Case Law Details
Viswanathan Securities Pvt. Ltd. Vs ACIT (ITAT Delhi)
ITAT Delhi held that AO drew belief on the reasons which were later found to be totally non-existent. Such defect in the reasons cannot be ascribed as a mere technical irregularity and consequently defect cannot be cured by applying Section 292B of the Income Tax Act.
Facts- The assessee-company is engaged in the business of dealing in shares and securities in its own name and also acting as sub-brokers. The assessee company filed its ROI on 30.09.2010 declaring income at Rs.28,95,180/- for A.Y. 2010-11.
Subsequently, certain information were statedly received by the AO from the office of Principal Director of Income Tax (Inv.) Ahmedabad vide letter dated 08.03 .2016 that assessee has under-reported its taxable income to the extent of Rs.21,31,154/- for Assessment Year 2010-11 by misusing the ‘client code modification’ (CCM) facility available for correction of punching mistakes. Consequently, the case was reopened u/s. 147 after recording of reasons and obtaining necessary approval from the superior authority. A notice u/s. 147 was issued on 27.03.2017 and duly served on the assessee in this regard. AO subsequently issued corrigendum on 14th December, 2017 to rectify certain mistakes occurred in the reasons originally recorded.
The proceedings u/s. 147 were accordingly initiated and the assessment was completed by AO u/s. 143(3) r.w. Section 147 of the Act wherein addition of Rs.21,31,154/- was made alleging profit shifting by the assessee in a clandestine manner by conniving in client code modification.
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