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| DATE: | August 28, 2012 (Date of publication) |
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| Click here to download the judgement (icici_securities_147_reopening_change_of_opinion.pdf) |
S. 147 Reopening on “change of opinion” is not permissible
For AY 1999-2000, the assessee claimed a deduction for Rs. 19.86 crores which was allowed by the AO in s. 143(3) assessment. Subsequently, after the expiry of 4 years, the AO reopened the assessment u/s 147 on the ground that the said loss was a “speculative loss” and could not be allowed as a deduction. The assessee filed a Writ Petition to challenge the reopening which was allowed by the High Court (file included) on the ground that though the AO was justified in his analysis that there was escapement of income, there was “nothing new” which had come to the notice of the revenue and that reopening was based on a “mere relook” which was not permissible. On appeal by the department to the Supreme Court, HELD dismissing the appeal:
The assessee had disclosed full details in the Return of Income in the matter of its dealing in stocks and shares. According to the assessee, the loss incurred was a business loss, whereas, according to the 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 23rd 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 very distinction (or factors to apply – refer the confusing circulars issued by the CBDT) between the two concepts – ‘business’ and ‘speculation’ , itself, has a very thin line to go by /judge on. In modern times, one should say that such a line has almost become extinct. As such, for the Revenue to take , more so in pursuing any litigation on the or like issue, that too upto the north is, to say the least, highly ridiculous. More ridiculous is doing so by the Revenue resorting to ‘reopening’ a closed assessment., against all odds, including the clinching series of case law.
What is all the more intriguing is, the long prevailing grave doubt on even the goverment seeking for / resorting to legislative amendments , be it prospective or retro active, under the guise of clarifying ‘the intention’ behind any enactment.
This particular aspect may be found to have been gone into in-depth, dealt with/ viewpoints put across by way of feedback, on this website itself, on earlier occasions as well.
Add-on
One may, if so inclined, usefully look up the two published related articles, – (2006) 153 Taxman 126, (2008) 169 Taxman 14 (this deals with one of the notorious re-legislation of our times i.e. amendment of section 43 (6))
Repeated judgment like this case
Could vswamy enlighten me in regard to which circulars he is referring to.