SURJIT SINGH BAGGA HUF, MUMBAI V. ITO 17(1)(1), MUMBAI

ITA 403/MUM/2016

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 1880 (ITAT-MUMBAI)
• Duration Of Justice: 9 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-11-2016
• Appeal Filed By: Assessee
• Bench Allotted: SMC
• Assessment Year: 2006-2007
• Appeal Filed On: 28-01-2016
• Court: TRIBUNAL
• Department Lawyers: AKHILENDRA YADAV
• Assessee Lawyers: HARI S RAHEJA
• Keywords: Business income; Opportunity of being heard; Wrong claim; Sham transactions

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL E BENCH, MUMBAI BEFORE SHRI D. KARUNAKARA RAO, ACCOUNTANT MEMBER AND SHRI C.N. PRASAD, JUDICIAL MEMBER I.T.A. NO.403/M/2016 (ASSESSMENT YEAR: 2006 - 2007) SURJIT SINGH BAGGA HUF, 2003, SILVER ARCH CHS, SHASTRI NAGAR, LOKHANDWALA, ANDHERI (W), MUMBAI - 053. / VS. INCOME TAX OFFICER, WARD - 25(1)(3), PRATYAKSHAKAR BHAVAN, BKC, BANDRA (E), MUMBAI 400 051. ./ PAN : AAAHS0155G ( / APPELLANT) .. ( / RESPONDENT ) / APPELLANT BY : SHRI HARI S. RAHEJA / RESPONDENT BY : SHRI AKHILENDRA YADAV, DR / DATE OF HEARING : 09.11.2016 / DATE OF PRONOUNCEMENT : 18 .11.2016 / O R D E R PER D. KARUNAKARA RAO, AM: THIS APPEAL FILED BY THE ASSESSEE ON 28.1.2016 IS AGAINST THE ORDER OF THE CIT (A) - 32, MUMBAI DATED 20.11.2015 FOR THE ASSESSMENT YEAR 2006 - 07. 2. IN THIS APPEAL, ASSESSEE RAISED FIVE GROUNDS IN TOTO AND THEY REVOLVE AROUND THE SOLITARY ISSUE RELATES TO THE DECISION OF THE AO / CIT (A) IN TAXING THE EARNING ON SALE OF SHARES OF TALENT INFOWAY LTD INVOLVING SOME DISPUTES UNDER THE HEAD INCOME FROM OTH ER SOURCES. ON THIS ISSUE, LD COUNSEL FOR THE ASSESSEE FAIRLY SUBMITTED THAT THE DECISION OF THE AO IS LINKED TO THE STATEMENT OF SHRI MUKESH CHOKSEY, WHICH WAS SUBSEQUENTLY RETRACTED AND THEREFORE, THE CLAIM OF THE ASSESSEE SHOULD BE ACCEPTED AS CLAIMED IN THE RETURN OF INCOME WITHOUT ANY CHANGES. HOWEVER, BRINGING OUR ATTENTION TO THE CONTENTS OF CBDT CIRCULAR NO.6/2016, DATED 29.2.2016, LD COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE CLAIM OF THE ASSESSEE IN THE BOOKS OF ACCOUNTS ASSUMES SIGNIFICANCE IN THE LIGHT OF THE SAID CIRCULAR. 2 3. PER CONTRA, LD DR FOR THE REVENUE SUBMITTED THAT THE MATTER MAY BE REMANDED TO THE FILE OF THE AO FOR FRESH ADJUDICATION IN THE LIGHT OF THE SAID CIRCULAR NO. 6/2016 (SUPRA). 4. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE ORDERS OF THE REVENUE AUTHORITIES AS WELL AS THE RELEVANT MATERIAL PLACED BEFORE US. ON PERUSAL OF THE FACTS AS WELL AS THE SAID BOARD CIRCULAR (SUPRA), WE FIND, THE OPTION OF THE ASSESSEE IN MATTERS OF THE C LAIM RELATING TO THE PROFITS / GAIN S ON SALE OF SHARES BASED ON THE ENTRIES IN THE BOOKS OF ACCOUNTS , ASSUMES SIGNIFICANCE. FURTHER, THE OFFICERS ARE PREVENTED FROM CHANGING THE HEAD OF INCOME FOR TAXING THE SAID GAINS ARBITRARILY AND WITHOUT HAVING CONTRARY EVIDENCE AGAINST THE ASSESSEE . THE SAID CIRCULAR ENLISTS CERTAIN CONDITIONS AND THE REVENUE AUTHORITIES ARE REQUIRED TO EXAMINE THE SAID CIRCULAR (SUPRA) CLOSELY AND ADJUDICATE THIS ISSUE AFTER GRATING A REASONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. FOR THIS PURPOSE, WE REMAN D THIS MATTER TO THE FILE OF THE AO. PRIMA FACIE, WE FIND, THE CONTENTS OF PARA 3(A) AND OTHER PARAGRAPHS OF THE SAID BOARD CIRCULAR DO NOT PERMIT THE REVENUE AUTHORITIES TO CHANGE THE HEAD OF INCOME FROM BUSINESS INCOME TO THE CAPITAL GAINS OR VICE VERSA, UNLESS THE CONDITIONS SPECIFIED IN PARA 4 OF THE SAID CIRCULAR (SUPRA) IE BOGUS CLAIMS OR SHAM TRANSACTIONS / QUESTIONABLE TRANSACTIONS ARE INVOLVED. THE REVENUE AUTHORITIES ARE REQUIRED TO HONOUR THE BOOKS OF ACCOUNT AND THE ENTRIES THEREIN PERTAI NING TO THE SHARES. IF THE ASSESSEE OPTS CERTAIN TRANSACTIONS OF PURCHASE AND SALE OF SHARES IN THE BOOKS OF ACCOUNT AS STOCK - IN - TRADE, BUSINESS INCOME CONSTITUTES APPROPRIATE HEAD OF INCOME IN SUCH CASES. IN SUCH CASE, IT IS PERTINENT FOR THE AO TO NOT TO DISTURB THE HEAD OF INCOME. CONSIDERING THE ABOVE, ALL THE GROUNDS RAISED BY THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. 5. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCE D IN THE OPE N COURT ON 1 8 T H NOVEMBER, 2016. S D / - S D / - ( C.N. PRASAD ) (D. KARUNAKARA RAO) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI ; 18.11 .2016 . . ./ OKK , SR. PS 3 / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ( ) / THE CIT(A) - 4. / CIT 5. , , / DR, ITAT, MUMBAI 6. / GUARD FILE . //TRUE COPY// / BY ORDER, / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI