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TMI Blog2023 (11) TMI 537X X X X Extracts X X X X X X X X Extracts X X X X ..... ceipt of this order duly verified in accordance with law. Ld DRP may decide the objection in accordance with the law. - SHRI PRASHANT MAHARISHI, AM AND SHRI RAHUL CHAUDHARY, JM For the Appellant : Shri S. Krishnan, AR For the Respondent : Shri Soumendu Kumar Das, DR ORDER PER PRASHANT MAHARISHI, AM: 01. These are the two appeals filed by BRIDGE INDIA FUND, New Delhi (The Assessee/Appellant) for assessment year 2014-15 and 2015-16 against the assessment orders passed by the learned assessing officer, involving common grounds of appeal, both the parties argued them identically; therefore both these appeals are disposed of by this common order. 02. ITA number 457/M/2023 is filed by the assessee for assessment year 2014-15 against the assessment order passed by The Assistant Commissioner Of Income Tax, International Taxation Circle, 1(3)(2), Mumbai dated 23/1/2023 under section 147 read with section 144 of The Income Tax Act (The Act) determining total income of the assessee at ₹ 168,572,010/ against the return of income filed on 29/9/2014 at a total income of ₹ 68 lakhs. 03. The assessee has raised several grounds of appeal as under. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... file a note on treaty implications to the transactions themselves. 9. The Synopsis was filed for AY 2014-15 on 03.11.2022 by email, while the note was filed on 09.11.2022. Thus, contrary to the version of the Panel, the matter was heard at length and on merits, as all grounds raised in Form 35A. B. Without prejudice to the contentions in Ground A above, the DRP's observations as to Form-35-A being ineligible for directions to be issued are violative of principles of natural justice, given that no notice whatsoever in this regard issue was ever issued to the Assessee before the Panel's completely unreasoned and non-speaking directions were framed. On the other hand, at each stage, i.e. acceptance of the Form 35-A by the Secretariat, duly stamped after scrutiny on 28.04.2022, on 04.09.2022, when the form annexures were uploaded on ITBA portal, on 13.10.2022 when notice for hearing as contemplated in Rule 5 was issued, on 31.10.2022 when link for online hearing was sent, as well as on 01.11.2022 when the Objections were heard in detail on every single ground, the Panel consistently proceeded on the basis the form 35A as filed had been accepted and was fit for be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aterial forwarded to the Assessing Officer and copy-pasted at pages 4 to 88 of the impugned order, forming the basis of the adverse conclusion, do not form any basis for the said inference, because: a. None of the parties stated to be trading in the scrip Odyssey Financial Services Limited ( Odyssey ) have been shown to be related or connected to the Assessee or its trading transactions; b. The tabulation of financial performance of Odyssey as reproduced at Page 10 of the impugned order itself refutes the subsequent finding as to the said company being a paper company; c. References at Page 6 22 of the impugned order to the line of business that Odyssey was engaged in, are themselves vague and inane. The AO has not even bothered to understand or bring on record what business / sector Odyssey was involved in; d. The admitted stock price chart placed at Page 27 of the draft order, omitted in impugned assessment order, is rebuttal of the charge of Odyssey being a penny stock, given that the stock price from 2011 till 2014 has ranged from Rs. 20 to almost Rs. 300; e. The comparison of the Odyssey stock price is attempted with a public sector company en ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ey scrip whatsoever, and has in fact pointed out the same to the AO, to his own admission, at Page 92 of the impugned order. 8. The AO erred in holding the Assessee's trades in Odyssey to be manipulated, in view of inter-alia, reasoning at Page 84 of the impugned order, despite admitting disclosure at Page 91 93, that all transactions of purchase as well as sale were on BSE terminal, at the rates the stock was listed. 9. The AO has erred in repeatedly alleging non- compliance and non-filing of complete particulars by the Assessee, without specifying even one document or material which according to him, was ever requisitioned and was not provided. 10. The AO has erred in not considering any of the material placed on record, and returning perverse findings of fact at various places in the impugned order, including with regard to the false charge of the Assessee having purchased 12,00,840 shares of Odyssey during FY 2013-14 and claimed STCL, as noted by the AO at Pages 2, 5, 84, 87 94 of the impugned order, while he has dutifully copy-pasted but otherwise ignored: a. Page 91-Averment as to demat account being filed before him, b. Page 91-Specific ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... see seeks leave to add to, modify, forego, or otherwise alter all or any of the grounds of appeal as above. 04. Brief facts of the case shows that assessee is a resident of Mauritius and foreign portfolio investor (FPI) registered with Securities and Exchange Board of India. It carries on portfolio investment activity and derives income from investment activities in the secondary market and sale securities in accordance with the regulation made by the securities and exchange board of India. 05. For assessment year 2014 15, assessee filed its return of income on 29/9/2014 declaring total income of ₹ 68 Lacs. This income was interest income offered under the head income from other sources being received from PTI infrastructure Ltd taxed at a special rate under section 196D of the act. 06. Subsequently information was received from inside Portal under CRU/VRU risk cases that assessee is one of the beneficiaries of bogus long-term capital gain/short-term capital loss pertaining to financial year 2013 14 in script name on the Odysseys Corporation Ltd, (listed at Bombay stock exchange vide script number 531996 and falls under penny stock category in equity/ cash mar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the income tax Department in the company in which the assessee has incurred loss on trading at Bombay stock exchange was also analyzed in deep. The learned AO extracted the financial of the company, its statutory auditors, its information and management as well as the various price sensitive information and results. Based on this, he held that these figures are not palatable to prove that assessee has incurred the loss genuinely. Therefore on the basis of the information available, enquiry by the AO and analysis of trading data of the company for each financial year, discussion about trading transaction of each of the client, ld AO issued a show cause notice to the assessee to hold that why the value of the purchase amount of ₹ 157,060,202 should not be held as unexplained investment under section 69 of The Income Tax Act and further why not to tax commission on fictitious trade incurred by the assessee to be taxed under section 69C of the act as unexplained expenditure. This notice was replied by the assessee on 24/3/2022 denying all the allegations. The learned AO rejected all the arguments of the assessee and held that assessee has failed to discharged its onus, there is a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in appeal before us. 011. In nutshell, the only issue before us is that the objections have been disposed of by the learned dispute resolution panel filed by the assessee which was verified by the advocate of the assessee, holding it as not maintainable and therefore confirmed the order of the learned assessing officer. 012. The fact shows that after the draft assessment order was passed for assessment year 2014-15, assessee filed objections to the draft order in form number 35A (under rule 4 (1) before the learned Dispute Resolution Panel. The objections were verified by one Mr. S Krishnan, advocate, authorized representative of the appellant on 27/4/2022 by putting his signature. The learned Dispute Resolution Panel applying rule 4 of the DRP rules held that such objection should have been filed by the person who is authorized to verify the return of income of the assessee in terms of section 140(c) of The Income Tax Act. As the same person has not verified the form number 35A of the act and therefore the learned DRP did not deal with the objections of the assessee on merit and rejected the same. Therefore the draft assessment order became final. 013. The learned authori ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Cisco WebEx platform and the case was discussed with him. The learned assessing officer was also given the copy of the notice of hearing but none appeared on behalf of him and neither any written request were filed. Thereafter the learned dispute resolution panel mentioned that all the objections raised by the assessee were considered and in the end the learned dispute resolution panel give a discussion and direction with respect to ground number 1 16 holding that the objections to the draft order in form number 35A is neither signed by the assessee and nor its agent as prescribed under Rule 4 of The Income Tax (Dispute Resolution Panel) Rules, 2009. Accordingly, LD DRP held that as the draft objections are signed by the advocate of the assessee, who is not empowered to sign the return of income either in its own capacity or as an agent, the objections filed by the assessee are not maintainable. It further held that the lapse of the assessee is not a minor procedural mistake and the authorized representative cannot be considered as an agent of the assessee. The authorized representative has limited liability to the work authorised to him and therefore the authorized represen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on behalf of assessee. In that case the signatory was authorized by the board of directors to prepare, sign and furnish and file income tax and other return etc and the document did not state the specific circumstances under which the board of director was compelled to authorize that gentleman to sign the income tax return among other documents. The learned dispute resolution panel held that form number 35A is not verified in compliance with the relevant provisions of section 140 (C) of the act and therefore, the learned DRP held that verification of form number 35A in case of that assessee was not in conformity with the provisions as mandated by section 140 (C) and hence the objections filed by the assessee were held to be invalid, objections stand dismissed in limine. The learned authorized representative submitted that the facts are identical and therefore the objections dismissed by the learned dispute resolution panel were not correct. In that case the coordinate bench directed the learned dispute resolution panel to consider the objections afresh and give necessary direction to the AO as per the provisions of the act and the rules thereon. The appeal was restored to the file ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... when the LD DRP is not before tribunal, no directions can be given to LD DRP. ix Verification states that whatever is stated in form number 35A is true to the best of information and belief of the signatory. Such averment cannot be made by an authorized representative. Therefore, there is no infirmity in the direction passed by the learned dispute resolution panel. x Accordingly, the order passed by the learned assessing officer against which the appeal is filed cannot be found fault with as the direction of the learned dispute resolution panel binds the learned AO and on receipt of direction, without giving any opportunity, the learned AO is duty-bound to pass an assessment order. 016. We have carefully considered the rival contentions and perused the order of the learned assessing officer which is passed pursuant to the direction of the learned dispute resolution panel. Short question before us is whether the learned dispute resolution panel is correct in dismissing the objection filed in form number 35A verified by the authorized representative holding that as the directions are not verified by the assessee or its agent, the same is required to be dismissed as not mai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 35A. Thus, No doubt, the advocate who signed the form is neither an assessee nor an agent. Therefore, we hold that verification of form number 35A made by the advocate being an authorized representative of the assessee is not proper verification and no fault can be found with the directions of the ld DRP holding that the objection are not maintainable. 019. However, despite holding that the learned authorized representative could not have verified form number 35A, we find that DRP Rules provide that as soon as the objections are filed, notice of hearing to the eligible assessee specifying the date and place of hearing of the objection shall be issued. The learned dispute resolution panel in this case has already issued a notice to the eligible assessee . Subsequently the hearing of objections also took place. This is in terms of rule 5 7 of the DRP rules. Subsequently according to rule 9, the learned dispute resolution panel further called for the written submissions of the assessee which were also filed. The personal hearing was also granted to the assessee. Therefore at every stage assessee was given an impression that its objection is being considered on merit. We note ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the objection as not maintainable, is clear-cut violation of the principles of natural justice. Whenever, the principles of natural justice are violated, the matter should be restored back at that particular stage. However, as the principles of natural justice are violated by the learned Dispute Resolution Panel which is not before us as respondent, we are not supposed to pass any instructions to them. It is the assessing officer who is before us. Therefore we would be passing directions to the learned that assessing officer and assessee. 020. The decision of the coordinate bench cited before us in ITA number 5401/M/2012 and 7230/M/2011 for assessment year 2007 08, set-aside the issue back to the file of the learned DRP. We have carefully perused the observations made by the bench in paragraph number 9, 12 and 13 however that are not the ratio decidendi of the judgment. Further, in that case, when the verification was not done by assessee, the learned dispute resolution panel gave an opportunity to the assessee to explain that why the objections filed by it should not be dismissed and thereafter considering the explanation of the assessee the learned dispute resolution panel i ..... X X X X Extracts X X X X X X X X Extracts X X X X
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