TMI Blog2013 (6) TMI 173X X X X Extracts X X X X X X X X Extracts X X X X ..... n the assessment order is not required to give detailed reasons and once it is clear that there was application of mind by an enquiry, the respondent, merely because he entertains a different opinion in the matter, cannot invoke his powers u/s. 263. It is therefore not correct to say that there was no proper enquiry by the AO. The decision in P.V.S Raju (2011 (7) TMI 818 - Andhra Pradesh High Court) does not apply to the present case because in the said case, the assessee had accepted that it was a trader in the earlier years but in the assessment years 2005-06 and 2006-07, in view of the amendment to S.111-A brought into effect from 01.04.2005, the assessees sought to change their stand contending that they were investors in order to claim the benefit of S.111-A. It was also found as a fact that all the shares were held by the assessee for less than two months and some shares were sold even before the purchase indicating the mind of the assessee that they were not intending to hold the same as investment. On those facts it was rightly held that the assessee was only doing trading activity and was not an investor. Moreover it was not a case u/s.263 to which totally different par ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... For the Respondent : Sri B. Narasimha Sarma JUDGMENT Per Hon ble Sri Justice M. S. Ramachandra Rao. These two appeals are filed under Section 260A of the Income Tax Act, 1961 (for short the Act ) by M/s Spectra shares Scripts Private Limited, Hyderabad (for short the assessee ) challenging the order dated 05-11-2011 in I.T.A. No.748/HYD/2011 and the order dated 16-03-2012 in M.A.No.193/HYD/2011 in the said I.T.A of the Income Tax Appellate Tribunal A Bench, Hyderabad (for short the Tribunal ) for the assessment year 2006-07. 2. The assessee is a private limited company incorporated in the year 1963. It is registered as Non-Banking Finance Company (NBFC) with the Reserve Bank of India . Initially, it was a franchisee of M/s Coca-Cola Company and was engaged in the Bottling business. In December, 1997, the business of the assessee was taken over by the said Company as a going concern and the assessee received Rs.56.23 Crores as consideration/compensation. This amount received by the assessee was invested by it in stages in shares of Companies quoted on the Stock Exchange and in units of Mutual Funds. The assessee also owns a Kalyanamandapam at Vijayawada from whi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... -01-2010, the assessee clarified that during the year 2005-06 relevant to the A.Y 2006-07, the assessee company had got allotment of 660 equity shares of M/s. ITC Limited against the existing holding of 5500 equity shares of M/s. ITC Hotels pursuant to a scheme of amalgamation of M/s. ITC Hotels with M/s. ITC Limited; that the newly allotted 660 equity shares of Rs.10/- each of M/s. ITC Limited, were received in demat form during May, 2005 and further they were sub divided into 6600 equity shares of Re.1/- each during September, 2005; that the assessee was holding the original shares of M/s. ITC Hotels for more than a year prior to the year relevant to the A.Y 2006-07; that the cost and date of acquisition of original shares of M/s. ITC Hotels would be the cost and date of the newly acquired merger shares of M/s. ITC Limited; and that since the holding of the original shares of M/s. ITC Hotels was more than a year, the capital gain arising on the sale of shares of M/s. ITC Limited would be long term in nature and therefore the claim of the assessee of LTCG of Rs.8,16,084/- is correct. 9. The respondent did not proceed further and it appeared that he was satisfied with the reply o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) That the assessee is an investor and not a trader and the income from the sale of shares is chargeable as Capital Gains and not as Business Income . 12. By order dated 31-03-2011, the respondent held that the order of the Assessing Officer passed on 16-12-2008 is erroneous and prejudicial to the interest of the Revenue; that the assessee is holding the shares and Mutual Funds as Stock-in-Trade and not as Investment and Profit from the sale of the same is chargeable as Income from Business and not as Capital Gains ; that this inference has to be drawn on the basis of information available before the Assessing Officer and in Assessment Records; that the Assessing Officer has not examined the issue in detail and erroneously accepted the claim of the assessee on LTCG; issuing a modification to the notice under Sec.263 of the Act based on the same record before conclusion of the proceedings under Sec.263 would not amount to change of opinion and is well within the powers under Sec.263 (1) and as per the time limit provided under Sec.263 (2) of the Act; that the application of mind by the Assessing Officer and coming to a wrong conclusion is not a bar for exercising jurisdi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ness and such board resolutions of closely held Companies are intended to cover up its true activity i.e. trading in shares; the fact that the assessee had an elaborate administrative set up with considerable administrative expenditure proves that it was indulging in trading activity and not investments; that the very name of the assessee i.e., M/s Spectra shares and Scrips Private Limited indicates its business activity of dealing in shares and Scrips; that the annual report for the year 2005-06 shows the income of the Company in the Profit and Loss account drawn only for an entity carrying on business as it shows net profit before depreciation; the remarks in the Director's Report for 2005-06 that during the year, the market was up-beat and the Directors were hopeful of good results supports this conclusion; that merely because the assessee is registered as an NBFC with RBI would not mean that it cannot do trading activity; that the assessee is using its registration as NBFC as a camouflage for its trading activity; one of the objects in the Memorandum and Articles of Association of the assessee states the company will raise funds to acquire or hold, sell, buy or otherwise deal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fit case for the Commissioner to exercise his revisional jurisdiction under Sec.263 of the Act. (b) that the assessee's contention that the Assessing Officer had taken a possible view in accepting its return with reference to head of income and, therefore, the Commissioner was not justified in revising it under Sec.263, is not tenable as there was a failure on the part of the Assessing Officer in making enquiries and to examine the claim of the assessee rendering his order erroneous and prejudicial to the interest of the Revenue. Therefore, a view taken by the Assessing Officer without examination and evaluation cannot be presumed to be a permissible view or a possible view; that the order of the Assessing Officer is not supported by judicial strength and such order if allowed to stand would have disastrous consequences making honest tax payer to pay more than others to compensate for the loss caused by such erroneous orders; that the Assessment Order is passed on an incorrect assumption of fact/incorrect application of law/without application of mind/without making requisite enquiries and will satisfy the requirement under Sec.263; that the plea of the assessee that consistenc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the cases of Malabar Industrial Co. Ltd. Vs. CIT 243 ITR 83 (SC); CIT Vs. Max India 295 ITR 282 (SC). II. If the Assessing Officer has issued show cause notices with respect to an issue and the assessee has replied thereto fully, Commissioner is not entitled to interfere as every decision or view that the Assessing Officer takes is not to be reflected in the Assessment Order and an item finds mention only if he does not agree with the assessee's contention. Hence, the assessment order cannot be said to be erroneous, and relied on the decisions in the cases of CIT Vs. Vikas Polymers 194 Taxman 57 (Del); CIT Vs. Sunbeam Auto Ltd., 332 ITR 167 (Del); and CIT Vs. Gabriel India Ltd. 203 ITR 108 (Bom). III. The Commissioner cannot under Sec.263 interfere on an issue which has been accepted by the Revenue for a number of years. In the present case, as the Revenue has accepted the Appellant to be an investor whose income is chargeable under the head Capital Gains for a number of years, the Assessment order of the Assessment year 2006-07 cannot be said to be erroneous if the same view has been accepted by the Assessing Officer, and relied on a decision in the case CIT Vs. Escort Ltd ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ns are Long Term Capital Gains and less than 1% is Short Term Capital Gains ; g) Almost 40% of the investments are in mutual funds; h) The appellant has never dealt in futures, derivates and options; i) All the transactions of purchase and sale were delivery based; j) The appellant has never claimed set off of the losses arising from sale of investments against other incomes; k) The frequency of the transaction in the current year is on account of the change proposed in section 10(38) and 115JB by the Finance Bill, 2006 presented on 28 th February, 2006, which provided that w.e.f. A.Y. 2007-08 (i.e. transactions from 1-4-2006), Long Term Capital Gains though exempt for normal computation would be chargeable to tax under sec.115JB of the Act for book profit tax. The appellant has entered into transactions in the month of March, 2006 to sell the present holding and to repurchase the same to get High cost of the shares which would save the MAT payable by the assessee in the subsequent year. Out of the total transaction of Rs.25,97,34,057/- (including Rs.2.66 Crores on sale of Hindustan Coca Cola Beverage P. Ltd) in shares, the appellant has entered into Rs.13,58,64,244/- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ly revised under Sec.263 by elaborative consideration by supporting material furnished by the assessee and relied upon the reported decisions in the cases of Raja Bahadur's (Supra); New Jahangir Vakil Mills Co.Ltd., Vs. CIT (1963) 49 ITR Pg.137 (SC); and Malabar Industrial Co (Supra). iii) Buying and Selling of shares/Units with high magnitudes and frequency throughout the year by systematic and regular activity is a trading activity and not an investment as claimed by the assessee and the profits are exigible to tax under the head of business profits and relied on the decisions in the cases of G. Venkataswami Naidu Co. Vs. CIT AIR 1959 SC Pg.359; Raja Bahadur's Case (Supra); New Jahangir Vakil Mill's Case (Supra); Dalhousie Investment Trust Co. Ltd., Vs. CIT (1968) 68 ITR Pg.486 (SC); and P.V. S. Raju Vs. Additional CIT (2012) 340 ITR Pg.75(AP). iv) The ITAT being the final fact finding authority, its findings are supported by facts on record and contain elaborate consideration of each and every submission of the assessee and reasoning. Hence, no substantial question of law has been made out by the assessee as required under Sec.260A of the act and the appeals filed by t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... such enquiry, order is erroneous and prejudicial to revenue and Commissioner of Income Tax need not prove that it is erroneous and he can revise it under Sec.263 on the decisions in the cases of Rampyari Devi Saraogi Vs. CIT (SC) 67 ITR 84; Malabar Industrial Co. Ltd Vs. CIT (Supra); Swarup Vegetable Products Industries Ltd., Vs. CIT (All) 187 ITR 421; Gee Vee Enterprises Vs. Addl.CIT Ors., (Del) 99 ITR 375 ; Rajlakshmi Mills Ltd. Vs. ITO (ITAT, SB-Chennai) 121 ITD 343; and SRM Systems Software Pvt. Ltd., Vs. ACIT - 22. We have considered the submissions of the parties. 23. Sec.263 of the Act states as follows: 263 . Revision of orders prejudicial to revenue.- (1) The Commissioner may call for and examine the record of any proceeding under this Act, and if he considers that any order passed therein by the [Assessing Officer] is erroneous in so far as it is prejudicial to the interests of the revenue, he may, after giving the assessee an opportunity of being heard and after making or causing to be made such inquiry as he deems necessary, pass such order thereon as the circumstances of the case justify, including an order enhancing or modifying the assessment, or canceli ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y the Commissioner suo motu under it, is the order of the Income Tax Officer is erroneous in so far as it is prejudicial to the interests of the Revenue. The Commissioner has to be satisfied of twin conditions, namely, (i) the order of the Assessing Officer sought to be revised is erroneous; and (ii) it is prejudicial to the interests of the Revenue. If one of them is absent - if the order of the Income Tax Officer is erroneous but is not prejudicial to the Revenue or if it is not erroneous but it is prejudicial to the Revenue - recourse cannot be had to Sec.263 (1) of the Act. It also held at pg-88 as follows: The phrase prejudicial to the interests of the Revenue has to be read in conjunction with an erroneous order passed by the Assessing Officer. Every loss of revenue as a consequence of an order of the Assessing Officer cannot be treated as prejudicial to the interests of the Revenue. For example, when an Income-tax Officer adopted one of the courses permissible in law and it has resulted in loss of Revenue: or where two views are possible and the Income-tax Officer has taken one view with which the Commissioner does not agree, it cannot be treated as an erroneous order p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t, the same cannot be branded as erroneous by the Commissioner simply because, according to him, the order should have been written differently or more elaborately; that the section does not visualize the substitution of the judgment of the Commissioner for that of the Income Tax Officer, who passed the order unless the decision is not in accordance with the law; that to invoke suo motu revisional powers to reopen a concluded assessment under Sec.263, the Commissioner must give reasons; that a bare reiteration by him that the order of the Income Tax Officer is erroneous in so far as it is prejudicial to the interests of the Revenue, will not suffice; that the reasons must be such as to show that the enhancement or modification of the assessment or cancellation of the assessment or directions issued for a fresh assessment were called for, and must irresistibly lead to the conclusion that the order of the Income Tax Officer was not only erroneous but was prejudicial to the interests of the Revenue. Thus, while the Income Tax Officer is not called upon to write an elaborate judgment giving detailed reasons in respect of each and every disallowance, deduction, etc., it is incumbent u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... material before the Commissioner to vary that opinion and ask for fresh inquiry. 28. In Gabriel India Ltd. (Supra), the Bombay High Court held that a consideration of the Commissioner as to whether an order is erroneous in so far as it is prejudicial to the interests of the Revenue, must be based on materials on the record of the proceedings called for by him. If there are no materials on record on the basis of which it can be said that the Commissioner acting in a reasonable manner could have come to such a conclusion, the very initiation of proceedings by him will be illegal and without jurisdiction. It held that the Commissioner cannot initiate proceedings with a view to start fishing and roving inquiries in matters or orders which are already concluded; that the department cannot be permitted to begin fresh litigation because of new views they entertain on facts or new versions which they present as to what should be the inference or proper inference either of the facts disclosed or the weight of the circumstance; that if this is permitted, litigation would have no end except when legal ingenuity is exhausted; that to do so is to divide one argument into two and multiply the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t year; that on the face of the record, the orders were pre-judicial to the interest of the Revenue; and no prejudice was caused to the assessee on account of failure of the Commissioner to indicate the results of the enquiry made by him, as she would have a full opportunity for showing to the income tax officer whether he had jurisdiction or not and whether the income tax assessed in the assessment years which were originally passed were correct or not 31. From the above decisions, the following principles as to exercise of jurisdiction by the Commissioner u/s.263 of the Act can be culled out:- a) The Commissioner has to be satisfied of twin conditions, namely, (i) the order of the Assessing Officer sought to be revised is erroneous; and (ii) it is prejudicial to the interests of the Revenue. If one of them is absent - if the order of the Income Tax Officer is erroneous but is not prejudicial to the Revenue or if it is not erroneous but it is prejudicial to the Revenue - recourse cannot be had to Sec.263 (1) of the Act. b) Every loss of revenue as a consequence of an order of the Assessing Officer cannot be treated as prejudicial to the interests of the Revenue. For example ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion to the Commissioner to pass orders under Sec.263 merely because he has a different opinion in the matter; that it is only in cases of lack of inquiry that such a course of action would be open; that an assessment order made by the Income Tax Officer cannot be branded as erroneous by the Commissioner simply because, according to him, the order should have been written more elaborately; there must be some prima facie material on record to show that the tax which was lawfully exigible has not been imposed or that by the application of the relevant statute on an incorrect or incomplete interpretation, a lesser tax than what was just, has been imposed. g) The power of the Commissioner under Sec.263 (1) is not limited only to the material which was available before the Assessing Officer and, in order to protect the interests of the Revenue, the Commissioner is entitled to examine any other records which are available at the time of examination by him and to take into consideration even those events which arose subsequent to the order of assessment. 32. In the light of the above principles, we have to see whether the respondent has rightly exercised revisional powers under Sec.263 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e assessment on the ground that the Assessing Officer did not make an elaborate discussion in that regard. 35. Admittedly, the assessee had given full details of these transactions in its letter/reply dated 29.08.2008 to the Assessing Officers letter dated 04.08.2008, giving details of dates of acquisition of the shares in question and dates of sale of shares. As such this material was available before the Assessing Officer. In its reply dt. 09-03-2011 to the revised show cause notice issued by the respondent also, the appellant had enclosed the list of transactions in relation to the scrips of M/s.Amara Raja Battery, M/s.Reliance Industries, M/s.Gujarat NRE Coke and M/s.Andhra Sugars Limited contending that having purchased the shares of the said companies, it had retained them for periods ranging from 1 year 2 months to 3 years 6 months before selling them. The counsel for the appellants has taken us through the said statements/list of transactions. 36. On a perusal of the list of transactions, we notice that: a) In relation to M/s.Amara Raja Battery shares, 51 transactions of purchase of the said shares took place between 05-06-2003 and 28-03-2005. They were retained by th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... every transaction entered into by it indicated that its dealing in shares was only by way of investment (evidenced by retention of shares for at least 11 months up to 5 years) attracting capital gains tax, and the assumption by the respondent that the shares are held as stock in trade and its business activity is buying and selling of shares, is incorrect. 37. But both the respondent (at Para 5.4 of his order) and the Tribunal (at Para 45 of its order) do not take note of the dates of acquisition of the shares which are sold in March, 2006 and presume that the assessee was purchasing and selling shares in the same year. Both the respondent and the Tribunal refer only to the purchase and sale by the assessee of its shares in M/s. Andhra Sugars Limited and conclude (at Para 5.4 and Para 45 of their respective orders) that similar pattern is found in respect of several other scrips also without considering the details of the date of purchase and sale of the other scrips. This shocks our judicial conscience. 38. Both the respondent and the Tribunal state (at Para 5.4 and Para 45 of their respective orders) that on 31.01.2006, the assessee bought 15500 shares and sold 1500 shares ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng - the profit earned from buying and selling of shares of Rs.19,18,77,121/-(consisting of LTCG of Rs.18,98,06,611 + STCG of Rs.20,70,510/-) with the dividend income of Rs.47,19,169/-. He therefore comes to a conclusion that the dividend income is meager compared to profit on sale of shares. But the figure of Rs.18,98,06,611/- of LTCG taken by the respondent includes the figure of Rs.5,41,58,133/- which is LTCG from sale of Mutual Fund units. To be fair to the assessee, the respondent should have computed the dividend income from the companies with the LTCG from the sale of quoted shares of Rs.13,56,48,478/- only and if he intended to include LTCG from sale of Mutual Funds units also, he should have taken into account the income from Mutual Funds and added it to the dividend income as indicated in Para 2 of his order. When it comes to cost of shares for purpose of computation of Capital Gains , the respondent takes the cost of the shares at the time of their purchase, but he refuses to look at the date of purchase (to decide whether they are LTCG or STCG) and holds that the purchase and sale is in the same year. This indicates a very disturbing and dishonest intention on the part ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ld all the units at Rs.13.23 per unit and collected an amount of Rs.5,90,55,207.75/-, as well as an incentive of Rs.23,76,778/- in respect of the transaction. In all the assessee received back Rs.7,96,44,847/- as against the initial payment of Rs.8,00,00,000/-. In its return, the assessee claimed the dividend received of Rs.1,82,12,862.80/- as exempt from tax u/s.10(33) of the Act, and also claimed a set off of Rs.2,09,44,793/- as loss incurred on the sale of the units. The I.T department disallowed the set off claimed. However, the Appellate Tribunal, on appeal, deleted the disallowance by holding that the assessee was entitled to set off the loss from the transactions in question against its other income chargeable to tax. This view was affirmed by the High Court and by the Supreme Court. The Supreme Court held that it was established that there was a sale and the assessee received dividend and that dividend was tax free. The use by the assessee of the provisions of S.10(33) of the Act cannot be said to be abuse of law ; even assuming that the transaction was preplanned, there was nothing to impeach the genuineness of the transaction; that the ruling of the Supreme Court in Mc. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ence of the power to purchase and sell shares in the memorandum of association is not decisive of the nature of the transaction; d) The substantial nature of transactions, the manner of maintaining books of account, the magnitude of purchases and sales and the ratio between purchases and sales and the holding would furnish a good guide to determine the nature of transactions; e) Ordinarily the purchase and sale of shares with the motive of earning a profit, would result in the transaction being in the nature of trade/ adventure in the nature of trade; but where the object of the investment in shares of a company is to derive income by way of dividend etc., then, the profits accruing by change in such investment(by sale of shares) will yield capital gain and not revenue receipt; f) One has to verify as to how the shares were valued/ held in the books of account i.e, whether they were valued as stock in trade at the end of the financial year for the purpose of arriving at business income or held as investment in capital assets; g) Regulation 18 of the SEBI Regulations enjoying upon every FII to keep and maintain books of account containing true and fair accounts relating to r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Tax Act, 1922, the question as to what is Adventure in the nature of trade was considered by the Supreme Court. The appellant firm in the said case acting as managing agents purchased four contiguous plots of land adjacent to the place where the mills of the company managed by it were situated. As long as the appellant firm was in possession of the lands it made no effort to cultivate them or erect any super structure on them but allowed them to remain unutilized except for the rent received from the house which existed on one of the plots. Subsequently it sold the lands to the company six years later. The question was whether the sum received by the appellant firm which is in excess of the purchase price was assessable to income tax. The Income Tax Appellate Tribunal rejected the contentions of the appellant firm that the properties were bought as an investment and that the plots were acquired for building tenements for the labourers of the mills as well as the alternative contentions that the managed company desired to purchase the plots on account of an award of an industrial tribunal recommending that the company should provide tenements for its labourers and held that since ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... with trade or business? Are the transactions of purchase and sale repeated? In regard to the purchase of the commodity and its subsequent possession by the purchaser, does the element of pride of possession come into the picture? A person may purchase a piece of art, hold it for some time and if a profitable offer is received may sell it. During the time that the purchaser had its possession he may be able to claim pride of possession and aesthetic satisfaction; and if such a claim is upheld that would be a factor against the contention that the transaction is in the nature of trade. These and other considerations are set out and discussed in judicial decisions which deal with the character of transactions alleged to be in the nature of trade. In considering these decisions it would be necessary to remember that they do not purport to lay down any general or universal test. The presence of all the relevant circumstances mentioned in any of them may help the court to draw a similar inference; but it is not a matter of merely counting the number of facts and circumstances pro and con; what is important to consider is their distinctive character. In each case, it is the total effect o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or A.Y 2008-09 i.e., more than Rs.8,00,00,000/-; that 99 % of the total gains are LTCG and less than 1 % is STCG; that 40% of investments are in mutual funds; the assessee had never dealt in futures, derivatives and options; that all the transactions of purchase and sale were delivery based except the one solitary instance of Reliance Industries Limited explained above; that the assessee was registered as NBFC with the R.B.I; and the assessee had never claimed set off of the losses arising from sale of investments against other incomes. Merely because of large frequency and volume of transactions, a conclusion that an assessee is a trader cannot be drawn without considering the period of holding of those shares by the assessee. A trader in shares normally holds them for a short time only; is unlikely to invest in unquoted shares or in mutual funds (which the assessee did ); and is likely to borrow funds for it's trading activity. The fact that the assessee is monitoring the stock markets and buying at dips and selling at highs with an intention to make profit from these transactions is not conclusive of the fact that the assessee is a trader because even an investor would not buy o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... whose income is chargeable under the head capital gains for a number of years from 1999-2000, particularly for the assessment years 2005-06 and 2007-08 i.e. before and after the assessment year 2006-07 which is the subject matter of these proceedings. The assessee has filed assessment order for 2004-05, 2005-06, 2007-08 from which it is clear that the department had accepted that the assessee is only investing in shares and mutual funds and his profits from sale of shares or mutual fund units should be taxed under the head capital gains . It is admitted by the Revenue that only after the impugned order of the respondent dated 31-03-2011, the assessment order for 2005-06 and 2007-08 were reopened. In Raja Bahadur Visheshwara Singh (Supra) and in New Jahangir Vakil Mills Co.Ltd., (Supra), the Supreme Court no doubt held that there is no such thing as res judicata in Income Tax matters and the decision given by an Income Tax Officer for one assessment year cannot effect or bind his decision for another year and that generally, the doctrine of res judicata or estoppel by record does not apply to such decisions. But in Radhasoami Satsang (Supra), the Supreme Court held at page-329 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Assessing Officer in the assessment order for the assessment year 2006-07 takes the same view by terming it erroneous as the respondent is able to demonstrate a change in circumstances in the said assessment year. 51. We are also of the opinion that the Tribunal could not have upheld the action of the respondent under Sec.263 on a ground different from what has been mentioned in the notice under Sec.263 or the order of the respondent under Sec.263. In the present case, the respondent had held that the Assessing Officer had applied his mind but has come to an erroneous conclusion at para-5.1 of his order dated 31-03-2011. The Tribunal at para-34 of its order dated 05-08-2011 held that the assessment order was passed without proper examination or inquiry or verification or objective consideration of the claim made by the assessee and hence, the Commissioner was justified in revising the order. This is clearly impermissible in view of the decisions in Jagadhri Electricity Supply and Industrial Co. (Supra) and in Howrah Flour Mills Ltd. (Supra). 52. In Jagadhri Electricity Supply and Industrial Co. (Supra), the High Court of Punjab and Haryana held that in an appeal against an ord ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er dated 29.08.2008 submitted by the assessee to the Assessing Officer, which shows that the units redeemed in March, 2006 were purchased between 15.10.2003 and 14.05.2004 and not in the same year. This was also pointed out in the petition MA No.193/HYD/2011 by the assessee u/s.254 of the Act but was ignored by the Tribunal totally. 57. The Tribunal at Para 44 of its order made observations regarding the unquoted shares of M/s. Hindusthan Coca-cola Beverage Limited and those of the subsidiary US company. The assessee in Para 17 to 20 of its written submissions dealt with the same but these submissions have been ignored totally by the Tribunal. 58. In the same paragraph, the Tribunal reproduced the dates of sale of shares of M/s. Andhra Sugars Limited. The assessee in its written submissions had stated at Para 21 that the error of the CIT (that the assessee was buying and selling shares of the said company on the same day) as he had taken data from the demat account of the assessee; that the transaction dates recorded in that account were different from the actual dates of the transaction; in the demat account, the dates of transactions will not reflect the correct date of execu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt proceedings and was replied by the assessee. Obviously, he was satisfied with the explanation of the assessee and therefore did not think that the issue needs to be specifically mentioned. It is settled law that the Assessing Officer in the assessment order is not required to give detailed reasons and once it is clear that there was application of mind by an enquiry, the respondent, merely because he entertains a different opinion in the matter, cannot invoke his powers u/s. 263 of the Act. It is therefore not correct to say that there was no proper enquiry by the assessing officer. 60. The decision in P.V.S Raju (Supra) does not apply to the present case because in the said case, the assessee had accepted that it was a trader in the earlier years (this is apparent from the order of the I.T.A.T dated 15.10.2010 in I.T.A No.1101/HYD/09 impugned therein which has been placed before us by the Counsel for the assessee) but in the assessment years 2005-06 and 2006-07 (in view of the amendment to S.111-A brought into effect from 01.04.2005), the assessees sought to change their stand contending that they were investors in order to claim the benefit of S.111-A. It was also found as a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... court will not interfere. It is necessary, however, that every fact for and against the asseseee must have been considered with due care and the Tribunal must have given its finding in a manner which would clearly indicate what were the questions which arose for determination, what was the evidence pro and contra in regard to each one of them and what were the findings reached on the evidence on record before it. The conclusions reached by the Tribunal should not be coloured by any irrelevant considerations or matters of prejudice and if there are any circumstances which required to be explained by the assessee, the assessee should be given an opportunity of doing so. On no account whatever should the Tribunal base its findings on suspicions, conjectures or surmises nor should it act on no evidence at all or on improper rejection of material and relevant evidence or partly on evidence and partly on suspicions, conjectures or surmises and if it does anything of the sort, it's findings, even though on questions of fact, will be liable to be set aside by this Court. . 63. For the above reasons, the order 31.3.2011 of the respondent and the order dated 5.8.2011 in ITTA.No.512 of 2011 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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