Prem Lata Nangalia, Kolkata V. ACIT, Central Circle - XVIII, Kolkata, Kolkata

ITA 1584/KOL/2010

• Counselvise Citation: 158423514 RSA 2010
• Duration Of Justice: 10 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-06-2011
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 27-05-2011
• Assessment Year: 2006-2007
• Appeal Filed On: 09-08-2010
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: UJJAL KUMAR
• Assessee Lawyers: K M ROY
• Keywords: Search and seizure; Period of limitation; Speculation loss; Speculative transactions
• Section: 148; 132; 28; 143(3); 153A; 234B; 43(5); 139(1)

Judgement Text

, , , IN THE INCOME TAX APPELLATE TRIBUNAL : B BENCH : KOLKATA ( ) . . , . .. . . .. . !' !' !' !' , ,, , $ $ $ $ ,) [BEFORE HONBLE SRI B.R. MITTAL, J.M. & HONBLE SRI S.V. MEHROTRA, A.M.] % % % % / I.T.A NOS. 1749, 1579, 1580, 1581, 1582, 1583 & 1584/KOL/2010 &' &' &' &' () () () () /ASSESSMENT YEARS : 2007-2008, 2001-2002 TO 2006-20 07 PREM LATA NANGALIA, KOLKATA -VS. - ASSISTANT COMMISSIONER OF INCOME TAX, (PAN : AEHPN 2506 H) CENTRAL CIRCLE-XVIII, KOLKATA ( *+ *+ *+ *+ /APPELLANT) ( ,-*+ ,-*+ ,-*+ ,-*+ /RESPONDENT) FOR THE ASSESSEE : SHRI K.M. ROY, A.R. FOR THE DEPARTMENT : SHRI UJJAL KUMAR, CIT, D.R. . . . . / ORDER PER SHRI B. R. MITTAL, JUDICIAL MEMBER/ . . , : THE ASSESSEE HAS FILED THESE APPEALS AGAINST SEPAR ATE ORDERS OF LD. COMMISSIONER OF INCOME-TAX (APPEALS), CENTRAL-II, KOLKATA ALL DATED 11.05.2010 RELATING TO ASSESSMENT YEARS 2001-02 TO 2006-07 AND ASSESSMENT YEAR 2007-08 AGAI NST ORDER OF LD. CIT(APPEALS), CENTRAL-II, KOLKATA DATED 30.06.2010 ON COMMON GROUNDS, WHICH A RE AS UNDER :- (1) THAT THE LEARNED CIT(APPEALS) ERRED IN LAW IN H OLDING THAT THE ASSESSMENT ORDER IS NOT BARRED BY LIMITATION ON A M ISTAKEN NOTION THAT SEARCH WAS CONTINUED ON 17.04.2007 WHERE IN FACT ON SUCH DATE THE PROHIBITORY ORDER WAS REVOKED AND ACCORDINGLY ASSES SMENT SHOULD HAVE BEEN COMPLETED WITHIN 31.12.2008. (2) THAT THE LOWER AUTHORITY HAS ERRED IN LAW IN CO NSIDERING INCOME FROM NON-DELIVERY BASED TRANSACTION AS SPECULATIVE IN NA TURE WHERE THE INCOME OF THE ASSESSEE ESTABLISHED IN THE STATUS OF AN INV ESTOR AND NOT AS TRADER AND THEREFORE SUCH INCOME CANNOT FORM PART OF SPECU LATIVE BUSINESS AND FURTHER SUCH TRANSACTIONS WERE ALSO ENTERED TO GUAR D AGAINST LOSS IN HOLDINGS THROUGH PRICE FLUCTUATIONS. (3) THAT WITHOUT PREJUDICE TO THE ABOVE GROUND THE LOWER AUTHORITY HAS ERRED IN NOT ALLOWING REBATE UNDER SECTION 88E WHEN NECESSARY PROOF OF PAYMENT OF SECURITY TRANSACTION TAX WAS PROVED BEFO RE THEM. ITA NOS. 1749, 1579-1584/KOL./2010 2 (4) THAT THE CALCULATION OF INTEREST UNDER SECTION 234A & 234B IS BAD IN LAW SINCE DUE DATE SHALL BE RECKONED FROM THE DUE D ATE OF SUBMISSION OF RETURN UNDER SECTION 153A AND NOT FROM THE DUE DATE UNDER SECTION 139(1) SINCE THE ASSESSEE WAS PREVENTED FROM FURNISHING TH E RETURN UNDER SECTION 153A. 2. SINCE FACTS AND ISSUES RAISED IN ALL THESE APPEA LS ARE SAME, WE HEARD THESE APPEALS TOGETHER AND DISPOSE OF THE SAME BY A COMMON ORDER. 3. AT THE TIME OF HEARING, LD. AUTHORIZED REPRESENT ATIVE OF THE ASSESSEE SUBMITTED THAT GROUND NO. 3 IN ALL THE APPEALS ARE NOT PRESSED FOR . HENCE, GROUND NO. 3 IN ALL THE APPEALS UNDER CONSIDERATION IS REJECTED. 4. IN RESPECT OF GROUND NO. 1 IN ALL THE APPEALS, R ELEVANT FACTS ARE THAT THERE WAS A SEARCH AND SEIZURE OPERATION UNDER SECTION 132 OF THE INCO ME TAX ACT CARRIED OUT ON NANGALIA HYDROCARBON GROUP OF CASES AT THE RESIDENTIAL AND O FFICE PREMISES ON 28.03.2007 AND ON SUBSEQUENT DATES. IT IS RELEVANT TO STATE THAT PANC HNAMA WAS PREPARED IN RESPECT OF SEARCH CARRIED ON 28.03.2007 AND A COPY IS PLACED AT PAGES 3 TO 6 OF THE PAPER BOOK. FURTHER, THERE IS A PANCHNAMA AT PAGES 7 TO 8 OF THE PAPER BOOK DATED 1 7.04.2007 IN RESPECT OF SEARCH CARRIED AT LOCKER NO. 34, UCO BANK, BELVEDERE ROAD, ALIPORE RO AD BRANCH, KOLKATA-27. IT WAS STATED THAT THE SAID LOCKER WAS IN THE JOINT NAME OF SRI M AHESH KUMAR NANGALIA AND SMT. PREMLATA NANGALIA. PURSUANT TO THE ABOVE PANCHNAMA DATED 17. 04.2007, ASSESSING OFFICER ISSUED NOTICE UNDER SECTION 153A OF THE ACT DATED 07.10.2009 TO F ILE THE RETURNS IN RESPECT OF EACH ASSESSMENT YEAR FALLING WITHIN SIX ASSESSMENT YEARS PRECEDING THE ASSESSMENT YEAR RELEVANT TO THE PREVIOUS YEAR IN WHICH THE SEARCH WAS CONDUCTED. ACCORDINGLY , THE ASSESSEE FILED RETURNS FOR ASSESSMENT YEARS UNDER CONSIDERATION SHOWING INCOME AS UNDER : - ASSESSMENT YEAR INCOME SHOWN 2001-2002 RS. 1,32,967/- 2002-2003 RS. 2,526/- 2003-2004 RS. 2,44,634/- 2004-2005 RS. 2,09,654/- 2005-2006 RS. 2,97,172/- 2006-2007 RS.10,65,846/- ITA NOS. 1749, 1579-1584/KOL./2010 3 THE ASSESSING OFFICER COMPLETED THE ASSESSMENT FOR ASSESSMENT YEARS 2001-02 TO 2006-07 UNDER SECTION 153A/ 143(3) OF THE ACT VIDE ORDER (S ) DATED 31.12.2009 AND ASSESSED THE INCOME OF THE ASSESSEE AT RS.1,81,400/- FOR ASSESSMENT YEA R 2001-02, RS.99,250/- FOR ASSESSMENT YEAR 2002-03, RS.2,62,310/- FOR ASSESSMENT YEAR 2003-04, RS.2,09,650/- FOR ASSESSMENT YEAR 2004- 05, I.E. THE SAME INCOME AS PER RETURN, RS.2,97,17 0/- FOR ASSESSMENT YEAR 2005-06; SAME INCOME AS RETURNED BY THE ASSESSEE AND OF RS.10,65 ,850/- FOR ASSESSMENT YEAR 2006-07; SAME INCOME AS RETURNED BY THE ASSESSEE. 5. IN RESPECT OF ALL THE ABOVE ASSESSMENT YEARS, TH E ASSESSEE HAD DISCLOSED INCOME ON ACCOUNT OF SHORT-TERM CAPITAL GAIN AND/OR SPECULATI ON PROFIT/ LOSS IN RESPECT OF SHARE TRANSACTIONS. ASSESSING OFFICER WHILE COMPUTING THE INCOMES FOR THE ABOVE ASSESSMENT YEARS, VIZ. ASSESSMENT YEARS 2001-2002 TO 2006-2007 DID NO T SET OFF THE SPECULATION LOSS AGAINST SHORT- TERM CAPITAL GAIN AS CLAIMED BY THE ASSESSEE FOR AS SESSMENT YEARS 2001-02 AND 2002-03. FURTHER, A SPECULATION GAIN SHOWN BY THE ASSESSEE F ROM ASSESSMENT YEARS 2003-04 TO 2006-07 HAS BEEN CONSIDERED BY ASSESSING OFFICER AS BUSINES S INCOME. IT IS ALSO RELEVANT TO STATE THAT THIS SPECULATION LOSS AS CLAIMED BY THE ASSESSEE IN ASSESSMENT YEARS 2001-02 AND 2002-03 HAS TO BE ASSESSED UNDER THE HEAD INCOME FROM BUSINESS AND PROFESSION. 6. IN RESPECT OF ASSESSMENT YEAR 2007-08, IT IS OBS ERVED THAT ASSESSING OFFICER ISSUED NOTICE UNDER SECTION 148 OF THE ACT DATED 04.11.200 9 AND PURSUANT THERETO FILED RETURN ON 17.12.2009 SHOWING INCOME OF RS.3,69,477/- FROM SPE CULATION PROFIT AND SHORT-TERM CAPITAL GAIN AS ALSO INCOME FROM OTHER SOURCES. ASSESSING O FFICER ASSESSED THE INCOME AS PER RETURN I.E. AT RS.3,69,480/-. 7. IT IS RELEVANT TO STATE THAT THE ASSESSEE DID NO T FILE THE RETURN IN RESPECT OF ANY OF THE ASSESSMENT YEARS UNDER CONSIDERATION UNDER SECTION 139(1) OF THE ACT. 8. THE ASSESSING OFFICER WHILE CONSIDERING THE SPEC ULATION LOSS/ SPECULATION PROFIT SHOWN BY THE ASSESSEE IN RESPECT OF SHARE TRANSACTIONS, C ONSIDERED THE SAID LOSS/ INCOME AS INCOME ASSESSABLE UNDER THE HEAD INCOME FROM BUSINESS AND PROFESSION ON THE GROUND THAT THERE WAS NO DELIVERY OF SHARES TAKEN BY THE ASSESSEE AND THE PURCHASES AND SALES TRANSACTIONS HAD TAKEN ITA NOS. 1749, 1579-1584/KOL./2010 4 PLACE ON THE SAME DATE. THAT THE ASSESSEE SQUARED O FF THE TRANSACTIONS ONLY BY MAKING THE DIFFERENCE IN RESPECT THEREOF. 9. THE ASSESSEE FILED APPEAL BEFORE LD. CIT(APPEALS ) MAINLY DISPUTING THE FACTS THAT THE ASSESSMENT ORDERS PASSED BY THE ASSESSING OFFICER A RE BARRED BY LIMITATION AS THE SEARCH HAD TAKEN PLACE ON 28.03.2007 AND, THEREFORE, ASSESSMEN T ORDERS COULD BE PASSED ON OR BEFORE 31.12.2008, I.E. WITHIN A PERIOD OF 21 MONTHS FROM THE END OF THE FINANCIAL YEAR IN WHICH LAST OF THE AUTHORIZATION FOR SEARCH UNDER SECTION 132 WAS EXECUTED. HE SUBMITTED THAT THE LOCKER WAS SEARCHED ON 28.03.2007 AND SEARCH OF THE LOCKER ON 17.04.2007 WAS MADE ONLY TO PROLONG THE SEARCH TO GAIN MORE TIME FOR COMPLETING THE ASSESSM ENT. HE SUBMITTED THAT NO ARTICLE WAS SEIZED FROM THE LOCKER ON 17.04.2007. HE SUBMITTED THAT TH E ASSESSMENT ORDERS ARE BARRED BY LIMITATION. 10. LD. AR PLACED RELIANCE ON THE DECISION OF THE HONBLE DELHI HIGH COURT IN THE CASE OF CIT VS.- D.D. AXLES PVT. LTD. IN ITA NO. 1652 OF 2 006 DATED 09.04.2010 AND SUBMITTED THAT THE HONBLE DELHI HIGH COURT AFTER CONSIDERING ITS EARLIER DECISION IN THE CASE OF CIT VS.- S.K. KATIYAL [308 ITR 168] HELD THAT THE ASSESSMENT ORDE R WAS BARRED BY LIMITATION. HE SUBMITTED THAT IN THE SAID CASE, THE SEARCH HAD TAKEN PLACE O N 29.08.1996. A PANCHNAMA WAS DRAWN ON 29.08.1996 WHEN BOOKS OF ACCOUNTS AND OTHER DOCUMEN TS WERE SEIZED. ON THAT DATE, A RESTRAINT ORDER WAS PASSED AND THE SAID RESTRAINT ORDER WAS E XTENDED TILL 18.11.1996. ON 18.11.1996, A PANCHNAMA WAS DRAWN AND NOTHING FURTHER WAS SEIZED FROM THE PREMISES OF THE ASSESSEE. IN THE SAID CASE, THE HONBLE DELHI HIGH COURT HELD THAT W HEN THE REVENUE HAD DONE NOTHING TANGIBLE ON 18.10.1996 AND 18.11.1996 TO DEMONSTRATE THAT TH E SEARCH WAS STILL IN PROGRESS, THE ASSESSMENT MADE ON 28.11.1997 WAS BARRED BY LIMITAT ION. LD. AR SUBMITTED THAT IN THE CASE OF THE ASSESSEE THE LOCKER WAS SEALED ON 28.03.2007 AN D ON 17.04.2007 IT WAS RE-OPENED AND NOTHING WAS FOUND. HENCE, THE PERIOD OF LIMITATION SHOULD BE CONSIDERED FOR COMPLETING THE ASSESSMENT FROM 28.03.2007 AND ACCORDINGLY, THE ASS ESSMENT SHOULD HAVE BEEN COMPLETED ON OR BEFORE 31.12.2008. LD. AR SUBMITTED THAT THE IMP UGNED ASSESSMENT ORDERS ARE BARRED BY LIMITATION. 11. ON THE OTHER HAND, LD. DR SUPPORTED THE ORDER O F LD. CIT(APPEALS). HE REFERRED PAGES 7 & 8 OF THE PAPER BOOK, WHICH IS A COPY OF PANCHNAMA PREPARED ON 17.04.2007 IN RESPECT OF ITA NOS. 1749, 1579-1584/KOL./2010 5 LOCKER NO. 34 OF UCO BANK AND SUBMITTED THAT THE SA ID PANCHNAMA WAS PREPARED IN THE NAME OF ASSESSEE AND NO PRIOR PANCHNAMA WAS PREPARED IN HER NAME. HE SUBMITTED THAT PRIOR TO 17.04.2007, THERE WAS NO PANCHNAMA IN THE NAME OF T HE ASSESSEE AND HENCE, THE QUESTION OF FRAMING OF ASSESSMENT UNDER SECTION 153A DOES NOT A RISE. HE SUBMITTED THAT THE FIRST PANCHNAMA WAS PREPARED IN THE NAME OF THE ASSESSEE ON 17.04.2007 AND HENCE IRRESPECTIVE OF THE FACT THAT NO FURTHER ITEM WAS SEIZED AND/OR FOU ND FROM THE SAID LOCKER ON THAT DATE, IT CANNOT BE SAID THAT THERE WAS ONLY AN INTENTION TO EXTEND TIME TO FRAME ASSESSMENT ORDER. LD. DR SUBMITTED THAT THE ASSESSMENT ORDERS DATED 31.12.20 09 HAVE BEEN PASSED WITHIN THE PERIOD OF LIMITATION AS PER SECTION 153B(1) OF THE ACT. 12. WE HAVE CAREFULLY CONSIDERED THE SUBMISSIONS OF LD. REPRESENTATIVES OF THE PARTIES AND THE ORDERS OF AUTHORITIES BELOW. 13. WE HAVE ALSO GONE THROUGH THE IMPUGNED ORDER OF HONBLE DELHI HIGH COURT DATED 09.04.2010 AND ALSO ITS EARLIER ORDER IN THE CASE O F S.K. KATIYAL (SUPRA) ON WHICH THE ASSESSEE ALSO PLACED RELIANCE. 14. WE OBSERVE THAT THERE WAS A SEARCH ON 28.03.200 7 ON NANGALIA HYDROCARBON GROUP OF CASES AND A PANCHNAMA WAS PREPARED IN THE NAME OF S HRI MAHESH KUMAR NANGALIA, COPY PLACED AT PAGES 3 TO 6 OF THE PAPER BOOK. THERE IS NO PANC HNAMA IN THE NAME OF ASSESSEE ON 28.03.2007. IT IS OBSERVED THAT THERE WAS A SEARCH WARRANT IN RESPECT OF LOCKER NO. 34 OF UCO BANK, BELVEDERE BRANCH, ALIPORE, KOLKATA. IT IS OBS ERVED THAT THE SAID LOCKER WAS IN THE JOINT NAME OF ASSESSEE AND HER HUSBAND SHRI MAHESH KUMAR NANGALIA. A PANCHNAMA WAS PREPARED IN THE NAME OF ASSESSEE ON 17.04.2007, COPY PLACED AT PAGES 7 TO 8 OF THE PAPER BOOK. NOW THE QUESTION ARISES AS TO WHETHER THE PERIOD OF LIMITAT ION FOR COMPLETING THE ASSESSMENT IS TO BE CONSIDERED FROM 28.03.2007 OR 17.04.2007. SECTION 1 53B(1), AS APPLICABLE TO THE ASSESSMENT YEARS UNDER CONSIDERATION, PROVIDES THE PERIOD OF L IMITATION. IT PROVIDES INTER ALIA THAT THE ASSESSMENT UNDER SECTION 153A IS TO BE COMPLETED IN RESPECT OF EACH ASSESSMENT YEAR FALLING WITHIN SIX ASSESSMENT YEARS IMMEDIATELY PRECEDING T HE ASSESSMENT YEAR RELEVANT TO THE PREVIOUS YEAR IN WHICH SUCH SEARCH HAD TAKEN PLACE IS A PERI OD OF 21 MONTHS FROM THE END OF THE FINANCIAL YEAR IN WHICH THE LAST OF THE AUTHORIZATI ON FOR SEARCH UNDER SECTION 132 WAS EXECUTED. IN THE CASE BEFORE US, WE OBSERVE THAT ONLY PANCHNA MA IN THE NAME OF THE ASSESSEE WAS ITA NOS. 1749, 1579-1584/KOL./2010 6 PREPARED ON 17.04.2007, COPY PLACED AT PAGES 7 TO 8 OF THE PAPER BOOK AND ACCORDINGLY WE ARE OF THE CONSIDERED VIEW THAT THE SEARCH WAS CONCLUDE D IN RESPECT OF THE ASSESSEE ON 17.04.2007. HENCE, THE PERIOD OF LIMITATION AVAILABLE FOR COMPL ETING THE ASSESSMENT, ACCORDING TO US IS 31.12.2009 AND NOT 31.12.2008 AS CONTENDED BY THE A SSESSEE. WE ARE OF THE CONSIDERED VIEW THAT RELIANCE PLACED BY LD. AR ON THE DECISION OF T HE HONBLE DELHI HIGH COURT (SUPRA) IS NOT APPLICABLE TO THE FACTS OF THE CASE BEFORE US AS IN THAT CASE, IT WAS HELD ON THE BASIS OF THE FACTS THAT THE SEARCH WAS PROLONGED JUST TO GAIN TIME AND NO ACTION HAD BEEN TAKEN. HOWEVER, IN THE CASE BEFORE US, WE OBSERVE THAT ONLY PANCHNAMA WAS PREPARED IN THE NAME OF ASSESSEE AFTER EXECUTION OF SEARCH WARRANT ON THE ASSESSEE IN RESP ECT OF LOCKER NO. 34, UCO BANK. THE ASSESESE HAS NOT PRODUCED ANY MATERIAL ON RECORD TH AT THERE WAS ANY EARLIER SEARCH WARRANT IN THE NAME OF ASSESSEE, WHICH HAD BEEN EXECUTED AND/O R EARLIER PANCHNAMA WAS PREPARED IN HER NAME. CONSIDERING THE ABOVE FACTS, WE ARE OF THE CO NSIDERED VIEW THAT THERE IS A MERIT IN THE CONTENTION OF LD. DR THAT THERE WAS NO INTENTION TO EXTEND TIME ONLY JUST TO FRAME THE ASSESSMENT ORDERS WHILE THE PANCHNAMA WAS PREPARED IN THE NAME OF ASSESSEE ON 17.04.2007. HENCE, WE DO NOT FIND ANY REASON TO INTERFERE WITH THE ORDERS OF LD. CIT(APPEALS) AND CONFIRM HIS FINDING THAT THE ASSESSMENT ORDERS FOR ASSESSME NT YEARS UNDER CONSIDERATION ARE NOT BARRED BY LIMITATION. HENCE, GROUND NO. 1 IN RESPECT OF AL L THE APPEALS IS REJECTED. 15. IN RESPECT OF GROUND NO. 2 OF THE APPEALS, THE ASSESSEE HAS STATED THAT THE NON-DELIVERY BASED TRANSACTIONS HAVE ALSO BEEN ENTERED INTO IN R ESPECT OF ALL THE ASSESSMENT YEARS UNDER CONSIDERATION WITH THE PURPOSE OF INVESTMENT AND, T HEREFORE THE SAID PROFIT/ LOSS SHOULD BE CONSIDERED AS SHORT-TERM CAPITAL GAIN/ LOSS. ASSESS ING OFFICER DID NOT ACCEPT THE CONTENTION OF THE ASSESSEE AND AFTER OBSERVING THAT THE LOSS/ INC OME DERIVED BY THE ASSESSEE FROM SHARE TRANSACTIONS WITHOUT TAKING DELIVERY IS TO BE ASSES SED SEPARATELY AS SPECULATION PROFIT/ LOSS AND NOT AS SHORT-TERM CAPITAL GAIN/ LOSS. ASSESSING OFF ICER HAS ALSO OBSERVED THAT FROM THE SEIZED BOOKS AND THE CHART, THE ASSESSEE HAS MADE SHARE PU RCHASES/ SALES TRANSACTIONS EITHER ON THE SAME DATE WITHOUT TAKING DELIVERY OR SOLD SHARES ON A LATER DATE AFTER ATTRACTING DELIVERY. ASSESSING OFFICER HAS CONSIDERED THE TRANSACTIONS A S SPECULATIVE WHICH WERE SQUARE OFF WITHOUT TAKING DELIVERY AND ONLY DIFFERENCE WAS PAID/ RECEI VED. IN THE FIRST APPEAL, LD. COMMISSIONER OF INCOME-TAX (APPEALS) CONFIRMED THE ACTION OF ASSESS ING OFFICER. BEING AGGRIEVED, THE ASSESSEE FILED APPEALS BEFORE LD. CIT(APPEALS). ITA NOS. 1749, 1579-1584/KOL./2010 7 16. ON BEHALF OF ASSESSEE, IT WAS CONTENDED THAT TH E ASSESSEE IS NOT DOING ANY BUSINESS OF SHARES AND HENCE, THE PROVISIONS OF SECTION 43(5) O F THE ACT WILL NOT APPLY AS THE ASSESSEE HAS NOT CARRIED OUT HER ACTIVITIES IN A SYSTEMATIC WAY IN REGULAR MANNER. IT WAS ALSO CONTENDED THAT ASSESSING OFFICER ACCEPTED THE INCOME/ LOSS FROM DE LIVERY BASED TRANSACTIONS UNDER THE HEAD CAPITAL GAIN AND JUST BECAUSE CERTAIN TRANSACTION S WERE NOT SETTLED ON DELIVERY CANNOT IP SO FACTO LEAD TO THE CONCLUSION THAT THE ASSESEE HAS C ARRIED OUT SPECULATIVE BUSINESS. ALTERNATIVELY, THE ASSESSEE CONTENDED THAT NON-DELIVERY BASED TRAN SACTIONS COULD BE CONSIDERED UNDER THE HEAD INCOME FROM OTHER SOURCES AND ACCORDINGLY NO REST RICTION SHOULD BE IMPOSED FOR SET OFF OF SUCH LOSS OR CARRY FORWARD OF LOSS. 17. LD. CIT(APPEALS) AFTER CONSIDERING THE SUBMISSI ON OF THE ASSESSEE VIDE PARA 4 OF THE ASSESSMENT YEAR 2006-07 CONFIRMED THE TREATMENT GIV EN BY THE ASSESSING OFFICER TO TAKE THE LOSS/ PROFIT IN RESPECT OF NON-DELIVERY BASED TRANS ACTIONS AS SPECULATIVE LOSS/ PROFIT. THE RELEVANT PART OF THE ORDER OF LD. CIT(APPEALS) READS AS UNDE R :- I HAVE GONE THROUGH THE ASSESSMENT ORDER AND SUBMI SSIONS OF APPELLANT. THE CLAIM OF APPELLANT IS THAT SOME SPEC ULATIVE TRANSACTIONS IN SHARES ARE ARISING ALONG WITH NORMAL SALE AND PU RCHASE OF SHARES MEANT FOR INVESTMENT AND THEREFORE ANY INCOME / LOS S ARISING FROM SUCH SPECULATIVE TRANSACTIONS CANNOT BE TAXED UNDER THE HEAD PROFITS AND GAINS OF BUSINESS OR PROFESSION AND SHOULD AT BEST BE TAXED UNDER THE HEAD INCOME FROM OTHER SOURCES. I FIND THAT THE S ECTION 43(5) OF THE I.T. ACT DEFINES THE SPECULATIVE TRANSACTIONS WHICH NECESSARILY EMANATE OUT OF BUSINESS TRANSACTIONS CARRIED OUT TO EARN PR OFITS AND GAINS OF BUSINESS OR PROFESSION AND AS CALCULATED UNDER SECT ION 28 TO 41 OF THE I.T.ACT. THEREFORE TO HOLD CERTAIN TRANSACTIONS AS SPECULATIVE AND TO TAX THE CORRESPONDING INCOME AS SPECULATIVE PROFIT/ LOSS UNDER THE HEAD PROFITS AND GAINS OF BUSINESS OR PROFESSION IT IS NECESSARY TO HOLD THAT THESE TRANSACTIONS ARE BUSINESS TRANSACTIONS. IN DE LIVERY BASED TRANSACTIONS THE MOTIVE TO EARN PROFIT OR TO INVEST THE CAPITAL IN CERTAIN SHARES AT CERTAIN POINT OF TIME MAY BE A DEBATABLE ISSUE AND THE ONUS IS ON THE ASSESSING OFFICER TO PROVE THAT THE DELIVERY BASED TRANSACTIONS ARE ENTERED WITH A MOTIVE TO EARN PROFIT AND NOT WI TH AN INTENTION OF INVESTMENT. IN THE PRESENT CASE ASSESSING OFFICER H AS ACCEPTED THE CLAIM OF APPELLANT THAT THE DELIVERY BASED ACQUISITION AN D SALE OF SHARES IS FOR THE PURPOSE OF INVESTMENT AND THERE IS NO DISPUTE I N THIS REGARD. HOWEVER, IN SPECULATIVE TRANSACTIONS IT IS NORMALLY ASSUMED THAT SPECULATIVE TRANSACTIONS ARE ENTERED WITH A STRONG MOTIVE TO EARN PROFIT AND NOT WITH AN INTENTION TO INVEST AND THEREFORE T HE ONUS IS ON APPELLANT TO PROVE OTHERWISE, THE ARGUMENT OF APPELLANT THAT BECAUSE THE DELIVERY BASED TRANSACTIONS IN SHARES HAVE BEEN ACCEPTED AS INVESTMENT TRANSACTIONS THEREFORE THE SPECULATIVE TRANSACTIONS IN SHARES SHOULD ALSO ITA NOS. 1749, 1579-1584/KOL./2010 8 BE ACCEPTED AS TRANSACTIONS OTHER THAN BUSINESS TRA NSACTIONS, IS NOT ACCEPTABLE. THE SPECULATIVE TRANSACTIONS DO NOT REQ UIRE ANY EMPLOYMENT OF CAPITAL, THEY DO NOT RESULT IN EARNING OF ANY DI VIDEND AND MOST IMPORTANTLY ARE ENTERED WITH A MOTIVE TO EARN PROFI T UNLESS PROVED OTHERWISE. HBLE CALCUTTA HIGH COURT IN CASE OF CIT - VS.- GANGA PRASAD BIRLA (HUF). 199 ITR 173, HAVE HELD THAT EVE N AN ISOLATED TRANSACTION INVOLVING PURCHASE AND SALE OF SHARES W ITHOUT TAKING DELIVERY OF MAY AMOUNT TO SPECULATION BUSINESS IF T HE INTENTION OF HEDGING IS NOT PROVED BY THE ASSESSEE. IN PRESENT C ASE, APPELLANT HAS NOT BEEN ABLE TO PROVE THAT THESE TRANSACTIONS WERE FOR ANY INVESTMENT WHERE THE SPECULATIVE PROFIT/ LOSS IS EARNED IN INVESTMEN T ALREADY ACQUIRED AND THEN PURCHASING THE SAME BACK TO GUARD LOSS DUE TO PRICE FLUCTUATION. THEREFORE I HOLD THAT THE SPECULATIVE TRANSACTIONS CARRIED OUT BY APPELLANT ARE ENTERED WITH AN INTENTION TO EARN PRO FIT AND ARE BUSINESS TRANSACTIONS AND TAXABLE UNDER THE HEAD PROFITS AN D GAINS OF BUSINESS OR PROFESSION. NOW UNDER BUSINESS TRANSACTIONS, IF THE TRANSACTIONS ARE HEDGING TRANSACTIONS THEY MAY BE TREATED AS B USINESS TRANSACTIONS BUT MAY NOT BE SPECULATIVE TRANSACTIONS. I HAVE ALR EADY STATED THAT APPELLANT HAS NOT SUBMITTED ANY ARGUMENT AND PROOF TO SHOW THAT THESE TRANSACTIONS ARE HEDGING TRANSACTIONS. I, THEREFORE , CONFIRM THE TREATMENT GIVEN BY ASSESSING OFFICER TO TAX.AS SP ECULATIVE PROFIT.. LD. CIT(APPEALS) BY FOLLOWING HIS ABOVE ORDER CONFI RMED THE ACTION OF ASSESSING OFFICER IN RESPECT OF THE OTHER ASSESSMENT YEARS UNDER CONSIDE RATION AS WELL. HENCE, THE ASSESEE IS IN FURTHER APPEALS BEFORE THE TRIBUNAL. 18. AT THE TIME OF HEARING, LD. AR CONCEDED THAT IN RESPECT OF NON-DELIVERY SHARE TRANSACTIONS, THE ASSESSEE ONLY PAID DIFFERENCE. HO WEVER, HE CONTENDED THAT THE ASSESSEE IS NOT IN THE BUSINESS OF SHARE DEALINGS AND IS ONLY AN IN VESTOR, THEREFORE, THE LOSS/ PROFIT SHOULD BE CONSTRUED AS SPECULATIVE CAPITAL LOSS/ PROFIT AND T HE SAME SHOULD BE SET OFF ACCORDINGLY. IN SUPPORT OF HIS SUBMISSION, HE PLACED RELIANCE ON TH E DECISION OF THE HONBLE KOLKATA HIGH COURT REPORTED IN 198 TAXMAN 357. 19. ON THE OTHER HAND, LD. DR SUPPORTED THE ORDERS OF LD. CIT(APPEALS) AND SUBMITTED THAT IN RESPECT OF NON-DELIVERY SHARE TRANSACTIONS, SUCH TRANSACTIONS HAVE TO BE CONSIDERED AS SPECULATIVE TRANSACTION. HE FURTHER SUBMITTED THAT THE ASSESSEE HAS CARRIED OUT PURCHASE AND SALE OF SHARES IN RESPECT OF ALL THE ASSESSMENT YEARS UN DER CONSIDERATION. HENCE, THE ASSESSEE IS CARRYING ON THE BUSINESS IN A SYSTEMATIC WAY OF SHA RES. HE SUBMITTED THAT IT IS NOT AN ISOLATED TRANSACTION, WHERE THE ASSESESE CARRIED OUT NON-DEL IVERY SHARE TRANSACTIONS BUT THE ASSESSEE ITA NOS. 1749, 1579-1584/KOL./2010 9 ENTERED INTO NON-DELIVERY BASED SHARE TRANSACTIONS IN RESPECT OF ALL THE ASSESSMENT YEARS UNDER CONSIDERATION AND SETTLED THE SAID TRANSACTIONS ONL Y BY PAYING/ RECEIVING THE DIFFERENCE. HE SUBMITTED THAT SAID SHARE TRANSACTIONS HAVE RIGHTLY BEEN CONSIDERED AS BUSINESS TRANSACTIONS OF THE ASSESSEE AND THE PROVISIONS OF SECTION 43(5) HA VE RIGHTLY BEEN APPLIED IN REGARD THERETO. 20. WE HAVE CAREFULLY CONSIDERED THE SUBMISSIONS OF LD. REPRESENTATIVES OF THE PARTIES AND THE ORDERS OF THE AUTHORITIES BELOW. 21. ON CONSIDERATION OF THE FACTS OF THE CASE BEFOR E US, THERE IS NO DISPUTE THAT THE ASSESSEE ENTERED INTO PURCHASE AND SALE OF SHARES WITHOUT TA KING DELIVERY OF SHARES IN RESPECT OF ALL THE ASSESSMENT YEARS UNDER CONSIDERATION EXCEPT IN ASSE SSMENT YEAR 2004-05. FURTHER, WE OBSERVE THAT THE ASSESSEE DID NOT FILE RETURN ORIGINALLY IN RESPECT OF ANY OF THE ASSESSMENT YEARS UNDER CONSIDERATION. THE ASSESSEE FILED THE RETURNS ONLY PURSUANT TO NOTICE ISSUED UNDER SECTION 153A OF THE ACT FROM ASSESSMENT YEARS 2001-02 TO 2006-07 AND PURSUANT TO NOTICE ISSUED UNDER SECTION 148 OF THE ACT FOR ASSESSMENT YEAR 2007-08. THE ASSESSEE HAS DISCLOSED THE INCOME IN RESPECT OF ALL THE ASSESSMENT YEARS UNDER CONSIDERA TION BY SHOWING SHORT-TERM CAPITAL GAIN AND/OR LONG-TERM CAPITAL GAIN FROM SHARES DEALING A ND ALSO SPECULATION PROFIT/ LOSS FROM SHARES BY TREATING THE SAME AS SPECULATIVE CAPITAL LOSS/ G AIN. WE ARE OF THE CONSIDERED VIEW THAT IT IS NOT AN ISOLATED SHARE TRANSACTION ENTERED INTO BY T HE ASSESSEE IN AN ASSESSMENT YEAR FOR PURCHASE AND SALE OF SHARES. ON THE OTHER HAND, THE ASSESSEE HAS BEEN ENTERING INTO SHARE TRANSACTIONS IN A SYSTEMATIC WAY IN RESPECT OF ALL THE ASSESSMENT YEA RS UNDER CONSIDERATION. THEREFORE, WE AGREE WITH LD. CIT(APPEALS) THAT NON-DELIVERY TRANSACTION S ARE TO BE CONSIDERED AS SPECULATIVE TRANSACTION ENTERED INTO BY THE ASSESSEE WITH AN IN TENTION TO EARN PROFIT AND AS SUCH ARE TO BE ASSESSED UNDER THE HEAD PROFITS AND GAINS OF BUSIN ESS OR PROFESSION AS THE SAME ARE BUSINESS TRANSACTIONS. THEREFORE, WE DO NOT FIND ANY REASON TO INTERFERE WITH ORDERS OF LD. CIT(APPEALS). ACCORDINGLY, GROUND NO. 2 IN ALL THE APPEALS IS REJ ECTED. 22. GROUND NO. 4 IN ALL THE APPEALS RELATES TO CHAR GING OF INTEREST UNDER SECTIONS 234A & 234B OF THE ACT. AT THE TIME OF HEARING, LD. AR SUB MITTED THAT INTEREST SHOULD BE CHARGED FROM DUE DATE OF RETURN UNDER SECTION 153A ONLY. ON THE OTHER HAND, LD. DR SUBMITTED THAT NO RETURN WAS FILED AS PER SECTION 139(1) OF THE ACT AND ACCO RDINGLY, INTEREST IS TO BE CHARGED AS PER ORIGINAL DUE DATE UNDER SECTIONS 234A & 234B OF THE ACT. ITA NOS. 1749, 1579-1584/KOL./2010 10 23. LD. CIT(APPEALS) HAS RIGHTLY HELD THAT CHARGING OF INTEREST IS MANDATORY AND IS CHARGED FOR NON-PAYMENT OR LESSER PAYMENT OF ADVANCE TAX. M ERELY BECAUSE THE ASSESSEE DID NOT FILE THE RETURN ORIGINALLY AND HAS FILED THE RETURNS AFTER T HE SEARCH HAD TAKEN PLACE, THE ASSESSEE CANNOT SAID THAT THE DUE DATE BE EXTENDED ONLY WHEN THE RE TURN IS TO BE FILED PURSUANT TO NOTICE ISSUED UNDER SECTION 153A OF THE ACT AND/OR 148 OF THE ACT . WE HOLD THAT CHARGING OF INTEREST AS PER PROVISIONS OF SECTIONS 234A & 234B OF THE ACT ARE M ANDATORY AND ARE TO BE CHARGED FROM ORIGINAL DUE DATE(S) AS PER PROVISIONS OF CHAPTER-X VII OF THE ACT. HENCE, THERE IS NO REASON TO INTERFERE WITH THE ORDERS OF AUTHORITIES BELOW. ACC ORDINGLY, GROUND NO. 4 OF THE APPEALS TAKEN BY THE ASSESSEE FOR ALL THE ASSESSMENT YEARS UNDER CONSIDERATION IS REJECTED. 24. IN THE RESULT, ALL THE APPEALS OF THE ASSESSEE ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 10.06. 2011. SD/- SD/- [S.V. MEHROTRA/ . .. . . .. . !' !' !' !' , ,, , ] [ B.R. MITTAL / . . ] ACCOUNTANT MEMBER/ $ $ $ $ JUDICIAL MEMBER/ DATED : 10 / 06/ 2011 COPY OF THE ORDER FORWARDED TO: 1. SMT. PREM LATA NANGALIA, 10, BELVEDERE ROAD, FLAT-6 B, KOLKATA-27, 2 ACIT, CENTRAL CIRCLE-XVIII, KOLKATA, 18, RABINDRA S ARANI, KOLKATA-1, 3. COMMISSIONER OF INCOME-TAX (APPEALS)- , KO LKATA, 4 CIT, KOLKATA- 5 . DR, KOLKATA BENCHES, KOLKATA (TRUE COPY) BY ORDER ASSIS TANT REGISTRAR, I.T.A.T., KOLKATA LAHA, SR. P.S.