The ITO, Ward-3, Gandhinagar V. Shri Manish J.Dave, Gandhinagar

ITA 3042/AHD/2009

• Counselvise Citation: 304220514 RSA 2009
• Duration Of Justice: 1 year(s) 11 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-10-2011
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 19-10-2011
• Assessment Year: 2006-2007
• Appeal Filed On: 12-11-2009
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: P R GHOSH
• Keywords: Business income; Opportunity of being heard; Peak credit
• Section: 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, A BENCH, AHMEDABAD BEFORE SHRI T. K. SHARMA, JUDICIAL MEMBER AND SHRI A. K. GARODIA, ACCOUNTANT MEMBER I.T.A. NO.3042 / AHD/2009 (ASSESSMENT YEAR 2006-07) ITO, WARD 3, GANDHINAGAR VS. MANISH J DAVE, 1167/2, NULL NULL, SECTOR 2A, GANDHINAGAR PAN/GIR NO. : AGZPD8276A (APPELLANT) .. (RESPONDENT) APPELLANT BY: SHRI P R GHOSH, SR. DR RESPONDENT BY: WRITTEN SUBMISSION DATE OF HEARING: 19.10.2011 DATE OF PRONOUNCEMENT: 25-10-2011 O R D E R PER SHRI A. K. GARODIA, AM:- THIS IS REVENUES APPEAL DIRECTED AGAINST THE ORDE R OF LD. CIT(A) GANDHINAGAR DATED 14.08.2009 FOR THE ASSESSMENT YEA R 2006-07. 2. THE GROUNDS RAISED BY THE REVENUE ARE AS UNDER: 1. THE LD. CIT(A)WAS SNOT JUSTIFIED IN DELETING TH E ADDITION MADE ON ACCOUNT OF UNEXPLAINED OPENING CAPITAL OF R S.30,32,278/-. 2. THE LD. CIT(A) WAS NOT JUSTIFIED IN DELETING THE ADDITION MADE ON ACCOUNT OF TRADING OF SHARES OF RS.74,63,30 0/- AS BUSINESS INCOME AS AGAINST THE ASSESSEES CLAIM OF THE SAME BEING LONG TERM CAPITAL GAIN. 3. ON THE FACTS AND CIRCUMSTANCES OF THE CASE THE L D. CIT(A) OUGHT TO HAVE UPHELD THE ORDER O THE A.O. 3. NONE APPEARED ON BEHALF OF THE ASSESSEE ON THE A PPOINTED DATE OF HEARING BUT WRITTEN SUBMISSIONS OF THE ASSESSEE DAT ED 14.10.2011 ARE AVAILABLE ON RECORD AS PER WHICH THE ASSESSEE HAS P LACED RELIANCE ON SOME I.T.A.NO.3042 /AHD/2009 2 TRIBUNAL DECISIONS AND HAS REQUESTED TO DECIDE THE APPEAL OF THE REVENUE ON THE BASIS OF THESE WRITTEN SUBMISSIONS. WE, THE REFORE, PROCEED TO DECIDE THE APPEAL OF THE REVENUE AFTER HEARING THE LD. D.R. OF THE REVENUE AND AFTER CONSIDERING THE WRITTEN SUBMISSIONS OF TH E ASSESSEE. LD. D.R. OF THE REVENUE SUPPORTED THE ASSESSMENT ORDER. HE ALS O SUBMITTED THAT FRESH EVIDENCES WERE FURNISHED BY THE ASSESSEE BEFORE LD. CIT(A) BUT NO REMAND REPORT WAS OBTAINED BY LD. CIT(A) AND HENCE, THE ORDER OF LD. CIT(A) CANNOT BE SUSTAINED AND THE MATTE MAY BE R ESTORED BACK TO THE FILE OF THE A.O. FOR A FRESH DECISION. 4. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS, PERUSE D THE MATERIAL ON RECORD AND HAVE GONE THROUGH THE ORDERS OF AUTHORIT IES BELOW AND THE JUDGEMENTS CITED BY THE ASSESSEE IN THE WRITTEN SUB MISSIONS ALONG WITH COPIES OF THREE TRIBUNAL DECISIONS ENCLOSED WITH TH E WRITTEN SUBMISSIONS. 5. THE FIRST ISSUE IN DISPUTE BEFORE US IS OF THE A DDITION MADE BY THE A.O. OF RS.30,32,278/- ON ACCOUNT OF OPENING CAPITA L. IT IS NOTED BY THE LD. CIT(A) IN PARA 3.1 OF HIS ORDER THAT THE A.O. R EJECTED THE ASSESSEES EXPLANATION THAT THE OPENING BALANCE IS REGARDING T HE SHARES PURCHASE BY HIM IN THE PRECEDING YEAR FROM HIS PAST SAVINGS BEC AUSE THE ASSESSEE COULD NOT PRODUCE THE BANK STATEMENT OF THE EARLIER YEAR. IT IS ALSO OBSERVED BY THE LD. CIT(A) IN THE SAME PARA THAT TH E A.O. ALSO RELIED ON THE RETURN OF INCOME FOR THE PRECEDING ASSESSMENT Y EAR I.E. ASSESSMENT YEAR 2005-06 WHERE NO CLOSING BALANCE HAS BEEN SHOW N WHICH CAN BE CLAIMED TO BE THE OPENING BALANCE OF THE PRESENT YE AR. IT IS ALSO NOTED BY THE LD. CIT(A) THAT THE A.O. INVOKED THE PROVISIONS OF SECTION 68 TO HOLD THAT THE ONUS WAS ENTIRELY ON THE ASSESSEE AND HAVI NG NOT EXPLAINED THE OPENING BALANCE, HE MADE THE ADDITION OF RS.30.32,2 78/-. IN PARA 3.2 OF THE ORDER OF LD. CIT(A), IT IS NOTED BY HIM THAT IT WAS CLAIMED BY THE ASSESSEE BEFORE HIM THAT NO BOOKS OF ACCOUNTS HAD B EEN MAINTAINED FOR I.T.A.NO.3042 /AHD/2009 3 THE EARLIER YEARS AND FROM THE PRESENT YEAR, THE AS SESSEE DECIDED TO KEEP SYSTEMATIC RECORD IN THE FORM OF COMPUTERIZED ENTRI ES IN TALLY SOFTWARE. IT WAS ALSO SUBMITTED THAT FOR THE OPENING BALANCE, TH E ASSESSEE DREW OUT TOTAL OF SHARES IN D MAT ACCOUNT ON 31.03.2005 AND THE BALANCE LYING IN SAVING BAN K AS ON THAT DATE AND THE SAME WERE RECO RDED AS ADJUSTMENT ENTRIES IN THE ASSESSEES BOOKS BY CREDITING THE CA PITAL ACCOUNT AND DEBITING THE ACCOUNT OF ICICI BANK ACCOUNT & SHARE. WE FIND THAT NO SUCH EVIDENCE WAS BROUGHT ON RECORD BY THE ASSESSEE BEFORE THE A.O. IN THE FORM OF STATEMENT OF D MAT ACCOUNT OF THE EARLI ER YEARS AND THE BANK ACCOUNTS OF THE EARLIER YEARS. THERE IS NO FINDING GIVEN BY LD. CIT(A) ALSO THAT HE HAS EXAMINED THESE STATEMENTS OF EARLI ER YEARS IN RESPECT OF D MAT ACCOUNT AND BANK ACCOUNTS, AS PER WHICH, THERE WAS CLOSING BALANCE AS ON 31.03.2005 OF TOTAL AMOUNT OF RS.30,32,277.70 . THERE IS NO FINDING AVAILABLE ON RECORD THAT AS TO HOW MUCH WAS THE PUR CHASE OF SHARES IN EACH PRECEDING YEAR AND WHAT WAS THE SOURCE OF SUCH PURCHASES AND WHETHER SUCH PURCHASE OF THE SHARES IN EACH PRECEDI NG YEAR IS COMMENSURATE WITH THE INCOME DECLARED BY THE ASSESS EE IN EACH SUCH PRECEDING YEAR. IN THE ABSENCE OF ANY FINDING ON T HIS ASPECT, THE ORDER OF CIT(A) ON THIS ISSUE IS NOT SUSTAINABLE. BUT AT TH E SAME TIME, WE FEEL THAT IN THE INTEREST OF JUSTICE, ONE MORE OPPORTUNITY SH OULD BE PROVIDED TO THE ASSESSEE TO BRING EVIDENCE ON RECORD TO SUBSTANTIAT E HIS CLAIM AND HENCE, WE SET ASIDE THE ORDER OF LD. CIT(A) ON THIS ISSUE AND RESTORE THE MATTER BACK TO THE FILE OF THE A.O. FOR A FRESH DECISION. THE ASSESSEE HAS TO BRING ON RECORD COPIES OF BANK STATEMENT, COPIES OF D MAT ACCOUNT STATEMENT FOR THE EARLIER YEARS AND HE HAD TO GIVE A WORKING AS TO HOW MUCH WAS THE PURCHASE OF SHARES IN EACH SUCH EARLIER YEAR AS PER THE D MAT ACCOUNT AND WHAT WAS THE SOURCE OF THAT PURCHASE AND WHETHER SU CH PURCHASE OF SHARES IS EXPLAINABLE OUT OF THE INCOME DECLARED BY THE AS SESSEE IN EACH EARLIER I.T.A.NO.3042 /AHD/2009 4 YEAR. SIMILARLY, REGARDING THE BANK BALANCE ALSO, T HE ASSESSEE HAS TO GIVE THE DETAILS REGARDING THE PEAK BALANCE OF EACH EARL IER YEAR AND HE HAS TO EXPLAIN THE SOURCE OF SUCH BALANCE IN THE BANK BEIN G OUT OF THE DISCLOSED INCOME. HENCE, GROUND NO.1 OF THE REVENUE STANDS A LLOWED FOR STATISTICAL PURPOSES. 6. REGARDING GROUND NO.2 OF THE REVENUE, WE FIND TH AT THE ISSUE INVOLVED IS WHETHER THE INCOME EARNED BY THE ASSESS EE OUT OF SALE OF SHARES IS ASSESSABLE AS LONG TERM CAPITAL GAIN AS C LAIMED BY THE ASSESSEE OR THE SAME IS ASSESSABLE AS BUSINESS INCOME AS HAS BEEN DONE BY THE A.O. IN THIS REGARD, WE FIND THAT THE A.O. HAS NOT ED THE SUBMISSIONS MADE BY THE ASSESSEE IN THIS REGARD ON PAGE 5 OF TH E ASSESSMENT ORDER AS PER WHICH, IT WAS SUBMITTED BY THE ASSESSEE BEFORE THE A.O. THAT HE HAS INVESTED RS.84,09,553/- IN PURCHASE OF SHARES AND T HERE WAS SALE OF SHARES OF RS.84,84,974/- IN THE PRESENT YEAR AND THE ASSES SEE EARNED DIVIDEND INCOME OF RS.2,72,835/- AND THERE IS LONG TERM CAPI TAL GAIN OF RS.72,67,555/-. ON PAGE 3, IT IS NOTED BY THE LD. CIT(A) THAT OUT OF THE TOTAL PROFIT ON SALE OF SHARES OF RS.73,31,276/-, R S.72,67,555/- IS ON ACCOUNT OF LONG TERM CAPITAL GAIN AND ONLY RS.63,72 1/- IS ON ACCOUNT OF SHORT TERM CAPITAL GAIN. IN PARA 2.3 OF HIS ORDER, IT HAS BEEN STATED BY THE LD. CIT(A) THAT MOST OF THE SHARES HAVE BEEN HELD B Y THE ASSESSEE FOR LONG ENOUGH PERIOD TO QUALIFY BY LONG TERM CAPITAL GAIN BUT NO BASIS HAS BEEN INDICATED BY HIM FOR THIS OBSERVATION AS TO WH ETHER IT IS ON THE BASIS OF MERE CLAIM OF THE ASSESSEE THAT THE INCOME CONCE RNED IS OF LONG TERM OR WHETHER HE HAS EXAMINED THE DETAILS REGARDING DATE OF PURCHASE OF SHARES AND DATE OF SALE OF SHARES AND WORKED OUT THE PERIO D OF HOLDING IN RESPECT OF EACH OF THE SHARE SOLD BY THE ASSESSEE IN THE PR ESENT YEAR. THERE IS NO SUCH MENTION IN THE ORDER OF LD. CIT(A) ABOUT SUCH EVIDENCE. ADMITTEDLY, NO BOOKS OF ACCOUNTS OR RECORDS WERE MA INTAINED BY THE I.T.A.NO.3042 /AHD/2009 5 ASSESSEE UP TO 31.03.2005 AND HENCE, IF THE SHARES ARE CLAIMED TO HAVE BEEN PURCHASED BY THE ASSESSEE IN THE PRECEDING YEA R, THE DATE OF PURCHASE HAS TO BE EXAMINED WITH RESPECT TO THE ENT RY IN D MAT ACCOUNT AND THE ENTRY IN THE BANK ACCOUNT FOR PAYMENT OF SU CH SHARES. THE SAME WERE NOT FURNISHED BY THE ASSESSEE BEFORE THE A.O. AND THERE IS NO MENTION IN THE ORDER OF LD. CIT(A) THAT THESE FACTS WERE EXAMINED BY HIM AND HENCE, WE ARE OF THE CONSIDERED OPINION THAT ON THIS ISSUE ALSO, THE ORDER OF LD. CIT(A) IS NOT SUSTAINABLE BUT IN THE I NTEREST OF JUSTICE, THE ASSESSEE DESERVES ONE MORE OPPORTUNITY TO BRING THE EVIDENCE ON RECORD IN SUPPORT OF THIS CONTENTION THAT THE SHARES SOLD BY THE ASSESSEE IN THE PRESENT YEAR WERE MOSTLY HELD BY THE ASSESSEE LONG ENOUGH A PERIOD TO QUALIFY FOR LONG TERM CAPITAL GAIN AND THE ASSESSEE HAS TO BRING EVIDENCE ON RECORD IN SUPPORT OF THIS CONTENTION. WE, THERE FORE, SET SIDE THE ORDER OF LD. CIT(A) ON THIS ISSUE AND RESTORE THE MATTER BACK TO THE FILE OF THE A.O. FOR A FRESH DECISION. WHILE DECIDING THE ISSU E, THE A.O. SHOULD ALSO CONSIDER VARIOUS TRIBUNAL DECISIONS WHICH ARE CITED BY THE ASSESSEE BEFORE US IN THE WRITTEN SUBMISSION. THE ASSESSEE IS ALSO FREE TO CITE THESE JUDGMENTS OR MORE JUDGMENTS BEFORE THE A.O. IN SUPP ORT OF HIS CONTENTION AND THE A.O. SHOULD DECIDE THE ISSUE AFT ER CONSIDERING ALL THE JUDGMENTS WHICH MAY BE CITED BEFORE HIM BY THE ASSE SSEE. HE SHOULD PASS NECESSARY ORDER AS PER LAW IN THE LIGHT OF ABO VE DISCUSSION AFTER PROVIDING ADEQUATE OPPORTUNITY OF BEING HEARD TO TH E ASSESSEE. 7. IN THE RESULT, APPEAL OF THE REVENUE STANDS ALL OWED FOR STATISTICAL PURPOSES. 8. ORDER PRONOUNCED IN THE OPEN COURT ON 25 TH OCT., 2011. SD/- SD/- (T. K. SHARMA) (A. K. GARODIA) JUDICIAL MEMBER ACCOUNTANT MEMBER AHMEDABAD; DATED : 25-10-2011 SP I.T.A.NO.3042 /AHD/2009 6 COPY OF THE ORDER FORWARDED TO: 1. THE APPLICANT 2. THE RESPONDENT 3. THE CIT CONCERNED 4. THE LD. CIT (APPEALS) 5. THE DR, AHMEDABAD BY ORDER 6. THE GUARD FILE AR,ITAT,AHMEDABAD 1. DATE OF DICTATION. 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER.OTHER MEMBER 3. DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR. P .S./P.S. 4. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE D ICTATING MEMBER FOR PRONOUNCEMENT 5. DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR. P.S./P.S. 6. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK 7. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK .. 8. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT RE GISTRAR FOR SIGNATURE ON THE ORDER . 9. DATE OF DESPATCH OF THE ORDER. ..