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2015 (4) TMI 866 - ITAT DELHI

2015 (4) TMI 866 - ITAT DELHI - TMI - Reopening of assessment - Change in Opinion based on same set of facts - Held that:- The learned CIT(A) upheld the reassessment proceedings merely on the reasoning that the Assessing Officer had not assigned any reason for accepting the capital gains made out of sale of shares as short term capital gains. This, in our view, cannot be a valid reason. If a claim made by the assesee in the return is not rejected, it stands allowed. If such a claim is scrutinize .....

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Further, there was no reference to any fresh material suggesting the escapement of income. In other words, the Assessing Officer was merely guided by change of opinion based on the same set of facts available on record at the time of framing the original assessment. It is settled proposition of law that even after the amendment in the provisions of Section 147/148 of the Act w.e.f. 01.04.1989 mere change of opinion cannot give rise to the valid reassessment proceedings. We are fortified b .....

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. G.C. Gupta And Sh. Inturi Rama Rao JJ For the Appellant : S/sh. KVSR Krishna, CA & Satish Sachdeva, CA For the Respondent : Sh. Vikram Sahay, Sr. DR ORDER Per Inturi Rama Rao, A.M.: C.O. NO. 206/Del/2011 in ITA No. 2726/De/2011 The cross objections are filed by the assessee company challenging the reopening of the assessment already made under Section 143(3) of the Income Tax Act, 1961 (hereinafter referred to as the Act ). Since the cross objection goes to the root of the matter, we deem .....

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ct, the assessment was completed 143(3) by the Assistant Commissioner of Income Tax, Circle-15(1), New Delhi. Subsequently, the Assessing Officer issued notice under Section 148 dated 30th March, 2010 proposing to reassess the short term capital gains of ₹ 3,06,37,449/- as business income. During the course of reassessment proceedings, the assessee company contended that the notice under Section 148 of the Act was not valid, inasmuch as, the very same issue was considered by the Assessing .....

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s income but as a short term capital gains only. Since the assessee company is aggrieved by that part of the order pertaining to the reopening of the assessment, the present cross objection has been filed, raising the following grounds: 1. That the learned CIT (A)-XVIII has erred is holding that the provisions of section 147/148 of the Income Tax Act, 1961 read with explanation (2) thereof are applicable in the case. 2. That the learned CIT (A)-XVIII further erred in holding that reasons recorde .....

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/ - has escaped assessment by virtue of either omission or failure on the part of the assessee to disclose truly all material facts necessary for assessment. 3. That the learned CIT(A)-XVIII has erred in holding that it is not a case of change of opinion where no new facts or material has been brought on records in the reassessment proceedings. It is contended that the audit objection without mentioning any fact(s) cannot be basis of reopening of assessment under section 147/ 148 of the Income T .....

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ssee company that there is no fresh tangible material brought on record by the Assessing Officer suggesting the escapement of chargeable income. It is nothing but change of opinion on the same set of facts as are available at the time of framing the original assessment. In this connection, the learned Authorized Representative has placed reliance on the decision of Hon ble Jurisdictional High Court in the case of CIT Vs. Usha International Ltd., 348 ITR 485. 5. Learned Departmental Representativ .....

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the Assessing Officer at the time of original assessment. The Assessing Officer had raised a specific query, as to why the short term capital gains should not be treated as business income. After consideration of reply filed by the assessee, the Assessing Officer accepted the claim. Further, it is trite law that in order to determine whether there are reasons to believe that the income got escaped the assessment, one has to look at the reasons recorded by the Assessing Officer before the issuanc .....

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entire sale/purchase of shares had been classified as investment. Since the only business activity of the assessee was investment for earning capital gains from the market , the sale/purchase of shares by the assessee was actually accretion/depletion in its stock-in-trade (camouflaged by the assessee as investments) and consequently any proceeds out of sale/purchase of these shares was business income of the assessee. Hon ble Supreme Court had held in the case of G. Venkata Swami Naidu & Co .....

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. The shares have been purchased in very large quantities, which eliminate the possibility of investment for personal use possession or enjoyment. Further, the share purchase/sale transactions are repetitive in nature in the case of assessee. In view of the above facts, I have reasons to believe that income of ₹ 3,06,37,449/- has escaped assessment by virtue of either omission or failure on the part of the assessee to disclose fully or truly all material facts necessary for assessment in t .....

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called the reasons, but only conclusions. 8. The learned CIT(A) upheld the reassessment proceedings merely on the reasoning that the Assessing Officer had not assigned any reason for accepting the capital gains made out of sale of shares as short term capital gains. This, in our view, cannot be a valid reason. If a claim made by the assesee in the return is not rejected, it stands allowed. If such a claim is scrutinized by the Assessing Officer during assessment, it means he was convinced about .....

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Act are special powers and peculiar in nature where a quasi-judicial order previously passed after full hearing and which has otherwise become final is subject to reopening on certain grounds. Ordinarily, a judicial or quasi-judicial order is subject to appeal, revision or even review if statute so permits but not liable to be reopened by the same authority. Such powers are vested by the Legislature presumably in view of the highly complex nature of assessment proceedings involving a large numb .....

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also with respect to entire original assessment, of course at the hands of the Revenue. This obviously would lead to considerable hardship and uncertainty. It is precisely for this reason that even while recognizing such powers, in special requirements of the statute, certain safeguards are provided by the statute which are zealously guarded by the courts. Interpreting such statutory provisions courts upon courts have held that an assessment previously framed cannot be reopened on a mere change .....

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t, is an issue on which the assessee Would have no control whatsoever. Whether the Assessing Officer allows such a claim, rejects such a claim or partially allows and partially rejects the claim, are all options available with the Assessing Officer, over which the assessee beyond trying to persuade the Assessing Officer, would have no control whatsoever. Therefore, while framing the assessment, allowing the claim fully or partially, in what manner the assessment order should be framed, is totall .....

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ns. If the Assessing Officer is burdened with the responsibility of giving reasons for several claims so made and accepted by him, it would even otherwise cast an unreasonable expectation which within the short frame of time available under law would be too much to expect him to carry. Irrespective of this, in a given case, if the Assessing Officer on his own for the reasons best known to him, chooses 'not to assign reasons for not rejecting the claim of an assessee after thorough scrutiny, .....

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ial suggesting the escapement of income. In other words, the Assessing Officer was merely guided by change of opinion based on the same set of facts available on record at the time of framing the original assessment. It is settled proposition of law that even after the amendment in the provisions of Section 147/148 of the Act w.e.f. 01.04.1989 mere change of opinion cannot give rise to the valid reassessment proceedings. We are fortified by the view of Hon be Supreme Court in the case of CIT Vs. .....

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at income has escaped assessment, confers jurisdiction to re- open the assessment. Therefore, post-1st April, 1989, power to re-open is much wider. 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 di .....

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