9911796707
TMI Blog2024 (3) TMI 1158X X X X Extracts X X X X X X X X Extracts X X X X ..... . Petitioner as a member of BSE and NSE is, inter alia, engaged in the business of providing stock broking services to its clients as well as Undertaking Proprietary Trade ("Pro-Trade") on BSE and NSE in derivative and cash segments. Pro-Trade under cash segment includes delivery based and intra-day non-delivery based transactions. Intra-day transactions are referred to transactions where purchase and sale transactions are executed and settled on trade day itself. 3. Pro-Trade activity of Petitioner continues to be a business activity of Petitioner and not an investment activity. The resultant profit/loss arising from the Pro-Trade activity of Petitioner is offered to tax as business income/loss in its return of income ("ROI"). The delivery based transactions in the nature of purchase (STT-01) and sale (STT-02) of equity shares under cash segment and sale of equity shares on intra-day basis (STT-03) undertaken on BSE and NSE are subjected to Security Transaction Tax ("STT"), which is levied and recovered by the Exchanges on daily basis. There is no STT levy, however, on the purchase of equity shares undertaken on intra-day basis. In the petition, Petitioner has explained how its b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... very) in recognized stock exchange 7118.79 4. STT-04 Sale of option in securities (derivative) in recognized stock exchange 2772.63 5. STT-05 Sale of Future (derivative) in recognized stock exchange 3282.54 Total 14358.07 In view of the above facts and after due application of mind after analyzing all the relevant information in the case of the assessee in totality, I have reason to believe that income of Rs. 14358.07/-Lakh has escaped assessment for A.Y. 2013-14 and the same is therefore required to be reopened for scrutiny assessment. In view of the "Taxation and other laws" (Relaxation of certain provisions) ordinance 2020 and Notification No. 35/2020 dated 24.06.2020. The applicability of provisions of sub section (2) of Section 151 of the I.T. Act, 1961 stands extended from 31.03.2020 to 31.03.2021, A notice u/s. 148 r.w.s. 147, is, therefore, being proposed to be issued to assessee such income and also any other income chargeable to tax which has escaped assessment which comes to notice subsequently in the course of the assessment proceedings." 8. The notice dated 31st March 2021 under Section 148 of the Act clearly indicates that it h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sent itself indicates, as held in Aroni Commercials Limited v. Deputy Commissioner of Income Tax-2(1) (2014) 44 taxmann.com 304 (Bombay)., once a query is raised during the assessment proceedings and assessee has replied to it, it follows that the query raised was a subject of consideration of the AO while completing the assessment. It is also not necessary that an assessment order should contain reference and/or discussion to disclose its satisfaction in respect of the query raised. Therefore, the reopening of the assessment, in our view, is merely on the basis of change of opinion of the AO from that held earlier during the course of assessment proceedings and this change of opinion does not constitute justification and/or reason to believe that income chargeable to tax has escaped assessment. 13. Further, the AO in the reasons recorded does not even make an allegation that there was failure on the part of assessee to truly and fully disclose material facts. From the reasons as reproduced earlier, we are unable to cull down the factum of failure to disclose. The reason, in our view, does not indicate anything cogent or clear that in fact there was failure on the part of Assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be no manner of doubt that the words 'reasons to believe' suggests that the belief must be that of an honest and reasonable person based upon reasonable grounds that the Income Tax Officer may act on direct or circumstantial evidence but not on mere suspicion, gossip or rumour. The Income Tax Officer would be acting without jurisdiction if the reason for his belief that the conditions are satisfied does not exist or is not material or relevant to the belief required by the section. The Court can always examine this aspect though the declaration or sufficiency of reasons for the belief cannot be investigated by the Court." 16. This Court in Neetu M Chandaliya v. Income Tax Officer-14(2) (3) has also held that while the Court cannot investigate into the adequacy or sufficiency of reasons, the Court can certainly examine whether the reasons are relevant and have a bearing on the matter in regard to which the AO is required to entertain the belief before he can issue notice under Section 148 of the Act. The reasons cannot be based on a suspicion subject to a case of fishing enquiry. 17. The Apex Court in the case of Income Tax Officer, I Ward, Distt.VI, Calcutta and Ors. v. Lakhman ..... X X X X Extracts X X X X X X X X Extracts X X X X
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