Shri Lalitkumar Omdev Guglani, Baroda V. The Dy.CIT, Circle-8, Baroda

ITA 1936/AHD/2014

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 8275 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 10 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-05-2018
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: C
• Next Hearing Date: 06-06-2017
• Assessment Year: 2008-2009
• Appeal Filed On: 24-06-2014
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Keywords: Business income
• Section: 143(3); 142(1); 234B

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD C BENCH BEFORE: SHR I RAJPAL YADAV , JUDICIAL MEMBER AND SHRI AMARJIT SINGH, ACCOUNTANT MEMBER SHRI LALITKUMAR OMDEV GUGLANI, C - 703, BHADRALOK, OLD PADRA ROAD, VADODARA - 390020 PAN: ADAPG912 6E (APPELLANT) VS THE DCIT, CIRCLE - 8, AAYKAR BHAVAN, RACE COURSE CIRCLE, BARODA (RESPONDENT) REVENUE BY : S H R I PRASOON KABRA , SR. D . R. ASSESSEE BY: S H RI BHAVIN MARFATIA , A.R. DATE OF HEARING : 08 - 03 - 2 018 DATE OF PRONOUNCEMENT : 14 - 05 - 2 018 / ORDER P ER : AMARJIT SIN GH, ACCOUNTANT MEMBER : - THIS ASSESSEE S APPEAL FOR A.Y. 2008 - 09 , AR ISES FROM ORDER OF THE CIT(A) - III, BARODA DATED 14 - 03 - 2014 , IN PROCEEDINGS UNDER SECTION 143(3) OF THE INCOME TAX ACT, 1961; IN SHORT THE ACT . 2. THE ASSESSEE HAS RAISED FOLLOWING G ROUNDS OF APPEAL: - 1. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) - III, BARODA ['THE CIT(A)'] ERRED IN FACT AND IN LAW IN CONFIRMING THE ACTION OF DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE - 8, BARODA ('THE AO') IN TAXING THE TRANSACTIONS IN SECURIT IES/ SHARES/ MUTUAL FUNDS UNDER THE HEAD 'INCOME FROM BUSINESS OR PROFESSION' INSTEAD OF 'INCOME UNDER THE HEAD CAPITAL GAINS' AS CLAIMED BY THE APPELLANT. I T A NO . 1936 / A HD/20 1 4 A SSESSMENT YEAR 200 8 - 09 I.T.A NO. 1936 /AHD/20 14 A.Y. 2008 - 09 PAGE NO SHRI LALITKUMAR OMDEV GUNGLNI VS. DCIT 2 2. THE LEARNED CIT(A) ERRED IN FACT AND IN LAW IN CONFIRMING THE ACTION OF AO IN CONSIDERING THE ENTIRE AMOUNT OF PROFITS OF RS.3,74,470/ - AS BUSINESS INCOME INSTEAD OF CAPITAL GAINS (SHORT TERM) AS CLAIMED BY THE APPELLANT. 3. THE LEARNED CIT(A) ERRED IN FACT AND IN LAW IN HOLDING THAT GAIN OF RS.1,89,644/ - FROM THE HDFC ASSET MANAGEMENT COMPANY LTD. ARE IN THE NATURE OF BUSINESS INCOME INSTEAD OF SHORT TERM CAPITAL GAIN DESPITE THE FACT THAT THERE WAS NO GROUND OF APPEAL RAISED BEFORE HIM REGARDING THE SAID ISSUE. 4. THE LEARNED CIT(A) ERRED IN FACT AND IN LAW IN CONFIRMING THE ACTION OF AO I N CHARGING INTEREST U/S 234B OF THE ACT. 5. THE LEARNED CIT(A) ERRED IN FACT AND IN LAW IN CONFIRMING THE ACTION OF AO IN INITIATING PENALTY PROCEEDINGS U/S 271(1)(C) OF THE ACT. 3. GROUND NOS. 1 TO 3 ARE INTER - CONNECTED, THEREFORE, THE SAME ARE ADJUD ICATED TOGETHER. 4 . THE BRIEF FACTS OF THE CASE IS THAT RETURN OF INCOME DECLARING INCOME OF RS. 10 , 53 , 920/ - WAS FILED ON 18 TH SEP, 2009. SUBSEQUENTLY, THE CASE WAS SELECTED UNDER SCRUTINY BY ISSUING OF NOTICE U/S. 143(2) OF THE ACT ON 19 TH AUGUST, 2009 . ON SCRUTINY IT WAS DISCERNED TO THE ASSESSING OFFICER THAT THE ASSESSEE HA D SHOWN SHORT TERM CAPITAL GAIN OF RS. 5 , 64 , 114/ - OUT OF WHICH RS. 3 , 74 , 470/ - PERTAINED TO SHARE TRADING AND RS. 1 , 89 , 644/ - PERTAINED TO HDFC ASSET MANAGEMENT LTD. THE ASSESSING OFFICER ALSO OBSERVED THAT ASSESSEE HAS ENTERED INTO 140 PURCHASE TRANSACTIONS AND 163 SALE TRANSACTIONS OF SHARES OF VARIOUS COMPANIES THEREFORE HE WAS OF THE VIEW THAT THE ASSESSEE HAS CARRIED OUT TRADING ACTIVITY IN THE SHARES . CONSEQUENT LY, HE HAS AS SESSED THE SHORT TERM CAPITAL GAIN OF RS . 3 , 74 , 470/ - AS PROFIT AND GAIN OUT O N TRADING OF SHARES . 5 . AGGRIEVED ASSESSEE FILED APPEAL BEFORE THE LD. CIT(A) . THE LD.CIT(A) HAS DISMISSED THE APPEAL OF THE ASSESSEE ON THE GROUND THAT THE FREQUENCY OF TRANS ACTION AND THE PERIOD OF HOLDING THE SHARE S DEMONSTRATE THAT ASSESSEE HAS CARRIED TRADING ACTIVITY . THE LD. CIT(A) HAS ALSO MADE ENHANCEMENT BY TREATING THE SHORT TERM CAPITAL GAIN OF RS. 1,89,644 FROM HDFC ASSET MANAGEMENT COMPANY LTD. AS BUSINESS INCO ME. I.T.A NO. 1936 /AHD/20 14 A.Y. 2008 - 09 PAGE NO SHRI LALITKUMAR OMDEV GUNGLNI VS. DCIT 3 6. DURING THE COURSE OF APPELLATE PROCEEDINGS BEFORE US, THE LD. COUNSEL HAS FURNISHED PAPER BOOK CONTAINING ACKNOWLEDGEMENT OF RETURN OF INCOME, NOTICE U/S. 142(1) AND SUBMISSION MADE BEFORE THE LD. CIT(A) ETC. HE HAS ALSO PLACED RELIANCE O N THE J UDICIAL PRONOUNCEMENT Y. BRAHMIAH VS. ITO (2014) 52 TAXMAN.COM 169 (ANDHRA PRADESH). HE CONTENDED THAT THE LD. CIT(A) IS NOT JUSTIFIED IN SUSTAINING THE ADDITION MADE BY THE ASSESSING OFFICER AS THE ASSESSEE HAS CORRECTLY SHOWN THE INCOME UNDER THE HEAD INCOME FROM SALE AND PURCHASE OF SHARES AS SHORT TERM CAPITAL GAIN. HE HAS REITERATED THE SUBMISSION M A DE BEFORE THE LD. CIT(A). ON THE OTHER HAND, LD. DEPARTMENTAL REPRESENTATIVE HAS SUPPORTED THE ORDER OF LD. CIT(A). HE HAS ALSO PLACED RELIANCE IN THE CASE OF RADIALS INTERNATIONAL VS. ACIT (2012) 18 TAXMAN.COM 20 (DELHI). 7 . WE HAVE HEARD BOTH THE SIDES AND PERUSED THE MA TE RIAL ON RECORD CAREFULLY. WE HAVE NOTICED THAT ASSESSEE HA S CARRIED OUT 140 PURCHASE TRANSACTION S AND 163 SALE TRANSACTION S O F VARIOUS SHARES REPORT ING SHORT TERM CAPITAL GAIN OF RS. 3 , 74 , 470/ - . AS STATED BY THE LD.CIT(A) DURING THE COURSE OF APPELLATE PROCEEDINGS THE ASSESSE HAS NOT FURNISH ED THE DETAIL OF PERIOD OF HOLDING O F SHARE S ETC. FOR THE PURPOSE OF EXAMIN ATION O F HIS CLAIM OF SHORT TERM CAPITAL GAIN ON TRANSACTION S IN SHARES . EVEN DURING THE COURSE OF APPELLATE PROCEEDINGS BEFORE US NO SUCH DETAIL WAS FURNISHED. IN RESPECT OF ENHANCEMENT OF BUSINESS INCOME BY TREATING THE SHORT TERM CAPITAL GAIN OF RS. 1 , 89 , 644/ - FROM PMS AS BUSINESS INCOME W E FIND FORCE IN THE CONTENTION OF THE ASSESSEE THAT LD. CIT(A) HAS MADE ENHANCEMENT TO THE INCOME WITHOUT GIVING ANY NOTICE U/S. 251(2) OF THE ACT . IN THE JUDICIAL PRONOUNCEMENT AS REFERRED SUPRA T HE HON BLE HIGH COUR T OF ANDHRA PRADESH HELD THAT BEFORE MAKING ENHANCEMENT A NOTICE AS PROVIDED U/S. 251(2) MUST BE ISSUED REQUIRING ASSESSEE TO SHOW CAUSE AS TO WHY SUCH A COURSE OF ACTION BE NOT TAKEN. 7.1 IN VIEW OF THE FACTS AND CIRCUMSTANCES WE CONSIDER IT APPROPRIAT E TO SET ASIDE BOTH THE ISSUE S TO THE FILE OF LD. CIT(A) FOR ADJUDICATING A AFRESH AFTER I.T.A NO. 1936 /AHD/20 14 A.Y. 2008 - 09 PAGE NO SHRI LALITKUMAR OMDEV GUNGLNI VS. DCIT 4 AFFORDING ADEQUATE OPPORTUNITIES TO THE ASSESSEE. THE ASSESSEE IS ALSO DIRECTED TO FURNISH THE RELEVANT DETAIL AS REQUIRED BY THE LD.CIT(A) FOR EXAMINATION TO DECIDE THIS APPEAL ON MERIT . ACCORDINGLY, TH E GROUNDS OF APPEAL FROM 1 TO 3 ARE ALLOWED FOR STATISTICAL PURPOSES. 8 . GROUND NO. 4 OF TH E ASSESEE REGARDING CHARGING OF INTEREST U/S 234 B IS DISMISSED AS CHARGING O F INTEREST IS MANDATORY AS PER SECTION 234B OF T HE ACT . G ROUND NO. 5 OF THE ASSESSEE REGARDING INITIATING PENALTY PROCEEDINGS U/S. 271(1)( C) OF THE ACT IS PREMATURE AT THIS STAGE , THEREFORE, THE SAME STANDS DISMISSED. 9 . IN THE RESULT , GROUND NO. 1 TO 3 OF APPEAL OF T H E ASSESSE ARE ALLOWED FOR STA TISTICAL PURPOSES AND GROUND NO. 4 AND 5 ARE DISMISSED. ORDER PR ONOUNCED IN THE OPEN C OURT ON 14 - 0 5 - 201 8 SD/ - S D/ - ( RAJPAL YADAV ) ( AMARJIT SINGH ) JUDICIAL MEMBER ACCOUN TANT MEMBER AHMEDABAD : DATED 14 /0 5 /2018 / COPY OF ORDER FORWARDED TO: - 1. ASSESSEE 2. REVENUE 3. CONCERNED CIT 4. CIT (A) 5. DR, ITAT, AHMEDABAD 6. GUARD FILE. BY ORDER/ , / ,