TMI Blog2014 (5) TMI 225X X X X Extracts X X X X X X X X Extracts X X X X ..... ued cannot be considered while examining the validity of such notice and the same essentially and materially requires to be dealt on the basis of recorded reasons - there was no failure of the assessee in furnishing the information at the time of original assessment, where the transactions were treated in the nature of capital gain after making the detailed inquiry - in absence of any failure of disclosure of fully and truly of all the material facts on the part of the assesee, issuance of notice of reopening u/s 148 of the Act is not sustainable – Decided in favour of Assessee. - SPECIAL CIVIL APPLICATION NO. 763 of 2014 - - - Dated:- 11-2-2014 - MR. AKIL KURESHI AND MS SONIA GOKANI, JJ. Hardik V. Vora for the Petitioner Sudhir M. Mehta for the Respondent ORDER Ms. Sonia Gokani, J. 1. Present petition is preferred challenging the notice under section 148 dated 13.2.2013 in the following factual background: 1.1 Assessee is the Director of M/s. S. Vinodkumar Diamonds Pvt. Ltd., engaged in the business of diamond. Interest is earned by the assessee from the income under the head income from other sources and capital gain from sale of shares. For the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... being accepted as under: Computation of Income The taxable income of the assessee for the assessment year 2006-07 is being computed as follows:- Total Taxable Income Rs. 1,51,31,103 4. On 13.2.2013 notice of reopening under section 148 of the Act for the Assessment Year 2006-07 has been issued under section 148 of the Act by the Assessing Officer inter alia stating that he has reason to believe that income chargeable to tax for the Assessment Year 2006-07 has escaped assessment within the meaning of section 147. The petitioner called for supply of detailed reasons recorded by the Assessing Officer and vide communication dated 1.8.2013 the Assessing Officer supplied the reasons for reopening. 5. The petitioner responded to such notice by furnishing his reply dated 28.10.2013, strongly objecting to such reopening by urging that his case was taken up in scrutiny assessment in the original assessment and the very issue had been examined by the Assessing Officer in the original assessment proceedings. He, therefore, had urged that any notice of reopening beyond the period of four years from the end of the relevant ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and truly disclosed all the materials. He has further urged that the petitioner had made various transactions in the purchase and sale of the shares which clearly indicate that his was a business activity, and therefore, his claim of eligibility for long-term capital gain was wrongly allowed as deduction under section 10(38) of the Act when in fact, shares held by him was a part of his business stock, as his main activity was of share trading. Such disclosure, if would have come on the record, clearly there was no question of allowing the benefit of long-term capital gain in the original assessment. 10. Upon hearing both the sides, and examination of the material on record, it could be noticed, at the outset, that notice of reopening is beyond the period of four years, and therefore, it is incumbent upon the Assessing Officer to have the reasonable belief that there was failure on the part of the assessee to fully and truly disclose all material facts necessary for the purpose of assessment. 11. Beyond the period of four years, if, any notice of reopening of assessment is issued in absence of any failure on the part of the assessee to disclose fully and truly all material fac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t in the case of Sun Pharmaceutical Industries Ltd. v. Dy. CIT reported in [2013] 353 ITR 450 was examining the validity of notice of reassessment issued after the expiry of period of four years, where it held that the notice of reopening of an assessment must be adjudged on the basis of the reasons recorded while issuing the notice. If a new ground occurs to the Assessing Officer after he has recorded the reasons for reopening the assessment and issue notice for this purpose, the same cannot be ground to support the notice of reopening. Reasons other than those on the basis of which notice was issued cannot be considered while examining the validity of such notice and the same essentially and materially requires to be dealt on the basis of recorded reasons. 15. In the case of Gujarat Lease Financing Ltd. v. Dy. CIT Gujarat Lease Financing Limited vs. Deputy Commissioner of Income Tax Circle 4, Ahmedabad decided in Special Civil Application No. 3048 of 2013 on 24.6.2013 has elaborately discussed all judicial pronouncement on the issue of reopening of assessment beyond the period of four years. It is well settled position of law that the assessee is required to disclose fully and ..... X X X X Extracts X X X X X X X X Extracts X X X X
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