M/s. WEIZMANN CAPITAL LTD., MUMBAI V. ACIT - 4(3), MUMBAI

ITA 7136/MUM/2006

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 49007 (ITAT-MUMBAI)
• Duration Of Justice: 4 year(s) 4 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-05-2011
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: G
• Next Hearing Date: 03-03-2011
• Assessment Year: 1999-2000
• Appeal Filed On: 29-12-2006
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: A K NAYAK
• Keywords: Reopening of assessment; Speculation loss; Reason to believe
• Section: 147; 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH G, MUMBAI BEFORE SHRI P.M. JAGTAP, A.M. AND SHRI V. DURGA RAO , J.M. ITA NO. 7136/MUM/2006 ASSESSMENT YEAR: 1999-2000 WEIZMANN CAPITAL LTD., APPELLANT 26, GOBIND MAHAL, 86B NETAJI SUBHASH ROAD, MARINE DRIVE, MUMBAI 400 001. (PAN AAACK5643G) VS. ASSTT. COMMISIONER OF INCOME-TAX, RESPONDENT 4(3), MUMBAI. APPELLANT BY : MR. VIJAY MEHTA RESPONDENT BY : MR. A.K. NAYAK . ORDER PER V. DURGA RAO, J.M.: THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGA INST THE ORDER OF CIT(A)- XIV, MUMBAI, PASSED ON 2/11/2006 FOR THE ASSESSMENT YEAR 1999-2000. 2. THE ASSESSEE RAISED AN ADDITIONAL GROUND, FOR TH E FIRST TIME BEFORE THE TRIBUNAL, WHICH READS AS UNDER:- ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN L AW, THE HONBLE CIT(A) ERRED IN UPHOLDING THE RE-OPENING U/ S 148 OF THE ACT. THE HONBLE CIT(A) OUGHT TO HAVE HELD THAT REA SONS RECORDED BY THE ASSESSING OFFICER ARE NOT IN CONFORMITY WITH THE PROVISIONS OF SECTION 148 OF THE ACT AND HENCE RESULTANT ASSES SMENT ORDER IS NULL AND VOID. 3. THE LEARNED COUNSEL FOR THE ASSESSEE HAS SUBMITT ED THAT THIS IS A LEGAL GROUND, WHICH GOES TO THE ROUTE OF THE MATT ER AND FOR ADJUDICATION OF THE SAID ADDITIONAL GROUND, ALL THE FACTS ARE AVAILABLE ITA NOS.7136/M/2006 M/10 WEIZMAN CAPITAL LTD. 2 ON RECORD, THEREFORE, NO FURTHER INVESTIGATION ON F ACTS ARE REQUIRED AND, HENCE, THE SAME MAY BE ADMITTED. IT IS SUBMIT TED THAT WHEN THE FACTS ARE AVAILABLE ON RECORD, TRIBUNAL HAVE POWERS TO ADMIT A LEGAL GROUND RAISED EVEN FOR THE FIRST TIME BEFORE THE TR IBUNAL. FOR THE ABOVE SUBMISSION, HE RELIED ON THE JUDGMENT IN THE CASE OF NATIONAL THERMAL POWER CORPORATION VS. CIT, 229 ITR 383 (SC) , JUTE CORPORATION OF INDIA LTD. VS. CIT, 187 ITR 688 (SC) AND AHMEDABAD ELECTRICITY CO. VS. CIT, 199 ITR 315 (BOM.)(FULL BE NCH). 4. THE LEARNED DEPARTMENTAL REPRESENTATIVE, ON THE OTHER HAND, HAS STRONGLY OBJECTED FOR ADMISSION OF ADDITIONAL G ROUND RAISED BY THE ASSESSEE. 5. WE HAVE HEARD BOTH THE SIDES AND PERUSED THE REC ORD AS WELL AS GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW. THE POINT FOR CONSIDERATION IS WHETHER THE ADDITIONAL GROUND RAIS ED BY THE ASSESSEE IS ADMISSIBLE AT THIS STAGE OR NOT ?. THE ADDITIONA L GROUND RAISED BY THE ASSESSEE IS WITH REGARD TO THE VALIDITY OF REOP ENING U/S 147 OF THE ACT. THE REASONS RECORDED BY THE ASSESSING OFFICER FOR REOPENING ASSESSMENT ARE AVAILABLE ON RECORD AND ALL THE FACT S ARE ALSO AVAILABLE ON RECORD, THEREFORE, BY TAKING INTO CONSIDERATION THE LAW LAID DOWN BY THE HONBLE SUPREME COURT IN THE CASE OF NATIONAL T HERMAL POWER CORPORATION VS. CIT, (SUPRA) THE ADDITIONAL GROUND RAISED BY THE ASSESSEE IS HEREBY ADMITTED. NOW WE PROCEED TO ADJ UDICATE THE ADDITIONAL GROUND RAISED BY THE ASSESSEE IN RESPECT OF LEGAL ISSUE, WHICH HAS BEEN ADMITTED BY US FOR ADJUDICATION. 6. BRIEFLY THE FACTS OF THE CASE ARE THAT THE ASSES SEE COMPANY IS ENGAGED IN THE BUSINESS OF MERCHANT BANKING AND TRA DING OF SHARES. THE ASSESSEE FILED ITS RETURN OF INCOME DECLARING L OSS OF RS. 9,25,052/- AND THE SAME WAS PROCESSED U/S 143(1) OF THE ACT, ON 16/10/2010. SUBSEQUENTLY, THE ASSESSMENT WAS REOPEN ED BY ISSUING ITA NOS.7136/M/2006 M/10 WEIZMAN CAPITAL LTD. 3 A NOTICE U/S 148 OF THE ACT ON 14/05/2003 ON THE GR OUND THAT THE CERTAIN INCOME OF THE ASSESSEE HAD ESCAPED ASSESSME NT. ON BEING ASKED TO EXPLAIN AS TO WHY THE CAPITAL LOSS SHOULD NOT BE TREATED AS SPECULATION LOSS AND THEREBY UNDER THE SET OFF DONE BY THE ASSESSEE AGAINST INTEREST INCOME, IT WAS EXPLAINED THAT THE LOSS RESULTED IN SHORT TERM CAPITAL LOSS AND NOT SPECULATION LOSS. T HE ASSESSING OFFICER DID NOT ACCEPT THE CLAIM OF THE ASSESSEE AND HELD T HAT THE LOSS RESULTING FROM ANY SHARE TRADING DONE BY THE ASSESS EE IS NOT CAPITAL LOSS BUT IT IS SPECULATION LOSS. ACCORDINGLY, APPL YING THE PROVISIONS OF SECTION 73 OF THE ACT, THE SET OFF AMOUNT OF RS. 32 ,16,005/- WAS ADDED BACK BY THE AO TO THE TOTAL INCOME OF THE ASSESSEE AND THE REMAINING AMOUNT OF RS. 9,17,095/- WAS ALLOWED TO BE CARRIED FORWARD AS SPECULATIVE LOSS FOR THE SUBSEQUENT YEARS. AGGRIEVE D, THE ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE CIT(A). THE CIT(A) CONFIRMED THE ORDER OF ASSESSING OFFICER ON THE GROUND THAT T HE ENTIRE TRANSACTION WAS NOT GENUINE TRANSACTION AND THE LOS S CLAIMED ON ACCOUNT OF SALE AT RS. 41,32,100/- DESERVED TO BE D ISALLOWED. STILL AGGRIEVED, THE ASSESSEE IS IN APPEAL BEFORE THE ITA T. 7. THE LEARNED COUNSEL FOR THE ASSESSEE HAS SUBMITT ED THAT THE REASON FOR REOPENING OF ASSESSMENT IS ON THE GROUND THAT THERE IS A DIMINUTION IN THE VALUE OF STOCK OF RS. 2,70,22,375 /-, IN FACT, THERE IS NO DIMINUTION OF VALUE AND THE AO HIMSELF NOTED THA T THERE IS INCREASE IN STOCK. THEREFORE, THE LEARNED COUNSEL C ONTENDED THAT THE REASONS RECORDED BY THE AO WERE NOT CORRECT AND THE REOPENING IS BAD IN LAW. FOR THE ABOVE PROPOSITION, THE LEARNED COUN SEL RELIED UPON THE FOLLOWING CASE LAWS:- 1. HINDUSTAN LEVER LTD. VS. RB WADEKAR & OTHERS, 268 I TR 332 (BOM.) 2. PRASHANT S. JOSHI AND OTHERS VIDE WP NO. 2287 OF 2 009 AND OTHERS, JUDGEMENT BY BOMBAY HIGH COURT. 3. SMT. MANIBEN LALJI SHAH, 283 ITR 453 (BOM.) 4. CIT VS. JET AIRWAYS (I) LTD, [2010] 195 TAXMAN 117 (BOM.) ITA NOS.7136/M/2006 M/10 WEIZMAN CAPITAL LTD. 4 8. ON THE OTHER HAND, THE LEARNED DR HAS SUBMITTED THAT THE ENTIRE REASONS RECORDED BY THE AO HAS TO BE READ TO GETHER TO FORM AN OPINION THAT WHETHER THERE IS AN ESCAPEMENT OF INCO ME OR NOT. HE FURTHER SUBMITTED THAT IN THIS CASE THE AO HAS RIGH TLY FORMED AN OPINION AND THE LEARNED DR HAS STRONGLY SUPPORTED B Y THE REOPENING ASSESSMENT MADE BY THE AO. 9. WE HAVE HEARD THE LEARNED REPRESENTATIVES OF THE PARTIES, PERUSED THE RECORD AND GONE THROUGH THE ORDERS OF T HE AUTHORITIES BELOW AS WELL AS DECISIONS CITED. THE MAIN LEGAL IS SUE INVOLVED IN THIS APPEAL IS WHETHER THE REASONS RECORDED BY THE AO FO R REOPENING OF ASSESSMENT ARE VALID U/S 148 OR NOT. TO EXAMINE THE ISSUE, TT IS RELEVANT TO REPRODUCE THE REASONS RECORDED BY THE A O, WHICH ARE AS UNDER:- ASSESSEES COMPANY IS ENGAGED IN THE BUSINESS OF M ERCHANT BANKING. ASSESSEE COMPANY FILED RETURN OF INCOME ON 30/10/1999 DECLARING LOSS OF RS. 9,25,050/-. FROM T HE BREAK UP OF THE OPERATING INCOME SHOWN BY THE ASSESSEE COMPA NY IT IS SEEN THAT OPERATING INCOME CONSIST OF FOLLOWING DIF FERENT HEADS:- 1. SALES SECURITIES RS. 2,05,11,400/- 2. INCREASE IN STOCK RS. 2,70,22,375/- 3. INTEREST RECEIVED RS. 48,24,787/- 4. INTEREST ON FDR RS. 400/- 5. LEAD MANAGEMENT FEES 85,000/- FROM THIS BREAK UP IT IS CLEAR THAT ASSESSEE COMPAN YS MAIN ACTIVITY IS DEALING IN SHARES/STOCK AND SECURITIES. FROM THE QUANTITATIVE DETAILS OF SHARES AND SECURITIES SUBMI TTED ALONG WITH THE RETURN OF INCOME, IT IS SEEN THAT THERE IS DIMI NUTION IN THE VALUE OF THE STOCKS OF RS. 2,70,22,375/-. THERE IS INCOME ON ACCOUNT OF INTEREST RECEIVED OF RS. 48,24,787/- + I NTEREST ON FDR OF RS. 400/- & EXPENSES ON ACCOUNT OF INTEREST PAID OF RS. 16,09,182/- I.E. NET INCOME ON ACCOUNT OF INTEREST IS RS. 32,16,005/-. AS ASSESSEE COMPANYS MAIN BUSINESS IS DEALING IN SHARES & SECURITIES, THE ASSESSEE COMPANY IS COVERE D UNDER EXPLANATION TO SECTION 73 OF THE ACT, 1961. THE DIM INUTION IN VALUE OF SHARE/STOCK IS SPECULATIVE IN NATURE, HENC E DIMINUTION IN VALUE OF THE SHARE/STOCK BEING SPECULATIVE LOSS CAN NOT BE SET OFF AGAINST INCOME FROM NON-SPECULATIVE ACTIVITIES. AS SESSEE COMPANY HAS SET OFF NET INTEREST INCOME OF RS. 32,1 6,005/- AGAINST DIMINUTION IN THE VALUE OF THE SHARES/STOCK . HENCE, I HAVE REASONS TO BELIEVE THAT THE AMOUNT OF RS. 32,1 6,005/- ITA NOS.7136/M/2006 M/10 WEIZMAN CAPITAL LTD. 5 CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT FOR AY 199 9-2000. HENCE, THE CASE IS REOPENED U/S 147 OF THE ACT. ISS UE OF NOTICE U/S 148 OF THE ACT. 10. ON PERUSAL OF THE ABOVE REASONS RECORDED BY THE AO, WE FIND THAT THE REASON FOR REOPENING OF ASSESSMENT WAS THA T THERE IS A DIMINUTION IN THE VALUE OF STOCK OF RS. 2,70,22,375 /-, IT IS SPECULATIVE IN NATURE, THEREFORE, IT CANNOT BE SET OFF AGAINST NON-SPECULATIVE ACTIVITIES. HOWEVER, DURING THE COURSE OF REOPENING ASSESSMENT PROCEEDINGS, THE AO MADE AN ADDITION ON THE GROUND THAT THE CAPITAL LOSS CLAIMED BY THE ASSESSEE IS NOT ALLOWABLE IN TH E LIGHT OF THE EXPLANATION TO SECTION 73 AND DISALLOWED THE CLAIM OF THE ASSESSEE. ON PERUSAL OF REOPENING ASSESSMENT ORDER, IT IS CLE AR THAT NO ADDITION WAS MADE BY THE AO ON THE GROUND ON WHICH REOPENING MADE BY HIM. 11. THE HONBLE BOMBAY HIGH COURT IN THE CASE OF HI NDUSTAN LEVER LTD., 268 ITR 332 OBSERVED THAT IN ORDER TO REOPEN THE ASSESSMENT AO SHOULD HAVE VALID REASONS TO DOUBT THE CORRECTNE SS OF THE RETURN FILED BY THE ASSESSEE. IN OTHER WORDS, REASONS ARE REQUIRED TO BE RECORDED BY THE AO ON VALID MATERIAL AND ASSESSMENT CANNOT BE REOPENED ON MERE ASSUMPTIONS. 12. IN THE INSTANT CASE, THE AO HAS ULTIMATELY NOT COMPLETED THE ASSESSMENT ON THE STRENGTH OF THE REASONS RECORDED FOR THE REOPENING OF THE ASSESSMENT BUT ALTOGETHER ON DIFFERENT GROUN DS AND HENCE REOPENING OF ASSESSMENT IS BAD IN LAW. SIMILARLY, I N THE CASE OF SMT. MANIBEN LALJI SHAH, 283 ITR 453, THE HONBLE BOMBAY HIGH COURT HAD TAKEN INTO CONSIDERATION THE PRINCIPLE LAID DOWN BY THE APEX COURT IN THE CASE OF GANGA SARAN & SONS P. LTD., VS. ITO, 13 0 ITR 1 TO HOLD THAT AT THE TIME OF ISSUANCE OF NOTICE THE AO SHOUL D HAVE PROPER BASIS TO ENTERTAIN A BELIEF THAT ANY PART OF THE INCOME O F THE ASSESSEE HAS ESCAPED ASSESSMENT AND REOPENING CANNOT BE MADE MER ELY TO COLLECT FURTHER DETAILS. THE APEX COURT, IN TURN, OBSERVED THAT THE BELIEF ENTERTAINED BY AN AO MUST NOT BE ARBITRARY OR IRRAT IONAL AND IT MUST ITA NOS.7136/M/2006 M/10 WEIZMAN CAPITAL LTD. 6 BE REASONABLE; THOUGH THE COURT CANNOT INVESTIGATE INTO THE ADEQUACY OR SUFFICIENCY OF THE REASONS WHICH HAVE WEIGHED WI TH THE AO IN COMING TO THE BELIEF, COURT CAN CERTAINLY EXAMINE W HETHER THE REASONS ARE RELEVANT AND HAVE A BEARING ON THE MATTERS IN R EGARD TO WHICH HE IS REQUIRED TO ENTERTAIN BELIEF, BEFORE ISSUING A N OTICE FOR REOPENING OF ASSESSMENT. THE APEX COURT FURTHER OBSERVED THAT IF THERE IS NO RATIONAL AND INTELLIGIBLE NEXUS BETWEEN THE REASONS AND THE BELIEF, THE CONCLUSION WOULD BE INESCAPABLE THAT THE AO COULD N OT HAVE REASON TO BELIEVE THAT ANY PART OF THE INCOME OF THE ASSESSEE HAD ESCAPED ASSESSMENT, IN WHICH EVENT NOTICE ISSUED BY THE AO WOULD BE LIABLE TO BE STRUCK-DOWN AS INVALID. 13. THE HONBLE JURISDICTIONAL HIGH COURT IN THE CA SE OF PRASHANT S. JOSHI & OTHERS V. ITO VIDE W.P. NO. 2287 OF 2009 AN D OTHERS, JUDGEMENT DATED 22 ND FEBRUARY, 2010 OBSERVED AS UNDER:- SECTION 147 PROVIDES THAT IF THE AO HAS REASON TO B ELIEVE THAT ANY INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT FOR ANY ASSESSMENT YEAR, HE MAY SUBJECT TO THE PROVISIONS O F SECTIONS 148 TO 163, ASSESS OR REASSESS SUCH INCOME AND ALSO ANY OTHER INCOME CHARGEABLE TO TAX, WHICH HAS ESCAPED ASSESSM ENT AND WHICH COMES TO HIS NOTICE SUBSEQUENTLY IN THE COURS E OF THE PROCEEDINGS UNDER THE SECTION. THE FIRST PROVISO TO SECTION 147 HAS NO APPLICATION IN THE FACTS OF THIS CASE. THE B ASIC POSTULATE WHICH UNDERLINES SECTION 147 IS THE FORMATION OF TH E BELIEF BY THE AO THAT ANY INCOME CHARGEABLE TO TAX HAS ESCAPED AS SESSMENT FOR ANY ASSESSMENT YEAR. THE AO MUST HAVE REASON TO BELIEVE THAT SUCH IS THE CASE BEFORE HE PROCEEDS TO ISSUE A NOTICE U/S 147. THE REASONS WHICH ARE RECORDED BY THE AO FOR R EOPENING AN ASSESSMENT ARE THE ONLY REASONS WHICH CAN BE CONSID ERED WHEN THE FORMATION OF THE BELIEF IS IMPUGNED. THE RECORD ING OF REASONS DISTINGUISHES AN OBJECTIVE FROM A SUBJECTIVE EXERCI SE OF POWER. THE REQUIREMENT OF RECORDING REASONS IS A CHECK AGA INST ARBITRARY EXERCISE OF POWER. FOR IT IS ON THE BASIS OF THE RE ASONS RECORDED AND ON THOSE REASONS ALONE THAT THE VALIDITY OF THE ORDER REOPENING THE ASSESSMENT IS TO BE DECIDED. THE REAS ONS RECORDED WHILE REOPENING THE ASSESSMENT CANNOT BE ALLOWED TO GROW WITH AGE AND INGENUITY, BY DEVISING NEW GROUNDS IN REPLI ES AND AFFIDAVITS NOT ENVISAGED WHEN THE REASONS FOR REOPE NING AN ASSESSMENT WERE RECORDED. THE PRINCIPLE OF LAW, THE REFORE, IS WELL SETTLED THAT THE QUESTION AS TO WHETHER THERE WAS R EASON TO BELIEVE, WITHIN THE MEANING OF SECTION 147 THAT INC OME HAS ESCAPED ASSESSMENT, MUST BE DETERMINED WITH REFEREN CE TO THE ITA NOS.7136/M/2006 M/10 WEIZMAN CAPITAL LTD. 7 REASONS RECORDED BY THE AO. THE REASONS WHICH ARE R ECORDED CANNOT BE SUPPLEMENTED BY AFFIDAVITS. THE IMPOSITIO N OF THAT REQUIREMENT ENSURES AGAINST AN ARBITRARY EXERCISE O F POWERS UNDER SECTION 148. 14. IN THE PRESENT CASE, THE REASON FOR REOPENING W AS DIMINUTION OF VALUE IN THE STOCK AND IN FACT THE AO HIMSELF HAS N OTED THAT THERE IS INCREASE IN STOCK. THEREFORE, IT APPEARS FROM THE R EASONS THAT THE AO WITHOUT APPLYING HIS MIND PROPERLY, ISSUED NOTICE U/S 148 OF THE ACT. THE VERY BASIS FOR REOPENING OF ASSESSMENT IS MERE ASSUMPTION OF THE AO AND THE REOPENING CANNOT BE SUSTAINED ON THE AS SUMPTIONS AND SURMISES AND HE NEVER CARED TO VERIFY THE FACTUAL P OSITION CORRECTLY. IN VIEW OF THE ABOVE FACTS AND CIRCUMSTANCES OF THE CASE AND FOLLOWING THE JUDICIAL PRECEDENTS, WE HOLD THAT THE REOPENING OF ASSESSMENT MADE BY THE AO IS INVALID AND LIABLE TO BE QUASHED. 15. IN SO FAR AS THE ADDITION MADE BY THE AO IN RES PECT OF SET OFF CLAIMED BY THE ASSESSEE IS NOT WARRANTED IN THE LIG HT OF THE HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT VS. JE T AIRWAYS (I) LTD., [2010] 195 TAXMAN 117 (BOM.) WHEREIN SIMILAR LEGAL ISSUE CAME UP FOR CONSIDERATION BEFORE THE HONBLE COURT AND THE COURT IN ITS ORDER VIDE PARA NO. 16 HELD AS UNDER:- EXPLANATION 3 LIFTS EMBARGO, WHICH WAS INSERTED BY JUDICIAL INTERPRETATION, ON THE MAKING OF AN ASSESSMENT OR R EASSESSMENT ON GROUNDS OTHER THAN THOSE ON THE BASIS OF WHICH A NOTICE WAS ISSUED UNDER SECTION 148 SETTING OUT THE REASONS FO R THE BELIEF THAT INCOME HAD ESCAPED ASSESSMENT. THOSE JUDICIAL DECISIONS HAD HELD THAT WHEN THE ASSESSMENT WAS SOUGHT TO BE REOPENED ON THE GROUND THAT INCOME HAD ESCAPED ASSESSMENT ON A CERTAIN ISSUE, THE ASSESSING OFFICER COULD NOT MAKE AN ASSE SSMENT OR REASSESSMENT ON ANOTHER ISSUE WHICH CAME TO HIS NOT ICE DURING THE PROCEEDINGS. THIS INTERPRETATION WILL NO LONGER HOLD THE FIELD AFTER THE INSERTION OF EXPLANATION 3 BY THE FINANCE ACT (NO.2) OF 2009. HOWEVER, EXPLANATION 3 DOES NOT AND CANNOT OV ERRIDE THE NECESSITY OF FULFILLING CONDITIONS SET OUT IN THE S UBSTANTIVE PART OF SECTION 147. AN EXPLANATION TO A STATUTORY PROVISIO N IS INTENDED TO EXPLAIN ITS CONTENTS AND CANNOT BE CONSTRUED TO OVERRIDE IT OR RENDER THE SUBSTANCE AND CORE NUGATORY. SECTION 147 HAS THIS EFFECT THAT THE ASSESSING OFFICER HAS TO ASSESS OR REASSESS THE INCOME (SUCH INCOME) WHICH ESCAPED ASSESSMENT AND WHICH WAS THE BASIS OF THE FORMATION OF BELIEF AND IF HE DOES SO, HE CAN ALSO ITA NOS.7136/M/2006 M/10 WEIZMAN CAPITAL LTD. 8 ASSESS OR REASSESS ANY OTHER INCOME WHICH HAS ESCAP ED ASSESSMENT AND WHICH, COMES TO HIS NOTICE DURING TH E COURSE OF THE PROCEEDINGS. HOWEVER, IF AFTER ISSUING A NOTICE UNDER SECTION 148, HE ACCEPTED THE CONTENTION OF THE ASSESSEE AND HOLDS THAT THE INCOME WHICH HE HAS INITIALLY FORMED A REASON T O BELIEVE HAD ESCAPED ASSESSMENT, HAS AS A MATTER OF FACT NOT ESC APED ASSESSMENT, IT IS NOT OPEN TO HIM INDEPENDENTLY TO ASSESS SOME OTHER INCOME. IF HE INTENDS TO DO SO, A FRESH NOTIC E UNDER SECTION 148 WOULD BE NECESSARY, THE LEGALITY OF WHICH WOULD BE TESTED IN THE EVENT OF A CHALLENGE BY THE ASSESSEE. 16. AS PER THE ABOVE DECISION, THE INCOME, WHICH TH E ASSESSING OFFICER INITIALLY FORMED A REASON TO BELIEVE HAD ES CAPED ASSESSMENT, HAS AS A MATTER OF FACT, NOT ESCAPED ASSESSMENT, IT IS NOT OPEN TO THE ASSESSING OFFICER INDEPENDENTLY TO ASSESS SOME OTHE R INCOME. IN THE PRESENT CASE, THE ASSESSING OFFICER REOPENED THE AS SESSMENT FOR THE REASON TO BELIEVE THAT THERE IS DIMINUTION IN THE V ALUE OF SHARES BUT IT IS NOT CORRECT AND WHILE MAKING ASSESSMENT THE ASSE SSING OFFICER HAD MADE AN ASSESSMENT ON A DIFFERENT GROUND THAT THE L OSS CLAIMED BY THE ASSESSEE IS NOT CAPITAL LOSS AND IT IS A SPECUL ATIVE LOSS. IF WE APPLY THE RATIO LAID DOWN BY THE HONBLE JURISDICTIONAL H IGH COURT TO THE FACTS OF THE CASE UNDER CONSIDERATION, THE ADDITION MADE BY THE AO CANNOT BE SUSTAINED. WE, THEREFORE, DELETE THE ADDI TION MADE ON THIS COUNT. 17. SINCE, THE LEGAL ISSUE OF REOPENING OF ASSESSME NT ITSELF IS QUASHED, THE ORIGINAL GROUNDS RAISED BY THE ASSESSE E ARE NOT REQUIRED TO BE ADJUDICATED BY US. 16. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS A LLOWED. PRONOUNCED IN THE OPEN COURT ON THIS DAY OF 27 TH MAY, 2011. SD/- SD/- (P.M. JAGTAP) (V. DURGA RA O) ACCOUNTANT MEMBER JUDI CIAL MEMBER MUMBAI, DATED: 27 TH MAY, 2011 KV ITA NOS.7136/M/2006 M/10 WEIZMAN CAPITAL LTD. 9 COPY TO:- 1) THE APPELLANT. 2) THE RESPONDENT. 3) THE CIT (A) CONCERNED. 4) THE CIT CONCERNED. 5) THE DEPARTMENTAL REPRESENTATIVE, G BENCH, I.T .A.T., MUMBAI. BY ORDER //TRUE COPY// ASST. REGISTRAR, I.T.A.T., MUMBAI. S.NO. DESCRIPTION DATE INTLS 1. DRAFT DICTATED ON 11/05/11 SR.P.S./P.S 2. DRAFT PLACED BEFORE AUTHOR 12/05/11 SR.P.S/PS 3 DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER JM/AM 4 DRAFT DISCUSSED/APPROVED BY SECOND MEMBER JM/AM 5 APPROVED DRAFT COMES TO THE SR.P.S./PS SR.P.S./P.S 6. KEPT FOR PRONOUNCEMENT ON SR. P.S./P.S. 7. FILE SENT TO THE BENCH CLERK SR.P.S./P.S 8 DATE ON WHICH FILE GOES TO THE HEAD CLERK 9 DATE OF DISPATCH OF ORDER