In a significant case the Bombay High court quashed a Re-Assessment Order passed under section 263 of Income Tax Act 1961.
Section 263 of Income Tax Act Defined as if the assessment order passed by the assessing officer is erroneous and prejudicial revenue the principal commissioner or commissioner have the power to revise the order.
Assessee Devkant Synthetics India Pvt engaged in the business of trading in shares and securities. Assessee declared their total income after filing the return and which included the income earned from the sale of shares and securities under the head of ‘Profits and Gains from Business and Profession. After verifying the certified copies of the auditor’s report, balance-sheet, profit and loss account passed the assessment order. Thereafter the principle commissioner found that the disallowance under section 14(A) Income Tax Act 1961 made was erroneous and prejudicial to the interest of revenue. Against this order assesse filed writ petition before the Bombay high court.
Nishant Thakkar counsel for petitioner submits that,
“There was no failure on the part of the petitioner to disclose any material fact fully and truly, which was a condition precedent for exercise of jurisdiction beyond the period of four years in terms of the first provision to section 147 of the Income Tax Act 1961”.
Akhileshwar Sharma counsel for the respondent submitted that on the first assessment proceeding,assessee/petitioner did not disclose sale of shares and the profits derived from trading in derivatives.
After considering the contentions of the both parties the division bench of the Bombay high court Justice Dhiraj Singh Thakur and Kamal Khata, allowed the writ petition and observed “that there was no basis to hold that there was any failure on the part of the assessee to disclose any material facts fully and truly during the regular assessment proceedings and further that reassessment proceedings are nothing but a change of opinion”.
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