IN THE INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCH “E”, MUMBAI BEFORE SHRI NARENDER KUMAR CHOUDHRY, JUDICIAL MEMBER AND SHRI GIRISH AGRAWAL, ACCOUNTANT MEMBER ITA No.2586/M/2024 Assessment Year: 2014-15 M/s. HSBC Securities and ACIT 2(1)(2), Capital Markets (India) Private Room No.629, 6^th Floor, Limited, Aayakar Bhavan, Vs.

52/60, Mahatma Gandhi Road, Maharishi Karve Road, Fort, Mumbai Mumbai Maharashtra-400001 Maharashtra - 400020 PAN: AAACJ1395E (Appellant) (Respondent)

Present for:

Assessee by : Ms. Krupa Gandhi, Ld. A.R.

a/w Shri Riken Shah, Ld. A.R.

Revenue by : Shri Biswanath Das, Ld. D.R.

Date of Hearing : 31.01.2025 Date of Pronouncement : 10.02.2025 O R D E R Per : Narender Kumar Choudhry, Judicial Member:

This appeal has been preferred by the Assessee against the order dated 26.03.2024, impugned herein, passed by the Ld. Principal Commissioner of Income Tax (in short Ld. PCIT) under section 263 of the Income Tax Act, 1961 (in short ‘the Act’) for the A.Y. 2014-15.

2. In the instant case, the Assessee had declared its total income at Rs.28,06,90,350/- by filing its return of income on 28.11.2014, which was selected for scrutiny under CASS and ultimately resulted into passing of the assessment order dated 17.01.2018 u/s 143(3) r.w.s. 144C of the Act and assessing the total income at Rs.52,35,41,450/- under normal provision and book profit of Rs.3,66,88,639/- under the provision of section 115JB of the Act.

3. Subsequently, the case of the Assessee was reopened and accordingly order dated 30.03.2022 u/s 147 r.w.s. 144B of the Act was passed, whereby the total income of the Assessee was assessed at Rs.28,06,91,350/-. However, the FAO, subsequently vide order dated 11.03.2024 u/s 154 r.w.s 147 of the Act made the addition of Rs.24,28,51,100/- on account of disallowance made in the original order which was purportedly missed out in the reassessment order, which is not subject matter before us .

4. The Ld. PCIT considering the order dated 30.03.2022 passed by the Faceless Assessing Officer (in short “FAO”) found that FAO has ignored the assessed income of Rs.52,35,41,450/-. Further, an amount of Rs.1,68,03,023/- was disallowed in view of the provision of section 14A of the Act in the original assessment order dated 17.01.2018 u/s 143(3) r.w.s. 144C of the Act. Further, for computing 8D(ii) & (iii), the closing value of the investment was taken after deducting provision for different diminution in value of Rs.7,16,26,80,000/- and therefore the Ld. PCIT opined that it should have been taken the average of opening investment under clause (iii) of rule 8D(ii) of the Income Tax Rules, 1963 (in short “the Rules”). In order to examine the aforementioned issue, the case of the Assessee was reopened u/s 147 of the Act. However, the Assessing Officer (AO) has erroneously recorded the reasons pertaining to the A.Y. 2013-14 and thus the assessment was completed u/s 147 r.w.s. 144B of the Act vide order dated

30.03.2022 assessing the total income at Rs.28,06,91,290/- wherein the FAO has ignored the addition/disallowance of Rs.24,28,51,098/- made in the original assessment order dated

17.01.2018 u/s 143(3) of the Act.

4.1 On the aforesaid reasons, the Ld. PCIT has formed an opinion that FAO has passed the order without making enquiries or verification which should have been made. To that extent the assessment order passed by the AO suffers infirmity and is erroneous in so far as it is prejudicial to the interest of the revenue. The Ld. PCIT consequently issued a notice dated

25.09.2023 u/s 263 of the Act which read as under.

“In your case, return of income for A.Y. 2014-15 was filed on

28.11.2014 declaring total loss of Rs. 28,06,90,350/- Subsequently, your case was selected for scrutiny under CASS and Assessment Order u/s 143(3) of the IT Act for AY 2014-15 was completed on 17.01.2018 assessing the total income at Rs.52,35,41,450/-. Thereafter, your case was re-opened u/s. 147 of the Act and the assessment u/s. 147 r.w.s 1448 was completed on 30.03.2