TaxTMI 
TaxTMI 
2020 (12) TMI 658
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....8. Thereafter, the Assessing Officer passed rectification order under section 154 of the Act dated 07/03/2013 whereby assessee's claim of carry forward of Long/ Short Term Capital Loss on sale of shares was disallowed. Aggrieved by the rectification order dated 07/03/2013(supra), the assessee filed appeal before the CIT(A) inter-alia, challenging the validity of Assessing Officer's action in invoking the provisions of section 154 of the Act. The CIT(A) vide impugned order dated 30/11/2015 granted relief to the assessee in respect of carry forward of Long Term Capital Loss but remain silent on the validity of proceedings under section 154 of the Act invoked by the Assessing Officer. Against the findings of CIT(A), the Revenue filed appeal in ITA No.726/Mum/2016 and assessee filed cross objections in the appeal filed by the Revenue. The assessee raised additional grounds in cross objections challenging jurisdiction of Assessing Officer in invoking the provisions of section 154 of the Act. For the sake of completeness, the additional grounds raised by the assessee before the Tribunal in cross objections are reproduced herein below: "1. In the alternative and without prejudice to th....
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..... Hence, we partly allow the miscellaneous application filed by the assessee and recall the impugned order dated 03.11.2017 for a limited purpose to decide the additional grounds of cross objection dated 27.09.2016 submitted before the "J" Bench of the Tribunal. We accordingly direct the Registry to post the case before a Regular Bench in the ordinary course for hearing on the additional grounds raised by the assessee before the Tribunal. 7. In the result, misc. application filed by the assessee for assessment year 2005-06 is partly allowed". In the light of above order of the Tribunal, the present cross objections are listed before the Bench for adjudication of additional grounds only that remain to be adjudicated in the first round. 3. Shri Nitesh Joshi, appearing on behalf of the assessee submitted that the assessee had acquired 263340 equity shares in BDH Industries Ltd in the financial year 1995-96 for a total consideration of Rs. 10,22,66,770/-. During the period relevant to assessment year under appeal, the assessee sold 229462 shares of the aforesaid company for a consideration Rs. 32,89,686/-, thus resulting in long term capital loss of Rs. 1,19,32,012/-. The said tra....
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....ified under section 154 of the Act. The ld.Authorized Representative of the assessee further submitted that where two views are possible on an issue and the Assessing Officer had taken one of the possible views during scrutiny assessment proceedings, later on the Assessing Officer cannot invoke the provisions of section 154 to change his view already taken. The ld.Authorized Representative of the assessee pointed that the Tribunal in the case of Raptakos Brett & Co. Ltd., vs.DCIT (supra) had followed the decision rendered by Hon'ble Calcutta High Court in the case of Royal Calcutta Turf Club vs. CIT, 144 ITR 709 (Cal). The Tribunal had also considered the decision of Hon'ble Gujarat High Court in the case of Kishorebhai Bhikabhai Virani vs. ACIT (supra) and had distinguished the same. Thus, there were two different views from non-Jurisdictional High Courts making the issue debatable. The ld.Authorized Representative of the assessee submitted that Assessing Officer has clearly gone beyond his jurisdiction in invoking the provisions of section 154 of the Act to impose his change of opinion. 5. On the other hand, Shri Uodal Raj, representing the Department vehemently defended....
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....her long term capital loss arising from sale of shares can be carry forward to subsequent assessment years is debatable. The Hon'ble Calcutta High Court in the case of Royal Calcutta Turf Club vs. CIT(supra) has decided the issue in favour of the assessee by allowing carry forward of such long term capital loss, whereas the Hon'ble Gujarat High Court in the case of Kishorebhai Bhikabhai Virani vs. ACIT(supra) has decided this issue in favour of the Revenue holding that Long Term Capital Loss on sale of shares cannot be allowed to be carry forward. The Co-ordinate Bench of the Tribunal in the case of Rapatakos Brett & Co.Ltd.(supra) after considering catena of judgments including the aforesaid two judgments has followed the ratio laid down by Hon'ble Calcutta High Court . Thus, the issue of carry forward of long term capital loss on sale of shares in the light of provisions of section 10(38) of the Act is debatable as two non-Jurisdictional High Courts have taken a divergent view. It would be pertinent to mention here that no decision by Hon'ble Jurisdictional High Court on this issue has been brought to the notice of the Bench by either sides. Thus, the issue being deba....
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....er examining the issue we find that the Assessing Officer in rectification proceedings has given a finding of fact that Short Term Capital Loss declared by the assessee on sale of shares is the result of sham transaction and falls within the ambit of provisions of section 47(v) of the Act . The Assessing Officer in proceedings under section 143(3) of the Act accepted the claim of assessee and thereafter on re-appreciation of facts initiated proceedings under section 154 of the Act to disallow assessee's claim of carry forward of Short Term Capital Loss terming the transaction to be sham. The Assessing Officer has revisited the issue and has invoked rectification provision to review his order. As we have pointed earlier that the Assessing Officer has limited scope under section 154 of the Act to rectify any mistake apparent from the record. Substitution of opinion by the Assessing Officer under section 154 of the Act is not permissible. We may point here that the Act provides safeguards to the Revenue to plug the escapement of any income. The cannons in the form of revision under section 263 of the Act, reassessment under section 147 of the Act and rectification of mistake under se....