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TMI Blog2013 (10) TMI 977X X X X Extracts X X X X X X X X Extracts X X X X ..... d orders of the Ld.CIT(A) for the Assessment Years 2005-06, 2006-07, 2008-09 and 2009-10. Since common issues are involved in all these appeals, the same are disposed off by this common order. For the sake of convenience, the facts in ITA No 1965/M/2013 and ITA No 1967/M/2013 for the A.Y. 2005-06 are taken as lead cases for the disposal of all the appeals. 2. Briefly stated, the assessee an individual and partner in the firm M/s Hawa Exports having income from share of profit form the firm, dividend, capital gains and income from other sources, had filed the return of income for the year under consideration declaring a net income of Rs.1,10,70,840/- comprising of Rs.19,87,127/- from STCG before 01.10.2004, Rs.56,49,475/- from STCG after 01.10.2004 and Rs.28,61,567/- from LTCG before 01.10.2004. The original return of income filed on 08.08.2005 declaring total income of Rs.1,10,70,840/- ( comprising of Rs.19,87,127 from STCG before 01.10.2004, Rs.56,49,475/- from STCG after 01.10.2004 and Rs.28,61,567 from LTCG before 01.10.2004) was accepted vide intimation u/s 143(1). The assessment was reopened by issuing notice u/s 148 dt. 02.06.2010. The income was reassessed vide order u/s 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd such income escaping assessment would be as noticed by the AO while recording the reasons for issuing notice under s. 148 and/or as coming to his notice during the course of reassessment proceedings. It is pertinent to note that the scope of reassessment proceedings is limited to bring to tax such escaped income of the assessee. Also, the position of law is very clear that the assessment order passed by the AO during the course of assessment proceedings under s. 147/148 can be revised by the CIT exercising the powers conferred upon him under s. 263 if the same is found to be erroneous as well as prejudicial to the interests of the Revenue. 4.1 For the purposes of examining the validity of the order of the Ld.CIT(A), it is important to see the reasons stated by the Ld.CIT(A) for his action u/s 263 of the Income Tax Act, which reads as under: "5. I have carefully considered the relevant facts and provisions of law with regard to the issues involved. I have also carefully considered the arguments put forth by the Learned Counsels for the assessee. 5.1 During the period relevant to A.Y. 2007-08 the assessee claimed long term capital gain of Rs.3.82 cores as exempt u/s 10(38) a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h share trading activity. (f) The assessee was not maintaining two portfolios, one for investment and another for trading. In fact, the assessee was frequently trading in specific script and claiming the same also to be investment activity. 5.2 The Assessing Officer after considering the volume, frequency and regularity of trading activity in shares, various judicial pronouncements and CBDT Circular No. 4/2007, held the activity of the assessee to be trading in shares and the profit earned from such activity was brought to tax by the Assessing Officer as income from business. 5.3 The Ld.CIT(A), however did not uphold the findings of the Assessing Officer by relying on the decisions of the Hon'ble ITAT, Mumbai, in the case of Gopal Purohit 122 TTJ 433 and based his decision on the following: (a) The assessee was showing share investment in the balance sheet in earlier years also and assessee's claim was accepted in earlier years. (b) The assessee had no organized business activity of trading in shares. (c) Major long term capital gain was in respect of only shares of 9 companies. (d) Most of the transactions were delivery based. (e) There was no borrowing. (f) Ther ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ity was treated as business activity in A.Y. 2007-08 and the issue was the subject matter of appeal before Hon'ble ITAT, the action of the Assessing Officer in dropping the proceeding initiated u/s 147 and accepting retuned income was grossly erroneous and highly prejudicial to the interest of revenue. 7. An action u/s 263 was fully justified in such cases as held in judicial pronouncements referred to in notice u/s 263 reproduced above and in various judicial pronouncement as under: a) In Income-Tax Officer vs Vanaz Engineers (P) Ltd. 70 ITD 525-Pune. The Honourable ITAT Pune held that even when Assessing Officer followed the line as per decision of CIT(A) in another year, the CIT was justified to invoke revision u/s 263 if the view held by CIT(A), in another assessment year was not acceptable to the department and an appeal was preferred to ITAT. In this decision, the Hon'ble Tribunal observed as under: "The fact that order of CIT(A) was subject-matter of further appeal before the Tribunal was very much available before the CIT and therefore, the CIT being representative of the Revenue was bound to consider the error committed by the Assessing Officer without being influe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... here is anything wrong with the order, if all the facts stated therein are assumed to be correct." f) Hon'ble Madhya Pradesh High Court in the case of CIT V. Kohinoor Tobacco products P. Ltd. [1998] 148 CTR (MP) 563 held as under: "Assessment order was passed by the Assessing Officer without making proper enquiry. Such order was erroneous and also prejudicial to the interests of the Revenue in as much as the Assessing Officer made no enquiry at all to ascertain whether the income received from letting out of the properties were assessable as income from business or as income from house property." g) Hon'ble Gujarat High Court in the case of CIT v. M.M. Khambhatwala [1992] 198 ITR 144 (Guj) held as under: "Powers can be exercised even if the issue is debatable. Revisional power under section 263 is not comparable with the power of rectification of mistake under section 154." In view of the above and facts and issues involved in the case of the assessee. I hold that there were no merits in the arguments put forth by the assessee and the provisions of section 263 were clearly applicable in the case of the assessee to ensure proper assessment in accordance with provisions of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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