TaxTMI 
TaxTMI 
2015 (5) TMI 950
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....the Bombay Stock Exchange. He carries on transactions in shares on behalf of his clients on which he receives brokerage that constitutes his income. In similar manner, he functions as a sub-broker on the National Stock Exchange. The petitioner has carried on share trading and speculation in shares from which activities, he has earned share trading profits and speculation profit/ loss. The petitioner has made investments in shares on which he receives dividend and on the sale of the said shares, he earns capital gains also. 4. He filed his return for the assessment year 2007-08 declaring a total income at Rs. 3,89,52,530, the break-up of the same has been set out in paragraph 3 of the petition and annexure A is the copy of the return filed in electronic form. 5. After filing of the return, the petitioner states that the petitioner's case was selected for scrutiny and a notice under section 142(2) of the Income- tax Act dated August 25, 2008, was issued. The petitioner appeared and filed all the requisite details required by the third respondent. 6. By another notice dated August 12, 2009, the Assessing Officer sought details and on the points which have been set out in paragr....
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....re supplied and furnished on August 20, 2014. Annexure K is the copy of this communication under which the reasons came to be supplied. 13. The petitioner responded to the same by a communication dated September 11, 2014, and pointed out as to how the reasons supplied or furnished are inadequate and do not meet the statutory requirements. The petitioner pointed out that respondent No. 3 was duty bound to dispose of the objections by a speaking order. This was pointed out by the petitioner by letter dated December 8, 2014, a copy of which is at annexure M. The petitioner complains that by a communication dated March 5, 2015, the objections raised by the petitioner came to be rejected and without any speaking order. Annexure N is a copy of this communication from respondent No. 3. 14. Thereafter, the petitioner communicated with respondent No. 3 by a letter dated March 12, 2015, and now the grievance raised is that on March 27, 2015, an assessment order came to be passed in pursuance of the notice under section 148 of the Income-tax Act. 15. Thus, the grievance raised is that the Assessing Officer did not wait for the requisite period to expire and, namely, four weeks from the dat....
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.... On the legality and validity of the notice, Mr. Pardiwalla points out that there is a Circular No. 4 of 2007, dated June 15, 2007, issued by the Revenue. That is on the subject of a distinction between shares held as stock-in-trade and shares held as investment. The relevant and requisite steps have been laid down so that the Assessing Officer can assess the income and in case of such assessee who have two portfolios, one may be an investment portfolio comprising of securities which are to be treated as capital assets and a trading portfolio comprising of stock-in-trade which are to be treated as trading assets. The assessee may have earned income under both heads and how such income should be dealt with by the Assessing Officer is set out in this circular, according to Mr. Pardiwalla. Mr. Pardiwalla also submits that the reopening of the assessment is not permissible merely because of a change of opinion. He would submit that the reasons furnished completely ignore the fact that how the income has been dealt with in the assessment order and if it is dealt with and discussed in a particular manner, then, revisiting that conclusion or decision is not permissible. That would amount ....
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.... out as to how the reasons were supplied and how they have been dealt with and objected to by him. The petitioner specifically requested the Assessing Officer not to proceed with the scheduled hearing till the objections raised to the reasons have been disposed of by a speaking order. 22. On March 5, 2015, a communication was addressed to the petitioner which purported to reject his objections. The objections have not been referred to in detail but what has been stated is that the case has not been reopened merely on the basis of a change of opinion. The fact that came to light during the assessment proceedings for the assessment year 2011-12 are the basis for reopening the case pertaining to the assessment year 2007-08. Since the petitioner is stated to have filed a new return of income, he was called upon to attend the office with the information required on March 13, 2015. The petitioner addressed a letter on March 12, 2015, and pointed out that the communication dated March 5, 2015, was received on March 12, 2015, but no speaking order has been passed rejecting the objections and which is required by the law laid down in the case of GKN Driveshafts (India) Ltd. v. ITO reported....
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....sessment indicate that the electronic return was filed and for the said assessment year 2007-08. The short-term capital gains are disclosed. The scrutiny assessment under section 143(3) has been completed on a total income of Rs. 4,47,57,283 after making additions on account of disallowance under section 14A of the Income-tax Act. The disallowance under section 40(a)(ia) of the Income-tax Act and for business promotion and motor cars. The reasons disclosed as to how income from house property, income from business or profession, income from speculation business and income from long-term capital gains and income from short-term capital gains and income from other sources was set out. The reasons furnished to the petitioner and in support of the reopening of the assessment refer to the figures. The reasons conclude that the assessee is earning from business or profession. He has also earned income from the capital gains. The petitioner-assessee was investor or trader but he is required to be examined on certain grounds and which are indicated in detail. The grounds, inter alia, are that the correct characterisation of securities in the books of the assessee in the balance-sheet and s....
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....t, balance-sheet, profit and loss account along with schedules, TDS certificates and copy of tax payment challans. 26. On October 12, 2009, the petitioner pointed out the details of the office and residential address. The petitioner has also invited the attention of the Assessing Officer to the nature of his business and income that he earned. At page 41 of the paper book and at serial No. 7, the petitioner has set out scrip-wise details of purchase and sale of shares. They were enclosed with the letter which has been addressed by the petitioner on October 12, 2009. The petitioner clarified that the Explanation to section 73 is not applicable as the assessee is an individual and not a company. He also mentioned that the profit is earned on the sale of shares, hence the Explanation is not applicable. The stock exchange membership, the card and complete details of payment made to persons specified under section 40A(2a)(b) of the Income-tax Act are given in annexure D the auditor's report, stock details were also furnished. The petitioner also pointed out as to how the investment in shares has been made for which he received dividend and capital gain income. What we find and furt....