ANAND JAIN, MUMBAI V. CIT CEN-III, MUMBAI

ITA 3895/MUM/2013

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 1062 (ITAT-MUMBAI)
• Duration Of Justice: 3 year(s) 11 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-05-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 28-12-2015
• Assessment Year: 2005-2006
• Appeal Filed On: 16-05-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: R AHUL RAMAN
• Keywords: Capital asset; Business income; Search and seizure; Maximum Marginal Rate; Corroborative evidences; Capital receipt
• Section: 143(3); 2(14); 153A; 263; 63; 132; 10

Judgement Text

H IN THE INCOME TAX APPELLATE TRIBUNAL H BENCH, MUMBAI BEFORE SHRI C.N. PRASAD, JUDICIAL MEMBER AND SHRI RAMIT KOCHAR, ACCOUNTANT MEMBER ./ I.T.A. NO.3895/ MUM/2013 ( / ASSESSMENT YEAR : 2005-06) ANAND JAIN, A-13, STERLING APARTMENTS, 38, PEDDAR ROAD, MUMBAI 400 026. / V. THE COMMISSIONER OF INCOME TAX , CENTRAL III, ROOM NO. 109, AAYAKAR BHAVAN, MUMBAI 400 020. ./ PAN : AABPJ1890J ( / APPELLANT ) .. ( / RESPONDENT ) ASSESSEE BY : SHRI VIJAY MEHTA REVENUE BY : SHRI RAHUL RAMAN, CIT-DR / DATE OF HEARING : 09-03-2017 / DATE OF PRONOUNCEMENT : 05-05-2017 / O R D E R PER RAMIT KOCHAR, ACCOUNTANT MEMBER THIS APPEAL, FILED BY THE ASSESSEE, BEING ITA NO. 3895/MUM/2013, IS DIRECTED AGAINST THE ORDER DATED 25 TH MARCH, 2013 PASSED BY THE LEARNED COMMISSIONER OF INCOME TAX (CENTRAL) - III, MUMBAI (HEREINAFTER CALLED THE CIT), FOR THE ASSESSMENT YEAR 2005-06 PASSED BY LEA RNED CIT U/S 263 OF THE INCOME-TAX ACT,1961 (HEREINAFTER CALLED THE ACT). 2. THE GROUNDS OF APPEAL RAISED BY THE ASSESSEE IN MEMO OF APPEAL FILED WITH THE INCOME-TAX APPELLATE TRIBUNAL, MUMBAI (HER EINAFTER CALLED THE TRIBUNAL) READ AS UNDER:- THE APPELLANT OBJECTS TO THE ORDER UNDER SECTION 263 OF THE INCOME TAX ACT, 1961 DATED 25/3/2013 PASSED BY THE LEARNED COMMISSIONER OF ITA 3895/MUM/2013 2 INCOME-TAX (CENTRAL)-III, MUMBAI (HEREINAFTER REFERR ED TO AS 'CIT') FOR THE ASSESSMENT YEAR 2005-06 ON THE FOLLOWING AMONG OTH ER GROUNDS: 1. THE ORDER PASSED BY THE LEARNED CIT U/S.263 OF TH E ACT IS ILLEGAL, BAD IN LAW, ULTRA VIRES AND CONTRARY TO THE PROVISION S OF LAW AND FACTS OF THE CASE AND WITHOUT APPRECIATING THE FACTS OF THE CASE IN THEIR PROPER PERSPECTIVE. 2. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN L AW, THE LEARNED CIT ERRED IN HOLDING THAT THE ASSESSMENT ORDER PASSED BY THE ASSESSING OFFICER UNDER SECTION 143(3) R.W.S.153A DA TED 29/12/2010 FOR THE ASSESSMENT YEAR 2005-06 IS ERRONEOUS IN SO FA R AS IT IS PREJUDICIAL TO THE INTEREST OF REVENUE AND THEREBY SET TING ASIDE THE ASSESSMENT ORDER PASSED BY THE ASSESSING OFFICER UNDE R SECTION 143(3) R. W.S.153A. 3. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN L AW, THE LEARNED CIT ERRED IN DIRECTING THE ASSESSING OFFICER TO RE-VERIFY THE DETAILS AND SOURCES FROM WHICH THE APPELLANT HAD MADE THE INVESTMENT IN IMMOVABLE PROPERTIES WITHOUT APPRECIATING THAT IN R ESPONSE TO THE ENQUIRY, THE APPELLANT HAD FILED COMPLETE DETAILS OF IM MOVABLE PROPERTIES INCLUDING SOURCES FOR MAKING SUCH INVESTME NTS AND THE SAME WERE DULY REFLECTED IN THE BALANCE SHEETS FILED WITH THE ASSESSING OFFICER. 4. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN L AW, THE LEARNED CIT ERRED IN DIRECTING THE ASSESSING OFFICER TO RE-VERIFY THE DETAILS REGARDING THE DIFFERENCE IN STAMP DUTY PAID A ND ALSO THE DETAILS OF THE PROPERTIES. 5. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN L AW, THE LEARNED CIT ERRED IN DIRECTING THE ASSESSING OFFICER TO RE-VERIFY THE NATURE, REGULARITY AND AMOUNT OF TRANSACTIONS IN SHARE S AND SECURITIES INVOLVED AND ASCERTAIN WHETHER THE SAME COMES WITHIN THE AMBIT OF CIRCULAR 4 ISSUED BY THE CBDT. 6. THE LEARNED CIT FAILED TO APPRECIATE THAT THE APPELL ANT, ON SPECIFIC QUERY FROM THE ASSESSING OFFICER, DURING TH E COURSE OF ASSESSMENT PROCEEDINGS, HAD FILED ALL THE REQUISITE D ETAILS OF ADVANCES AND DEPOSITS, BALANCE SHEET, POSSESSION LETTER FOR OC CUPYING VARIOUS PREMISES BY THE APPELLANT, PURCHASE CONSIDERATION, STAMP DUTY, REGISTRATION FEES, SOURCES OF INVESTMENTS ETC. AND TH E ASSESSING OFFICER, AFTER DUE SATISFACTION, HAD ALLOWED THE CLAIM OF THE A PPELLANT ON VERIFICATION OF ALL DOCUMENTS. 7. THE APPELLANT FURTHER SUBMITS THAT THE INCOME OR LOS S IN QUESTION ARISING OUT OF PURCHASE AND SALE OF SHARES AND SECURITIES WAS IN THE NATURE OF CAPITAL GAIN AND THE APPELLANT TREATED THE SAME ITA 3895/MUM/2013 3 ACCORDINGLY AS PER THE PROVISIONS OF THE INCOME TAX AC T AND AS PER THE DECISION OF BOMBAY HIGH COURT IN THE CASE OF GOPAL PU ROHIT V. JCIT (228 ITR 582) AS AFFIRMED BY THE HON'BLE SUPREME COU RT AND THEREFORE, THE ORDER OF THE LEARNED CIT DIRECTING THE ASSESSING O FFICER TO MAKE ENQUIRIES ON THE ABOVE LINES AND PASS FRESH ASSESSME NT ORDER BE QUASHED. 3. THE BRIEF FACTS OF THE CASE ARE THAT THIS APPEAL OF THE ASSESSEE HAS ARISEN AGAINST THE ORDER DATED 25 TH MARCH 2013 PASSED BY LEARNED CIT U/S 263 OF THE 1961 ACT. THE ASSESSEE E-FILED THE ORI GINAL RETURN OF INCOME ON 31-08-2005 DECLARING TOTAL INCOME AT RS. 1,26,04,66 1/- WHICH RETURN OF INCOME WAS PROCESSED U/S 143(1) OF THE 1961 ACT. TH E ASSESSMENT IN THIS CASE WAS ORIGINALLY FRAMED BY THE LEARNED ASSESSING OFFICER (HEREINAFTER CALLED THE AO) U/S 143(3) OF THE 1961 ACT ON 19-12-2007 ACCEPTING THE RETURNED INCOME. THEREAFTER, THE ASSESSMENT WAS FRAMED BY TH E AO VIDE ASSESSMENT ORDER DATED 29 TH DECEMBER 2010 PASSED U/S 143(3) R.W.S. 153A OF THE 1961 ACT , WHEREIN THE EXPENSES OF RS. 2500/- WHICH WERE CLAIMED ON ACCOUNT OF PROFESSIONAL TAX WERE DISALLOWED BY THE A.O. AND TH E INCOME WAS ASSESSED AT RS. 1,26,07,160/-. THE BACKGROUND OF THE CASE ARE THAT SEARCH AND SEIZURE ACTION U/S 132 OF THE 1961 ACT WAS CARRIED ON BY TH E REVENUE ON 05-03-2009 IN THE CASE OF JAI CORP GROUP, ITS EMPLOYEES AND CL OSE ASSOCIATES. THE JAI CORP GROUP HAS EXTENDED ITS OPERATION TO REALTY SEC TOR. THE GROUP IS PARTNER ALONG WITH RIL IN TWO MAJOR UPCOMING SEZ NAMELY NAV I MUMBAI SPECIAL ECONOMIC ZONE(NMSEZ) AND MUMBAI SPECIAL ECONOMIC ZO NE(MSEZ). THE ASSESSEE IS CHAIRMAN OF BOTH NMSEZ AND MSEZ. IT WAS OBSERVED BY LD. CIT FROM THE RECORDS OF ASSE SSMENT PROCEEDINGS U/S 143(3) OF THE 1961 ACT THAT THE ASSESSEE HAD SHOWN ADVANCES AND DEPOSITS AMOUNTING TO RS. 16,05,41,233/- IN THE BALANCE SHEE T AS ON 31-03-2005 AS PER SCHEDULE F WHICH INCLUDES STAMP DUTY OF RS. 40 ,80,500/- . THE LEARNED CIT SUBMITTED THAT AS PER BALANCE SHEET THE STAMP D UTY CHARGES WERE SHOWN OF RS. 40,48,500/- WHEREAS THE RECEIPTS OF THE STAM P DUTY SUBMITTED WERE OF ITA 3895/MUM/2013 4 RS. 32,65,500/- AND THE DIFFERENCE BETWEEN THE TWO ESTABLISHES THAT THERE WERE CERTAIN PROPERTIES OTHER THAN THOSE DISCLOSED BY THE ASSESSEE. THE LD. CIT OBSERVED THAT CERTAIN PROPERTY WHICH WERE PURCH ASED BY THE ASSESSEE HAD NOT BEEN DISCLOSED TO THE REVENUE. THE SOURCE OF I NVESTMENT IN THESE PROPERTIES OF AGGREGATE VALUE OF RS. 7,54,02,860/- REMAINED UNEXPLAINED, WERE THE OBSERVATION OF THE LEARNED CIT. IT WAS AL SO OBSERVED THAT THE A.O. HAS NOT OBTAINED DETAILS OF THE REMAINING AMOUNT OF STAMP DUTY OF RS. 7,73,000/-. THE THIRD GROUND FOR INVOKING SECTION 2 63 OF THE 1961 ACT IS WITH RESPECT TO THE SHORT TERM CAPITAL GAIN OF RS. 71,07 ,855/- DECLARED BY THE ASSESSEE ON THE SALE AND PURCHASE OF SHARES WHICH I N THE OPINION OF THE LD. CIT, SHOULD HAVE BEEN DECLARED AS BUSINESS INCOME I NSTEAD OF SHORT TERM CAPITAL GAINS AND BE CHARGED AT MAXIMUM MARGINAL RA TE. THE ASSESSEE WAS GIVEN OPPORTUNITY BY LEARNED CIT V IDE NOTICE DATED 15.2.2013 TO EXPLAIN WHY THE ASSESSMENT ORDER DATED 29-12-2010 PASSED BY THE AO U/S 143(3) R.W.S. 153A OF THE 1961 ACT SHOU LD NOT BE HELD TO BE ERRONEOUS SO FAR AS IT IS PREJUDICIAL TO THE INTERE ST OF REVENUE. THE ASSESSEE IN RESPONSE SUBMITTED THE FOLLOWING REPLY :- AT THE OUTSET, IT IS HUMBLY SUBMITTED THAT THE ORD ER PASSED BY THE ASSESSING OFFICER U/S.143(3) R.W.S 153A IS NEIT HER ERRONEOUS NOR PREJUDICIAL TO THE INTEREST OF REVENUE AS ALL T HE DETAILS RELATING TO THE ISSUES STATED BY YOUR HONOUR IN YOUR LETTER HAVE BEEN DEALT WITH AND HAVE BEEN DULY EXPLAINED AND AFTER DUE CON SIDERATION OF THE SAME, THE ASSESSING OFFICER HAS PASSED THE ASSE SSMENT ORDER BY APPLYING HIS MIND. THIS IS EVIDENT FROM THE FACT S GIVEN HEREUNDER: THE ASSESSEE HAD FILED THE RETURN OF INCOME FOR ASS ESSMENT YEAR 2005-06 IN RESPONSE TO NOTICE RECEIVED U/S. 153A OF THE ACT. THE ASSESSMENT WAS TAKEN UP FOR SCRUTINY AND DURING THE COURSE OF THE SCRUTINY ASSESSMENT PROCEEDINGS, THE ASSESSEE H AD FILED ALL THE DETAILS REQUIRED BY THE ASSESSING OFFICER FROM TIME TO TIME. IN THE LETTER DATED 15/2/2013 ISSUED BY YOUR HONOUR, I T HAS BEEN ITA 3895/MUM/2013 5 STATED THAT THE ASSESSEE HAS FAILED TO DISCLOSE THE DETAILS OF IMMOVABLE PROPERTIES AND HAS FAILED TO GIVE THE DET AILS / EXPLANATION ABOUT THE PROPERTIES PURCHASED BY THE A SSESSEE ON WHICH STAMP DUTY WAS PAID HAS BEEN FURNISHED. ACCOR DING TO YOUR HONOUR, THE TOTAL VALUE OF THE PROPERTIES PURC HASED AMOUNTING TO RS. 7,54,02,860/- HAS ESCAPED ASSESSME NT AS THE SOURCE OF INVESTMENT IS UNEXPLAINED. THE ASSESSEE W OULD LIKE TO HUMBLY SUBMIT THAT DURING THE COURSE OF SCRUTINY AS SESSMENT PROCEEDINGS. THE ASSESSEE WAS ASKED TO EXPLAIN THE DETAILS OF IMMOVABLE PROPERTIES AND THE SOURCES OF FUNDS. IN R ESPONSE TO THE SAME, THE ASSESSEE HAD FILED A LETTER WITH THE DEPUTY COMMISSIONER OF INCOME TAX. CENTRAL CIRCLE 39, MUMB AI GIVING THE REQUIRED DETAILS, WHICH READ AS UNDER:- 'SHRI ANAND JAIN (ASSESSE) HAD ACQUIRED 20 FLATS AT CENTRAL GARDEN COMPLEX, SWADESHI MILL COMPOUND, CHUNABHATTI , KURLA. MUMBAI FROM SURELA INVESTMENTS & TRADING P L TD. AS PER THE DETAILS GIVEN IN THE ATTACHED STATEMENT. THE SAID FLATS WERE ACQUIRED DURING THE FINANCIAL YEAR 2004- 05 FOR A TOTAL CONSIDERATION OF RS.7,54,02,860/-. THE CONSID ERATION WAS PAID AS UNDER. RS. UPTO A.Y. 2005 - 06 4,56,00,000 A.Y. 2006-07 1,15,00,000 A.Y. 2007-08 1,00,00,000 A.Y. 2008-09 83,02,860 TOTAL 7,54,02,860 SINCE THE ACCOUNTING IN RESPECT OF THE ABOVE FLATS WAS ON CASH BASIS, THE ASSESSE HAD ACCOUNTED FOR ALL THE P AYMENTS MADE AGAINST THEM AND THE SAME WAS REFLECTED AS ADV ANCES IN THE RESPECTIVE YEARS. ACCORDINGLY, AS ON 31.03.2 005, THE AMOUNT OF RS. 4,56,00,000/- WAS SHOWN UNDER THE HEA D 'ADVANCES AND DEPOSITS'. IN RESPECT OF THESE FLATS, DURING THE ASSESSMENT YEAR 31/3/2005, THE ASSESSE HAD MADE PAYMENT OF STAMP DUTY AMOUNTING TO RS.34,48,500 AND REGISTRATION CHARGES OF RS.6,00,000 AGGREGATING TO RS.40,48,500/-. THE SAID AMOUNT OF RS.40,48,500 HAS BEEN REFLECTED UNDER THE HEAD 'ADVANCES AND DEPOSITS'. I N SCHEDULE F TO THE BALANCE SHEET FILED WITH YOUR ALO NG WITH THE RETURN OF INCOME. ITA 3895/MUM/2013 6 A COPY OF THE BALANCE SHEET TOGETHER WITH THE RELEV ANT SCHEDULES ARE ENCLOSED HEREWITH FOR YOUR READY REFE RENCE. THE ASSESSE HAD RECEIVED POSSESSION OF THE AFORESAI D PREMISES ON 4TH DAY OF APRIL, 2008 I.E. ASSESSMENT YEAR 2009-10. ACCORDINGLY, THESE FLATS HAVE BEEN CAPITAL IZED AND SHOWN AS IMMOVABLE PROPERTY AT RS.9,71,18,660 AS ON 31/3/2009 AS PER THE DETAILS GIVEN HEREUNDER: PARTICULARS AMOUNT (RS) (A) AGREEMENT VALUE 7,54,02,860 (B) STAMP DUTY 34,48,500 (C) REGISTRATION CHARGES 6,00,000 (D) DOCUMENTATION CHARGES/SCANNING CHARGES 11,600 (E) RENOVATION EXPENSES 1,76,55,700 TOTAL 9,71,18,660 THE ASSESSEE HAD ACQUIRED THESE FLATS OUT OF HIS OW N SOURCES AS CAN BE SEEN FROM THE BALANCE SHEET FOR V ARIOUS YEARS FILED WITH THE RETURN OF INCOME.' THE ASSESSING OFFICER VIDE LETTER DATED 12.11.2010 CALLED FOR THE DETAILS OF STAMP DUTY AND RELATED ASSETS AS ALSO TH E DETAILS OF ALL SHARE TRANSACTIONS. THE ASSESSEE HAD SUBMITTED ITS REPLY AS UNDER: 'WE REFER TO YOUR LETTER NO.DCIT/CC-39/JAI CORP GROUP/AJ/DETAILS/2010-11 DATED 12 TH NOVEMBER, 2010 IN CONNECTION WITH ASSESSMENT PROCEEDINGS FOR THE ASSESSMENT YEAR 2005-06 IN THE CASE OF OUR AFORESAI D CLIENT. IN THIS CONNECTION, UNDER THE INSTRUCTIONS OF OUR C LIENT, WE WOULD LIKE TO SUBMIT AS UNDER: 1. RECONCILIATION STATEMENT OF STAMP DUTY REFLECTED IN BALANCE SHEET WITH ACTUAL STAMP DUTY PAID FOR PURCH ASE OF PREMISES IS ENCLOSED. THE STAMP DUTY AND REGISTRATI ON WAS ITA 3895/MUM/2013 7 PAID TO REGISTER THE AGREEMENT IN RESPECT OF PURCHA SE OF RESIDENTIAL FLATS AT CENTRAL GARDEN COMPLEX. SWADES HI MILL COMPOUND, CHUNABHATTI, KURLA, MUMBAI. THE POSSESSIO N WAS NOT RECEIVED. A SUM OF RS.4,56,00,000/- WAS PAI D TO SURELA INVESTMENTS AND TRADING P. LTD. AND RS. 40,48,500/- PAID FOR STAMP DUTY AND REGISTRATION HA S BEEN SHOWN AS ADVANCE. THE BALANCE AMOUNT OF RS.2,98,02,860/- WAS PAYABLE TO SURELA INVESTMENTS AND TRADING P. LTD. AS ON 31 ST MARCH, 2005. COPIES OF AGREEMENTS IN THIS RESPECT HAVE ALREADY BEEN SUBMIT TED TO YOU EARLIER. 2. CAPITAL GAIN WORKING STATEMENTS OF UNITS OF MUTU AL FUNDS AND SHARES ARE ENCLOSED GIVING THE DETAILS OF ALL TRANSACTIONS LIKE NAME OF SCRIP, DATE OF PURCHASE, QUANTITY, AMOUNT AND CAPITAL GAIN ALONG WITH SUPPORTING EVIDENCES/CONTRACT NOTES. WE HOPE THE ABOVE WILL MEET WITH YOUR REQUIREMENTS. THE ASSESSEE HAD ALSO FILED PREMISES-WISE DETAILS O F PURCHASE CONSIDERATION, STAMP DUTY & REGISTRATION FEES. THE ASSESSEE HAD ALSO FILED BALANCE SHEET AND THE RELEVANT DETAILS O F ADVANCES AND DEPOSITS FOR THE YEAR ENDING 31/3/2005 TO 31/3/2009 . A COPY OF THE SAID LETTER SUBMITTED BY THE ASSESSEE TOGETHER WITH ALL THE SUPPORTING EVIDENCES ARE ENCLOSED FOR THE KIND PERU SAL OF YOUR HONOUR. DURING THE COURSE OF THE SCRUTINY ASSESSMEN T PROCEEDINGS, THE ASSESSEE HAD ALSO FILED A LETTER F ROM SURELA INVESTMENTS AND TRADING PVT LTD HANDING OVER THE PO SSESSION OF THE VARIOUS PREMISES AT CENTRAL GARDEN COMPLEX TO T HE ASSESSEE. THUS, YOUR HONOUR'S CONTENTION THAT THE IMMOVABLE P ROPERTIES ACQUIRED BY THE ASSESSEE HAVE NOT BEEN REFLECTED IN THE BALANCE SHEET IS WITHOUT ANY BASIS. THE ASSESSING OFFICER HAD VERIFIED THE DETAILS FILE D BY THE ASSESSEE IN RESPECT OF IMMOVABLE PROPERTIES AND ALL THE RELE VANT SUPPORTING EVIDENCES FILED WITH HIM BEFORE PASSING THE ASSESSM ENT ORDER U/S.143(3) R.W.S. 153A. IT MAY FURTHER BE STATED TH AT IN RESPECT OF THESE PREMISES, THE ASSESSING OFFICER HAD RECOMPUTE D THE ANNUAL LETTING VALUE U/S. 23(1)(A) FOR ASSESSMENT YEAR 200 9-10 I.E. THE YEAR IN WHICH THE ASSESSEE RECEIVED THE POSSESSION OF THE PREMISES. THUS, BY NO STRETCH OF IMAGINATION, THE O RDER PASSED ITA 3895/MUM/2013 8 U/S. 153A CAN BE CONSIDERED AS ERRONEOUS OR PREJUDI CIAL FOR THE INTEREST OF REVENUE ON THIS ISSUE. YOUR HONOUR HAS STATED IN YOUR AFORESAID LETTER THA T AS PER CIRCULAR 4 ISSUED BY THE CBDT, THE ASSESSING OFFICE R HAS TO LOOK INTO THE NATURE AND REGULARITY OF THE TRANSACTIONS IRRESPECTIVE OF WHETHER THE ASSESSEE HAS SHOWN THE SHARES AS INVEST MENT IN THE BALANCE SHEET OR NOT. ACCORDING TO YOUR HONOUR, THE ASSESSING OFFICER HAS NOT DEALT WITH THIS ISSUE AND HAS ACCEP TED THE STAND OF THE ASSESSEE AND ACCORDINGLY THE ASSESSING OFFIC ER SHOULD HAVE TREATED THE INCOME FROM SHORT TERM CAPITAL GAIN AS BUSINESS INCOME AND TAXED ACCORDINGLY. TO THIS EXTENT, ACCOR DING TO YOUR HONOUR, THE ORDER PASSED BY THE ASSESSING OFFICER I S ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF REVENUE. IN THIS CONNECTION, AT THE OUTSET, IT IS SUBMITTED THAT DURING THE COURSE OF SCRUTINY ASSESSMENT PROCEEDINGS, THE ASSE SSEE WAS ASKED TO EXPLAIN THE JUSTIFICATION OF TREATING THE PROFITS/SURPLUS ARISING OUT OF PURCHASE AND SALE OF SHARES/SECURITI ES AS CAPITAL GAIN AND NOT AS BUSINESS INCOME. IN THIS RESPECT THE ASSESSEE HAD FILED ITS SUBMISSIONS WHICH ARE REPRODUCED BELO W:- 'WE REFER TO THE ASSESSMENT PROCEEDINGS U/S. 153A F OR ASSESSMENT YEAR 2003-04 TO 2009-10 IN THE CASE OF O UR CLIENT SHRI ANAND JAIN. AS REGARDS TREATMENT GIVEN TO THE PROFIT/SURPLUS AR ISING FROM PURCHASE AND SALE OF EQUITY SHARES AND SECURIT IES AS CAPITAL GAIN AND NOT AS INCOME FROM BUSINESS, WE HA VE TO SUBMIT AS UNDER. 1. SHRI ANAND JAIN (THE ASSESSEE) IS AN INVESTOR IN SHARES AND SECURITIES. HE HAS BEEN INVESTING IN SHARES AND SECURITIES SINCE LAST MANY YEARS. THE ASSESSEE HAS BEEN TREATING THE SHARES AND SECURITIES AS INVESTMENT FR OM THE TIME THEY ARE ACQUIRED. THE SHARES AND SECURITIES A CQUIRED BY HIM HAVE ALWAYS BEEN KEPT AS INVESTMENT AND NOT AS STOCK IN TRADE IN THE BOOKS OF ACCOUNT AND THE SAME HAS SHOWN AS INVESTMENT IN THE BALANCE SHEET FILED WITH THE DEPARTMENT ALONGWITH THE RETURN OF INCOME. ITA 3895/MUM/2013 9 2. THE ASSESSEE HAS NOT BORROWED ANY FUNDS FOR THE PURPOSE OF MAKING INVESTMENT IN SHARES AND SECURITI ES IN ANY OF THE YEARS UNDER CONSIDERATION. MOREOVER, NO INTEREST EXPENDITURE HAS BEEN INCURRED OR CLAIMED BY THE ASS ESSEE AGAINST THE INCOME ARISING FROM SUCH INVESTMENTS. T HE ASSESSEE HAS ALWAYS UTILIZED ITS OWN SURPLUS FUNDS OR FAMILY FUNDS ACCUMULATED OVER A PERIOD OF TIME AND HAS NOT RESORTED TO BORROWING FOR THE PURPOSE OF INVESTMENT S. THIS IS BORNE OUT BY THE DETAILS FIFED WITH YOU DURING T HE COURSE OF THE ASSESSMENT PROCEEDINGS. 3. THE ASSESSEE DOES NOT HAVE ADMINISTRATION SET UP AND HAS NOT ENGAGED OR EMPLOYED ANY PERSON FOR INVESTME NT IN SHARES OR SECURITIES AND THE SAME IS BEING CARRIED OUT BY THE ASSESSEE HIMSELF WHICH GOES TO PROVE THAT THE INVESTMENT IN SHARES IS NOT AN ORGANIZED ACTIVITY. 4. DURING THE PERIOD UNDER CONSIDERATION, THE ASSES SEE HAD ALSO MADE INVESTMENT IN THE UNITS OF VARIOUS MUTUAL FUNDS. THE ASSESSEE HAS RECEIVED DIVIDEND ON THE SAID MUTU AL FUND UNITS. THE INVESTMENT IN THE MUTUAL FUNDS CAN, BY ANY STRETCH OF IMAGINATION, BE CONSIDERED ONLY AS INVESTMENT AND NOT AS BUSINESS ASSETS MORE PARTICUL ARLY, SINCE THE UNITS OF MUTUAL FUND CANNOT BE TRADED ON THE MARKET AT ALL, THE UNITS CAN ONLY BE REPURCHASED BY THE MUTUAL FUNDS CONCERNED AND CANNOT BE SOLD TO ANY OT HER PERSON. 5. DURING THE PERIOD UNDER CONSIDERATION THE ASSESS EE HAS EARNED CAPITAL GAIN BOTH BY WAY OF LONG TERM AND BY WAY OF SHORT TERM. THE PERIOD OF HOLDING SHARES RANGES FRO M TWO YEARS TO TWENTY YEARS. SIMILARLY, EVEN IN THE CASE OF SHORT TERM CAPITAL/LOSS THE PERIOD OF HOLDING RANGES FROM THREE MONTHS TO ELEVEN MONTHS IN MOST OF THE CASES. THE H OLDING PERIOD OF LESS THAN TWO MONTHS IS ONLY AN EXCEPTION . FOR EXAMPLE, THE ASSESSEE HAS HELD THE SHARES OF JAI CA RP LTD FROM MORE THAN TWENTY YEARS AND THEY HAVE BEEN HELD EVEN TODAY. SOME OF THESE SCRIPS HAVE BEEN SOLD AFTER HO LDING IT FOR MORE THAN FIFTEEN YEARS. DURING THE PERIOD UNDE R CONSIDERATION, THE ASSESSEE HAS EARNED CAPITAL GAIN FROM SALE OF LONG TERM INVESTMENTS AS GIVEN HEREUNDER: ITA 3895/MUM/2013 10 SR NO. ASSESSMENT YEAR LONG TERM CAPITAL GAIN ON SHARES & SECURITIES. 1 2003-04 RS. 1,98,05,875 2 2004-05 89,84,495 3 2006-07 36,13,840 4 2008 - 09 44,42,656 6. THE ASSESSEE HAS EARNED INCOME BY WAY OF DIVIDEN D ON THE INVESTMENTS MADE FROM YEAR TO YEAR AS ALSO C APITAL APPRECIATION ON THE SALE OF SHARES. THE DETAILS OF DIVIDEND RECEIVED IN EACH OF THE SEVEN YEAR IS GIVEN AS UNDE R: SR NO. ASSESSMENT YEAR INCOME BY WAY OF DIVIDEND RECEIVED ON SHARES & SECURITIES 1 2003-04 45,91,394 2 2004-05 4,54,07,085 3 2005 - 06 1,68,07,472 4 2006-07 3,67,599 5 2007-08 8,12,450 6 2008-09 85,685 7 2009 - 10 75,742 FROM THE ABOVE, IT IS PROVED BEYOND DOUBT THAT THE DIVIDEND WAS THE PRIME MOTIVE FOR MAKING INVESTMENT IN SHARES AN D SECURITIES. 7. THE ASSESSEE HAS TAKEN DELIVERY OF SHARES AGAINS T THE PURCHASES MADE AND THE SAME ARE CREDITED TO HIS DEM AT ACCOUNT. SIMILARLY, THE ASSESSEE HAS GIVEN DELIVERY OF SHARE S AGAINST SALES MADE FROM THE DEMAT ACCOUNT. HENCE, ALL THE TRANSAC TIONS OF PURCHASE AND SALE ARE DELIVERY BASED. 8. THE TREATMENT GIVEN BY THE ASSESSEE IN RESPECT OF SHARES AND INVESTMENTS HAS BEEN ACCEPTED BY THE DEPARTMENT YEA R AFTER YEAR. THE DEPARTMENT HAS IN ALL THE YEARS ACCEPTED THE INCOME OF THE ASSESSEE AS SHORT TERM CAPITAL GAIN OR LONG TER M CAPITAL GAIN AS THE CASE MAY BE. THE FACTS AND THE CIRCUMSTANCES ARE NOT DIFFERENT FROM THE YEAR YEARS AND HENCE THERE IS NO JUSTIFICATION ITA 3895/MUM/2013 11 ON THE PART OF THE DEPARTMENT TO TREAT THE SAME AS BUSINESS INCOME. IT MAY BE RELEVANT TO STATE HERE THAT THE D EPARTMENT HAS ACCEPTED THE TREATMENT GIVEN BY THE ASSESSEE EVEN I N THESE SEVEN YEARS EITHER U/S. 143(3)/143(1) OF THE ACT. 9 THE FREQUENCY AND VOLUME OF THE TRANSACTION ENTER ED INTO BY THE ASSESSEE IN ALL THESE YEARS HAS NOT BEEN HUGE. MOREOVER, THE VOLUME AND THE FREQUENCY SHOULD BE CONSIDERED VIS-A -VIS THE AVAILABILITY OF THE FUNDS AND THE SIZE OF THE BALAN CE SHEET OF THE ASSESSEE. 10. MOREOVER, EVERY INVESTMENT IS A CAPITAL ASSET W ITHIN THE MEANING OF SECTION 2(14) OF THE ACT. THUS THE PROFI T ARISING ON TRANSFER OF SUCH INVESTMENTS BEING CAPITAL ASSETS I S NECESSARILY TO BE TAXED UNDER THE HEAD 'CAPITAL GAIN'. THE ASSESSE E HAS BEEN SHOWING THE INCOME AIRING ON TRANSFER OF SHARES/SEC URITIES UNDER THE HEAD CAPITAL GAIN EITHER SHORT TERM OR LONG TER M DEPENDING ON THE PERIOD OF HOLDING. THE DEPARTMENT, FOLLOWING TH E STATUTORY PROVISIONS, HAS ACCEPTED THE HEADS OF INCOME UNDER WHICH THE INCOME WAS OFFERED I.E. CAPITAL GAIN IN THE EARLIER YEARS AND EVEN IN THESE YEARS IN EARLIER ASSESSMENT PROCEEDINGS AS STATED ABOVE. THE SHARES HAVE BEEN PURCHASED AND SOLD THROUGH REC OGNIZED STOCK EXCHANGE AND SECURITIES TRANSACTION TAX HAS B EEN PAID WHEREVER APPLICABLE. THE ASSESSEE HAS ALSO RECEIVED DIVIDEND FOR ALL THE YEARS UNDER CONSIDERATION AND AS ALREADY ST ATED ABOVE, NO AMOUNT HAS BEEN BORROWED. 11. FOR THE AFORESAID PROPOSITIONS, THE ASSESSEE RE LIES ON THE DECISION OF BOMBAY HIGH COURT IN THE CASE OF GOPAL PUROHIT V JCIT - 228 CTR 582. THE SPECIAL LEAVE PETITION FILE D BY THE DEPARTMENT HAS BEEN DISMISSED BY THE HON'BLE SUPREM E COURT VIDE ITS ORDER DATED 15TH NOVEMBER, 2010. 12. THE MUMBAI ITAT IN THE CASE OF DCIT V SMK SHARE S & STOCK BROKING HELD THAT THE AO'S CONCLUSION THAT SINCE TH E SALE AND PURCHASE HAD BEEN DETERMINED IN THE VOLATILITY IN T HE MARKET, THE SAME IS AGAINST THE BASIC PICTURE OF INVESTOR IS NO T BASED ON SOUND RATIONAL REASONING. A PRUDENT INVESTOR ALWAYS KEEPS A WATCH ON THE MARKET TRENDS AND, THEREFORE, IS NOT B ARRED UNDER LAW FROM LIQUIDATING HIS INVESTMENTS IN SHARES. THE LAW ITSELF HAS RECOGNIZED THESE FACTS BY TAXING SUCH TRANSACTIONS UNDER THE HEAD 'SHORT TERM CAPITAL GAINS' AND IF THE AO'S REA SONING IS ACCEPTED, THEN IT WOULD BE AGAINST THE LEGISLATIVE INTENT ITSELF THE ITA 3895/MUM/2013 12 HON'BLE ITAT FURTHER HELD THAT THE FACT THAT THE AS SESSEE DID NOT BORROW FUNDS FOR INVESTMENT IN SHARES IS AN IMPORTA NT ASPECT WHICH CANNOT BE LOST SITE OF WHILE DECIDING THE TRU E INTENTION OF THE ASSESSEE. IT FURTHER HELD THAT THOUGH THE PRINC IPLES OF RES JUDICATA DO NOT APPLY TO INCOME TAX PROCEEDINGS IT IS WELL SETTLED LAW THAT THE PRINCIPLES OF CONSISTENCY SHOULD NOT B E IGNORED. 13. THE DELHI HIGH COURT IN THE CASE OF CIT V ROHIT ANAND (327 ITR 445) HAS HELD THAT WHERE THE ASSESSEE HOLDING S HARES AFTER TAKING DELIVERY AND MAKING FULL PAYMENT FOR INVESTM ENTS THE TRANSACTIONS ARE TO BE TREATED AS GIVING RISE TO CA PITAL GAIN AND CANNOT BE BRANDED AS TRADING IN SHARES. IN VIEW OF THE ABOVE, IT IS SUBMITTED THAT THE INCO ME OR LOSS ARISING OUT OF PURCHASE AND SALE OF SHARES AND SECU RITIES IS IN THE NATURE OF CAPITAL GAIN AND THE ASSESSEE HAS TREATED THE SAME ACCORDINGLY AS PER THE PROVISIONS OF THE ACT AND HE NCE THE SAME CANNOT BE TREATED AS BUSINESS INCOME.' FROM THE ABOVE, IT IS AMPLY CLEAR THAT THE ISSUE UN DER CONSIDERATION WAS ALSO RAISED BY THE ASSESSING OFFICER FOR WHICH THE DETAILED EXPLANATION HAS BEEN GIVEN. AFTER CONSIDERING THE E XPLANATION MADE BY THE ASSESSEE, THE DETAILS FILED BY THE ASSESSEE IN THIS RESPECT, THE FACTS OF THE CASE, THE PROVISIONS OF LAW AND THE VARIOUS CASE LAWS RELIED UPON BY THE ASSESSEE, THE ASSESSING OFFICER WAS SATISFIE D THAT THE PROFIT ON SALE OF SHARES HAS RIGHTLY BEEN OFFERED AS INCOME U NDER THE HEAD 'CAPITAL GAIN'. ACCORDING TO THE ASSESSING OFFICER, AFTER CONSIDERING THE SUBMISSIONS OF THE CASE, THERE WAS NO JUSTIFICATION IN TAXING THE INCOME ON SALE OF SHARES AS BUSINESS INCOME. IT IS ONLY AF TER DUE CONSIDERATION THAT THE ASSESSING OFFICER HAS CHOSEN TO TAX THE SU RPLUS ON SALE OF SHARES AS INCOME UNDER THE HEAD 'CAPITAL GAIN'. THE ASSESSING OFFICER HAS APPLIED HIS MIND WHILE DEALING WITH THE ISSUES UNDER CONSIDERATION. THUS, IT CANNOT BE SAID THAT NO APPLICATION OF MIND HAS BEEN MADE BY THE ASSESSING OFFICER ON THE ISSUE WHILE PASSING TH E ASSESSMENT ORDER U/S. 143(3) R.W.S. 153A. IN VIEW OF THIS, THE ORDER PASSED U/S. 143(3) R.W.S. 153A IS NEITHER ERRONEOUS NOR PREJUDICIAL TO THE INTERESTS OF THE REVENUE IN SO FAR AS THIS ISSUE IS CONCERNED. IT MAY ALSO BE NOTED HERE THAT THE ASSESSEE HAD, IN TER ALIA, RELIED ON THE DECISION OF BOMBAY HIGH COURT IN THE CASE OF GOPAL PUROHIT V JCIT (228 ITR 582) WHICH WAS HELD IN FAVOUR OF THE ASSESSEE. THE SPECIAL LEAVE PETITION FILED BY THE REVENUE AGAINST THE SAID ORDE R OF THE BOMBAY HIGH ITA 3895/MUM/2013 13 COURT HAS BEEN DISMISSED BY THE HON'BLE SUPREME COU RT VIDE ITS ORDER DATED 15 TH NOV. 2010. THE ASSESSEE HAD ALSO RELIED ON THE MU MBAI ITAT DECISION IN CASE OF DCIT V SMK SHARES & STOCK BROKING. THE ASSESSING OFFICER HAS CONSIDERED THE FACTS OF THE C ASE AND THE DECISION OF THE JURISDICTIONAL HIGH COURT AND ALSO THE ORDER OF HON'BLE SUPREME COURT IN THE CASE OF GOPAL PUROHIT (SUPRA) BEFORE C OMING TO THE CONCLUSION THAT THE ASSESSEE IS AN INVESTOR AND NOT A TRADER. IT IS REQUIRED TO BE NOTED THAT THE DECISION REACHED BY T HE TRIBUNAL OR THE HIGH COURT ARE BINDING UPON THE ASSESSING OFFICER. THUS, THE ASSESSING OFFICER HAS NOT MADE ANY ERROR BY PASSING THE ORDER WHICH IS BASED ON THE FACTS OF THE CASE AND BINDING DECISION OF THE J URISDICTIONAL HIGH COURT. THE ACCEPTANCE OF THE DECISION OF THE JURISD ICTIONAL HIGH COURT AND THE SUPREME COURT, THE ASSESSING OFFICER CANNOT BE SAID TO BE IN ERROR IN MAKING THE ASSESSMENT WHILE FOLLOWING THE JUDGMENTS. IT WOULD NOT BE OPEN TO THE COMMISSIONER OF INCOME TAX TO PR OCEED WITH THE SETTING ASIDE OF THE ORDER OF THE ASSESSING OFFICER WHICH IS PASSED AFTER CONSIDERING THE FACTS OF THE CASE, PROVISIONS OF LA W AND VARIOUS JUDICIAL PRONOUNCEMENTS. THE ERROR ENVISAGED UNDER SECTION 263 IS NOT ONE WH ICH DEPENDS ON POSSIBILITY OR GUESSWORK, BUT IT SHOULD BE ACTUALLY AN ERROR EITHER OF FACT OR OF LAW . IN THE INSTANT CASE, THE ORDER PASSED B Y THE ASSESSING OFFICER IS BASED ON THE FACTS OF THE CASE AND THE PROVISION S OF LAW. IT IS NOT THE CASE OF YOUR HONOUR THAT THE ASSESSMENT ORDER PASSE D BY THE ASSESSING OFFICER IS AGAINST THE PROVISIONS OF THE INCOME-TAX ACT. ERRONEOUS ASSESSMENT REFERS TO AN ASSESSMENT THAT DEVIATES FR OM THE LAW AND ACCORDINGLY AN ORDER CANNOT BE TERMED AS ERRONEOUS UNLESS IT IS NOT IN ACCORDANCE WITH LAW. IT IS FURTHER SUBMITTED THAT AT THE TIME OF PASSING THE ASSESSMENT ORDER, THE ASSESSING OFFICER WAS FULLY SATISFIED ABOUT THE IMMOVABLE PROPERTIES ACQUIRED BY THE ASSESSEE AND THE SOURCES THEREOF TH E ASSESSING OFFICER WAS ALSO AWARE OF THE DECISION OF THE JURISDICTIONA L HIGH COURT AND THE SUPREME COURT IN CASE OF GOPAL PUROHIT V JCIT - 228 CTR 582. IN SUCH CIRCUMSTANCES, IT CANNOT BE SAID THAT THE ORDER OF ASSESSMENT PASSED BY THE ASSESSING OFFICER AFTER CONSIDERING ALL THE FACTUAL POSITIONS, DETAILS FILED AND VARIOUS JUDICIAL PRONOUNCEMENTS I S ERRONEOUS OR PREJUDICIAL TO THE INTERESTS OF THE REVENUE. THE ASSESSEE RELIES ON THE DECISION OF GUJARAT HIGH COURT IN GARDEN SILK MILLS LTD V CIT - 221 ITR 861 IN WHICH IT WAS HELD THAT THE COMMISSIONER IS NOT EMPOWERED TO IGNORE THE BINDING DECISIONS OF THE ITA 3895/MUM/2013 14 SUPREME COURT OR A JURISDICTIONAL HIGH COURT CONSID ERED BY THE ASSESSING OFFICER WHILE PASSING THE ASSESSMENT ORDE R. THE ASSESSEE ALSO RELIES ON THE DECISION OF SUPREME COURT IN THE CASE OF CIT V. G.M. MITTAL STAINLESS STEEL PVT. LTD. (263 I TR PAGE 255) WHEREIN IT WAS HELD AS UNDER: 'HELD, AFFIRMING THE DECISION OF THE HIGH COURT, TH AT THE COMMISSIONER HAD NOT RECORDED HIS REASONS FOR COMIN G TO THE CONCLUSION THAT THE ASSESSING OFFICER WAS ERRONEOUS IN DECIDING THAT POWER SUBSIDY WAS A CAPITAL RECEIPT. GIVEN THE FACT THAT THE DECISION OF THE JURISDICTIONAL HIGH COURT WAS OPERA TIVE AT THE MATERIAL TIME, THE ASSESSING OFFICER COULD NOT BE S AID TO BE WRONG. THE FACT THAT THE SUPREME COURT HAD SUBSEQUE NTLY HELD IN SAHNEY STEEL AND PRESS WORKS' CASE [1997] 228 ITR 2 53, THAT POWER SUBSIDY WAS REVENUE IN NATURE WOULD NOT JUSTI FY THE COMMISSIONER'S TREATING THE DECISION OF THE ASSESSI NG OFFICER AS ERRONEOUS. THE POWER OF THE COMMISSIONER UNDER SECT ION 263 HAD TO BE EXERCISED ON THE BASIS OF THE MATERIAL TH AT WAS AVAILABLE TO HIM WHEN HE EXERCISED THE POWER. AT THAT TIME, T HERE WAS NO DISPUTE THAT THE ISSUE WHETHER POWER SUBSIDY COULD BE TREATED AS A CAPITAL RECEIPT HAD BEEN CONCLUDED AGAINST THE RE VENUE. THE SATISFACTION OF THE COMMISSIONER WAS, THEREFORE, NO T BASED ON MATERIAL EITHER LEGAL OR FACTUAL, WHICH ALONE WOULD GIVE HIM THE JURISDICTION TO TAKE ACTION UNDER SECTION 263. DECISION OF THE MADHYA PRADESH HIGH COURT AFFIRMED. ' WE FURTHER SUBMIT THAT YOUR PROPOSED ACTION UNDER S ECTION 263, IN TREATING THE ASSESSMENT ORDER PASSED BY THE AO AS E RRONEOUS IN SO FAR AS IT IS PREJUDICIAL TO THE INTEREST OF REVENUE IS NOT JUSTIFIED AS THE AO HAS PASSED THE ORDER AS PER THE LAW. THE AO HAS TAK EN ONE POSSIBLE VIEW OF THE MATTER WHICH IS MORE LOGICAL AND SUPPOR TED BY VARIOUS JUDICIAL PRONOUNCEMENTS WHILE PASSING ORDER U/S 143 (3) R. W S. 153A OF THE ACT. HENCE THE ORDER PASSED BY THE AO COULD NOT BE TERMED AS ERRONEOUS FOR INVOKING THE PROVISIONS OF SECTION 26 3 OF THE INCOME TAX ACT, 1961. IN SUPPORT OF OUR ABOVE SUBMISSION, WE RELY UPON TH E BOMBAY HIGH COURT JUDGMENT REPORTED IN 203 ITR 108 IN THE CASE OF CIT VS GABRIEL LNDIA LTD. THE HON'BLE COURT WHILE DEALING WITH THE PROVISIONS OF SECTION 263 OF THE I. T. ACT, HAS OBSERVED AS UNDER :- ITA 3895/MUM/2013 15 'THE COMMISSIONER, ON PERUSAL OF THE RECORDS, MAY B E OF THE OPINION THAT THE ESTIMATE MADE BY THE OFFICER CONCERNED WAS ON THE LOWER SIDE AND LEFT TO THE COMMISSIONER HE WOULD HAVE ESTIMATE D THE INCOME OF A HIGHER FIGURE THAN THE ONE DETERMINED BY THE INCOME -TAX OFFICER . THAT WOULD NOT VEST THE COMMISSIONER WITH POWER TO RE-EX AMINE THE ACCOUNTS AND DETERMINE THE INCOME HIMSELF AT A HIGH ER FIGURE. THIS IS BECAUSE THE INCOME-TAX OFFICER HAS EXERCISED THE QU ASI-JUDICIAL POWER VESTED IN HIM IN ACCORDANCE WITH LAW AND ARRIVED AT A CONCLUSION AND SUCH A CONCLUSION CANNOT BE TERMED TO BE ERRONEOUS SIMPLY BECAUSE THE COMMISSIONER DOES NOT FEEL SATISFIED WITH THE C ONCLUSION. IT MAY BE SAID IN SUCH A CASE THAT IN THE OPINION OF THE COMM ISSIONER THE ORDER IN QUESTION IS PREJUDICIAL TO THE INTERESTS OF THE REV ENUE. BUT THAT BY ITSELF WOULD NOT BE ENOUGH TO VEST THE COMMISSIONER WITH T HE POWER OF SUO MOTU REVISION BECAUSE THE FIRST REQUIREMENT, NAMELY , THAT THE ORDER IS ERRONEOUS IS ABSENT.' THE ITAT, BOMBAY IN THE CASE OF JHULEAL LAND DEVELO PMENT CORPN. V. DCIT (56 ITD 345) FOLLOWING GABRIEL INDIA'S JUDGMEN T, ALSO HELD THAT WHEN ASSESSING OFFICER'S VIEW WAS ALSO A POSSIBLE V IEW, IT COULD BE INCORRECT TO HOLD ASSESSMENT ORDER TO BE ERRONEOUS MERELY BECAUSE COMMISSIONER HELD A DIFFERENT VIEW. THE ASSESSING OFFICER HAS RIGHTLY ALLOWED THE CLAIM OF THE ASSESSEE COMPANY AFTER CONSIDERING THE FACTS OF THE CASE. TH E ORDER PASSED BY THE ASSESSING OFFICER IS NEITHER ERRONEOUS NOR PREJ UDICIAL TO THE INTEREST OF THE REVENUE. THE CLAIM HAS BEEN ACCEPTED BY THE ASSESSING OFFICER IN ACCORDANCE WITH LAW. MOREOVER, AN ORDER CANNOT BE T ERMED AS ERRONEOUS UNLESS IT IS NOT IN ACCORDANCE WITH THE L AW. IF AN ASSESSING OFFICER ACTING IN ACCORDANCE WITH THE LAW MAKES A C ERTAIN ASSESSMENT, THE SAME CANNOT BE BRANDED AS ERRONEOUS BY THE COMM ISSIONER SIMPLY BECAUSE, ACCORDING TO HIM, THE ASSESSING OFFICER SH OULD HAVE TAKEN A DIFFERENT VIEW THAN WHAT HE HAS TAKEN. THE ERROR SH OULD BE AN ERROR IN APPLYING THE RELEVANT LAW OR FACTS. JUST BY RESORTI NG A DIFFERENT METHOD A LARGER TAX COULD HAVE BEEN LEVIED, CANNOT BE THE SOLE CONSIDERATION TO ATTRACT SECTION 263, AS PREJUDICIAL TO THE INTEREST OF THE REVENUE, UNLESS THE SAID METHOD IS THE ONLY MODE LEGALLY APPLICABLE . THE LD. CIT AFTER CONSIDERING THE REPLIES OF THE AS SESSEE DIRECTED THE A.O. TO VERIFY THE SOURCE FROM WHERE THE ASSESSEE HAD MADE INVESTMENTS IN THE PROPERTIES AND WHETHER THE SAID INCOME WAS OFFERED FOR TAXATION IN THE RELEVANT ASSESSMENT YEARS AS WELL AS TO VERIFY THE GENUINENESS OF THE CLAIM OF ITA 3895/MUM/2013 16 THE ASSESSEE REGARDING REFLECTION OF THE INVESTMENT IN THE RESPECTIVE YEARS. THE LD. CIT ALSO DIRECTED THE AO TO VERIFY THE DIFF ERENCE IN THE PAYMENT OF STAMP DUTY OF RS. 7,73,000/- BETWEEN THE AMOUNT OF RS. 40,48,500/- AS REFLECTED IN BALANCE SHEET AND AN AMOUNT OF RS. 32, 65,500/- REFLECTED IN THE REPLY SUBMITTED BEFORE THE AO DURING THE ASSESSMENT PROCEEDINGS , WHILE THE ASSESSEE CLAIMED BEFORE LEARNED CIT THAT THE ASSESS EE HAS PAID RS.34,48,500/- TOWARDS STAMP DUTY AND RS. 6,00,000/ - WAS PAID TOWARDS REGISTRATION CHARGES . THE LEARNED CIT DIRECTED THE AO TO VERIFY THE DETAILS OF THE PROPERTIES AND ITS SOURCES OF ACQUISITION. THE LEARNED CIT ALSO DIRECTED A.O. TO VERIFY WHETHER THE GAINS ARISING FROM SALE OF SHARES/UNITS OF MUTUAL FUNDS SHOULD BE CHARGED TO TAX AS BUSINESS INCOME IN ACCORDANCE WITH THE CBDT CIRCULAR NO. 4, VIDE ORDER DATED 25-03-2013 PA SSED BY LEARNED CIT U/S 263 OF THE 1961 ACT. 4. AGGRIEVED BY THE ORDER DATED 25-03-2013 PASSED B Y THE LD. CIT U/S 263 OF THE 1961 ACT, THE ASSESSEE FILED AN APPEAL BEFORE T HE TRIBUNAL. 5. AT THE OUTSET, THE LD. COUNSEL SUBMITTED THAT TH E A.O. HAS FRAMED THE ASSESSMENT VIDE ASSESSMENT ORDER DATED 30.3.2014 PA SSED U/S 143(3) R.W.S. 263 OF THE ACT WHICH IS PLACED ON RECORD VIDE PAGE NO. 26 TO 31/PAPER BOOK WHEREIN THE A.O. HAS ACCEPTED THE CONTENTION OF THE ASSESSEE WITH RESPECT TO THE FIRST TWO GROUNDS WHICH HAS BEEN INVOKED BY THE LD. CIT U/S 263 OF THE 1961 ACT NAMELY TO VERIFY THE INVESTMENTS MADE BY T HE ASSESSEE IN IMMOVABLE PROPERTIES AND ITS SOURCES OF ACQUISITION AS WELL TO VERIFY THE DIFFERENCE IN STAMP DUTY AS REFLECTED IN THE BALANC E SHEET AND AS SUBMITTED IN REPLY BEFORE THE LEARNED AO DURING THE COURSE OF ASSESSMENT PROCEEDINGS U/S 143(3) R.W.S. 153A OF THE 1961 ACT WHEREIN NO A DDITIONS WERE MADE IN ASSESSMENT PROCEEDINGS BY THE A.O. U/S 143(3) R.W.S . 263 OF THE 1961 ACT VIDE ASSESSMENT ORDERS DATED 30-03-2014, AND THE AO CONFINED THE ADDITIONS ONLY BY BRINGING TO TAX GAINS ARISING ON SALE OF SH ARES OF RS. 71,07,855/- AS ITA 3895/MUM/2013 17 BUSINESS INCOME INSTEAD OF CAPITAL GAINS DECLARED B Y THE ASSESSEE, VIDE ASSESSMENT ORDER DATED 30-03-2014 PASSED U/S 143(3) R.W.S. 263 OF THE 1961 ACT. THE LD. COUNSEL SUBMITTED THAT THE GENESIS OF THE ASSESSMENT ORDER DATED 29-12-2010 PASSED BY THE AO U/S 143(3) R.W.S. 153A OF THE ACT WAS THE SEARCH CONDUCTED BY REVENUE IN THE CASE OF THE ASSE SSEE U/S 132 OF THE ACT ON 05.03.2009. IT IS SUBMITTED THAT THE AFORE-SAID ASSESSMENT ORDER DATED 29- 12-2010 PASSED BY THE AO U/S 143(3) R.W.S. 153A OF THE 1961 ACT DID NOT MENTION THAT ANY INCRIMINATING MATERIAL WAS FOUND D URING THE COURSE OF SEARCH . THUS, IT WAS SUBMITTED THAT NO ADDITIONS C OULD HAVE BEEN MADE IN THE ASSESSMENT ORDER DATED 29-12-2010 PASSED BY THE AO U/S 143(3) R.W.S. 153A OF THE 1961 ACT IN THE ABSENCE OF ANY INCRIMIN ATING MATERIAL AS THE ASSESSMENT FOR THE ASSESSMENT YEAR 2005-06 WAS AN U NABATED ASSESSMENT KEEPING IN VIEW PROVISIONS OF SECTION 153A OF THE 1 961 ACT AS DATE OF SEARCH WAS 05-03-2009 , THE ORIGINAL ASSESSMENT HAVING BEI NG FRAMED BY THE AO FOR ASSESSMENT YEAR 2005-06 U/S 143(3) OF THE 1961 ACT VIDE ASSESSMENT ORDERS DATED 19-12-2007, WHICH IS PLACED IN PAPER BOOK AT PAGE 21-22. THE LD. COUNSEL RELIED UPON THE DECISION OF HONBLE BOMBAY HIGH COURT IN THE CASE OF ALL CARGO GLOBAL LOGISTICS, 374 ITR 645 (BOM) AND D ECISION OF HONBLE DELHI HIGH COURT IN THE CASE OF CIT V. KABUL CHAWLA, 380 ITR 573 (DEL) . IT WAS SUBMITTED THAT WHAT COULD NOT BE ACHIEVED DIRECTLY CANNOT BE ACHIEVED INDIRECTLY AS NO INCRIMINATING MATERIAL WERE FOUND DURING THE COURSE OF SEARCH AND HENCE IT WAS SUBMITTED THAT INVOCATION O F PROVISIONS OF SECTION 263 OF THE 1961 ACT IS BAD IN LAW WHEN THERE IS NO REFERENCE TO THE MATERIAL FOUND DURING THE COURSE OF SEARCH IN THE ASSESSMENT FRAMED BY THE AO VIDE ASSESSMENT ORDER DATED 29-12-2010 PASSED U/S 143(3) R.W.S. 153A OF THE 1961 ACT AND NO ADDITION COULD HAVE BEEN MADE IN TH E ABSENCE OF INCRIMINATING MATERIAL FOUND DURING THE COURSE OF S EARCH AND THUS INVOCATION OF PROVISIONS OF SECTION 263 OF THE ACT IS BAD IN L AW. THE LD. COUNSEL ALSO RELIED UPON THE DECISION OF THE MUMBAI BENCH OF THIS TRIBU NAL IN THE CASE OF MRS. SHWETA AVARSEKAR V. PRINCIPAL COMMISSIONER OF INCOM E TAX IN ITA NO. 3186 ITA 3895/MUM/2013 18 AND 3187/MUM/2016 FOR ASSESSMENT YEARS 2006-07 AND 2009-10, VIDE COMMON ORDER DATED 1 ST AUGUST, 2016 AS WELL AS IN THE CASE OF M/S HANSPRO.COM PVT LTD. V. PR. COMMISSIONER OF INCOME TAX IN ITA NO. 3573/MUM/2016 FOR ASSESSMENT YEAR 2006-07 VIDE ORDE R DATED 31 ST JANUARY, 2017 AND DECISION OF MUMBAI-TRIBUNAL IN THE CASE OF JITENDRA J. MEHTA V. CIT IN ITA NO. 1872/MUM/2015 FOR ASSESSMENT YEAR 2006-0 7 VIDE ORDERS DATED 24 TH JUNE, 2015, COPIES OF THE ORDERS ARE PLACED IN THE FILE AND CONTENDED THAT SINCE INVOCATION OF PROVISIONS OF SECTION 263 OF TH E ACT HAS NO REFERENCE TO THE INCRIMINATING MATERIAL, NO ADDITIONS COULD HAVE BEE N MADE AND HENCE IT IS BAD IN LAW. 6. THE LD. D.R., ON THE OTHER HAND, RELIED ON THE O RDER OF THE LD. CIT. 7. WE HAVE CONSIDERED THE RIVAL CONTENTIONS AND ALS O PERUSED THE MATERIAL AVAILABLE ON RECORD. WE HAVE OBSERVED THAT THE ASS ESSEE E-FILED THE ORIGINAL RETURN OF INCOME ON 31-08-2005 DECLARING TOTAL INCO ME AT RS. 1,26,04,661/- WHICH RETURN OF INCOME WAS PROCESSED U/S 143(1) OF THE 1961 ACT. THE ASSESSMENT ON THIS CASE WAS ORIGINALLY FRAMED BY TH E AO U/S 143(3) OF THE 1961 ACT ON 19-12-2007 ACCEPTING THE RETURNED INCOM E. THEREAFTER THE ASSESSMENT WAS FRAMED BY THE AO VIDE ASSESSMENT ORD ER DATED 29 TH DECEMBER 2010 PASSED U/S 143(3) R.W.S. 153A OF THE 1961 ACT, WHEREIN THE EXPENSES OF RS. 2500/- WHICH WERE CLAIMED ON ACCOUN T OF PROFESSIONAL TAX WERE DISALLOWED BY THE AO AND THE INCOME WAS ASSESS ED AT RS. 1,26,07,160/-. THE BACKGROUND OF THE CASE ARE THAT SEARCH AND SEIZ URE ACTION U/S 132 OF THE 1961 ACT WAS CARRIED ON BY THE REVENUE ON 05-03-200 9 IN THE CASE OF JAI GROUP, ITS EMPLOYEES AND CLOSE ASSOCIATES. THE JAI CORP GROUP HAS EXTENDED ITS OPERATION TO REALTY SECTOR. THE GROUP IS PARTN ER ALONG WITH RIL IN TWO MAJOR UPCOMING SEZ NAMELY NAVI MUMBAI SPECIAL ECONO MIC ZONE(NMSEZ) AND MUMBAI SPECIAL ECONOMIC ZONE (MSEZ). THE ASSES SEE IS CHAIRMAN OF BOTH NMSEZ AND MSEZ. WE HAVE OBSERVED THAT LD. CIT OBSERVED FROM THE ITA 3895/MUM/2013 19 RECORDS CIT OBSERVED FROM THE RECORDS OF ASSESSMENT PROCEEDINGS U/S 143 (3) OF THE 1961 ACT THAT THE ASSESSEE HAD SHOWN ADVANCE S AND DEPOSITS AMOUNTING TO RS. 16,05,41,233/- IN THE BALANCE SHEE T AS ON 31-03-2005 AS PER SCHEDULE F WHICH INCLUDES 'STAMP DUTY OF RS. 40 ,80,500/-' . THE LEARNED CIT OBSERVED THAT AS PER BALANCE SHEET THE STAMP DU TY CHARGES WERE SHOWN OF RS. 40,48,500/- WHEREAS THE RECEIPTS OF THE STAMP D UTY SUBMITTED WERE OF RS. 32,65,500/- AND THE DIFFERENCE BETWEEN THE TWO IN T HE OPINION ESTABLISHES THAT THERE WERE CERTAIN PROPERTIES OTHER THAN THOSE DISCLOSED BY THE ASSESSEE. THE ID. CIT OBSERVED THAT CERTAIN PROPERTIES WHICH WERE PURCHASED BY THE ASSESSEE HAD NOT BEEN DISCLOSED TO THE REVENUE. THE SOURCE OF INVESTMENT IN THESE PROPERTIES OF AGGREGATE VALUE OF RS. 7,54,02, 860/- REMAINED UNEXPLAINED, WERE THE OBSERVATION OF THE LEARNED CI T. IT WAS ALSO OBSERVED BY LEARNED CIT THAT THE A.O. HAS NOT OBTAINED DETAILS OF THE REMAINING AMOUNT OF STAMP DUTY OF RS. 7,73,000/-. THE THIRD GROUND IS W ITH RESPECT TO THE SHORT TERM CAPITAL GAIN OF RS. 71,07,855/- DECLARED BY TH E ASSESSEE ON THE SALE AND PURCHASE OF SHARES WHICH IN THE OPINION OF THE ID. CIT, SHOULD HAVE BEEN DECLARED AS BUSINESS INCOME INSTEAD OF SHORT TERM C APITAL GAINS AND BE CHARGED AT MAXIMUM MARGINAL RATE. THE ASSESSEE GAVE DETAILED REPLIES EXPLAINING THAT ALL THE ISSUES WERE DULY EXPLAINED IN THE ASSESSMENT PROCEEDINGS U/S 143(3) R.W.S. 153A OF THE 1961 ACT WHICH CULMINATED INTO AN ASSESSMENT ORDER DATED 29-12-2010. THE REPLIES FILE D BEFORE LEARNED CIT EXPLAINING THE EXPLANATIONS OFFERED DURING THE COUR SE OF ASSESSMENT PROCEEDINGS U/S 143(3) R.W.S. 153 A OF THE 1961 ACT IS REPRODUCED IN THE PRECEDING PARA'S OF THIS ORDER, (WHICH RELIES BEFOR E THE AO WERE INCORPORATED IN REPLIES FILED BY THE ASSESSEE BEFORE ID. CIT IN PROCEEDINGS VI] S 263 OF THE 1961 ACT) AND ARE NOT REPEATED AGAIN BY US. THE LEA RNED CIT WAS NOT SATISFIED AND HELD THAT ASSESSMENT ORDER DATED 29-12-2010 PAS SED BY THE AO WAS ERRONEOUS SO FAR AS IT IS PREJUDICIAL TO THE INTERE ST OF REVENUE VIDE ORDERS DATED 25-03-2013 PASSED BY LEARNED CIT U/S 263 OF T HE 1961 ACT. THUS, THE ID. CIT AFTER CONSIDERING THE REPLIES OF THE ASSESS EE DIRECTED THE A.O. TO VERIFY ITA 3895/MUM/2013 20 THE SOURCE FROM WHERE THE ASSESSEE HAD MADE INVESTM ENTS IN THE PROPERTIES AND WHETHER THE SAID INCOME WAS OFFERED FOR TAXATIO N M THE RELEVANT ASSESSMENT YEARS AS WELL AS TO VERIFY THE GENUINENE SS OF THE CLAIM OF THE ASSESSEE REGARDING REFLECTION OF THE INVESTMENT IN THE RESPECTIVE YEARS. THE ID. CIT ALSO DIRECTED THE AO TO VERIFY THE DIFFERENCE I N THE PAYMENT OF STAMP DUTY OF RS. 7,73,000/- BETWEEN THE AMOUNT OF RS. 40,48,5 00/- AS REFLECTED IN BALANCE SHEET AND AN AMOUNT OF RS. 32,65,500/- REFL ECTED IN THE REPLY SUBMITTED BEFORE THE AO DURING THE ASSESSMENT PROCE EDINGS , WHILE THE ASSESSEE CLAIMED BEFORE LEARNED CIT THAT THE ASSESS EE HAS PAID RS.34,48,500/- TOWARDS STAMP DUTY AND RS. 6,00,000/ - WAS PAID TOWARDS REGISTRATION CHARGES . THE LEARNED CIT DIRECTED THE AO TO VERIFY THE DETAILS OF THE PROPERTIES AND ITS SOURCES OF ACQUISITION. THE LEARNED CIT ALSO DIRECTED A.O. TO VERIFY WHETHER THE GAINS ARISING FROM SALE OF SHARES/UNITS OF MUTUAL FUNDS SHOULD BE CHARGED TO TAX AS BUSINESS INCOME I N ACCORDANCE WITH THE CBDT CIRCULAR NO. 4, VIDE ORDERS DATED 25-03-2013 P ASSED BY LEARNED CIT U/S 263 OF THE 1961 ACT. WE HAVE OBSERVED FROM THE RECORDS BEFORE US THAT IT IS NOT BROUGHT ON RECORD BY REVENUE BEFORE US WHETH ER ANY INCRIMINATING MATERIAL WAS FOUND DURING THE COURSE OF SEARCH U 1 S 132 OF THE 1961 ACT AND WE HAVE OBSERVED THAT WHILE FRAMING ASSESSMENT ORDE R DATED 29-12-2010 U/S 143(3) R.W.S 153A OF THE 1961 ACT NO ADDITIONS HAVE BEEN MADE BY THE AO BASED ON ANY INCRIMINATING MATERIAL FOUND DURING TH E COURSE OF SEARCH. IN ANY CASE, WE HAVE OBSERVED THAT THE AO HAS MADE PRO PER ENQUIRIES IN PROCEEDINGS U/S 143(3) R.W.S. 153 A OF THE ACT WITH RESPECT TO ALL THE THREE ISSUES WHICH WERE INVOKED BY THE CIT IN PROCEEDINGS U/S 263 OF THE 1961 ACT AND THE AO HAD ARRIVED AT A CONCLUSIONS ON ALL THE THREE ISSUES AFTER ENQUIRIES, WHICH ARE PLAUSIBLE VIEW BOTH ON FACTS A ND ON LAW. IT IS NOT A CASE WHERE NO ENQUIRIES HAVE BEEN MADE BY AO OR AN INADE QUATE ENQUIRY WERE MADE BY THE AO. IN CASE OF DIFFERENTIAL IN STAMP DU TY OF RS. 7,73,000/- AS POINTED OUT BY LEARNED CIT, THE ASSESSEE DULY EXPLA INED THAT THE VALUE REFLECTED AS STAMP DUTY IN BALANCE SHEET COMPRISED OF STAMP DUTY OF RS. ITA 3895/MUM/2013 21 34,48,500/- AND REGISTRATION CHARGES OF RS. 6,00,00 0/- AND THERE IS NO DIFFERENCE IN THE VALUE AS REFLECTED IN BALANCE SHE ET IN THE REPLIES FILED BY THE ASSESSEE BEFORE THE AO DURING PROCEEDINGS U/S 143(3 ) R.W.S. 153A OF THE 1961 ACT. THE SAID AMOUNTS WERE DULY REFLECTED IN THE BA LANCE SHEET OF THE ASSESSEE. WITH RESPECT TO THE INVESTMENTS IN PROPER TIES, THE ASSESSEE HAS DULY EXPLAINED IN PROCEEDINGS U/S 143(3) R.W.S. 153 A OF THE 1961 ACT THAT THE ASSESSEE ACCOUNT FOR THE AMOUNTS AS INVESTMENT IN P ROPERTIES BASED ON PAYMENTS ACTUALLY MADE BEFORE THE END OF THE RELEVA NT FINANCIAL YEAR WHICH WERE TO THE TUNE OF RS. 4,56,00,000/- AND WERE DULY REFLECTED IN BALANCE SHEET OF THE ASSESSEE. THE ASSESSEE DULY RECONCILED THE TOTAL INVESTMENTS OF RS. 7,54,02,860/- MADE IN THE PROPERTIES IN DIFFERE NT ASSESSMENT YEARS DURING ASSESSMENT PROCEEDINGS U/S 143(3) R.W.S. 153 A OF THE 1961 ACT WITH WHAT IS REFLECTED IN ITS BOOKS OF ACCOUNTS, WHICH D ULY IN-FACT RECONCILED WITH THE TOTAL INVESTMENTS IN PROPERTIES SOUGHT FOR EXPL ANATION BY CIT IN ITS ORDERS U/S 263, AS UNDER: RS. UPTO A.Y. 2005-06 4,56,00,000 A.Y. 2006-07 1,15,00,000 A.Y. 2007 - 08 1,00,00,000 A.Y. 2008 - 09 83,02,860 TOTAL 7,54,02,860 THESE INVESTMENTS WERE REFLECTED IN THE BALANCE SHE ET OF THE ASSESSEE. THE EVIDENCES FOR ABOVE ASSESSMENT YEARS WERE FILED BEF ORE THE AO IN PROCEEDINGS U/S 143(3) R.WS. 153 A OF THE 1961 ACT WHICH WERE V ERIFIED BY THE AO. HENCE, IT COULD NOT BE SAID THAT THE SAID VIEW IS ERRONEOU S SO FAR AS PREJUDICIALLY TO THE INTEREST OF REVENUE SO AS TO BE COVERED UNDER T HE MANDATE OF SECTION 263 OF THE 1961 ACT WHICH IS FORTIFIED FURTHER BY THE A O ITSELF DROPPING BOTH THE GROUNDS OF INVOCATION OF SECTION 263 OF THE 1961 AC T BY LEARNED CIT IN AN ASSESSMENT ORDER DATED 30-03-2014 FRAMED U/S 143(3) R.W.S. 263 OF THE 1961 ACT, WHEREIN NO ADDITIONS WERE MADE ON GROUNDS OF D IFFERENTIAL IN STAMP DUTY ITA 3895/MUM/2013 22 AS WELL INVESTMENTS IN PROPERTIES AND ITS SOURCES. FURTHER, WITH RESPECT TO TREATMENT OF SHORT TERM CAPITAL GAINS ON SALE OF SH ARES OF RS. 71,07,855/- AS BUSINESS INCOME INVOKED AS ONE OF THE GROUNDS BY LE ARNED CIT FOR APPLYING SECTION 263 OF THE 1961 ACT ALSO LACKS MERIT AS' TH E AO HAD WHILE FRAMING ASSESSMENT ORDER DATED 29-12-2010 PASSED U/S 143(3) R.WS. 153A OF THE 1961 ACT HAD MADE PROPER AND DETAILED ENQUIRIES AGA INST WHICH THE ASSESSEE SUBMITTED DETAILED REPLIES AND ARRIVED AT CONCLUSIO N TO TREAT THE GAINS ARISING FROM SALE OF SHARE AS CAPITAL GAINS WHICH IS A PLAU SIBLE VIEW BOTH ON FACTS AND ON LAW. THE REPLIES FILED BY THE ASSESSEE ON THIS G ROUND IN PROCEEDINGS BEFORE THE AO U/S 143(3) R.W.S 153A OF THE 1961 ACT IS REP RODUCED IN PRECEDING PARA'S OF THIS ORDER AND ARE NOT REPEATED AGAIN FOR SAKE OF BREVITY. THUS, THE ORDER DATED 25-03-2013 PASSED BY LEARNED CIT U/S 26 3 OF THE 1961 ACT IS EVEN NOT SUSTAINABLE ON THIS GROUND. WE HAVE NOTED THAT THE AO DID TREATED THE SHORT TERM CAPITAL GAINS ON SALE OF SHARES OF R S. 71,07,855/- AS BUSINESS INCOME IN AN ASSESSMENT ORDER DATED 30-03-2014 PASS ED U/ 143(3) R.W.S. 263 OF THE 1961 ACT BUT IT IS CLEARLY A CHANGE OF OPINI ON BY THE AO AS AGAINST THE CONSISTENT STAND TAKEN FOR LAST SEVERAL YEARS BY RE VENUE BY ACCEPTING THE GAINS ON SALE OF SHARES AS CAPITAL GAINS INSTEAD OF BUSINESS INCOME WHICH IS AGAINST THE PRINCIPLES OF CONSISTENCY WHICH IS NOT PERMISSIBLE IN PROCEEDINGS UNDER THE 1961 ACT AS THE FACTS ARE SIMILAR IN PREC EDING YEARS. RELIANCE IS PLACED ON DECISION OF HON'BLE SUPREME COURT IN THE CASE OF RADHASOAMI SATSANG V. CIT (1992) 193 ITR 321 (SC). MORE-SO, TH AT AO ITSELF IN ORIGINAL ASSESSMENT FRAMED U/S 143(3) OF THE 1961 ACT VIDE A SSESSMENT ORDERS DATED 19-12-2007 AND ALSO IN ASSESSMENT ORDERS DATED 29-1 2-2010 PASSED U/S 143(3) R.W.S. 153A OF THE ACT HAS ACCEPTED GAINS ON SALE OF SHARES AS CAPITAL GAINS WHILE IT IS BROUGHT ON RECORD THAT DETAILED E NQUIRY WAS MADE BY THE AO BEFORE PASSING ASSESSMENT ORDER DATED 29-12-2010 PA SSED U/S 143(3) R.W.S. 153A OF THE 1961 ACT. EVEN KEEPING IN VIEW THE NEWL Y INSERTED EXPLANATION 2 TO SECTION 263 OF THE 1961 ACT, IN OUR CONSIDERED V IEW THIS ORDER DATED 25-03- ITA 3895/MUM/2013 23 2013 OF THE LEARNED CIT U/S 263 OF THE 1961 ACT IS NOT SUSTAIN ABLE IN THE EYES OF LAW AND WE HAVE NO HESITATION IN QUASHING T HE ORDER DATED 25-03- 2013 PASSED BY LEARNED CIT U/S 263 OF THE 1961 ACT. WE ORDER COORDINGLY. 8. IN THE RESULT, APPEAL FILED BY THE ASSESSEE IN I TA NO. 3895/MUM/2013 FOR ASSESSMENT YEAR 2005-06 IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 5 TH MAY, 2017. # $% &' 05-05-2017 ( ) SD/- SD/- (C.N. PRASAD) (RAMIT KOCHAR) JUDICIAL MEMBER ACCOUNTANT MEMBER $ MUMBAI ; & DATED 05-05-2017 .9../ R.K. R.K. R.K. R.K. , EX. SR. PS !'#$%&%# / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. : ( ) / THE CIT(A)- CONCERNED, MUMBAI 4. : / CIT- CONCERNED, MUMBAI 5. =>( 99?@ , ?@ , $ / DR, ITAT, MUMBAI H BENCH 6. (BC D / GUARD FILE. / BY ORDER, = 9 //TRUE COPY// / ( DY./ASSTT. REGISTRAR) , $ / ITAT, MUMBAI