ACIT, New Delhi V. Sh. Jai Bhagwan Singh Chauhan, Rewari

ITA 3532/DEL/2011

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 74236 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 7 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-02-2014
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: D
• Next Hearing Date: 31-01-2013
• Assessment Year: 2008-2009
• Appeal Filed On: 13-07-2011
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: NARESH KUMAR AGGARWAL
• Assessee Lawyers: LEENA SRIVASTAVA
• Keywords: Business income; Salary income

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH D NEW DELHI) BEFORE SHRI U.B..S. BEDI, JUDICIAL MEMBER AND SHRI T.S. KAPOOR, ACCOUNTANT MEMBER I.T.A. NO.3532/DEL/2011 ASSESSMENT YEAR : 2008-09 ACIT, SH. JAI BHAGWAN SINGH CHAUHAN, CIRCLE REWARI, 323-R, MODEL TOWN, NEW DELHI. V. REWARI. (APPELLANT) (RESPONDENT) PAN /GIR/NO. PAN /GIR/NO. PAN /GIR/NO. PAN /GIR/NO.AEWCP AEWCP AEWCP AEWCP- -- -7917 7917 7917 7917- -- -F FF F APPELLANT BY : SHRI NARESH KUMAR AGGARWAL, RESPONDENT BY : SMT. LEENA SRIVASTAVA, SR. DR. ORDER PER TS KAPOOR, AM: THIS IS AN APPEAL FILED BY THE REVENUE AGAINST THE ORD ER OF LD CIT(A) DATED 2.5.2011. THE REVENUE HAS TAKEN ONLY O NE GROUND OF APPEAL WHEREBY IT HAS CHALLENGED THE LD CIT(A)S ACTI ON IN DELETING THE ADDITION OF ` .33,87,110/- MADE BY THE ASSESSING OFFICER. 2. THE BRIEF FACTS OF THE CASE ARE THAT ASSESSEE FILED HI S RETURN OF INCOME ON 30.9.2008 DISCLOSING TOTAL INCOME OF ` .22,49,540/-. THE INCOME OFFERED INCLUDED SHORT TERM CAPITAL GAIN AT ` .15,66,827/- BESIDES INCOME FROM SALARY, HOUSE PROPERTY AND FROM OTH ER SOURCES. THE ASSESSING OFFICER DURING ASSESSMENT PROCEEDINGS OBSERVED THAT THE GAIN DECLARED BY ASSESSEE AS SHORT TERM CAPITAL GAIN WAS IN FACT HIS BUSINESS INCOME AND THEREFORE THE ASSESSEE WAS SHOW CAUSED A S TO WHY THE INCOME FROM CAPITAL GAINS DECLARED BY HIM BE NOT TREATED AS ITA NO3532/DEL/2011 2 INCOME FROM BUSINESS AND PROFESSION. THE ASSESSEE VIDE REPLY DATED 28.11.2010 SUBMITTED THAT HE WAS NOT INVOLVED INTO SAL E AND PURCHASE OF SHARES AND RATHER HE HAD MADE THE INVESTMENT FOR CA PITAL APPRECIATION AND HE HAD NEVER ENTERED INTO DAILY TR ANSACTIONS AND RATHER HE TOOK DELIVERY OF SHARES IN HIS DEMAT ACCOUN T AND THEN SOLD THE SHARES. IT WAS ALSO SUBMITTED THAT IF EVEN AFTER CON SIDERING THESE SUBMISSIONS HIS INCOME IS TO BE TREATED AS INCOME FROM BU SINESS AND PROFESSION THEN HE SHOULD BE ALLOWED TO PRESENT ACCOUNT S IN THIS PERSPECTIVE AND HE SHOULD BE ALLOWED ALL DEDUCTIONS OF EXPENSES WHICH HE HAD NOT CLAIMED IN THE RETURN OF INCOME. THE ASSESSI NG OFFICER THEN TREATED THE INCOME OF ASSESSEE AS BUSINESS INCOME AND ALLOW ED CERTAIN EXPENSES AND ASSESSED THE TOTAL INCOME AT ` .3803560/-. WHILE COMPUTING THE BUSINESS INCOME, THE ASSESSING OFFICER TOOK INCOME SALE OF MUTUAL FUNDS AT ` .16,95,542/- AND INCOME FROM SALE OF SHARES TOTALING AT ` .16,91,558/-. THE ASSESSEE HAD DECLARED TOTAL INCOME OF LONG TERM AND SHORT TERM AT ` .16,91,558/- ONLY. 3. AGGRIEVED WITH THE ORDER, THE ASSESSEE FILED APPEAL BEFORE LD CIT(A) AND REITERATED HIS STAND BEFORE ASSESSING OFFICER AND SUBMITTED THAT OFFER FOR TREATING HIS INCOME AS BUSINESS INCOME W AS MADE JUST TO BUY PEACE OF MIND WHEREAS IN FACT THE INCOME RELATED TO CAPITAL GAINS ONLY. IT WAS ALSO SUBMITTED THAT ASSESSING OFFICER BESIDES CHANGING THE HEAD OF INCOME ALSO ENHANCED THE TAXABLE INCOME WIT HOUT ANY REASON AND SUPPORTIVE EVIDENCE AND IN THIS RESPECT FILED CER TAIN RECONCILIATION STATEMENTS BEFORE LD CIT(A). 4. THE LD CIT(A) ON THE BASIS OF WRITTEN SUBMISSIONS HEL D THAT THE PROFIT CANNOT BE SAID TO BE DUE TO BUSINESS AS IN THAT CASE INSTEAD OF CAPITAL GAIN, THE ASSESSEE WOULD HAVE INCURRED LOSS AS TH E VALUE OF CLOSING STOCK WOULD COME DOWN DRASTICALLY. THEREFORE, HE UPHELD THE ITA NO3532/DEL/2011 3 CONTENTION OF ASSESSEE AND TREATED THE INCOME OF ASSESSEE A S CAPITAL GAIN AND ALSO RECALCULATED THE COMPUTATION OF INCOME AND EXCLUDED THE AMOUNT OF ` .16,95,542/- FROM TOTAL INCOME. 5. AGGRIEVED THE REVENUE IS IN APPEAL BEFORE US. 6. AT THE OUTSET THE LD DR SUBMITTED THAT LD CIT(A) O N THE BASIS OF SUBMISSIONS OF ASSESSEE HAS DELETED THE ADDITION OF ` .16,95,542/- MADE BY ASSESSING OFFICER WITHOUT MAKING ANY FINDING A ND HE HEAVILY RELIED UPON THE ORDER OF ASSESSING OFFICER. 7. THE LD AR, ON THE OTHER HAND, SUBMITTED THAT INCO ME OF ASSESSEE HAS BEEN ADDED TWICE BY ASSESSING OFFICER WHICH THE LD C IT(A) AFTER GOING THROUGH ALL FACTS AND CIRCUMSTANCES HAS DELETED. THE ASSESSING OFFICER ONLY WANTED TO CHANGE THE HEAD OF INCOME TO WHICH THE ASSESSEE HAD AGREED AND THEREFORE, ENHANCED AMOUNT CAME AS A SURPRISE AND LD CIT(A) HAS RIGHTLY DELETED THE ADDITIO N. 8. WE HAVE HEARD THE RIVAL SUBMISSIONS OF BOTH THE PAR TIES AND HAVE GONE THROUGH THE MATERIAL AVAILABLE ON RECORD. THE CASE WAS EARLIER HEARD ON 31.1.2013. HOWEVER, THE CASE WAS FIX ED FOR RE-HEARING AS CERTAIN CLARIFICATIONS WERE NEEDED. THE CASE WAS FIN ALLY HEARD ON 13.12.2013. WE OBSERVE THAT THE ISSUE BEFORE ASSESSING OFF ICER WAS ONLY WITH RESPECT TO CHANGE OF HEAD OF INCOME TO WHI CH THE ASSESSEE HAD ALSO AGREED BUT WHILE COMPUTING BUSINESS INCOME, TH E ASSESSING OFFICER TOOK TWO FIGURES OF INCOME I.E. ONE FROM SAL E OF SHARES AND OTHER AS INCOME FROM SALE OF MUTUAL FUNDS TO BE THE TO TAL INCOME OF ASSESSEE WHEREAS THE ASSESSEE HAD DISCLO0SED ONLY ` .16,91,558/- AS INCOME FROM LONG TERM AND SHORT TERM CAPITAL GAIN. THE LD CIT(A) ON THE BASIS OF CERTAIN RECONCILIATIONS PRESENTED BY THE ASSESSEE DELETED ITA NO3532/DEL/2011 4 THE ADDITION OF ` .16,95,542/- AND ALSO UPHELD THE VERSION OF ASSESSEE THAT IT WAS A CAPITAL GAIN AND NOT BUSINESS INCOME. AT PAPER BOOK PAGE 34 IS A COPY OF INCOME & EXPENDITURE ACCOUNT PREPARE D AND SIGNED BY ASSESSEE WHEREIN SALE AND PURCHASE OF MUTUAL FUNDS HAS BEE N SEPARATELY SHOWN AND SALE AND PURCHASE OF SHARES HAS BEEN SEPARATELY DECLARED. WE FURTHER FIND THAT DIFFERENCE BETWEEN SA LE AND PURCHASE OF MUTUAL FUNDS COMES AT ` .16,95,542/- THE FIGURE WHICH WAS TAKEN BY THE ASSESSING OFFICER. THEREFORE, WE ARE UNABLE TO UNDE RSTAND HOW LD CIT(A) HAS DELETED THIS AMOUNT. THE ASSESSEE DURING APPE LLATE PROCEEDINGS HAD FILED VARIOUS RECONCILIATIONS WHICH WE RE NOT CONFRONTED TO ASSESSING OFFICER. THOUGH REVENUE HAS NOT TAKEN A SPECIFIC GROUND FOR VIOLATION OF RULE 46A OF THE IT RULES, 1962 BUT STILL IN THE INTEREST OF JUSTICE WE ARE OF THE CONSIDERED OP INION THAT THE MATTER BE RE-ADJUDICATED BY ASSESSING OFFICER BY KEEPI NG IN VIEW ALL FACTS AND FIGURES. THE ASSESSING OFFICER SHOULD PASS A FRESH ASSESSMENT ORDER AFTER GIVING A REASONABLE OPPORTUNITY T O ASSESSEE OF BEING HEARD. 9. IN VIEW OF THE ABOVE, THE APPEAL FILED BY THE RE VENUE IS ALLOWED FOR STATISTICAL PURPOSES. 10. ORDER PRONOUNCED IN THE OPEN COURT ON 14TH DAY OF FEBRUARY, 2014. SD/- SD/- (U.B.S. BEDI) (T.S. KAPOOR) JUDICIAL MEMBER ACCOUNTANT MEMBER DT.14.02.2014. HMS ITA NO3532/DEL/2011 5 COPY FORWARDED TO:- 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT 4. THE CIT (A)-, NEW DELHI. 5. THE DR, ITAT, LOKNAYAK BHAWAN, KHAN MARKET, NEW DEL HI. TRUE COPY. (ITAT, NEW DELHI). DATE OF HEARING 13.12.2014 DATE OF DICTATION 11.2.2014 DATE OF TYPING 11.2.2014 DATE OF ORDER SIGNED BY 14.2.2014 BOTH THE MEMBERS & PRONOUNCEMENT. DATE OF ORDER UPLOADED ON NET & SENT TO THE BENCH CONCERNED.