INCOME TAX ACT, 1961

Section 147

Reassessment - Validity - Change of opinion - Absence of fresh tangible material

During relevant assessment year, assessee-company claimed loss on sale of shares as revenue expenditure. Whereas, the assessee claimed profit on sale of shares in the previous assessment year as “Capital gains”. That aspect was not considered by AO, while making the assessment and therefore, reassessment was made under section 147 and an order was passed holding that the assessee could not claim loss on sale of shares as revenue loss. Before, CIT(A) assessee claimed that it was dealing in shares for several years and therefore, the loss on sale of shares could be treated as “business loss”. However, the CIT(A) rejected the contention of the assessee and confirmed the action of the AO. Held: While filing original return of income, the details of loss on sale of shares had been clearly disclosed in the profit and loss account by the assessee, and that the AO made a thorough scrutiny after issuing scrutiny notice and thereafter, passed the original assessment order. Further, it was not a case where loss claimed was not visible because substantial part of loss claimed by the assessee was on account of loss on sale of shares. Further, it was not a case, where the AO was required to discover any material evidence with diligence because the entry was visibly available on the face of the record itself. Moreover, in absence of fresh tangible material, reopening could not be done where original assessment was completed under section 143(3). Therefore, it could be said that the reassessment was based on mere change of opinion and hence, the reassessment order would not be sustainable.

REFERRED :

FAVOUR : In assessee's favour

A.Y. :

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