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Income Tax Appellate Tribunal, ‘C’ (SMC
Before: SHRI ABRAHAM P. GEORGE]
आदेश / O R D E R
This appeal filed by the assessee is directed against an order dated 04.03.2016 of ld. Commissioner of Income Tax (Appeals)-15, Chennai. Assessee assails reopening done for the impugned assessment year. According to it such reopening was done after four years from the end of the impugned assessment year, and did not ITA No. 1250/Mds/16 :- 2 -: satisfy the requirements set out in first proviso to Section 147 of the Income Tax Act, 1961 (in short ‘’the Act”).
Facts apropos are that assessee engaged in manufacturer of corrugated cartons had filed return of income for the impugned assessment year declaring a loss of �18,15,356/-. The return filed was alongwith Audited profit and loss account, balance sheet, schedules and computation of income. The assessment was completed thereafter u/s.143(3) of the Income Tax Act, 1961 (in short ‘’the Act’’) on 15.12.2008. The loss returned was accepted after making a disallowance of a sum of �21,265/- being transportation charges paid without deducting TDS. Thereafter on 15.03.2013 a notice u/s.148 of the Act was issued to the assessee. The reason for reopening was mentioned as escapement of income due to debit of a sum of �26,51,684/- as loss on sale of shares. As per ld. Assessing Officer this was a capital loss. Assessee thereupon requested the ld. Assessing Officer to treat the return originally filed as one filed in pursuance of such notice. Claim of the assessee was that it was trading in share market for past many years and hence loss in share trading was a business loss. Ld. Assessing Officer however noted that for assessment year 2005-2006, assessee had made profit of ITA No. 1250/Mds/16 :- 3 -:
�43,37,282/- which was claimed by the assessee as long term capital gains. Thus as per ld. Assessing Officer for impugned assessment year loss of �26,51,684/- due to sale of shares was not a business loss but only capital loss. The assessment was completed after making a disallowance of �26,51,684/-.
Aggrieved, assessee moved in appeal before ld. 3.
Commissioner of Income Tax (Appeals). One of the grounds raised by the assessee challenged the reopening. As per the assessee reopening was done based on a change of opinion and could not stand the test of law. Further, as per assessee it was engaged in purchase and sale of shares for very many years. However, ld. Commissioner of Income Tax (Appeals) was not appreciative of these contentions. According to him, in original assessment ld. Assessing Officer had not formed any opinion on the claim of loss on sale of shares. Thus, according to him, reopening was not on account of any change of opinion. He also held that ld. Assessing Officer was justified in treating the loss on sale of shares as capital loss. He dismissed the appeal of the assessee.
Now before me, ld. Authorised Representative strongly assailing the reopening done for the impugned assessment year submitted that such reopening having been done after four years from ITA No. 1250/Mds/16 :- 4 -:
the end of the impugned assessment year proviso of Sec. 147 of the Act would be attracted. According to him, by virtue of judgment of Hon’ble Apex Court in the case of CIT vs. Kelvinator India Ltd 320 ITR 561 unless and until there was fresh tangible material justifying a reopening, a reopening done after four years would not be valid in law.
Per contra, ld. Departmental Representative submitted that 5.
in the original assessment, ld. Assessing Officer had not reached any opinion or exercised his mind on the issue regarding the nature of loss due to share trading. Hence, according to him, reopening was not based on any change of opinion and therefore was valid.
I heard the rival submissions and perused the material on 6. record. It is not disputed that alongwith original return of income, assessee had provided Audited balance sheet, profit and loss account and schedules. Profit and loss account placed at paper book page no.6 clearly mentions loss on sale of shares of �26,51,684/- as a specific item of expenditure. The loss claimed by the assessee in the return was �18,15,356/-. The loss was determined by the ld. Assessing Officer in the original assessment at �17,94,091/-. The only disallowance made was for non deduction of tax at source on a sum of ITA No. 1250/Mds/16 :- 5 -:
�21,265/-. It would be naïve to presume that ld. Assessing Officer would not have gone through the profit and loss account of the assessee, especially when such profit and loss account reflected a loss of �15,93,811/-. It is not a case were loss claimed was not visible.
Substantial part of loss claimed by the assessee was on account of loss in sale of shares of �.26,51,684/-, which was debited in its profit and loss account as a specific item. It is not a case, where the ld. Assessing Officer was required to discover any material evidence with diligence.
The entry was visibly available on the face of the record itself. Thus, we cannot say that ld. Assessing Officer had determined the loss of the assessee without verifying the profit and loss account filed by it. In a case where reopening is attempted after four years from the end of an assessment year, first proviso to Sec. 147 of the Act would clearly apply. Nothing has been brought on record by the Revenue to show that assessee had failed to disclose fully and truly all material facts necessary for the assessment. Further, hon’ble Apex Court in the case of Kelvinator India Ltd (supra) had held that in the absence of fresh tangible material, reopening could not be done where original assessment was completed u/s.143(3) of the Act. I am of the opinion that reopening done for the impugned assessment year was bad in ITA No. 1250/Mds/16 :- 6 -: law. Ex-consequenti the assessment is setaside.
In the result, the appeal of the assessee is allowed.
Order pronounced on Wednesday, the 25th January, 2017, at Chennai.