The Tax Publishers2016 TaxPub(DT) 4511 (Cal-HC) : (2016) 144 DTR 0225

 

CIT v. Eureka Stock & Share Broking Services Ltd.

 

INCOME TAX ACT, 1961

--Reassessment--Reason to believeMisrepresentation of facts by assessee----Where the loss from dealing in shares was allowed to be set off against brokerage income of assessee due to misrepresentation of facts made by assessee, assessing officer was justified in reopening the assessment on the ground that no set off should be allowed as it was speculative loss for there was no change of opinion the case being of misrepresentation by assessee.--Assessee running a broking firm claimed set off of loss arising from sale and purchase of shares on its own account from its brokerage income on the ground that for earning brokerage income it had to do purchase and sell of shares. AO initially allowed the set off, however, subsequently the successor AO sought to reopen the assessment on the ground that the assessee had misrepresented the facts and no set off of loss could be allowed from business income since the loss was speculative.Held: Assessee misrepresented the facts and mislead AO into believing that in order to earn brokerage income, it had to purchase or sell various shares on its own account. Submission made by the assessee was factually incorrect and AO realised that the assessee had misrepresented the facts on earlier occasion. It is not therefore a case of change of opinion. When the concerned officer was under a misapprehension as regards the facts based on misrepresentation made by the assessee, it cannot be said that he subsequently changed his opinion when he issued a section 148 notice seeking to disallow the loss earlier allowed expressly or impliedly to be set off against the income arising out of the brokerage of shares.

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