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2019 (6) TMI 1185 - HC - Income TaxReopening of assessment u/s 147 - gain on sale of shares - profit out of sale of shares was taxable under the normal provisions or that it was excluded for the purpose of computing book profit u/s 115JB - HELD THAT:- The same is a minor difference of ₹ 41.16 Lacs between the transaction amount of sale of shares and one contained in the statement filed by the assessee with objections. As correctly pointed out by the learned counsel for the petitioner, this represents the brokerage component and has nothing to do with the taxability of the income. In so far as objection No. (ii) is concerned, the Assessing Officer is plainly incorrect in law. Mere nondisclosure of receipt would not automatically imply escapement of income chargeable to tax from assessment. There has to be something beyond an unintentional oversight or error on the part of the assessee in not disclosing such receipt in the return of income. Even after non-disclosure, if the documents on record conclusively establish that the receipt did not give rise to any taxable income, it would not be open for the AO to reopen the assessment referring only to the non disclosure of the receipt in the return of income. AO virtually conceded to the assessee's contention that the shares of M/s. Piramal Healthcare were held by M/s. Savoy Finance and Investments Pvt Ltd for a period more than 12 months immediately preceding the date of the transfer. Having done so, he thereafter, resorts to further inquiries that may be needed during the course of assessment. As held repeatedly by this Court and other Courts, reopening of assessment cannot be based on fishing or rowing inquiries or for carrying out further investigation. If there was any prima facie material suggesting that income chargeable to tax had escaped assessment, surely, the Assessing Officer was entitled to carry out further inquiries. The documents on record would show that the assessee had submitted its computation of book profit for the purpose of Section 115JB of the Act in which under caption “other income” sum of ₹ 13.41 Crores (rounded off) was included for computation of such profit. Same was elaborated in Schedule 7 and pertained to profit on sale of shares. Thus, the assessee had for the purpose of computation of its book profit in terms of Section 115JB of the Act, accounted the profit arising out of the sale of share which was in any case in tune with the first proviso to Section 10(38) of the Act and corresponding provisions of Section 115JB. Department submitted that this requires examination which can be done only during the course of reassessment. We are afraid such a contention will not be valid in view of the decision of the Supreme Court in case of Apollo Tyres Ltd Vs. CIT [2002 (5) TMI 5 - SUPREME COURT] in which it was held that while determining the book profit under Section 115J (which is a predecessor provision to Section 115JB), the Assessing Officer cannot recompute the profit in the Profit & Loss Account. It was held that the Assessing Officer cannot tinker with the audited accounts of the assessee while computing book profit under Section 115JB. Even prima facie, AO was unable to demonstrate before us on the grounds stated and the reasons recorded that income chargeable to tax had escaped assessment. His i.e. Assessing Officer's attempt of further verification would amount to rowing inquiry. There is nothing on record prima facie suggesting that the profit out of sale of shares was taxable under the normal provisions or that it was excluded for the purpose of computing book profit under Section 115JB of the Act. Under these circumstances, the impugned notice for reassessment is quashed - Decided in favour of assessee.
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