The Delhi bench of Income Tax Appellate Tribunal (ITAT) has recently held that assessment framed under Section 147 of Income Tax Act,1961 on information under Project Falcon regarding trading on United Stock Exchange of India not borne out of any record.
The Assessee Saarthak Vanijya India Pvt engaged in the business of manufacturing of other paper articles. The return of Assessment Year 2013-14 was filed by assesses on 16.09.2013.Therfater Assessment under Section 153A Income Tax Act was completed on 31.03.2016 and reopened the case.
The case was reopened on getting information by AO under Project Falcon from Directorate of General of Income Tax (Investigation), through the Income-tax Business Application regarding trading on the United Stock Exchange of India by engaging in reversal trades in illiquid stock options resulting in non-genuine business loss/gains to the beneficiary assessee and the assessee is also party to such manipulation.
Counsel for the revenue submitted that assessee has benefitted from engaging in reversal trades in illiquid stock options on the USE/BSE resulting in non genuine loss amounting to Rs.99 ,42,838/- which has not been disclosed by the assessee and incurred cash expenses amounting to Rs. 3,27,45,176.
Thus after making enquiries Assessing Officer held that there was reason to believe that the amount of Rs.4,26,88,014/-is an income chargeable to tax which has escaped assessment for AY 2013-14 in the case of assessee.
When the assessee filed an appeal before the Commissioner of Income Tax (Appeals) [CIT(A)] against the order of AO. The CIT(A) determined the commission paid by the assessee at Rs.1 ,99,380/- on the loss earned by the assessee of Rs.99,42,838/-.
Thereafter the tribunal during the proceedings point out that clause (ii) in the Explanation to clause (d) of the proviso to clause (5) of section 43 of the Income Tax Act read with rule 6DDB of the Income Tax Rules, 1962, the Central Government hereby notifies the United Stock Exchange of India Ltd. as a recognized stock exchange for the purpose o f the said clause with effect from the date of publication of this notification in the Official Gazette.
Therefore the two member bench of Dr. B. R. R. Kumar, (Accountant Member) and . Astha Chandra, (Judicial Member) held that the order passed by the Assessing Officer under Section 147 Income Tax Act, is beyond logic and not borne out of any record. R. S. Singhavi, A counsel appeared for the assessee. H. K. Choudhary, counsel appeared for revenue
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