(A) which was given in the submission but not considered by the Ld. CIT(A) which are in favour of the appellant. 2. The appellant therefore requests your Honour to kindly delete the addition made by the Ld. A. O. looking to the merits of the case. 4. A perusal of the above grounds indicate that the solitary grievance of the assessee against the order passed by the ld. CIT(A) is the confirmation of the addition made to the income of the assessee of Rs. 15,61,447/- on the basis that the assessee had indulged in client code modificatio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he assessee disclosing reasons on the basis of which the case was reopened and the same reads as under: 8. Referring to the above, the ld. counsel for the assessee contended that the reasons only reveal some information received by the AO which revealed that the assessee had contrived reduction in its income by modification of client code by Gold Mine Stocks P. Ltd. shifting net loss to the tune of Rs. 15,61,447/-. The ld. counsel for the assessee contended that the reasons did not reveal source of the information; the scrip, on the trading of which client modification code was resorted to, and also role and status of the said Gold Mine Stocks P. Ltd. in the same. He, therefore, contended that it was not clear from the reasons as to what was the specific information or material which formed the basis for the AO to be satisfied that income of the assessee had escaped the assessment. Further, he contended that since the reasons did not reveal the exact scrip in whose trading CCM was resorted to, the AO could not have possibly verified this information from the records; that he could not have and did not even attempt to verify, whether the information in his possession match ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lysis, count analysis etc forwarded by the ADIT along with survey report. As per the information received, M/s. ISL Consulting, who is assessed in central Circle-1(3), contrived reduction in income of Rs. 15,61,447/- due to the modification of client code by the Gold Mine Stocks Private Limited. The detail received is as under; PAN of beneficiary client Name of beneficiary When OC (Ascertained Profit Shifted out) When MC (Ascertained Losses Shifted In) Net reduction in Income due to CCM 1 2 3 4 5 AABCI1994F M/s. ISL Consulting Ltd. 0 -1561447 -1561447 In view of the above, I am satisfied that income of Rs. 15,61,447/- chargeable to income tax has escaped from assessment. (B. LAXMIKANT, IRS) Assistant Commissioner Of Income-tax Central Circle-1(3), Chennai. 10. The ld. DR, however, admitted that these reasons were never supplied to the ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion 147 of the Act has now found Legislatures approval by insertion of all these conditions in newly inserted provisions of section 148/148A of the Act by the Finance Act, 2021. Therefore, the requirement of the assessee for being supplied with copy of the reasons before proceeding to frame assessment is a mandatory requirement and a brief or cryptic reason supplied to the assessee, with the original being held back by the AO, will not suffice to fulfill this mandatory requirement of law. For this reason, I reject the arguments of the ld. DR. In view of the above, the additional ground raised by the assessee is allowed. Since the assessment order passed in the present has been quashed by us the ground raised on merits requires no adjudication being a mere academic exercise. However I shall still adjudicate the ground raised on merits also challenging the addition made on account of alleged shifting out of profits by resorting to CCM. 14. I find that throughout the re-assessment proceedings, and even in the appellate proceedings, the assessee was never confronted with the information with the AO regarding CCM indulged in by the assessee nor the details of the specific scri ..... X X X X Extracts X X X X X X X X Extracts X X X X
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