M/s. Gillette Group India Pvt. Ltd., New Delhi V. DCIT, New Delhi

ITA 1797/DEL/2012

• Counselvise Citation: 179720114 RSA 2012
• Duration Of Justice: 1 year(s) 8 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-12-2013
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Next Hearing Date: 29-10-2013
• Assessment Year: 2007-2008
• Appeal Filed On: 18-04-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: R S GILL
• Keywords: Business income; Cost of acquisition; Assessment record; Tax effect
• Section: 263

Judgement Text

ITA NO.1797/DEL/2012 1 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCHES : C : NEW DELHI BEFORE SHRI S.V. MEHROTRA, ACCOUNTANT MEMBER AND SHRI A.D. JAIN, JUDICIAL MEMBER ITA NO.1797/DEL/2012 ASSESSMENT YEAR : 2007-08 GILLETTE GROUP INDIA PVT. LTD., (NOW WELLA INDIA HAIR COSMETICS P. LTD.), C/O JAI KUMAR TEJWANI & CO., B-50, EAST OF KAILASH, NEW DELHI. PAN : AAACE5212H VS. DCIT, CIRCLE-12(1), NEW DELHI. ( APPELLANT ) ( RESPONDENT ) ASSESSEE BY : SHRI PRADEEP DINODIA, CA DEPARTMENT BY : SHRI R.S. GILL, CIT, DR ORDER PER A.D. JAIN, JUDICIAL MEMBER: THIS IS ASSESSEES APPEAL FOR ASSESSMENT YEAR 2007-08 AGAINST THE ORDER DATED 15.03.2012, PASSED BY THE CIT, DELHI-IV, NEW DELHI, TAKING THE FOLLOWING EFFECTIVE GROUNDS:- 1. THAT THE ORDER PASSED BY THE LD. CIT-IV, NEW DELHI DATED 15.03.2012 U/S 263 IS BAD IN LAW AND AGAINST THE FACTS OF THE CASE. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AN D IN LAW, THE ORDER OF THE CIT IN SETTING ASIDE THE ORDER OF THE A.O. ON THE LIMITED ISSUE OF TREATING THE GAIN ON SALE OF SHARES OF GILLETTE BANGLADESH AND ITA NO.1797/DEL/2012 2 GILLETTE SRI LANKA AS LONG-TERM CAPITAL GAINS, IS ERRO NEOUS, ILLEGAL AND AGAINST THE PROVISIONS OF LAW AND DESERVES TO BE SET A SIDE. 3. THE LD. CIT HAS FAILED TO APPRECIATE THAT THE ORDER O F THE A.O. IN TREATING THE GAIN ON SALE OF SHARES OF GILLETTE BANGLADE SH AND GILLETTE SRI LANKA HELD AS LONG-TERM INVESTMENTS LIABLE TO TAX AS LONG-TERM CAPITAL GAINS, IS NEITHER ERRONEOUS NOR PREJUDICIAL TO THE INTEREST OF THE REVENUE; AND AS SUCH, THE LEARNED CIT HAS NO VALID J URISDICTION U/S 263 TO SET ASIDE THE ORDER ON THIS ISSUE. 2. GROUND NO.1 IS GENERAL. 3. APROPOS GROUNDS 2 AND 3, THE FACTS, AS AVAILABLE FRO M THE RECORD ARE THAT THE CIT OBSERVED FROM THE ASSESSMENT RECORDS OF THE ASSESSEE FOR ASSESSMENT YEAR 2007-08, I.E., THE YEAR UNDER CONSIDERAT ION, THE ASSESSEE HAD DERIVED PROFITS ON SALE OF INVESTMENT, AMOUNTING T O ` 5,07,04,136/- AND HAD DERIVED INCOME IN THE FORM OF DIVIDENDS AND LONG -TERM CAPITAL GAIN AND SHORT-TERM CAPITAL GAIN ON SALE OF INVESTMENTS. OBSERVI NG THAT THE ACTIVITIES CARRIED ON BY THE ASSESSEE WERE TRANSACTIONS RELATED TO S HARES, THE CIT WAS OF THE OPINION THAT THESE SHARES CONSTITUTED STOCK-IN-T RADE OF THE ASSESSEE AND NOT CAPITAL INVESTMENT. IT WAS OBSERVED THAT THERE WAS NO SEPARATE HEAD FOR STOCK-IN-TRADE/INVENTORY IN THE ASSESSEES PROFIT & LOSS ACCOUNT, RATHER ALL THE SHARES HAD BEEN SHOWN AS INVESTMENT. FROM THIS, THE C IT WAS OF THE OPINION THAT THE ASSESSEES PROFIT FROM THE SALE OF STOCK OF SHARES WAS BUSINESS PROFIT AND NOT LONG-TERM CAPITAL GAIN OR SHOR T-TERM CAPITAL GAIN. THUS, OBSERVING THAT THE ASSESSEES OMISSION TO TREAT THE PR OFIT ON SALE OF INVESTMENT AS LONG-TERM CAPITAL GAIN AND SHORT-TERM C APITAL GAIN INSTEAD OF BUSINESS PROFIT, HAD RESULTED IN UNDER-ASSESSMENT OF THE ASSE SSEES INCOME BY ` 5,07,04,136/-, INVOLVING A TAX EFFECT OF ` 1,7 0,67,012/-. HENCE, CONSIDERING THE ASSESSMENT ORDER DATED 12.11.2009 TO BE ERRONEOUS AND PREJUDICIAL TO THE INTERESTS OF THE REVENUE, THE CIT SHOW CAUSED THE ASSESSEE. THE REPLY OF THE ASSESSEE WAS FORWARDED BY THE CIT TO T HE ASSESSING OFFICER. THE ASSESSING OFFICER SUBMITTED HIS REPORT THEREON. ON CO NSIDERING BOTH, THE LD. CIT, VIDE THE IMPUGNED ORDER, OBSERVED THAT IT A PPEARED THAT FOR THE YEAR UNDER CONSIDERATION, THE ASSESSING OFFICER HAD NOT CONDU CTED ANY INQUIRY TO ITA NO.1797/DEL/2012 3 ASCERTAIN AS TO WHETHER THE ASSESSEES TRANSACTIONS BY WAY OF PURCHASE OR SALES WOULD CONSTITUTE TRADING IN SHARES OR HOLDING SUC H SHARES AS INVESTMENT FOR LONG-TERM/SHORT-TERM CAPITAL GAIN. THI S, AS PER THE CIT, HAD RENDERED THE ASSESSMENT ORDER ERRONEOUS AND PREJUDICIAL TO THE INTERESTS OF THE REVENUE. ON THESE OBSERVATIONS, THE CIT DIRECTED T HE ASSESSING OFFICER TO CAUSE SUFFICIENT INQUIRIES, AND TO REFRAME THE ASSESSMENT ORDER ON THE BASIS THEREOF. 4. CHALLENGING THE IMPUGNED ORDER, THE LD. COUNSEL F OR THE ASSESSEE HAS MADE ORAL SUBMISSIONS. A WRITTEN SYNOPSIS HAS BEEN FILED A S WELL. IT HAS BEEN CONTENDED THAT THE LD. CIT HAS ERRED IN SETTING ASIDE THE ORDER OF THE ASSESSING OFFICER AND DIRECTING SUFFICIENT INQUIRIES TO BE MADE AND THERE UPON TO REFRAME THE ASSESSMENT ORDER ON THE BASIS THEREOF ; THAT WHILE DOING SO, THE LD. CIT HAS FAILED TO APPRECIATE THAT THE ASSESSI NG OFFICER HAD CORRECTLY TREATED THE GAIN ON SALE OF SHARES OF GILLET TE BANGLADESH AND GILLETTE SRI LANKA AS LONG-TERM INVESTMENTS LIABLE TO TAX AS LONG-TERM CAPITAL GAINS; THAT THE LD. CIT FAILED TO APPRECIATE THAT TH E ASSESSEE COMPANY IS AN NBFC AND ITS BUSINESS HAS REMAINED THE SAME RIGHT FROM IT S INCEPTION IN 1994; THAT THE PRINCIPAL BUSINESS AS PER THE ASSESSEES MEM ORANDUM OF ASSOCIATION IS AND HAS EVER REMAINED TO ENTER INTO JOIN T VENTURE AND ACQUIRE OR PROMOTE OTHER COMPANIES ENGAGED IN THE SAME BUSINESS AS THAT OF THE PARENT COMPANY OF THE ASSESSEE COMPANY, WHICH IS PROMOTI ON OF FMCG PRODUCTS WITH PRIMARY FOCUS ON GROOMING PRODUCTS FOR M ALES AND FEMALES AND ORAL CARE; THAT THE MAIN SOURCE OF INCOME OF THE ASSESSEE COMPANY IS INTEREST INCOME ON MONEY LENT TO THE JOINT VENTURE C OMPANIES OR COMPANIES PROMOTED BY IT AND DIVIDEND INCOME FROM INVESTMENTS MADE IN THESE COMPANIES; THAT IT HAS EVER BEEN THAT LOSS OR GAIN ON I NVESTMENT LIQUIDATED BY WAY OF SOME JOINT VENTURE, MERGER OR SALE IS DISCLOSE D AS CAPITAL GAIN, AS ALREADY NOTED BY THE LD. CIT IN THE IMPUGNED ORDER; THAT DAY-TO-DAY BUSINESS OF TRADING IN SHARES IS NOT THE BUSINESS OF THE ASSESSEE C OMPANY; THAT THE SAID GAINS OR LOSSES ON DISINVESTMENT OF ANY PORTFOLIO HA S ALWAYS BEEN ITA NO.1797/DEL/2012 4 DECLARED BY THE ASSESSEE COMPANY AS CAPITAL GAINS AND T HE SAME HAS ALWAYS BEEN ACCEPTED IN SCRUTINY ASSESSMENTS; THAT DURING THE YE AR ALSO, THERE WAS SUCH ACCEPTANCE BY THE ASSESSING OFFICER, ON DUE SCRUTINY ; THAT SPECIFIC INQUIRY WAS MADE IN THIS REGARD BY THE ASSESSING OFFICER AND IT WAS ONLY AFTER BEING SATISFIED WITH THE ASSESSEES RESPONSE THERETO, THAT THE ACCEPTANCE WAS ORDERED; THAT THEREFORE, EVIDENTLY, IT WAS NOT A CASE OF NON-APPLICATION OF MIND WHICH RESULTED IN AN ASSESSMENT ORDER WHICH WAS ERRO NEOUS AND PREJUDICIAL TO THE INTERESTS OF THE REVENUE; THAT THE LD. CIT, IN FACT, SOUGHT TO REVIEW THE WELL REASONED ASSESSMENT ORDER, WHICH IS IMP ERMISSIBLE UNDER THE PROVISIONS OF SECTION 263 OF THE IT ACT; THAT INA DEQUACY OF INQUIRY BY THE ASSESSING OFFICER CANNOT LEAD TO INVOCATION OF THE PROV ISIONS OF SECTION 263 OF THE ACT AND IT IS ONLY IN THE CASE OF NO INQUIRY B Y THE ASSESSING OFFICER THAT SUCH POWER CAN BE INVOKED; THAT OTHERWISE TOO, IT IS N OT A CASE OF ADEQUATE INQUIRY INASMUCH AS THE ASSESSING OFFICER WANTED THE ASSESSE E TO INFORM HIM ABOUT THE LOSS OR GAIN ON SALE/PURCHASE OF SHARES AND HAD SPECIFICALLY INQUIRED OF THE ASSESSEE AS TO THE HEAD UNDER WHICH THE SAME HAD BEEN DECLARED; THAT THE OBSERVATIONS OF THE CIT IN THE IMP UGNED ORDER ARE MUTUALLY INTRINSICALLY CONTRADICTORY INASMUCH AS, THO UGH THE CIT HIMSELF ACCEPTS THAT THE CLAIM OF THE ASSESSEE WITH REGARD TO TH E INVESTMENT ACTIVITIES AND PROFIT OR LOSS ARISING THEREFROM HAS BEEN ACCEPTED AS CAPITAL GAINS IN THE EARLIER YEARS, THE CIT STILL HELD THE ASSESSM ENT ORDER TO BE ERRONEOUS AND PREJUDICIAL TO THE INTERESTS OF THE REVE NUE, DESPITE THE FACTS REMAINING THE SAME FOR THE YEAR UNDER CONSIDERATION; THE LD. CIT ERRED IN DIRECTING THE ASSESSING OFFICER TO CARRY OUT FURTHER I NQUIRIES IN THE MATTER WITHOUT DELINEATING AS TO HOW AND TO WHAT EXTENT THE ASSESSMENT WAS ERRONEOUS AND PREJUDICIAL TO THE INTERESTS OF THE REVE NUE; AND THAT THEREFORE, THE ORDER PASSED BY THE LD. CIT IS UNSUSTAINABLE IN TH E EYE OF LAW AND IS LIABLE TO BE CANCELLED. IT HAS BEEN CONTENDED THAT THEREFOR E, THE APPEAL OF THE ASSESSEE BE ALLOWED, THE ORDER PASSED BY THE LD. CIT BE C ANCELLED AND THAT PASSED BY THE ASSESSING OFFICER BE REVIVED. ITA NO.1797/DEL/2012 5 5. THE LD. DR, ON THE OTHER HAND, HAS PLACED STRONG RELIANCE ON THE IMPUGNED ORDER. IT HAS BEEN CONTENDED THAT DURING T HE YEAR UNDER CONSIDERATION, THE ASSESSEE COMPANY DERIVED INCOME BY WA Y OF DIVIDENDS AND LONG-TERM CAPITAL GAIN AND SHORT-TERM CAPITAL GA IN ON SHARE OF INVESTMENTS; THAT HOWEVER, THE ASSESSEE DID NOT MAINTAIN ANY SEPARATE HEAD OF STOCKIN-INVESTMENT INVENTORY IN THE PROFIT & LOSS A CCOUNT AND THE ENTIRE SHARES HAD BEEN SHOWN AS INVESTMENT; THAT THE PROFIT ON SALE OF INVESTMENT WAS NOT TREATED AS LONG-TERM CAPITAL GAIN AND SHORT-TE RM CAPITAL GAIN BUT WAS TAKEN AS BUSINESS PROFIT; THAT IN THIS REGARD, THE ASSESSIN G OFFICER DID NOT CARRY OUT ANY INQUIRY AS TO WHETHER THE TRANSACTIONS W ERE IN THE NATURE OF TRADING IN SHARES OR HOLDING THEM AS INVESTMENT FOR LO NG-TERM OR SHORT-TERM CAPITAL GAIN; THAT THIS RESULTED IN UNDER ASSESSMENT OF I NCOME OF ` 5,07,04,136/-, INVOLVING A TAX EFFECT OF ` 1,70,67, 012/-; THAT UNDER THESE CIRCUMSTANCES, THE LD. CIT WAS WELL JUSTIFIED IN INVOKI NG THE PROVISIONS OF SECTION 263 OF THE ACT REVISING THE ORDER AND DIRECT ING THE ASSESSING OFFICER TO REFRAME THE ASSESSMENT ORDER ON CAUSING SUFFICIENT INQ UIRIES TO BE MADE AFTER PROVIDING DUE OPPORTUNITY OF HEARING TO THE A SSESSEE; THAT BY SUCH DIRECTIONS OF THE LD. CIT, NO PREJUDICE HAS BEEN CAUSE D TO THE ASSESSEE; THAT THEREFORE, THE APPEAL OF THE ASSESSEE DOES NOT CARRY ANY MERIT WHATSOEVER; AND THAT THEREFORE, THE APPEAL OF THE ASSESSEE BE DISMISS ED, UPHOLDING THE WELL REASONED ORDER PASSED BY THE LD. CIT. 6. WE HAVE HEARD THE PARTIES AND HAVE PERUSED THE MAT ERIAL ON RECORD. UNDISPUTEDLY, THE ASSESSEE COMPANY DURING THE YEAR, HAS C ARRIED ON ITS BUSINESS IN ACCORDANCE WITH ITS BUSINESS ACTIVITY IN THE E ARLIER YEARS RIGHT FROM ITS INCEPTION, ON 03.01.1994. THE PRINCIPAL BUSI NESS OF THE ASSESSEE COMPANY AS PER ITS MEMORANDUM OF ASSOCIATION HAS BEEN T O ENTER INTO THE JOINT VENTURE AGREEMENTS AND ACQUIRE OR PROMOTE OTHE R COMPANIES, ENGAGED IN THE SAME BUSINESS AS THAT OF THE ULTIMATE PARENT COMP ANY OF THE ASSESSEE. THE BUSINESS OF THE PARENT COMPANY OF THE ASSESSEE I S MANUFACTURE AND SALE OF GROOMING PRODUCTS FOR MALES A ND FEMALES AND ORAL ITA NO.1797/DEL/2012 6 CARE. THE INCOME OF THE ASSESSEE COMPANY, MAINLY, IS IN TEREST INCOME ON MONEY LENT TO THE JOINT VENTURE COMPANIES, OR TO COM PANIES WHICH HAVE BEEN PROMOTED BY IT AND DIVIDEND INCOME FROM THE INVESTME NTS MADE IN THOSE COMPANIES. THE METHOD ADOPTED BY THE ASSESSEE COMPANY HA S REMAINED OF DISCLOSING AS CAPITAL GAINS, LOSS OR GAIN ON INVESTMENT LI QUIDATED BY WAY OF SOME JOINT VENTURE, MERGER OR SALE, THOUGH SUCH DISINVE STMENT DOES NOT COME BY VERY OFTEN. THIS IS EVIDENT FROM THE CHART R EPRODUCED BY THE LD. CIT HIMSELF AT PAGE 3 OF THE IMPUGNED ORDER. THIS CHART D EPICTS INVESTMENTS MADE BY THE ASSESSEE FROM F.Y. 2001-02 TO F.Y. 2007-08 . THIS CHART SHOWS THAT SOME INVESTMENTS WERE SOLD IN F.Y. 2001-02 AND THE REAFTER IN FY 2006- 07 ONLY. THUS, EVIDENTLY, DAY-TO-DAY TRADING IN SHARE S IS NOT THE BUSINESS OF THE ASSESSEE COMPANY AND OBVIOUSLY, THE GAIN EARNED BY T HE ASSESSEE WAS A CAPITAL GAIN AND NOT BUSINESS INCOME, AS WRONGLY TRIED TO BE MADE OUT BY THE LD. CIT. THIS, PARTICULARLY WHEN THE DISINVESTMENT SHOW N BY THE ASSESSEE COMPANY AS CAPITAL GAINS HAS REGULARLY BEEN ACCEPTED B Y THE DEPARTMENT IN SCRUTINY ASSESSMENTS. 7. IN THE YEAR UNDER CONSIDERATION, DURING THE ASSESSMEN T PROCEEDINGS, THE ASSESSING OFFICER MADE ELABORATE INQUIRY INTO THE M ATTER. AS MANY AS 32 QUESTIONS WERE RAISED VIDE QUESTIONNAIRE DATED 17.03.2 009, U/S 142 (1) OF THE ACT. COPIES OF THIS QUESTIONNAIRE HAVE BEEN PLACED BEFORE US. QUESTION NO.25 OF THIS QUESTIONNAIRE, WHICH IS A POINTED QUESTIO N BY THE ASSESSING OFFICER WITH REGARD TO THE TRANSACTIONS CARRIED OUT B Y THE ASSESSEE, READS AS FOLLOWS:- 25. DETAILS OF INCOME/LOSS DECLARED ON ACCOUNT OF PU RCHASE/SALE OF SHARES, IF ANY, ALONG WITH A NOTE ON THE NATURE OF SUCH INCOME. PLEASE STATE AS TO UNDER WHICH HEAD OF INCOME SUCH INCOME/LOS S HAS BEEN DECLARED. 8. THE ASSESSEE, VIDE LETTER DATED 27.10.2009 (COPY IS P LACED ON RECORD), SUBMITTED THE DETAILS OF CAPITAL GAIN EARNED DURING T HE YEAR. THESE DETAILS (EXHIBIT-5 TO THE ASSESSEES REPLY) ARE AS FOLLOWS:- ITA NO.1797/DEL/2012 7 SALE OF SHARES SALE OF SHARES SALE OF SHARES SALE OF SHARES - -- - GROSS CONSIDERATION RECEIVED GROSS CONSIDERATION RECEIVED GROSS CONSIDERATION RECEIVED GROSS CONSIDERATION RECEIVED SALE OF CONSIDERATION (TRANSACTION DATE 09.05.2006) SHARES OF GILLETTE BANGLADESH SHARES OF GILLETTE SRI LANKA COST OF ACQUISITION COST OF ACQUISITION COST OF ACQUISITION COST OF ACQUISITION SHARES OF GILLETTE BANGLADESH (5490 SHARES IN FY 01 - 02) SHARES OF GILLETTE SRI LANKA LESS: B/F LONG TERM CAPITAL LOSS PERTAINING TO AY 0 0- 01 ADJUSTED TO THE EXTENT OF TAXABLE LTCG A 481,007 37,015 7,090,027 TOTAL INDEXED COST (B) LONG TERM CAPITAL GAINS (A- B) YEAR OF PURCH FY 01-02 FY 02-03 FY 01-02 58,312,185 INDEXED COST OF PURCHASE 586,016 42,977 8,637,850 9,266,843 49,045,343 (49,045,343) INDEX IN THE YEAR OF PURCHASE 426 447 426 INDEX IN THE YEAR OF SALE 519 519 519 9. THESE DETAILS WERE FILED BY THE ASSESSEE BEFORE THE ASSE SSING OFFICER, ALTHOUGH DETAILS OF CAPITAL GAINS STOOD ALREADY FILED WITH THE COMPUTATION OF INCOME FURNISHED ALONG WITH THE RETURN OF INCOME FIL ED. 10. IT WAS ON BEING DULY SATISFIED WITH THE AFORESAID D ETAILS CALLED FOR FROM AND DULY FURNISHED BY THE ASSESSEE, THAT THE ASSESSING OFFIC ER ACCEPTED THE AMOUNT DECLARED UNDER THE HEAD OF CAPITAL GAINS. THI S AMOUNT WAS SET OFF AGAINST THE BROUGHT FORWARD CAPITAL LOSS OF EARLIER Y EARS. 11. IN THE FACE OF ABOVE POINTED DETAILED INQUIRY C ARRIED OUT BY THE ASSESSING OFFICER, OBVIOUSLY, THE LD. CIT WAS NOT JUSTIFIE D IN INVOKING THE PROVISIONS OF SECTION 263 OF THE ACT, TREATING, WRONG LY, THE ASSESSMENT ORDER TO BE ERRONEOUS AND PREJUDICIAL TO THE INTERESTS OF TH E REVENUE. IN FACT, THIS ACTION OF THE LD. CIT AMOUNTED TO NOTHING OTHER THA N A REVIEW OF THE ASSESSMENT ORDER WHICH IS NOT WARRANTED IN THE LIGHT OF THE FOLLOWING DECISIONS RIGHTLY RELIED ON ON BEHALF OF THE ASSESSEE:- ITA NO.1797/DEL/2012 8 I) MALABAR INDUSTRIES CO. LTD., 243 ITR 83 (SC); II) CIT VS. GREENWORLD CORPN., 2009-TIOL-69-SC; III) CIT VS. MAX INDIA LTD., 295 ITR 282 (SC); AND IV) CIT VS. R.K. CONSTRUCTION CO., 175 TAXMAN 165; 12. IN CIT VS. SUNBEAM AUTO LTD., 332 ITR 167 (DEL ) AND IN CIT VS. VIKAS POLYMER, 236 CTR 476 (DEL), IT HAS BEEN HELD THAT I T IS ONLY WHERE NO INQUIRY HAS BEEN CARRIED ON BY THE ASSESSING OFFICER THAT POWER U/S 263 OF THE ACT CAN BE EXERCISED. IN THE PRESENT CASE, AS NOTED HEREINA BOVE, SPECIFIC INQUIRY WAS DONE BY THE ASSESSING OFFICER, IN WHICH POINTED QUES TIONS WERE RAISED, TO WHICH THE ASSESSEE DULY SUBMITTED DETAILED REPLY. 13. IN FACT, WHAT TO TALK OF A CASE OF NO INQUIRY, A S SEEN ABOVE, THE PRESENT IS NOT EVEN A CASE OF INADEQUATE INQUIRY. 14. IN VIEW OF THE DETAILS FILED BY THE ASSESSEE BEFORE THE ASSESSING OFFICER, IT APPEARS THAT THE OBSERVATIONS MADE BY THE CIT TO THE EFFECT THAT THE ASSESSEE SHOWED ABNORMALLY HIGH EXPENDITURE, THAT PR OBABLY THE ASSESSEE SHOULD HAVE DECLARED BEFORE TRADING RESULTS, AND THAT THE INCOME FROM SALE/PURCHASE OF INVESTMENTS SHOULD HAVE BEEN DEC LARED AS BUSINESS INCOME, ARE UNCALLED FOR. UNDISPUTEDLY, IN ALL THE EARLIER YEARS, ASSESSMENT OF THE ASSESSEE HAS BEEN DONE AS SCRUTINY ASSESSMENT. THUS, THESE OBSERVATIONS OF THE LD. CIT ARE NOT BASED ON ANY MATER IAL AND FALL IN THE REALM OF CONJECTURES AND SURMISE, AND DO NOT ENTITLE THE PROVISIONS OF SECTION 263 OF THE ACT TO BE INVOKED SO AS TO REVISE THE ASSESSMENT ORDER, WITHOUT IT CONTAINING ANY ERROR AND WITHOUT ANY PRE JUDICE BEING CAUSED TO THE INTERESTS OF THE REVENUE BY THE PASSING OF SUCH ASSESSMENT O RDER. IT IS ALSO PERTINENT TO NOTE THAT IN THE IMPUGNED ORDER, THE L D. CIT HAS HIMSELF TAKEN NOTE OF THE FACT THAT IN THE EARLIER YEARS, THE CLAI M OF THE ASSESSEE CONCERNING THE INVESTMENT ACTIVITIES AND PROFIT AND L OSS THEREFROM STANDS ACCEPTED AS CAPITAL GAINS. ON HAVING TAKEN A CONSCIOUS NOTE OF THIS FACT, IT WAS INAPPROPRIATE FOR THE LD. CIT TO TERM THE ASSESSMENT ORDER FOR THE YEAR ITA NO.1797/DEL/2012 9 UNDER CONSIDERATION AS ERRONEOUS AND PREJUDICIAL TO TH E INTERESTS OF THE REVENUE. FURTHER, AS CORRECTLY OBJECTED, THE LD. CI T HAS ERRED IN GIVING MERELY GENERAL DIRECTIONS TO THE ASSESSING OFFICER TO REFRAME T HE ASSESSMENT ORDER ON CAUSING FURTHER INQUIRIES. THUS, WITHOUT POINTING O UT AS TO HOW AND TO WHAT EXTENT THE ASSESSMENT ORDER IS ERRONEOUS AND PREJUDI CIAL TO THE INTERESTS OF THE REVENUE. IN THIS REGARD, THESE CASE LAW S HAVE BEEN CORRECTLY RELIED ON:- I) DIT VS. JYOTI FOUNDATION, 2013-TIOL-569-HC-DEL; II) CIT VS. DG HOUSING PROJECTS, 2012-TIOL-195-HC-DELHI- IT; III) CIT VS. GABRIAL INDIA LTD., 203 ITR 208 (BOM); IV) CIT VS. KANDA RICE MILLS, 178 ITR 446 (P&H); & V) CIT VS. BHARAT ALUMINUM CO., 303 ITR 256 (ALL). 15. IN VIEW OF THE ABOVE, THE GRIEVANCE RAISED BY TH E ASSESSEE BY WAY OF GROUNDS OF APPEAL TAKEN, IS FOUND TO BE JUSTIFIED AND IS ACCEPTED AS SUCH. THE ORDER PASSED BY THE LD. CIT IS CANCELLED AND THAT PASSE D BY THE ASSESSING OFFICER IS REVIVED. 16. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWED . THE ORDER PRONOUNCED IN THE OPEN COURT ON 27.12.20 13. SD/- SD/- [ S.V. MEHROTRA ] [A.D. JAIN] ACCOUNTANT MEMBER JUDICIAL MEMBER DATED, 27.12.2013. DK COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT (A) 5. DR, ITAT AR, ITAT, NEW DELHI.