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2015 (2) TMI 945 - AT - Income TaxReopening of assessment - Under assessment of income under section 143(3) with reference to the intimation under section 143(1) - Treating business income as short-term capital gains - Held that:- Merely because material lies embedded in the material or evidence produced by the assessee, which the Assessing Officer could have uncovered but did not uncover that is not a good ground to cancel the reassessment proceedings. The Assessing Officer could have found the truth, but he did not, does not preclude the Assessing Officer from exercising the power of re-assessment to bring to tax the escaped income. In the present case, as seen from the reasons recorded, there is a prima facie escapement of income. Hence, the Assessing Officer after recording the reasons, issued notice to the assessee under section 148 of the Act. We do not find any infirmity in the order of the lower authorities to reopen the assessment. - Decided in favour of revenue Source of income - Sale of shares - business income or capital gains - Held that:- In the light of the various parameters and the decision of the Andhra Pradesh High Court in the case of P. V. S. Raju v. Addl. CIT [2011 (7) TMI 818 - Andhra Pradesh High Court ] and on perusal of the statements incorporated by the Assessing Officer in the assessment order, we find that the assessees have made several transactions of purchase of shares during the relevant year under consideration, and if there high volume, frequency and regularity of the activity carried on by the assessees in a systematic manner, it would partake of the character of business activities carried on by the assessee in shares, and it cannot be said that the assessees have merely made investments in shares. - Decided in favour of assessee Diminution in the value of shares - assessee made an alternative claim that in the event of the Tribunal confirming the action of the Assessing Officer, reduction in market value of shares has to be allowed as deduction - Held that:- Claim of the assessee is appropriate. However, we make it clear that the shares are to be valued at market price or cost, whichever is less. Accordingly, while passing a consequential order, the Assessing Officer shall consider the same and decide the issue accordingly. - Decided partly in favour of assessee for statistical purposes. Expenses to be allowed under business - Held that:- AO is required to consider what are the expenses relating to the sale transactions to be allowed while computing the income of the assessee, if it is not allowed already. - Decided in favour of assessee for statistical purposes. Disallowance under section 40(a)(ia) - Held that:- This ssue is squarely covered by the order of the Special Bench of the Tribunal, Mumbai in the case of Bharati Shipyard Ltd. v. Deputy CIT [2011 (9) TMI 258 - ITAT MUMBAI] wherein held that the disallowance under section 40(a)(ia) of the Act cannot be made invoking retrospective amendment. - Decided in favour of assessee
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