TMI Blog2015 (5) TMI 950X X X X Extracts X X X X X X X X Extracts X X X X ..... tax Act has been dealt with from paragraph 6.1 onwards. In the circumstances, we do not find as to on what basis the assessment could have been reopened. If not only the main contention and stand of the assessee has been dealt with but even the alternate contention and there is a reference to all the details which were supplied, then there was no reason at all for reopening the assessment. We have also been shown the details in the books of account. The break-up of income is extensively referred even in the assessment order. Thus, the present one is a clear case of reopening of the assessment on a mere change of opinion and that such a course is impermissible in law is by now well settled. We do not, therefore, find that the reasons which have been recorded for reopening the assessment meet and satisfy the statutory pre-conditions. Those having not being satisfied, there is no alternative but to quash and set aside the impugned notice and the assessment order following the same. - Decided in favour of assessee. - Writ Petition (L.) No. 1044 of 2015. - - - Dated:- 5-5-2015 - S. C. DHARMADHIKARI and A. K. MENON, JJ. Percy Pardiwalla, Senior Advocate, Ms. Aarti Sathe, Kalpe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted on October 12, 2009. Thereafter, the petitioner's representative appeared and tendered submissions. These were recorded in the letter dated November 6, 2009. The petitioner pointed out as to how he has received dividend income which is exempt under section 10(34) of the Income-tax Act. The petitioner further submitted that he has earned long- term capital gains and short-term capital gains in sums mentioned in paragraph 8 of the writ petition. The petitioner pointed out as to how these amounts were offered to tax. Thus, there was a series of letters prior to the assessment order dated December 14, 2009, under which the petitioner's income was determined at ₹ 4,45,57,283. There were certain disallowances made. However, the treatment of the gains arising to the petitioner and the shares held by him by way of investment as long-term capital gains and short-term capital gains was accepted. The working thereof has been set out in the assessment order. 8. The petitioner was not satisfied with this assessment order and preferred an appeal to the Commissioner of Income-tax (Appeals) and the same was disposed of on September 27, 2010, allowing certain grounds of the pet ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... om). Thirdly, it is urged that notice purportedly issued and invoking section 147 of the Income-tax Act does not satisfy the statutory requirements. The pre-conditions for reopening the assessment are that the Assessing Officer must have reason to believe that income chargeable to tax has escaped assessment. If the assessment is sought to be reopened after four years from the date of the assessment, then, as in this case, the reasons must disclose failure on the part of the assessee to fully and truly set out material facts necessary for the assessment for the said assessment year. The jurisdictional ingredients, according to the petitioner, are not satisfied. Further, it is pointed out that whether the petitioner is a investor or a trader is a matter examined at the time of the assessment order under section 143(3) of the Income-tax Act. The petitioner's income has not escaped any assessment. The declared long-term capital gains and short-term capital gains earned on the sale of shares have been fully set out and disclosed. They form part of the order passed by the Assessing Officer as well. In the circumstances, when all requisite details were furnished, explanation offered i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tor and as a share broker, then, the requisite details were fully and truly disclosed. There is nothing by which the Assessing Officer could have reason to believe that income of more than one lakh rupees chargeable to tax has escaped assessment in the case of the assessee for the assessment year 2007-08. Further, what are the material facts and relevant to the assessment which are not fully and truly disclosed have not been set out in the impugned notice. He, therefore, submits that the notice be quashed and set aside. 18. On the other hand, it has been pointed out by Mr. Malhotra that the petitioner is a trader and not an investor. If this court was to entertain this writ petition now, it would be considering disputed questions of fact. Such a course is impermissible in the writ jurisdiction. Mr. Malhotra heavily relied upon the assessment order which is passed pursuant to the notice under section 148 of the Income-tax Act on March 27, 2015. For all these reasons, he would submit that the writ petition be dismissed. 19. For properly appreciating the rival contentions, we must at once refer to the undisputed factual position. In the present case, the earlier/original assessm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... objections to the reopening of the assessment or the reasons recorded, he shall not proceed further in the matter within a period of four weeks from the date of receipt or service of the said order on the assessee. Since the order dated March 5, 2015, is stated to be rejecting the objections, then the assessee prayed that for a period of four weeks from that order, no steps should be taken. 23. However, as has been rightly contended by Mr. Pardiwalla, ignoring this mandate in the decisions of this court and the hon'ble Supreme Court which has been further reiterated in Aroni Commercials Ltd. (supra), the impugned assessment order has been passed, that is, dated March 27, 2015. That is clearly within the period of four weeks from March 5, 2015. The first contention of Mr. Pardiwalla, therefore, deserves acceptance as nothing contrary to the same has been placed before us. 24. However, we will not rest our conclusion only on the first contention. Suffice it to state that we have observed and held that the first contention deserves acceptance only to hold that we are not bound by the assessment order passed on March 27, 2015. We are, therefore, not inclined to accept the co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of purchase and sale and the ratio between purchase and sale, the holding of share is taken as a price to determine the nature of transaction. All these aspects and which have been set out in the reasons disclose that the Revenue intends to revisit the conclusion in the assessment order. They are also sought to be revisited, without reference to the order passed by the Commissioner of Income-tax (Appeals) on September 27, 2010. That may be an appeal preferred by the petitioner-assessee aggrieved by the assessment order and on some points and issues. However, we do not find any reference being made to this appellate order. Further, if from the record it is evident that the assessee has earned interest income amounting to ₹ 14,67,288, then how that interest income has to be treated and assessed in law is a matter which cannot be gone into and in such details after the assessment order was passed. If these facts have not been examined while passing the assessment order, then it is clear change of opinion on the part of the respondents. Nothing prevented the Assessing Officer from treating the income and in the manner suggested in these reasons. The reasons recorded do not indica ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of scrip, purchase quantity, amount, sale quantity, amount and profits earned have been enclosed to this letter. Similar details with regard to short-term capital gains and shares are also set out (item Nos. 10 and 11 on page 44 of the paper book). Thus, everything that was relevant, according to the petitioner, and for the purpose of the assessment came to be disclosed and prior to the assessment order. Our attention has also been invited to pages 45 and 46 of the paper-book, particularly a response to the queries of the Assessing Officer as to why the income from the assessment could not be treated as business income. In that regard, the petitioner replied as under : With reference to your honour's query as to why income from investment should not be treated as 'business income', we are to sub mit that the assessee has not taken any loans whatsoever for making investments in shares. Hence, investment was made entirely out of the assessee's own funds only. The assessee has offered income as STCG only in respect of 11 scrips which is held for investment. The shares on which such STCG has been earned hold for more than three months in all the cases. The investmen ..... X X X X Extracts X X X X X X X X Extracts X X X X
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