TMI Blog2014 (2) TMI 791X X X X Extracts X X X X X X X X Extracts X X X X ..... e under section 143(3) and another applicable where an intimation was earlier issued under section 143(1) - it is open to the assessee to contend that notwithstanding that the argument of "change of opinion" is not available to him, it would still be open to him to contest the reopening on the ground that there was either no reason to believe or that the reason to believe is not relevant for the formation of the belief that income chargeable to tax has escaped assessment - it is open to the assessee to challenge the reasons recorded under section 148(2) on the ground that they do not meet the standards – Decided in favour of Assessee. - W. P. (C) 7660/2012 - - - Dated:- 28-1-2014 - S. Ravindra Bhat And R. V. Easwar,JJ. For the Petitioner : Sh. Salil Kapoor, Sh. Vikas Jain, Sh. Sanat Kapoor and Sh. Ankit Gupta, Advocates. For the Respondents : Ms. Suruchii Aggarwal, Sr. Standing Counsel with Sh. Judy James, Jr. Standing Counsel. JUDGMENT Mr. Justice S. Ravindra Bhat (Open Court) 1. This writ petition challenges orders dated 26.03.2012 and 09.08.2012 of the Income Tax authorities under Section 148 of the Income Tax Act, 1961 ( the Act ) for reassessment for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Act for the A.Y. 2007-08, from which the reassessment arose, after considering in detail the nature and frequency of the sale and purchase of shares by the assessee concluded that the activity was not for the purposes of investment but in the nature of a business activity, and thus, chargeable as such. The fact that such income was considered to be STGC in previous years was considered insufficient by the Assessing Officer as it is a settled law that intimation under Section 143(1) are summary processing wherein there is no application of mind. The assessee appealed this order (Appeal No. 114/09-10). The CIT (Appeals) reversed the finding of the Assessing Officer and held that the income was to be treated at STCG and not as business income. 5. Despite this, the Revenue proceeded with the reopening of the assessment for the year 2005-06, based on the reasoning that an order under Section 143(1) which was the case for the A.Y. 2005-06 is only an intimation which does not involve an application of mind of the Assessing Officer. As new information had now come to light, given the nature and frequency of the scrips traded by the assessee, the Assessing Officer had reasons to b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reference in this case to material facts , which does not meet the standard under Section 148 as identified by the Supreme Court in Phool Chand (supra). In fact, the reasons provided also state that [a]s per the office note of the assessing officer for the A.Y. 2007-08, the issue of treating of STCG income on sale of share is needed to be assessed again. Therefore, this reassessment is not on the basis of new information or facts that have come to the fore now, but rather, a reappreciation or review of the facts that were provided along with the original return filed by the assesse. As the Supreme Court noted in CIT v. Kelvinator, (2010) 2 SCC 723 = 320 ITR 561 (SC): 6......................However, one needs to give a schematic interpretation to the words "reason to believe" failing which, we are afraid, Section 147 would give arbitrary powers to the Assessing Officer to re-open assessments on the basis of "mere change of opinion", which cannot be per se reason to re-open. We must also keep in mind the conceptual difference between power to review and power to re-assess. The Assessing Officer has no power to review; he has the power to re-assess. But reassessment has to be ba ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ermits the Revenue to assume that somehow the same rigorous standards which are applicable in the interpretation of the expression when it is applied to the reopening of an assessment earlier made under Section 143(3) cannot apply where only an intimation was issued earlier under Section 143(1). It would in effect place an assessee in whose case the return was processed under Section 143(1) in a more vulnerable position than an assessee in whose case there was a full-fledged scrutiny assessment made under Section 143(3). Whether the return is put to scrutiny or is accepted without demur is not a matter which is within the control of assessee; he has no choice in the matter. The other consequence, which is somewhat graver, would be that the entire rigorous procedure involved in reopening an assessment and the burden of proving valid reasons to believe could be circumvented by first accepting the return under Section 143(1) and thereafter issue notices to reopen the assessment. An interpretation which makes a distinction between the meaning and content of the expression "reason to believe" in cases where assessments were framed earlier under Section 143(3) and cases where mere intima ..... X X X X Extracts X X X X X X X X Extracts X X X X
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