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TMI Blog2015 (10) TMI 2734X X X X Extracts X X X X X X X X Extracts X X X X ..... on of capital gains on sale of equity shares of Ganesar Ginning Mills Ltd has been verified by the then Assessing Officer based on the relevant facts and materials submitted by the assessee and the Assessing Officer has accepted the stand of the assessee in respect of calculation of capital gains on sale of shares. In such an eventuality in an assessment u/s.143(3) where there has been no failure on the part of the assessee in disclosing truly and materially all facts relating to the case, the assessment cannot be reopened after 4 years time limit which was completed on 31.03.2012 as per the proviso to section 147 of the Act. There was no allegation by AO that there was failure on the part of the assessee to disclose the materials, facts truly and correctly for the period of assessment. Being so, since the assessment was reopened after four years from the end of the relevant assessment year when the original assessment was completed u/s.143(3), this issue is squarely covered by the judgment of Supreme Court in the case of CIT vs. Kelvinator of India Ltd. [2010 (1) TMI 11 - SUPREME COURT OF INDIA]. AO precluded from reopening the assessment - Reopening of assessment is invalid - ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessee, her father and mother during September 2005. The Company was sold during November 2006 as the entire share capital of the company was sold by the assessee and her family. As per the Balance Sheet filed by The Ganesar Ginning Company Private Limited for the year ending 313.2006, the authorized share capital was ₹ 1,50,OOO/- consisting of 1,500 shares ( each having a face value of ₹ 100/-). The total of the balance sheet is only ₹ 20,29,147/-, which consists of accumulated losses of ₹ 30,14,192/-. As per the Profit and Loss account filed by the above Company for the said period, there was a net loss of ₹ 3,19,905/-. Further, no income was reflected in this account, which showed that no business was conducted for 31.3.2005 and 31.3.2006. In such a situation, no prudent business man would acquire 1500 shares of a company, which was incurring continuous losses, with a face value of ₹ 1,50,OOO/- for ₹ 5,31,97,500/-. Hence it was apparent that when the assessee and her parents acquired the shares of The Ganesar Ginning Company Private Limited, their only objective / interest was in the prime land owned by the company and not in the busines ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... T(A) be quashed. Moreover, the modus operandi adopted by this assessee in transferring the above mentioned shares was entirely different from that of the case relied upon by the Commissioner of Income Tax (Appeals). In this case, the entire share capital of Ganesar Ginning Company Pvt. Ltd. was acquired through resolution of transfer of shares by the assessee and her family whereas in the case of Bhoruka Engineering Industries Ltd, the transfer of shares was done through a registered stock exchange and the applicable securities transaction tax was paid by them. The objective of the transfer as per the MOU ibid, was to construct a shopping mall and complex on the land. Hence, assessing officer's action of assessing the capital gain as a short term capital gain, in this case, has to be upheld since this case is entirely different in nature from the one cited by the Commissioner of Income Tax (Appeals). 8. We have heard the ld. Departmental Representative and perused the material available on record. It is evident that the assessee has sold the shares of M/s. Ganesar Ginning Company (Pvt) Ltd. to M/s. DLF Retail Developers Ltd. The Authorized Representative submitted before the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... le property is contrary to law and contrary to the material on record. The Karnataka High Court held that if the veil of the company is lifted, what appeared to them is transaction of immovable property. Such a finding is impermissible in law. In the case of M/s. Bhoruka Engineering Industries Ltd (cited supra), the assessee traded the shares in Magadh Stock Exchange and paid the transaction fee and claimed the Long Term Capital Gains as exempt. In the case of the assessee, she paid the Long Term Capital Gain on the sale of shares as per the requirement of law. In view of the above, the issue in appeal is squarely covered by the above judgment. Hence, the appeal of the Revenue is dismissed. 9. ITA No.1601/Mds/2015, assessment year 2007-08; K. Priya. The first ground raised by the Revenue is with regard to reopening of assessment. 10. The facts of the issue are that in the return of income filed, the assessee had offered Long Term Capital Gains of ₹ 2,23,91,380/- earned by her from the sale of shares of M/s. Ganesar Ginning Company (Pvt) Ltd. The assessee and her parents Shri T.S.R.Khannaiyan and Smt. T.R.K.Saraswathy, are the directors of M/s. Ganesar Ginning Company (P ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s industrial land and could be used for general commercial purposes, etc. Hence, a perusal of the above events revealed that the said land was acquired by assessee and her parents on 23.9.2005 and subsequently sold on 28.11.2006. It was apparent that since the holding period of the asset ( land) was less than 3 years, the resultant Capital Gain in the hands of the assessee needed to be assessed as Short Term Capital Gains. Hence, in this case, there was tangible material and there was reason to believe that Income chargeable has escaped assessment Hence notice u/s.148 was issued to the assessee. Aggrieved, the assessee preferred an appeal before the Commissioner of Income Tax (Appeals). 11. On appeal, the Commissioner of Income Tax (Appeals) gave a finding in favour of the assessee holding that reopening is bad in law. Against this, the Revenue is in appeal before us. 12. We have heard both the sides and perused the material on record. In this case the original assessment for the assessment year 2007-2008 was completed u/s.143(3) of the Act after examining the books of accounts. It was noted that the calculation of capital gains on sale of equity shares of Ganesar Ginning Mil ..... X X X X Extracts X X X X X X X X Extracts X X X X
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