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TMI Blog2025 (1) TMI 815X X X X Extracts X X X X X X X X Extracts X X X X ..... ormation received from the insight portal, has issued impugned notice forming reason to believe that the income has escaped the assessment on the presumption that the petitioner has been involved in creating the non-genuine profit which is already offered to tax in the return of income which is accepted in the regular course of assessment by passing the order under section 143 (3) of the Act. There is no basis to form reasonable belief for escapement of income except the information made available on the insight portal - As on the basis of the information received from another agency on insight portal or from the SEBI report, there cannot be any reassessment proceedings unless the respondent, after considering such information/material received from other sources, consider the same with the material on record in the case of the petitioner assessee and thereafter, is required to form independent opinion that income has escaped assessment. Without forming such opinion solely and mechanically relying upon the information received from the other sources, the respondent-Assessing Officer could not have assumed the jurisdiction to reopen the assessment based on such information. This vie ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ertain transactions in Futures Options (hereinafter referred to as F O for the sake of brevity) which resulted into loss of Rs. 67,72,832/- and such loss is duly reflected in the Profit Loss account. Such transactions were carried out through the broker namely ASE Capital Markets Ltd. . 3.3 The case of the Petitioner was selected for scrutiny assessment. The then Assessing Officer called upon the Petitioner to furnish various details including details pertaining to the loss on account of F O transactions. The Petitioner, vide letter dated 10.09.2015, furnished details in respect of such loss and furnished following documentary evidences in support of the same: (i) Ledger of F O trading control account; (ii) Contract note cum bills of broker; (iii) Ledger of broker in the books of the Petitioner; (iv) Contra ledger of Petitioner in the books of broker; 3.4 The then Assessing Officer, while framing the assessment vide order dated 18.03.2016 under section 143 (3) of the Act, consciously chose not to make any addition in respect of such loss on account of F O transactions in view of details and explanation furnished by the Petitioner. 3.5 Suddenly thereafter, the Respondent issued the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on records, it is noticed that the assessee has entered into transactions of Rs. Rs. 67,66,600/- with ASE Cpital Markets Ltd. As an outcome of enquiry / perusal and analysis of details available on records, it is noticed that the genuineness of the said transactions is not conclusively proved. After considering the materials available on records, I am satisfied that the said amount of Rs. Rs. 67,66,600/- is required to be brought under tax net. 3. From the above details and Insight information available on the system for the year under consideration, it is found that the assessee has made transaction with ASE Capital Markets Ltd. where during the investigation carried out by the department has revealed that the group had provided accommodation entries to the beneficiaries were unearthed as a result of the investigation. 4 The report is perused and having satisfied with the outcome and no further enquiry is necessary. I have gone through the information received and I have also gone through the material available on records. The ITBA/ITD data available in this office is also verified. The information and facts are found to be correct. On personal analysis of the data, prima facie, I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cks (where there can be a penny stock ), there is nothing like penny F O . 4.3 In view of the aforesaid vital differences between F O and stocks there could never be any non genuine loss in F O transaction and thus there could not be any escapement of income chargeable to tax on the aforesaid basis. Lastly, it was submitted that the assessment for the year under consideration was framed under Section 143 (3) of the Act and the same is sought to be reopened beyond the period of four years from the end of the relevant assessment year and therefore, the petitioner having filed a return under Section 139 of the Act and disclosed fully and truly all material facts necessary for its assessment for that Assessment Year, the impugned notice issued by the respondent deserves to be quashed. 5.1 Mr. Varun Patel, learned Senior Standing Counsel appearing for the respondent submitted that the petition is filed at a pre-mature stage inasmuch as only a notice u/ s 148 read with section 147 of the Income Tax Act ('the Act' for short) for A.Y. 2013-14 has been issued. In the event, the petitioner is aggrieved by the reassessment, alternative efficacious remedy is available by way of an Appe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... based on the report of the investigation wing that the petitioner has booked fictitious losses and illegal trade, the reopening of assessment on the basis of such newly disclosed material is fully justified. Mr. Patel, learned Senior Standing Counsel concluded by submitting that there are many cases where under the investigation of reversal project (Falcon) where there have been no losses booked by the assesses. However, in the present case, where a huge loss has been booked by the petitioner, the petitioner s case must stand on a different footing. 5.6 In view of the aforesaid Mr. Patel submitted that this Court must not interfere in the reassessment proceedings and present petition deserves to be dismissed. 6. Having heard learned advocates appearing for the respective parties and on perusal of the records, this Court arrives at the following findings :- (i) It will be seen from the profit and loss account for Assessment Year 2013-14 that the petitioner had shown the losses on futures and Options amounting to Rs. 67,72,832/- in the profit and loss account for the relevant year. Based upon such disclosure the assessment proceedings of the petitioner came to be finalized. Thereaft ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nabove carries many flaws in so far as the alleged amount of transaction entered with ASE Capital Market Ltd as mentioned by you is incorrect as against the correct amount of Rs. 67,72,832/- being Future Option trading loss incurred debited to P L account. Hence, details available on your records for forming your opinion for bringing the said alleged amount to tax is fallacious since, your observation based on your records simply refers to the transaction and not F O trading loss. Hence, on the basis of such wrongful observation, no alleged amount of Rs. 67,66,600/- could be brought to tax. Observations made under Para-3 and Para-4 are general in nature and in the form of simple wild allegation which does not conclusively prove as to how the transactions entered into with ASE Capital Market Ltd has provided accommodation entries to the beneficiaries were unearthed as a result of Investigation and hence, such incorrect and Invalid observations cannot termed as your independent satisfaction capable of invoking provisions of Section 147 of the IT Act, 1961. Para-6 It is pertinent to mention here that the assessee filed return of income but chosen not to disclose fully and truly all pa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion is not acceptable. The assessee has accepted that it had entered into transactions with M/s.ASE Capital Market Ltd. which formed the basis of information. The differences in the amount of transactions as per the Department's records and as per the assessee can be proven during the course of reassessment proceedings. Whether the contentions of the assessee for the reopening is correct or not can be determined only through scrutiny of the facts and law and for the very purpose, the assessment has been reopened. Without going through the process of assessment proceedings by giving opportunity to the assessee as per law, etc., it would not be possible to arrive at a decision. 9. Thus, we find that at no point of time was there any failure on the part of the petitioner. (i) to make a return u/s. 139 or in response to the notice issued under sub-section (1) of section 142 or section 148; (ii) to disclose fully and truly all material facts necessary for his assessment for that Assessment Year 10. Having gone through the assessment proceedings and scrutiny where, the specific issue of losses on account of F O trade was raised by the department, it cannot be held that the department ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reported in 394 ITR 146. 14. Considering the facts the case, we are of the opinion that the respondent-Assessing Officer could not have assumed the jurisdiction merely and solely relying upon the information made available on the insight portal without forming any independent opinion on the basis of the material on record vis-a-vis the petitioner is concerned. 15. This Court has held in the decision of this Court in the case of The Principal Commissioner of Income Tax-1 Vs. M/s. Farmson Pharmaceuticals Gujarat Pvt. Ltd. passed in Tax Appeal No. 229 of 2024 following the decision in the case of CIT Vs. The Kelvinator of India Ltd. reported in (123 Taxmann.com 433) as under: 9. Respectfully following the above judicial precedents, we have no hesitation in holding that when there is no failure on the part of the assessee in disclosing the income and No new tangible material on record, the reopening of assessment after 4 years period amounts to change of opinion only. Therefore the reopening of assessment invalid in law. Thus the finding arrived by the Ld. CIT (A) does not require any interference. Therefore the grounds raised by the Revenue is devoid of merits and the same is hereby d ..... X X X X Extracts X X X X X X X X Extracts X X X X
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