9911796707
TMI Blog2024 (8) TMI 527X X X X Extracts X X X X X X X X Extracts X X X X ..... RISHI, ACCOUNTANT MEMBER SHRI RAHUL CHAUDHARY, JUDICIAL MEMBER For the Appellant : Shri Jigar Mehta For the Respondent : Smt. Mahita Nair ORDER Per Rahul Chaudhary, Judicial Member: 1. By way of the present appeal the Assessee has challenged the order, dated 11/07/2023, passed by the Ld. Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi [hereinafter referred to as the CIT(A) ] for the Assessment Year 2010-11, whereby the Ld. CIT(A) had dismissed the appeal of the Assessee against the Assessment Order, dated 30/03/2016, passed under Section 143(3) read with Section 147 of the Income Tax Act, 1961 (hereinafter referred to as the Act ). 2. The Appellant has raised following grounds of appeal: 1. (a) The Ld. National Faceless Appeal Centre (hereinafter referred to as the NFAC) erred in law and facts in upholding the reassessment proceedings u/s. 147 of the Income Tax Act, 1961 (hereinafter referred to as the Act ) initiated on the basis of factually incorrect reasons. (b) Without prejudice, the Ld. NFAC erred law and facts in upholding the validity of assessment order u/s. 143(3) r.w.s. 147 of the Act dated 30.03.2016 without appreciating the fact that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the Act, the Assessing Officer made addition of INR 21,82,003/- in the hands of the Appellant holding as under: 6. In this context, the assessee has not provided any details called for. In case, if the assessee filed such submissions, it would have drawn whether the assessee has done these transactions genuinely or given the benefits to the clients. From the report of the I CI, it is noticed that the brokers who have facilitated client code modification to the clients have charged certain percentage of the transaction value as brokerage/commission which ranges from 0.5% to 6%. Thus, it must be noted that the assessee has paid certain commission to obtain such transaction. Considering these facts commission @ 3% of the Rs. 7,27,33,427/- i.e. Rs. 21,82,003/- is treated as unexplained expenditure and added back to the total income. Penalty proceedings are initiated separately for furnishing inaccurate particulars of income and concealment of income. 5. Being aggrieved, the Appellant preferred appeal before CIT(A) against the order dated, 30/03/2016, passed under Section 147 read with Section 143(3) of the Act challenging the initiation of reassessment proceedings as well as the addi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing reasons for reopening the assessment for the Assessment Year 2010-11 under Section 147 of the Act: 1. The assessee filed return of income on 28.09.2010 declaring total income at Rs. 8,27,20,450/-. The assessment was completed on 22.03.2013. 2. On the basis of information received from the O/o DIT (Intell. CR Inv), Mumbai on 27.02.2015 through the O/o The Commissioner of Income Tax-4, Mumbai Information were received that fictitious profits and losses were created by some brokers by misusing the client code modification facility in F O Segment on NSE during March, 2010. The brokers were alleged to be indulging in transferring the fictitious losses to different clients to reduce their tax liability and also fictitious profit to other clients. On detailed analysis it was established that the brokers had misused client code modification facility and created non-genuine losses and profits. These losses and profits were given to different clients/beneficiaries accordingly to their requirement. The clients had taken fictitious losses to set off against their profits with a view to reduce their tax liability. Some of the clients also took fictitious profits to cover up their undisclose ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the aforesaid failure. Whereas on perusal of the paragraph 6 of the Assessment Order [reproduced in paragraph 4 above] , we find that the Assessing Officer has made an addition of INR 21,82,003/- being 3% of the aforesaid amount of INR 7,27,33,427/- by treating the same as unexplained expenditure. The Assessing Officer has also returned a finding that the Appellant had paid aforesaid amount as commission. Thus, clearly, the reasons recorded for reopening the assessment and income that was believed to have escaped assessment are different from with the addition made by the Assessing Officer and the reasons thereof. In our view, the judgment in the case of Jet Airways (India) Private Limited (supra) would apply to the facts of the present case wherein it was held by the Hon ble Bombay High Court as under: 15. Parliament, when it enacted the Explanation (3) to section 147 by the Finance (No. 2) Act, 2009 clearly had before it both the lines of precedent on the subject. The precedent dealt with two separate questions. When it effected the amendment by bringing in Explanation 3 to section 147, Parliament stepped in to correct what it regarded as an interpretational error in the view wh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2009. However, Explanation 3 does not and cannot override the necessity of fulfilling the conditions set out in the substantive part of section 147. An Explanation to a statutory provision is intended to explain its contents and cannot be construed to override it or render the substance and core nugatory. Section 147 has this effect that the Assessing Officer has to assess or reassess the income ( such income ) which escaped assessment and which was the basis of the formation of belief and if he does so, he can also assess or reassess any other income which has escaped assessment and which, comes to his notice during the course of the proceedings. However, if after issuing a notice under section 148, he accepted the contention of the assessee and holds that the income which he has initially formed a reason to believe had escaped assessment, has as a matter of fact not escaped assessment, it is not open to him independently to assess some other income. If he intends to do so, a fresh notice under section 148 would be necessary, the legality of which would be tested in the event of a challenge by the assessee (Emphasis Supplied). 12. In the above judgment the Hon ble Bombay High Cou ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
