TMI Blog1997 (1) TMI 557X X X X Extracts X X X X X X X X Extracts X X X X ..... es (hereinafter referred to as SKRS), a concern belonging to her parents. SKRS were maintaining the account of the assessee in which all transactions of the assessee, viz., purchases, payments on behalf of the assessee, sales on behalf of the assessee and collections on behalf of the assessee were all recorded. In June 1990, the assessee purchased 7,00,000 equity shares of IGFCL at an average price of ₹ 18.87 per share for a total consideration of ₹ 1,32,08,500. The assessee with a view to pay the consideration of the purchase of 7,00,000 shares, sold off 2,50,000 shares that were purchased in August 1988 for an average price of ₹ 42.10 per share and realised ₹ 1,05,25,000. The assessee had filed a return of income showing long-term capital gains on sale of 2,50,000 equity shares at ₹ 29,30,000 after deducting from the sale consideration of ₹ 1,05,25,000 the cost of transfer and claiming deductions as are permitted under section 48(2) of the Act to the tune of ₹ 44,05,000. This has been so stated by her in the Annexure A to the return of income wherein she had given the particulars of acquisition of shares in 1988, sale in 1990, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... referred to the long-term capital gains declared by the assessee on sale of 2,50,000 shares of IGFCL. The CIT had observed in the notice that the 2,50,000 shares acquired in 1988 were with the help of loans from SKRS. He further observed that the said shares were sold at ₹ 1,05,25,000 in September 1990. He also observed that the assessee had acquired 7,00,000 shares in 1990. He further observed that the shares purchased in 1988 were sold off in 1990 and the shares that were purchased in 1990 were sold off in the year 1991. He further observed that huge purchases and sales were made of only one company and that too by raising loans, when the father-in-law of the assessee, Mr. Aditya Vikra Birla was the Vice Chairman of that company. He further observed that considering these circumstance the Assessing Officer in the assessment year 1992-93 had treated the gain on the sale of shares as income from business. He further observed that when in a subsequent year, viz., assessment year 1992-93, the Assessing Officer having treated the gain on sale of shares as income from business, his predecessor by accepting the claim of the assessee that it is long-term capital gains on sale of s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... failed to obtain the relevant facts as discussed particularly in para 10.3 and in other preceding paragraphs. This failure was of a nature as to render the assessment order erroneous. Secondly, the Assessing Officer allowed the claim of deduction of ₹ 44,05,000 under section 40(2) of the Act which was inadmissible since the profit from the sale of shares was income from business. This under assessment resulted into the loss of revenue due to the state and hence the order was prejudicial to the interest of revenue. Finally, by a well-planned scheme of earning profits, the assessee took plunges in the waters of trade during the period relevant to four assessment years, namely, 1989-90, 1990-91, 1991-92 and 1992-93. These adventures, if not ventures in the nature of trade, resulted into huge profits of ₹ 73,35,000 and ₹ 2,57,42,175 during the assessment years 1991-92 and 1992-93 respectively. However, for the assessment year, the income earned in furtherance and execution of a well-planned profit-making scheme was incorrectly assessed as income from long-term capital gains. 4. On the above facts, the submissions before us basically were that the assessing a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bmitted that when each assessment year is independent of the other assessment year and the principle of res judicata does not apply in assessment proceedings and on that basis if in the assessment year 1992-93 there were certain more informations that were available to the Assessing Officer based on which he had come to a different conclusion, it would not automatically lead to the conclusion that in the earlier year also such informations would have been available or were available but the Assessing Officer omitted to look into. He submitted that it is not the case of the CIT that these informations were available, existing while concluding the assessment for the present assessment year. He accordingly contended that in such a situation, the action of the CIT is clearly unwarranted. On the issue whether the transaction could lead to the belief or impression that it was a business, then the onus is heavily on the Assessing Officer to establish so. He submitted that it is very much necessary to keep in mind that the intention of the purchase of the shares is very important. He submitted that the assessee at the time when she purchased the shares in 1988 had no inclination o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ble, revision is permissible has been so held by the Gujarat High Court in CIT v. M.M. Khambhatwala [1992] 198 ITR 144. On facts, he submitted that it must be kept in mind that the amount was borrowed initially for the purchase of the shares and again for the repurchase of larger quantity of shares there were borrowals and in settlement of the borrowings only the shares were sold, which all go to show that the intention was to make profit only. He relied on CIT v. Sutlej Cotton Mills Supply Agency Ltd. [1975] 100 ITR 706 (SC), Bhagirath Prasad Bilgaiya v. CIT [1983] 139 ITR 916 /[1980] 4 Taxman 174 (MP), Juggilal Kamlapat v. CIT [1970] 75 ITR 186 (SC), G. Venkataswami Naidu Co. v. CIT [1959] 35 ITR 594 (SC), Tribhuvandas Vallabhdas v. CIT [1966] 61 ITR 518 (Bom.), Hemachand Hirachand Shah v. CIT [1994] 206 ITR 55 (Guj.), Indian Metals Ferro Alloys Ltd. v. CIT [1993] 203 ITR 729 (Ori.), Raja Bahadur Kamakhya Narain Singh v. CIT [1970] 77 ITR 253 (SC) and CIT v. Smt. Minal Rameshchandra [1987] 167 ITR 507/ 30 Taxman 282 (Guj.). The further plea raised was that there was no compelling reason for purchase of 7,00,000 shares. 6. The rival submissions have been very carefull ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... earlier assessment order. In that case the property was valued at a particular amount. In the subsequent assessment year the assessee had declared a higher value for the property. Because of such higher value declared by the assessee revision was proposed for the earlier assessment year. The Gujarat High Court was concerned with the term record of any proceedings and they have held that records of the proceedings mean the records based on which orders were passed. We may also observe that Courts have been repeatedly holding that it is permissible for the assessing authorities to take a different view in a later year. We may not need to travel to the various decisions of various High Courts and Supreme Court, but it would suffice to state that what is decided in one year may not apply to the following year, which has been so held by the Supreme Court in Radhasoami Satsang v. CIT [1992] 193 ITR 321 / 60 Taxman 248. It was precisely for this reason that the Bombay High Court in CIT v. Shree Nirmal Commercial Ltd. [1995] 213 ITR 361 (FB) had observed that where a fundamental aspect permeating through the different assessment years has been found as a fact, one way or the other the au ..... X X X X Extracts X X X X X X X X Extracts X X X X
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