Law:

Section:

Section 147 of the Income-tax Act, 1961 - Income escaping assessment - Non-disclosure of primary facts - Assessment year 2001-02 - Assessee was carrying on business of purchase/sale of shares on behalf of its customers as a sub-broker - In relevant assessment year, it had entered into two transactions for purchase and sale of shares of a company for and on behalf of 'C' and had earned speculation profit - Admittedly, said speculation profit had been paid by assessee to 'C' and same had been assessed to tax in hands of 'C' - In case of assessee, assessment for relevant assessment year had been made determining a loss - Thereafter, Assessing Officer, by impugned notice issued under section 147, sought to reopen assessment on ground that during a survey carried out at business premises of assessee, it was found that assessee, apart from said two transactions, had no other transaction with 'C' ; that it had not charged margin money; that 'C' was only customer of assessee where such huge profit was shown in a particular settlement ; that volume of shares dealt with by assessee as a sub-broker in instant case was very high ; that in both transactions in question there were only profits and no loss ; and that, thus, it appeared that assessee had failed to disclose fully and truly all material facts necessary for its assessment and it had transferred speculation profit to 'C' - Whether from aforesaid facts, it could be considered that declaration made by assessee was false or that assessee had failed to disclose fully and truly all material facts as a result whereof income chargeable to tax had escaped assessment - Held, no FACTS The assessee was carrying on the business of purchase/sale of shares on behalf of its customers as a sub-broker. In the relevant assessment year, it had, inter alia, entered into two transactions for purchase and sale of shares of a company for and on behalf of 'C' and earned certain speculation profit. Admittedly, the said speculation profit had been paid by the assessee to 'C' and the same had been assessed to tax in the hands of 'C'. In the case of the assessee, the assessment for the relevant assessment year was made at loss. Said…

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