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Issues involved: Reopening of assessment u/s 148/147, Classification of assessee as trader or investor in shares, Valuation of opening stock
Reopening of assessment u/s 148/147: The assessee challenged the reopening of assessment under Section 148/147 of the Income Tax Act, contending that it could have been rectified under Section 154. The assessee relied on the judgment in ACIT Vs. Rajesh Jhaveri Stock Brokers Pvt. Ltd, emphasizing that no opinion was formed during the initial proceedings. However, the Revenue argued that certain mistakes, like changing the head of income for taxing capital gains, are not rectifiable under Section 154. The Tribunal, after considering the arguments and relevant documents, dismissed the ground raised by the assessee against the reopening of assessment. Classification of assessee as trader or investor in shares: The dispute arose regarding the classification of the assessee as a trader or investor in shares. The assessee claimed to be an investor based on consistent treatment of shares as capital gains and their reflection as investments in the balance sheet. The Revenue, however, argued that the closing stocks were shown under "stocks" and not "investment" in the balance sheet. The Tribunal observed that crucial parameters determining the head of income were not adequately examined by the Revenue. It directed a remand to the CIT(A) for a fresh finding on the issues, emphasizing the need to consider investment patterns, transaction details, and consistency in the treatment of shares. Grounds No. 2 & 3 were allowed for statistical purposes. Valuation of opening stock: The AO had adopted the market value of opening stock at a lower figure compared to the cost reflected in the books. The assessee contended that this deviation was not in line with a relevant Tribunal decision. The Revenue argued that the change in head of income justified the alteration in valuation method. The Tribunal found deficiencies in the orders regarding the valuation of stock and directed a remand for a fresh examination by the CIT(A) to ensure a comprehensive analysis. Ultimately, the appeal of the assessee was allowed partly for statistical purposes.
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