TaxTMI 
TaxTMI 
2010 (6) TMI 379
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....me-tax Act, 1961. 3. The first question which arises is whether a party at the time of final hearing can be permitted to raise a substantial question of law which has not been framed earlier. Section 260A of the Incometax Act reads as follows:- 260A. (1) An appeal shall lie to the High Court from every order passed in appeal by the Appellate Tribunal, if the High Court is satisfied that the case involves a substantial question of law. (2) [The Chief Commissioner or the Commissioner or an assessee aggrieved by any order passed by the Appellate Tribunal may file an appeal to the High Court and such appeal under this subsection shall be—] (a) filed within one hundred and twenty days from the date on which the order appealed against is [received by the assessee or the Chief Commissioner or Commissioner]; (b) 92[***] (c) in the form of a memorandum of appeal precisely stating therein the substantial question of law involved. (3) Where the High Court is satisfied that a substantial question of law is involved in any case, it shall formulate that question. (4) The appeal shall be heard only on the question so formulated, and the respondents shall, at the hearing ....
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....ase. The memorandum of appeal must precisely state the substantial question of law involved and the High Court is obliged to satisfy itself regarding the existence of such question. If satisfied, the High Court has to formulate the substantial question of law involved in the case. The appeal is required to be heard on the question so formulated. However, the respondent at the time of the hearing of the appeal has a right to argue that the case in the court did not involve any substantial question of law. The proviso to the section acknowledges the powers of the High Court to hear the appeal on a substantial point of law, though not formulated by it with the object of ensuring that no injustice is done to the litigant where such question was not formulated at the time of admission either by mistake or by inadvertence." 6. In Krishanchand v. Ramkrishna, 1993 MPLJ 655, a Single Judge of the High Court of Madhya Pradesh held that if at the admission stage the High Court formed an opinion that a particular question of law did not arise in the case or that it was not a substantial question of law it would deprive the High Court of its jurisdiction to permit a rehearing on that questio....
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....f law which arises for decision in these appeals:- 1. Whether the Assessing Officer was justified in reopening the assessment proceedings by issuance of notice under Section 148 of the Income-tax Act, 1961 since the Assessing Officer had no reason to believe that any income chargeable to tax has escaped an assessment? 2. Whether the assessee holds the shares which are the subject matter of dispute as an investment or was dealing with such shares as a trader and whether the income derived from such shares should be treated as business income or as a long term capital gain. 10. It is not disputed that for the relevant years in question the assessee had filed returns declaring income and one of the main heads of income was by sale of shares. The assessee, however, claims that this income was not business income but was capital gains since it had invested the funds of the company in the said shares as a long term business investment. The returns filed under Section 143(1) were accepted as a matter of course. Later the Assessing Authority on perusal of the computation of income came to the prima facie view that the assessee engaged in the business of the trading of shares and t....
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....sing Officer could reopen the assessment. The contention of the assessee is that once the returns filed by it had been accepted by the department for the three previous years in which it was clearly mentioned that the investment in the shares in question was a long term investment the department could not change its opinion and therefore, the notice is without jurisdiction. The learned counsel for the appellant has relied upon following judgements of the Apex Court. 14. In The Income-tax Officer, 1 Ward, District VI, Calcutta and others vs. Lakhmani Mewal Dass, (1976) 3 SCC 757, the Apex Court while dealing with Section 147 before it is amended held as follows:- "8. The grounds or reasons which lead to the formation of the belief contemplated by Section 147 (a) of the Act must have a material bearing on the question of escapement of income of the assessee from assessment because of his failure or omission to disclose fully and truly all material facts. Once there exist reasonable grounds for the Income-tax Officer to form the above belief, that would be sufficient to clothe him with jurisdiction to issue notice. Whether the grounds are adequate or not is not a matter for the ....
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....Ltd. vs. Assistant Commissioner of Income -tax, (2004) 267 I.T.R. 779, Aditya and co. Vs. Commissioner of Income-tax and another, (2005) 279 I.T.R 47. We need not to refer to these judgements in detail since in our view the law stands settled by the judgement of the Apex Court in Rajesh Jhaveri Stock Brokers Pvt. Ltd. (supra) wherein in a very exhaustive judgement the Apex Court has brought out the differences in the provisions prior to the amendment thereof w.e.f. 1st April, 1989 and 1st June, 1999. After considering entire provision the Apex Court held as follows:- "19. Section 147 authorises and permits the Assessing Officer to assess or reassess income chargeable to tax if he has reason to believe that income for any assessment year has escaped assessment. The word "reason" in the phrase "reason to believe" would mean cause or justification. If the Assessing Officer has cause or justification to know or suppose that income had escaped assessment, it can be said to have reason to believe that an income had escaped assessment. The expression cannot be read to mean that the Assessing Officer should have finally ascertained the fact by legal evidence or conclusion. The function ....
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....as escaped assessment it confers jurisdiction to reopen the assessment. It is, however, to be noted that both the conditions must be fulfilled if the case falls within the ambit of the proviso to section 147. The case at hand is covered by the main provision and not the proviso." 17. In view of the law laid down above, it is apparent that the powers of the Assessing Officer to reopen assessment are very wide. True it is that the word 'reason to believe' does not mean a mere change in opinion. If the Assessing Officer has at any time expressed an opinion or come to a finding on the facts before him and decided the matter in a particular way then just because a different interpretation is possible the Assessing Officer may not have the power to issue a notice under Section 148. However, in case, no opinion has been expressed then whatever be the reason as long as they prima facie satisfy the conscience of the Court, the Court would not interfere in the issuance of a notice. In the present case, as pointed out above, no reasoned findings were given on the returns filed by the assessee for the three previous years. The returns were accepted as a matter of course. It is well known th....