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TMI Blog2015 (6) TMI 240X X X X Extracts X X X X X X X X Extracts X X X X ..... nces of the case and in law the learned CIT(A) erred in rejecting the submission of the appellant that the reassessment was a review of the original assessment and as such in the absence of any new information such reassessment was bad in law and be declared ab initio void. 3. On the facts and circumstances of the case and in law the learned C.I.T. (Appeals) erred in concluding that in respect of certain transactions there was 'churning' in shares and hence the profit was taxable as 'Business Income' as against taxed as 'Short Term Capital Gains' in the original assessment. 4. Without Prejudice to above it is submitted that the learned C.LT. (Appeals) erred in holding that there was churning in the shares of McDowe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as 10-2-2006 and did not make addition on account of speculative income which was proposed for reopening of assessment. However the A.O. has made certain additions by treating the short term capital gain assessed in the original assessment as business income in the reassessment. The assessee challenged the action of the A.O. before the ld. CIT(A) including the validity reassessment of the short term capital gain as business income but could not succeed. 4. Before us the ld. Counsel for the assessee has referred the details of purchase and sale of shares at page 9 & 10 of the paper book and submitted that at Sl. 77 of the details, the shares of Pfizer Ltd. was shown to have been sold on 10-2-2005 instead of 10-02-2006 whereas the shares wer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essment in respect of this issue during the course of reassessment proceedings. 7. Having considered the rival submissions as well as relevant material available on record we note that the original assessment completed u/s 143(3) of the Act on 26-12-2008. Thereafter the A.O. reopened the assessment by issuing notice u/s 148 of the Act on 30-3-2011 on the basis of reason recorded for reopening as under:- "SUB: Reason recorded for reopening of the assessment for A. Y. 2006-07 - reg. Please refer to the above. Your above assessment has been reopened in view of the fact that your entire income from capital gains which has been wrongly taxed at 10%. It is now noticed that this also includes income from speculative transaction amounting to Rs. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the reassessment proceeding, the assessee produced the purchase and sale contract/bill to show that the correct date of sale was 10-2-2006 and not 10-2-2005. The A.O. accepted the correct date as 10-2-2006 and did not make any addition on this account and accordingly dropped the proceeding to treat such transaction as speculative transaction. However in the reassessment proceeding, the A.O. treated the entire short term capital gain accepted in the original assessment as business income and subsequently made the addition. We find that in the original assessment passed u/s 143(3) of the Act, the A.O. has specifically asked query as to why short term capital gain should not be treated as business income. In response to the query, the assesse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eld that when the assessment was sought to be reopened on the ground that income had escaped assessment on a certain issue, the Assessing Officer could not make an assessment or reassessment on another issue which came to his notice during the proceedings. This interpretation will no longer hold the field after the insertion of Explanation 3 by the Finance Act (No. 2) of 2009. However, Explanation 3 does not and cannot override the necessity of fulfilling the conditions set out in the substantive part of section 147. An Explanation to a statutory provision is intended to explain its contents and cannot be construed to override it or render the substance and core nugatory. Section 147 has this effect that the Assessing Officer has to assess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ese words as being in the alternative would be to rewrite the language used by Parliament. Our view has been supported by the background which led to the insertion of Explanation 3 to section 147. Parliament must be regarded as being aware of the interpretation that was placed on the words "and also" by the Rajasthan High Court in Shri Ram Singh's case (supra). Parliament has not taken away the basis of that decision. While it is open to Parliament, having regard to the plenitude of its legislative powers to do so, the provisions of section 147(1) as they stood after the amendment of 1-4-1989 continue to hold the field." 10. In the case in hand, when there is no addition made by the A.O. on the issue of treatment of short term capital gain ..... X X X X Extracts X X X X X X X X Extracts X X X X
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