ITO - 8(2)(4), MUMBAI V. M/s. PACIFIC ENERGY P. LTD., MUMBAI

ITA 1073/MUM/2007

• Counselvise Citation: [2012] 119 COUNSELVISE.COM (IT) 8216 (ITAT-MUMBAI)
• Duration Of Justice: 5 year(s) 5 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 03-08-2012
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: C
• Next Hearing Date: 17-07-2012
• Assessment Year: 1999-2000
• Appeal Filed On: 05-02-2007
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: A C TEJPAL
• Assessee Lawyers: VINOD MODI
• Keywords: Business income; Deemed to accrue or arise in india; Difference of opinion; Change of opinion
• Section: 143(3); 115JB; 147; 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCH C , MUMBAI BEFORE SHRI D. MANMOHAN, VICE PRESIDENT AND SHRI RAJENDRA SINGH, ACCOUNTANT MEMBER ITA NO.1073/MUM/2007 ASSESSMENT YEAR : INCOME TAX OFFICER WARD 8(2)(4), ROOM NO.213, AAYAKAR BHAVAN, 2 ND FLOOR M.K. ROAD MUMBAI-400 020. M/S. PACIFIC ENERGY PVT. LTD. 301, CAPRI GREEN FIELD ESTATE A.B. NAIR ROAD, JUHU MUMBAI-400 049. PAN NO. AACCP 0544 P (APPELLANT) VS. (RESPONDENT) APPELLANT BY : SHRI A.C. TEJPAL RESPONDENT BY : SHRI FARROKH IRANI AND SHRI VINOD MODI DATE OF HEARING : 17.7.2012 DATE OF PRONOUNCEMENT : 03.08.2012 O R D E R PER RAJENDRA SINGH, AM: THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST THE ORDE R DATED 30.11.2006 OF CIT(A) FOR THE ASSESSMENT YEAR 1999-2000. THE ONLY DISPUTE RAISED BY THE REVENUE IN THIS APPEAL IS REGARDI NG LEGAL VALIDITY OF RE-OPENING OF THE ASSESSMENT FOR ASSESSMENT YEAR 1999-00 UNDER SECTION 147 OF THE ACT. ITA NO.1073/M/07 A.Y.99-00 2 2. THE FACTS IN BRIEF ARE THAT THE ASSESSEE FOR THE ASSESSMEN T YEAR 1999-00 HAD DECLARED LONG TERM CAPITAL LOSS OF RS.4,01,7 5,013/- ON SALE OF SHARES WHICH HAD BEEN SET OFF AGAINST SHORT TERM CAPITAL GAIN FROM SALE OF SHARES OF RS.3,98,40,597/- AND THUS THERE W AS NET LONG TERM CAPITAL LOSS OF RS.10,73,749/-. THE BOOK PROFIT OF THE ASSESSEE UNDER SECTION 115JB OF THE INCOME TAX ACT (THE ACT) WAS RS.1,13,25,826/- AND, THEREFORE, UNDER THE PROVISIONS OF THE SAID SECTION ASSESSEE HAD DEEMED TOTAL INCOME OF RS.33,97,748/-. THE ASSESSEE HAD, THEREFORE PAID TAX UNDER SECTION 115JB ON D EEMED INCOME. THE INCOME DECLARED BY THE ASSESSEE HAD BEEN ACCEPTE D BY THE AO UNDER SUMMARY SCHEME UNDER SECTION 143(1). THEREA FTER, THE AO NOTED FROM THE ASSESSMENT ORDER PASSED UNDER SECTION 143 (3) FOR 2002-03 THAT THE ASSESSEE HAD SOLD 2,00,000 SHARES OF GA MMON INDIA LTD. IN ASSESSMENT YEAR 1999-2000. THE SAID SHARES HAD BE EN PURCHASED IN FINANCIAL YEAR 1995-96. THE AO ALSO NOTED THAT PURCHASE PRICE OF THE SHARE WAS RS.242.01 PER SHARE WHEREAS IN THE COMPUTATION OF LONG TERM CAPITAL LOSS FROM THE SAID SHAR ES IN ASSESSMENT YEAR 1999-2000, ASSESSEE HAD TAKEN THE PURCHASE PR ICE @248.88 PER SHARE. THUS THE ASSESSEE HAD INFLATED THE L OSS TO THE TUNE OF RS.17,15,576/- AND THE INCOME HAD THUS BEEN R EDUCED TO THAT EXTENT. THE AO, THEREFORE, ISSUED NOTICE UNDER SECTION 148 WHICH WAS SERVED ON THE ASSESSEE ON 18.4.2005. IN RESPONSE TO THE SAI D NOTICE, ITA NO.1073/M/07 A.Y.99-00 3 THE ASSESSEE STATED THAT THE RETURN OF INCOME FILED ON 29 .12.1999 MAY BE TAKEN AS RETURN FILED IN RESPONSE TO SECTION 148. 2.1 THE ASSESSEE ALSO SUBMITTED THAT THE NOTICE ISSUED UND ER SECTION 148 WAS MISCONCEIVED AND ASKED FOR THE REASONS RECOR DED UNDER SECTION 147. THE AO IN THE ASSESSMENT ORDER MENTION ED THAT THE REASONS RECORDED HAD BEEN GIVEN TO THE ASSESSEE VIDE LETTE R DATED 18.11.2005. HE ALSO REJECTED THE OBJECTION RAISED BY THE ASSESSEE TO ISSUE OF NOTICE UNDER SECTION 148. THE AO ON SCRUTINY OF R ECORDS ALSO NOTED THAT THE ASSESSEE HAD TRANSACTIONS IN SHARES IN BOCK A ND TIME GAP BETWEEN PURCHASE AND SALE OF SHARES WAS VERY SHORT VAR YING FROM 2 TO 5 DAYS. THE AO, THEREFORE, ASKED THE ASSESSEE TO EXP LAIN AS TO WHY SHORT TERM CAPITAL GAIN DECLARED BY THE ASSESSEE FROM PURCHASE AND SALE OF SHARES SHOULD NOT BE TREATED AS BUSINESS INCOME AND CLAIM OF SET OFF OF LONG TERM CAPITAL LOSS SHOULD NOT BE DISAL LOWED. THE ASSESSEE REPLIED THAT ACTION PROPOSED BY AO WAS BASELESS, MISCONCEIVED AND UNJUSTIFIED. THE AO, HOWEVER, CONCLUDED THAT THE ASSESSEE HAD FAILED TO PROVE AS TO WHY THE SHARE TRANSACTIO NS RESULTING INTO SHORT TERM CAPITAL GAIN SHOULD BE TREATED AS INVE STMENT. ACCORDINGLY HE ASSESSED INCOME DECLARED AS SHORT TERM CAPITAL GAIN BY THE ASSESSEE AS BUSINESS INCOME. THE LOSS DECLARED ON SALE OF SH ARES OF GAMMON INDIA LTD. WAS ACCEPTED AS LONG TERM CAPITAL LOSS WHICH ITA NO.1073/M/07 A.Y.99-00 4 WAS COMPUTED AT RS.3,84,59,438/- WHICH WAS ALLOWED TO BE CARRIED FORWARD. THE TOTAL BUSINESS INCOME OF THE ASSESSEE WAS COMPUT ED AT RS.3,91,01,264/- WHICH INCLUDED THE GAIN FROM SALE OF SHARES OF RS.3,98,40,597/- DECLARED BY THE ASSESSEE AS SHORT TERM CAP ITAL GAIN AND ASSESSED BY THE AO AS BUSINESS INCOME. 3. THE ASSESSEE DISPUTED THE DECISION OF AO TO ASSESS SHORT TER M CAPITAL GAIN AS BUSINESS INCOME AND ALSO CHALLENGED THE LE GAL VALIDITY OF RE-OPENING OF THE ASSESSMENT BEFORE CIT(A). IT WAS AR GUED THAT ASSESSEE VIDE LETTER DATED 18.10.2005 ISSUED BY AO WAS ASK ED TO GIVE REASONS RECORDED FOR ISSUE OF NOTICE UNDER SECTION 147 WHI CH WAS RECEIVED ON 9.12.2005 VIDE LETTER DATED 18.11.2005 O F THE AO ENCLOSED WITH THE ASSESSMENT ORDER DATED 30.11.2005. THE ASSESSEE SUB MITTED THAT AO HAD NOT GIVEN REASONS RECORDED TO THE ASSESSEE BEF ORE PASSING OF THE ASSESSMENT ORDER AND THEREFORE, REASSESSMENT WAS BAD IN LAW. THE ASSESSEE PLACED RELIANCE ON THE JUDGMENT OF HON'BLE SU PREME COURT IN THE CASE OF GKN DRIVESHAFTS (INDIA) LTD. VS. I TO (259 ITR 19). THE ASSESSEE ALSO SUBMITTED THAT IN THE ASSESSMENT ORDER FOR ASSESSMENT YEAR 2002-03 MADE UNDER SECTION 143(3), THE AO HAD ACCEPTED THE SALE AND PURCHASE OF SHARES AS INVESTMENT ACTIVI TY AND, THEREFORE, RE-OPENING OF ASSESSMENT WAS BASED ON CHANGE OF OPINION WHICH WAS NOT PERMITTED IN LAW. THE ASSESSEE ALSO PLEADED THAT THE ASSESSMENT SHOULD BE QUASHED ON THE GROUND THAT THE REASON S ITA NO.1073/M/07 A.Y.99-00 5 RECORDED HAD NOT BEEN PROVIDED TO THE ASSESSEE. CIT(A) D ID NOT ACCEPT THE PLEA OF THE ASSESSEE THAT THE ASSESSMENT SHOULD BE QUA SHED ON THE GROUND THAT THE REASONS WERE NOT PROVIDED BEFORE PASSING ASSESSMENT ORDER. HOWEVER, HE AGREED WITH THE ASSESSEE THAT THE RE- OPENING WAS BASED ON CHANGE OF OPINION AND AO DID NOT HAVE REASONS TO BELIEVE FOR ESCAPEMENT OF INCOME FOR ASSESSMENT YEAR 19 99-2000. HE, THEREFORE, QUASHED THE RE-ASSESSMENT MADE BY AO AGGR IEVED BY WHICH, THE REVENUE IS IN APPEAL. 4. BEFORE US, THE LD. DEPARTMENTAL REPRESENTATIVE APP EARING FOR THE REVENUE ASSAILED THE ORDER OF CIT(A). IT WAS SUBMITTED THAT THE RETURN OF INCOME FILED FOR ASSESSMENT YEAR 1999-2000 HAD ONLY B EEN PROCESSED UNDER SECTION 143(1)AND THERE WAS NO ASSESSMENT M ADE AND, THEREFORE, RE-OPENING OF THE ASSESSMENT UNDER SECTIO N 147 COULD NOT BE SAID TO BE BASED ON CHANGE OF OPINION. IT WAS AL SO SUBMITTED THAT AO HAD RE-OPENED THE ASSESSMENT ON VALID GROUND OF INFLATION OF LONG TERM CAPITAL LOSS BY SHOWING INFLATED PURCHASE PRICE AND ONCE THE ASSESSMENT HAD BEEN RE-OPENED ON VALID GROUND, THE AO H AD THE JURISDICTION TO ASSESS OR RE-ASSESS ANY OTHER INCOME WHICH HA D ESCAPED ASSESSMENT. THE LD. DR FURTHER SUBMITTED THAT THE AO HAD GIVEN REASONS RECORDED TO THE ASSESSEE VIDE LETTER DATED 18.11.2005 WHICH WAS BEFORE THE DATE OF ASSESSMENT ORDER. THEREFORE, THE ORDER OF CIT(A) QUASHING THE RE-ASSESSMENT WAS NOT PROPER. IT WAS ALSO ITA NO.1073/M/07 A.Y.99-00 6 ARGUED THAT THE ASSESSEE WAS AWARE OF THE REASONS RECORDED AND, THEREFORE, NON-SUPPLY OF REASONS EVEN IF IT WAS PRESUMED THAT THE REASONS WERE NOT RECEIVED BY THE ASSESSEE BEFORE PASSING OF ASSESSMENT ORDER, COULD NOT BE CONSIDERED AS FATAL TO VALI DITY OF RE- ASSESSMENT. RELIANCE WAS PLACED ON THE DECISION OF DELHI B ENCH OF THE TRIBUNAL IN THE CASE OF ITO VS. GURINDER KAUR (102 ITD 189). 4.1 THE LD. AR ON THE OTHER HAND ARGUED THAT THE AO WAS REQUIRED TO GIVE COPY OF REASONS RECORDED TO THE ASSESSEE WITHIN A REA SONABLE TIME AND ON RECEIPT OF REASONS, ASSESSEE WAS ENTITLED TO FI LE OBJECTIONS WHICH THE AO WAS BOUND TO DISPOSE OFF BY A SPEAKING ORDE R AS HELD BY HON'BLE SUPREME COURT IN THE CASE OF GKN DRIVESHAFTS (I NDIA) LTD. (SUPRA), THE AO HAD THUS NOT FOLLOWED THE PROCEDURE LA ID DOWN BY THE HON'BLE SUPREME COURT IN THE MATTER OF RE-OPENING OF THE ASSESSMENT. IT WAS ALSO POINTED OUT THAT THE ASSESSEE IN THE RETURN OF INCOME HAD DECLARED LONG TERM CAPITAL LOSS OF RS.10,73,749/-. THE AO RE-OPENED THE ASSESSMENT FOR ESCAPEMENT OF INCOME BY INFLATING LONG TERM CAPITAL LOSS BY RS.17,15,576/- AND, THEREFORE, EVEN IF THE LONG TERM CAPITAL LOSS WAS INCREASED TO THAT EXTENT, THIS WOULD HAVE RESULTED INTO TOTAL LONG TERM CAPITAL GAIN OF RS.6,41,829/-. THE AS SESSEE HAD PAID THE TAX ON DEEMED TOTAL INCOME OF RS.33,97,748/- UNDE R SECTION 115JB OF THE ACT. THEREFORE, EVEN AFTER CONSIDERING THE REASO NS RECORDED BY AO, THERE WAS NO ESCAPEMENT OF INCOME CHARGEABLE TO TAX. IT WAS ALSO ITA NO.1073/M/07 A.Y.99-00 7 SUBMITTED THAT HAD THE AO GIVEN COPY OF REASONS RECORDED BEFORE ASSESSMENT, THE ASSESSEE WOULD HAVE EXPLAINED THE POINT AND PROBABLY THE AO WOULD HAVE DROPPED THE REASSESSMENT AS T HE VERY GROUND FOR RE-OPENING OF THE ASSESSMENT WAS NOT VALID. T HEREFORE, THERE BEING NO VALID REASON FOR RE-OPENING, AO WOULD NOT HAVE BEEN ABLE TO REASSESS THE SHORT TERM CAPITAL GAIN AS BUSINESS INCOM E. SINCE THE AO HAD NOT FOLLOWED THE PROCEDURE LAID DOWN BY T HE HON'BLE SUPREME COURT IN THE CASE OF GKN DRIVESHAFTS (INDIA) LT D. (SUPRA), THE LD. AR URGED THAT THE RE-ASSESSMENT ORDER SHOULD BE QUASH ED OR AT THE MOST THE MATTER COULD BE SENT BACK TO AO FOR PROVIDING OPPORTUNITY TO THE ASSESSEE TO FILE OBJECTIONS AFRESH. 5. WE HAVE PERUSED THE RECORDS AND CONSIDERED THE RIVAL CONTENTIONS CAREFULLY. THE DISPUTE RAISED BY THE REVENU E IN THIS APPEAL IS REGARDING LEGAL VALIDITY OF RE-OPENING OF THE ASSESSM ENT. THE ASSESSEE IN ASSESSMENT YEAR 1999-2000 HAD DECLARED LONG TER M CAPITAL LOSS OF RS.10,73,749/- ON SALE OF SHARES. THE ASSESSE E HAD ALSO EARNED GAIN ON SALE OF SHARES OF RS.3,98,40,597/- WHICH HAD BEEN DECLARED AS SHORT TERM CAPITAL GAIN. THE RETURN HAD BEE N PROCESSED UNDER SECTION 143(1). THEREAFTER THE AO FROM THE DETA ILS GIVEN IN THE ASSESSMENT PROCEEDINGS FOR ASSESSMENT YEAR 2002-03 NOTED THAT THE ASSESSEE HAD PURCHASED SHARES OF GAMMON INDIA LTD. AT RS.24 2.01 PER SHARE IN FINANCIAL YEAR 1995-96 WHICH HAD BEEN SOLD IN ASSESSMENT ITA NO.1073/M/07 A.Y.99-00 8 YEAR 1999-00 RESULTING INTO LONG TERM CAPITAL LOSS OF R S.10,73,749/-. IT WAS FOUND THAT THE ASSESSEE HAD ADOPTED PURCHASE PRICE OF R S.248.88 PER SHARE WHILE COMPUTING LONG TERM CAPITAL LOSS WHEREAS THE ACTUAL PURCHASE PRICE WAS RS.242.01 PER SHARE. THE LOSS THUS HAD B EEN INFLATED BY RS.17,15,576/-. THE AO HAD, THEREFORE, R E-OPENED THE ASSESSMENT PROCEEDINGS AND IN THE FRESH ASSESSMENT ORDER DETER MINED LONG TERM CAPITAL LOSS ON THE BASIS OF CURRENT PURCHASE PR ICE OF RS.242.01. THE AO ALSO DID NOT ACCEPT THE CLAIM OF SHORT TERM CAPITAL GAIN ON SALE OF SHARES AND TREATED THE SAME AS BUSINESS AFT ER HOLDING THAT THE ASSESSEE HAD FREQUENTLY BOUGHT AND SOLD SHARES I N BIG VOLUME. 5.1 THE RE-ASSESSMENT PROCEEDINGS WERE CHALLENGED BY THE ASSESSEE. THOUGH THE AO IN THE ASSESSMENT ORDER HAS MENTION ED THAT HE HAD GIVEN A COPY OF THE REASONS RECORDED TO THE ASSESSE E VIDE LETTER DATED 18.11.2005, BUT THE CASE OF THE ASSESSEE IS THAT THE REASONS WERE RECEIVED ALONG WITH THE ASSESSMENT ORDER DAT ED 18.10.2005 ON 9.12.2005. THE ASSESSEE ARGUED THAT RE-A SSESSMENT PROCEEDINGS SHOULD BE QUASHED AS REASONS RECORDED WERE NOT GIVEN TO THE ASSESSEE BEFORE PASSING OF THE ASSESSMENT ORDER. CIT(A) DID NOT ACCEPT THE PLEA OF THE ASSESSEE THAT ASSESSMENT ORDER SHOULD B E QUASHED ONLY ON THE GROUND THAT REASONS WERE NOT GIVEN TO THE ASSESSEE. HOWEVER, HE HELD THAT TREATMENT OF SHORT TERM CA PITAL GAIN ITA NO.1073/M/07 A.Y.99-00 9 DECLARED BY ASSESSEE AS BUSINESS INCOME WAS BASED ON CHANGE O F OPINION AS AO IN THE ASSESSMENT ORDER UNDER SECTION 143(3) IN ASSESSMENT YEAR 2002-03 HAD ACCEPTED THE SHARE TRANSACTIONS A S INVESTMENT ACTIVITY. HE, THEREFORE, QUASHED THE REASSESSMEN T PROCEEDINGS ON THE GROUND THAT THE SAME WAS BASED ON THE CHANGE OF OPINION. 5.2 ON CAREFUL CONSIDERATION OF THE VARIOUS ASPECTS OF TH E MATTER WE ARE UNABLE TO SUSTAIN THE ORDER OF CIT(A) QUASHING RE ASSESSMENT PROCEEDINGS ON THE GROUND THAT RE-OPENING OF THE ASSESSM ENT WAS BASED ON CHANGE OF OPINION. THE AO HAD NOT RE-OPENED THE ASSESSMENT ON THE GROUND OF TREATMENT OF INCOME FROM SHAR E TRANSACTIONS WHICH HAD BEEN DECLARED BY THE ASSESSEE AS SHORT TERM CAPITAL GAIN. THE AO HAD RE-OPENED THE ASSESSMENT ON THE GROUND THAT LONG TERM CAPITAL LOSS FROM SALE OF SHARES OF GAMMON INDI A LTD. HAD NOT BEEN CORRECTLY COMPUTED RESULTING INTO INFLATION OF CAPITAL LOSS. THE RETURN FOR ASSESSMENT YEAR 1999-2000 HAD ONLY BEEN PROCE SSED UNDER SECTION 143(1) IN WHICH THE AO HAD ONLY TO ACCEPT WHATEV ER HAD BEEN DECLARED BY THE ASSESSEE AND HE HAD NO POWER TO CHANGE O R MODIFY THE INCOME/LOSS RETURNED. THEREFORE, THE RE-OPENING COULD NOT BE SAID TO BE BASED ON CHANGE OF OPINION. THIS LEGAL POSITION IS SETTLED BY THE JUDGMENT OF HON'BLE SUPREME COURT IN THE CASE OF ACIT VS. RAJESH JHAVERI STOCK BROKERS P. LTD. (SC) (291 ITR 500). M OREOVER, IN THIS ITA NO.1073/M/07 A.Y.99-00 10 CASE THE FACT THAT THE ASSESSEE HAD INFLATED PURCHASE PRICE I N COMPUTATION OF LONG TERM CAPITAL LOSS CAME TO THE NOTICE OF THE DEPARTMENT ONLY LATER DURING COURSE OF ASSESSMENT PROCEEDI NGS FOR ASSESSMENT YEAR 2002-03. IT IS ALSO A SETTLED LEGAL POSITI ON THAT, ONCE ASSESSMENT HAS BEEN RE-OPENED PROPERLY, IN THE RE-ASSESSME NT ORDER, THE AO COULD ALSO BRING TO TAX ANY OTHER INCOME WHICH HAS ESCAPED ASSESSMENT. THEREFORE, ONCE THE ASSESSMENT HAS BEEN RE-OPENED PROPERLY, THE AO HAS POWER TO CONSIDER THE TRUE NATURE OF INCOME FROM SHARE TRANSACTIONS RESULTING INTO SHORT TERM CAPITAL GAIN . HOWEVER, WE FIND THAT THE AO IN THE MATTER OF RE-OPENING OF THE ASSESSMENT, HAD NOT FOLLOWED THE PROCEDURE LAID DOWN BY THE HONBLE S UPREME COURT IN THE CASE OF GKN DRIVESHAFTS (INDIA) LTD. (SUPRA). IN T HAT CASE IT HAS BEEN HELD THAT AFTER ASSESSMENT IS REOPENED, THE ASSESSEE CAN SEEK REASONS FOR ISSUE OF NOTICE AND AO IS BOUND TO FURNISH REA SONS WITHIN REASONABLE TIME. FURTHER ON RECEIPT OF REASONS, ASSESSEE IS ENTITLED TO FILE OBJECTIONS TO THE ISSUANCE OF THE NOTICE AND AO IS BO UND TO DISPOSE OF THE SAME BY PASSING A SPEAKING ORDER. IN THIS CASE THE RE IS NO DISPUTE THAT THE ASSESSEE DID ASK FOR COPY OF REASONS RECOR DED. THE CLAIM OF THE DEPARTMENT IS THAT THE AO HAD GIVEN COPY OF REASONS RECORDED VIDE LETTER DATED 18.11.2005 BUT THE CASE OF THE ASSESSEE IS THAT THE SAID LETTER DATED 18.11.2005 WAS RECEIVED BY THE ASSESSEE ONLY ON 9.12.2005 ALONG WITH COPY OF ASSESSMENT ORDER DA TED ITA NO.1073/M/07 A.Y.99-00 11 30.11.2005. BEFORE US, THE LD. D.R HAS NOT PRODUCED A NY MATERIAL TO SHOW THAT THE LETTER DATED 18.11.2005 WAS SERVED ON TH E ASSESSEE BEFORE PASSING OF THE ASSESSMENT ORDER. THEREFORE, THE CL AIM OF THE REVENUE THAT THE REASONS HAD BEEN GIVEN BEFORE THE ASSE SSMENT ORDER WAS PASSED IS NOT SUPPORTED BY ANY EVIDENCE. THE LD. CO UNSEL FOR THE ASSESSEE HAS MADE A VERY VALID POINT THAT THE ASSESSEE HAD DECLARED LONG TERM CAPITAL LOSS OF RS.10,73,749/- AND THEREFORE, EVEN AFTER ADDITION OF RS.17,15,576/- WAS MADE BY AO BECAUSE OF IN FLATION OF LONG TERM CAPITAL LOSS, IT WOULD HAVE RESULTED INTO LON G TERM CAPITAL GAIN OF RS.6,41,829/-. THE ASSESSEE HAD HOWEVER PAID TA X UNDER SECTION 115JB OF DEEMED INCOME OF RS.33,97,478/-. THE REFORE, THERE WAS NO ESCAPEMENT OF INCOME ON ACCOUNT OF WRONG COMPUTATIO N OF LONG TERM CAPITAL GAIN. THE LD. COUNSEL FOR THE ASSESSEE RIGHTLY ARGUED THAT IN CASE THE AO HAD GIVEN ASSESSEE REASONS RECORDED, THE ASSESSEE MAY HAVE BEEN ABLE TO CONVINCE THE AO THAT THERE WAS N O ESCAPEMENT OF INCOME AND AO MAY HAVE AGREED TO DROP THE REASSESSMEN T PROCEEDINGS. THE ASSESSEE HAD BEEN DEPRIVED OF THIS VITAL OPPORTUNITY HAVING A BEARING ON THE REOPENING OF THE ASSESSMENT. T HEREFORE, IN OUR VIEW, THE MATTER IS REQUIRED TO BE SENT BACK TO TH E AO FOR PROVIDING OPPORTUNITY TO THE ASSESSEE TO RAISE OBJECTIONS AGAINST REASONS RECORDED WHICH WILL BE DISPOSED OFF BY AO BY WAY OF REASONED AND SPEAKING ORDER. THE AO WILL PASS A FRESH ORDER AF TER DISPOSING OFF ITA NO.1073/M/07 A.Y.99-00 12 THE OBJECTIONS RAISED BY THE ASSESSEE AND AFTER ALLOWING OPPORTUNITY OF HEARING TO THE ASSESSEE. 6. IN THE RESULT, APPEAL OF THE REVENUE IS ALLOWED FO R STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 3.8.2012. SD/- SD/- (D. MANMOHAN ) VICE PRESIDENT (RAJENDRA SINGH) ACCOUNTANT MEMBER MUMBAI, DATED: 3.8.2012. JV. COPY TO: THE APPELLANT THE RESPONDENT THE CIT, CONCERNED, MUMBAI THE CIT(A) CONCERNED, MUMBAI THE DR BENCH TRUE COPY BY ORDER DY/ASSTT. REGISTRAR, ITAT, MUMBAI.