Reassessment when related question was examined but not the pointed question

Brief- High Court held that when a claim was processed at length and after calling for detailed explanation from the assessee, the same was accepted, merely because a certain element or angle was not in the mind of the Assessing Officer while accepting such a claim, cannot be a ground for issuing notice for reassessment.

Facts of the Case

The Assessing Officer carried out scrutiny assessment of the return filed by the assessee. One of the claims was of capital gain arising out of sale of shares. In the context, the assessee had claimed various expenditures in the nature of professional services for investment portfolio and such other services. The Assessing Officer disallowed the expenditure holding that such expenditure was not for the purpose of assessee’s business. The issue was carried in appeal. CIT(Appeals) confirmed the disallowance on slightly different grounds.

To reopen such assessment, the Assessing Officer issued notice dated 28.4.2008. In the reasons recorded, he had stated as under :

“In this case assessment order for A.Y. 2005­06 was passed u/s. 143(3) on 31.12.2007 by the Addl. CIT, Range­1, Baroda. It was observed by him that the assessee has shown huge income as short term capital gains and long term capital gains arising out of investments. These incomes were held to be income assessable under the head “profits and gains of the business or profession” to the tune of Rs. 16,54,53,272/­ and thereby brought to the net of higher slab of the tax net.

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