TMI Blog2021 (12) TMI 881X X X X Extracts X X X X X X X X Extracts X X X X ..... IGH COURT ] reasons of re-opening the assessment has to be based / examined only on the basis of reasons recorded at the time of issuing a notice under Section 148 of the Act seeking to re-open the assessment. These reasons cannot be improved upon and/or supplemented much less substituted by an affidavit and/or oral submissions. Once a query has been raised by Assessing Officer through the assessment proceeding and the assessee has responded to that query, it would necessarily follow that Assessing Officer has accepted petitioner's submissions so as not to deal with that issue in the assessment year. Even if, the assessment order passed under Section 143(3) of the Act does not reflect any consideration of the issue, it must follow t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... with a view to take another view. - Decided in favour of assessee. - WRIT PETITION NO.7388 OF 2008 - - - Dated:- 17-12-2021 - K.R. SHRIRAM AMIT B. BORKAR, JJ Mr. Percy Pardiwalla, Senior Advocate a/w Mr. Prakash Shah and Mr. Jas Sanghvi i/b PDS Legal for Petitioner Mr. Suresh Kumar for Respondents ORAL JUDGMENT (PER K. R. SHRIRAM J.) 1. The petitioner is impugning a notice dated 13th March 2008 issued under Section 148 of the Income Tax Act (the Act) and order dated 14th October 2008 passed by respondent no.2 rejecting the objections of petitioner to the proposed re-opening of assessment. 2. Petitioner was issued 420,000 shares of ₹ 10/- each in Ponds (India) Limited at the time of its incorporation in 19 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arge of ₹ 25,271,633/- @ 2.5%. 4. Petitioner during the course of assessment proceedings vide letter dated 10th November 2006, clarified the queries raised by respondent no.2 as to why the rate of tax on capital gains in its case should be computed @ 10% and the applicability of first proviso to Section 48. Further, petitioner submitted a without prejudice working of capital gains without considering the benefit of first proviso to Section 48. 5. Respondent no.2 thereafter passed an assessment order dated 15th November 2006 by computing the income of petitioner. Being satisfied with the submission made, respondent no.2 accepted the contention advanced by petitioner. 6. Thereafter petitioner received the impugned notice dated ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... een complied with. In the reasons recorded, respondent no.2 has opined that the rate of tax to be applied to the capital gain that arose to petitioner was 20% in terms of Section 112(1)(c) and not 10% as was determined whilst passing the order under Section 143(3) of the Act. 9. Mr. Suresh Kumar submitted that in the original assessment order, Assessing Officer overlooked the fact that petitioner admitted that there was common assessment of ₹ 7,74,33,712/-. The fact is that the revised working that was filed by petitioner was on without prejudice basis. It is also clear from the computation annexed to the return of income that petitioner had paid the income tax @10% as per the proviso to Section 112(1) of the Act and the assessment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sed working of capital gains without considering the benefit of the first proviso to Section 48. In such a situation, your goodself will accept that the capital gain would be liable to tax @ 10% under the provisions of Section 112 . 10. Therefore, it is quite clear that the reassessment proceedings are initiated purely on change of opinion with regard to the rate of tax payable by petitioner on the long term capital gain made by it on the sale of shares of Hindustan Lever Ltd. The issue of applicability of first proviso to Section 48 as well as rate of tax under Section 112 were discussed and considered at the time of the said assessment proceedings under Section 143(3). 11. Mr. Suresh Kumar also submitted that as stated in the aff ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sing Officer had not applied his mind while passing the assessment order. When a query has been raised, as has been done in this case, with regard to a particular issue during regular assessment proceedings, it must follow that Assessing Officer had applied his mind and taken a view in the matter as is reflected in the assessment order. It is clear that once a query has been raised in the assessment proceedings with regard to rate at which capital gains should be taxed under Section 112(1)(c)(ii) and petitioner has responded to the query to the satisfaction of Assessing Officer as is evident from the fact in the assessment order dated 15th November 2006, accepts petitioner's submissions as to why taxation should be only 10% under Sectio ..... X X X X Extracts X X X X X X X X Extracts X X X X
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