TMI Blog2000 (11) TMI 278X X X X Extracts X X X X X X X X Extracts X X X X ..... 2(4) wherein he admitted that he had floated the assessee-company as an investment company along with 5 other investment companies with a view to invest its unaccounted income in the names of various benami shareholders. 4. In so far as assessment year 1989-90 is concerned, the Assessing Officer noticed that the assessee has claimed the deduction of short-term capital loss amounting to Rs. 3,87,225 on the sale transactions of share as under: ------------------------------------------------------------------------------------ Name of the No. of Date Purchase Date Sale Company shares amount Amt. ------------------------------------------------------------------------------------ 1. TISCO 400 13-12-1988 43,60,000 21-12-1988 42,00.000 2. Reliance Inds. Ltd. 7450 21-12-1988 11,95,725 5-1-1989 9,68,500 ------------- ------------ 55,55,725 51,68,500 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ears from the end of the relevant assessment year argued that there is no information or material with the Assessing Officer for the information of belief that income has escaped assessment. The ld. counsel read by the Assessing Officer while initiating the proceedings under section 147 and argued that there was no valid ground or material for the belief of the Assessing Officer regarding escapement of income. The ld. counsel placed reliance on the Supreme Court decision in Sheo Nath Singh v. AAC [1971] 82 ITR 147. Further reliance is placed on the decisions of Gujarat High Court in Navinchandra Mohanlal Parikh v. WTO [1980] 124 ITR 68 and Garden Silk Mills (P.) Ltd. v. Dy. CIT [1999] 237 ITR 668. 7. Shri Jaspal Singh, the ld. Sr. D.R. supporting the order of the ld. CIT(A) on the issue argued that the impugned proceedings have been initiated under the new procedure contained under the amended section 147 which confers wider powers on the Assessing Officer to initiate proceedings under section 147 for escapement of income. The ld. D.R. pointed out that for the purpose of initiating proceedings under section 147 within four years, all that the section requires is that the Asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r has reason to believe that any income chargeable to tax has escaped assessment. The words "reason to believe" cannot mean that the Assessing Officer should have finally ascertained the facts by legal evidence. If the Assessing Officer has a cause to believe that income had escaped assessment, he can be said to have a reason to believe that the income had escaped assessment. Obviously the belief should be a bona fide belief held by the assessee. The new procedure for bringing the escaped income in the tax net has been introduced by the Direct Tax Laws (Amendment) Act 1987 w.e.f. 1-4-1989 whereby section 147 has been redrafted conferring wider powers on the Assessing Officer for taking action to bring to tax the escaped income. The amended section 147, which is relevant for our purposes does not envisage that the reason to believe should be as a consequence of "information" in possession of the A.0. The expression "information" has been excluded in the amended section in so far as action under section 147 is taken within four years. The Hon'ble Gujarat High Court has construed the expression "reason to believe" in its recent decision in the case of Praful Chunilal Patel. At page 84 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... purchase and sale of shares of TISCO and Reliance Industries have been carried out within a period of 15 days. The ld. counsel observed that the settlement period for the settlement of the transaction in the stock exchange is 15 days to 21 days during the relevant year. In the instant case shares of TISCO have been shown as purchased on 13-12-1988 and sold on 21-12-1988 i.e. within a period of 8 days only. Further shares of Reliance Industries have been purchased on 21-12-1988 and sold on 5-1-1989 i.e. within a period of about 15 days time. The very time span of the transaction indicates that the delivery of shares has not been taken and the transactions have been concluded without taking delivery. Furthermore the share broker through whom transactions have been entered into is the firm M/s R.J. Financial Consultancy Services which is a sister concern in which the director Shri J.K. Doshi and his wife Smt. J.C. Shah are partners. Both these persons are directors of the assessee-company also. The cumulative effect of the aforesaid facts and circumstances of the case in our opinion provide ample justification to the Assessing Officer for coming to a bona fide belief that income has ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s as under: "The ld. CIT(A) erred in law and on facts of the case in not allowing set off of loss occasioned in a speculative transaction against business income." This ground is also connected with the issue regarding treating the loss in sale of shares as speculation loss. This ground has not been argued before us. Since we have restored the issue regarding deduction of loss on sale of shares to the file of the Assessing Officer (sic), while dealing with ground No. 2 above, this ground is also restored for fresh consideration by the ld. CIT(A). 14. Ground No. 4 needs no comments. The appeal of the assessee is thus partly allowed as above. 15. Now we take up revenue's appeal ITA No. 2300/94. The only ground raised in the revenue's appeal is that the ld. CIT(A) erred in holding that interest under section 234B is not chargeable in a fresh assessment if such interest has not been charged at the time of processing the return under section 143(1)(a) of the I.T. Act, 1961. We have already indicated above that the Assessing Officer processed the original return filed on 26-12-1989 under section 143(1)(a) and sent intimation dated 29-6-1990. In this intimation no interest under ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... consciously deleted by the Legislature and substituted by an intimation. The intimation issued under the amended provisions of section 143(1)(a) cannot be construed as an order of assessment. The amended section in fact provides that the intimation specifying the amount payable shall be deemed to be a notice of demand issued under section 156 meaning thereby that no demand notice would be issued under section 156 along with the initiation. Explanation appended below section 143, inserted by the Finance (No. 2) Act 1991 specifically provided that an intimation sent under section 143(1)(a) shall be deemed to be an order for the purposes of sections 246 and 264. Thus prior to 1-10-1991, the intimation sent under section 143(1)(a) was not treated as an order even for the purposes of sections 246 and 264. The true impact of the expression "intimation" used under section 143(1)(a) is thus amply brought out by the phraseology used under section 143(1)(a) as well as section 234B. The termination date for the period for which interest is charged are specified in the section as (1) date of determination of total income under section 143(1) and (2) where a regular assessment is made date ..... X X X X Extracts X X X X X X X X Extracts X X X X
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