SHEELA BHOGILAL, MUMBAI V. ACIT 16(2), MUMBAI

ITA 2307/MUM/2018

• Counselvise Citation: [2018] 118 COUNSELVISE.COM (IT) 8518 (ITAT-MUMBAI)
• Duration Of Justice: 8 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-12-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2011-2012
• Appeal Filed On: 13-04-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S K BEPARI
• Assessee Lawyers: V MOHAN
• Keywords: Business income; Opportunity of being heard; Wrong claim; Sham transactions

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL SMC BENCH, MUMBAI BEFORE SHRI SAKTIJIT DEY , JUDICIAL MEMBER AND SHRI N.K. PRADHAN , ACCOUNTANT MEMBER ITA NO. 2307 & 2308 / MUM . /2018 ( ASSESSMENT YEAR : 20 11 12 & 2012 13 ) SHEELA BHOGILAL , 39, GOLD CROFT BHULABHAI DESAI ROAD NEAR MAHALAXMI TEMPLE MUMBAI 400 026 PAN AAEPB9579R . APPELLANT V/S ASSTT. COMMISSIONER OF INCOME TAX CIRCLE 16(2), MUMBAI . RESPONDENT ASSESSEE BY : SHRI V. MOHAN REVENUE BY : SHRI S.K. BEPARI DATE OF HEARING 06 . 12 .2018 DATE OF ORDER 31.12.2018 O R D E R PER SAKTIJIT DEY, J.M. AFORESAID APPEALS BY THE ASSESSEE ARE DIRECTED AGAINST TWO SEPARATE ORDERS, BOTH DATED 09.02.2018, OF LEARNED COMMISSIONER OF INCOME TAX (APPEALS) 6, MUMBAI, FOR THE ASSESSMENT YEAR 2011 - 12 AND 2012 - 13. 2 . THE ONLY COMMON ISSUE ARISING FOR CONSIDERATION IN BOTH THESE APPEALS IS, WHETHER LOSS/ GAIN FROM SHARE TRANSACTION IS TO BE TREATED AS SHORT TERM CAPITAL GAIN/ LOSS OR INCOME FROM BUSINESS AND PROFESSION. 2 SHEELA BHOGILAL 3 . BRIEFLY THE FACTS, WHICH ARE MORE OR LESS COMMON IN BOTH THE APPEALS ARE, THE ASSESSEE IS AN INDIV IDUAL. FOR THE ASSESSMENT YEAR 2011 - 12 SHE FILED HER RETURN OF INCOME ON 26.07.2011 DECLARING TOTAL INCOME OF RS. 22,97,573. SIMILARLY, SHE FILED HER RETURN OF INCOME FOR THE ASSESSMENT YEAR 2012 - 13 ON 26.07.2012 DECLARING TOTAL INCOME OF THE 17,68,336. DU RING THE ASSESSMENT PROCEEDINGS FOR THE AFORESAID ASSESSMENT YEARS THE ASSESSING OFFICER FOUND THAT IN THE COMPUTATION OF INCOME FOR ASSESSMENT YEAR 2011 - 12 THE ASSESSEE HAS SHOWN SHORT - TERM AND LONG TERM CAPITAL GAIN ON SALE OF SHARES AT `.10,66,375 AND ` 15,10,762 RESPECTIVELY. SIMILARLY, HE FOUND THAT, IN ASSESSMENT YEAR 2012 - 13 THE ASSESSEE HAS SHOWN SHORT - TERM AND LONG TERM CAPITAL LOSS FROM SALE OF SHARES AT ` 5,01,105 AND ` 04,81,032 RESPECTIVELY. AFTER CALLING UPON THE ASSESSEE TO EXPLAIN WHY THE LOSS/ GAIN FROM SALE OF SHARES SHOULD NOT BE ASSESSED UNDER THE HEAD INCOME FROM BUSINESS AND PROFESSION AND AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE, THE ASSESSING OFFICER ULTIMATELY HELD THAT THE PROFIT/ LOSS FROM SHARE TRANSACTION HAS TO BE ASSESSED UNDER THE HEAD INCOME FROM BUSINESS AND PROFESSION. ACCORDINGLY, HE COMPLETED THE ASSESSMENT FOR BOTH THE ASSESSMENT YEARS. BEING AGGRIEVED WITH THE ASSESSMENT ORDERS SO PASSE D, ASSESSEE PREFERRED APPEALS BEFORE LEARNED COMMISSIONER (APPEALS). AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE IN THE CONTEXT OF FACTS AND MATERIALS ON RECORD AND REFERRING TO ORDERS PASSED 3 SHEELA BHOGILAL BY HIM ASSESSEES OWN CASE IN ASSESSMENT YEAR 2009 - 10 AND 2010 - 11 AND ORDER OF THE TRIBUNAL IN ASSESSMENT YEAR 2010 - 11 HE HELD THAT GAIN FROM SHARES HELD FOR A PERIOD OF MORE THAN 12 MONTHS SHOULD BE ASSESSED UNDER THE HEAD LONG TERM CAPITAL GAIN. HOWEVER HE DISALLOWED ASSESSEE'S CLAIM OF SHORT - TERM CAPITAL GAIN/ LOSS IN RESPECT OF SHARES HELD FOR LESS THAN 12 MONTHS. 4 . THE LEARNED AUTHORISED REPRESENTATIVE SUBMITTED, WHILE DECIDING IDENTICAL ISSUE IN ASSESSEE'S OWN CASE FOR ASSESSMENT YEAR 2010 - 11 THE TRIBUNAL IN ITA NO. 1489/M/2014 DATED 01.11.2016 HAS RESTORED TH E ISSUE TO THE ASSESSING OFFICER WITH SPECIFIC DIRECTIONS. HE SUBMITTED, SIMILAR DIRECTIONS MAY BE ISSUED TO THE ASSESSING OFFICER IN THE IMPUGNED ASSESSMENT YEARS AS WELL. 5 . THE LEARNED DEPARTMENTAL REPRESENTATIVE SUBMITTED, ISSUES MAY BE DECIDED IN ACCOR DANCE WITH THE DIRECTION OF THE TRIBUNAL IN ASSESSMENT YEAR 2010 - 11. 6 . WE HAVE CONSIDERED RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. AS COULD BE SEEN FROM THE FACTS ON RECORD, THOUGH, THE ASSESSING OFFICER HAS TREATED BOTH LONG TERM AND SHORT TE RM CAPITAL GAIN/LOSS AS BUSINESS INCOME, HOWEVER, LEARNED COMMISSIONER (APPEALS) HAS ACCEPTED ASSESSEE'S CLAIM OF LONG TERM CAPITAL GAIN/LOSS. HOWEVER, HE HAS UPHELD THE DECISION OF THE ASSESSING 4 SHEELA BHOGILAL OFFICER WITH REGARD TO SHORT TERM CAPITAL GAIN/ LOSS TO BE T REATED AS BUSINESS INCOME. IT IS RELEVANT TO OBSERVE, WHILE DECIDING IDENTICAL ISSUE IN ASSESSEE'S OWN CASE FOR THE ASSESSMENT YEAR 2010 - 11 THE TRIBUNAL IN ITA NO. 1489/M/2014 DATED 01.11.2016 HAS RESTORED THE ISSUE TO THE ASSESSING OFFICER WITH THE FOLLOW ING DIRECTION: - 6. REGARDING THE TREATMENT OF THE SHORT TERM CAPITAL GAIN, WE FIND, THE DECISION OF THE A.O. AND THE CIT(A) WERE TAKEN PRIOR TO THE ISSUE OF THE CBDT CIRCULAR NO.6/2016 DATED 29.2.2016. IT IS THE PRAYER OF THE LD REPRESENTATIVE OF BOTH THE PARTIES THAT THI S ISSUE MAY BE REMANDED TO THE FILE OF THE CIT(A) TO ADJUDICATE THE ISSUE AFRESH IN THE LIGHT OF THE SAID CIRCULAR NO.6/2016 (SUPRA). THE REVENUE AUTHORITIES ARE REQUIRED TO EXAMINE THE SAID CIRCULAR (SUPRA) CLOSELY AND ADJUDICATE THE ISSUE AFTER GRANTING A REASONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. PRIMA FACIE, WE FIND, THE CONTENTS OF PARA 3(A) OF THE SAID BOARD CIRCULAR DOES NOT PERMIT THE REVENUE AUTHORITIES TO CHANGE THE HEAD OF INCOME FROM BUSINESS INCOME TO THE CAPITAL GAINS UNLESS TH E CONDITIONS SPECIFIED IN PARA 4 OF THE SAID CIRCULAR (SUPRA) I.E., BOGUS CLAIMS OR SHAM TRANSACTIONS / QUESTIONABLE TRANSACTIONS ARE INVOLVED. THE REVENUE AUTHORITIES ARE REQUIRED TO HONOUR THE BOOKS OF ACCOUNT AND THE ENTRIES THEREIN PERTAINING TO THE SH ARES. IF THE ASSESSEE OPTS CERTAIN TRANSACTIONS OF PURCHASE AND SALE OF SHARES IN THE BOOKS OF ACCOUNT AS STOCK IN TRADE, BUSINESS INCOME CONSTITUTES APPROPRIATE HEAD OF INCOME IN SUCH CASES. IN SUCH CASE, IT IS PERTINENT FOR THE A.O. TO NOT TO DISTURB THE HEAD OF INCOME. CONSIDERING THE ABOVE, THE RELEVANT GROUND NO.2, RAISED BY THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. 7 . THERE BEING NO MATERIAL DIFFERENCE IN FACTS INVOLVED IN THE IMPUGNED ASSESSMENT YEARS, FOLLOWING THE AFORESAID DIRECTION OF THE TRIBUNAL WE RESTORE THE ISSUE TO THE ASSESSING OFFICER FOR FRESH ADJUDICATION KEEPING IN VIEW OF THE DIRECTIONS OF THE TRIBUNAL AS 5 SHEELA BHOGILAL REFERRED TO ABOVE. NEEDLESS TO MENTION, THE ASSESSING OFFICER MUST AFFORD REASONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE BEFORE DECIDING THE ISSUE. GROUNDS ARE ALLOWED FOR STATISTICAL PURPOSES. 8 . IN THE RESULT ASSESSEE'S APPEALS ARE ALLOWED FOR S TATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 31.12.2018 SD/ - N.K. PRADHAN ACCOUNTANT MEMBER SD/ - SAKTIJIT DEY JUDICIAL MEMBER MUMBAI, DATED: 31.12.2018 COPY OF THE ORDER FORWARDED TO : ( 1 ) THE ASSESSEE; ( 2 ) THE REVENUE; ( 3 ) THE CIT(A); ( 4 ) THE CIT, MUMBAI CITY CONCERNED; ( 5 ) THE DR, ITAT, MUMBAI; ( 6 ) GUARD FILE . TRUE COPY BY ORDER PRADEEP J. CHOWDHURY SR. PRIVATE SECRETARY (SR. PRIVATE SECRETARY) ITAT, MUMBAI