Tipsons Stock Brokers Pvt. Ltd. Vs DCIT (ITAT Ahmedabad)
Ahmedabad ITAT Quashes Reassessment Beyond Four Years as Mere Change of Opinion; Deletes ₹1.33 Crore Disallowance Under Section 37(1)
The Ahmedabad ITAT allowed the assessee’s appeal by quashing the reassessment proceedings initiated under sections 147/148 and also holding, on merits, that the disallowance of ₹1.33 crore under section 37(1) was unsustainable. The Tribunal held that the reassessment, initiated beyond four years from the end of the relevant assessment year, was based solely on a reappraisal of material already available on record and amounted to a mere change of opinion.
The Tribunal observed that during the original scrutiny assessment under section 143(3), the assessee had fully disclosed all primary facts, including the audited financial statements, tax audit report and details of payments made to its directors. The Assessing Officer failed to identify any specific omission or failure to disclose fully and truly all material facts, as required under the first proviso to section 147. A bald assertion that the relevant facts were “embedded” in the records could not justify reopening after four years. Accordingly, the notice issued under section 148 and the consequential reassessment order were held to be without jurisdiction and were quashed.
On merits, the Tribunal held that the Revenue had wrongly treated the payment of ₹1.33 crore to the directors as sub-brokerage prohibited under Regulation 15A of the SEBI (Stock Brokers and Sub-Brokers) Regulations, 1992. It found that the amount represented a share of arranger fees received by the assessee from Shriram Transport Finance Company Ltd. for arranging a public issue of bonds and not brokerage arising from stock-broking activities. There was no material to show that the directors had acted as sub-brokers of the assessee-company. Consequently, the provisions of Regulation 15A were held to be inapplicable, and the disallowance under section 37(1) was deleted in its entirety.
Since the principal disallowance itself was deleted, the Tribunal held that the alternative issue relating to the service tax component of ₹14.63 lakh had become infructuous. The assessee’s appeal was accordingly allowed in full.
FULL TEXT OF THE ORDER OF ITAT AHMEDABAD
This appeal has been filed by the assessee against the order dated 30.12.2025 passed by the Ld. Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi (hereinafter referred to as ‘Ld. CIT (A)’ in short), under Section 250 of the Income-tax Act, 1961 (hereinafter referred to as ‘the Act’ in short) for Assessment Year 2015-16.
