Sonalank Investments & Trading Pvt.Ltd., Ahmedabad V. The CIT-I, Ahmedabad

ITA 1343/AHD/2011

• Counselvise Citation: 134320514 RSA 2011
• Duration Of Justice: 8 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 03-02-2012
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 02-12-2011
• Assessment Year: 2006-2007
• Appeal Filed On: 05-05-2011
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: RAVINDRA KUMAR
• Assessee Lawyers: TUSHAR P HIMANI
• Keywords: Business income; Opportunity of being heard; Assessment record; Revised return
• Section: 143(3); 263; 63

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH AHMEDABAD (BEFORE S/SHRI G. D. AGARWAL, VP AND SHRI MUKUL KUM AR SHRAWAT, JM) ITA NO.1343/AHD/2011 A. Y. 2006-07 M/S. SONALANK INVESTMENT & TRADING PVT. LTD., 1 ST FLOOR, AKSHAY, 53, SHRIMALI SOCIETY, NAVRANGPURA, AHMEDABAD VS THE COMMISSIONER OF INCOME TAX-I, AYAKAR BHAVAN, AHMEDABAD PA NO. AACCS 7614 J (APPELLANT) (RESPONDENT) APPELLANT BY SHRI TUSHAR P. HIMANI, AR RESPONDENT BY SHRI RAVINDRA KUMAR, CIT DR DATE OF HEARING: 02-12-2011 DATE OF PRONOUNCEMENT: 03-02-2012 O R D E R PER MUKUL KR. SHRAWAT: THIS APPEAL IS FILED AT THE BEHEST OF THE ASSESSEE AGAINST THE ORDER OF THE LE ARNED COMMISSIONER OF INCOME TAX-IV, AHMEDABAD DATED 25-0 2-2011 FOR ASSESSMENT YEAR 2006-07 PASSED U/S 263 OF THE IT A CT. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS: 1. THE LEARNED CIT HAS GROSSLY ERRED IN LAW AND ON FACTS IN ASSUMING JURISDICTION U/S 263 OF THE ACT ON THE ERRONEOUS GROUND THAT THE IMPUGNED ASSESSMENT ORDER IS ERRONEOUS IN SO FAR AS IT IS PREJUDICIAL TO THE INT EREST OF THE REVENUE. 2. LD. CIT GROSSLY ERRED IN NOT APPRECIATING THAT I N ORDER TO INVOKE S.263, TWO CONDITIONS MUST BE FULFILLED VIZ. THE IMPUGNED ASSESSMENT ORDER MUST BE ERRONEOUS AND THA T ERROR MUST BE PREJUDICIAL TO THE INTEREST OF THE RE VENUE. IN ITA NO.1343/AHD/2011 M/S. SONALANK INVESTMENT & TRADING PVT. LTD. VS CIT -I, AHMEDABAD 2 THE PRESENT CASE, LD. AO HAS PASSED THE REASONED ASSESSMENT ORDER AFTER ANALYZING ALL DETAILS AND TH EREFORE THERE WAS NO ERROR IN THE IMPUGNED ASSESSMENT ORDER SO AS TO JUSTIFY ACTION U/S 263 OF THE ACT. UNDER THE CIRCUMSTANCES, THE VERY ASSUMPTION OF POWER U/S 263 OF THE ACT IS UNJUSTIFIED AND BAD IN LAW AND THEREFORE , ORDER U/S 263 OF THE ACT DESERVED TO BE QUASHED. 3. ALTERNATIVELY AND WITHOUT PREJUDICE TO THE GROUN DS RAISED HERE, THE LD. CIT HAS ERRED IN SETTING ASIDE THE OR DER OF ASSESSMENT OFFICER BY DIRECTING TO TREAT THE INCOME FROM CAPITAL GAINS AS THE BUSINESS INCOME OF THE APPELLANT. 4. LD. CIT HAS ERRED IN NOT CONSIDERING VARIOUS FAC TS, SUBMISSIONS, EXPLANATIONS AND CLARIFICATIONS AS GIV EN BY THE APPELLANT AND FURTHER ERRED IN NOT APPRECIATING THE FACTS AND LAW IN THEIR PROPER PERSPECTIVE. 2. THE LEARNED COMMISSIONER OF INCOME TAX (CIT IN S HORT) IN HIS ORDER HAS OBSERVED THAT AN ASSESSMENT WAS MADE U/S 143 OF THE IT ACT DATED 11-12-2008 AND TOTAL INCOME WAS ASSESSED AT RS.63,55,230/-. IT WAS ALSO NOTED IN THE IMPUGNED O RDER THAT A RETURN WAS FILED ON 27-12-2006 ON AN INCOME OF RS.50,66,78 8/- WHICH WAS LATER ON REVISED AT RS.63,55,225/- ON 13-09-2007. T HE CASE WAS SELECTED FOR SCRUTINY AND THEREFORE, NOTICES OF HEA RING U/S 142(1)/143(2) OF THE IT ACT WERE ISSUED. THE ASSESSEE IS A PRIVATE LIMITED COMPANY ENGAGED IN FINANCE AND INVESTMENT. IN THE IMPUGNED ORDER THE ONLY OBSERVATION OF THE AO WAS T HAT THE ASSESSEE HAD EARLIER CLAIMED INTEREST AS WELL AS PM S FEES AGAINST SHORT TERM CAPITAL GAIN AMOUNTING TO RS.12,88,437/- . THE OBSERVATION OF THE AO WAS THAT WHILE FILING THE REVISED RETURN OF INCOME THE SAID CLAIM WAS WITHDRAWN. WITH THIS FACTUAL BACKGROUND T HE LEARNED CIT HAS OBJECTED THE MANNER IN WHICH THE ASSESSMENT WAS COMPLETED ITA NO.1343/AHD/2011 M/S. SONALANK INVESTMENT & TRADING PVT. LTD. VS CIT -I, AHMEDABAD 3 WITHOUT ASCERTAINING THE EXACT NATURE OF THE CAPIT AL GAIN. A SHOW CAUSE NOTICE WAS ISSUED AS UNDER: IN YOUR CASE, AN ASSESSMENT ORDER U/S. 143(3) OF T HE I. T. ACT WAS PASSED ON 11/12/2008 DETERMINING YOUR INCOM E AT RS.63,55,230/- WHICH INCLUDED AN AMOUNT OF RS.55,10,721 ASSESSED UNDER THE HEAD SHORT TERM CAPITAL GAIN. ON VERIFICATION OF CASE RECORDS, IT IS OBSERVED THAT YOUR COMPANY IS ENGAGED IN FINANCE A ND INVESTMENT. THEREFORE, THE INCOME DERIVED BY YOU F ROM PURCHASE AND SALES OF EQUITY SHARES/MUTUAL FUND ETC ., WAS IN THE NATURE OF PROFITS & GAINS OF BUSINESS O R PROFESSION AND CANNOT BE TREATED AS CAPITAL GAIN. IN VIEW OF THE FACTS MENTIONED ABOVE, IT APPEARS THAT THE O RDER PASSED BY THE AO IS ERRONEOUS AND PREJUDICIAL TO TH E INTEREST OF REVENUE. I, THEREFORE, PROPOSE TO REVIS E THE SAID ORDER U/S. 263 OF THE I. T. ACT. YOU ARE HEREB Y GIVEN AN OPPORTUNITY OF BEING HEARD IN PERSON ALONG WITH DOCUMENTS AND EVIDENCE JUSTIFYING YOUR SUBMISSIONS. YOU MAY, IF YOU SO DESIRE, SUBMIT YOUR CONTENTIONS IN W RITING OR THROUGH AN AUTHORIZED REPRESENTATIVE ALSO. 3. AFTER ANALYZING THE RECORDS AS WELL AS THE EXPLA NATION OF THE ASSESSEE THE LEARNED CIT HAS NOTED THAT THE AO HAD ACCEPTED THE INCOME UNDER THE HEAD SHORT TERM CAPITAL GAIN WIT HOUT MAKING ANY ENQUIRY TO ASCERTAIN THE TRUE AND CORRECT NATURE OF INCOME. HE HAS OBSERVED THAT EARLIER THE AO HAD ISSUED A SHOW CAUS E NOTICE DATED 05-09-2008 WHEREIN THE ASSESSEE WAS ASKED TO SUBMIT THE FACTS REGARDING THE NATURE OF THE BUSINESS. IN RESPONSE, THE ASSESSEE HAS SIMPLY INFORMED THAT THE COMPANY IS ENGAGED IN FINA NCE AND INVESTMENT ACTIVITY. AS PER THE LEARNED CIT, THE SA ID EXPLANATION OF THE ASSESSEE WAS ACCEPTED AS SUCH BY THE AO WITHOUT ASCERTAINING THE TRUE NATURE OF THE INCOME. ACCORDING TO HIM, TH ERE WAS NOTHING ON RECORD TO SHOW THAT THE AO HAD VERIFIED CORRECTNESS OF THE ARGUMENTS. ITA NO.1343/AHD/2011 M/S. SONALANK INVESTMENT & TRADING PVT. LTD. VS CIT -I, AHMEDABAD 4 ACCORDING TO CIT THERE WAS REGULAR PURCHASE AND SAL ES OF SHARE TRANSACTIONS CARRIED OUT BY THE ASSESSEE BUT TO ASC ERTAIN THE TRUE CHARACTER OF THE INCOME NO ENQUIRY WAS MADE. ACCORD ING TO HIM, THE QUESTION WHETHER A PARTICULAR TRANSACTION IS A TRAD ING TRANSACTION OR A CAPITAL TRANSACTION COULD ONLY BE DECIDED ONLY ON A SCERTAINING THE TRUE NATURE AND FREQUENCY OF THE TRANSACTIONS CARRIED OU T BY THE ASSESSEE. HE HAS HELD THAT THE ORDER OF THE AO WAS PREJUDICIA L TO THE INTEREST OF THE REVENUE, AS PER THE FOLLOWINGS: '9. AS THE A. O. HAS ACCEPTED THE SHORT TERM CAPITA L GAIN AS SHOWN BY THE ASSESSEE WITHOUT MAKING PROPER VERIFIC ATION AND ASCERTAINING THE TRUE NATURE OF THE INCOME, WHICH H AS RESULTED IN SHORT LEVY OF TAX AND UNDER INCORRECT HEAD OF I NCOME, HENCE THE ORDER PASSED BY THE ASSESSING OFFICER IS ERRONE OUS AND FOUND TO BE PREJUDICIAL TO THE INTEREST OF REVENUE. HONBLE SUPREME COURT HAS OBSERVED IN THE CASE OF MALABAR I NDUSTRIAL COMPANY LTD. VS. CIT (243 ITR 83) THAT WHERE THE ASSESSING OFFICER HAD ACCEPTED ENTRY IN THE STATEMENT OF ACCO UNT FILED BY THE ASSESSEE SHOWING CERTAIN INCOME AS AGRICULTU RAL INCOME, WITHOUT MAKING ANY INQUIRY, THE EXERCISE OF JURISDICTION BY COMMISSIONER U/S.263(1) WOULD BE JUSTIFIED. IN THE PRESENT CASE, THE A.O. HAS ACCEPTED THE SHORT TERM CAPITAL GAIN AS SHOWN BY THE ASSESSEE WI THOUT MAKING PROPER VERIFICATION AND ASCERTAINING THE TRU E NATURE OF THE INCOME. THEREFORE, I AM CONVINCED THAT THE ORDE R PASSED BY THE A. O. TO THAT EXTENT IS ERRONEOUS AND PREJUDICI AL TO THE INTEREST OF REVENUE. HENCE, THE ORDER OF THE A. O. IS SET ASIDE TO THIS EXTENT WITH THE DIRECTION TO EXAMINE THE TRUE AND CORRECT NATURE OF TRANSACTION AND DECIDE THE MATTER AFRESH AS PER LAW. 4. NOW, THE ASSESSEE HAS OBJECTED THE JURISDICTION OF THE LEARNED CIT AND IN THIS REGARD THE LEARNED AR OF THE ASSESS EE, MR. TUSHAR P. HIMANI HAS PLEADED THAT ALL THE REQUISITE INFORMATI ON WAS DULY FURNISHED ALONG WITH THE RETURN AND AFTER EXAMINATI ON OF THE ACCOUNTS ITA NO.1343/AHD/2011 M/S. SONALANK INVESTMENT & TRADING PVT. LTD. VS CIT -I, AHMEDABAD 5 OF THE ASSESSEE THE SHORT TERM CAPITAL GAIN WAS ASS ESSED BY THE AO. THE AO HAD ISSUED NOTICES OF HEARING WHICH WERE DUL Y COMPLIED WITH BY THE ASSESSEE. MR. TUSHAR P. HIMANI, THE LEARNED AR OF THE ASSESSEE HAS VEHEMENTLY ARGUED THAT THE ASSESSMENT BEING FRAMED U/S 143(3) OF THE IT ACT, THEREFORE, SUCH AN ASSESS MENT WAS FINALIZED AFTER DUE APPLICATION OF MIND. HE HAS ARGUED THAT ADEQUATE OPPORTUNITY WAS GRANTED BY THE AO AND THEREAFTER TH E ASSESSMENT WAS COMPLETED. A REASONABLE ASSESSMENT ORDER WAS PA SSED AFTER CONSIDERING THE CLARIFICATIONS PLACED BEFORE THE AO . THE LEARNED AR OF THE ASSESSEE ALSO SUBMITTED THAT SUBSEQUENTLY IN ASSESSMENT YEAR 2007-08 AGAIN THE ENQUIRY WAS RAISED AND THEREAFTER ASSESSMENT WAS MADE U/ 143 (3) OF THE IT ACT VIDE ORDER DATED 21-1 2-2009 AND THE NATURE OF INCOME WAS ACCEPTED AS INCOME FROM SHORT TERM CAPITAL GAIN. THE LEARNED AR HAS ALSO INFORMED THAT IN THE PRECEDING ASSESSMENT YEAR AY 2005-06 THE ASSESSMENT WAS MADE U/S 143 OF THE IT ACT VIDE ORDER DATED 05-09-2007 AND THEREIN AS WELL THE NATURE OF INCOME WAS HELD AS SHORT TERM CAPITAL GAIN. TH E LEARNED AR OF THE ASSESSEE HAS ALSO DRAWN OUR ATTENTION TO THE BA LANCE SHEETS OF THE ASSESSEE DRAWN AS ON 31-03-2005 AND 31-03-2006 TO DEMONSTRATE THAT UNDER THE HEAD INVESTMENT, THE S TOCK OF SHARES WAS DISCLOSED. HE HAS EMPHASIZED THAT THE SHARES WE RE NOT HELD AS STOCK IN TRADE BUT THE SHARES WERE HELD AS INVESTME NT. 4.1 A LEGAL ARGUMENT HAS BEEN RAISED THAT THERE WAS NO LACK OF INQUIRY SO AS TO INVOKE THE PROVISIONS OF SECTION 2 63 OF THE IT ACT. RELIANCE WAS PLACED IN THE DECISION OF HONBLE DELH I HIGH COURT IN THE CASE OF CIT VS SUNBEAM AUTO LTD., 332 ITR 167. HE HAS ALSO ITA NO.1343/AHD/2011 M/S. SONALANK INVESTMENT & TRADING PVT. LTD. VS CIT -I, AHMEDABAD 6 STATED THAT THE TRANSACTION AS MADE BY THE ASSESSEE WERE DEFINED IN THE ORDER BY THE HONBLE BOMBAY HIGH COURT IN THE C ASE OF CIT VS GOPAL PUROHIT, 336 ITR 287. HIS ANOTHER LEGAL ARGU MENT WAS THAT A DISTINCTION MUST BE DRAWN BETWEEN LACK OF INQUIRY AND INADEQUATE INQUIRY. IN CASE OF LACK OF INQUIRY, THE CIT CAN INVOKE REV ISIONARY POWERS, BUT NOT IN THE CASE WHERE THERE ARE INADEQU ATE INQUIRY. FOR THIS LEGAL PROPOSITION RELIANCE WAS PLACED ON THE D ECISION OF THE HONBLE DELHI HIGH COURT IN THE CASE OF CIT VS ANIL KUMAR SHARMA, 335 ITR 83 (DELHI). 5. FROM THE SIDE OF THE REVENUE, LEARNED DR, MR. RA VINDRA KUMAR APPEARED AND SUPPORTED THE ORDER PASSED U/S 263 OF THE IT ACT. HE HAS ARGUED THAT THERE WAS NO FINDING BY THE AO IN R ESPECT OF THE NATURE OF THE TRANSACTION WHETHER IT WAS SHORT TER M CAPITAL GAIN OR NOT. NO INVESTIGATION WHATSOEVER WAS MADE BY THE AO THOUGH A RETURN WAS REVISED AND THE TRANSACTION IN QUESTION WAS UNDER DOUBT. AS PER THE ASSESSMENT ORDER ITSELF THE SAME WAS PAS SED IN A CRYPTIC MANNER. THE LEARNED DR HAS EMPHASIZED THAT THOUGH T HE RETURN OF INCOME WAS AT THE SUBSTANTIALLY HIGH FIGURE OF RS.6 3,55,225/- BUT THE ONE AND A HALF PAGE ASSESSMENT ORDER WAS PASSED AND THE RETURNED INCOME WAS ACCEPTED AS SUCH. THE LEARNED DR HAS ARG UED THAT THE LEARNED CIT WITHIN HIS POWERS HAS INVOKED THE PROVI SIONS OF SECTION 263 OF THE IT ACT BECAUSE THE CLAIM WAS ALLOWED WIT HOUT VERIFYING THE NATURE OF THE TRANSACTIONS AND IN SUPPORT HE PLACED RELIANCE ON THE DECISION OF THE HONBLE MADRAS HIGH COURT IN THE CA SE OF CIT VS SOUTH INDIA SHIPPING CORPORATION LTD., 233 ITR 546 (MAD.). ITA NO.1343/AHD/2011 M/S. SONALANK INVESTMENT & TRADING PVT. LTD. VS CIT -I, AHMEDABAD 7 6. WE HAVE HEARD BOTH THE SIDES AT SOME LENGTH. WE HAVE ALSO CAREFULLY PERUSED THE IMPUGNED ORDERS OF THE REVENU E AUTHORITIES. UNDOUBTEDLY, THE ASSESSMENT ORDER IN QUESTION IS A CRYPTIC ORDER. THOUGH CERTAIN NOTICES WERE ISSUED U/S 143 (2) OF T HE IT ACT, BUT WHAT WAS THE LINE OF INVESTIGATION, HAS NOT BEEN DISCUSS ED IN THE ASSESSMENT ORDER. THERE WAS NO DISCUSSION ABOUT THE NATURE OF THE CAPITAL GAIN AS DISCLOSED BY THE ASSESSEE. THE ADMI TTED FACTUAL POSITION IS THAT AS PER THE BODY OF THE ASSESSMENT ORDER, THE AO HAS NOT GIVEN ANY REASON AS TO WHY THE SHORT TERM CAPIT AL GAIN AS DISCLOSED BY THE ASSESSEE WAS ACCEPTED. EVEN, FROM THE SIDE OF THE ASSESSEE IT HAS NOT BEEN ARGUED BEFORE US THAT THE DETAILED SHOW CAUSE NOTICES WERE ISSUED THROUGH WHICH AN INQUIRY WAS MADE BY THE AO IN RESPECT OF THE NATURE OF THE CAPITAL GAIN. IT HAS ALSO NOT BEEN DEMONSTRATED BY THE LEARNED AR OF THE ASSESSEE, MR. TUSHAR P. HIMANI THAT AN EXPLANATION WAS SUBMITTED BEFORE THE AO THROUGH WHICH THE CHARACTER OF THE TRANSACTION WHILE DEALIN G IN SHARES WAS ALSO THE MAJOR NATURE OF CAPITAL GAIN WAS EXPLAINED TO THE ASSESSEE. THE LEARNED AR OF THE ASSESSEE HAS ONLY DRAWN OUR A TTENTION ON ONE REPLY MADE TO THE AO DATED 28-12-2009 AND EVEN IN T HAT REPLY THERE WAS NO EXPLANATION IN RESPECT OF THE SHARES. THIS L ETTER IS OF NO CONSEQUENCE BECAUSE IT WAS FILED BEFORE THE ACIT (O SD), CIRCLE-VIII, AHMEDABAD DATED 28-12-2009. HOWEVER, THE ASSESSMENT BY THAT TIME HAD ALREADY BEEN COMPLETED ON 11-12-2008. WHAT EVER COULD BE THE REASON IN RESPECT OF THAT SUBMISSIONS; BUT THE FACT REMAINED THAT NO CORRESPONDENCE IS PLACED BEFORE US WHICH WAS MAD E BEFORE THE AO TO SHOW THAT THE ASSESSEE HAD IN FACT GIVEN CERT AIN SUBMISSIONS OR EXPLANATIONS IN SUPPORT OF THE NATURE OF THE SHA RE TRANSACTIONS. ITA NO.1343/AHD/2011 M/S. SONALANK INVESTMENT & TRADING PVT. LTD. VS CIT -I, AHMEDABAD 8 6.1 ACCORDING TO US, WHEN THE LEARNED CIT, AFTER TH E PERUSAL OF THE ASSESSMENT RECORDS AND THE ASSESSMENT ORDER, ARRIVE D AT A FINDING THAT THE CLAIM WAS ALLOWED IN A PER FUNCTIONARY MAN NER OR IN A MECHANICAL MANNER, THEN IT IS WITHIN HIS POWERS TO INVOKE THE PROVISIONS OF SECTION 263 OF THE IT ACT. THE LEARN ED CIT COULD ALSO INVOKE THE REVISIONARY POWERS IF HE HAS FOUND THAT WITHOUT PROBING INTO THE MATTER THE AO HAS ALLOWED A CLAIM OR ACCEP TED THE RETURNED INCOME. AN ASSESSMENT ORDER CAN BE ERRONEOUS EITHER IN LAW OR IN FACT. AN ASSESSMENT ORDER CAN BE AN ERRONEOUS ONE W HEN PRIMA FACIE A CLAIM IS ALLOWED WHICH ACCORDING TO THE LEARNED C IT WAS AGAINST THE PROVISIONS OF LAW. AN ASSESSMENT ORDER CAN BE HELD AS PREJUDICIAL TO THE INTEREST OF THE REVENUE IF IN THE OPINION OF TH E LEARNED CIT THE INQUIRY WAS NOT ADEQUATE OR NO INQUIRY AT ALL HAS B EEN MADE. WE MAY LIKE TO MENTION THAT THE AO IS NOT ONLY AN ADJUDICA TOR BUT ALSO AN INVESTIGATOR. THE AO CANNOT REMAIN A PASSIVE SPECTA TOR WHILE DEALING WITH A RETURN OF INCOME FILED BY THE TAX PAYER. IF, ON THE FACE OF THE RETURN IT IS APPARENT THAT AN INQUIRY IS REQUIRED, THEN IT IS EXPECTED FROM THE AO TO CONDUCT AN INVESTIGATION SO AS TO AS CERTAIN CORRECTNESS OF THE RETURN FILED AS ALSO THE INCOME DECLARED THEREIN. IT IS HIS DUTY TO ASCERTAIN THE TRUTH OF THE FACTS STA TED IN THE RETURN. WHERE THE CIRCUMSTANCES INDICATE TO PROVOKE AN INQU IRY, THEN THE SAME SHOULD NOT BE WITHHOLD. IN A LANDMARK DECISION IN THE CASE OF G. V. ENTERPRISES, 99 ITR 375, THE HONBLE DELHI HIGH COURT HAS HELD THAT INADEQUACY OF INQUIRY IS A GOOD REASON FOR INVOKIN G THE PROCEEDINGS U/S 263 OF THE ACT. IN ANY CASE, WE ARE NOT CONFINING OUR DECISION ENTIRELY ON THE ISSUE OF LACK OF INQU IRY OR INADEQUATE INQUIRY. FROM THE SIDE OF THE ASSESSEE THE LEARNED AR, MR. TUSHAR P. ITA NO.1343/AHD/2011 M/S. SONALANK INVESTMENT & TRADING PVT. LTD. VS CIT -I, AHMEDABAD 9 HIMANI HAS ARGUED THAT THIS IS NOT THE CASE OF LACK OF INQUIRY BY A.O. AND THAT IF THE AO HAD MADE INADEQUATE INQUIRY THEN THAT SHOULD NOT BE A GROUND TO APPLYING THE PROVISIONS OF SECTION 2 63 OF THE IT ACT. NEVERTHELESS, WE ARE ON THE ISSUE THAT NO INQUIRY A T ALL HAS BEEN MADE BY THE AO IN RESPECT OF THE DETERMINATION OF T HE NATURE OF THE TRANSACTION. THE LAW IS VERY CLEAR THAT THE AO HAS QUASI-JUDICIAL POWERS VESTED ON HIM. BY EXERCISING THOSE POWERS IT IS NECESSITATED TO PASS A REASONED ORDER. IF THE REASONING IS LACKI NG IN AN ASSESSMENT ORDER, THEN ALSO THE LEARNED CIT CAN INV OKE THE REVISIONARY POWERS. THERE MUST BE SOME PRIMA FACIE MATERIALS ON RECORD TO SHOW THAT THE TAX WHICH WAS OFFERED BY TH E ASSESSEE WAS LAWFULLY EXCISABLE ON THE ASSESSEE AND, THEREFORE, IT WAS ACCEPTED BY THE AO WITHOUT ANY CHANGE OR ALTERATION. ON THE OTH ER HAND, THE FREQUENCY OF TRANSACTIONS IN SHARE DEALING WAS THE BASIC REASON FOR CREATION OF DOUBT IN THE MIND OF THE LEARNED CIT. R ATHER, WE HAVE ALSO MADE A COMMENT DURING THE COURSE OF HEARING WHILE PERUSING THE BALANCE SHEET OF THE ASSESSEE PLACED ON PAGE 30 OF THE PAPER BOOK DRAWN AS ON 31-03-2006 THAT THOUGH THE HOLDINGS WER E UNDER THE HEAD INVESTMENT BUT THAT FACT SHOULD ALSO NOT BE IGNORED THAT THE SHARE CAPITAL OF THE ASSESSEE WAS ONLY RS.1,00,000/ - AND THE INVESTMENT WAS RS.3,90,360/- AND THE UNSECURED LOAN S WERE VERY HIGH. RATHER, AS PER THE BALANCE SHEET DRAWN AS ON 31-03-2005 IT HAS BEEN DEMONSTRATED THAT FOR THE INVESTMENT OF RS .4,97,53,711/- THE UNSECURED LOANS WERE TO THE TUNE OF RS.7,09,48 ,204/- AND THE SHARE CAPITAL WAS ONLY RS.1,00,000/-. ON ACCOUNT OF THOSE FACTS, SINCE IN VIEW OF THE FACT THAT THE HONBLE COURTS H AVE OPINED THAT WHERE THE ASSESSEE IS RAISING FUNDS ON INTEREST TO MAKE INVESTMENT IN ITA NO.1343/AHD/2011 M/S. SONALANK INVESTMENT & TRADING PVT. LTD. VS CIT -I, AHMEDABAD 10 SHARES THEN ALSO THE DEALING IN SHARES IS BUSINESS TRANSACTION. BECAUSE OF THESE REASONS WE ARE OF THE CONSIDERED V IEW THAT THE DECISION OF THE HONBLE DELHI HIGH COURT PRONOUNCED IN THE CASE OF SUNBEAM AUTO LTD. (SUPRA) AS RELIED UPON BY THE ASS ESSEE IS ON DIFFERENT FACTS AND, THEREFORE, IT WOULD NOT APPLY ON THE FACTS OF THIS APPEAL. RATHER, THE DECISION IN THE CASE OF GOPAL P UROHIT (SUPRA) AS PRONOUNCED BY THE HONBLE BOMBAY HIGH COURT HAS GIV EN CERTAIN GUIDELINES TO DETERMINE AS TO WHETHER SHARE TRANSAC TION CAN FALL IN THE CATEGORY OF SHORT TERM CAPITAL GAIN OR LONG TERM CAPITAL GAIN. IN THE LIGHT OF THE DISCUSSIONS MADE HEREINABOVE, WE, THEREFORE, CONCLUDE THAT THE LEARNED CIT HAS RIGHTLY INVOKED H IS REVISIONARY POWERS AND JUDICIOUSLY PASSED THE ORDER U/S 263 OF THE IT ACT. WE HEREBY UPHOLD THE ORDER. 7. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS DIS MISSED. ORDER PRONOUNCED IN THE OPEN COURT. SD/- SD/- (G. D. AGARWAL) VICE PRESIDENT (MUKUL KUMAR SHRAWAT) JUDICIAL MEMBER PRONOUNCED SD/- SD/- (A.M.) (J.M.) AKG MKS 3.2.12 LAKSHMIKANT/- COPY OF THE ORDER FORWARDED TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT CONCERNED 4. THE CIT(A) CONCERNED 5. THE DR, ITAT, AHMEDABAD 6. GUARD FILE BY ORDER //TRUE COPY// D Y. REGISTRAR, ITAT, AHMEDABAD