ACIT, Circle - 32, Kolkata, Kolkata V. Mrs. Jesal Dabriwala, Kolkata

ITA 1148/KOL/2011

• Counselvise Citation: 114823514 RSA 2011
• Duration Of Justice: 5 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-02-2012
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: Not Allotted
• Assessment Year: 2008-2009
• Appeal Filed On: 05-09-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S K ROY LD
• Assessee Lawyers: D S DAMLE LD
• Keywords: Business income; Rule of consistency; Reasonable cause
• Section: 143(3)

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH: KOL KATA () BEFORE , /AND , ! . '# . ) [BEFORE HONBLE SRI MAHAVIR SINGH, JM & HONBLE SHR I C. D. RAO, AM] $ $ $ $ / I.T.A NO. 1148/KOL/2011 %& '( %& '( %& '( %& '(/ // / ASSESSMENT YEAR : 2008-09 A.C.I.T, CIRCLE- 32,, KOLKATA VS. MRS. JESAL DA BRIWALA PAN: ADXPD 9072F (*+ /APPELLANT ) (,-*+/ RESPONDENT ) DATE OF HEARING: 27-01-2012 DATE OF PRONOUNCEMENT: 21-02-2012 FOR THE APPELLANT: SHRI S.K.ROY, LD.DR FOR THE RESPONDENT: SHRI D.S. DAMLE, LD.AR . / ORDER PER MAHAVIR SINGH, JM ( , , , , ) THIS APPEAL BY REVENUE IS ARISING OUT OF ORDER OF C IT(A)-XIX, KOLKATA IN APPEAL NO.144/CIT(A)-XIX/JCIT, R-32/KOL/10-11 DATED 30/05/ 2011. ASSESSMENT WAS FRAMED BY JCIT, RANGE-32, KOLKATA U/S. 143(3) OF THE INCOME T AX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT) FOR ASSESSMENT YEAR 2008-09 VIDE HIS ORD ER DATED 31-12-2010. 2. THE APPEAL FILED BY THE REVENUE IS TIME BARRED B Y 27 DAYS. FOR WHICH, REVENUE HAS FILED CONDONATION PETITION BY WAY AN AFFIDAVIT, WHERE IT HAS BEEN STATED AS UNDER:- 2. THAT THE COPY OF THE ORDER OF THE LEARNED COMMIS SIONER OF INCOME TAX (APPEALS)NO.114/CIT(A)-XIX/JCIT R-32IKOJJ1O-11 DATE D 30.05.2011 IN THE CASE OF MRS. JESALDABIIWALA, PAN- ADXPD9O72F WAS RECEIVED B Y THE OFFICE OF THE LEARNED COMMISSIONER OF INCOME TAX, KOLKATA ON 10-06-2011. THAT THE LAST DATE TO FILE THE APPEAL BEFORE THE HO NBLE INCOME TAX APPELLATE TRIBUNAL KOLKATA WAS ON 08-08-2011. HOWEVER THE APP EAL IS BEING FILED ON 05-09-2011. THUS THERE IS A DELAY OF 27 DAYS IN FILING OF THE A PPEAL BEFORE THE HONBLE INCOME TAX APPELLATE TRIBUNAL KOIKATA. THE APPEAL COULD NOT BE FILED IN TIME DUE TO FOLLOWING REASONS: 12..07.2011 APPEAL SCRUTINY REPORT SUBMITTED IN T HE OFFICE OF THE JOINT COMMISSIONER OF INCOME TAX, KOLKATA-XI,, KOLKATA. T HE JOINT COMMISSIONER WAS ON LEAVE ON THAT TIME. 13.07.2011 AWAITING THE INSTRUCTION FROM THE OFFICE OF THE CIT-XI, KOLKATA TO ITA NO.1148/KOL/2011-MRS. JESAL DABRIWALA, AY 08-09 2 17.08.2011 18.08.2011 INSTRUCTION RECEIVED FOR FILING THE AP PEAL TO I.T.A.T. 19.08.2011 PREPARED GROUNDS OF APPEAL 20.08.2011 SATURDAY (HOLIDAY) 21.08.2011 SUNDAY (HOLIDAY) 22.08.2011 FINALISED THE GROUNDS OF APPEAL. 23.08.2011 SUBMITTED THE GROUNDS OF APPEAL IN THE C.I.T. OFFICE FOR APPROVAL. 24.08.2011 WAILING APPROVAL FROM THE CITS OFFICE. 25.08.2011 -DO- 26.08.2011 VERBAL COMMUNICATION RECEIVED FOR MODI FYING THE GROUNDS OF APPEAL 27.08.2011 SATURDAY (HOLIDAY) 28.08.2011 SUNDAY (HOLIDAY) 29.08.2011 PROCESSED IN THE CITS OFFICE. 30.08.2011 RECEIVED APPROVED GROUNDS OF APPEAL 31.08.2011 HOLIDAY ON ACCOUNT OF IDD. 01.09.2011 PREPARED THE MEMO OF APPEAL & OTHER ENC LOSURE. HOWEVER AFFIDAVIT FOR CONDO NATION OF DELAY COULD NOT BE PREPARED AS STAM P PAPER WAS NOT AVAILABLE. 02.09.2011 PURCHASED THE STAMP PAPER AND PREPARED THE AFFIDAVIT FOR CONDONATION OF THE DELAY. 03.09.2011 SATURDAY (HOLIDAY) 04.09.2011 SUNDAY (HOLIDAY) 05.09.2011 SECOND APPEAL IS BEING FILED BEFORE LT.A .T. CONSIDERING THE ABOVE FACTS IT IS HUMBLE PRAYED BEF ORE THE HONBLE INCOME TAX APPELLATE TRIBUNAL KOLKATA TO KINDLY CONDONE THE DE LAY IN THE FILING OF THE APPEAL AS THE SAME WAS DUE TO A REASONABLE CAUSE AND THERE WAS NO INTENTION TO DELAY THE FILING OF THE APPEAL UNLESS THE DELAY IS NOT CONDONED THE REVENUE DEPARTMENT WILL SUFFER IRREPARABLE LOSS AND PREJUDICE. THAT THE STATEMENTS ARE TRUE TO THE BEST OF MY KNO WLEDGE. 2.1 AFTER CONSIDERING THE AVERMENTS MADE IN THE AFF IDAVIT, AND HEARING BOTH THE PARTIES, WE ARE OF THE OPINION THAT ONCE ASSESSEES COUNSEL CON SENTED FOR CONDONATION OF DELAY, THE REVENUE/DEPARTMENT WAS PREVENTED BY REASONABLE CAUS E FROM PREFERRING THE APPEAL WITHIN THE STIPULATED PERIOD. WE, ACCORDINGLY, CONDONE THE DEL AY IN FILING THE APPEAL AND ADMIT THE SAME IN VIEW OF THE DECISION OF THE HONBLE SUPREME COURT IN THE CASE OF CIT VS. WEST BENGAL INFRASTRUCTURAL & FINANCIAL CORPORATION LTD REPORT ED IN (2011) 196 TAXMAN 321(SC) AND PROCEED TO DECIDE THE APPEAL ON MERITS. 3. THE ONLY ISSUE IN THIS APPEAL OF REVENUE IS AGAI NST THE ORDER OF CIT(A) IN HOLDING THAT INCOME EARNED FROM SALE OF SHARES IS TO BE ASSESSED AS CAPITAL GAINS AS AGAINST THE FINDING OF ASSESSING OFFICER THAT THE SAME IS ASSESSABLE AS B USINESS INCOME. FOR THIS, REVENUE HAS RAISED FOLLOWING GROUND:- 1. THAT THE LD.CIT(A) ERRED IN NOT CONSIDERING THE FACT THAT THE ONLY BUSINESS OF THE ASSESSEE WAS TRADING IN SHARES BEIN G CARRIED IN A MANNER COVERED BY THE CRITERIA AS LAID DOWN BY HONBLE IT AT, LUCKNOW BENCH IN THE ITA NO.1148/KOL/2011-MRS. JESAL DABRIWALA, AY 08-09 3 CASE OF M/S. SARNATH INFRASTRUCTURE (P) LTD VS. ACI T, RANGE-1, BARELLY (2010) [124 ITD 71] LUCKNOW 4. WE HAVE HEARD RIVAL SUBMISSIONS AND GONE THROUGH FACTS AND CIRCUMSTANCES OF THE CASE. DURING THE ASSESSMENT PROCEEDINGS THE ASSESSING OFF ICER NOTICED THAT THE ASSESSEE HAS SHOWN PROFIT ON SALE OF INVESTMENT AT RS.59,54,598/- AS L ONG-TERM CAPITAL GAIN OR SHORT-TERM CAPITAL GAIN ACCORDING TO ITS HOLDING PERIOD. THE ASSESSING OFFICER NOTED THAT IN THE IMMEDIATE PRECEDING YEAR ALSO THE ASSESSEE HAS SHOWN PROFIT O N SALE OF INVESTMENT OF SHARES AT RS.38,61,640/-. ACCORDING TO THE ASSESSING OFFICER, THE ASSESSEE IS REGULAR DEALER IN SHARES AND DIFFERENCE BETWEEN THE PURCHASE AND SALES OF SHARES VARIES FROM 1-2 DAYS FROM 4-5 MONTHS. ACCORDING TO ASSESSING OFFICER, THE ACTIVITY OF SAL E OF SHARES IS THAT OF BUSINESS OF THE ASSESSEE AND THAT ALSO IN DIFFERENT SCRIPS. ACCORDING TO AS SESSING OFFICER, THE DETAILS OF PURCHASE AND SALES ACTIVITY BY THE ASSESSEE REVEAL THAT THE SALE S AND PURCHASE ARE QUITE SUBSTANTIAL AND IS NOT IN THE NATURE OF INVESTMENT IN SHARES. ACCORDINGLY, THE ASSESSING OFFICER ASSESSED THE INCOME OF THE ASSESSEE UNDER THE HEAD BUSINESS INSTEAD OF CAPITAL GAINS AS DECLARED BY THE ASSESSEE. FOR THIS, THE ASSESSING OFFICER ALSO HELD THAT THE ASSE SSEE IS NOT INTERESTED IN DIVIDEND INCOME RATHER INTERESTED AS EARNING PROFITS AS IS EVIDENT FROM TH E DETAILS FILED BY HER. ACCORDINGLY, HE ASSESSED THE INCOME UNDER THE HEAD BUSINESS ON ACCOUNT OF PR OFIT EARNED FROM SALE OF SHARES. 5. AGGRIEVED, ASSESSEE PREFERRED APPEAL BEFORE CIT( A), WHO ALLOWED THE CLAIM OF THE ASSESSEE BY HOLDING IN PARA 4.2 OF HIS APPELLATE O RDER AS UNDER:- I HAVE CONSIDERED THE SUBMISSION OF THE APPELLANT AND PERUSED THE ASSESSMENT ORDER. I HAVE ALSO GONE THROUGH THE PROFIT & LOSS A CCOUNT AND BALANCE SHEET FOR THE YEAR UNDER APPEAL AS WELL AS THE EARLIER YEARS. ON PERUSAL OF PROFIT & LOSS ACCOUNT FOR THE YEAR UNDER APPEAL, IT IS APPARENT T HAT IN ADDITION TO OTHER RECEIPTS, THE APPELLANT HAS SHOWN SUM OF RS. 59,54, 598/-UNDER THE HEAD PROFIT IN SHARE INVESTMENT. IN THE COMPUTATION OF INCOME THE ASSESSEE HAS SHOWN THAT INCOME UNDER THE HEAD CAPITAL GAINS. AS PER COMPU TATION OF INCOME, THE APPELLANT HAS SHOWN LONG TERM CAPITAL GAIN AMOUNTIN G TO RS.15,76,493/- WHICH INCLUDES LONG TERM CAPITAL GAIN OF RS.22,464/- PERT AINING TO APPELLANTS MINOR DAUGHTER. THE APPELLANT HAS ALSO DISCLOSED SHORT TE RM CAPITAL GAIN AMOUNTING TO RS.44,85,522/-. ON PERUSAL OF ASSESSMENT ORDER, IT IS APPARENT THAT THE A.O. HAS NOT CONSIDERED THE AMOUNTS OF LONG TERM CAPITAL GAI N AND SHORT TERM CAPITAL GAIN AS SHOWN BY THE APPELLANT IN THE COMPUTATION OF INC OME AND HE HAS CONSIDERED THE PROFIT IN SHARE INVESTMENT AT RS.59,54,598/- AS CREDITED TO THE PROFIT & LOSS ACCOUNT AS INCOME FROM BUSINESS OR PROFESSION. FROM THE ASSESSMENT ORDER IT APPEARS THAT A.O. HAS CHANGED CLASSIFICATION OF INC OME FROM CAPITAL GAINS TO BUSINESS INCOME WITHOUT ALLOWING ANY OPPORTUNITY TO THE APPELLANT. THE A.O. HAS TREATED THE CAPITAL GAIN INCOME AS BUSINESS INCOME FOR THE REASON THAT THE DIFFERENCE BETWEEN THE PURCHASE DATE AND SALE DATE OF SHARES VARIES FROM ONE OR TWO DAYS TO FOUR TO FIVE MONTHS AND THAT THE ASSESS EE IS HABITUALLY A SHARE TRADER. THE A.O. WAS ALSO OF THE OPINION THAT THE INTENTION OF THE APPELLANT WAS TO EARN ITA NO.1148/KOL/2011-MRS. JESAL DABRIWALA, AY 08-09 4 PROFIT FROM SHARE DEALING AND NOT EARN THE DIVIDEND INCOME. THE A.O. WAS ALSO OF THE OPINION THAT THE VOLUME OF PURCHASE AND SALE OF SHARES WAS QUITE SUBSTANTIAL AND WILL NOT BE MADE BY A PERSON WHO INVESTS IN THE SHARES. ON THE OTHER HAND, IT WAS CONTENDED BY THE APPELLANT THAT SHE IS AN INVES TOR IN THE SHARES AND NOT THE TRADER AS HELD BY THE A.O. THE APPELLANT HAD INVEST ED HER OWN CAPITAL IN THE SHARES AND SHE HAD NOT TAKEN ANY LOAN ETC. THE SHAR ES WERE ALWAYS REPORTED AT COST IN THE BOOKS OF ACCOUNT AND FINANCIAL STATEMEN TS AND NOT AT THE LOWER OF COST OR MARKET VALUE. IN THE FINANCIAL STATEMENTS, SHARE S WERE ALWAYS CLASSIFIED UNDER THE HEAD INVESTMENTS AND NOT STOCK-IN-TRADE. IT WAS ALSO ARGUED BY THE APPELLANT THAT IN ALL THE EARLIER YEARS, THE PROFIT ON SALE OF INVESTMENT SHARES WAS DECLARED BY THE APPELLANT UNDER THE HEAD CAPITAL G AINS AND ACCEPTED BY THE DEPARTMENT. ON CAREFUL CONSIDERATION OF THE FACTS A ND ON PERUSAL OF FINANCIAL STATEMENTS OF THE APPELLANT, I FIND FORCE IN THE SU BMISSION OF THE APPELLANT THAT SHE WAS AN INVESTOR IN THE SHARES AND NOT A DEALER AS H ELD BY THE A.O. I ALSO FIND FORCE IN THE SUBMISSION OF THE APPELLANT THAT THE O BSERVATION OF THE A.O. WAS NOT CORRECT THAT THE APPELLANTS INTENTION WAS TO EARN ONLY THE PROFIT AND NOT THE DIVIDEND INCOME, WHEREAS AS PER THE PROFIT & LOSS A CCOUNT, THE APPELLANT HAS ALSO EARNED A SUBSTANTIAL AMOUNT OF DIVIDEND AMOUNTING T O RS.6,OO,7OO/- BESIDES, THE A.O.S THIS OBSERVATION IS ALSO NOT CORRECT THA T THE MAXIMUM PERIOD OF HOLDING OF SHARES WAS FOUR TO FIVE MONTHS, WHEREAS THE APPE LLANT HAS HELD THE SHARES FOR A QUITE LONGER PERIOD AND THEREBY DURING THE YEAR UND ER APPEAL, SHE HAS EARNED LONG TERM CAPITAL GAIN OF RS.15,76,497/- IT IS ALSO APPARENT THAT IN ALL THE EARLIER YEARS, THE PROFIT ON SALE OF INVESTMENTS WAS DECLAR ED BY THE APPELLANT UNDER THE HEAD CAPITAL GAINS AND SAME WAS ACCEPTED BY THE A O I AM OF THE OPINION THAT THOUGH THE PRINCIPLE OF RES-JUDICATA IS NOT APPLICA BLE IN INCOME TAX PROCEEDINGS, BUT IN A NUMBER DECISIONS IT HAS BEEN HELD BY THE HONBLE SUPREME COURT AND VARIOUS HIGH COURTS THAT IF THERE IS NO CHANGE IN T HE FACTS OF CASE IN COMPARISON TO FACTS IN THE EARLIER YEARS, THE .A.O. SHOULD MAI NTAIN RULE OF CONSISTENCY. IN THE CASE OF APPELLANT, SHE HAD DECLARED PROFIT ON SALE OF INVESTMENT UNDER THE HEAD CAPITAL GAINS IN ALL THE EARLIER YEARS, WHICH WAS ACCEPTED BY THE A.O. AND IN THE YEAR UNDER APPEAL THERE IS NO CHANGE IN THE OF THE CASE. HENCE, I AM OF THE OPINION THAT THE A.O. WAS NOT JUSTIFIED UNILATERALL Y CHANGING THE CLASSIFICATION OF INCOME FROM CAPITAL GAINS TO INCOME. AGGRIEVED, REVENUE CAME IN APPEAL BEFORE US. 6. WE FIND THAT THE ASSESSEE HAS DISCLOSED PROFITS FROM SALE OF SHARES UNDER THE HEAD PROFIT IN SHARE INVESTMENT AND DISCLOSED UNDER THE HEAD C APITAL GAINS. WE FURTHER FIND THAT THE ASSESSEE IS INVESTOR IN SHARES AND INVESTED OUT OF HER OWN FUNDS AND NOT BY TAKING ANY LOAN ETC. FROM THE FINANCIAL STATEMENT IT IS CLEAR THAT THE S HARES WERE ALWAYS REPORTED AT COST IN THE BOOKS OF ACCOUNT AND FINANCIAL STATEMENTS. EVEN IN THE F INANCIAL STATEMENT THE SHARES UNDER DISPUTE WERE ALWAYS CLASSIFIED UNDER THE HEAD INVESTMENT AND NOT UNDER THE HEAD STOCK IN TRADE. EVEN THE OBSERVATION OF AO IS CONTRARY TO THE FACTS FOR THE ONE REASON THAT THE AO OBSERVED THAT THE MAXIMUM PERIOD OF HOLDING OF SHARES BY ASSESSEE IS FOUR TO FIVE MONTHS WHEREAS THE ASSESSEE HELD THESE SHARES FOR MORE THAN ONE YEAR A ND EARNED LONG TERM CAPITAL GAIN. EVEN OTHERWISE IN ALL EARLIER YEARS, THE ASSESSEES INVE STMENTS WERE CONSIDERED AS LONG TERM CAPITAL ITA NO.1148/KOL/2011-MRS. JESAL DABRIWALA, AY 08-09 5 GAIN AS IS EVIDENT FROM THE EARLIER YEARS RETURNS OF THE ASSESSEE. ONCE IT IS ESTABLISHED THAT ASSESSEE MAINTAINED THE INVESTMENT IN SHARES AND HO LD THE SHARES AS INVESTMENTS, WHATEVER IS SOLD IS OUT OF INVESTMENT IS RIGHTLY DECLARED AS LO NG TERM OR SHORT TERM CAPITAL GAIN, AS THE CASE MAY BE. ACCORDINGLY, WE ARE OF THE VIEW THAT CIT(A ) HAS RIGHTLY ALLOWED THE CLAIM OF ASSESSEE HOLDING ASSESSEE AS INVESTOR AND WE CONFIRM THE SAM E. 7. IN THE RESULT, APPEAL OF REVENUE IS DISMISSED. 8. ORDER PRONOUNCED IN OPEN COURT ON 21.02.2012. SD/- SD/- [ . '# '#'# '# . ! ] [ , ] (C. D. RAO, ACCOUNTANT MEMBER) (MAHAVIR SINGH, JU DICIAL MEMBER ( #! #! #! #!) )) ) DATED : 21 ST FEBRUARY, 2012 /0 %12 3 *PP(SR.P.S.) . 4 ,5 6 5'7- COPY OF THE ORDER FORWARDED TO: 1 . *+ / APPELLANT ACIT, CIRCLE-32, 10B, MIDDLETON ROW, 2 ND FL., KOL-71. 2 ,-*+ / RESPONDENT,- MRS. JESAL DEBRIWALA 6/1 WOOD STREET , KOLKATA-16. 3 . .% ( )/ THE CIT(A), 4. .% / CIT, 5 . >? ,% / DR, KOLKATA BENCHES, KOLKATA -5 ,/ TRUE COPY, .%@/ BY ORDER, 2 /ASSTT. REGISTRAR .