9911796707
TMI Blog2020 (8) TMI 763X X X X Extracts X X X X X X X X Extracts X X X X ..... ibunal was right in cancelling the reopening of assessment under Section 147 of the Income Tax Act, when there was failure on the part of the assessee to disclose fully and truly all material facts necessary for the assessment relating to the Asst. Year 2006-07? 2. Is the finding of the Tribunal not perverse when the assessee claimed sale of shares in the previous assessment year 2005 - 06 as "capital gains" and the very next asst. year 2006-07 sale of shares is shown as "business loss" and set off against the business income, which is against sub-clause [iv] to clause [c] to explanation 2 of Section 147 of the Income Tax Act? 3.Whether the Tribunal was right and justified in cancelling the reopening of assessment u/s 147 overlooking the binding decisions in Hoda Siel Products Ltd Vs. DCIt & Anr (Del) reported in 340 ITR 53 which was upheld by Honourable Supreme Court in 340 ITR 64?" 5. Mr. J. Narayanaswamy, learned Senior Standing Counsel for the department has submitted that the respondent/assessee incurred loss of a sum of Rs. 26,51,684/- out of sale of shares and the said loss was debited by the assessee in the profit and loss account of the previous year, relevant to asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vailable on record. 10. In the present case, the Commissioner of Income Tax (Appeals)15, Chennai came to the conclusion that in the original assessment proceedings, no opinion was formed by the Assessing Officer. Therefore, in order to form a fresh opinion, the reassessment proceeding was initiated under Section 147 of the Act. At this juncture, it would be apposite to refer paragraph no.5.1 of the order of the Commissioner of Income Tax (Appeals)-15, which reads as under:- "5.1. Ground No.1 to 5 raised by the appellant are against the action of the AO in reopening assessment u/s 147 of the IT Act. The Assessing officer had reopened the assessment u/s 148 on the reason that Rs. 26,51,684/- was debited as loss on shares which is a capital loss resulting in escapement of income. The appellant submitted before the Assessing Officer that it had been trading in share market for past several years and therefore, loss on sale of shares should be treated as business loss. The Assessing Officer asked it to submit financials for AY 2005-06 to verify its claim which were not submitted. As per assessment record of AY 2005-06, profit on sale of shares was shown as Long term capital gain. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cture, it would be appropriate to extract the provisions of Section 147, which deals with the income escaping assessment, hereunder:- "147. If the Assessing Officer has reason to believe that any income has escaped assessment for any of the assessment year, he may, subject to the provisions of Section 148 to 153, assess or re-assess such income and also other income chargeable to tax but has escaped assessment and which comes to his notice. Subsequently, in the course of the proceedings under this section, or recomputing the loss on shares or depreciation allowances or any other allowances as the case may be, for the assessment order is concerned. [herein after the Section 148 to 153 is referred to as the relevant assessment year]." 14.On perusal of Section 147, it is clear that if the Assessing Officer has reason to believe that any income chargeable has escaped assessment for any assessment year, the reassessment can be made. But, in the present case, no income was escaped from the assessment. The loss on sale of shares was disclosed by the assessee in the original return of income. Thereafter, scrutiny was conducted and after such thorough scrutiny, the assessment order was p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... A perusal of the order of the Commissioner of Income Tax (Appeals)-15 would make it clear that he has been persuaded to pass the orders as if there was no change of opinion, as, according to him, no opinion was formed by the Assessing Officer. However, the fact remains that the original assessment order was passed by the Assessing Officer after forming the opinion. 16. It appears that the reassessment proceeding under Section 147 was made to form change of opinion and therefore, it would clearly amount to reviewing the original order of assessment under Section 147 under the pretext of reassessment. We make it clear that in the reassessment proceedings under Section 147, the original assessment order cannot be reviewed. Further, the proceedings also cannot be initiated merely because there is a possibility of change of opinion. Accordingly, we hold that no review on the original assessment order is permissible in the reassessment proceedings initiated under Section 147. Therefore, we are of the view that the Tribunal had rightly set aside the impugned reassessment made under Section 147 of the Act. In this regard, we would like to press into service of the Judgments of the Honour ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... owance, as the case may be, for the assessment year concerned (hereafter in this section and in Sections 148 to 153 referred to as the relevant assessment year)." 3.2. After the Amending Act, 1989, Section 147 reads as under: "147. Income escaping assessment.-- If the Assessing Officer has reason to believe that any income chargeable to tax has escaped assessment for any assessment year, he may, subject to the provisions of sections 148 to 153, assess or reassess such income and also any other income chargeable to tax which has escaped assessment and which comes to his notice subsequently in the course of the proceedings under this section, or recompute the loss or the depreciation allowance or any other allowance, as the case may be, for the assessment year concerned (hereafter in this section and in sections 148 to 153 referred to as the relevant assessment year). 4.On going through the changes, quoted above, made to Section 147 of the Act, we find that, prior to direct Tax laws (Amendment) Act, 1987, re-opening could be done under above two conditions and fulfilment of the said conditions alone conferred jurisdiction on the Assessing officer to make a back assessment, but ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
