The Income Tax Appellate Tribunal (ITAT) Delhi bench quashes Reassessment order passed under Section 148 of the Income Tax Act, 1961 based on vague reasons related to transactions carried on platform of National Stock Exchange (NSE)
Assessee ,Captive Commerce Pvt. Ltd. assessment was completed under Section 143(3) of the Income Tax Act.Thereafter the AO reopened the assessment by issuing notice under Section 148 of Income Tax Act due to doubts on the correctness of losses claimed in the transactions carried on the platform of the National Stock Exchange. Accordingly, AO passed a reassessment order by confirming notional income of Rs.41,48,008/- on account of client code modification.
By challenging the re assessment order, the assessee filed an appeal before the commissioner of Income Tax Appeal(CIT(A), who dismissed the appeal.Thereafter the assessee filed another appeal before the tribunal.
Before the bench Ashu Goel , counsel for the assessee submitted that the Assessing Officer has wrongly assumed jurisdiction by issuing notice under Section 148 of the Act without authority of law
Further, the ingredients of Section 147/148 of the Act are not fulfilled in the instant case to enable the Assessing Officer to exercise jurisdiction and to proceed with the reassessment proceedings. There was no reason to believe income of the assessee had escaped .Thus without fulfilling the requirement AO passed the order .
Moreover the AO initiated the reassessment proceedings based on vague reasons related to transactions carried on the platform of the National Stock Exchange .
Vivek Kumar Upadhyay, Counsel for the revenue, supported the decision of the lower authorities.
The tribunal during the proceedings observed that on the grounds of doubts on the correctness of losses claimed in the transactions carried on the platform of the National Stock Exchange the Assessing Office reopened the assessment .
Assessing Officer has merely made averments towards the modus operandi used by the different brokers for transfer of profit and loss of one constituent to another by modification of the client code.
However, AO did not find any reference to any relevant material which can give rise to prima facie belief of an escapement resulting from the Revenue.
The instances of transactions resulting in loss/profit to the assessee on account of client code modification do not feature in the reasons at all.
Thus It is a classic case of assumption of jurisdiction under Section 147 by recording ‘belief’ based on extremely vague and non-descript reasons.
After reviewing the facts submitted by both parties, the two member bench of Pradip Kumar Kedia,(Accountant Member ) and Chandra Mohan Garg,(Judicial Member) quashed the reassessment order passed under Section 148 of the Income Tax act
Subscribe Taxscan Premium to view the JudgmentSupport our journalism by subscribing to Taxscan premium. Follow us on Telegram for quick updates
