1985 (4) TMI 105 - AT - Income Tax

Summary

Issues:
1. Reopening of assessment under section 147(b) based on the definition of short-term capital asset.
2. Legality of the action taken by the Income Tax Officer (ITO) under section 147(b) for the mistake committed in the original assessment.

Analysis:
1. The assessee, a limited company, acquired a property and later sold it, resulting in a capital gain. The ITO treated the gain as long-term capital gain initially but later reopened the assessment under section 147(b) to treat it as short-term capital gain based on the introduction of the definition of short-term capital asset. The CIT (Appeals) upheld the ITO's action, citing the applicability of the new definition. The assessee contended that the ITO could not reopen the assessment on the same facts available in the original assessment. However, the CIT (Appeals) rejected this argument, emphasizing the relevance of the new definition introduced in the relevant year.

2. The counsel of the assessee argued that the ITO's action was illegal, citing Supreme Court decisions that clarified the scope of section 147(b) in cases of oversight or inadvertence. The Departmental Representative provided specific dates to support the legality of the ITO's jurisdiction under section 147(b. However, the counsel of the assessee countered, stating that the law had evolved post the Supreme Court's decision, rendering the ITO's action illegal. The Tribunal ultimately held that the ITO's order under section 147(b) was not legally sustainable, setting it aside and maintaining the original order. The appeal of the assessee was allowed based on this analysis.