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Income Tax Appellate Tribunal, VISAKHAPATNAM BENCH, VISAKHAPATNAM
Before: SHRI V. DURGA RAO, HON’BLE & SHRI D.S. SUNDER SINGH, HON’BLE
Assessee by : Shri C.Subrahmanyam, FCA Department By : Smt.U.Mini Chandran, Sr.DR Date of hearing : 20/02/2020. Date of pronouncement : 28/02/2020. O R D E R PER V. DURGA RAO, JUDICIAL MEMBER This appeal by the Revenue and the cross objection by the assessee are directed against the order of Commissioner of C.O.No. 129/VIZ/2019 (Sri Koduri Venkateswara Subhakara Santharam)
Income Tax (Appeals), Rajamahendravaram, dated 16/04/2019 for the Assessment Year 2007-08.
There is a delay of 04 days in filing this appeal. The Revenue has filed an affidavit for condonation of delay. We have gone through the affidavit and find that there is a sufficient cause to condone the delay. Accordingly, delay is condoned.
Ground Nos. 1, 7 & 8 are general in nature, no adjudication is required, therefore same are dismissed.
Ground Nos. 2 to 4 relate to reopening of the assessment. The ld. CIT(A) gave a categorical finding that the Assessing Officer has examined the issue in the scrutiny assessment proceedings u/sec. 143(3) and assessment was completed on 23/09/2009 by accepting the share loss as business loss. Subsequently, without there being any new material, assessment is reopened by issuing a notice u/sec.
The loss which has already been allowed is disallowed by the Assessing Officer u/sec. 143(3) r.w.s. 147 dated 30/10/2012 is a change of opinion and not valid in accordance with law. For the sake of convenience, the relevant portion of the order of the ld. CIT(A) is extracted as under:- (i) I have carefully considered the arguments of both the parties. It is noted by the A.O. from the capital account of the appellant that he claimed an amount of Rs.2,33,8901- as 'online share trading loss' for the 2006-07 which is inclusive of loss of C.O.No. 129/VIZ/2019 (Sri Koduri Venkateswara Subhakara Santharam)
Rs.18,785/- of the F.Y: 2005-06. Since the appellant is inclined to discontinue his business, he has sought credit for the earlier year's toss of Rs.18,785!-. The A.O. in the re-assessment proceedings opined that there is no evidence as to the basis for arriving such toss by the appellant. Further, it is opined by the A.O. that the appellant utilized the loan amounts sanctioned by the UTI for trading purposes, there were no details of the commodities traded by the appellant which resulted in Loss. The claim of the appellant seeking credit for the loss incurred in devoid of merits and cannot be taken cognizance. Accordingly, the amount of Rs.2,33,890/- is not allowed by the A.O. as loss. (ii) Whereas, it is the contention of th6 appellant that with regard to the toss on share trading the appellant elaborately discussed the issue, furnished all the information to the assessing officer in the original assessment. In response to the notice u/s.148 of the Act, the appellant has furnished information and expressed his opinion that the re-assessment is only due to the change in the opinion and hence it is not according to law. (iii) In the instant case, the A.O. persisted that online trading is not speculative trading as per the provisions of Sec 3(5)(d) of the Act, whereas, the appellant has contended that according to the provisions of Sec 43(5)(d) those transactions which are electronically on screen based systems through stock broker/sub broker/such other intermediary registered by banks or mutual funds or supported by a time stamped contract note issued to such stock broker/sub broker/such other intermediary to every client indicating therein Unique Client Identity number, PAN etc. (iv) I have perused the legal grounds raised by the appellant and findings of the A.O. in the assessment order. With regard to the provisions of Sec. 43(5)(d) of the I.T. Act, the arguments of the both parties are variant. However, the appellant has raised legal grounds against the additions made by the Assessing Officer are only due to change of opinion and are not due to default on part of the appellant in furnishing material facts to the assessing authority at the time of original assessment. In view thereof, it is the contention of the appellant that the addition resulted on reassessment of the case under the provisions of Sec. 148, is illegal. Further, it is' submitted and explained-by the AR of the appellant in the appeal hearing, there is no failure on the part of the assessee to render the material facts to the A.O at the time of original assessment. The A.O.verified the books of account, bills etc., and made certain additions after satisfaction with the information etc. submitted by the appellant. It shows that the C.O.No. 129/VIZ/2019 (Sri Koduri Venkateswara Subhakara Santharam)
A.O. had applied his mind and accordingly completed the assessment Whatever the further action which is in the nature of interpretation /opinion does not stand good in law to reassess the assessed income. In this context, the appellant relied on the case law in the case of ACIT, Mumbai Vs. ICICI Securities Primary Dealership Limited LD/61/ 18-22-8-12 (SC) (Civil appeal on SLP(C) No. 16054 of 2007) wherein it was held that – "The assessee had disclosed full details in the Return of Income in the matter of its dealing in stocks and shares. According to assessee, the loss incurred was a business loss, whereas, according to Revenue, the loss incurred was a speculative loss. Rejection of the objections of the assessee to the re-opening of the assessment by the Assessing Officer vide his Order dated 23d June, 2006, is clearly a change of opinion. In the circumstances, we are of the view that the order re-opening the assessment was not maintainable. The Civil appeal is, accordingly, dismissed." (v) I have also perused the various case laws whether the contention of the appellant is in support of it's claim or not. Whereas, the Apex Court in the cases of: (i) Phool Chand Bajrang Lal Vs.ITO (1993) 2031TR 456 (SC) held that 'Where the Assessing Officer's comes into possession of fresh information or new facts, which lead him to form a reasonable belief that income has escaped assessment, he can reopen the assessment'. In the instant case, it appears that there is neither new information nor fresh facts could find by the A.O., therefore, the course of action taken by the A.O. is not justified. (ii) Raymond Woolen Mills Ltd., Vs. IT (1999) 236 ITR 34 (SC)–In determining whether commencement of reassessment proceedings was valid it has only to be seen whether there was prima facie some material on the basis of which the department could reopen the case. The sufficiency or correctness of the material is not a thing to be considered at this stage. (v) By respectfully following the ratio of the apex court's decisions cited supra, I have reason to believe that the A.O. was reopened the case devoid of any fresh information or new facts. In view thereof, the A.O. is directed to delete the addition made C.O.No. 129/VIZ/2019 (Sri Koduri Venkateswara Subhakara Santharam) on this account and the grounds of the appellant are allowed.
Before us, ld.DR strongly supported the order passed by the Assessing Officer.
On the other hand, ld.AR has strongly supported the roder passed by the ld. CIT(A).
We have heard both the sides, perused the material available on record and orders of the authorities below.
In the case of the assessee original assessment was completed u/sec. 143(3) on 23/09/2009, by which online trading loss of Rs. 2,33,890/- was allowed by the Assessing Officer after considering the explanation and by examining the details. Therefore, the ld. CIT(A) is of the opinion that the notice issued by the Assessing Officer u/sec. 148 without there being any new material is not valid and quashed the reopening on the ground that there is a change of opinion. We find that once the Assessing Officer has examined the issue and firm opinion that share trading loss is allowable and accordingly allowed, subsequently without there being any material he cannot disallow, this is amounting to change of opinion as per the judgment of the Hon'ble Supreme Court in the case of CIT Vs. Kelvinator of India [(2010) 320 ITR 561]. As per the above decision of the Hon'ble Supreme Court, C.O.No. 129/VIZ/2019 (Sri Koduri Venkateswara Subhakara Santharam) the Assessing Officer without there being any new material cannot reopen the assessment which is amounting to change of opinion. In view of the decision of the Hon'ble Supreme Court in the above referred to case, we find no infirmity in the order passed by the ld.CIT(A). Thus, these grounds of appeal
raised by the Revenue are dismissed.
9. So far as merits of the case is concerned, ground No.5 raised by the Department relates to online trading loss. The assessee before the Assessing Officer has furnished copy of capital account. According to that, the amount of Rs. 2,33,890/- is relatable to online trading loss for the F.Ys. 2005-06 & 2006-07. The Assessing Officer asked the assessee to produce the details with regard to whom transactions have carried. The assessee was not able to produce the same because the assessee with whom carried the business have closed their office, therefore he could not give present address of those parties. Therefore, the Assessing Officer is of the opinion that these share trading loss incurred by the assessee is disallowed. We find that this aspect was examined by the Assessing Officer in 143(3) proceedings. The assessee has given details available with him and submitted even before the present Assessing Officer. The Assessing Officer simply rejected C.O.No. 129/VIZ/2019 (Sri Koduri Venkateswara Subhakara Santharam) the claim of the assessee without giving proper reasons, is not justified. Therefore, in our opinion, the Assessing Officer is not correct in rejecting the claim of the assessee. Thus, this ground of appeal raised by the Revenue is dismissed.
10. Ground No.6 relates to interest on car loan. The ld. CIT(A) directed the Assessing Officer to disallow 30% of balance amount of expenditure towards car maintenance as agreed by the assessee. The relevant portion of the order of the ld. CIT(A) is extracted as under:- “I have carefully considered the arguments of both the parties. During assessment proceedings, it is noted by the A.O. that there is under assessment of income for the year 2007-08, therefore, he decided to allow the claim expenditure in respect of car loan proportionately in view of use it for person purposes. Accordingly, the A.O. has disallowed 30% on car maintenance on estimation basis. At this juncture, the course of action taken by the A.O. in disallowing the interest paid towards car loan to bank, is not justifiable. Interest on any loan is payable as per the terms & conditions of the Loa sanctioned, as per schedule fixed and not depend upon the usage of the property. Since the interest payable will not flux according to the time therefore, the decision taken by the A.O. towards is not maintainable Accordingly, the A.O. is directed to delete the addition made of Rs.13,331/- w.r.t. the car loan taken. However, the A.O. is directed to verify the total amount of expenditure claim made towards car maintenance, out of it the interest paid towards car loan, may be allowed in full. Whereas, it is to direct the A.O. to disallow 30% on the balance amount of expenditure of car maintenance, as agreed by the appellant.”
We find no reason to interfere with the order passed by the ld. CIT(A). Thus, this ground of appeal raised by the Revenue is dismissed.
C.O.No. 129/VIZ/2019 (Sri Koduri Venkateswara Subhakara Santharam)
So far as cross objection filed by the assessee is concerned, it is only supportive to the order of the ld. CIT(A). As no grievance against the order of the ld. CIT(A), this cross objection filed by the assessee is dismissed.
In the result, appeal filed by the Revenue and the cross objection filed by the assessee are dismissed. Order Pronounced in open Court on this 28th day of Feb., 2020.
Sd/- sd/- (D.S. SUNDER SINGH) (V. DURGA RAO) Accountant Member Judicial Member Dated: 28th February, 2020. vr/- Copy to:
1. 1. The Assessee - Sri Koduri Venkateswara Subhakar Santharam, D.No. 8-2-26, NBR Street, Rajahmundry.