Mrs. Perin F.Lalkaka, Ahmedabad V. The Dy.CIT.,Circle-7, Ahmedabad

ITA 3284/AHD/2010

• Counselvise Citation: [2013] 140 COUNSELVISE.COM (IT) 67912 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 10 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-11-2013
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 11-02-2014
• Assessment Year: 2006-2007
• Appeal Filed On: 13-12-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: P L KUREEL
• Keywords: Business income
• Section: 143(3)

Judgement Text

ITA 3284/AHD /2010 A.Y. 2006- 07 1 IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, AHMEDABAD (BEFORE SHRI D. K. TYAGI, J.M. & SHRI ANIL CHATURV EDI, A.M.) I.T. A. NO. 3284 /AHD/2010 (ASSESSMENT YEAR:2006-07) MRS. PERIN F. LALKAKA THUMBELINA, OPP. SARVAMANGAL SOCIETY, NARANPURA VISTAR, AHMEDABAD V/S D.C.I.T CIRCLE-7, AHMEDABAD (APPELLANT) (RESPONDENT) PAN: AAGPL6462K APPELLANT BY : MS. URVASHI SHODHAN RESPONDENT BY : SHRI P.L. KUREEL, SR. D.R. ( )/ ORDER DATE OF HEARING : 30-10-2013 DATE OF PRONOUNCEMENT : 01-11-2013 PER SHRI ANIL CHATURVEDI,A.M. 1. THIS APPEAL IS FILED BY THE ASSESSEE AGAINST THE OR DER OF CIT(A)-XIV, AHMEDABAD DATED 27.10.2010 FOR A.Y. 2006-07. 2. THE FACT AS CULLED OUT FROM THE MATERIAL ON RECORD ARE AS UNDER. 3. ASSESSEE IS AN INDIVIDUAL HAVING INCOME FROM BUSINE SS, CAPITAL GAINS AND INTEREST INCOME. ASSESSEE FILED HER RETURN OF INCOM E FOR A.Y. 06-07 ON ITA 3284/AHD /2010 A.Y. 2006- 07 2 29.12.2006 DECLARING TOTAL INCOME OF RS. 43,74,639/ -. THE CASE WAS SELECTED FOR SCRUTINY AND THEREAFTER THE ASSESSMENT WAS FRAMED UNDER SECTION 143(3) VIDE ORDER DATED 19.12.2008 AND THE TOTAL INCOME WAS DETERMINED AT RS. 43,74,639/-. WHILE FRAMING THE AS SESSMENT A.O. CONSIDERED THE SHORT TERM CAPITAL GAIN OF RS. 5,55, 334/- SHOWN BY ASSESSEE AS BUSINESS INCOME OF THE ASSESSEE. AGGRIE VED BY THE ORDER OF A.O., ASSESSEE CARRIED THE MATTER BEFORE CIT(A). CI T(A) VIDE ORDER DATED 27.10.2010 DISMISSED THE APPEAL OF THE ASSESS EE. AGGRIEVED BY THE AFORESAID ORDER OF CIT(A) , THE ASSESSEE IS NOW IN APPEAL BEFORE US AND HAS RAISED THE FOLLOWING EFFECTIVE GROUND:- 1. THE LEARNED CIT(A) HAS ERRED IN LAW AND ON FACTS IN CONFIRMING THE TREATMENT OF THE SHORT-TERM CAPITAL GAIN OF RS. 5,53,334/- AS BU SINESS INCOME. 4. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, A.O. N OTICED THAT ASSESSEE HAD SHOWN INCOME OF RS. 5,55,334/- AS SHORT TERM CA PITAL GAINS EARNED ON SHARES. HE FURTHER NOTICED THAT ASSESSEE HAD ENTERE D INTO 60 TRANSACTIONS OF PURCHASE AND SALES AND THE VALUE OF PURCHASE WAS TO THE TUNE OF RS. 63,11,345/- AND THAT OF SALE WAS RS. 68,66,679/-. HE ALSO NOTICED THAT THE HOLDING PERIOD RANGED FROM 1 TO 6 MONTHS AND THE NU MBER OF COMPANIES IN WHICH THE ASSESSEE HAD TRADED WERE AROUND 60 COM PANIES. A.O. THEREFORE CONCLUDED THAT ASSESSEE WAS INDULGING IN FREQUENT BUYING AND SELLING OF SHARES ON A VERY LARGE SCALE CONTINUOUSL Y DURING THE YEAR. HE WAS OF THE VIEW THAT HAD THE INTENTION OF THE ASSES SEE BEEN TO PURCHASE THE SHARES FOR THE PURPOSE OF INVESTMENTS THEN THE ASSESSEE WOULD HAVE ONLY GOT SHARES AND SOLD THEM ONLY ON EMERGENCY AND NOT FREQUENTLY AS DONE AT PRESENT BY THE ASSESSEE. HE THUS RELYING O N THE DECISION OF AHMEDABAD BENCH IN THE CASE OF POORNIMA SHAH (ITA N O. ITA 3284/AHD /2010 A.Y. 2006- 07 3 3154/AHD/2002) HELD THE PROFIT EARNED FROM BUYING A ND SELLING OF SHARES TO BE INCOME FROM BUSINESS AND ACCORDINGLY THE SH ORT TERM CAPITAL GAIN WAS TREATED AS BUSINESS INCOME. AGGRIEVED BY THE O RDER OF A.O. ASSESSEE CARRIED THE MATTER BEFORE CIT(A). CIT(A) V IDE ORDER DATED 27.10.2010 DISMISSED THE APPEAL OF THE ASSESSEE BY HOLDING AS UNDER:- 5.2 BEFORE COMMENTING ON THE MERITS OF AR'S SUBMI SSION, IT IS TO BE SEEN THAT ALTHOUGH THE AO HAS MENTIONED THE NO. OF TRANSACTIO NS, IT'S VALUE OF PURCHASE AND SALE, NO. OF TRANSACTIONS AND INVESTMENT ON A PARTI CULAR, DAY, BUT HE HAS NOT GIVEN ANY CHART OR BREAK UP OF THE SHARES PURCHASED AND S OLD IN A PROPER MANNER I.E. DATE OF PURCHASE AND SALE, RATE OF PURCHASE AND SALE, NU MBER OF SHARES PURCHASED AND SOLD, NUMBER OF SHARES OF COMPANY-WISE, PURCHASE AMOUNT OF SHARES, RATE OF SALE, DATE OF SALE, NUMBER OF SHARES SOLD, NUMBER OF SHAR ES SOLD COMPANY-WISE, NET CAPITAL GAIN/ NET CAPITAL LOSS AND SO ON. SIMILARLY THE AR HAS ALSO REBUTTED THE AO'S PLEA IN A GENERAL MANNER BUT IS NOT SUPPORTED BY DOCUMENTARY EVIDENCE I.E. COPY OF BALANCE SHEET AND COPY OF THE P&L A/C. TO SHOW THE CLOSING STOCK IN A PARTICULAR YEAR AND THE EXPENSES INCURRED FOR THE PURPOSE OF PURCHASE AND S ALE OF SHARES, NO BREAK- UP OF THE MONEY AVAILABLE WITH THE APPELLANT AT THE TIME OF P URCHASE OF SHARES, NO BREAK UP OF MONEY BORROWED BY THE APPELLANT BEFORE THE' PURCHAS E OF SHARES/INVESTMENT IN SHARES. FURTHER THERE IS NO CHART OR BREAK UP OF THE DETAIL S ALREADY MENTIONED IN THE ABOVE PARA. THE AR HAS ONLY REPLIED IN THEORY AND IN A GE NERAL MANNER CITING SOME DECISIONS IN HIS FAVOUR AND REBUTTED THE DECISION R ELIED BY THE AO. IN ABSENCE OF THE DETAILS OF THE TRANSACTIONS OF SHARES/INVESTMENT FO R RETAINING PERIOD, NUMBER OF- SHARES, NAME OF THE COMPANY AND RATE OF PURCHASE AN D SALE AND OTHER THINGS, IT IS NOT POSSIBLE TO DECIDE AS TO WHETHER THE TRANSACTION IS A SHORT TERM CAPITAL GAIN/ INVESTMENT OR MEANT FOR A BUSINESS ACTIVITY. THUS, I HAVE NO ALTERNATIVE BUT TO CONFIRM THE ORDER OF THE AO ON THIS ISSUE. THEREFORE, THE A O'S TREATMENT OF SHORT TERM CAPITAL GAIN OF RS.5,55,334/- AS BUSINESS INCOME IS CONFIRM ED AND THE APPEAL IS DISMISSED. 5. AGGRIEVED BY THE ORDER OF CIT(A), THE ASSESSEE IS N OW IN APPEAL BEFORE US. ITA 3284/AHD /2010 A.Y. 2006- 07 4 6. BEFORE US, THE LD. A.R. SUBMITTED THAT ASSESSEE IS THE SENIOR CITIZEN AND HER TAXABLE INCOME WAS OVER 25 LACS FOR THE LAST FE W YEARS. SHE HAD SUBSTANTIAL SURPLUS FUND WHICH HAD BEEN INVESTED IN VARIOUS INVESTMENTS. IT WAS FURTHER STATED THAT ASSESSEE DID NOT BORROW ANY MONEY TO MAKE INVESTMENTS, ASSESSEE HAD TAKEN THE DELIVERY OF THE SHARES AND HAD NOT ENTERED INTO THE TRANSACTIONS OF SALE WITHOUT TAKIN G DELIVERY. IT WAS FURTHER SUBMITTED THAT NO F & O ACTIVITY WAS CARRIE D OUT BY THE ASSESSEE. THE LD. A.R. FURTHER POINTED TO THE STATEMENT OF CA PITAL GAINS EARNED DURING THE YEAR AND ALSO SUBMITTED SHARE-WISE LEDGE R ACCOUNT AND THE COPY OF WHICH WERE PLACED IN PAPER BOOK. SHE FURTHE R SUBMITTED THE COPY OF THE PASS BOOK OF THE ASSESSEE TO DEMONSTRATE THA T THE ASSESSEE HAD USED HER OWN FUNDS AND NO BORROWED FUNDS WERE USED FOR MAKING INVESTMENTS. SHE FURTHER SUBMITTED THAT THE INTENT ION OF THE ASSESSEE WAS TO HOLD THE SHARES AS INVESTMENT. SHE ALSO PLACED ON RECORD, THE CHART SHOWING THE CAPITAL GAINS EARNED BY THE ASSESSEE IN 3 YEARS PRIOR AND 3 YEARS AFTER A.Y. 06-07 AND FROM IT DEMONSTRATED THE CAPITAL GAINS EARNED BY THE ASSESSEE IN VARIOUS YEARS. SHE FURTHER SUBMI TTED THAT THE LOSS INCURRED BY THE ASSESSEE IN A.Y. 08-09 & 09-10 HAVE BEEN CARRIED FORWARD AND NOT ADJUSTED AGAINST THE TAXABLE INCOME WHICH PROVES HER INTENTION THAT THE INVESTMENTS WERE NOT BUSINESS AC TIVITY OF THE ASSESSEE. SHE FURTHER PLACED RELIANCE ON THE DECISION OF AHME DABAD TRIBUNAL IN THE CASE OF KALPESH C. SHAH ITA NO. 2818/AHD/2011 ORDER DATED 31.10.2012 APART FROM VARIOUS OTHER DECISIONS IN HER SUPPORT. THE LD. D.R. ON THE OTHER HAND SUPPORTED THE ORDER OF A.O. AND CIT(A). ITA 3284/AHD /2010 A.Y. 2006- 07 5 7. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. IT IS AN UNDISPUTED FACT THAT ASSESSEE HAD EARNED P ROFIT ON SALE OF SHARES AMOUNTING TO RS. 5,55,334/- WHICH HAS BEEN TREATED BY ASSESSEE AS SHORT TERM CAPITAL GAINS BUT ON THE OTHER HAND THE A.O. H AS TREATED INTO AS BUSINESS INCOME AND WHICH HAS ALSO BEEN CONFIRMED BY CIT(A). FROM THE ORDER OF CIT(A), WE FIND THAT THE REASON FOR CO NFIRMING THE ORDER OF A.O. INTERALIA WAS THAT THE ASSESSEE HAD NOT GIVEN ANY CHART OR BREAK UP OF THE SHARES PURCHASE AND SOLD CONTAINING THE DETA ILS OF DATE OF PURCHASE AND SALE, RATE OF PURCHASE AND SALE, NUMBER OF SHAR ES PURCHASE AND SOLD, NUMBER OF SHARES COMPANY WISE, PURCHASE AMOUNT OF S HARES, NET CAPITAL GAIN LOSS ETC. HE HAS FURTHER NOTED THAT THE ASSES SEE HAS ALSO NOT FILED ANY COPY OF BALANCE SHEET OR PROFIT AND LOSS ACCOUN T TO PROVE THE AVAILABILITY OF OWN FUNDS WITH THE ASSESSEE AND FUR THER SUBSTANTIATE HER STAND THAT NO BORROWED FUNDS HAVE BEEN USED BY THE ASSESSEE. IN THE ABSENCE OF AFORESAID DETAILS, ACCORDING TO CIT(A), THE MATTER COULD NOT BE DECIDED AS TO WHETHER THE TRANSACTIONS ENTERED BY T HE ASSESSEE WERE IN THE NATURE OF SHORT TERM CAPITAL GAIN OR THE TRANSA CTIONS WERE MEANT FOR BUSINESS ACTIVITY. 8. BEFORE US IN THE PAPER BOOK THE ASSESSEE HAS FILED THE DETAILS AND WORKING OF THE CAPITAL GAINS EARNED GIVING VARIOUS DETAILS THEREIN. SHE HAS ALSO FILED THE COPY OF THE BANK BOOK OF THE ASSESSE E IN SUPPORT OF HER CONTENTION THAT SHE WAS HAVING OWN FUNDS AND FURTHE R HER OWN FUNDS HAVE BEEN USED FOR THE PURPOSE OF MAKING INVESTMENTS. SH E HAS ALSO FILED COPY OF BALANCE SHEET. IN VIEW OF THE AFORESAID SUBMISS IONS AND DETAILS FILED BY THE ASSESSEE, WE FEEL THAT THE MATTER NEEDS TO B E REEXAMINED AT THE END OF CIT(A). WE THEREFORE FEEL THAT TO MEET THE E NDS OF JUSTICE AND FAIR ITA 3284/AHD /2010 A.Y. 2006- 07 6 PLAY THE MATTER NEEDS RE-EXAMINATION BY CIT(A) AND WE THEREFORE RESTORE THE ISSUE TO THE FILE OF CIT(A) FOR HIM TO DECIDE T HE ISSUE AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE, THE CA SE LAWS RELIED BY THE ASSESSEE AND OTHER SUPPORTINGS AND DETAILS PLACED B Y THE ASSESSEE AND THEREAFTER DECIDE THE ISSUE AFTER GIVING A REASONAB LE OPPORTUNITY OF HEARING TO THE ASSESSEE. THE ASSESSEE IS ALSO DIRE CTED TO COOPERATE BY SUBMITTING THE NECESSARY DETAILS CALLED FOR BY CIT( A). 9. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWE D FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN OPEN COURT ON 01- 11 - 2013. SD/- SD/- (D.K. TYAGI) (ANIL CHATURVEDI) JUDICIAL MEMBER ACCOUNTANT MEMBER AHMEDABAD. TRUE COPY RAJESH COPY OF THE ORDER FORWARDED TO: - 1. THE APPELLANT. 2. THE RESPONDENT. 3. THE CIT (APPEALS) 4. THE CIT CONCERNED. 5. THE DR., ITAT, AHMEDABAD. 6. GUARD FILE. BY ORDER DEPUTY/ASSTT.REGISTRAR ITAT,AH MEDABAD