Sunidhi Securities & Finance Limited Vs DCIT (ITAT Mumbai)
The Income Tax Appellate Tribunal (ITAT), Mumbai bench, has allowed the appeal of Sunidhi Securities & Finance Limited, overturning a reassessment order for the Assessment Year 2015-16. The Tribunal ruled that the reassessment notice issued by the Deputy Commissioner of Income Tax (DCIT) was invalid due to a procedural defect in obtaining the required statutory sanction, rendering the subsequent assessment null and void.
The case originated from a reassessment of the assessee company, which is engaged in various financial and brokerage services. After the company filed its return of income for A.Y. 2015-16, a scrutiny assessment was completed under Section 143(3) of the Income Tax Act, 1961, on December 28, 2017. However, the case was subsequently reopened on March 31, 2021, via a notice issued under Section 148 of the Act.
The basis for the reassessment was intelligence received from a search and survey operation conducted on a third party, Shri Naresh Jain, and his associates. The authorities alleged that the assessee was a beneficiary of “accommodation entries” in the form of bogus trading losses in penny stocks. Specifically, a loss of Rs. 16,86,282 on transactions in Steel Exchange India Limited was treated as a bogus trading loss by the Assessing Officer (AO). This addition increased the company’s total income, leading to an appeal by Sunidhi Securities to the Commissioner of Income Tax (Appeals), or CIT(A). The CIT(A) dismissed the appeal, upholding the AO’s order and the addition.
