M/S. R S VINIMAY PVT. LTD.,KOLKATA V. ITO, CIRCLE 11(1), KOLKATA

ITA 1513/KOL/2025

AI Insights

The case involves M/s R.S. Vinimay Pvt. Ltd., which appealed against the order of the National Faceless Appeal Centre, Delhi, concerning the reopening of their assessment for the Assessment Year 2016-17 under section 147 of the Income Tax Act. The AO had reopened the assessment based on information that the assessee engaged in non-genuine transactions in equity derivatives, incurring significant losses. However, the assessee contested that they had not traded through the brokers identified by the AO and provided evidence to support their claim. The Tribunal found that the AO had not properly verified the facts before reopening the assessment, leading to the quashing of the reassessment.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 784723 (ITAT-KOLKATA)
• Duration Of Justice: 3 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-11-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Assessment Year: misc
• Appeal Filed On: 14-07-2025
• Other Referred Cases: PCIT Vs Meenakshi Overseas Pvt Ltd (2017) 82 taxmann.com 300 (Del), CIT vs. SFIL Stock Broking Ltd. [2010] 325 ITR 285 (Del), GRD Commodities Ltd Vs PCIT (2023) 149 taxmann.com 223(Cal), PCIT Vs Shodiman Investment Pvt Ltd (2018) 93 taxmann.com 153 (Bom), Sarthak Securities Co Pvt Ltd. Vs ITO (2010) 329ITR 110(Del)
• Laws Referred To: Income Tax Act
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: BONNIE DEBBARMA
• Assessee Lawyers: GIRIDHAR DHELIA
• Keywords: Reopening of assessment; Transactions in derivatives; Tangible material; Borrowed satisfaction; Bogus
• Section: 147; 148

Judgement Text

" IN THE INCOME TAX APPELLATE TRIBUNAL “D” BENCH, KOLKATA BEFORE SHRI RAJESH KUMAR, AM AND SHRI PRADIP KUMAR CHOUBEY, JM ITA No.1513/KOL/2025 (Assessment Year:2016-17) M/s R.S. Vinimay Pvt. Ltd. 3A, national Library Avenue, Alipore, Kolkata-700027 West Bengal Vs. ITO, Circle 11(3), Aaykar Bhawan, P-7, Chowringhee Square, Kolkata-700069, West Bengal (Appellant) (Respondent) PAN No. AADCR0739H Assessee by : Shri Giridhar Dhelia, AR Revenue by : Shri Bonnie Deb Barma, DR Date of hearing: 29.10.2025 Date of pronouncement: 11.11.2025 O R D E R Per Rajesh Kumar, AM: 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. 02. 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. 03. 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- Printed from counselvise.com Page | 2 ITA No.1513/KOL/2025 M/s R.S. Vinimay Pvt. Ltd.; A.Y. 2016-17 genuine transactions in equity derivatives incurring loss of ₹98,10,876/- by trading in illiquid stocks option on Bombay Stock Exchange during the previous year. The notice u/s 148 of the Act was issued on 31.03.2021, which was not complied with by the assessee but later the ITR was filed on 23.08.2021. The learned AO noted that the department has carried out detailed investigation under the project Falcon wherein it was found that many entities/ clients were consistently incurring loss by reversal trade in the stock options on the exchange platform. Accordingly, the learned AO called upon the assessee to furnish the details of the transactions along with contract notes, which were duly furnished and the learned AO duly considered the said documents while framing the assessment. In Para no.5.5, the learned AO noted that the broker who carried out trades were; 1. V.G. Capital market Pvt. ltd. 2, The Calcutta Stock Exchange Ltd. 3. Lalit Kumar Tulshyan, 4. Bahubali Forex Pvt. ltd. 5. GRD Securities Ltd. 6. Sankalp Share Brokers Pvt. ltd. and 7. CM Goenka Stock brokers Pvt. ltd. The learned AO mentioned that all these brokers except Sankalp Share Brokers Pvt. Ltd and CM Goenka Stock Brokers Pvt. Ltd. were covered under the said project Falcon and they admitted their role in tax evasion by giving bogus profit/loss through derivatives. Finally, the learned AO added the entire F&O loss of ₹1,05,69,902/- to the income of the assessee whereas loss incurred in Bombay Stock Exchange F&O transactions was ₹1,04,25,000/- and the total NSE F&O loss was ₹1,42,901/-. Even the loss in respect of Bombay Stock Exchange F&O was added by the learned AO. The ld. Counsel for the assessee submitted that the assessee has never made any trade through the above said brokers mentioned by the learned AO. The learned Authorized Representative drew our attention of the Bench to the ledger account of the stock broker (Preferred Securities Printed from counselvise.com Page | 3 ITA No.1513/KOL/2025 M/s R.S. Vinimay Pvt. Ltd.; A.Y. 2016-17 (P) ltd) for the said period for Bombay Stock Exchange F&O as well as NSE F&O and submitted that the learned AO has completely missed the bus by taking wrong stock brokers instead of preferred securities (P) Ltd. as is apparent from the statement of account as well as contract notes which are available in the paper book from page no.13 to 142 of the Paper Book. The learned Authorized Representative referred to para no. 5.4 of the CIT (A) who also gave a wrong finding that the assessee had appointed a number of stock brokers for caring of F&O trading which is patently and factually wrong. The learned CIT (A) thereafter noted that these stock brokers were carrying out and arranging loss in a very planned manner. Thereafter, the learned CIT (A) in para no.5.6 noted that all the 6 to 7 brokers were acting on behalf of assessee arranging loss which was completely wrong and against the facts on record. Finally, the learned Authorized Representative submitted that the assessee’s broker was never named in the investigation wing report and therefore very basis of reopening of assessment is wrong and deserves to be quashed. 04. The learned DR on the other hand relied on the order of the authorities below. 05. 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 Printed from counselvise.com Page | 4 ITA No.1513/KOL/2025 M/s R.S. Vinimay Pvt. Ltd.; A.Y. 2016-17 mentioned in the assessment order as well as appellate order. Therefore, the reasons were recorded with the complete non- application of mind and in a very casual manner. In our opinion, the reopening of assessment based on the said reasons cannot be sustained. Moreover, the assessee’s broker named was never mentioned in the investigation wing report and therefore, this was another blatant mistake on the part of the learned AO. 06. 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 Printed from counselvise.com Page | 5 ITA No.1513/KOL/2025 M/s R.S. Vinimay Pvt. Ltd.; A.Y. 2016-17 covered by the decisions of CIT vs. SFIL Stock Broking Ltd. in [2010] 325 ITR 285 (Del) ,GRD Commodities Ltd Vs PCIT (2023) 149 taxmann.com 223(Cal), PCIT Vs Shodiman Investment Pvt Ltd (2018) 93 taxmann.com 153 (Bom) and Sarthak Securities Co Pvt Ltd. Vs ITO (2010) 329ITR 110(Del). 07. We therefore respectfully following the ratio laid in the above decisions, quash the reopening of assessment along with the consequent assessment framed. 08. In the result, the appeal of the assessee is allowed Order pronounced in the open court on 11.11.2025. Sd/- Sd/- (PRADIP KUMAR CHOUBEY) (RAJESH KUMAR) (JUDICIAL MEMBER) (ACCOUNTANT MEMBER) Kolkata, Dated: 11.11.2025 Sudip Sarkar, Sr.PS Copy of the Order forwarded to: BY ORDER, True Copy// Sr. Private Secretary/ Asst. Registrar Income Tax Appellate Tribunal, Kolkata 1. The Appellant 2. The Respondent 3. CIT 4. DR, ITAT, 5. Guard file. Printed from counselvise.com "