2016 (8) TMI 273 - HC - Income Tax

Reopening of assessment - loss suffered by the assessee on sale of gold and silver - Held that - In the final order of assessment that the Assessing Officer passed, he made no disallowance on this count. It can thus be seen that entire issue of nature of loss suffered by the assessee on sale of gold and silver was examined at length by the Assessing Officer during the original assessment proceedings. His pointed question was why should such loss not be treated as speculative and disallowed in terms of section 43(5) of the Act. On the same ground, therefore, it would not be permissible for the Assessing Officer to reopen the assessment which would be based on change of opinion. TDS 194A - non deduction of tds - Held that - On the issue of appropriate rate of deduction of tax at source on the usance charges paid by the assessee also, the Assessing Officer had shown sufficient interest in the assessment proceedings. The assessee had made detailed representations why the collection of tax at source as shown by the assessee was in order. Once again in the final order of assessment, Assessing Officer made no disallowance on this count by holding that deduction of tax was deficient. Sale of gold - Held that - Coming to the last issue, it is undisputed that the same was never gone into by the Assessing Officer during the assessment proceedings since the Assessing Officer was not conscious that Shri Chudasma to whom the sale of gold was allegedly made was not alive on such date. He had no occasion to inquire into such a transaction. In context of notice for reassessment, however, the issue does not rest here. Prime question is, had income chargeable to tax escaped assessment on this count. Only if there is prima facie material to suggest that due to such sale stated by the Assessing Officer to be bogus, income chargeable to tax has escaped assessment, reassessment would be permissible. If we examine the transaction more closely it refers to a cash sale of gold made by the assessee for a sum of ₹ 42.68 lacs to Shri Chudasma Viajysinh Pratapsinh. It was later on found that on the date of sale Shri Chudasma had already expired. However, it is not even the case of the Revenue that the assessee did not offer the sale proceeds of ₹ 42.68 lacs to tax. Obviously, since the assessee claimed that the gold was sold for a sum of ₹ 42.68 lacs, such sum being a revenue receipt would form part of the assessee s total income. Even if there was some cloud about the sale itself or to the person to whom such sale was made, in absence of any basis to hold that the income chargeable to tax had escaped assessment, reopening of assessment would not be permissible. - Decided in favour of assessee

Issues:
1. Challenge to notice for reopening assessment for AY 2011-2012.
2. Claims of speculative loss on MCX rate difference, deduction of Usance charges, and alleged bogus cash sales.
3. Objections raised against the notice for reopening assessment.
4. Examination of reasons recorded by the Assessing Officer and materials on record.
5. Arguments regarding change of opinion, examination of issues by Commissioner under section 263 of the Act.
6. Proper reasons recorded for reopening assessment, especially regarding sale of gold to a deceased individual.
7. Grounds for reopening assessment: speculative loss, incorrect deduction of tax at source, and alleged bogus cash sales.
8. Detailed responses provided by the assessee during assessment proceedings.
9. Analysis of the nature of losses, deduction of tax at source, and the alleged bogus cash sales.
10. Assessment of the reasons recorded by the Assessing Officer and the materials on record.
11. Disallowance made by the Assessing Officer in the final order of assessment.
12. Examination of the issues raised and the reasons for reopening the assessment.
13. Discharge of the impugned notice and disposal of the petition.

In this case, the petitioner challenged a notice seeking to reopen the assessment for AY 2011-2012. The Assessing Officer identified three grounds for reopening: speculative loss on MCX rate difference, incorrect deduction of tax at source on Usance charges, and alleged bogus cash sales. The petitioner objected to the notice, arguing against a change of opinion and citing previous examination of these issues by the Commissioner under section 263 of the Act. The Assessing Officer's reasons for reopening, including the sale of gold to a deceased individual, were considered. The petitioner provided detailed responses during the original assessment proceedings, clarifying the nature of losses and tax deductions. The Assessing Officer's actions during the assessment, including the lack of disallowance on certain counts, were scrutinized. The court ultimately set aside the notice for reopening the assessment, emphasizing the lack of prima facie evidence that income chargeable to tax had escaped assessment. The petition was disposed of accordingly.

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