Kaushal Kumar Aggarwal, Delhi V. ACIT, New Delhi

ITA 1003/DEL/2012

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 5270 (ITAT-DELHI)
• Duration Of Justice: 5 year(s) 5 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-08-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Next Hearing Date: 01-08-2017
• Assessment Year: 2008-2009
• Appeal Filed On: 29-02-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: P N CHAWALA
• Keywords: Business income

Judgement Text

ITA NO.1003/DEL/2012 ASSESSMENT Y EAR: 2008 - 09 PAGE 1 OF 6 IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH D BENCH NEW DELHI) BEFORE SHRI G.D. AGRAWAL, PRESIDENT & SHRI AMIT SHUKLA , JUDICIAL MEMB E R I N ITA NO. 1003 /DEL/201 2 ASSESSMENT YEAR: 20 0 8 - 0 9 KAUSHAL KUMAR AGGARWAL, PROP. M/S. B.L. ENTERPRISES, 1915/17, RAMESH MARKET, SIRKIWALAN HAUZ QUAZI, DELHI VS. ACIT CIRCLE 28(1), NEW DELHI (APPLICANT) (RESPONDENT) (PAN: A A APA1286E ) ASSESSEE BY: SHRI P.N. CHAWALA, ADVOCATE REVENUE BY: SH RI VIJAY KUMAR, CIT DR DATE OF HEARING 01 / 0 8 /201 7 DATE OF PRONOUNCEMENT 01 / 0 8 /201 7 ORDER PER AMIT SHUKLA, JUDICIAL MEMBER : THE AFORESAID APPEAL HAS BEEN FILED BY THE ASSESSEE AGAINST IMPUGNED ORDER DATED 12 . 1 .201 2 , PASSED BY THE LD. CIT (APPEALS) - XXV , NEW DELHI FOR THE QUANTUM OF ASSESSMENT PASSED U/S 1 4 3 ( 3 ) FOR THE A.Y. 200 8 - 0 9 . IN THE GROUNDS OF APPEAL THE ASSESSEE HAS RAISED FOLLOWING GROUNDS: - 1. THAT THE ORDER IS BAD IN LAW AND IN FACTS. 2. THAT IN THE FACTS AND CIRCUMSTANCES OF THE CASE THE LEARNED ASSESSING OFFICER GROSSLY ERRED IN DETERMINING/ASSESSING SHORT TERM CAPITAL GAIN OF RS. 5,44,566/ - AS INCOME UNDER THE HEAD PROFIT AND GAINS OF' 'THE BUS I NESS OR PROFESSION AND THE LEARNED PAGE 2 OF 6 CIT (APPEALS) HAS ERRED IN UPHOLDING THE SAID INCOME AS INCOME FROM BUSINESS OR PROFESSION INSTEAD OF INCOME FROM SHORT TERM CAPITAL GAIN. 3 . THAT THE OBSERVATIONS OF THE LEARNED ASSESSING OFFICER IN THE ASSESSMENT ORDER TO THE EXTENT THAT THE ASSESSEE S REPRESENTATIVE AGREED TO THE TREATMENT OF SHORT TERM CAPITAL G AIN OF RS. 5,44,566/ - AS INCOME FROM BUSINESS OR PROFESSION ARE BASED ON SOME MISTAK E OF FACT AS THE SAID REPRESENTATIVE NEVER AGREED TO SUCH TREATMENT OF DECLARED SHORT TERM CAPITAL GAIN. THE LEARNED CIT(APPEALS) HAS ERRED IN CONFIRMING THE SAID OBSERVATIONS OF THE LEARNED ASSESSING OFFICER. 4. THAT THE APPELLANT PURCHASED 500 SHARES OF M/S ADANI EXPORTS ON 22/05/2007 FOR RS. 120000/ - THROUGH M/S INDIA BULLS SECURITIES LTD. VIDE CONTRACT NO. NSC/N/2007094/DEL - KB/76100 1 AND AGAIN PURCHASED 500 SHARES ON 23/05/2007 FOR RS. 119850/ - THROUGH M/S INDIA BULLS SECURITIES LTD. VIDE CONTRACT NO. NSC/N/2007095/DEL - KB/765026. THE SAID SHARES WERE TRANSFERRED TO THE DEMAT A/C OF THE APPELLANT. ALL THESE SHARES WERE SOLD ON 31/10/2007 VIDE CONTRACT NO. NSC/N/2007208/DEL - KB/2317113 AND NSC /N/ 2007228/ DEL - KB/3909212 DATED 28/11/2007 FOR RS.7,84,415 . 70. THESE ENTRIES WERE ALSO REFLECTED IN THE DEMAT A/C OF THE APPELLANT. THE SHARES WERE PURCHASED ON 22/05/2007 AND 23/05/2007 A ND SOLD ON 31/10/2007 AND 28/11/2007. THE APPELLANT HELD THE SHARES FOR LESS THAN A YEAR THROUGH DEMAT A/C AND PROFIT EARNED IS A SHORT TERM CAPITAL GAIN AND NOT INCOME FROM BUSINESS AND PROFESSION. THE LEARNED AUTHORITIES BELOW HAVE, AS SUCH, ERRED IN HOL DING THE INCOME IN THE NATURE OF SHORT TERM CAPITAL GAIN AS INCOME FROM BUSINESS AND PROFESSION. 5. THAT THE LEARNED ASSESSING OFFICER HAS WRONGLY CHARGED INTEREST U/S 234(B) . 6. THAT THE LEARNED ASSESSING OFFICER IS ALSO WRONG IN INITIATING THE PENALTY PROCEEDINGS U/S 271(1)(C) OF THE INCOME TAX ACT. PAGE 3 OF 6 2. THE BRIEF FACTS QUA THE ISSUE INVOLVED ARE THAT THE ASSESSEE HAD DECLARED SHORT TERM CAPITAL GAIN OF RS. 5,44,566/ - ON SALE OF SHARES OF ADANI EXPORTS . THE ASSESSING OFFICER NOTED THAT ON SALE OF OTHER SHARES ASSESSEE HAS DECLARED GAIN AND LOSS UNDER THE HEAD BUSINESS AND PROFESSION. AS NOTED BY THE ASSESSING OFFICER, IN RESPONSE TO THE ORDER SHEET ENTRY DATED 8.10.2010 AS TO WHY THE SHORT TERM CAPITAL GAIN CLAIMED ON SALE OF SHARES OF ADANI EXPORTS SHOULD NOT BE TREATED AS BUSINESS INCOME, THE AUTHORIZED REPRE SENTATIVES OF THE ASSESSEE AGREED THAT IT SHOULD BE TAXED AS BUSINESS INCOME AND IT WAS BY MISTAKE DECLARED AS SHORT TERM CAPITAL GAIN. ACCORDINGLY, THE ASSESSING OFFICER TREATED THE INCOME UNDER THE HEAD STCG ON SHARES OF ADANI EXPORTS AS INCOME CHARGEABL E TO TAX UNDER THE HEAD OF P ROFIT AND GAINS OF BUSINESS AND PROFESSION . THE LEARNED CIT (APPEALS) TOO HAD CONFIRMED THE SAID ORDER OF THE ASSESSING OFFICER ON THE GROUND THAT THE ASSESSEE HAS NOT BEEN CONSISTENT IN THE TREATMENT OF SHARES TRANSACTION , EV EN THOUGH HE WAS INVOLVED IN REGULAR PURCHASE AND SALE OF SHARES . 3. BEFORE US THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE AUTHORIZED REPRESENTATIVE WHO HAD REPRESENTED BEFORE THE ASSESSING OFFICER DID NOT INTENTIONALLY GAVE ANY CONCESSION THAT TH E INCOME FROM SALE OF SHARES IS TO BE TAXED UNDER THE HEAD OF BUSINESS INCOME AND NOT UNDER THE HEAD OF SHORT TERM GAIN. IN SUPPORT OF THIS CONTENTION, AN AFFIDAVIT OF SHRI M.N. BANSAL, CHARTERED ACCOUNTANT, WHO HAD APPEARED BEFORE THE ASSESSING AUTHORITY HAS DEPOSED AS UNDER: - I M.L. BANSAL, CHARTERED ACCOUNTANT S/O SH. D.R. BANSAL, R/O 37F, KAMLA NAGAR, DELHI - 110007, DO HEREBY STATE ON SOLEMN AFFIRMATION AS UNDER: - PAGE 4 OF 6 1. THAT DURING THE ASSESSMENT PROCEEDINGS FOR THE ASSESSMENT YEAR 2008 - 09, I APPEARED BEFORE THE CONCERNED LEARNED ASSESSING OFFICER ON 08 - 12 - 2010 WHICH WAS THE LAST DATE OF HEARING BEFORE HIM AND THE CASE WAS FINALLY DISCUSSED ON THAT DATE. 2. THAT I SIGNED THE ORDER - SHEET DATED 08 - 12 - 2010 IN ROUTINE, WRITTEN BY THE LEARNED ASSESSING AUTHORITY BY HIS OWN HAND WITHOUT GOING THROUGH THE CONTENTS & NOTING IN THE SAID ORDER - SHEET. AS A MATTER OF FACT I NEVER AGREED MENTALLY WITH LEARNED ASSESSING A UTHORITY TO TREAT THE SHORT TERM CAPITAL GAIN OF RS. 5,44,566/ - DECLARED IN THE RELEVANT INCOME TAX RETURN AS REGULAR PROFIT ON SALE & PURCHASE OF S H ARES. HE FURTHER SUBMITTED THAT THE SHARES OF ADANI EXPORTS THE SHARES WERE HELD FOR 5 TO 6 MONTHS AND WAS PURELY FOR THE PURPOSE OF INVESTMENT , T HEREFORE, THE SAME COULD NOT BE TAXED UNDER THE HEAD OF BUSINESS INCOME. 4 . ON THE OTHER HAND, THE LD. DR RELYING UPON THE ORDER OF THE LEARNED CIT (APPEALS) SU BMITTED THAT , ONCE THE AR HAS HIMSELF ADMITTED THAT THE PROFIT S /GAIN FROM SALE IS TO BE TAXED UNDER THE HEAD OF BUSINESS INCOME, THEN THERE WAS NO OCCASION TO THE ASSESSING OFFICER TO EXAMINE THE FACTS PROPERLY AND DECIDE ON MERITS ESPECIALLY THE CONT ENTION OF THE ASSESSEE WHICH HAS B EEN RAISED NOW . THUS, THE PLEA TAKEN BY THE ASSESSEE BEFORE TH IS TRIBUNAL CANNOT BE ENTERTAINED. 5 . AFTER CONSIDERING THE RIVAL SUBMISSIONS AND ON PERUSAL OF THE MATERIALS PLACED ON RECORD AND THE ASSESSMENT ORDER IT IS S EEN THAT THE ASSESSEE THROUGH HIS AUTHORIZED REPRESENTATIVES HAS CONCEDED THAT THE PROFIT AND GAINS FROM SALE OF SHARES IS TO BE TAXED UNDER THE HEAD BUSINESS INCOME INSTEAD OF SHORT TERM GAIN AS SHOWN IN THE PAGE 5 OF 6 RETURN OF INCOME AND SUCH A DISCLOSURE IN THE R ETURN OF INCOME WAS STATED TO BE BY MISTAKE. NOW, AT THIS STAGE, AN AFFIDAVIT AUTHORIZED REPRESENTATIVES, C.A. SHRI M.L. BANSAL, HAS BEEN FILED DEPOSING THAT HE SIGNED THE ORDER SHEET ENTRY IN THE ROUTI NE MANNER. THOUGH, THIS IS COMPLETELY A LAM E EXPLANATI ON, HOWEVER, WE FEEL THAT IN THE INTEREST OF JUSTICE , THIS MATTER SHOULD BE REMANDED BACK TO THE FILE OF THE ASSESSING OFFICER WHO SHALL EXAMINE ALL THE RELEVANT FACTORS OF JUDGING THE TRANSACTION OF PURCHASE AND SALE OF SHARES , WHETHER IT IS TO BE TAXED U NDER THE HEAD SHORT TERM CAPITAL GAIN OR BUSINESS INCOME , BECAUSE DUE TO CONCESSION /CONCEDING THE MATTER BY THE AR AT THE TIME OF ASSESSMENT , T HIS MATTER COULD NOT BE EXAMINED ON MERITS. THEREFORE, WE DIRECT THE ASSESSING OFFICER TO EXAMINE THIS ISSUE ON M ERITS AND DECIDE IN ACCORDANCE WITH LAW AFTER GIVING DUE OPPORTUNIT Y TO THE ASSESSEE TO EXPLAIN HIS CASE. 6 . IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. ORDER P RONOUNCED IN THE OPEN COURT ON 01 . 0 8 .201 7. SD / - SD/ - ( G.D. AGRAWAL ) (AMIT SHUKLA) (PRESIDENT) (JUDICIAL MEMBER) DATED: 01 . 0 8 .2017 NARENDER COPY FORWARDED TO: 1) APPELLANT 2) RESPONDENT PAGE 6 OF 6 3) CIT 4) CIT (APPEALS) 5) DR: ITAT ASSISTANT REGISTRAR DATE DRAFT DICTATED ON 01 .0 8 .2017 DRAFT PLACED BEFORE AUTHOR 01 . 0 8 .2017 DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER DRAFT DISCUSSED/APPROVED BY SECOND MEMBER. APPROVED DRAFT COMES TO THE SR.PS/PS 1 . 8 .2017 KEPT FOR PRONOUNCEMENT ON 1 . 8 .2017 FILE SENT TO THE BENCH CLERK 1 . 8 .2017 DATE ON WHICH FILE GOES TO THE AR DATE ON WHICH FILE GOES TO THE HEAD CLERK. DATE OF DISPATCH OF ORDER.