Assistant Commissioner of Income-tax, Jalgaon V. Smt. Madhuri Sunil Kothecha, Jalgaon

ITA 385/PUN/2016

• Counselvise Citation: [2019] 112 COUNSELVISE.COM (IT) 6872 (ITAT-PUNE)
• Duration Of Justice: 2 year(s) 11 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-02-2019
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2008-2009
• Appeal Filed On: 09-03-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ABHISHEK MESHRAN
• Assessee Lawyers: HARI KRISHAN
• Keywords: Business income; Search and seizure; Difference of opinion; Revised return; Change of opinion; Futures and options; Capital Gains
• Section: 153A; 143(2)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, PUN E . , , ! , ' # BEFORE SHRI D. KARUNAKARA RAO, AM AND SHRI VIKAS AW ASTHY, JM . / ITA NOS. 383 TO 386/PUN/2016 '% & '& / ASSESSMENT YEARS : 2006-07 TO 2009-10 THE ASSISTANT COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE-1, NASHIK. ....... / APPELLANT (% / V/S. MRS. MADHURI SUNIL KOTECHA, 4, SIDDHARTH, SAGAR SOCIETY, VARDHAMAN NAGAR, JALGAON-425 001. PAN : AHMPK6577H / RESPONDENT . / ITA NOS. 2458 & 2459/PUN/2016 '% & '& / ASSESSMENT YEARS : 2006-07 & 2007-08 MRS. MADHURI SUNIL KOTECHA, 4, SIDDHARTH, SAGAR SOCIETY, VARDHAMAN NAGAR, JALGAON-425 001. PAN : AHMPK6577H ....... / APPELLANT (% / V/S. THE ASSISTANT COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE-1, NASHIK. / RESPONDENT ASSESSEE BY : SHRI HARI KRISHAN REVENUE BY : SHRI ABHISHEK MESHRAN, JCIT / DATE OF HEARING : 31.12.2018 / DATE OF PRONOUNCEMENT : 28.02.2019 2 ITA NOS. 383 TO 386/PUN/2016 ITA NOS. 2458 & 2459/PUN/2016 ) / ORDER PER VIKAS AWASTHY, JM THIS BUNCH OF SIX APPEALS, FOUR BY THE REVENUE AND TWO BY THE ASSESSEE ARE DIRECTED AGAINST THE ORDER OF COMMISSIONER OF INCOME TAX (APPEALS)-12, PUNE DATED 15.12.2015 COMMON FOR THE ASSESS MENT YEARS 2006-07 TO 2009-10. THE REVENUE HAS ASSAILED THE FINDINGS OF FIRST APPELLATE AU THORITY IN ITA NO.383/PUN/2016 FOR THE ASSESSMENT YEAR 2006-07. T HE ASSESSEE HAS FILED CROSS APPEAL IN ITA NO. 2458/PUN/2016 AGAINST THE O RDER OF COMMISSIONER OF INCOME TAX (APPEAL) FOR THE ASSESSMENT YEAR 2006 -07. THE APPEAL FILED BY THE REVENUE IN ITA NO.384/PUN/2016 IS AGAINST THE FINDINGS OF COMMISSIONER OF INCOME TAX (APPEALS) FOR THE A SSESSMENT YEAR 2007-08. THE ASSESSEE HAS FILED CROSS APPEAL FOR THE SAID ASSESSMENT YEAR IN ITA NO.2459/PUN/2016. THE APPEALS FILED BY THE REVENUE IN ITA NOS. 385 & 386/P UN/2016 ARE DIRECTED AGAINST THE ORDER OF COMMISSIONER OF INCOME TAX (APPEALS) FOR THE ASSESSMENT YEARS 2008-09 & 2009-10, RESPECTIVELY. THERE ARE NO CROSS APPEALS BY THE ASSESSEE FOR THE SAID TWO ASSESSMENT YEARS. 2. SINCE THE ISSUE RAISED IN ALL THESE APPEALS ARE COMMON AND ARE ARISING FROM SAME SET OF FACTS, THESE APPEALS ARE TAKEN UP TOGETHER FOR ADJUDICATION AND ARE BEING DISPOSED OF VIDE THIS COMMON ORDER. 3. THE BRIEF FACTS GERMANE TO THESE APPEALS ARE: A SEARC H AND SEIZURE ACTION WAS CARRIED OUT AT THE PREMISES OF KOTECHA GROUP OF JALGAON ON 3 ITA NOS. 383 TO 386/PUN/2016 ITA NOS. 2458 & 2459/PUN/2016 09.08.2011. THE ASSESSEE BEING ONE OF THE FAMILY MEMBERS O F KOTECHA GROUP WAS COVERED UNDER SEARCH ACTION. THE ASSESSEE IS ENGAGED IN TRADING OF SHARES, TRADING IN FUTURES AND OPTIONS AND COMMODITY TRADING. THE ASSESSEE ALSO EARNS INTEREST INCOME ON FIXED DEPOSITS. T HE ASSESSEES MINOR SON SIDDHARTH KOTECHA DERIVED SHORT TERM CAPITAL GAIN ON SALE OF SHARES WHICH WAS CLUBBED WITH INCOME OF THE ASSESSEE. THE ASSES SEE IN HER RETURN OF INCOME HAD DECLARED INCOME FROM TRADING OF SHARES, FUTUR ES AND OPTIONS UNDER THE HEAD CAPITAL GAINS, WHEREAS, THE ASSESSING OFFIC ER TREATED THE INCOME FROM SALE OF SHARES AS BUSINESS INCOME. THE ASSE SSING OFFICER IN ASSESSMENT PROCEEDINGS CONSEQUENT TO THE SEARCH, MADE CERTAIN ADDITIONS IN THE HANDS OF THE ASSESSEE FOR THE ASSESSMENT YEARS UNDER APPE AL. 4. AGGRIEVED BY THE ASSESSMENT ORDER PASSED U/S.143(3) R.W.S. 153A OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS TH E ACT) FOR THE RESPECTIVE ASSESSMENT YEARS, THE ASSESSEE FILED APPEALS B EFORE THE COMMISSIONER OF INCOME TAX (APPEALS). THE COMMISSIONER OF IN COME TAX (APPEALS) AFTER EXAMINING THE FACTS AND DOCUMENTS ON RECO RD HELD THAT IN ABSENCE OF ANY INCRIMINATING MATERIAL, NO ADDITION CAN BE MA DE WHERE THE ASSESSMENTS HAVE NOT ABATED. CONSEQUENTLY, SUBSTANTIAL ADDITIONS MADE BY THE ASSESSING OFFICER IN ALL THE IMPUGNED ASSESSMENT YEARS WERE DELETED BY THE COMMISSIONER OF INCOME TAX(APPEALS). AGAINST THE FINDINGS OF THE COMMISSIONER OF INCOME TAX (APPEALS), THE REVENUE IS IN APP EAL BEFORE THE TRIBUNAL. THE ASSESSEE IS ALSO IN APPEAL FOR TWO ASSESSME NT YEARS ASSAILING THE FINDINGS OF COMMISSIONER OF INCOME TAX (APPEALS) IN CHANGIN G THE HEAD OF INCOME OF ASSESSEES MINOR SON WHOSE INCOME FROM SALE O F SHARES HAS BEEN CLUBBED WITH THAT OF ASSESSEE. 4 ITA NOS. 383 TO 386/PUN/2016 ITA NOS. 2458 & 2459/PUN/2016 ITA NO.383/PUN/2016 ( BY REVENUE) ITA NO.2458/PUN/2016 (BY ASSESSEE) ASSESSMENT YEAR 2006-07 5. THE REVENUE IN ITA NO.383/PUN/2016 HAS ASSAILED THE FINDINGS OF COMMISSIONER OF INCOME TAX (APPEALS) BY RAISING FOLLOWING GROUNDS: I) ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) WAS NOT JUSTIFIED IN ADJUDICATING THAT THE I NCOME EARNED BY THE ASSESSEE OF RS.29,14,221/- BY SELLING OF SHARES IS BUSINESS INCOME ON ONE HAND AND ON THE OTHER HAND CONSIDERIN G THE INCOME OF MINOR SON CLUBBED IN THE HANDS OF THE ASSESSEE A S SHORT TERM CAPITAL GAIN, THEREBY TREATING THE SAME ISSUE DIFFE RENTLY FOR THE SAME ASSESSEE. II) ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD.CIT(A) WAS NOT JUSTIFIED IN TREATING THE DISCLOSED INCOME IN THE R EVISED RETURN AS INCOME CLAIMED TO BE EXEMPT U/S.10(38) I.E. LONG TE RM CAPITAL GAIN OF RS.54,82,500/-, WHEN THERE IS NO MENTION OF SUCH A NEXUS AND THE SAME HAS BEEN MADE ON CONJECTURE. FURTHER, THE ASSESSEE'S ACT OF INCLUDING THE EXEMPTED INCOME UNDER THE HEAD LON G TERM CAPITAL GAIN ITSELF SHOWS THAT THE TWO ARE DIFFERENT, I.E. DISCLOSED INCOME IN REVISED RETURN AND IMPUGNED EXEMPTION CLAIMED UNDER LTCG. III) ON THE FACTS AND CIRCUMSTANCES OF THE CASE, TH E ID. CIT(A) WAS NOT' JUSTIFIED IN DELETING THE ADDITION OF RS.21,68 0/- MADE ON INTEREST ON PPF ACCOUNT, SINCE THE ASSESSEE HAS MUL TIPLE PPF ACCOUNTS. THE APPELLANT CRAVES TO ADD, AMEND OR DELETE ANY GR OUNDS OF APPEAL. 6. SHRI HARI KRISHAN APPEARING ON BEHALF OF THE ASSESSEE S UBMITTED THAT DURING THE COURSE OF SEARCH, NO INCRIMINATING MATERIAL WAS FO UND AND THERE WAS NO PENDING ASSESSMENT FOR THE ASSESSMENT YEAR 200 6-07. THUS, IT IS A CASE OF NON-ABATED ASSESSMENT. THE ASSESSING OFFICER COU LD NOT HAVE MADE ANY ADDITION IN ABSENCE OF ANY INCRIMINATING MATERIAL. THE LD. A R IN SUPPORT OF HIS SUBMISSIONS, PLACED RELIANCE ON THE DECISION OF HON'BLE BOMBAY HIGH COURT IN THE CASE OF CIT VS. CONTINENTAL WAREHOUSING COR PORATION (NHAVA SHEVA) REPORTED AS 374 ITR 645 AND THE DECISION OF PUNE BENCH OF THE 5 ITA NOS. 383 TO 386/PUN/2016 ITA NOS. 2458 & 2459/PUN/2016 TRIBUNAL IN THE CASE OF LEELAVATI VIJAY KUMAR KOTECHA IN I TA NOS.1294 TO 1297/PUN/2016 FOR THE ASSESSMENT YEARS 2007-08 TO 20 12-13. THE LD. AR POINTED THAT ALL THE ADDITIONS WERE MADE BY ASSESSING OFFICE R WITHOUT INCRIMINATING MATERIAL, ON MERE CHANGE OF OPINION. 7. ON THE OTHER HAND, SHRI ABHISHEK MESHRAN REPRESENTIN G THE DEPARTMENT VEHEMENTLY DEFENDED THE ASSESSMENT ORDER AND PRAYED FOR REVERSING THE FINDINGS OF COMMISSIONER OF INCOME TAX (APPEALS). 8. WE HAVE HEARD THE SUBMISSIONS MADE BY REPRESENTATIV ES OF RIVAL SIDES AND HAVE PERUSED THE ORDERS OF THE AUTHORITIES BELOW. IT IS AN UNDISPUTED FACT THAT NO INCRIMINATING MATERIAL WAS FOUND DURING THE CO URSE OF SEARCH THAT WOULD HAVE RESULTED IN ANY ADDITION IN INCOME RETURNE D BY THE ASSESSEE. IT IS ALSO AN UNCONTROVERTED FACT THAT ASSES SMENT CONSEQUENT TO THE RETURN OF INCOME FILED U/S.139 OF THE ACT FOR THE ASSE SSMENT YEAR 2006- 07 WAS COMPLETED. THUS, ON THE DATE OF SEARCH, NO ASSESS MENT WAS PENDING WHICH COULD HAVE ABATED. IN OTHER WORDS, IT IS A CASE OF NON-ABATED ASSESSMENT. IT IS A WELL SETTLED LAW THAT NO ADDITION CAN B E MADE IN RESPECT OF ASSESSMENTS WHICH HAVE BECOME FINAL IF NO INCRIMINATING MA TERIAL IS FOUND DURING SEARCH. THE LAW WAS FIRST PROPOUNDED BY THE HON'BLE BOMBAY HIGH COURT IN THE CASE OF CIT VS. MURLI AGRO PRODUCTS L TD. REPORTED AS 49 TAXMANN.COM 172 WHICH WAS SUBSEQUENTLY FOLLOWED BY THE H ON'BLE BOMBAY HIGH COURT IN THE CASE OF CIT VS. CONTINENTAL WAREHOUSING CORPORATION (NHAVA SHEVA) (SUPRA.). SIMILAR VIEW HAS BEEN TAKEN BY THE HO N'BLE DELHI HIGH COURT IN THE CASE OF CIT VS. KABUL CHAWLA, REPORTED AS 380 ITR 5 73. 6 ITA NOS. 383 TO 386/PUN/2016 ITA NOS. 2458 & 2459/PUN/2016 THUS, IN VIEW OF UNDISPUTED FACTS OF THE CASE AND LAW LAID DOWN BY THE HON'BLE JURISDICTIONAL HIGH COURT WHICH HAS BEEN CONSIS TENTLY FOLLOWED BY THE TRIBUNAL, WE DO NOT FIND ANY MERIT IN THE GROUNDS R AISED BY THE REVENUE, ACCORDINGLY, THE SAME ARE DISMISSED BEING DEVOID OF ANY MER IT. 9. IN THE RESULT, APPEAL OF THE REVENUE IN ITA NO.383/PUN /2016 IS DISMISSED. 10. NOW, WE PROCEED TO DECIDE THE APPEAL OF THE ASSESSE E. THE ASSESSEE FILED CROSS APPEAL AGAINST THE ORDER OF COMMISSIONER OF INCO ME TAX (APPEALS) FOR ASSESSMENT YEAR 2006-07 AND CONTESTED THE SAME BY RAISING FOLLOWING GROUNDS: 1) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW THE HONOURABLE CIT (APPEALS)-12, PUNE ERRED IN CONFIRMI NG THE TREATMENT OF SHORT TERM CAPITAL GAIN RS.26,24,802/- ON SALE OF S HARES OF LISTED COMPANIES AS PROFITS AND GAINS OF BUSINESS ON THE G ROUNDS THAT THE APPELLANT IS TRADING IN SHARES. THE APPELLANT HEREB Y PRAYS THAT THE SHORT TERM CAPITAL GAIN OF RS.26,24,802/- MAY PLEAS E BE RESTORED AND ADDITION AS NORMAL BUSINESS INCOME MAY PLEASE BE DE LETED. 2) THE APPELLANT HEREBY RESERVES THE RIGHT TO ADD, AMEND, ALTER, DELETE OR RAISE ANY ADDITIONAL GROUND/S ON OR BEFORE THE D ATE OF HEARING. 11. A PERUSAL OF THE RECORD REVEALS THAT IT IS A CASE O F NON ABATED ASSESSMENT AND NO INCRIMINATING MATERIAL WAS FOUND DURING S EARCH. THEREFORE, NO ADDITION CAN BE MADE IN THE CASE OF THE ASS ESSEE. A CHANGE OF HEAD OF INCOME UNDER SUCH CIRCUMSTANCES IS ALSO NOT PERM ISSIBLE ONCE THE RETURN OF THE ASSESSEE HAS BEEN SUBJECTED TO ASSESSM ENT AND HAS BEEN ACCEPTED BY THE DEPARTMENT. WITHOUT THERE BEING ANY INC RIMINATING MATERIAL, IN THE CASE OF COMPLETED ASSESSMENTS, NEITHER ANY ADDITION CAN BE MADE NOR THERE CAN BE ANY CHANGE OF OPINION, BE IT CHANG E OF HEAD OF 7 ITA NOS. 383 TO 386/PUN/2016 ITA NOS. 2458 & 2459/PUN/2016 INCOME. HENCE, WE FIND MERIT IN THE SUBMISSIONS OF THE LD. AR, ACCORDINGLY, APPEAL FILED BY THE ASSESSEE FOR THE ASSESSMENT YEAR 2006-07 IS ALLOW ED. 12. IN THE RESULT, APPEAL OF THE ASSESSEE FOR THE ASSE SSMENT YEAR 2006-07 IS ALLOWED. ITA NO.384/PUN/2016 (BY REVENUE) ITA NO.2459/PUN/2016 (BY ASSESSEE) ASSESSMENT YEAR 2007-08 13. THE REVENUE IN ITA NO.384/PUN/2016 HAS ASSAILED TH E FINDINGS OF COMMISSIONER OF INCOME TAX (APPEALS) BY RAISING FOLLOWING GROUNDS: I) ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) WAS NOT JUSTIFIED IN DELETING THE ADDITION OF RS.26,414/- M ADE ON INTEREST OF PPF ACCOUNT, SINCE THE ASSESSEE HAS MULTIPLE PPF ACCOUN TS. II) THE APPELLANT CRAVES TO ADD, AMEND OR DELETE AN Y GROUNDS OF APPEAL. 14. THE REVENUE HAS ASSAILED THE ORDER OF COMMISSIONER OF INCOME TAX (APPEALS) ON THE SOLITARY ISSUE OF DELETING ADDITION OF RS.26,414 /- ON ACCOUNT OF INTEREST ON PUBLIC PROVIDENT FUND (PPF) ACCOUN TS. THE ASSESSING OFFICER MADE ADDITION ON THE GROUND THAT THE ASSESSEE IS HAVING MULTIPLE PPF ACCOUNTS AND WHEREAS, THE ASSESSEE CAN CLAIM BENEFIT OF DEDUCTION IN RESPECT OF ONLY ONE SUCH PPF ACCOUNT. 15. WE FIND THAT THE SOLITARY GROUND RAISED BY THE REVE NUE IN APPEAL IS IDENTICAL TO GROUND NO.(III) RAISED IN ASSESSMENT YEAR 2006- 07. THE ADDITION HAS BEEN MADE BY THE ASSESSING OFFICER MERELY ON CHANGE OF OPINION. THE RETURN OF THE ASSESSEE FILED U/S.139 OF THE ACT WAS SUBJE CT TO SCRUTINY ASSESSMENT. THE ASSESSMENT ORDER U/S.143(3) OF THE ACT W AS PASSED ON 8 ITA NOS. 383 TO 386/PUN/2016 ITA NOS. 2458 & 2459/PUN/2016 29.12.2009 I.E. MUCH PRIOR TO THE DATE OF SEARCH. THUS, IT IS A CASE OF NON- ABATED ASSESSMENT. NO INCRIMINATING MATERIAL, WHATSOEVER, WA S FOUND DURING SEARCH AND SEIZURE ACTION THAT COULD HAVE RESULTED IN ADDIT ION DURING THE IMPUGNED ASSESSMENT YEAR. THEREFORE, FOLLOWING THE DET AILED REASONS GIVEN WHILE ADJUDICATING APPEAL OF REVENUE ASSESSMENT Y EAR 2006-07, THE PRESENT APPEAL OF THE REVENUE FOR ASSESSMENT YEAR 2007 -08 IS DISMISSED BEING DEVOID OF ANY MERIT. 16. IN THE RESULT, APPEAL OF THE REVENUE FOR THE ASSESSM ENT YEAR 2007-08 IS DISMISSED. 17. THE ASSESSEE FILED CROSS APPEAL AGAINST THE ORDER OF C OMMISSIONER OF INCOME TAX (APPEALS) FOR ASSESSMENT YEAR 2007-08 AND CO NTESTED THE SAME BY RAISING FOLLOWING GROUNDS: 1) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW THE HONOURABLE CIT(APPEALS)-12, PUNE ERRED IN CONFIRMIN G THE TREATMENT OF SHORT TERM CAPITAL GAIN RS. 15,38,490/- ON SALE OF SHARES OF LISTED COMPANIES AS PROFITS AND GAINS OF BUSINESS ON THE G ROUNDS THAT THE APPELLANT IS TRADING IN SHARES. THE APPELLANT HEREB Y PRAYS THAT THE SHORT TERM CAPITAL GAIN OF RS. 15,38,490/- MAY PLEASE BE RESTORED AND ADDITION AS NORMAL BUSINESS INCOME MAY PLEASE B E DELETED. 2) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW THE HONOURABLE CIT(APPEALS)-12, PUNE ERRED IN CONFIRMIN G THE TREATMENT OF LONG TERM CAPITAL GAIN RS. 13,11,006/- ON SALE OF SHARES OF LISTED COMPANIES AS PROFITS AND GAINS OF BUSINESS ON THE G ROUNDS THAT THE APPELLANT IS TRADING IN SHARES. THE APPELLANT HEREB Y PRAYS THAT THE LONG TERM CAPITAL GAIN OF RS. 13,11,006/- MAY PLEASE BE RESTORED AND ADDITION AS NORMAL BUSINESS INCOME MAY PLEASE B E DELETED. 3) THE APPELLANT HEREBY RESERVES THE RIGHT TO ADD, AMEND, ALTER, DELETE, OR RAISE ANY ADDITIONAL GROUNDS ON OR BEFOR E THE DATE OF HEARING. 18. ON PERUSAL OF THE RECORD, WE FIND THAT IT IS A CASE O F NON ABATED ASSESSMENT AND NO INCRIMINATING MATERIAL WAS FOUND DURING S EARCH. THEREFORE, NO ADDITION CAN BE MADE IN THE CASE OF THE ASS ESSEE. A CHANGE OF 9 ITA NOS. 383 TO 386/PUN/2016 ITA NOS. 2458 & 2459/PUN/2016 HEAD OF INCOME UNDER SUCH CIRCUMSTANCES IS ALSO NOT PERM ISSIBLE. ONCE THE RETURN OF INCOME FILED U/S.139 OF THE ACT BY THE ASSESSEE HAS BEEN SUBJECTED TO SCRUTINY ASSESSMENT AND HAS BEEN ACCEPTED BY THE DEPARTMENT, WITHOUT THERE BEING ANY INCRIMINATING MATERIAL AND BEING THE CASE O F NON-ABATED ASSESSMENT, NEITHER ANY ADDITION CAN BE MADE NOR THERE CAN BE ANY CHANGE OF HEAD OF INCOME. HENCE, WE FIND MERIT IN THE SUBMISSIONS OF THE LD. AR A ND ALLOW THE APPEAL OF ASSESSEE FOR ASSESSMENT YEAR 2007-08. 19. IN THE RESULT, APPEAL OF THE ASSESSEE FOR THE ASSE SSMENT YEAR 2007-08 IS ALLOWED. ITA NO.385/PUN/2016 (BY REVENUE) ASSESSMENT YEAR 2008-09 20. THE REVENUE IN ITA NO.385/PUN/2016 HAS ASSAILED TH E ORDER OF COMMISSIONER OF INCOME TAX (APPEALS) BY RAISING FOLLOWING GROUNDS: I) ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) WAS NOT JUSTIFIED IN CONSIDERING THAT THE AD DITIONS WHICH ARE NOT BASED ON THE MATERIAL GATHERED DURING THE SEARC H ARE BEYOND THE SCOPE OF ASSESSMENT U/S. 153A WITHOUT APPRECIATING THAT THE ADDITIONS MADE BY THE AO WAS AS A RESULT OF SEARCH AND THE ISSUES, DIRECTLY OR INDIRECTLY, EMERGED ONLY AFTER THE SEARCH ACTION AND EVIDENCES GATHERED DURING THE ASSESSMENT PROCEE DINGS AND HENCE, CANNOT BE SEEN IN ISOLATION FROM SEARCH. II) ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) ERRED IN DELETING THE ADDITION OF RS.1,37,60,491/- AS BUS INESS INCOME AND TREATING THE SAME AS LONG TERM CAPITAL GAIN. III) ON THE FACTS AND CIRCUMSTANCES OF THE CASE, TH E LD. CIT(A) ERRED IN DELETING THE ADDITION OF RS.1,28,921/- AS BUSINE SS INCOME AND TREATING THE SAME AS LONG TERM CAPITAL GAIN. IV) ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE ID. CIT(A) WAS NOT JUSTIFIED IN TREATING THE DISCLOSED INCOME BEING INVESTMENT IN PLOT OF LAND SITUATED AT G.NO.105, PL OT NO.36, MAUJE NIMKHEDI & DIST.JALGAON AS BEING INCLUDED UNDER THE HEAD 'INVESTMENT IN PLOTS' WITHOUT CONSIDERING THAT THE INVESTMENT OF RS.18,72,660/-HAS BEEN UNEARTHED FOLLOWING SEARCH A CTION AND THE ASSESSEE HAS FAILED TO PROVIDE ANY COGENT E VIDENCE TO SUPPORT HER CLAIM. 10 ITA NOS. 383 TO 386/PUN/2016 ITA NOS. 2458 & 2459/PUN/2016 V) ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD.CIT(A) WAS NOT JUSTIFIED IN DELETING THE ADDITION OF RS.31,594 /-MADE ON INTEREST OF PPF ACCOUNT, SINCE THE ASSESSEE HAS MULTIPLE ACC OUNTS. VI) THE APPELLANT CRAVES TO ADD, AMEND OR DELETE AN Y GROUNDS OF APPEAL. 21. THE LD. AR FOR THE ASSESSEE SUBMITTED THAT THE ASSESSEE HAD FILED RETURN OF INCOME U/S.139 OF THE ACT ON 30.09.2008. THE TIME ALLOWED FOR MAKING SCRUTINY ASSESSMENT U/S.143(3) OF THE AC T EXPIRED ON 31.12.2010. A SEARCH ACTION WAS CARRIED OUT IN THE CASE OF ASSESSEE ON 09.08.2011. THUS, BY THE TIME SEARCH ACTION WAS CAR RIED OUT, THE TIME PERIOD FOR SCRUTINY ASSESSMENT U/S.143(3) OF THE AC T HAD ALREADY EXPIRED. THE LD. AR FURTHER SUBMITTED THAT NO INCRI MINATING MATERIAL, WHATSOEVER, WAS FOUND DURING SEARCH ACTION. THE ASS ESSING OFFICER IN ASSESSMENT PROCEEDINGS CONSEQUENT TO NOTICE ISSUED U/S.153A OF THE ACT MADE ADDITION MERELY ON PRESUMPTION AND ASSUMPT ION AND CHANGE OF OPINION. 21.1 THE LD. AR SUBMITTED THAT GROUND NOS. (I) AND (VI) ARE GENERAL IN NATURE. 21.2 THE LD. AR FURTHER SUBMITTED THAT IN GROUND N OS. (II) AND (III), THE REVENUE HAS ASSAILED THE ACTION OF COMMISSIONER OF INCOME TAX (APPEALS) IN DELETING ADDITION ARISING OUT OF TRADI NG IN SHARES BY THE ASSESSEE AND HER MINOR SON. THE ADDITIONS WERE MADE MERELY ON CHANGE OF OPINION WITHOUT THERE BEING ANY INCRIMINA TING MATERIAL. 21.3 IN RESPECT OF GROUND NO.(IV), THE LD. AR SUBMI TTED THAT ADDITION WAS MADE IN RESPECT OF INVESTMENT IN PLOT OF LAND C OMPRISING IN GAT 11 ITA NOS. 383 TO 386/PUN/2016 ITA NOS. 2458 & 2459/PUN/2016 NO.105, PLOT NO. 36, MAUJE: NIMKHEDI & DIST. JALGAO N. THE LD. AR SUBMITTED THAT THE ASSESSEE HAD ACQUIRED THE SAID P LOT OF LAND IN THE YEAR 2001 AND THE SAME WAS REFLECTED IN THE BALANCE SHEET FOR THE FINANCIAL YEAR 2001-02. THE ADDITION WAS MADE BY TH E ASSESSING OFFICER MERELY FOR THE REASONS THAT THE AGREEMENT F OR PURCHASE OF THE SAID PLOT OF LAND WAS FOUND DURING SEARCH. THE COMM ISSIONER OF INCOME TAX (APPEALS) DELETED THE ADDITION BY OBSERVING THA T THE LAND WAS PURCHASED ON 02.03.2001 AND THE TRANSACTION WAS REC ORDED IN THE BOOKS OF ACCOUNT. THERE WAS NO EVIDENCE THAT ANY UN EXPLAINED INVESTMENT WAS MADE BY THE ASSESSEE IN RESPECT OF P URCHASE OF LAND DURING THE YEAR UNDER CONSIDERATION. 21.4 WITH REGARD TO GROUND NO.(V), RELATING TO INT EREST ON PPF ACCOUNT, THE LD. AR SUBMITTED THAT THIS GROUND IS IDENTICAL TO GROUND NO.(III) RAISED IN ASSESSMENT YEAR 2006-07. 22. ON THE OTHER HAND, LD. DR VEHEMENTLY DEFENDED T HE FINDINGS OF ASSESSING OFFICER IN THE ASSESSMENT ORDER AND PRAYE D FOR REVERSING THE FINDINGS OF COMMISSIONER OF INCOME TAX (APPEALS). 23. BOTH SIDES HEARD. ORDERS OF THE AUTHORITIES BEL OW PERUSED. IT IS AN UNDISPUTED FACT THAT ON THE DATE OF SEARCH, THERE W AS NO PENDING ASSESSMENT FOR THE IMPUGNED ASSESSMENT YEAR. NO DOC UMENT HAS BEEN PLACED BY REVENUE ON RECORD TO SHOW THAT INCRIMINAT ING MATERIAL WAS FOUND DURING THE COURSE OF SEARCH ACTION ON THE BAS IS OF WHICH ADDITIONS HAVE BEEN MADE IN THE HANDS OF THE ASSESS EE FOR ASSESSMENT YEAR 2008-09. 12 ITA NOS. 383 TO 386/PUN/2016 ITA NOS. 2458 & 2459/PUN/2016 23.1 GROUND NOS. (I) AND (VI) ARE GENERAL IN NATURE AND HENCE, REQUIRES NO ADJUDICATION. 23.2 GROUND NOS. (II), (III) AND (V) OF THE APPEALS ARE SIMILAR TO THE ONE RAISED IN APPEAL FOR THE ASSESSMENT YEAR 2006-07. S INCE THERE ARE NO INCRIMINATING MATERIAL AND THE ASSESSMENT FOR ASSES SMENT YEAR UNDER APPEAL HAVE NOT ABATED, NO ADDITION MADE ON THE BAS IS OF MERE CHANGE OF OPINION, IS SUSTAINABLE. ACCORDINGLY, GROUND NO S. (II), (III) AND (V) OF THE APPEAL ARE DISMISSED BEING DEVOID OF ANY MERITS . 23.3 IN GROUND NO. (IV), THE REVENUE HAS ASSAILED DELETING ADDITION MADE ON ACCOUNT OF INVESTMENT OF RS.18,72,660/- IN PLOT OF LAND SITUATED AT NO.105, PLOT NO. 36, MAUJE : NIMKHEDI & DIST. JALGAON. THE COMMISSIONER OF INCOME TAX (APPEALS) HAS DELETED TH E ADDITION ON THE GROUND THAT THE PLOT OF LAND WAS PURCHASED IN THE Y EAR 2001 AND THE TRANSACTION WAS RECORDED IN THE BOOKS OF ACCOUNT. D URING SEARCH NO EVIDENCES WERE FOUND THAT ANY UNEXPLAINED INVESTMEN T WAS MADE BY THE ASSESSEE FOR PURCHASE OF SAID PLOT OF LAND DURI NG THE PERIOD RELEVANT TO IMPUGNED ASSESSMENT YEAR. THE LD. AR HAS DRAWN O UR ATTENTION TO THE BALANCE SHEET AS ON 31.03.2001 INDICATING THE E XTENT OF INVESTMENT MADE AND LIST OF IMMOVABLE PROPERTIES HELD BY THE A SSESSEE AS ON 31.03.2001.WE FIND THAT THE PLOT IN QUESTION HAS BE EN DISCLOSED IN THE LIST OF IMMOVABLE PROPERTIES AS ON 31.03.2001. SINC E THE PURCHASE OF ASSET HAS ALREADY BEEN REFLECTED IN THE BALANCE SHE ET FOR THE FINANCIAL YEAR ENDING IN WHICH THE ASSET WAS PURCHASED, MERE SEIZURE OF SOME DOCUMENTS PERTAINING TO THE SAID PROPERTY WOULD NOT MAKE THE 13 ITA NOS. 383 TO 386/PUN/2016 ITA NOS. 2458 & 2459/PUN/2016 DOCUMENTS INCRIMINATING. WE DO NOT FIND ANY INFIRMI TY IN THE ORDER OF COMMISSIONER OF INCOME TAX (APPEALS) IN DELETING TH E ADDITION. ACCORDINGLY, THE IMPUGNED ORDER IS UPHELD AND THE A PPEAL OF REVENUE FOR THE ASSESSMENT YEAR 2008-09 IS DISMISSED BEING DEVOID OF ANY MERIT. 24. IN THE RESULT, APPEAL OF THE REVENUE FOR THE AS SESSMENT YEAR 2008- 09 IS DISMISSED. ITA NO.386/PUN/2016 (BY REVENUE) ASSESSMENT YEAR 2009-10 25. THE REVENUE IN ITA NO.386/PUN/2016 HAS ASSAILED THE O RDER OF COMMISSIONER OF INCOME TAX (APPEALS) BY RAISING FOLLOWING GROUNDS: I) ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) WAS NOT JUSTIFIED IN CONSIDERING THAT THE AD DITIONS WHICH ARE NOT BASED ON THE MATERIAL GATHERED DURING THE SEARC H ARE BEYOND THE SCOPE OF ASSESSMENT U/S.153A WITHOUT APPRECIATI NG THAT THE ADDITIONS MADE BY THE AO WAS AS A RESULT OF SEARCH AND THE ISSUES DIRECTLY OR INDIRECTLY EMERGED ONLY AFTER THE SEARC H ACTION AND EVIDENCES GATHERED DURING THE ASSESSMENT PROCEEDING S AND HENCE CANNOT BE SEEN IN ISOLATION FROM SEARCH. II) ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) ERRED IN DELETING THE ADDITION OF RS.1,19,98,381/- AS BUS INESS INCOME AND TREATING THE SAME AS LONG TERM CAPITAL GAIN. III) THE APPELLANT CRAVES TO ADD, AMEND OR DELETE A NY GROUNDS OF APPEAL. 26. THE LD. AR FOR THE ASSESSEE SUBMITTED THAT IN A SSESSMENT YEAR 2009-10 AS WELL NO INCRIMINATING DOCUMENTS WERE FOU ND AND THERE WAS NO PENDING ASSESSMENT. THE ASSESSEE FILED RETURN OF INCOME U/S.139 OF THE ACT ON 03.09.2009, TIME FOR ISSUING NOTICE U/S. 143(2) EXPIRED ON 30.09.2010. NO NOTICE U/S.143(2) OF THE ACT WAS IS SUED TO THE ASSESSEE TILL THEN. THUS, IT IS A CASE OF CLOSED ASSESSMENT. THE LD. AR POINTED THAT ADDITION WAS MADE BY THE ASSESSING OFFICER MERELY B Y CHANGING HEAD OF 14 ITA NOS. 383 TO 386/PUN/2016 ITA NOS. 2458 & 2459/PUN/2016 INCOME. THE ASSESSEE HAD DISCLOSED INCOME FROM TRAD ING OF SHARES AS CAPITAL GAIN. THE ASSESSING OFFICER MADE ADDITION BY HOLDING GAIN ON SALE OF SHARES AS BUSINESS INCOME. THE LD. AR SUB MITTED THAT IN VIEW OF LAW LAID DOWN IN THE CASE OF CIT VS. MURLI AGRO PRO DUCTS LTD. (SUPRA), NO ADDITION CAN BE MADE WITHOUT THERE BEING ANY INC RIMINATING MATERIAL AND THERE IS NO PENDING ASSESSMENT. THE ASSESSING O FFICER HAS MADE ADDITION MERELY ON THE BASIS OF CHANGE OF OPINION. THE COMMISSIONER OF INCOME TAX (APPEALS) DELETED THE ADDITION FOLLOWING THE LAW LAID DOWN BY THE HON'BLE JURISDICTIONAL HIGH COURT. 27. ON THE OTHER HAND, LD. DR VEHEMENTLY DEFENDED T HE ORDER OF ASSESSING OFFICER AND PRAYED FOR REVERSING THE FIND INGS OF COMMISSIONER OF INCOME TAX (APPEALS) ON THIS ISSUE. 28. BOTH SIDES HEARD. ORDERS OF THE AUTHORITIES BEL OW PERUSED. THE SOLITARY ISSUE RAISED IN THE APPEAL BY REVENUE IS W ITH REGARD TO CHANGE OF HEAD OF INCOME. THE ASSESSEE DISCLOSED GAIN FROM TRADING IN SHARES UNDER THE HEAD CAPITAL GAINS. THE ASSESSING OFFIC ER CHANGED THE HEAD OF INCOME TO BUSINESS INCOME. IT IS AN UNDISPUTE D FACT THAT THERE WAS NO PENDING ASSESSMENT AND NO INCRIMINATING MATERIAL WAS FOUND DURING SEARCH. THUS, IT IS A CASE OF NON-ABATED ASSESSMENT . THE ASSESSING OFFICER CANNOT MAKE ADDITION BY MERELY CHANGING HEA D OF INCOME IN ASSESSMENT PROCEEDING U/S.153A OF THE ACT, WITHOUT THERE BEING ANY INCRIMINATING MATERIAL IN A CASE OF CLOSED ASSESSME NT. WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF COMMISSIONER OF INCOM E TAX (APPEALS) IN DELETING THE ADDITION. THE FINDINGS OF THE COMMISSI ONER OF INCOME TAX 15 ITA NOS. 383 TO 386/PUN/2016 ITA NOS. 2458 & 2459/PUN/2016 (APPEALS) ARE UPHELD, CONSEQUENTLY, APPEAL OF THE R EVENUE FOR THE ASSESSMENT YEAR 2009-10 IS DISMISSED. 29. TO SUM UP, APPEALS OF THE REVENUE IN ITA NOS.38 3 TO 386/PUN/2016 ARE DISMISSED AND APPEALS OF THE ASSES SEE IN ITA NO.2458 & 2459/PUN/2016 ARE ALLOWED. ORDER PRONOUNCED ON THURSDAY, THE 28 TH DAY OF FEBRUARY, 2019. SD/- SD/- ( . / D. KARUNAKARA RAO ) ( ! /VIKAS AWASTHY) / ACCOUNTANT MEMBER / JUDICIAL MEMBER / PUNE; !' / DATED : 28 TH FEBRUARY, 2019. SB ) * +',- . ', / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT. 2. / THE RESPONDENT. 3. THE CIT(APPEALS)-12, PUNE. 4. THE PR. CIT, CENTRAL, NAGPUR. 5. %&' () , * () , +,- , / DR, ITAT, A BENCH, PUNE. 6. './ 01 / GUARD FILE. // TRUE COPY // *2 / BY ORDER, 3 (- / PRIVATE SECRETARY * () , / ITAT, PUNE. 16 ITA NOS. 383 TO 386/PUN/2016 ITA NOS. 2458 & 2459/PUN/2016 DATE 1 DRAFT DICTATED ON 15.02.2019 SR.PS/PS 2 DRAFT PLACED BEFORE AUTHOR 28 .02.2019 SR.PS/PS 3 DRAFT PROPOSED AND PLACED BEFORE THE SECOND MEMBER JM/AM 4 DRAFT DISCUSSED/APPROVED BY SECOND MEMBER AM/JM 5 APPROVED DRAFT COMES TO THE SR. PS/PS SR.PS/PS 6 KEPT FOR PRONOUNCEMENT ON SR.PS/PS 7 DATE OF UPLOADING OF ORDER SR.PS/PS 8 FILE SENT TO BENCH CLERK SR.PS/PS 9 DATE ON WHICH THE FILE GOES TO THE HEAD CLERK 10 DATE ON WHICH FILE GOES TO THE A.R 11 DATE OF DISPATCH OF ORDER