TaxTMI 
TaxTMI 
2014 (2) TMI 659
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....assed by the Assessing Officer under Section 143(3) read with Section 147 of the Act for A. Y. 2008-09. 3) At the very outset, Mr. Chhotaray, learned Counsel for the respondentrevenue raises a preliminary objection to the petition viz. that as an Assessment Order dated 19 December 2013 has already been passed, the issue of challenge to reopening of assessment could be challenged by filing an appeal under the Act. Therefore, on this short ground alone, the petition be dismissed. 4) As against the above, Mr. Percy Pardiwala, learned Senior Counsel for the petitioner submits that the sequence of events in this case warrants this petition being entertained. It was by order dated 20 November 2013 that the Assessing Officer rejected the petitioner' objection to reopening of assessment for A. Y. 2008-09 by notice dated 28 March 20103. This Court in Asian Paints Limited vs. Deputy Commissioner of Income Tax and anr. (2008) 296 ITR 90 (Bom) has clearly laid down that when an assessment is sought to be reopened under Section 148 of the Act and the objections of the assessee have been over ruled by the Assessing Officer, then in such a case the Assessing Officer will not proceed fur....
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....hat a writ petition has been filed challenging the order dated 20 November 2013 in respect of A. Y. 2008-09 and is posted for admission on 23 December 2013. It is averred in the petition that the Assessing Officer was informed at the hearing held on 10 December 2013, that it is preparing a petition to challenge the reopening for A. Y. 2008-09 on identical grounds as done in earlier Assessment Year namely A. Y. 200708 which is pending in this Court and ad interim relief has also been granted, restraining the revenue from proceeding with the assessment for A. Y. 200708. The passing of an order on 19 December 2013 by the Assessing Officer in undue haste and thereafter contending that in view of alternative remedy, the writ petition should not be entertained, does not appear bonafide. This undue haste in passing the impugned order dated 19 December 2013 is an attempt to overreach the Court and to thwart the petitioner's challenge to the impugned order dated 20 November 2013 pending before this Court. 7) In the above circumstances, we set aside the order dated 19 December 2013 passed by the Assessing Officer under Section 143(3) read with Section 147 of the Act for A. Y. 2008-09. ....
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....ove assessment order the income was determined at Rs.4.15 crores under the normal provisions of the Act and at Rs.7.82 crores under Section 115JB of the Act. In fact, the assessment order also disallowed certain expenses under Section 14A of the Act incurred in respect of the exempted income viz. long term capital gains as well as dividend income. f) On 28 March 2013 the Assessing officer issued a notice under Section 148 of the Act to the petitioner seeking to reopen the assessment for A.Y. 2008-09 for the purposes of reassessment. On receipt of the notice, the petitioner sought the reasons for the reopening of the assessment for A.Y. 2008-09. In response the Assessing Officer communicated the following reasons for reopening the assessment: "It is observed that the assessee is only engaged in the business of share trading and regularly doing purchase and sale of shares. The assessee has manipulated the affairs in such a way that where scrip has been sold within twelve months, it is claimed as short term capital gains and taxed at a lower rate by applying section 111A.As assessee is engaged in share trading activity only, all income/receipts should be treated as b....
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....sel in support of the petition submits as under: a) The impugned order dated 20 November 2013, rejecting the petitioner's objection to notice dated 28 March 2013 under Section 148 of the Act is unsustainable. This is for the reason that reopening is being done on mere change of opinion which does not constitute a reason to believe that income chargeable to tax has escaped assessment. The very basis of the reasons for reopening viz. the gains arising from purchase and sale of shares is taxable as business income and not as capital gain was examined during the course of assessment proceedings, leading to the assessment order dated 12 October 2010. This is evident from the petitioner's letter dated 8 September 2010 during Assessment proceedings. Thus, this notice for reopening is only on account of change of opinion i.e. a different interpretation/view of facts which were already examined in the original proceedings leading to order dated 12 October 2010. b) The impugned order dated 20 November 2013 rejecting the petitioner's objections to reopening the assessment proceeds on a factually incorrect basis i.e. no sample copy of purchase/sale note or Demat s....
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....of the respondent. A copy of the Audit report dated 29 September 2011 was handed across the bar. It was submitted that this audit report has pointed out that the petitioner had manipulated its account in such a manner that the regular business of the assessee of trading in shares was hidden resulting in business income of trading in shares being taxed as capital gain arising out of investment. It was on the basis of the aforesaid material received from the audit that notice to reopen the assessment for assessment year 2008-09 was issued. This was the tangible material before the Assessing Officer which warranted reopening the assessment for assessment year 2008-09 even if it is assumed that all facts were available to the Assessing Officer during the assessment proceedings leading to Assessment Order dated 12 October 2010; and c) Merely because the petitioner's claim for being charged to tax under the head 'capital gain' instead of the head "Profits and gains of business or profession had been accepted for earlier and subsequent years by the revenue it would not follow that for assessment year 2008-09 under consideration, the same has to be blindly accepted. It....
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....ere is change of opinion on the part of the Assessing Officer notice under Section 147/148 of the Act is not permissible. The powers under Section147/ 148 of the Act cannot be exercised to correct errors/mistakes on the part of the Assessing Officer while passing the original order of assessment. There is a sanctity bestowed on an order of assessment and the same can be disturbed by exercise of powers under Sections 147/148 of the Act only on satisfaction of the jurisdictional requirements. Further, the reasons for reopening an assessment has to be tested/examined only on the basis of the reasons recorded at the time of issuing a notice under Section 148 of the Act seeking to reopen an assessment. These reasons cannot be improved upon and/or supplemented much less substituted by affidavit and /or oral submissions. Moreover, the reasons for reopening an assessment should be that of the Assessing Officer alone who is issuing the notice and he cannot act merely on the dictates of any another person in issuing the notice. Moreover, the tangible material upon the basis of which the Assessing Officer comes to the reason to believe that income chargeable to tax has escaped assessment can ....
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....he very ground on which the notice dated 28 March 2013 seeks to reopen the assessment for assessment year 2008-09 was considered by the Assessing Officer while originally passing assessment order dated 12 October 2010. This by itself demonstrates the fact that notice dated 28 March 2013 under Section 148 of the Act seeking to reopen assessment for A.Y. 2008-09 is based on mere change of opinion. However, according to Mr. Chhotaray, learned Counsel for the revenue the aforesaid issue now raised has not been considered earlier as the same is not referred to in the assessment order dated 12 October 2010 passed for A.Y. 2008-09. We are of the view that once a query is raised during the assessment proceedings and the assessee has replied to it, it follows that the query raised was a subject of consideration of the Assessing Officer while completing the assessment. It is not necessary that an assessment order should contain reference and/or discussion to disclose its satisfaction in respect of the query raised. If an Assessing Officer has to record the consideration bestowed by him on all issues raised by him during the assessment proceeding even where he is satisfied then it would be im....
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....ed on the basis of the reasons recorded at the time of issuance of notice and no further reasons either orally at the bar or by filing of an affidavit can be considered to meet the challenge to reopening of an assessment. Therefore, it would not be permissible for Mr. Chhotaray to advance submissions on the basis of an audit report which was not basis of the reasons recorded at the time of issuing notice under Section 148 of the Act. 16) Be that as it may, even if, one examines audit report dated 29 September 2011 from the internal audit department it would be noticed that the basis of the audit report is the interpretation/inference drawn by the auditors from the accounts submitted by the petitioner to the department during the course of its assessment proceedings. The reasons as indicated in the audit report are similar to the reasons as set out in the grounds for reopening the assessment by the Assessing officer. Neither the audit report nor the ground for reopening assessment disclose any tangible material for the purpose of reopening the assessment but relies upon opinion/inferences drawn by the internal audit department on existing material and these inferences/opinion dif....