Shri Janak Niranjan Shah, Ahmedabad V. The Income Tax Officer, Ward-7(1), Ahmedabad

CO 5/AHD/2014

• Counselvise Citation: [2016] 119 COUNSELVISE.COM (IT) 3343 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 5 month(s) 12 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 20-06-2016
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 09-06-2016
• Assessment Year: 2010-2011
• Appeal Filed On: 07-01-2014
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: R C SHAH
• Keywords: Business income; Rule of consistency; Fair market value
• Section: 143(3); 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD C BENCH (BEFORE SHRI RAJPAL YADAV, JUDICIAL MEMBER & SHRI N.K. BILLAIYA, ACCOUNTANT MEMBER) ITA. NO: 1967/AHD/2013 & C.O. NO. 05/AHD/14 (ASSESSMENT YEAR: 2010-11) INCOME TAX OFFICER WARD- 7(1), AHMEDABAD SHRI JANAK NIRANJAN SHAH 31, VIVA BUNGLOWS, B/H RANJIT PETROL PUMP, OPP: GRAND BHAGWATI HOTEL, S.G. HIGHWAY, AHMEDABAD V/S V/S SHRI JANAK NIRANJAN SHAH 31, VIVA BUNGLOWS, B/H RANJIT PETROL PUMP, OPP: GRAND BHAGWATI HOTEL, S.G. HIGHWAY, AHMEDABAD INCOME TAX OFFICER WARD- 7(1), AHMEDABAD (APPELLANT) (RESPONDENT) PAN: AFUPS6351R APPELLANT BY : SHRI PRASOON KABRA, SR. D. R. RESPONDENT BY : SHRI R.C. SHAH, A.R. ( )/ ORDER DATE OF HEARING : 09 -06-201 6 DATE OF PRONOUNCEMENT : 20 -06-2016 ITA NO. 1967/AHD /13 & C.O. NO. 05/A/14 . A.Y. 2010-2011 2 PER N.K. BILLAIYA, ACCOUNTANT MEMBER: 1. ITA NO. 1967/AHD/2013 & C.O. NO. 05/AHD/2014 ARE AP PEALS BY THE REVENUE AND CROSS OBJECTION OF THE ASSESSEE DIRECTE D THE VERY SAME ORDER OF THE LD. CIT(A)-XIV, AHMEDABAD DATED 24.05. 2013 PERTAINING TO A.Y. 2010-11. 2. THE GRIEVANCE OF THE REVENUE RELATES TO THE TREATME NT OF BUSINESS INCOME AS CAPITAL GAINS BY THE FIRST APPELLATE AUTH ORITY. 3. ASSESSEE MAINLY DERIVES INCOME FROM BUSINESS OR PRO FESSION BEING CONSULTANCY SERVICE PROVIDED TO MIHIKITA INFRASTRUC TURE PVT. LTD. THE ASSESSEE IS ALSO DERIVING INCOME FROM CAPITAL GAINS AND FROM OTHER SOURCES. 4. WHILE SCRUTINIZING THE RETURN OF INCOME, THE A.O. F OUND THAT THE ASSESSEE HAS SHOWN INCOME UNDER THE HEAD CAPITAL GA INS ON ACCOUNT OF PURCHASE AND SALE OF SHARES. THE A.O. FOUND THAT TH E ASSESSEE HAS MADE 88 SHARE TRANSACTIONS AND WAS OF THE FIRM BELI EF THAT THE ASSESSEE IS ENGAGED IN TRADING OF SHARES. THE A.O. SUPPORTED HIS CONTENTION BY STATING THAT THE ASSESSEE IS USING BO RROWED FUNDS, THE AVERAGE HOLDING PERIOD IS VERY LOW AND THE SHARES D ID NOT REMAIN IN THE DEMAT ACCOUNT FOR MORE THAN ONE YEAR. THE A.O. ACCORDINGLY TREATED THE ENTIRE CAPITAL GAINS AS BUSINESS INCOME OF THE ASSESSEE. 5. ASSESSEE CARRIED THE MATTER BEFORE THE LD. CIT(A) A ND STRONGLY CONTENDED THAT HE HAS BEEN AN INVESTOR IN THE SHARE S RIGHT FROM THE BEGINNING. THE ASSESSEE ALSO POINTED OUT TO THE LD. CIT(A) THAT IN EARLIER ASSESSMENT YEARS I.E. A.Y. 2008-09 WHERE TH E ASSESSMENT WAS ITA NO. 1967/AHD /13 & C.O. NO. 05/A/14 . A.Y. 2010-2011 3 MADE U/S. 143(3) OF THE ACT, THE CAPITAL GAINS WERE ACCEPTED BY THE A.O. SIMILAR WAS THE CASE IN A.Y. 2009-10, IT WAS F URTHER EXPLAINED THAT ALL THE TRANSACTIONS WERE DELIVERY BASED. AFTE R CONSIDERING THE FACTS AND THE SUBMISSIONS AND THE PAST HISTORY OF T HE ASSESSEE, THE LD. CIT(A) DIRECTED THE A.O. TO TREAT THE GAINS UNDER T HE HEAD CAPITAL GAINS LONG TERM OR SHORT TERM AS THE CASE MAY BE. 6. AGGRIEVED BY THIS, THE REVENUE IS BEFORE US. 7. THE LD. D.R. STRONGLY RELIED UPON THE FINDINGS OF T HE A.O. PER CONTRA, THE LD. COUNSEL FOR THE ASSESSEE REITERATED WHAT HA S BEEN STATED BEFORE THE LOWER AUTHORITIES. 8. WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSIONS AND HAVE CAREFULLY PERUSED THE ORDERS OF THE AUTHORITIES BELOW. IN OUR CONSIDERED OPINION TRANSACTING IN 88 COMPANY SHARES WOULD NOT IPSO FAC TO MAKE THE SHARE TRANSACTION AS TRADING IN SHARES, WHAT IS PARAMOUNT IS TO SEE THE INTENTION OF THE ASSESSEE, WHEN THE SHARES ARE PURC HASED AND IT IS ONLY THE ASSESSEE WHO IS IN A POSITION TO DECIDE WHETHER HE WANTS TO TRADE IN SHARES OR REMAIN AN INVESTOR. THE A.O. CANNOT TH RUST HIS VIEWS ON THE ASSESSEE. EVEN THE PAST HISTORY OF THE ASSESSEE SHOW THAT THE REVENUE AUTHORITIES HAVE ACCEPTED HIM AS AN INVESTO R. AS THE FACTS FOR THE YEAR UNDER CONSIDERATION ARE SAME AND THE LAW H AS NOT CHANGED THE RULE OF CONSISTENCY AS EXPOUNDED BY THE HONBLE SUPREME COURT IN THE CASE OF RADHASOAMI SATSANG 193 ITR 321 NEED TO BE FOLLOWED. 9. CONSIDERING THE TOTALITY OF THE FACTS, IN THE LIGHT OF THE RATIO LAID DOWN BY THE HONBLE SUPREME COURT (SUPRA), WE DO NOT FIN D ANY REASON TO INTERFERE WITH THE FINDINGS OF THE LD. CIT(A). ITA NO. 1967/AHD /13 & C.O. NO. 05/A/14 . A.Y. 2010-2011 4 10. APPEAL FILED BY THE REVENUE IS ACCORDINGLY DISMISSE D. 11. COMING TO THE CROSS OBJECTION OF THE ASSESSEE WHICH READS AS UNDER:- L.(A)THAT THE C.I.T. (APPEALS) ERRED IN TAXING THE SALE PROCEEDS OF ONE JADTAR SET OF RS. 105000 AS 'INCOME FROM OTHER SOURCES' THOUGH HE AGREED THAT THE SAME CANNOT BE TAXED U/S 68 OF THE I. T. ACT AS THE ASSE SSEE HAD SUBMITTED A COPY OF THE BILL NO. 1851 DT. 10-11-2009 OF CHOKSHI AMBALAL GOV INDLAL AND THE AMOUNT WAS RECEIVED BY CHEQUE. IT IS SUBMITTED THAT THE SAME C ANNOT BE TAXED AS INCOME FROM OTHER SOURCES' BUT LONG-TERM CAPITAL GAINS BE DIRECTED TO BE DETERMINED AFTER ALLOWING THE INDEXED FAIR MARKET VALUE AS ON 1-4-1981' AS CLAIMED AND THAT THE RESULTANT L.T.C.G. BE DIRECTED TO BE TAXED AS A N INCOME. 12. DURING THE COURSE OF THE SCRUTINY ASSESSMENT PROCEE DINGS, THE A.O. FOUND THAT THE ASSESSEE HAS SHOWN AN AMOUNT OF RS. 1,05,000/- AS RECEIPT FROM JADTAR SET SALE. IN THE ABSENCE OF ANY PROOF OF PURCHASE/ACQUISITION, THE A.O. ASKED THE ASSESSEE T O SHOW CAUSE AS TO WHY THE AMOUNT OF RS. 1,05,000/- SHOULD NOT BE TREA TED AS SHORT TERM CAPITAL GAIN. THE ASSESSEE STRONGLY REPLIED THAT HE HAS RECEIVED THE SAID GOLD ORNAMENT FROM HIS FATHER ON HIS MARRIAGE. IT WAS FURTHER EXPLAINED THAT THE SAID GOLD ORNAMENT WAS RECEIVED BY HIS FATHER FROM HIS GRANDFATHER BEFORE 1981; THEREFORE, THE PURCHAS E BILLS ARE NOT AVAILABLE. THIS CONTENTION OF THE ASSESSEE DID NOT FIND ANY FAVOUR WITH THE A.O. WHO TREATED THE SALE RECEIPT OF RS. 1,05,0 00/- AS SHORT TERM CAPITAL GAIN. 13. AGGRIEVED BY THIS, THE ASSESSEE CARRIED THE MATTER BEFORE THE LD. CIT(A) BUT WITHOUT ANY SUCCESS. ITA NO. 1967/AHD /13 & C.O. NO. 05/A/14 . A.Y. 2010-2011 5 14. BEFORE US, THE LD. COUNSEL FOR THE ASSESSEE COULD N OT ADDUCE ANY EVIDENCE, IN SUPPORT OF THE CONTENTION THAT THE ORN AMENT WAS RECEIVED BY HIM ON HIS MARRIAGE FROM HIS FATHER. AS NO DEMON STRATIVE EVIDENCE HAS BEEN BROUGHT ON RECORD, WE DECLINE TO INTERFERE WITH THE FINDINGS OF THE LD. CIT(A). THE CROSS OBJECTION OF THE ASSES SEE IS ACCORDINGLY DISMISSED. ORDER PRONOUNCED IN OPEN COURT ON 20 - 06 - 201 6. SD/- SD/- (RAJPAL YADAV) (N. K. BILLAIYA) JUDICIAL MEMBER ACCOUNTANT MEMBER AHMEDABAD: TRUE COPY RAJESH COPY OF THE ORDER FORWARDED TO: - 1. THE APPELLANT. 2. THE RESPONDENT. 3. THE CIT (APPEALS) 4. THE CIT CONCERNED. 5. THE DR., ITAT, AHMEDABAD. 6. GUARD FILE. BY ORDER DEPUTY/ASSTT.REGISTRAR ITAT,AHME DABAD