Stratagem Portfolio (P.) Ltd. Vs. DCIT (ITAT Delhi)
Conclusion: Since there was no material to infer that client code modification had been done by assessee with malafide purpose of shifting of the profit or evasion of the tax hence, assessment could not be reopened under section 147 in absence of any tangible material to infer that income escaped in the case of assessee.
Held: AO had completed assessment in terms of section 147 after making addition under section 68 and 69C on the reason that client code modification was allowed to the brokers by the stock exchange, within a limited window of time after business hours, for rectification of any mistakes in punching of the client code while carrying out transaction of purchase and sale on behalf of the customers however in case of assessee client code modification had been done for shifting of the profit or loss. It was held that there was no material to infer that such client code modification had been done with malafide purpose of shifting of the profit or evasion of the tax. There was no material before AO to form such a belief that income had escaped due to such client code modification and thus there was no live link between the material before AO and inference made. The Hon’ble Supreme Court in the case of Rajesh Jhaveri Stock Brokers (P) Ltd. reported in 291 ITR 500 had held that for validity of reason recorded it is essential that there should be a relevant material on which a reasonable person could make requisite belief. Thus, assessment could not be reopened validly on the basis of the above reasons recorded in absence of any tangible material to infer that income escaped in the case of assessee.
FULL TEXT OF THE ITAT JUDGEMENT
This appeal has been preferred by the assessee against the order dated 30/07/2019, passed by the Learned CIT(Appeals)-XXV, New Delhi [in short ‘the Ld. CIT(A)’] for assessment year 2010-11 raising following grounds:
