ITO WD 19(3)(4), MUMBAI V. VED MITTER N PURI, MUMBAI

ITA 1504/MUM/2012

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 88043 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 10 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-01-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: F
• Next Hearing Date: 26-11-2013
• Assessment Year: 2006-2007
• Appeal Filed On: 05-03-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: JEETENDRA KUMAR
• Assessee Lawyers: K SHIVARAM
• Keywords: Business income; Rule of consistency
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCH F , MUMBAI BEFORE SHRI D. KARUNAKARA RAO , ACCOUNTANT MEMBER AND SHRI SANJAY GARG , JUDICIAL MEMBER ITA NO. 1504 /M/201 2 ASSESSMENT YEAR: 200 6 - 0 7 ITO, WARD 19(3)(4), 3 RD FLOOR, PIRAMAL CHAMBERS, R. NO. 304, LALBAUG, MUMBAI 400 012 VS. SHRI VED MITTER N. PURI, 111, GALAXI APT. B.J. ROAD, BANDRA (W), MUMBAI 400 050 PAN: AABPP4224G (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI K. SHIVARAM, A.R. & NEELAM JADHAV , A.R. REVENUE BY : SHRI JEETENDRA KUMAR , D.R. DATE OF HEARING : 30.12. 201 4 DATE OF PRONOUNCEMENT : 14. 0 1.2015 O R D E R PER SANJAY GARG, JUDICIAL MEMBER: THE PRESENT APPEAL HAS BEEN PREFERRED BY THE REVENUE AGAINST THE ORDER DATED 15.12.2 011 OF THE COMMISSIONER OF INCOME TAX (APPEALS) [(HEREINAFTER REFERRED TO AS CIT(A)] RELEVANT TO ASSESSMENT YEAR 2006 - 07 . 2. THE SOLE ISSUE RAISED BY THE REVENUE THROUGH ITS GROUNDS OF APPEAL IS AGAINST THE ACTION OF THE L D. CIT(A) IN DIRECTING THE AO T O ACCEPT THE CLAIM OF THE ASSESSEE ON PROFITS ARRIVING FROM PURCHASE AND SALE OF SHARES AS LONG TERM CAPITAL GAINS INSTEAD OF BUSINESS INCOME TREATED BY THE A SSESSING OFFICER (HEREINAFTER REFERRED TO AS THE AO). 3. THE BRIEF FACTS OF THE CASE ARE THA T THE ASSESSEE HAD SHOWN LONG TERM CAPITAL GAINS AT RS.19,85,376/ - IN HIS CAPITAL ACCOUNT WHICH HAD BEEN CLAIMED ITA NO.1504/M/2012 SHRI VED MITTER N. PURI 2 AS EXEMPT FROM TAX UNDER SECTION 10(38) OF THE INCOME TAX ACT. THE ASSESSEE HAD ALSO SHOWN INCOME FROM SHARE TRADING AT RS.12,24,202/ - . THE A O OBSERVED THAT THE ASSESSEE WAS NOT M AINTAINING ANY BALANCE SHEET IN SPITE OF THE FACT THAT THE ASSESSEE WAS LIABLE TO GET HIS BOOKS OF ACCOUNTS AUDITED. THOUGH THE ASSESSEE HAD CLAIMED THAT HE WAS MAINTAINING TWO TYPES OF PORTFOLIOS I.E. TRADING INVESTM ENT, HOWEVER, THERE WAS NOTHING ON RECORD TO SHOW THAT THE ASSESSEE WAS MAINTAINING SUCH SEPARATE PORTFOLIOS FOR SHARES KEPT AS STOCK IN TRADE AND SHARES HE L D AS INVESTMENT. THE AO, TAKING INTO CONSIDERATION THE VOLUMINOUS MAGNITUDE OF TRANSACTIONS, TREAT ED INCOME OF RS. 19,85,376/ - AS BUSINESS INCOME AGAINST THE ASSESSEES CLAIM OF SAME BEING LONG TERM CAPITAL GAINS. AGGRIEVED BY THE ORDER OF THE AO, THE ASSESSEE FILED APPEAL BEFORE THE LD. CIT(A). 4. BEFORE THE LD. CIT(A), THE ASSESSEE SUBMITTED THE V ARIOUS DETAILS OF THE TRANSACTIONS AND SHOWED THAT DURING THE YEAR UNDER CONSIDERATION THE ASSESSEE HAD EARNED ONLY LONG TERM CAPITAL GAINS I N INVESTMENT ACCOUNT. ALL THE SHARES HELD IN INVESTMENT ACCOUNT DURING THE YEAR WERE HAVING HOLDING PERIOD OF MORE THAN 12 MONTHS AND IN MANY CASES EVEN MORE THAN 2 TO 3 YEARS. IT WAS FURTHER SUBMITTED THAT ALL THE FIGURES/DETAILS FOR PREPARATION OF A BALANCE SHEET WERE VERY MUCH AVAILABLE ON THE RECORD. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, WHEN THE AO HAD A SKED TO FILE A BALANCE SHEET, THE BALANCE SHEET NOT ONLY FOR THE YEAR UNDER CONSIDERATION BUT EVEN FOR EARLIER YEARS, W AS FILED BY THE ASSESSEE. FROM THE LAST SO MANY YEARS THE ASSESSEE HAD BEEN FILING SEPARATE STATEMENTS GIVING COMPLETE DETAILS A S SHARES HELD BY HIM IN INVESTMENT ACCOUNT AND TRADING ACCOUNT ON THE BASIS OF WHICH THE CLAIM OF THE ASSESSEE HAD BEEN CONSISTENTLY ACCEPTED BY THE DEPARTMENT IN THE EARLIER ASSESSMENT YEARS AND EVEN IN SCRUTINY ASSESSMENT ORDER PASSED UNDER SECTION 143(3) FOR AS SESSMENT YEARS 2002 - 03, 2003 - 04 & 2004 - 05. ITA NO.1504/M/2012 SHRI VED MITTER N. PURI 3 5. EVEN THE CLAIM OF THE ASSESSEE HAS BEEN ACCEPTED FOR SUBSEQUENT ASSESSMENT YEARS I.E. A.Y. 2007 - 08 AND A.Y. 2008 - 09 ALSO. IT HAD ALSO BEEN SUBMITTED THAT THE ASSESSEE HAD BEEN EARNING SUBSTANTIAL INCOME BY WAY OF DIVIDEND AND EVEN IN THE YEAR UNDER CONSIDERATION THE ASSESSEE HAD EARNED DIVIDEND OF RS. 12,2 3 ,755/ - . IT HAD BEEN FURTHER SUBMITTED THAT THE ASSESSEES BOOKS OF ACCOUNT WERE DULY AUDITED IN THE EARLIER YEARS AND THE ASSESSEE HAD FILED THE AUDIT REP ORTS ALONG WITH RETURN. AFTER CONSIDERING THE SUBMISSIONS OF THE LD. REPRESENTATIVES OF THE ASSESSEE, THE LD. CIT(A) HELD THAT IN THE ASSESSEES OWN CASE IN EARLIER YEARS , UNDER SIMILAR FACTS AND CIRCUMSTANCES , THE ASSESSEE S CLAIM OF EARNING OF CAPITAL G AIN ON TRANSFER OF SHARES HAD BEEN ACCEPTED. THE FACTS AND CIRCUMSTANCES OF THE CASE BEING SIMILAR IN NATURE, HE RELYING UPON THE DECISION OF HONBLE JURISDICTIONAL BOMBAY HIGH COURT IN THE CASE OF CIT VS. GOPAL PUROHIT [2011] 336 ITR 287 (BOM.) AND THE REBY FOLLOWING THE PRINCIPLE OF CONSISTENCY, HELD THE CLAIM OF THE ASSESSEE OF LONG TERM CAPITAL GAINS AS CORRECT. THE REVENUE IS THUS IN APPEAL BEFORE US. 6. WE HAVE CONSIDERED THE RIVAL CONTENTIONS. THE LD. A.R. OF THE ASSESSEE HAS FURNISHED BEFOR E US A STATEMENT GIVING COMPARATIVE ANALYSIS OF THE RELEVANT FACTS TO SHOW THAT THE MATERIAL FACTS RELEVANT TO THE ISSUE UNDER CONSIDERATION FOR EARLIER ASSESSMENT YEARS WERE ALMOST SIMILAR WITH THAT OF ASSESSMENT YEAR UNDER CONSIDERATION. THE CLAIM OF TH E ASSESSEE IN THE EARLIER ASSESSMENT YEARS HAD CONSISTENTLY BEEN ACCEPTED BY THE DEPARTMENT AS CORRECT. THE LD. D.R. COULD NOT BRING OUT AS TO HOW THE ISSUE UNDER CONSIDERATION FOR THIS YEAR CAN BE DIFFERENTIATED FROM THAT OF EARLIER YEARS. 7 . THOUGH THE PRINCIPLE OF RESJUDICATA IS NOT APPLICABLE IN INCOME TAX PROCEEDINGS BUT THE PRINCIPLE OF CONSISTENCY REQUIRES THAT THE VIEW TAKEN IN ONE YEAR SHOULD BE FOLLOWED IN SUBSEQUENT YEARS UNLESS THE FACTS OR THE LEGAL POSITION JUSTIFY DEPARTURE THERE FROM ; R ELIANCE CAN BE PLACED ON THE RECENT ITA NO.1504/M/2012 SHRI VED MITTER N. PURI 4 AUTHORITIES OF THE HONBLE BOMBAY HIGH COURT IN CIT VS. DARIUS PANDOLE [(2011) 330 ITR 485 (BOM.)] AND IN CIT VS. GOPAL PUROHIT (2011) 336 ITR 287 (BOM). THIS ISSUE IS ACCORDINGLY DECIDED IN FAVOUR OF THE ASSESSEE AND A GAINST THE R EVENUE. 8. IN VIEW OF THIS, WE DO NOT FIND ANY MERIT IN THE APPEAL OF THE REVENUE AND THE SAME IS ACCORDINGLY DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 14.01. 201 5 . SD/ - SD/ - (D. KARUNAKARA RAO ) (SANJAY GARG) ACCOUNTANT M EMBER JUDICIAL MEMBER MUMBAI, DATED: 14.01. 2015. * KISHORE , SR. P.S. COPY TO: THE APPELLANT THE RESPONDENT THE CIT, CONCERNED, MUMBAI THE CIT ( A) CONCERNED , MUMBAI THE DR CONCERNED BENCH //TRUE COPY// [ BY OR DER DY/ASSTT. REGIS TRAR, ITAT, MUMBAI.