Question 1

What are the key legal issues in JAP Overseas Private Limited vs. ITO Ward, 10(2)(1)?

Accepted Answer

1. Validity of jurisdiction assumed by the ITO under section 147 of the Act. 2. Dismissal of Gr.No. 2 challenging the action of the AO of commencing the assessment proceedings by issue of notices under sections 143(2) & 142(1) of the Act without first furnishing the reasons recorded.

Question 2

What are the facts of JAP Overseas Private Limited vs. ITO Ward, 10(2)(1)?

Accepted Answer

The assessee, JAP Overseas Private Limited, filed its return of income electronically on 14.10.2010 declaring a total income of Rs.12,49,437/-. The company is engaged in trading in licenses and derivatives. The case was processed under section 143(1) of the Income-tax Act, 1961. Subsequently, the case was re-opened and a notice under section 148 of the Act was issued on 24.03.2015. The re-opening was based on information received from the DIT(I&CI), Mumbai, indicating that the client code modification (CCM) facility in the F & O segment on NSE was misused, and the assessee’s name was in the list of beneficiaries. The assessee allegedly obtained fictitious loss of Rs.53,88,134/- due to CCM. In response to the notice under section 148, the assessee submitted that the original return filed on 14.10.2010 may be treated as the return under section 148 of the Act. The Assessing Officer disallowed the loss of Rs.53,88,134/- in respect of F & O transactions through broker R.K. Global Shares and Securities Ltd. and added 2% of the above amount as unexplained expenditure under section 69C of the Act. Accordingly, the total income was computed at Rs.67,45,330/- against the return income of Rs.12,49,437/-.

JAP Overseas Private Limited vs. ITO Ward, 10(2)(1)

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