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TMI Blog2015 (3) TMI 878X X X X Extracts X X X X X X X X Extracts X X X X ..... e Order No.19/Kol/127/08-09 dated 23-03-2009 passed by the ld.CIT, Central-III, Kolkata. Subsequently, concerned assessing officer i.e. DC/AC, Cir-8, Kolkata after getting approval by the ld.CIT-III, Kolkata filed a fresh appeal u/s. 253 vide ITA No.676/Kol/2012 before The ITAT,'B" Bench, Kolkata on 26-04-2012. 3. The department vide an application dated 26-04-2012 requested to condone the delay and has stated as under: "The last date for filing second appeal in the above mentioned case was 24-04-2012. But it could not be filed for the following reasons Date Reasons 24-04-2012 Additional CIT, Range-8, Kolkata submitted the proposal to CIT-III on 24.04.2012 CIT, Kolkata-III, Kolkata, approved the case for filing further appeal 25-04-2012 File received from CIT office and Prepared for paper books for filing appeal On account of unavoidable circumstances, filing of appeal was delayed for two days. You are kindly requested to condone the delay accordingly. 4. During the course of hearing the ld. Counsel for the assessee did not object if the delay in filing of the appeal is condoned and he also did not press for the cross objection stating therein as unde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d in law, the ld.CIT(A) has erred in annulling the reassessment proceedings holding that there was no reason for the Assessing Officer to believe that income has escaped assessment and that the notice u/s.148 of the Act was invalid. 2. That in the facts and circumstances of the case and in law, the ld.CIT(A) has erred in holding that the reasons for reopening the assessment were mere change of opinion without appreciating that the reason to belief was based on factual error which is distinctly different from change of opinion and therefore reopening of assessment was valid in view of the decision of the Hon'ble Apex Court in the case of CIT Vs. M/s. PVS Beedies (P) Ltd (1999) 237 ITR 13(SC). 3. That in the facts and circumstances of the case and in law, the ld.CIT(A) has erred in not appreciating the ratio of the decision of the Hon'ble Apex Court in the case of ITO vs. Laxmi Mewala Das (1976) 103 ITR 437(SC) , wherein it was opined that the assessee can not challenge the sufficiency of belief of Assessing Officer whenever the said belief is based on bonafide reasons. 8. The facts of the case in brief are that the assessee company had filed its return of income for the assessmen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed, the assessee carried the matter to the ld.CIT(A). Before him the assessee filed the written submission, which has been reproduced in the impugned order at page Nos. 3 to 6 and reads as under:- Ïn ground No.1,2,3,5 & 6 the appellant disputes the reopening of the assessment by invoking Sec. 147/148 of the I.T Act, 1961. That for the assessment year 2003-04, the original return was filed on 27,11.2003 showing the total income of Rs. 1,63,48,267/- and the case was proceeded u/s. 143(1) on 01.03.04. Later on, notice u/s 143(2) was issued on 01.03.2004 which was served on the assessee on 15.07.04. Later on a notice u/s. 142(1) was issued and served on 15.07.05. That for scrutiny assessment proceeding for assessment year 2003-04, requisitions on detail information in connection therewith was made a letter dated 23.12.05 and in column 17, the AO has made requisition as under:- Ön close perusal of Profit & Loss A/c vis-à-vis relevant schedules, it is seen that your company is mainly engaged in the business of trading in shares because corresponding turn over far exceeds the other receipts shown in the Profit & Loss A/c, it is further observed, that during the relevant ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... xplanation to sec.73 clearly applicable and the loss suffered by the assessee company in its share trading transaction inclusive of interest paid on borrowed monies attributable to that business was treated by the Tribunal as loss in speculation business. That the above principal laid down by the Calcutta High Court the facts of the case of the appellant is quite different as in the case of appellant's income from house property capital gains, interest and income from other sources much exceeds the loss incurred in share trading business. Therefore, the Explanation to sec.73 has no application on the facts of the case. Assessment has been reopened the reasons recorded as issued to appellant, it is found that the assessment has been reopened for a mere change of opinion as in the original assessment the AO has accepted after thorough enquiry that Explanation to Sec.73 has no application and for this reliance is placed on the decision of Full Bench Delhi High Court in the case of CIT V. Kelvinator of India 256 ITR p 1. It has been held that an order of assessment can be passed either in terms of sub section (1) of section 143 or sub section(3) of section 143, where a regular order o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al of balance sheet Rs. 23,24,47,318/- about 90% of the fund is lay out for investment, fixed deposit, property and loans and advances. Therefore, considering the totality of the fact Explanation to Sec 73 has no application and reopening of the assessment and the reasons recorded for reopening the assessment was that AO has wrongly allowed the share loss Rs. 1,12,61,578/- as business loss. Considering that the major income of the company from house property, interest, capital gain and other sources, therefore, the loss in share trading cannot be treated as speculation loss and the assessment framed u/s. 143(3)/147 is liable to be cancelled and/or quashed." 10. The ld.CIT(A) after considering the above submissions of the assessee has disposed of the appeal of the assessee by observing as under:- "4.1 I have gone through the assessment order, submissions of appellant and Assessing Officer. As far as the question of assumption that every issue in respect of income has been dealt with in a regular assessment order u/s. 143(3) and any other opinion on the same sets of fact will be a mere change of opinion, is concerned, there are contrary decisions of various High Courts, H'ble Gujar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ec.73 is not applicable in case of the appellant. However, in the reasons recorded by the Assessing Officer before issuing the notice u/s.148 of the I.T Act, Assessing Officer has stated that the principal business of appellant is not that of granting of loan but did not find any error in the submission of appellant that gross total income of appellant consisted mainly of income which is chargeable under the heads Interest on securities", Income from house property, "Capital Gains and Income from other sources. For invoking the Explanation of section 73 both the conditions i.e.(a) principal business of appellant is that of granting of loan and (b) gross total income of appellant consisted mainly of income which is chargeable under the heads Interest on securities, Income from house property, Capital Gains and Income from other sources should be absent. The reasons recorded for reopening show that the Assessing Officer did not find any error in the condition for non application of explanation to Sec 73 that gross total income of appellant consisted mainly of income which is chargeable under the heads Interest on securities, Income from house property, Capital Gains and Income from s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... order passed by the ld.CIT(A). 13. We have considered the rival submissions and the material available on record. In the present case, it is noticed that the AO during the course of original assessment proceedings specifically asked the assessee about the application of Explanation to sec. 73 of the Act and the assessee had categorically replied as to how it was a company whose gross total income consisted mainly of income, which was chargeable under the "Interest on Securities", "Income from house property", "Capital gains" and "income from other sources". The assessee has stated that its principal business was granting of loan. Thereafter, the AO passed the assessment order u/s. 143(3) by considering the material on record and formed an opinion that Explanation to Sec 73 was not applicable in the case of the assessee. In the instant case, the AO has recorded the reasons before issuing of notice u/s. 148 of the Act and stated that the principal business of the assessee was not that of granting of loan but did not find any error in the submissions of the assessee that gross total income of assessee consisted mainly of income which is chargeable under the heads "Interest on securi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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