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TMI Blog2025 (3) TMI 94X X X X Extracts X X X X X X X X Extracts X X X X ..... sessment due to any failure on the part of the assessee in not disclosing fully and truly all material facts necessary for assessment. Moreover, from the reasons recorded it appears that the initiation of reopening proceedings are on borrowed satisfaction as no independent opinion is formed and on bare perusal of the reasons recorded, it emerges that the AO, considering the information received from the insight portal, has issued the impugned notice forming his reason to believe that the income has escaped assessment on the presumption that the petitioner has been involved in creating the non-genuine losses which is already reflected 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. Besides, there is no clarity in the reasons whether the transaction value in question or the loss that resulted from such transaction, amounts to Rs. 27,61,650/-. Further, the petitioner had reported a total loss of Rs. 41,56,218/- in F&O Trade in its return. Why only a portion thereof, namely Rs. 27,61,650/- is considered to be non-genuine loss and the rest of the loss is considered to be genuine, is also baffling. Ther ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . Patel for the respondent No.1. 2. Rule returnable forthwith. Mr. Varun Patel, learned Senior Standing Counsel waives service of notice of rule on behalf of the respondent No.1. Since the controversy involved is short, the matter is finally heard and disposed of. 3. This petition is filed under Article 226 of the Constitution of India with a prayer to quash and set aside the impugned notice dated 30.03.2021. Accordingly, the following prayers have been made :- "(a) quash and set aside the impugned notice at "Annexure A" at to this petition. (b) Pending the admission, hearing and final disposal of present petition, to stay the implementation and operation of the notice at Annexure "A" to this petition and stay the further proceedings for the Assessment Year 2014-15. (c) any other and further relief deemed just and proper be granted in the interest of justice; (d) to provide for the cost of this petition." 3.1 The brief case of the facts are as under:- 3.2 The Petitioner is a partnership firm, during the year under consideration, entered into certain transactions in Futures & Options (hereinafter referred to as "F & O" for the sake of brevity) which resulted into loss of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 50/- during the year under consideration. In view of the above facts, I have reason to believe that income of Rs. 27,61,650/- has escaped assessment within the meaning of section 147 of the Act. Therefore it is a fit case for reopening of the assessment by invoking the provision of section 147 of the I.T. Act 1961. Accordingly, it is fit case for issuing notice u/s. 148 of the I.T. Act. 3.7. The Petitioner, vide letter dated 06.09.2021, raised objections against reopening. In view of the same, the Respondent was requested to drop the reassessment proceedings. 3.8 The Respondent, vide order dated 28.02.2022 disposed off such objections and, inter-alia, held that the reopening is justified. 4.1 Learned Senior Advocate Mr. Hemani submits that the reasons for reopening are absolutely vague, scanty and non-specific. According to him, the respondent has not provided details of the date of receipt of information which is the foundation for reopening the petitioner's case. Neither has the department provided any clarity either on the date of transactions or the nature of transactions . Further, it is not clear that the transactions pertain to an item reflected in the balance-sheet or pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 148 read with section 147 of the Income Tax Act ('the Act' for short) for A.Y. 2014-15 has been issued. In the event, the petitioner is aggrieved by the reassessment, alternative efficacious remedy is available by way of an Appeal to the CIT(A) and thereafter to the Tribunal as per the provisions of the Act. On this ground alone, learned Senior Standing Counsel Mr. Patel submitted that the petition is devoid of any merit and be summarily rejected. 5.2 He has further submitted that the reopening has been resorted to on the basis of information received under "Project Falcon" from DGIT (Investigation), Mumbai in March, 2021 through Insight Portal regarding coordinated and premeditated trading by brokers on behalf of their clients on the Bombay Stock Exchange by engaging in reversal trades in illiquid stock options resulting in non-genuine business loss/gains to the beneficiary. He has further submitted that the present petitioner is a party to such manipulation through ASE Capital Markets Ltd. and is the beneficiary of such fictitious loss and the petitioner had consistently recorded losses for each contract. 5.3 He has further submitted that thus, based on the analysis of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... had shown the losses on futures and Options amounting to Rs. 41,56,218/- in the profit and loss account for the relevant year. Based upon such disclosure the assessment proceedings of the petitioner came to be finalized. (ii) Thereafter, the notice under Section 148 of the Act was issued on 30.03.2021 and the reasons were supplied on 06.05.2021. 7. We find that the petitioner had categorically responded to the issues raised against the petitioner in respect of the F&O trading loss as under :- 8. "In this connection, on going thoroughly the observations/contents for re-opening the completed assessment for A.Y. 2014-15 , we could notice in Para-3 the observation and conclusion reproduced as under: "Para 3 On perusal of the details and information, it is very clear that the asessee entered into transaction in fictitious losses in equity/derivative Trading (BSE Equity Derivative Loss) of ASE Capital Markets Ltd (PAN-AADCA4635P) amounting to Rs. 27,61,650/- during the year under consideration. In view of the above facts, I have reason to believe that income of Rs. 27,61,650/- has escaped assessment within the meaning of section 147 of the Act. Therefore, it is a fit case for re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 147 of the IT Act, 1961. Accordingly, it is fit case for issuing notice u/s 148 of the Act. Your observation as re-produced herein above carries many flaws in so far as the alleged amount of transaction entered with ASE Capital Market Ltd in Fictitious Losses in Equity/ Derivatives Trading as mentioned by you is incorrect as against the correct amount of Rs. 41,56,218/- being Future & Option trading loss incurred and debited to P&L account. Hence, details's 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. 27,61,650/- could be brought to tax. 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. It cannot be held that the department was justified in reopening the ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sment. 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 view is fortified by the decision of this Court in case of Harikishan Sunderlal Virmani vs. Deputy Commissioner of Income Tax 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 its decision 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) "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 disclo ..... X X X X Extracts X X X X X X X X Extracts X X X X
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