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TMI Blog2016 (5) TMI 718X X X X Extracts X X X X X X X X Extracts X X X X ..... in terms of the proviso to section 147 of the Act where there is no failure on the part of the assessee to disclose fully and truly all material facts necessary for assessment. 4. That the A.O. had no material whatsoever for formation of any belief that income of the appellant chargeable to tax had escaped assessment since the appellant had not received accommodation entries by way of share capital/capital gains. 5. That the A.O. erred in initiating the reassessment proceedings on mere change of opinion for reviewing order of assessment made earlier which is contrary to the law. 6. That in any case, the alleged undisclosed income was already offered by the appellant as its income hence the CIT(A) erred in upholding the said addition which amounted to adding the same income twice. 7. That the Id. CIT(A) erred in confirming the said addition by holding that the appellant failed to prove identity, genuineness and creditworthiness of the transactions as if these transactions were on capital account whereas the transactions were on revenue account and the appellant had already accounted the said transactions as its income. 8. The appellant prays that it may be permitted t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted against the addition of Rs. 1,06,06,355/- on account of income from undisclosed sources. Since all the grounds are interconnected with each other, they are being discussed together. 3.2. The ld. AR submitted that the assessee is engaged in dealing in shares and advancing of loans. During the year under consideration, the assessee had entered into share trading transactions with M/s Creative Financial Services Pvt. Ltd., which resulted in net trading profit of Rs. 1,06,06,440/-. He submitted that the assessee has specifically disclosed the profit earned from the share trading in P&L Account under the head 'Profit on sale purchase of shares.' The ld. AR submitted that during the course of the assessment proceedings, the AO had asked for the details of profit on sale and purchase of shares. 3.3. It is further submitted that vide letter dated 22nd November, 2006, the assessee had submitted all the relevant details in respect of the share purchase. The relevant letter dated 22nd November, 2006 is placed at pages 48 to 86 of the paper book. The ld. AR submitted that it was after going through the relevant details provided by the assessee that the ld. AO had accepted the same while ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... issued by the ld. AO on 30.3.2011 which is beyond four years from the end of the relevant assessment order. The ld. AO has proceeded with the re-assessment proceedings merely on the information received from the Investigation Wing, without verifying the same. In the light of the above, we shall evaluate the provisions u/s 147 of the Act as under. No reason to believe that income has escaped assessment 5.3. The initiation of reassessment proceedings on the basis of the above reasons/information is void ab initio since there is no reason to believe that income has escaped assessment. The information that accommodation entries aggregating to Rs. 1,06,06,355/- was received by the assessee has not been established by the ld.AO. The assessee company entered into share trading transactions with the said company and on such trading it had earned profit. Thus the information that such entries have been taken and introduced either as share capital or capital gain is incorrect. Therefore, the very reason on the basis of which the case was reopened is non- existent and therefore the proceedings are void ab initio. 5.4. It is further submitted that the assessee has duly accounted the said pro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e assessment year 2004-05, the year under consideration. The assessment was framed u/s 143(3) vide order dated 24.11.2006. It is submitted that the assessee has duly disclosed the income/profit in its accounts and the same was specifically reflected in the Profit and Loss Account. During the course of assessment proceedings, the AO enquired about the same and raised a specific query. The assessee has filed detailed explanations along with supporting documents. Thus, the assessee has disclosed fully and truly all material facts necessary for assessment both at the time of filing the return of income as well as during the course of assessment proceedings. It is therefore observed that the present proceedings are bad, in terms of the proviso to section 147. 5.9. Proviso to the section 147 of the Act places fetters on the powers of the Assessing Officer to initiate reassessment proceedings beyond the period of 4 years from the end of the relevant assessment year, where the assessment has been completed under section 143(3) of the Act unless the income has escaped assessment by reason of the failure of the appellant to disclose fully and truly all material facts necessary for assessmen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of change of opinion" on the part of Assessing Officer to reopen an assessment does not stand obliterated after the substitution of section 147 of the Income-tax Act, 1961, by the Direct Tax Laws (Amendment) Acts, 1987 and 1989. After the amendment, the Assessing Officer has to have reason to believe that income has escaped assessment, but this does not imply that the Assessing Officer can reopen an assessment on mere change of opinion. 5.13. The ld. AR for the assessee has placed his reliance on the decision of the jurisdictional High Court in the case of CIT vs. Bhushan Capital and Credit Services Ltd., reported in (2013) 263 CTR 393, wherein it has been held as under:- "Held: The amount had been declared in the return of income as capital gains and what the AO did was only to change the nomenclature from "capital gains" to "undisclosed income". The assessment has been reopened after a lapse of about eight years from the end of the relevant assessment year as noted by the Tribunal. If the assessment is sought to be reopened after a period of four years from the end of the relevant assessment year, it is incumbent upon the AO, under the first proviso to s. 147, to show that th ..... 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