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TMI Blog2024 (9) TMI 872X X X X Extracts X X X X X X X X Extracts X X X X ..... s categorically stated there is no stock lying in the AY 2014-15 pertaining to NSEL transactions conducted during AY. 2013-14 as well as in absence of purchase and sales transactions in A.Y. 2014-15, the question of impact of any difference in the value of Stock on the Profit Loss Account of the Assessee Company does not arise. Thus, AO without application of mind only on the basis of the information and material made available by the NSEL confidential information which shows that outstanding dues to be paid by the petitioner for transactions carried out in earlier years is outstanding, and considering that outstanding amount payable by the petitioner to NSEL was determined during the F.Y. 2013-14, the impugned notice is issued for the alleged escapement of income. It can be said that the impugned notice is issued on borrowed satisfaction without considering the material available on record in form of statutory audit report u/s 142A of the Act. It is pertinent to note that during the regular assessment framed under Section 143 read with Section 144C and 142 (2A) of the Act, the entire issue was scrutinized by the then assessing officer and therefore, the issuance of impugned notice ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nal Assessment Officer and based on such report the assessment order dated 05.02.2018 was passed under Section 143(3) of the Act where by the total income of the petitioner was assessed at Rs.28,728,540/-. 5.5. The impugned notice was issued by the respondent on 27.03.2021, the petitioner filed return of income on 24.11.2021 in response to the impugned notice and requested for reasons recorded. The respondent along with the notice under Section 142(1) of the Act dated 10.12.2021 provided the reasons recorded for reopening of the assessment which are reproduced herein below: Reasons for re-opening of the Assessment in the case of N.K. Industries Ltd. for A.Y. 2014-15 u/s 147 of the Act. 1. The assessee filed return of income for the A.Y. 2014-15 on 01.12.2014 declaring (loss) of (Rs. 50,05,45,809). The assessee also filed revised return of income on 01.12.2014 declaring (loss) of (Rs.5,73,00,618). The case was selected for scrutiny. Assessment order u/s 143(3) was passed on 06.02.2018 and total income was assessed at Rs.2,87,28,540. 1. In this case, an information was received from National Spot Exchange Limited (NSEL). As per the information, NSEL started in 2005-06 and offered an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... luded that income to the extent of Rs.626,97,60,495/- has escaped taxation in the hands of the assessee. 1. Therefore, I have reason to believe that income chargeable to tax to the tune of Rs.626,97,60,495/- has escaped assessment in the hands of the assessee with in the meaning of section 147 of the IT Act and hence I am satisfied that it is a fit case for reopening the assessment under section 147 of the IT Act. 5.6. The petitioner thereafter filed objections on 17.01.2022 against the proceedings initiated under Section 147 of the Act for reopening of the assessment. It was contended by the assessee that the reassessment proceedings are initiated after four years on incorrect presumption of default of the assessee for not having made true disclosure is invalid inasmuch as the information which is provided and the reasons recorded are not true and correct as the assessee has not entered into any transaction in the National Stock Exchange Limited (for short NSEL ) during the Financial Year relevant to the Assessment Year 2014-15. 5.7. It was also contended that in the report of the special auditor, it was categorically observed that there is no stock lying during the Assessment Yea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion of impact of any difference in the value of stock on profit loss account of the petitioner company would not arise. 9. It was therefore submitted that as the special audit report was considered by the Assessing Officer in the scrutiny assessment and no addition was made on that basis and hence, the impugned notice for reopening issued by the respondent Assessing Officer is contrary to the facts on record because in absence of any sale or purchase transaction of NSEL for the year under consideration, there was no question of any income escaping assessment. 10. It was further submitted that the assessment order dated 05.02.2018 passed under Section 143 read with Section 144C and 142(2A) of the Act clearly states that the Assessing Officer has examined whether the transaction of the assessee on NSEL were in the nature of actual sales and purchase of stock for the purpose of trading/manufacturing or were means of a short term financing capitalising on difference in settlement for sale and purchase allowable on NSEL as claimed by the assessee was one of the issue to be considered by the special auditor. 11. It was submitted that the Assessing Officer after considering the special a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... case of escapement of income. It was therefore submitted that this petition may be dismissed. 14. It was submitted that the impugned notice for reopening is issued as the information received by the respondent Assessing Officer was embedded in such a manner in the facts disclosed by the petitioner, the same could not be verified during the regular assessment. Reliance was placed on the reports of the Principal Chief Commissioner of the Income Tax and the NSEL to point out that the petitioner was liable to pay Rs.696.89 Crore and it is confirmed before the Enforcement Directorate in the statement recorded that the petitioner has sold the commodities without any physical stock and issued VAT invoices of such sales and it was established that the petitioner was selling commodities without any physical movement of the goods. 15. Reliance was also placed on the decision of the Hon ble Apex Court in case of the petitioner dismissing the Special Leave Petition arising from the order passed by this Court dismissing the petition filed by the petitioner Company for reopening of assessment of earlier year wherein it is held that the entire undisclosed income generated out of bogus transactio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... thout considering the facts on record to the effect that there is no sale or purchase transaction carried by the petitioner company on NSEL during the F.Y. 2013 14 relevant to A.Y. year 2014 15 and therefore, there was no question of any income arising in the hands of petitioner assesses resulting into escapement thereof. Therefore, it is apparent that the assumption of jurisdiction by Assessing Officer to reopen the assessment for A.Y. 2014-15 is without any basis and contrary to facts on record. 20. In view of above, it can be said that the impugned notice is issued on borrowed satisfaction without considering the material available on record in form of statutory audit report under Section 142A of the Act. It is pertinent to note that during the regular assessment framed under Section 143 read with Section 144C and 142 (2A) of the Act, the entire issue was scrutinized by the then assessing officer and therefore, the issuance of impugned notice of reopening would also amount to change of opinion. 21. It appears that notice under challenge Was issued only because reassessment proceedings were initiated for the earlier assessment year which have been upheld by this Court and the Hon ..... X X X X Extracts X X X X X X X X Extracts X X X X
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