UDAY PUNJ,DELHI V. DCIT,CIRCLE-19(1), DELHI

ITA 3087/DEL/2025

AI Insights

The case involves Uday Punj, the appellant, contesting the reassessment of his income for the Assessment Year 2013-14 by the Deputy Commissioner of Income Tax (DCIT), Circle 19(1), New Delhi. The original assessment was completed under section 143(3) of the Income-tax Act, 1961, where the assessee's income was adjusted with short-term capital losses from previous years. However, the DCIT later reopened the case under sections 147/148, claiming that the income had escaped assessment. The Tribunal examined whether the reassessment was justified, focusing on the principles of 'change of opinion' and the requirement of new tangible material for reopening an assessment.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 786186 (ITAT-DELHI)
• Duration Of Justice: 5 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-10-2025
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: C
• Assessment Year: 2013-2014
• Appeal Filed On: 08-05-2025
• Other Referred Cases: Discovery Communications India v. ACIT, CIT v. Kelvinator of India Ltd., CIT v. Usha International Ltd., Maruti Suzuki India Ltd. v. DCIT, S.B. Packagings Ltd. v. ACIT, Ralsons India Ltd. v. CIT
• Laws Referred To: Income-tax Act, 1961
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: OM PRAKASH
• Assessee Lawyers: RAHUL KHARE
• Keywords: Speculation loss; Business income; Difference of opinion; Change of opinion; Reassessment proceedings; Documents seized; Capital Gains; Wrong claim; Transactions in derivatives; Tangible material
• Section: 147; 148; 143(3); 142(1)

Judgement Text

"IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH ‘C’: NEW DELHI BEFORE SHRI S. RIFAUR RAHMAN, ACCOUNTANT MEMBER and SHRI YOGESH KUMAR U.S., JUDICIAL MEMBER ITA No.3087/DEL/2025 (Assessment Year: 2013-14) Uday Punj, vs. DCIT, Circle 19 (1), CHIMES, New Delhi. 55, Sultanpur Farms, New Delhi – 110 030. (PAN : AAAPP1309F) (APPELLANT) (RESPONDENT) ASSESSEE BY : Shri Rahul Khare, Advocate REVENUE BY : Shri Om Prakash, Sr. DR Date of Hearing : 17.09.2025 Date of Order : 30.10.2025 ORDER PER S. RIFAUR RAHMAN, ACCOUNTANT MEMBER : 1. This appeal preferred by the assessee is directed against the order of the ld. Commissioner of Income-tax (Appeals)-29, New Delhi [for short ‘ld. CIT (A)] dated 18.03.2025 for Assessment Year 2013-14 raising following grounds of appeal :- “1. That Learned CIT-A erred in fact and in law in confirming the reopening of the case u/s 147/148 without appreciating the facts which is not only bad in law but also against the facts and circumstances of the case. Printed from counselvise.com 2 ITA No.3087/DEL/2025 2. That Learned CIT-A had confirmed the reopening without adjudicating the issue hence the order passed not only bad in law but also against the facts and circumstances of the case. 3. The learned CIT-A erred in fact and in law in not allowing the setting off of short term capital gains with the b/f assessed short term capital loss of Rs.3,44,91,848/- pertaining to A.Y. 2008-09.” 2. Brief facts of the case are, the original return of income was filed by the assessee on 30.09.2013 for AY 2013-14 declaring total income of Rs.43,04,500/-. The return was processed under section 143 (1) of the Income-tax Act, 1961 (for short ‘the Act’) and the case was selected for scrutiny under CASS. The assessment u/s 143(3) of the Act was completed on 23.03.2016 at assessed income of Rs.63,40,091/- against the returned income of Rs.43,04,500/-. The AO observed at para 2 of the assessment order that assessee had declared short term capital gain of Rs.62,48,670/- during the year under consideration which was set off with the losses of assessment years 2007-08 and 2008-09. Further he observed that during the assessment year 2007-08, the assessment was completed u/s 143(3) on 29.12.2011 wherein the AO held that the loss of Rs.86,53,405/- claimed on account of share transaction/commodities trading done under F&O was business loss from speculative business, therefore, the same could be set off against the income from speculation business only. As stated above, the assessee has set off the earlier speculative loss to the tune of Rs.62,48,670/- against the current year’s Printed from counselvise.com 3 ITA No.3087/DEL/2025 (short term speculative business) non-speculative gain which is not correct as per the provisions of section 73 of the Act. He observed that assessee by setting off speculative loss against the short term business income had understated his income to the tune of Rs.62,48,670/-. While completing the assessment u/s 143(3), this wrong claim of adjustment remained unverified and also inadvertently accepted wrongly. In view of the above, the case of the assessee was reopened u/s 147/148 of the Act after recording the reason/satisfaction note for the AY 2013-14. Accordingly notice u/s 148 was issued and served on the assessee after obtaining the prior approval. Accordingly, he completed the assessment by making the abovesaid addition. 3. At the time of hearing, ld. AR of the assessee raised legal issue before us. Therefore, we are restricting ourselves to address the legal issue herein above. 4. At the time of hearing, ld. AR of the assessee submitted as under :- “2. It is humbly submitted that in terms of section 147 of the Act (as applicable for the relevant AY under consideration), the AO could initiate reassessment proceedings for the concerned AY, only if he had \"reasons to believe\" that the income chargeable to tax had escaped assessment for such an AY. Further, there ought to be a live link / rational nexus between the tangible material in the possession of the AO and formation of belief that the income chargeable to tax of the Assessee had escaped taxation for the relevant AY. In the absence thereof, initiation of reassessment proceedings would have no legs to stand on in the eyes of law. Reliance in this-regard is placed on the decision of the jurisdictional High Court rendered in the case of Discovery Communications India v. ACIT, [2025] 473 ITR 627 (Delhi HC). Printed from counselvise.com 4 ITA No.3087/DEL/2025 3. Further, it is humbly submitted that in terms of the well-settled law on the subject, once an Assessee has been subjected to a scrutiny assessment, review of such order indirectly by invoking the provisions of section 147/148 of the Income-tax Act, 1961 [\"Act\"], is impermissible. Meaning thereby, the AO cannot resort to reassessment proceedings as envisaged under section 147/148 of the Act to revisit concluded issues, which were duly examined by him during the course of assessment proceedings. Such actions of the AO would be hit by the judicial bar of “change of opinion\". Reliance in this regard is placed on the decision of the Hon'ble Apex Court in the case of CIT v. Kelvinator of India Ltd., [2010] 320 ITR 561 (SC). 4. In furtherance thereto, it is also respectfully submitted that once a query on an issue has been raised by the AO during the course of the scrutiny assessment, which was duly responded / replied to by the Assessee, failure of the AO to not discuss the same in the assessment order would not validate assumption of jurisdiction under section 147/148 of the Act being hit by the judicial bar of \"change of opinion\". Reliance in this regard is placed on the Full Bench decision of the jurisdictional High Court in the case of CIT v. Usha International Ltd., [2012] 348 ITR 485 (Delhi HC) and the cases of Maruti Suzuki India Ltd. v. DCIT, [2025] 477 ITR 725 (Delhi HC); S.B. Packagings Ltd. v. ACIT, [2025] 482 ITR 456 (Delhi HC). 5. Admittedly, in the present case, the AO vide notice dated 12/06/2015 issued under section 142(1) of the Act, specifically raised a query in relation to b/f losses ,which was duly responded by the Assessee vide its submission dated 15.10.2015 (please refer page no.10/11/15 of the paper book). Further, no new / tangible material was brought on record by the AO evidencing that on such concluded issues, the income chargeable to tax of the Appellant had escaped assessment for the subject AY. 6. Ergo, in light of the above, it is ostensibly clear that the reassessment proceedings sought to be initiated by the AO in the present case is nothing, but review of its own order passed during the course of scrutiny assessment, which is hit by the judicial bar of \"change of opinion\", rendering the whole reassessment proceedings bad in law.” 5. On the other hand, ld. DR of the Revenue relied on the orders of the lower authorities and submitted that F&O loss cannot be carried forward Printed from counselvise.com 5 ITA No.3087/DEL/2025 and it is not allowable. 6. Considered the rival submissions and material placed on record. We observe that assessment u/s 143(3) was completed on 23.03.2016 and now the AO initiated the reassessment proceedings after recording the reasons to believe that income chargeable to tax has escaped assessment for the relevant assessment year under consideration. This fact is on record that the assessment u/s 143(3) was already completed. Upon completion of the regular assessment, the AO has invoked the provisions of section 147/148 after review of the abovesaid order. It is also fact on record that there was no tangible material in the possession of the AO and formation of plea that the income chargeable to tax had escaped for the relevant assessment year. We observe that the relevant issue under consideration was already verified by the then AO and the same was communicated to the AO vide email dated 25.11.2019 as under :- \"The assessment was completed u/ s 143(3) and during the course of hearing this objection of setting off of b/ f loses pertaining to A. Y. 2007-08, which was assessed as speculative loss, was raised which was duly accepted by us and it was duly informed to him vide our letter dated 15.10.2015 wherein it was informed that inadvertently, this was claimed but we had assessed short term loss of Rs.3,44,91,848/- pertaining to A. Y. 2008-09 is available hence, this short term gain may be adjusted against the loss of A. Y. 2008-9. The ACIT after going thru the chart and evidences filed by us along with our above letter dated 15.10.2015, the assessment was completed u/ s 143(3) after going thru each and every details hence, the re-opening is proceedings is not only void ab initio but bad in law.\" 7. From the record, we observe that the assessment u/s 143(3) was Printed from counselvise.com 6 ITA No.3087/DEL/2025 completed after raising a query on the relevant issue and AO has accepted the submissions of the assessee on the relevant issue and duly accepted the same, now on the same issue AO has no jurisdiction to reopen the assessment merely because the relevant issue in question was not specifically discussed in the assessment order. In this regard, we rely on the decision of Hon’ble Delhi High Court in the case of Ralsons India Ltd. (2014) 366 ITR 103 (Del) wherein Hon’ble Delhi High Court held that where assessment order u/s 143(3) after considering the assessee’s explanation in respect of documents seized in course of search proceedings, initiation of reassessment proceedings on the basis of same material now available on record could not be upheld. Therefore, the relevant notice and consequent proceedings cannot be sustained and are liable to be quashed by relying on the decision of Hon’ble Supreme Court in the case of CIT vs. Kelvinator of India Ltd. (2010) 320 ITR 561 (SC). Even the Hon’ble Supreme Court held that the AO cannot resort to reassessment proceedings as envisaged u/s 147/148 of the Act to revisit the concluded issues, which were duly examined by him during the course of original assessment proceedings. Such action would be hit by judicial bar of change of opinion. After considering the material facts on record, we observe that the AO has already considered the relevant issue at the time of original assessment proceedings itself and not discussed Printed from counselvise.com 7 ITA No.3087/DEL/2025 any issue in the assessment order, the same issue after reviewing the assessment order cannot be termed as new tangible material in the possession of the assessee to initiate the proceedings u/s 147 of the Act. Therefore, we are inclined to treat the assessment order and the initiation of proceedings based on change of opinion is bad in law. 8. In the result, the reassessment proceedings initiated in this case is bad in law. Accordingly, we quash the assessment order passed u/s 147/250/143(3) of the Act and Ground Nos.1 & 2 are hereby allowed and not adjudicated Ground No.3 at this stage. 9. In the result, the appeal filed by the assessee is partly allowed. Order pronounced in the open court on this 30th day of October, 2025. Sd/- sd/- (YOGESH KUMAR U.S.) (S.RIFAUR RAHMAN) JUDICIAL MEMBER ACCOUNTANT MEMBER Dated: 30.10.2025 TS Copy forwarded to: 1. Appellant 2. Respondent 3. CIT 4. CIT(Appeals). 5. DR: ITAT ASSISTANT REGISTRAR ITAT, NEW DELHI Printed from counselvise.com "