JASPAL SINGH AND SONS HUF,NEW DELHI V. ITO WARD 50(3), NEW DELHI

ITA 3324/DEL/2023

AI Insights

The case involves Jaspal Singh and Sons HUF, who appealed against the order of the Learned First Appellate Authority (CIT(A)) concerning the assessment year 2009-10. The primary contention was the legality of the reassessment under section 147 of the Income Tax Act, which the assessee argued was based on insufficient jurisdictional grounds and lacked specific, reliable, and tangible material to justify 'Reasons to believe'. The Assessing Officer had reopened the assessment based on information from the Ahmedabad investigation wing, alleging manipulation of client codes to shift profits and incur losses, thereby reducing taxable income significantly. The CIT(A) upheld the reassessment, leading to the appeal before the Tribunal.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 470708 (ITAT-DELHI)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-03-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Assessment Year: 2009-2010
• Laws Referred To: Income Tax Act
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: OM PARKASH
• Assessee Lawyers: G.S.KOHLI
• Keywords: Set aside; Reassessment proceedings; Transactions in derivatives; Tangible material
• Section: 147

Judgement Text

"IN THE INCOME TAX APPELLATE TRIBUNAL, DELHI ‘C’ BENCH, NEW DELHI BEFORE SHRI ANUBHAV SHARMA, JUDICIAL MEMBER AND SHRI AMITABH SHUKLA, ACCOUNTANT MEMBER ITA No. 3324/DEL/2023 [Assessment Year: 2009-10] Jaspal Singh and Sons HUF, Vs. ITO, Ward 50(3), C-110, Anand Niketan, Civic Centre, New Delhi New Delhi – 110 021 (PAN:- AAAHJ2746Q) [Appellant] [Respondent] Date of Hearing : 05.03.2025 Date of Pronouncement : 07.03.2025 Assessee by : Shri G.S. Kohli, CA Revenue by : Shri Om Parkash, Sr. D.R. ORDER PER AMITABH SHUKLA, ACCOUNTANT MEMBER, This appeal by the Assessee is preferred against the order of the Ld. NFAC, Delhi dated 31.10.2024 pertaining to assessment year 2009-10. 2. At the outset, it is necessary to briefly recapitulate the factual matrix of the case. Return of Income for assessment year 2009–2010, was filed by the assesse on 29/9/2009 declaring nil income. The same was processed under section 143 (1) of the act. Pursuant to an information received from investigation wing of Ahmedabad., the learned, assessing officer reopened assessment proceedings under section 147 of the act. The assesse again filed another return of income declaring nil income. ITA No.- 3324/Del/2023 Jaspal Singh and sons HUF 2 3. As per the information received from investigation wing of Ahmedabad, assesse had shifted its ascertained profit of Rs 3,84, 93,252/- in ascertained losses to the tune of Rs 7,12,221,60/-, through broker by changing the client codes in sale, purchase order of securities post conclusion of trades. The indulgence of the assesse in said activity resulted in reduction in income of the assesse by Rs 3,77, 81,031/-. The. Ld. Assessing Officer confronted the assesse as regards the justification for such client code modification, and being unsatisfied with the defence, proceeded to make the impugned addition of Rs 3,77,81,031/-. Before the Learned First Appellate Authority, the assesse challenged the order of Ld. AO on legal grounds as well as on merits of the case. 4. As regards the legal challenge, the learned CIT(A), noted that the assesse has raised mere general allegations on non-compliance to mandatory requirements of section to 151 of the act and has not provided any supporting document to prove its case. Consequently, the assesses’s challenge was dismissed. Similarly, on the issue of merits of the addition, also, it was noted that the applicant had not produced any evidence in support of its claim of having entered in genuine transactions. The appeal of the assesse was therefore dismissed. Before us the Learned Counsel for the appellant submitted that the order of the Assessing Officer is non-maintainable on account of jurisdictional in sufficiency and that the same therefore deserves to be quashed. The Ld. Departmental Representative argued in favour of order of authorities below. ITA No.- 3324/Del/2023 Jaspal Singh and sons HUF 3 5. We have heard rival submissions, in the light of material available on records. At this stage, we deem it necessary to examine the grounds of appeal raised by the assesse before us, while assailing the impugned order of Ld. First Appellate Authority. The grounds raised by the assessee are reproduced as under: “ 1(i) That on the facts and circumstances of the case the learned CIT (Appeal) not only erred in law in confirming the re-opening of Assessment U/s 147 rather had also failed to appreciate and ignored the submission of appellant in this respect (ii) That the proviso 147 stipulates \"Reasons to believe and not to \"Reason to suspect\", while in the appellant's case there was no specific related material, any reliable and tangible material to form \"Reasons to believe\", the A.O. has only reproduced the \"Report of Investigation Wing and higher authorities have also given its approval in mechanical manner. (iii) That the learned CIT(Appeal) had confirmed the proceedings U/s 147 in predetermined spirit and deduced under general observation that malafide transactions are common in F&O business. (iv) That an initiation of proceedings U/s 147 by A.O. and its confirmation by CIT(Appeal) is unlawful and bad in law. 2(i) That where all the transactions are accounted for in the books of accounts and financial statements are audited an addition held U/s 69 is not valid in the eyes of law. (ii) That it is irreparable error on the part of A.O. and in view of well settled law in such cases the order deserves to be quashed. 3. That the lower authorities failed to go through the financial statement of the appellant and were confined only to the information received from Investigation Wing Ahd, thus, it is evident that they were not prepared to consider the submission of the appellant or to consider the information available on the record in the normal course of filing of return of income, thus. made an addition of Rs. 3,77,81,031/- (received information) blindly. 4(1) That an assessment has been framed in haste without giving proper opportunities to the humble appellant. (ii) That the appellate proceedings firstly represented before CIT (Appeal) physically, later it was transferred to \"Faceless where no doubt the entire submission was referred online but since it was the ITA No.- 3324/Del/2023 Jaspal Singh and sons HUF 4 initial year for the submission online, there seems to be an omission in its handling as the learned CIT (Appeal) had failed to give his comments in an appropriate manner on submission made physically. 5. That the appellant craves his right to amend, delete or add any grounds of appeal at or before the time of hearing.” 6. From a perusal, of the grounds of appeal extracted, here in above, from Form 36 we have noted that the first ground of appeal raised by the appellant is regarding the learned, first appellate Authority, ignoring the jurisdictional insufficiency of the reassessment proceedings under section 147. It was submitted that the said challenge was not properly adjudicated by the Ld. CIT(A). We have also noted that while dismissing the impugned ground of appeal, the learned First Appellate Authority has merely recorded deficient compliance by the assesse. Be that as it may be, we are of the considered view, that ends of justice would be met, if the matter is set aside to the file of Learned first appellate authority for fresh adjudication. Consequently, the order of learned first appellate authority is set aside and he is directed to re-adjudicate the appeal, de novo in accordance with law by passing a speaking order, and after giving due opportunity of being heard to the appellant. The appellant shall comply with all the statutory notices and any non-compliance may be adversely viewed. Accordingly, all the grounds of appeal raised by the assesse are allowed for statistical purposes. ITA No.- 3324/Del/2023 Jaspal Singh and sons HUF 5 7. In the result, appeal of the assesse is allowed for statistical purposes. Order pronounced in open court on 07/03/2025. Sd/- Sd/- [ANUBHAV SHARMA] [AMITABH SHUKLA] JUDICIAL MEMBER ACCOUNTANT MEMBER Dated 07 /03/2025 Pooja, Sr .PS Copy forwarded to: 1. Appellant 2. Respondent 3. CIT 4. CIT(A) 5. DR Asst. Registrar, ITAT, New Delhi 1. Date of dictation of Tribunal order 6.3.25 2. Date on which the typed draft Tribunal Order is placed before the Dictating Member 6.3.25 3. Date on which the typed draft Tribunal order is placed before the other Member 4. Date on which the approved draft Tribunal order comes to the Sr. PS/PS 5. Date on which the fair Tribunal order is placed before the Dictating Member for pronouncement 6. Date on which the signed order comes back to the Sr.PS/PS 7. Date on which the final Tribunal order is uploaded by the Sr.PS/PS on official website 8. Date on which the file goes to the Bench Clerk alongwith Tribunal order 9 Date of killing off the disposed of files on the judisis Portal of ITAT by the Bench Clerks 10. Date on which the file goes to the Supervisor (Judicial) 11. The date on which the file goes to the Assistant Registrar for endorsement of the order 12. Date of Despatch of the order "