ACIT 10(1), MUMBAI V. HETAL MADHUKANT GANDHI, MUMBAI

ITA 4714/MUM/2012

• Counselvise Citation: [2013] 140 COUNSELVISE.COM (IT) 71889 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 4 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-12-2013
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: H
• Next Hearing Date: 10-12-2013
• Assessment Year: 2006-2007
• Appeal Filed On: 16-07-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: M RAJAN
• Assessee Lawyers: P V LAKHANI
• Keywords: Reopening of assessment; Business income; Tangible material; Difference of opinion; Change of opinion; Reassessment proceedings
• Section: 147; 148

Judgement Text

H IN THE INCO ME TAX APPELLATE TRIBUNAL H BENCH, MUMBAI BEFORE SHRI D. KARUNAKARA RAO, ACCOUNTANT MEMBER AND DR. S.T.M. PAVALAN , JUDICIAL MEMBER ./I.T.A. NO.4714/M/2012 (AY: 2006 - 2007) ACIT - 10(1), 455, AAYAKAR BHAVAN, 4 TH FLOOR, M.K. MARG, MUMBAI - 400 020. / VS. HETAL MADHUKANT GANDHI, 61, ROSIE APARTMENTS, NORTH AVENUE, SANTACRUZ (W), MUMBAI 400 065. ./ PAN : ACKPG 0257 D ( / APPELLANT) .. ( / RESPONDENT ) / APPELLANT BY : SHRI M. RAJAN / RESPONDENT BY : SHRI P.V. LAKHANI / DATE OF HEARING : 10.12.2013 / DATE OF PRONOUNCEMENT : 10 .12.2013 / O R D E R PER D. KARUNAKARA RAO, AM: THIS APPEAL FILED BY THE REVENUE ON 16.7.2012 IS AGAINST THE ORDER OF THE CIT (A) - 21, MUMBAI DATED 4.4.2012 FOR THE ASSESSMENT YEAR 2006 - 2007. IN THIS APPEAL, REVENUE RAISED THE FOLLOWING GROUNDS WHICH READ AS UNDER: 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD CIT (A) ERRED IN ALLOWING THE ADDITIONAL GROUND AND HOLDING THAT THE ASSESSMENT MADE ON THE BASIS OF REOPENING U/S 147 / 148 IS INVALID. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD CIT (A) ERRED IN HOLDING THAT THE AO HAD NO NEW MATERIAL FOR FORMING AN OPINION THAT TRADING IN SHARES WAS REQUIRED TO BE TREATED AS BUSINESS INCOME . 2. AT THE OUTSET, SHRI P.V. LAKHANI , LD COUNSEL FOR THE ASSESSEE MENTIONED THAT THE GROUNDS RAISED IN THE APPEAL BY THE REVENUE IS AGAINST QUASHING OF REASSESSMENT PROCEEDINGS U/S 147 / 148 OF THE ACT ON THE FACT THAT NO NEW MATERIAL WAS AVAILABLE FOR FORMING A DIFFERENT OPINION, WHICH IS NE CESSARY FOR SUCH VALID REASSESSMENT PROCEEDINGS. IN THIS REGARD, LD COUNSEL BROUGHT OUR ATTENTION TO CERTAIN CONTENTS OF PARA 4.3 OF THE IMPUGNED ORDER AND MENTIONED THAT AO TRIED TO ASSESS THE PROFITS ON SALE OF CERTAIN SHARES AS BUSINESS INCOME AGAINST CAPITAL 2 GAINS OFFERED BY THE ASSESSEE. IN THIS REGARD, LD COUNSEL READ OUT THAT THE SAID ISSUE IS THE SUBJECT MATTER OF EXAMINATION AND VERIFICATION DURING THE REGULAR ASSESSMENT PROCEEDINGS AND THE AO ACCEPTED THE ASSESSEES CLAIM AND THE PROFIT WAS F OUND ASSESSABLE UNDER THE HEAD SHORT TERM CAPITAL GAINS. THE PRESENT REASSESSMENT PROCEEDINGS IS A PRODUCT OF CHANGE OF OPINION AND THERE WAS NO TANGIBLE MATERIAL TO WORK AS A LIVEWIRE FOR ASSUMING THE JURISDICTION U/S 147 / 148 OF THE ACT. 3. ON THE OTHER HAND, LD DR FAIRLY RELIED ON THE ORDER OF THE AO. 4. WE HAVE HEARD BOTH THE PARTIES ON THE LIMITED ISSUE OF VALIDITY OF THE REASSESSMENT RAISED IN GROUND NO.1 AND 2 OF THE REVENUES APPEAL. WE HAVE ALSO PERUSED THE ORDER OF THE CIT (A) IN GENERAL A ND THE OPERATIONAL PARAGRAPH 4.3 OF THE SAID ORDER. RELEVANT FINDING OF THE CIT (A) IN THIS REGARD IS REPRODUCED HERE UNDER: 4.3IN THE ORIGINAL ASSESSMENT ORDER, AFTER CONSIDERING ALL THESE DETAILS, THE AO ACCEPTED APPELLANTS CLAIM THAT THE PROFIT EARNED ON SALE / PURCHASE OF SHARES WAS ASSESSABLE UNDER THE HEAD SHORT TERM CAPITAL GAIN. IN THE FACTS AND CIRCUMSTANCES THE REASONS RECORDED BY AO WERE NOT SUFFICIENT FOR REOPENING THE ASSESSMENT U/S 147 / 148 OF THE ACT. THUS, THE REOPENING WAS MADE ON IMPROPER / INCORRECT REASONS. CONSEQUENTLY, SUCH IMPROPER / INCORRECT REASONS COULD NOT HAVE GIVEN VALID JURISDICTION TO AO U/S 147 OF THE ACT FOR REOPENING THE ASSESSMENT. THEREFORE, THE REOPENING OF ASSESSMENT U/S 147 / 148 OF THE ACT DESERVES TO BE HELD AS INVALID.. 5. FROM THE ABOVE, IT IS EVIDENT THAT THE AO ORIGINALLY FORMED AN OPINION AND ACCEPTED THE CLAIM OF THE ASSESSEE. THE AO REOPEN ED THE SAID ASSESSMENT IN THE ABSENCE OF ANY TANGIBLE MATERIAL TO TAKE A DIFFERENT VIEW. IT IS A SETTLED PROPOSITION OF THE LAW THAT REASSESSMENT PROCEEDINGS BASED ON THE CHANGE OF OPINI ON AND WHEN THERE IS NO TANGIBLE MATERIAL IS NOT SUSTAINABLE. THEREFORE, WE ARE OF THE OPINION THAT THE ORDER OF THE CIT (A) DOES NOT CALL FOR ANY INTERFERENCE. ACCORDINGLY, GROUND NOS. 1 AND 2 RAISED BY THE REVENUE ARE DISMISSED . 6. IN THE RESULT, APPEAL OF THE REVENUE IS DISMISSED . ORDER PRONO UNCED IN THE OPEN COURT ON 1 0 T H DECEMBER, 2013. S D / - S D / - ( DR. S.T.M. PAVALAN ) (D. KARUNAKARA RAO) / JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI ; DATED 1 0 .12.2013 . . ./ OKK , SR. PS 3 / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ( ) / THE CIT(A) - 4. / CIT 5. , , / DR, ITAT, MUMBAI 6. / GUARD FILE . //TRUE COPY// / BY ORDER, / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI