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Income Tax Appellate Tribunal, “D” BENCH, KOLKATA
This is an appeal preferred by the assessee against the order of the National Faceless Appeal Centre, Delhi (hereinafter referred to as the “Ld. CIT(A)”] dated 20.06.2025 for the AY 2016-17.
The assessee has challenged the reopening of assessment u/s 147 of the Act, based on the reasons recorded which are invalid and nullity in the eyes of law.
The brief facts are that the assessee filed the return of income on 17.10.2016, declaring total income at ₹43,04,040/-, which was processed u/s 143(1) of the Act. Thereafter, on the basis of credible information with the learned AO, the assessment was reopened u/s 147 of the Act on the ground that the assessee has indulged in non-
The learned DR on the other hand relied on the order of the authorities below.
After hearing the rival contentions and perusing the materials available on record, we find that merit in the contention of the learned Authorized Representative that the correct broker through whom the assessee executed the trades was M/S preferred securities Pvt. ltd. and the evidences are available in the form of stock ledger in respect of the said broker and the contract notes which are available from page no.13 to 142 of the Paper Book in respect all the derivatives trades executed on behalf of the assessee. We also note that the assessee has never executed any trade with these 6-7 brokers as
In our opinion, the AO has to exercise powers as conferred upon him by section 147 r.w.s. 148 of the Act with great care and caution as by exercising the reassessment jurisdiction u/s. 147, the AO unsettles the already completed assessment putting the assessee to a huge inconvenience and harassment. In the present case, the AO has incorrectly reopened the assessment by not even verifying the facts that there were no trades in F & O segments executed by the brokers referred to by the both the authorities. Therefore, considering these facts and circumstances the reopening of assessment is void ab initio and invalid in the eyes of law on the ground of non application of independent application of mind to the information received from the wing as well as on barrowed satisfaction. The case of the assessee finds support from the decision in the case PCIT Vs Meenakshi Overseas Pvt Ltd (2017) 82 taxmann.com 300 (Del). In the said decision, Hon'ble Delhi High Court has held that where the reasons to believe contain not the reasons but the conclusions of the AO one after the other and there was no independent application of mind by the AO to the tangible material which forms the basis of the reasons to believe that income has escaped assessment. The Hon'ble High Court has held that the conclusions of the AO are at best a reproduction of the conclusion in the investigation report. Indeed it is a borrowed satisfaction. Besides the case of the assessee is squarely
We therefore respectfully following the ratio laid in the above decisions, quash the reopening of assessment along with the consequent assessment framed.
In the result, the appeal of the assessee is allowed
Order pronounced in the open court on 11.11.2025.