9911796707
TMI Blog2013 (7) TMI 767X X X X Extracts X X X X X X X X Extracts X X X X ..... of revenue is against the order of CIT(A) in cancelling the assessment assumed by AO by issuing notice u/s. 147 read with section 148 of the Act i.e. the jurisdiction issue. For this, revenue has raised following ground no.1: "1. That on the facts and circumstances of the case, Ld. CIT(A)-IV, Kolkata has erred in cancelling the assessment, completed u/s. 147/143(3) of the I. T. Act, 1961." 4. Briefly stated facts are that in this case return of income was filed u/s. 139(1) of the Act on 22.10.2001 for the relevant AY 2001-02 along with audited accounts. The AO processed this return of income and sent intimation u/s. 143(1) of the Act. No notice u/s. 143(2) of the Act was ever issued. Thereafter, the AO issued notice u/s. 148 of the Act dated 31.03.2005, which was served on the assessee on 07.04.2005. The assessee on receipt of this notice furnished an application stating that the original return filed may be treated as return in response to this notice u/s. 148 of the Act and also required the copies of reasons recorded for issuance of notice u/s. 148 of the Act. The AO furnished copy of reasons recorded. The relevant reasons recorded as enclosed in assessee's paper ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ide the matter for consideration of jurisdictional issue regarding reopening u/s. 147 of the Act. The Tribunal vide para 12 and 13 set aside the issue as under: "12. In view of the aforesaid order of the Hon'ble Madhya Pradesh High Court, we set aside the order of the Ld. CIT(A) and remand the matter to the CIT(A) for deciding the appeal afresh including the additional ground taken by the assessee for the first time before us, which has been admitted. 13. Hence, the order of the Ld. CIT(A) is set aside by restoring the appeal to his file for deciding it afresh along with additional ground taken by the assessee." 5. The AO in his assessment order dated 30.11.2006 computed the total income of the assessee by disallowing the loss from share trading at Rs.1,06,74,050/by stating the reason that this is speculative loss and by virtue of Explanation to Sec. 73 of the Act this is to be disallowed. Aggrieved, assessee preferred appeal before CIT(A), who (in second round) after considering the submissions of the assessee quashed the reassessment proceedings vide para 7 of his order as under: "7. I have considered the submissions made by Sri Saraf, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... In the case of Bapalal & Co(Exports) (2007) 289 ITR 37 (Mad), it has been held by Madras High Court that in absence of new material, the A.O. is not empowered to re-open assessment u/s. 147 even though the assessment has been made u/s.143(1). It has been further held by the High Court in that case if no new facts were found, re-opening was not possible u/s. 147 and section 147 does not authorize the A.O. to re-open assessment merely on a change of opinion. In this case, admittedly no new facts were available with the A.O. for reopening of assessment and he has relied only on facts disclosed by the appellant in the return fìled. Again, in the case of Vipin Khanna VSCIT (2002) 255 ITR 220 (P & H), it has been held by P & H High Court that if the A.O. had allowed time for initiation of regular assessment by issue of notice u/s.143(2) to lapse, it was entirely his doing and he cannot do indirectly what he is not permitted to do directly. In the case of CIT VSM.Chellappan (2005) 198 CTR (Mad) 490 it was held by Madras High Court that where no notice U/s.143(2) was issued within 12 months and therefore proceedings U/s.143 came to an end and the matter became final, in that event, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ee has declared following P&L Account for the year ended 31st March, 2001: Opening Stock 16214584 Sale proceeds of Shares 1829950 Purchase of shares 600000 Dividend 21564.40 Rates& Taxes 3660 Interest Received 27807.83 Welfare Expenses 455 Closing stock 43105.84 Miscellaneous expenses 33627 Liabilities no longer required written back 129568.83 Audit Fes 4200 Depreciation 212348 Balance carried down 2077912.33 Total 19146789.23 Total 19146789.23 He argued that the AO has noted in the reasons that the assessee has share trading loss of Rs.1,06,74,050/and also examined reassessment history of the assessee for AY 1992-93, 1994-95 and 1996-97 and found that in those years the assessee has made claim in respect of interest of cash credit facility availed from Bank of India. The Bank of India has filed a suit for recovery for its dues and that matter was settled out of Court and as a result assessee did not have to pay dues to the tune of Rs.1,29,56,883/and assessee, therefore, wrote those liabilities back in its books of account and offered the same as income. According to Ld. CIT, DR, the AO ascertained that the liabilities written ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es on to explain law relating to reopening in the case of processing made u/s. 143(1) of the Act. According to him, law on this issue is very clear that u/s. 143(1) of the Act only processing is done and not assessment. The wording of section 143(1) of the Act makes it amply clear that the word used is processing and not assessing or the assessment as mentioned in section 143(3) of the Act. 7. Ld. CIT-DR argued that the processing u/s. 143(1) of the Act is not an assessment proceedings and processing is specifically deemed as a case of "income escaping assessment" in Explnation-2(b) of Section 147 of the Act and this issue is directly covered in favour of the Revenue by the decision of Hon'ble Supreme Court in the case of ACI v. Rajesh Jhaveri Stock Brokers (P.) Ltd. (2007) 291 ITR 500 (SC). He also argued that there is no change of opinion as action is taken u/s. 147 of the Act after processing of return u/s. 143(1) of the Act. For this proposition, he relied on the Full Bench decision of Hon'ble Delhi High Court in the case of CIT v. Usha International Ltd., (2012) 253 CTR 113 (Del)(FB). He narrated that Hon'ble Delhi High Court in the case of Usha International Ltd. (supra) has ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 3(1) of the Act and after that issued notice u/s. 148 of the Act and for that reason recorded are reproduced in para-4 page-2 of this order. We find that assessee's income from other source like dividend, interest exceed the gross business income by taking into consideration loss in share trading and the income by way of liabilities written back and deducting their sundry expenses of Rs.2,54,293/and in that case assessee would come under the exception clause of Explanation to Section 73 of the Act and it would avoid the mischief of the Explanation. The Assessing Officer treated the loss in share trading as speculative loss and qua that reasons were recorded. We find from the reasons recorded by the AO, wherein it is clearing mentioned that, "summary of the profit and loss account of the appellant for the relevant AY was as follows:" The figure of loss of Rs.1,06,74,050/by way of share trading loss was in the profit and loss account and was also filed with the return of income. According to Ld. Counsel for the assessee, the reason to belief does not stand to reopening in the given facts of the case. We have gone through the decision of Hon'ble Delhi High Court in the case of Usha In ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... proceedìng without anything further, the same would amount to giving premium to an authority exercising quasijudìcial function to take benefit of its own wrong. It was held that section 147 of the Act does not postulate conferment of power upon the Assessing Officer to initiate reassessment proceedings upon a mere change of opinion. On appeal by the department to the Supreme Court HELD dismissing the appeal: Though the power to reopen under the amended s. 147 is much wider, one needs to give a schematic interpretation to the words reason to believe failing which s. 147 would give arbitrary powers to the AO to reopen assessments on the basis of mere change of opinion, which cannot be per se reason to re-open. One must also keep in mind the conceptual difference between power to review and power to re-assess. The AO has no power to review; he has the power to re-assess. But reassessment has to be based on fulfillment of certain pre-condition and if the concept of change of opinion is removed, as contended on behalf of the Department, then, in the garb of re-opening the assessment, review would take place. One must treat the concept of change of opinion as an in-built ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
