I.T.O.Wd - 8(1),Kol., Kolkata V. M/s Alkharsh International Pvt Ltd, Kolkata

ITA 632/KOL/2013

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 4910 (ITAT-KOLKATA)
• Duration Of Justice: 3 year(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-03-2016
• Appeal Filed By: Department
• Bench Allotted: B
• Assessment Year: 2004-2005
• Appeal Filed On: 22-03-2013
• Court: TRIBUNAL
• Department Lawyers: RAJAT KR KUREEL JCIT LD SR
• Assessee Lawyers: D S DAML E FCA LD
• Keywords: Reopening of assessment; Tangible material; Speculation loss; Difference of opinion; Reason to believe; Change of opinion; Reassessment proceedings
• Section: 143(3); 80HHC; 43(5); 147; 148

Judgement Text

ITA NO.632/KOL/2013 -B-AM M/S. ALKHARSH INTERNATIONAL PVT. LTD 1 IN THE INCOME TAX APPELLATE TRIBUNAL, B BENCH, K OLKATA BEFORE : SHRI M. BALAGANESH, ACCOU NTANT MEMBER, AND SHRI S.S.VISWANETHRA RAVI, JUDICIAL MEMBER ITA NO. 632/KOL/2013 A.Y 2004-05 I.T.O WARD 8(1), KOLKATA VS. M/S. ALKHARSH INTER NATIONAL PVT. LTD. PAN:AACCA1563D (APPELLANT) (RESPONDENT) FOR THE APPELLANT/: SHRI RAJAT KR. KUREEL. JCIT, LD.SR.AR FOR THE RESPONDENT/SHRI D.S.DAML E, FCA, LD.AR DATE OF HEARING: 29-03-2016 DATE OF PRONOUNCEMENT: 29 -03 -2016 ORDER SHRI M.BALAGANESH, AM THIS APPEAL OF THE REVENUE ARISES OUT OF THE ORDER OF THE LEARNED CIT(A), VIII, KOLKATA IN APPEAL NO. 225/CIT(A)-VIII/KOL/10-11 DA TED 14-12-2012 AGAINST THE ORDER OF ASSESSMENT FRAMED FOR THE ASST YEAR 2004-0 5 U/S 143(3) OF THE INCOME-TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT). 2. THE FIRST ISSUE TO BE DECIDED IN THIS APPEAL I S THE VALIDITY OF REASSESSMENT PROCEEDINGS INITIATED BY THE LEARNED AO. WE FIND T HAT THE ASSESSEE HAD FILED A PETITION UNDER RULE 27 OF THE ITAT RULES , WHEREIN THE LEGAL VALIDITY OF REASSESSMENT PROCEEDINGS WERE OBJECTED TO BY IT BEFORE THE LEARN ED CIT(A). RULE 27 PETITION STATES THAT THOUGH THE RELIEF WAS GRANTED TO THE ASSESSEE ON MERITS, THE LEARNED CIT(A) UPHELD THE VALIDITY OF REASSESSMENT PROCEEDINGS U/S 147 OF THE ACT. AGAINST THIS, THE ASSESSEE HAS PREFERRED PETITION UNDER RULE 27 OF IT AT RULES IN RESPECT OF GROUND DECIDED AGAINST HIM BY THE LEARNED CIT(A). ACCOR DINGLY WE ADMIT THE PETITION UNDER RULE 27 OF THE ITAT RULES ON THE LEGAL VALIDI TY OF REASSESSMENT PROCEEDINGS AND ITA NO.632/KOL/2013 -B-AM M/S. ALKHARSH INTERNATIONAL PVT. LTD 2 PROCEED TO ADJUDICATE THE SAME AT THE FIRST INSTANC E BEFORE GOING INTO THE MERITS OF THE ADDITION. 3. THE BRIEF FACTS OF THE ISSUE IS THAT THE ASSES SEE FILED ITS RETURN OF INCOME ON 30.10.2004 FOR THE ASST YEAR 2004-05 DISCLOSING TOT AL INCOME OF RS. 7,08,070/- WHICH WAS PROCESSED U/S 143(1) OF THE ACT. LATER THE CAS E WAS SELECTED FOR SCRUTINY AND ASSESSMENT U/S 143(3) OF THE ACT WAS FRAMED ON 26.1 2.2006. THEREAFTER, THE ASSESSMENT WAS REOPENED BY ISSUANCE OF NOTICE U/S 1 48 OF THE ACT DATED 8.3.2010 WHICH IS ADMITTEDLY BEYOND THE FOUR YEARS FROM THE END OF THE RELEVANT ASSESSMENT YEAR. THE REASSESSMENT WAS COMPLETED AFTER MAKING CERTAIN DISALLOWANCES. 4. WE FIND THAT THE ASSESSMENT WAS REOPENED BY T HE LEARNED AO BY RECORDING THE FOLLOWING REASONS :- IT WAS OBSERVED THAT THE ASSESSEE HAD EARNED INCOME FROM SHARES DIVISION AND EXPORTS DIVISION DURING THE PERIOD AND HAS SET OFF THE B/F SPECULATION LOSS WITH THE NORMAL BUSINESS PROFIT. THE DETAILS OF INCOME / CREDITS MADE IN THE PROFIT & LOSS ACCOUNT IN RESPECT OF SHARES D IVISION ARE AS UNDER: (I) SALES : RS. 11,79,27,664/- (II) CLOSING STOCK : MUTUAL FUND : RS. 2,72,06,433/- SHARES : RS. 1,25,65,881/- ------------------------ RS. 3,97,72,314/- (III) PROFIT FROM DERIVATIVE TRADING : RS. 29,502/- (IV) DIVIDEND : RS. 41,86,449/- ------------------------- RS. 16,19,15,931/- LESS: EXPENSES : RS. 15,43,39,229/- ----------------------- PROFIT RS. 75,76,702/- ------------------------ ITA NO.632/KOL/2013 -B-AM M/S. ALKHARSH INTERNATIONAL PVT. LTD 3 COMPUTATION SHEET :- PROFIT FROM SPECULATION BUSINESS : RS. 75,76,702 /- LESS: DIVIDEND EXEMPT U/S 10(33) : RS. 41,86,449/ - -------------------- RS. 33,90,252 LESS: SPECULATION LOSS BROUGHT FORWARD RS. 41,77, 362/- -------------------- SPECULATION LOSS TO BE C/F : RS. 7,87,110/- -------------------- FROM THE ABOVE, IT IS SEEN THAT THE ASSESSEE DID NO T HAVE ANY INCOME FROM SPECULATION BUSINESS. SPECULATIVE TRANSACTION HAS BEEN DEFINED IN SECTION 43(5) AND THE ASSESSEES AFOREMENTIONED BUSINESS TR ANSACTIONS ARE OBVIOUSLY NOT COVERED IN SECTION 43(5). THUS THE ASSESSEE HA S CLAIMED PROFIT EARNED IN THE NORMAL BUSINESS OF SHARE TRADING, AS SPECULATIV E PROFIT UNDER DEEMING PROVISION OF EXPLANATION TO SECTION 73 OF THE ACT. HOWEVER, SECTION 73 OF THE ACT DEALS ONLY WITH LOSSES IN SPECULATION BUSINESS. NEEDLESS TO SAY, EXPLANATION TO SECTION 73 ALSO DEALS WITH LOSSES IN THE SHARE TRADING BUSINESS. THE PHRASE FOR THE PURPOSES OF THIS SECTION CLEAR LY INDICATES THAT EXPLANATION TO SECTION 73 WILL NOT COVER PROFITS EA RNED IN THE BUSINESS OF PURCHASE OF SALE OF SHARES. THUS BY WRONGLY CLAIMI NG NORMAL BUSINESS PROFITS AS SPECULATIVE PROFITS THE ASSESSEE HAD SET OFF CAR RIED FORWARD SPECULATION LOSS AGAINST THE AFORESAID NORMAL BUSINESS PROFITS WHICH IS NOT ALLOWABLE UNDER THE ACT. THE ABOVE ACTION HAS RESULTED IN ES CAPEMENT OF ASSESSMENT WITHIN THE MEANING OF SECTION 147 OF THE ACT., 1961 . 5. THE LEARNED CIT(A) UPHELD THE VALIDITY OF REAS SESSMENT PROCEEDINGS ON THE GROUND THAT THE ISSUE WITH REGARD TO THE PROFITS DE RIVED FROM SHARE TRADING IS SPECULATIVE IN NATURE OR NOT, WAS NOT CONSIDERED BY THE LEARNED AO IN THE ORIGINAL ASSESSMENT AND HENCE IT DOES NOT TANTAMOUNT TO FORM ATION OF ANY OPINION ON THE PART OF THE LEARNED AO AND CONSEQUENTLY THERE IS NO QUESTIO N OF ANY CHANGE OF OPINION. 6. THE LEARNED AR PLACED THE COPY OF THE SCRUTINY ASSESSMENT ORDER FRAMED U/S 143(3) OF THE ACT DATED 26.12.2006, WHEREIN THE LEA RNED AO HAD MADE THE COMPUTATION AS BELOW:- ITA NO.632/KOL/2013 -B-AM M/S. ALKHARSH INTERNATIONAL PVT. LTD 4 INCOME FROM BUSINESS : RS. 9,28,979/- INCOME FROM SPECULATION : PROFIT FROM SPECULATION BUSINESS RS. 75,76,7 01.91 LESS: DIVIDEND RECEIVED EXEMPT U/S 10(33) RS. 41, 86,449.91 ----------------------- PROFIT RS. 33,90,252.00 LESS: SPECULATION LOSS BROUGHT FORWARD FROM A.YR. 2001-02 RS. 31,11,507.86 FROM A.YR. 2003-04 RS. 2,90,686.37 ------- --------------- RS. 34,02,194.23 SET OFF RESTRICTED TO RS. 33,90,252.00 ---------- ------------- - (REMAINING BALANCE OF RS. 11,942.23 FOR A.YR. 2003-04 IS ALLOWED TO CARRY FORWARD AS PER LAW) INCOME FROM OTHER SOURCES : RS. 33,657/- ---------------------- GROSS TOTAL INCOME RS. 9,62,636/- LESS: DEDUCTION U/S 80HHC RS. 2,54,570/- ---------------------- ASSESSED TOTAL INCOME RS. 7,08,066/- ROUNDED OFF TO RS. 7,08,070/- ASSESSED U/S 143(3) AS ABOVE. 6.1. THE LEARNED AR ARGUED THAT FROM THE ABOVE ASS ESSMENT ORDER IT COULD BE EASILY CONCLUDED THAT THE LEARNED AO HAD DULY APPLIED HIS MIND WITH REGARD TO THE TAXING OF PROFIT FROM TRADING OF SHARES AS SPECULATION PROFIT AND MOREOVER, THE MAIN HEADING ALSO HAS BEEN DULY CLASSIFIED BY THE LEARNED AO AS INC OME FROM SPECULATION. HE FURTHER ARGUED THAT THE LEARNED AO HAD DULY APPLIED HIS MIND ON THE IMPUGNED ISSUE BY ALSO ALLOWING THE BROUGHT FORWARD SPECULATION LO SS AGAINST THE SPECULATION PROFIT OF THE CURRENT YEAR. HENCE IT IS UNREASONABLE TO SAY THAT THE LEARNED AO DID NOT HAVE AN OCCASION TO LOOK INTO THE IMPUGNED ISSUE AND FORM A NY OPINION THEREON IN THE ORIGINAL ITA NO.632/KOL/2013 -B-AM M/S. ALKHARSH INTERNATIONAL PVT. LTD 5 ASSESSMENT PROCEEDINGS. HE ARGUED THAT REOPENING T HE ASSESSMENT ON THIS GROUND WOULD ONLY AMOUNT TO RE-APPRECIATION OF EXISTING MA TERIALS AVAILABLE ON RECORD WHICH WOULD AMOUNT TO REVIEW OF THE ORDER , WHICH IS NOT PERMISSIBLE AS PER LAW. FURTHER THERE WAS NO TANGIBLE MATERIAL THAT HAS COME INTO T HE POSSESSION OF THE LEARNED AO AFTER THE COMPLETION OF THE SCRUTINY ASSESSMENT U/S 143(3) OF THE ACT TO PROVE THAT THE INCOME HAS ESCAPED ASSESSMENT WITHIN THE MEANING OF SECTION 147 OF THE ACT. HE FURTHER ARGUED THAT SINCE THE ASSESSMENT WAS REOPEN ED AFTER A PERIOD OF 4 YEARS FROM THE END OF THE RELEVANT ASSESSMENT YEAR, THE PROVIS O TO SECTION 147 WOULD BECOME APPLICABLE . THEN IT WOULD BE NECESSARY FOR THE LE ARNED AO TO PROVE THAT THE INCOME HAS ESCAPED ASSESSMENT BY REASON OF FAILURE ON THE PART OF THE ASSESSEE TO DISCLOSE FULL AND TRUE MATERIAL FACTS NECESSARY FOR THE ASSESSMEN T FOR THAT ASSESSMENT YEAR. HE RELIED ON THE DECISIONS OF THE HONBLE SUPREME COURT IN THE CASE OF KELVINATOR OF INDIA LTD REPORTED IN 320 ITR 561 (SC) AND THE DECI SION OF THE HONBLE DELHI HIGH COURT IN THE CASE OF CIT VS ORIENT CRAFT LTD REPORT ED IN 29 TAXMANN.COM 392 (DEL) , IN SUPPORT OF HIS PROPOSITION. IN RESPONSE TO THI S, THE LEARNED DR RELIED ON THE ORDER OF THE LEARNED AO. 7. WE HAVE HEARD THE RIVAL SUBMISSIONS. IT IS SEE N THAT IN ORIGINAL SCRUTINY ASSESSMENT, THE LEARNED AO HAD DULY APPLIED HIS MIND BY CONCLUD ING THAT THE PROFIT FROM TRADING OF SHARES IS SPECULATIVE IN NATURE AND HE HAD TAXED THE SAME AS INCOME FROM SPECULATION AND HAD ALSO DULY ALLOWED THE SET OFF OF BROUGHT FORWARD SPECULATION LOSSES FROM EARLIER YEARS AGAINST THE SPECULATION P ROFIT OF THE ASST YEAR 2004-05 (YEAR UNDER APPEAL) AND HAD FURTHER APPLIED HIS MIND TO C ARRY FORWARD THE LEFT OVER SPECULATION LOSS OF ASST YEAR 2003-04 OF RS. 11,942 /- TO SUBSEQUENT YEARS AS PER LAW. HENCE IT COULD BE SAFELY CONCLUDED THAT THE LEARNED AO HAD DULY APPLIED HIS MIND ON THE IMPUGNED ISSUE ON THE TAXABILITY OF SHARE TRADI NG PROFITS AS INCOME FROM SPECULATION. TO THIS EXTENT, THE REASONING GIVEN BY THE LEARNED CIT(A) FOR UPHOLDING THE VALIDITY OF REASSESSMENT IS NOT JUSTIFIED. WE ALSO HOLD THAT THE LEARNED AO BY HIS JUDICIAL BEHAVIOUR IN THE ORIGINAL ASSESSMENT PROCE EDINGS U/S 143(3) OF THE ACT HAD ITA NO.632/KOL/2013 -B-AM M/S. ALKHARSH INTERNATIONAL PVT. LTD 6 INDEED FORMED AN OPINION ON PROPER APPLICATION OF M IND. WE ALSO AGREE WITH THE ARGUMENTS OF THE LEARNED AR THAT THERE IS NO FRESH TANGIBLE MATERIAL AVAILABLE WITH THE LEARNED AO TO JUSTIFY THE IMPUGNED ACTION OF RESORT ING TO REOPEN THE ASSESSMENT. WE HOLD THAT WHERE THERE WAS NO NEW MATERIAL OR INFORM ATION WHICH CAME TO THE KNOWLEDGE OF THE LEARNED AO TO RE-INITIATE PROCEEDI NGS AND SINCE HE HAD DERIVED THE FACTS AND MATERIALS PLACED BY THE ASSESSEE ITSELF D URING THE ORIGINAL ASSESSMENT PROCEEDINGS , THAT DID NOT CONSTITUTE NEW INFORMATI ON. HENCE SUBSEQUENT ACTION ON THE PART OF THE LEARNED AO IN REOPENING THE ASSESSMENT BASED ON THE SAME MATERIALS AVAILABLE ON RECORD WOULD ONLY AMOUNT TO RE-APPRECI ATION OF EXISTING FACTS ALREADY ON RECORD WHICH WOULD AMOUNT TO REVIEW AND WOULD ONLY TANTAMOUNT TO CHANGE OF OPINION. MOREOVER WE FIND THAT THE PROVISO TO SE CTION 147 OF THE ACT WOULD COME INTO PLAY IN THE FACTS OF THE INSTANT CASE AS ADMIT TEDLY THE REOPENING IS DONE AFTER THE END OF 4 YEARS FROM THE END OF THE RELEVANT ASSESSM ENT YEAR. THEN IT IS THE DUTY OF THE LEARNED AO TO PROVE AS PER THE PROVISO THAT THE REO PENING IS WARRANTED DUE TO FAILURE ON THE PART OF THE ASSESSEE BY NOT MAKING FULL AND TRUE DISCLOSURE OF MATERIAL FACTS NECESSARY FOR ASSESSMENT. THIS CRUCIAL CONDITION I S CONSPICUOUSLY ABSENT IN THE FACTS OF THE PRESENT CASE AND HENCE REOPENING BEYOND 4 YE ARS COULD NOT BE DONE EVEN AS PER THE STATUTE. WE FIND THAT THE AUTHORITY TO REOPEN AN ASSESSMENT U/S 147 OF THE ACT IS , EVEN WITHIN A PERIOD OF 4 YEARS, IS CONDITIONED BY THE REQUIREMENT THAT THERE MUST BE REASON TO BELIEVE THAT INCOME HAS ESCAPED ASSESSMEN T. THE LEARNED AO IS THUS INCAPACITATED, IN THE GUISE OF INVENTING A REASON TO BELIEVE FOR EXERCISING JURISDICTION TO REVIEW AN EARLIER OPINION. HENCE, THE CONDITION PRECEDENT FOR EXERCISING POWER FOR INITIATING PROCEEDING U/S 147 OF THE ACT IS TO MAKE A REFERENCE TO TANGIBLE MATERIAL IN THE REASONS RECORDED U/S 148(2) OF THE ACT. 7.1. IT IS PERTINENT TO GO INTO THE VARIOUS JUDICI AL DECISIONS ON THE IMPUGNED SUBJECT:- A. IN CIT VS. KELVINATOR OF INDIA LTD. [2010] 320 ITR 561 (SC) [AFFIRMING CIT VS. KELVINATOR OF INDIA LTD. [2002] 256 ITR 1 (DELHI) ( FB)] J. KAPADIA HELD THAT THE CONCEPT OF CHANGE OF OPINION MUST BE TREATED AS A N IN-BUILT TEST TO CHECK ABUSE ITA NO.632/KOL/2013 -B-AM M/S. ALKHARSH INTERNATIONAL PVT. LTD 7 OF POWER BY ASSESSING OFFICER AND THAT THE REASONS MUST HAVE A LIVE LINK WITH FORMATION OF BELIEF. IMPORTANT EXTRACTS OF THE DECI SION IS REPRODUCED HEREUNDER : 'HOWEVER, ONE NEEDS TO GIVE A SCHEMATIC INTERPRETAT ION TO THE WORDS REASON TO BELIEVE, FAILING WHICH SECTION 147 WOULD GIVE A RBITRARY POWERS TO THE ASSESSING OFFICER TO REOPEN ASSESSMENTS ON THE BASI S OF MERE CHANGE OF OPINION, WHICH CANNOT BE PER SE REASON TO REOPEN. ONE MUST ALSO KEEP IN MIND THE CONCEPTUAL DIFFERENCE BETWEEN POWER TO REV IEW AND POWER TO REASSESS. THE ASSESSING OFFICER HAS NO POWER TO REV IEW; HE HAS THE POWER TO REASSESS, BUT THE REASSESSMENT HAS TO BE BASED ON F ULFILLMENT OF CERTAIN PRE- CONDITIONS AND IF THE CONCEPT OF CHANGE OF OPINION IS REMOVED AS CONTENDED ON BEHALF OF THE DEPARTMENT, THEN IN THE GARB OF RE OPENING THE ASSESSMENT, REVIEW WOULD TAKE PLACE. ONE MUST TREAT THE CONCEPT OF CHANGE OF OPINION AS AN IN-BUILT TEST TO CHECK ABUSE OF POWER BY THE ASSESSING OFFICER. HENCE, AFTER 1-4-1989 , THE ASSESSING OFFICER HAS POWER TO REOPEN, PROVIDED THERE IS TANGIBLE MATERIAL TO COME TO CONCLUSION THAT THER E IS ESCAPEMENT OF INCOME FROM ASSESSMENT. UNDER THE DIRECT TAX LAWS (AMENDMENT) ACT, 1987, THE PARLIAMENT NOT ONLY DELETED THE WORDS RE ASON TO BELIEVE BUT ALSO INSERTED THE WORD OPINION IN SECTION 147. HOWEVER , ON RECEIPT OF REPRESENTATIONS FROM THE COMPANIES AGAINST OMISSION OF THE WORDS REASON TO BELIEVE, THE PARLIAMENT REINTRODUCED THE SAID EXPR ESSION AND DELETED THE WORD OPINION ON THE GROUND THAT IT WOULD VEST ARB ITRARY POWERS IN THE ASSESSING OFFICER.' THE DELHI HIGH COURT IN CIT VS. KELVINATOR OF INDIA LIMITED [2002] 256 ITR 1 (DEL.) [DECISION AFFIRMED BY THE SUPREME COURT IN [2010] 3 20 ITR 561 (SC)] HELD THAT IF TWO INTERPRETATIONS ARE POSSIBLE , THE INTERPRETATION WHICH UPHOLDS CONSTITUTIONALITY, IT IS TRITE, SHOULD BE F AVOURED. IN THE EVENT IT IS HELD THAT BY REASON OF SECTION 147 IF THE ITO EXERCISES HIS JURISDICTION FOR INITIATING A PROCEEDING FOR REASSESSMENT ONLY UPON A MERE CHAN GE OF OPINION, THE SAME MAY BE HELD TO BE UNCONSTITUTIONAL. WE ARE THEREFOR E OF THE OPINION THAT SECTION 147 OF THE ACT DOES NOT POSTULATE CONFERMEN T OF POWER UPON THE A.O. TO INITIATE REASSESSMENT PROCEEDING UPON HIS MERE C HANGE OF OPINION. IF 'REASON TO BELIEVE' OF THE A.O. IS FOUNDED ON AN IN FORMATION WHICH MIGHT HAVE BEEN RECEIVED BY THE A.O. AFTER THE COMPLETION OF ASSESSMENT, IT MAY BE A SOUND FOUNDATION FOR EXERCISING THE POWER UNDER S ECTION 147 READ WITH SECTION 148 OF THE ACT. AN ORDER OF ASSESSMENT CAN BE PASSED EITHER IN TERMS OF SUB-SECTION (1) OF SECTION 143 OR SUB-SECTION (3 ) OF SECTION 143. WHEN A REGULAR ORDER OF ASSESSMENT IS PASSED IN TERMS OF T HE SAID SUB-SECTION (3) OF SECTION 143 A PRESUMPTION CAN BE RAISED THAT SUCH A N ORDER HAS BEEN PASSED ON APPLICATION OF MIND. IT IS WELL KNOWN THAT A PRE SUMPTION CAN ALSO BE RAISED TO THE EFFECT THAT IN TERMS OF CLAUSE (E) OF SECTIO N 114 OF THE INDIAN EVIDENCE ITA NO.632/KOL/2013 -B-AM M/S. ALKHARSH INTERNATIONAL PVT. LTD 8 ACT, 1872, JUDICIAL AND OFFICIAL ACTS HAVE BEEN REG ULARLY PERFORMED. IF IT BE HELD THAT AN ORDER WHICH HAS BEEN PASSED PURPORTEDL Y WITHOUT APPLICATION OF MIND WOULD ITSELF CONFER JURISDICTION UPON THE ASSE SSING OFFICER TO REOPEN THE PROCEEDING WITHOUT ANYTHING FURTHER, THE SAME WOULD AMOUNT TO GIVING A PREMIUM TO AN AUTHORITY EXERCISING QUASI-JUDICIAL F UNCTION TO TAKE BENEFIT OF ITS OWN WRONG. B. IN CIT, CENTRAL I VS M/S KANOI INDUSTRIES (P) LTD IN I TA NO. 108 OF 2012 DATED 15.6.2012 RENDERED BY THE JURISDICTIONAL CAL CUTTA HIGH COURT, IT WAS HELD THAT WHERE THERE WAS NO NEW MATERIAL OR INFORM ATION WHICH CAME TO THE KNOWLEDGE OF THE AO TO RE-INITIATE PROCEEDINGS AND SINCE HE HAD DERIVED THE FACTS AND MATERIALS PLACED BY THE ASSESSEE HIMSELF DURING THE ORIGINAL ASSESSMENT PROCEEDINGS , THAT DID NOT CONSTITUTE NEW INFORMATI ON. WHEN ON THE SAME SET OF FACTS AND MATERIALS ASSESSING OFFICER TAKES BONAFID E DECISION, IT IS NOT OPEN FOR THE SUBSEQUENT OFFICER TO REOPEN THE SAME JUST BECA USE HE DOES NOT AGREE TO THE DECISION OF THE PREVIOUS OFFICER. IN THIS CASE THE TRIBUNAL HAS RECORDED THAT A MERE CHANGE OF OPINION BETWEEN TWO OFFICERS IN REOP ENING THE ASSESSMENT AND IT IS NOT LEGALLY PERMISSIBLE. WE, THEREFORE, DO NOT FIND ANY INFIRMITY AND ILLEGALITY IN THE IMPUGNED JUDGEMENT AND ORDER DATED 12 TH JANUARY 2012 PASSED BY THE LEARNED TRIBUNAL. C. IN ACIT VS ICICI SECURITIES PRIMARY DEALERSHIP LTD , THE HONBLE APEX COURT IN CIVIL APPEAL NO. 5960 OF 2012 DATED 22.8.2012 HELD AS UNDER :- LEAVE GRANTED. WE HAVE HEARD COUNSEL ON BOTH SIDES. THE ASSESSEE HAD DISCLOSED FULL DETAILS IN THE RETU RN OF INCOME IN THE MATTER OF ITS DEALING IN STOCKS AND SHARES. ACCORDING TO THE ASSESSEE, THE LOSS INCURRED WAS A BUSINESS LOSS, WHEREAS, ACCORDING TO THE REVENUE, THE LOSS INCURRED WAS A SPECULATIVE LOSS. REJECTION OF THE O BJECTIONS OF THE ASSESSEE TO THE RE-OPENING OF THE ASSESSMENT BY THE ASSESSING O FFICER VIDE HIS ORDER DATED 23.6.2006, IS CLEARLY A CHANGE OF OPINION. IN THE C IRCUMSTANCES, WE ARE OF THE VIEW THAT THE ORDER RE-OPENING THE ASSESSMENT WAS N OT MAINTAINABLE. THE CIVIL APPEAL IS, ACCORDINGLY, DISMISSED. NO ORDER AS TO COSTS. ITA NO.632/KOL/2013 -B-AM M/S. ALKHARSH INTERNATIONAL PVT. LTD 9 D. IN CIT VS. ORIENT CRAFT LTD REPORTED IN 29 TAXMAN N. COM 392(DEL),THE HONBLE DELHI HIGH COURT HELD THAT :- FINALITY OF INTIMATION UNDER SECTION 143(1) CAN BE DISTURBED ONLY IF ASSESSING OFFICER HAS 'REASON TO BELIEVE' . THE ASSESSEE'S CONTENTION THAT EVEN AN ASSESSMENT M ADE UNDER SECTION 143(1) OF THE ACT CAN BE REOPENED UNDER SECTION 147 IF THE ASSESSING OFFICER HAS 'REASON TO BELIEVE' THAT INCOME CHARGEA BLE TO TAX HAS ESCAPED ASSESSMENT, IS SOUND. IT IS TRUE THAT NO ASSESSMENT ORDER IS PASSED WHEN THE RETURN IS MERELY PROCESSED UNDER SECTION 143(1) AND AN INTIMATION TO THAT EFFECT IS SENT TO THE ASSESSEE. HOWEVER, IT HAS BEE N RECOGNIZED BY THE SUPREME COURT ITSELF IN ASSTT. CIT V. RAJESH JHAVER I STOCK BROKERS (P.) LTD. [2007] 291 ITR 500 / 161 TAXMAN 316 (SC), THAT EVEN WHERE PROCEEDINGS UNDER SECTION 147 ARE SOUGHT TO BE TAKEN WITH REFER ENCE TO AN INTIMATION FRAMED EARLIER UNDER SECTION 143(1), THE INGREDIENT S OF SECTION 147 HAVE TO BE FULFILLED; THE INGREDIENT IS THAT THERE SHOULD E XIST 'REASON TO BELIEVE' THAT INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT. TH IS JUDGMENT, DOES NOT GIVE A CARTE BLANCHE TO THE ASSESSING OFFICER TO DI STURB THE FINALITY OF THE INTIMATION UNDER SECTION 143(1) AT HIS WHIMS AND CA PRICE; HE MUST HAVE REASON TO BELIEVE WITHIN THE MEANING OF THE SECTION . [PARA 8] IN ABSENCE OF ANY TANGIBLE MATERIAL, THERE WILL BE A REVIEW IN GUISE OF REOPENING IN CIT V. KELVINATOR OF INDIA LTD. [2010] 187 TAXMA N 312 / 320 ITR 561 (SC), IT WAS OBSERVED THAT AFTER 1-4-1989 THE ASSESSING OFFICER HAS POWER TO REOPEN PROVIDED THERE IS 'TANGIBLE MATERIA L' TO COME TO THE CONCLUSION THAT THERE IS ESCAPEMENT OF INCOME. THE JUDGMENT HAS LAID EMPHASIS ON TWO MORE ASPECTS: THAT THERE CAN BE NO REVIEW OF AN ASSESSMENT IN THE GUISE OF REOPENING AND THAT A BAR E REVIEW WITHOUT ANY TANGIBLE MATERIAL WOULD AMOUNT TO ABUSE OF THE POWE R. [PARA 12] THE ASSUMPTION OF THE REVENUE THAT SOMEHOW THE WORD S 'REASON TO BELIEVE' HAVE TO BE UNDERSTOOD IN A LIBERAL MANNER WHERE THE FINALITY OF AN INTIMATION UNDER SECTION 143(1) IS SOUGHT TO BE DIS TURBED IS ERRONEOUS AND MISCONCEIVED. THERE IS NO WARRANT FOR SUCH AN ASSUMPTION BECAUSE OF THE LANGUAGE EMPLOYED IN SECTION 147; IT MAKES NO DISTINCTION BE TWEEN AN ORDER PASSED UNDER SECTION 143(3) AND THE INTIMATION ISSUED UNDE R SECTION 143(1). THEREFORE, IT IS NOT PERMISSIBLE TO ADOPT DIFFERENT STANDARDS WHILE ITA NO.632/KOL/2013 -B-AM M/S. ALKHARSH INTERNATIONAL PVT. LTD 10 INTERPRETING THE WORDS 'REASON TO BELIEVE' VIS-A-VI S SECTION 143(1) AND SECTION 143(3). [PAR 13] AN ASSESSEE IN WHOSE CASE THE RETURN WAS PROCESSED UNDER SECTION 143(1) CANNOT BE PLACED IN A MORE VULNERABLE POSITI ON THAN AN ASSESSEE IN WHOSE CASE THERE WAS A FULL-FLEDGED SCRUTINY ASSESS MENT MADE UNDER SECTION 143(3). WHETHER THE RETURN IS PUT TO SCRUTI NY OR IS ACCEPTED WITHOUT DEMUR IS NOT A MATTER WHICH IS WITHIN THE CONTROL O F ASSESSEE; HE HAS NO CHOICE IN THE MATTER. THE OTHER CONSEQUENCE, WHICH IS SOMEWHAT GRAVER, WOULD BE THAT THE ENTIRE RIGOROUS PROCEDURE INVOLVE D IN REOPENING AN ASSESSMENT AND THE BURDEN OF PROVING VALID REASONS TO BELIEVE COULD BE CIRCUMVENTED BY FIRST ACCEPTING THE RETURN UNDER SE CTION 143(1) AND THEREAFTER ISSUE NOTICES TO REOPEN THE ASSESSMENT. AN INTERPRETATION WHICH MAKES A DISTINCTION BETWEEN THE MEANING AND CONTENT OF THE EXPRESSION 'REASON TO BELIEVE ' IN CASES WHERE ASSESSMENTS WER E FRAMED EARLIER UNDER SECTION 143(3) AND CASES WHERE MERE INTIMATIONS WE RE ISSUED EARLIER UNDER SECTION 143(1) MAY WELL LEAD TO SUCH AN UNINT ENDED MISCHIEF. IT WOULD BE DISCRIMINATORY TOO. AN INTERPRETATION THAT LEADS TO ABSURD RESULTS OR MISCHIEF IS TO BE ESCHEWED. [PARA 13] THE SUPREME COURT IN RAJESH JHAVERI STOCK BROKERS ( P.) LTD.'S CASE (SUPRA) HAS HELD THAT THE STRICT REQUIREMENTS OF SE CTION 147 CAN BE COMPROMISED. ON THE CONTRARY, FROM THE OBSERVATIONS IT WOULD APPEAR CLEAR THAT THE COURT REITERATED THAT 'SO LONG AS THE ING REDIENTS OF SECTION 147 ARE FULFILLED AN INTIMATION ISSUED UNDER SECTION 143(1 ) CAN BE SUBJECTED TO PROCEEDINGS FOR REOPENING. THE COURT ALSO EMPHASIZE D THAT THE ONLY REQUIREMENT FOR DISTURBING THE FINALITY OF AN INTIM ATION IS THAT THE ASSESSING OFFICER SHOULD HAVE REASON TO BELIEVETHAT INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT. THE EXPRESSION REASON TO BELI EVEHAVE TWO DIFFERENT STANDARDS OR SETS OF MEANING, ONE APPLICABLE WHERE THE ASSESSMENT WAS EARLIER MADE UNDER SECTION 143(3) AND ANOTHER APPLI CABLE WHERE AN INTIMATION WAS EARLIER ISSUED UNDER SECTION 143(1). IT FOLLOWS THAT IT IS OPEN TO THE ASSESSEE TO CONTEND THAT NOTWITHSTANDING THA T THE ARGUMENT OF CHANGE OF OPINION IS NOT AVAILABLE TO HIM, IT W OULD STILL BE OPEN TO HIM TO CONTEST THE REOPENING ON THE GROUND THAT THERE WAS EITHER NO REASON TO BELIEVE OR THAT THE ALLEGED REASON TO BELIEVE IS N OT RELEVANT FOR THE FORMATION OF THE BELIEF THAT INCOME CHARGEABLE TO T AX HAD ESCAPED ASSESSMENT. IN DOING SO, IT IS FURTHER OPEN TO THE ASSESEE TO CHALLENGE THE REASONS RECORDED UNDER SECTION 148(2) ON THE GROUND THAT THEY DO NOT MEET THE STANDARDS SET IN THE VARIOUS JUDICIAL PRONOUNCE MENTS [PARA 14] IN THE PRESENT CASE THE REASONS DISCLOSE THAT THE A SSESSING OFFICER REACHED THE BELIEF THAT THERE WAS ESCAPEMENT OF INC OME ON GOING THROUGH ITA NO.632/KOL/2013 -B-AM M/S. ALKHARSH INTERNATIONAL PVT. LTD 11 THE RETURN OF INCOME FILED BY THE ASSESSEE AFTER H E ACCEPTED THE RETURN UNDER SECTION 143(1) WITHOUT SCRUTINY, AND NOTHING MORE. THIS IS NOTHING BUT A REVIEW OF THE EARLIER PROCEEDINGS AND AN ABUS E OF POWER BY THE ASSESSING OFFICER. THE REASONS RECORDED BY THE ASSE SSING OFFICER IN THE PRESENT CASE DO CONFIRM OUR APPREHENSION ABOUT THE HARM THAT A LESS STRICT INTERPRETATION OF THE WORDS REASON TO BELIEVE VIS --VIS AN INTIMATION ISSUED UNDER SECTION 143(1) CAN CAUSE TO THE TAX RE GIME. THERE IS NO WHISPER IN THE REASONS RECORDED, OF ANY TANGIBLE MATERIAL WHICH CAME TO THE POSSESSION OF THE ASSESSING OFFICER SUBSEQUENT TO THE ISSUE OF THE INTIMATION. IT REFLECTS AN ARBITRARY EXERCISE OF TH E POWER CONFERRED UNDER SECTION.147.[PARA 15] 7.2. FROM THE FACTS AND CIRCUMSTANCES OF THE INSTA NT CASE AND RESPECTFULLY FOLLOWING THE JUDICIAL PRECEDENTS ON THE IMPUGNED SUBJECT INC LUDING THAT OF HONBLE SUPREME COURT, JURISDICTIONAL HIGH COURT AND OTHER HIGH CO URTS, WE HOLD THAT THE ASSUMPTION OF JURISDICTION U/S 147 BY THE LEARNED AO, IS BASE D ONLY ON CHANGE OF OPINION ; MADE WITHOUT ANY TANGIBLE MATERIAL THAT CONSTITUTED NEW INFORMATION, AND HENCE THE REOPENING OF ASSESSMENT U/S 148 AND CONSEQUENTIAL R EASSESSMENT ORDER PASSED U/S 147 IS BAD IN LAW AND ACCORDINGLY THE REASSESSMENT PROC EEDINGS STAND QUASHED. ACCORDINGLY, THE GROUND RAISED BY THE ASSESESE IN R ULE 27 OF ITAT RULES IS ALLOWED. 7.3. AS THE ISSUE ON REOPENING ITSELF IS HELD TO BE BAD IN LAW, THE ADJUDICATION OF THE ISSUE ON MERITS BECOMES INFRUCTUOUS AND ACCORDINGLY WE REFRAIN TO GO INTO THE MERITS OF THE CASE. HENCE THE GROUNDS RAISED BY THE REVE NUE ARE DISMISSED AS INFRUCTUOUS. 8. IN THE RESULT, THE APPEAL OF THE REVENUE IS DIS MISSED. THIS ORDER IS PRONOUNCED IN OPEN COURT ON 29 - 0 3 - 2016 SD/- ( S.S.VISWANETHRA RAVI, JUDICIAL MEMBER ) SD/- (M. BALAGANESH, ACCOUNTANT MEMBER) DATE: DATE 29 -03-2016 ITA NO.632/KOL/2013 -B-AM M/S. ALKHARSH INTERNATIONAL PVT. LTD 12 1.. THE APPELLANT/DEPARTMENT: THE INCOME TAX OFFIC ER WARD 8(1), P-7 CHOWRINGHEE SQ., 5 TH FL., KOL-69. 2 THE RESPONDENT/ASSESSEE: M/S. ALKHARSH INTERNATIO NAL PVT. LTD 9 TH FL., DALMIA HOUSE, 13 NELIE SENGUPTA SARANI, ESPLANADE, KOL-87. 3 /THE CIT, 4.THE CIT(A ) 5. DR, KOLKATA BENCH 6. GUARD FILE. TRUE COPY, BY ORDER, ASSTT REGISTRAR **PRADIP SPS COPY OF THE ORDER FORWARDED TO:-