The DCITPatan Circle, Patan V. Smt. Siddiqua Abdul Salem Momin, Patan

ITA 669/AHD/2013

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 72879 (ITAT-AHMEDABAD)
• Duration Of Justice: 10 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-01-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 07-01-2014
• Assessment Year: 2005-2006
• Appeal Filed On: 08-03-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: O P BATHEJA
• Assessee Lawyers: VIJAY RANJAN
• Keywords: Difference of opinion; Change of opinion
• Section: 147

Judgement Text

, , , , , , , , IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH A BENCH, AHMEDABAD .., ! ! ! ! ' #$, BEFORE SHRI N.S. SAINI, ACCOUNTANT MEMBER AND SHRI KUL BHARAT, JUDICIAL MEMBER !./ I.T.A. NO.669/AHD/2013 ( & '& & '& & '& & '& / / / / ASSESSMENT YEAR : 2005-06) DCIT PATAN CIRCLE PATAN / VS. SMT.SIDDIQUA ABDUL SALEM MOMIN AT : AMARPURA, TAL.PATAN 363 622 ( !./)* !./ PAN/GIR NO. : AJIPM 0719 M ( (+ / // / APPELLANT ) .. ( ,-(+ / RESPONDENT ) AND CO NO.130/AHD/2013 - AY 2005-06 (IN ITA NO.669/AHD/2013) SMT. SIDDIQUA ABDUL SALEM VS. DCIT, PATAN CIRCLE MOMIN, PATAN PATAN (CROSS OBJECTOR) .. (RESPONDE NT) REVENUE BY : SHRI O.P. BATHEJA, SR.D.R. ASSESSEE BY : SHRI VIJAY RANJAN, A.R. ' . / $0 / / / / DATE OF HEARING : 07/01/2014 12' / $0 / DATE OF PRONOUNCEMENT : 17/01/2014 3 / O R D E R PER SHRI KUL BHARAT, JUDICIAL MEMBER : BOTH THE REVENUE AND ASSESSEE HAVE CHALLENGED THE ORDER OF THE LD.COMMISSIONER OF INCOME TAX(APPEALS)-GANDHINAGAR (CIT(A) FOR SHORT) DATED 11/12/2012 PERTAINING TO ASSESSMENT Y EAR (AY) 2005-06. ITA NO.669/AHD/2013 (BY REVE NUE) AND CO NO.130/AHD/2013(BY ASSESSEE) DCIT VS.SMT. SIDDIQUA ABDUL SALEM MOMIN ASST.YEAR 2005-06 - 2 - 2. THE REVENUE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL:- 1. THE LEARNED CIT(APPEALS) HAS ERRED IN LAW AND O N FACTS IN ANNULLING THE RE-ASSESSMENT PROCEEDINGS, AS AT THE TIME OF OR IGINAL ASSESSMENT THERE IS NO OPINION GIVEN BY THE AO, THEREFORE THE QUESTION OF CHANGE OF OPINION DOES NOT ARISE. 2. ON THE FACTS AND CIRCUMSTANCES OF THE CASE THE LD.CIT(A) OUGHT TO HAVE UPHELD THE ORDER OF THE ASSESSING OFFICER. IT IS THEREFORE PRAYED THAT THE ORDER OF THE LEARNE D CIT(APPEALS) MAY BE SET ASIDE AND THAT OF THE A.O. BE RESTORED TO THE A BOVE EXTENT. 2.1. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF CROSS-OBJECTION:- 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE, THE LEARNED CIT(A) SHOULD HAVE HELD THAT INCOME EARNED FROM SAL E OF SHARES FOR RS.18,49,071/- IS REQUIRED TO BE ASSESSED AS INCOME FROM SHORT TERM CAPITAL GAIN AS SHOWN IN RETURN OF INCOME BY APPELL ANT AS AGAINST INCOME FROM BUSINESS & PROFESSION CONSIDERED BY ASS ESSING OFFICER. 2. THE RESPONDENT CRAVES LEAVE TO ADD, ALTER, AMEN D AND/OR WITHDRAW ANY GROUND OR GROUNDS OF CROSS OBJECTIONS EITHER BE FORE OR DURING THE COURSE OF HEARING OF THE SAME. 3. AT THE OUTSET, THE LD.COUNSEL FOR THE ASSESSEE S UBMITTED THAT HE DOES NOT WISH TO PRESS THE CROSS-OBJECTION. IN VIEW OF THE STATEMENT MADE BY THE LD.COUNSEL FOR THE ASSESSEE, THE CROSS-OBJECTIO N FILED BY THE ASSESSEE IS HEREBY DISMISSED. 4. NOW, COMING TO THE REVENUES APPEAL, I.E. ITA NO .669AHD/2013 FOR AY 2005-06. ITA NO.669/AHD/2013 (BY REVE NUE) AND CO NO.130/AHD/2013(BY ASSESSEE) DCIT VS.SMT. SIDDIQUA ABDUL SALEM MOMIN ASST.YEAR 2005-06 - 3 - 4.1. BRIEFLY STATED FACTS REGARDING THE SOLELY GROU ND ARE THAT THE CASE OF THE ASSESSEE WAS PICKED UP FOR SCRUTINY ASSESSMENT AND THE ASSESSMENT U/S.143(3) OF THE INCOME TAX ACT,1961 (HEREINAFTER REFERRED TO AS THE ACT) WAS FRAMED VIDE ORDER DATED 22/12/2010, THEREBY THE ASSESSING OFFICER(AO) ASSESSED THE INCOME AT RS.18,84,150/- A CCEPTING THE DECLARED INCOME FILED BY THE ASSESSEE. SUBSEQUENTL Y, THE CASE OF THE ASSESSEE WAS REOPENED AND THE AO TREATED THE SHORT- TERM CAPITAL GAIN AS DECLARED INCOME EARNED FROM BUSINESS OR PROFESSION. AGAINST THIS, THE ASSESSEE FILED AN APPEAL BEFORE THE LD.CIT(A), WHO AFTER CONSIDERING THE SUBMISSIONS, HELD THE REOPENING ASSESSMENT HAS INVA LID AND THE SAME WAS DIRECTED TO BE ANNULLED. NOW, REVENUE IS IN APPEAL BEFORE US. 5. THE LD.SR.DR SUBMITTED THAT THE LD.CIT(A) WAS JU STIFIED IN ANNULLING THE ASSESSMENT MADE U/S.143(3) R.W.S.147 OF THE ACT. HE PLACED RELIANCE ON THE ASSESSMENT ORDER AS WELL AS THE DECISION RENDERED BY THE HONBLE HIGH COURT OF BOMBAY IN THE CASE OF EXPORT CREDIT GUARANTEE CORPROAITON OF INDIA LTD. VS. ADDL.CIT RE PORTED AT (2013) 30 TAXMANN.COM 211 (BOM.). 5.1. ON THE CONTRARY, LD.COUNSEL FOR THE ASSESSEE S UBMITTED THAT IT IS EX- FACIE CASE OF CHANGE IN OPINION. HE SUBMITTED THAT IN THE REASONS FOR RE- OPENING, THE AO OBSERVED THAT ON VERIFICATION OF CA SE RECORD, IT WAS NOTICED THAT THE ASSESSEE HAD SOLD SHARES AMOUNTING TO RS.1,11,16,328/- AND SHOWN SHORT-TERM CAPITAL GAIN (STCG) AT RS.18,4 9,071/-. THESE SHARES WERE FREQUENTLY SOLD AND PURCHASED AND IN MO ST OF THE CASES, THE PERIOD OF HOLDING WAS LESS THAN ONE MONTH. HE SUBM ITTED THAT IN REGULAR ITA NO.669/AHD/2013 (BY REVE NUE) AND CO NO.130/AHD/2013(BY ASSESSEE) DCIT VS.SMT. SIDDIQUA ABDUL SALEM MOMIN ASST.YEAR 2005-06 - 4 - ASSESSMENT, ALL THE DETAILS WERE FURNISHED. HE D REW OUR ATTENTION TO PAGE NO.5 OF THE PAPER-BOOK, WHEREIN NOTICE U/S.142 (1) OF THE ACT DATED 10/08/2007 IS ENCLOSED. HE FURTHER SUBMITTED THAT IN THE ASSESSMENT ORDER DATED 28/12/2007, THE AO HAS RECORDED THAT T HE ASSESSEE DERIVES INCOME FROM TRADING AND INVESTMENT ACTIVITIES IN SH ARES/SECURITIES. HE SUBMITTED THAT THE AO WAS AWARE THAT THE ASSESSEE I S ENGAGED IN BOTH INVESTMENT AND TRADING ACTIVITIES. HE SUBMITTED TH AT REOPENING IS NOTHING BUT MERELY A CHANGE OF OPINION. 6. WE HAVE HEARD THE RIVAL SUBMISSIONS, PERUSED THE MATERIAL AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW. WE FIND THAT THE LD.CIT(A) HAS RELIED ON THE DECISI ON OF HONBLE APEX COURT RENDERED IN THE CASE OF CIT VS. KELVINATOR OF INDIA LTD. REPORTED AT (2010) 320 ITR 561 (SC) AND DECISION OF HONBLE JUR ISDICTIONAL HIGH COURT RENDERED IN THE CASE OF TULSI DEVELOPERS VS. DCIT REPORTED AT 59 DTR 351 (GUJ.) AS WELL AS THE DECISION OF HONBLE BOMBAY HIGH COURT RENDERED IN THE CASE OF CARTINI INDIA LIMITED VS. A DDL.CIT REPORTED AT 314 ITR 275 (BOM.). WE FIND THAT THE LD.CIT(A) HA S GIVEN A FINDING ON FACT IN HIS ORDER AT PARA 5.3, WHICH IS REPRODUCED HEREINBELOW:- 5.3. I HAVE CONSIDERED THE FACTS OF THE CASE, THE REGULAR ASSESSMENT ORDER, QUESTIONNAIRE ISSUED AND THE REPLIES FILED I N THE REGULAR ASSESSMENT PROCEEDINGS, THE REASONS RECORDED FOR RE OPENING AND THE RE- ASSESSMENT ORDER. THE FOLLOWING PERTINENT OBSERVAT IONS ARE MADE WHICH EMERGE FROM THEIR EXAMINATION: A) THE CASE HAS BEEN REOPENED WITHIN 4 YEARS. SO THER E IS NO APPLICATION OF PROVISO TO SECTION 147 AND JUDGMENTS ON THAT LINE ARE NOT APPLICABLE TO APPELLANTS CASE. ITA NO.669/AHD/2013 (BY REVE NUE) AND CO NO.130/AHD/2013(BY ASSESSEE) DCIT VS.SMT. SIDDIQUA ABDUL SALEM MOMIN ASST.YEAR 2005-06 - 5 - B) THE ORIGINAL ASSESSMENT WAS COMPLETED U/S.143(3) AF TER ISSUING DETAILED QUESTIONNAIRE AND FILING OF SUBMISSIONS AN D EVIDENCES BY THE APPELLANT. IT IS TRUE, AS CONTENDED BY THE APPELLANT, THAT THE AO IN ORIGINAL ASSESSMENT PROCEEDINGS, VIDE Q NO 2 TO 4 OF LETTER DATED 10.8.2007 THE AO HAD ASKED TO FILE DETAILS OF PURCHASE AND SA LE OF SHARES AND SECURITIES, SOURCE OF INVESTMENT AND DETAILED ACCOU NT WITH EVIDENCE OF SHORT TERM CAPITAL GAINS. C) THE AO IN THE ORIGINAL ASSESSMENT PROCEEDINGS HAD E XAMINED THE ISSUE WHICH IS APPARENT FROM THE BODY OF ORDER, WHE RE HE HAS CATEGORICALLY OBSERVED THAT ASSESSEE DERIVES INCOM E FROM TRADING AND INVESTMENT ACTIVITY IN SHARES & SECURITIES. WHETHER THE INCOME IS TO BE ASSESSED AS BUSINESS I NCOME OR UNDER CAPITAL GAINS HAS TO BE DECIDED ON EXAMINATION OF DIFFERENT FACTS AND CIRCUMSTANCES AND AT BEST THIS DECISION IS A CONSID ERED OPINION. MANY COURTS HAVE HELD THAT MERELY BECAUSE THE PURCHASES ARE OUT OF BORROWED FUNDS WOULD NOT NECESSARY MEAN THAT IT IS A BUSINES S ACTIVITY. SIMILARLY AN ASSESSEE IS FREE TO CHANGE HIS ACTIVITIES FROM I NVESTMENT TO BUSINESS AND VICE-VERSA. WHETHER THE CHANGE IS ACTUAL AND B ONAFIDE OR OTHERWISE CAN BE DECIDED ON A NUMBER OF FACTORS. T HIS IS NOT A CASE WHERE ONLY ONE UNDISPUTED DECISION CAN BE TAKEN ON THE FACTS OF THE CASE. IN THE LIGHT OF ABOVE, THE REOPENING IN THIS CASE IS AN ATTEMPT TO REVIEW THE ORDER ALREADY PASSED. IN THE TOTALITY OF THESE FACTS, IT CAN BE SAID THAT THIS IS A CASE OF A MERE CHANGE OF OPINION AND REOPENING IS NOT VALID IN VIE W OF THE DECISION OF THE HONBLE SUPREME COURT IN THE CASE OF M/S.KELVIN ATOR OF INDIA LTD. 320 ITR 561. IN SIMILAR FACTS AND CIRCUMSTANCES, T HE JURISDICTIONAL HIGH COURT IN THE CASE OF TULSI DEVELOPERS VS. DCIT G REPORTED AT 59 DTR 351 (GUJ.) HAS HELD THAT THE REOPENING WAS INVA LID. IN VIEW OF THE JUDGMENT OF THE HONBLE JURISDICTIONAL HIGH COURT A S ABOVE, THE REOPENING IN THIS CASE HAS TO BE DECIDED AS A CASE OF MERE CHANGE OF OPINION AND BAD IN LAW. SIMILAR DECISION ON THE SA ME PREPOSITION HAS BEEN GIVEN BY HONBLE MUMBAI HIGH COURT IN THE CASE OF CARTINI INDIA LIMITED VS. ADDL. CIT 314 ITR 275 (BOM). THE RE-AS SESSMENT PROCEEDINGS ARE THEREFORE DIRECTED TO BE ANNULLED. ITA NO.669/AHD/2013 (BY REVE NUE) AND CO NO.130/AHD/2013(BY ASSESSEE) DCIT VS.SMT. SIDDIQUA ABDUL SALEM MOMIN ASST.YEAR 2005-06 - 6 - 6.1. THE HONBLE APEX COURT IN THE CASE OF CIT VS. KELVINATOR OF INDIA LTD.(SUPRA) HAS HELD THAT SECTION 147 OF THE ACT, WOULD GIVE ARBITRARY POWERS TO THE AO TO REOPEN ASSESSMENTS ON THE BASIS OF 'MERE CHANGE OF OPINION', WHICH CANNOT BE PER SE REASON T O REOPEN. FURTHER, THE HONBLE BOMBAY HIGH COURT IN THE CASE OF CARTIN I INDIA LTD.(SUPRA) HELD THAT WHERE THE MATERIALS ON RECORD HAVE ALREAD Y BEEN CONSIDERED AND CONCLUSIVELY DECIDED IN THE REGULAR ASSESSMENT, THE PRIMA FACIE OPINION TO THE CONTRARY FORMED BY THE AO ON THE BASIS OF THE V ERY SAME MATERIAL WOULD BE MERE CHANGE OF OPINION, AND THEREFORE, THE REOPENING OF THE ASSESSMENT BASED ON MERE CHANGE OF OPINION CANNOT B E SUSTAINED. NO DOUBT THAT THE JUDICIAL REVIEW IN CASES RELATING TO REOPENING OF THE ASSESSMENT IS RESTRICTED TO CONSIDER AS TO WHETHER ANY MATERIAL EXISTS AND NOT THE SUFFICIENCY OF THE MATERIAL ON RECORD SO AS TO FORM A BELIEF THAT INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT. BU T WHERE ON CONSIDERATION OF THE MATERIAL ON RECORD, ONE VIEW I S CONCLUSIVELY TAKEN BY THE AO, IT WOULD NOT BE OPEN TO THE AO TO REOPEN THE ASSESSMENT BASED ON THE VERY SAME MATERIAL WITH A VIEW TO TAKE ANOTHER VIEW. IN THE PRESENT CASE, THE ASSESSMENT IS SOUGHT TO BE REOPEN ED ON THE BASIS OF THE MATERIAL BASED ON WHICH A FINAL DECISION HAS ALREAD Y BEEN TAKEN, AND THEREFORE, THE REOPENING OF THE ASSESSMENT BASED ON THE VERY SAME MATERIALS TO TAKE A CONTRARY VIEW CONSTITUTES REOPE NING ON ACCOUNT OF CHANGE OF OPINION WHICH IS NOT PERMISSIBLE UNDER S. 147 OF THE ACT AND THE HONBLE HIGH COURT QUASHED THE NOTICE ISSUED U/ S.148 OF THE ACT. SIMILARLY, THE HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF TULSI DEVELOPERS VS. DCIT(SUPRA) HAS HELD THAT THE REOPEN ING WAS INVALID. ITA NO.669/AHD/2013 (BY REVE NUE) AND CO NO.130/AHD/2013(BY ASSESSEE) DCIT VS.SMT. SIDDIQUA ABDUL SALEM MOMIN ASST.YEAR 2005-06 - 7 - 6.2. IN THE PRESENT CASE, THE UNDISPUTED FACT REMAI NS THAT ALL THE DETAILS AND MATERIAL WERE AVAILABLE BEFORE THE AO DURING TH E REGULAR ASSESSMENT WHICH WERE ALSO DURING THE RE-ASSESSMENT PROCEEDING S. NO NEW MATERIAL WAS AVAILABLE WITH THE AO. THE LD.CIT(A) HAS GIVEN A FINDING ON FACT IN HIS ORDER AT PARA 5.3 THAT THE AO IN ORIGINAL ASSES SMENT PROCEEDINGS VIDE QUESTION NOS.2 TO 4 OF LETTER DATED 10/08/2007 THE AO HAD ASKED TO FILE DETAILS OF PURCHASE AND SALE OF SHARES AND SECURITI ES, SOURCE OF INVESTMENT AND DETAILED ACCOUNT WITH EVIDENCE OF SHORT TERM CA PITAL GAINS. IT IS ALSO RECORDED BY THE LD.CIT(A) THAT THE AO IN ORIGINAL A SSESSMENT PROCEEDINGS HAD EXAMINED THE ISSUE WHICH IS APPAREN T FROM THE BODY OF ORDER, WHERE HE HAS CATEGORICALLY OBSERVED THAT AS SESSEE DERIVES INCOME FROM TRADING AND INVESTMENT ACTIVITY IN SHARES & SE CURITIES. THESE FINDING ARE NOT CONTROVERTED BY THE REVENUE. MOREO VER, THE REVENUE HAS NOT PLACED ANY NEW MATERIAL ON RECORD IN SUPPORT OF THE CONTENTION THAT IT WAS NOT MERELY A CHANGE OF OPINION BUT THE OPINION WAS FORMED ON SOME MATERIAL WHICH WAS NOT AVAILABLE DURING THE COURSE OF REGULAR ASSESSMENT PROCEEDINGS. THE JUDGEMENT RELIED UPON BY THE SR.D R IS NOT APPLICABLE IN THE PRESENT CASE SINCE THE REVENUE HAS NOT PLACE D ANY NEW MATERIAL ON RECORD SUGGESTING THAT THE AO HAS NOT APPLIED HIS M IND ON THE MATERIAL AVAILABLE WITH HIM. MOREOVER, THE HONBLE APEX COU RT HAS CATEGORICALLY HELD THAT THE ASSESSMENT CANNOT BE REOPENED ON THE BASIS OF MERE CHANGE OF OPINION. THEREFORE, RESPECTFULLY FOLLOWING THE R ATIO LAID DOWN BY THE HONBLE APEX COURT IN THE CASE OF CIT VS. KELVINATO R OF INDIA LTD.(SUPRA) AND THE OTHER JUDGEMENTS OF THE HONBL E JURISDICTIONAL HIGH COURT IN THE CASE OF TULSI DEVELOPERS VS. DCIT(SUPR A) AND IN THE CASE OF CARTINI INDIA LIMITED VS. ADDL.CIT(SUPRA). HENCE, WE DO NOT FIND ANY ITA NO.669/AHD/2013 (BY REVE NUE) AND CO NO.130/AHD/2013(BY ASSESSEE) DCIT VS.SMT. SIDDIQUA ABDUL SALEM MOMIN ASST.YEAR 2005-06 - 8 - REASON TO INTERFERE WITH THE ORDER OF THE LD.CIT(A) , THE SAME IS HEREBY UPHELD AND THE GROUND RAISED BY THE REVENUE IS HERE BY REJECTED. 7. IN THE COMBINED RESULT, THE APPEAL OF THE REVENU E AS WELL THE CROSS-OBJECTION FILED BY THE ASSESSEE BOTH ARE DISM ISSED. ORDER PRONOUNCED IN COURT ON THE DATE MENTIONED HER EINABOVE AT CAPTION PAGE SD/- SD/- ( .. ) (' #$) ( N.S. SAINI ) ( KUL BHARAT ) ACCOUNTANT MEMBER JUDICIAL MEMBER AHMEDABAD; DATED 17/ 01/2014 60.., .../ T.C. NAIR, SR. PS 3 / ,$7 87'$ 3 / ,$7 87'$ 3 / ,$7 87'$ 3 / ,$7 87'$/ COPY OF THE ORDER FORWARDED TO : 1. (+ / THE APPELLANT 2. ,-(+ / THE RESPONDENT. 3. !! $ '9 / CONCERNED CIT 4. '9() / THE CIT(A)-GANDHINAGAR 5. 7 #: ,$ , , / DR, ITAT, AHMEDABAD 6. :;& <. / GUARD FILE. 3' 3' 3' 3' / BY ORDER, -7$ ,$ //TRUE COPY// = == =/ // / !) !) !) !) ( DY./ASSTT.REGISTRAR) , , , , / ITAT, AHMEDABAD 1. DATE OF DICTATION .. 9.1.14(DICTATION-PAD 13 PAGE S ATTACHED AT THE END OF THIS FILE) 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER 10.1.14 3. DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR.P. S./P.S.. 4. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE D ICTATING MEMBER FOR PRONOUNCEMENT 5. DATE ON WHICH FAIR ORDER PLACED BEFORE OTHER MEMBER 6. DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR.P .S./P.S.17.1.14 7. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK 17.1.14 8. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK ... 9. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT RE GISTRAR FOR SIGNATURE ON THE ORDER.. 10. DATE OF DESPATCH OF THE ORDER