Superior Projects LLP Vs ITO (ITAT Delhi)
The appeal in ITA No. 2725/Del/2026 for Assessment Year 2016-17 arose from the CIT(A)’s order dated 01.12.2025, which followed the reassessment order dated 24.05.2023 passed under Sections 147 read with 144 and 144B of the Income-tax Act, 1961. The assessee, an LLP, filed its return on 27.08.2016 declaring total income of Rs. 9,27,620 and claimed a derivative trading loss of Rs. 33,59,750. The Revenue reopened the assessment under Sections 147/148 based on information concerning alleged coordinated and premeditated trading in illiquid stock options. The assessment records referred to an Investigation Wing investigation under “Project Falcon”, statements of brokers, and transactions allegedly involving reversal of trades or allowing options to expire to generate losses. The assessee’s transactions were stated to have been undertaken through M/s Destiny Securities Ltd., with a reported loss of Rs. 33,59,615.
The assessee did not initially file a return pursuant to the notice under Section 148. Notices under Section 142(1), letters and show-cause notices under Section 144 followed. The assessee filed part replies to two notices but did not respond to the subsequent show-cause notice proposing the addition. The AO ultimately disallowed the derivative trading loss of Rs. 33,59,750, treating it as fictitious. The AO relied, among other things, on SEBI v. Rakhi Trading Private Limited reported in (2018) 90 taxmann.com 147 (SC).
