Tribunal rejects departmental appeals, upholds CIT(A)'s annulment of reassessment. Reassessment based on change of opinion deemed invalid.

The tribunal dismissed the departmental appeals and the cross-objection of the assessee, upholding the CIT(A)'s decision to annul the reassessment proceedings. The tribunal emphasized that reassessment based on a mere change of opinion is invalid, and the original assessment had correctly applied the law regarding Explanation to Section 73.

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Issues Involved:
1. Jurisdiction to file the appeal.
2. Condonation of delay in filing the appeal.
3. Validity of reopening assessment under Section 147/148 of the Income Tax Act, 1961.
4. Application of Explanation to Section 73 of the Income Tax Act, 1961.

Detailed Analysis:

1. Jurisdiction to File the Appeal:
The department initially filed an appeal (ITA No.572/Kol/2010) which was contested by the assessee on the grounds of jurisdiction, as the case had been transferred to a different assessing officer. Consequently, a fresh appeal (ITA No.676/Kol/2012) was filed after obtaining the necessary approval. The tribunal dismissed the initial appeal and the related cross-objection as not pressed.

2. Condonation of Delay in Filing the Appeal:
The department requested condonation of a two-day delay in filing the second appeal due to unavoidable circumstances. The assessee did not object to the condonation. The tribunal, citing the Hon'ble Supreme Court's decision in Vedabai alias Vijayantabai Baburao Patil Vs. Shantaram Baburao Patil & Ors (2001) 253 ITR 798(SC), adopted a pragmatic approach and condoned the delay, allowing the appeal to be admitted.

3. Validity of Reopening Assessment Under Section 147/148:
The department contested the CIT(A)'s decision to annul the reassessment proceedings. The original assessment under Section 143(3) considered the business loss in share trading, which was not treated as speculation loss based on the assessee's explanation. The AO later issued a notice under Section 148, believing income had escaped assessment. The CIT(A) held that the reopening was based on a mere change of opinion, which is not permissible. The tribunal upheld this view, referencing the Full Bench decision of the Delhi High Court in CIT Vs. Kelvinator of India Ltd (2002) 261 ITR 1, which stated that Section 147 does not allow reassessment based merely on a change of opinion.

4. Application of Explanation to Section 73:
The AO initially accepted the assessee's claim that Explanation to Section 73 did not apply, as the gross total income mainly consisted of income from house property, capital gains, and other sources, and the principal business was granting loans. However, during reassessment, the AO treated the share trading loss as speculation loss, contrary to the initial assessment. The CIT(A) found that the AO had considered all relevant facts during the original assessment and had formed a valid opinion. The tribunal supported this, noting that the AO did not find any errors in the assessee's submissions regarding the composition of its income and principal business activities.

Conclusion:
The tribunal dismissed the departmental appeals and the cross-objection of the assessee, upholding the CIT(A)'s decision to annul the reassessment proceedings. The tribunal emphasized that reassessment based on a mere change of opinion is invalid, and the original assessment had correctly applied the law regarding Explanation to Section 73.

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