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TMI Blog2024 (12) TMI 31X X X X Extracts X X X X X X X X Extracts X X X X ..... lso observed that the ld. AO has not looked into the fact whether the assessee has raised any complaint against the scam carried out by NSEL which the assessee claims to be the reason for the loss. AO has not inquired into the issue for which the reopening of assessment was initiated and has merely accepted the returned loss filed by the assessee without substantiating as to why he has arrived at the said conclusion. The assessee was also unable to explain whether it had filed the complete details along with the documentary evidence to establish the fact that it had not entered into any bogus trade transaction and whether or not it was one of the beneficiary to the NSEL scam. The assessment order is silent in respect of all these issues and more precisely the issue for which the reassessment was initiated. In the absence of the same, we find no infirmity in the order of the ld. PCIT in holding the assessment order to be erroneous in so far as it is prejudicial to the interest of the revenue. It is a case were the ld. AO has not dealt with or inquired into the issue which was the subject matter of the reassessment. We therefore are inclined to dismiss the grounds of appeal raised by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s. 40A(2)(b) of the Act reported in audit report and ITR . The ld. AO then passed the assessment order u/s. 143(3) dated 28.11.2016 determining total loss at Rs. 4,05,79,259/- after making a disallowance of Rs. 65,305/-. Subsequently, the assessee s case was reopened vide notice u/s. 148 dated 31.03.2021 by the ld. AO for the reason that, based on the information from the investigation wing of the Income Tax Department the assessee has obtained fictitious profits in commodity trading in NSEL by Client Code Modification (CCM) were the assessee is said to have entered into bogus trades creating a loss of Rs. 8.68 crores in its P L Account which has been set off by the assessee against its regular business income. The ld. AO passed the assessment order u/s. 147 r.w.s. 144B of the Act dated 24.03.2022 determining total income at Rs. Nil by duly accepting the returned loss. 4. The ld. PCIT vide notice u/s. 263 dated 20.02.2024 invoked the revisionary powers and held that the assessment order is erroneous and prejudicial to the interest of the revenue thereby setting aside the assessment order with the direction to pass fresh assessment order for the reason that the assessee was one of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r reopening. The ld. DR also contended that the ld. AO has also not dealt with the issue of the allowability of loss to be set off with the regular income of the assessee. The ld. DR submitted that the ld. PCIT order is a detailed speaking order and prayed that the same be upheld. 8. We have heard the rival submissions and perused the materials available on record. It is observed that the ld. PCIT has invoked the revisionary powers u/s. 263 of the Act for the reason that the assessee has entered into bogus commodity trading on NSEL by Client Code Modification (CCM) for which the ld. AO has reopened the assessment but has not verified the information available in the Insight Portal/Investigation wing, thereby the information received has been unverified and unexplained which holds the assessment order to be erroneous in so far as it is prejudicial to the interest of the revenue as per Section 263 of the Act. It is observed that the assessee has entered into commodity arbitrage transactions on National Spot Exchange Ltd. (NSEL) through recognized exchange brokers of NSEL viz. M/s. Anand Rathi Commodities Pvt. Ltd. (ARCL) and Motilal Oswal Commodities Brokers Pvt. Ltd. (MOCL) and paym ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hase transaction was Rs. 6,311 crores as per the investigation report. Out of the same, the maximum Client Code Modification (CCM) were done by ARCL amounting to Rs. 3,073.48 crores and on summon issued u/s. 131 of the Act, its president Shri. Chetan Pitamber Bharkharda revealed that there was no physical delivery of goods in any of the transactions carried out on NSEL platform and the same has been reproduced in the ld. PCIT s order. The ld. PCIT had also discussed the details of the investigation done by the investigation team and the Serious Fraud Investigation Office (SFIO). That being so, the ld. AO has not verified the CCM data related to the assessee neither from the assessee nor from its brokers pertaining to the transactions made in July, 2013 which is when the assessee has booked loss in respect of investment made. The ld. AO has also not made any inquiry as to whether the assessee was involved in regular trading in the earlier occasion. It is also observed that the ld. AO has not looked into the fact whether the assessee has raised any complaint against the scam carried out by NSEL which the assessee claims to be the reason for the loss. Further, the ld. AO has also not ..... X X X X Extracts X X X X X X X X Extracts X X X X
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