ANIL M. CHHABRIA, MUMBAI V. ACIT 19(3), MUMBAI

ITA 4184/MUM/2011

• Counselvise Citation: [2012] 119 COUNSELVISE.COM (IT) 7637 (ITAT-MUMBAI)
• Duration Of Justice: 10 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-03-2012
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2006-2007
• Appeal Filed On: 20-05-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: T ROUMUAN PAITE
• Assessee Lawyers: AARTI SATNE; ARUN SATNE
• Keywords: Business income; Residential status
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES A, MUMBAI BEFORE SHRI. D.K. AGARWAL (JM) AND SHRI. N.K. BILLA IYA (AM) ITA NO.4184/MUM/2011 ASSESSMENT YEAR: 2006-07 MR. ANIL M CHHABRIA 301 , GRAND CANYON 87 , PALI HILL , BANDRA [ WEST ] MUMBAI 400050 PAN NO.ACLPC3229J VS. ASST. COMMISSIONER OF INCOME-TAX, CIRCLE 19(3), 3 RD FLOOR , PIRAMAL CHAMBERS , PAREL , MUMBAI 400 012. (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI ARUN SATNE & AARTI SATNE RESPONDENT BY : SHRI. T ROUMUAN PAITE DATE OF HEARING: 21.3.2012 DATE OF PRONOUNCEMENT: 28.3.2012 O R D E R PER N.K. BILLAIYA, A.M: THIS APPEAL HAS BEEN FILED BY THE ASSESSEE ON 20.05 .2011 AGAINST THE ORDER OF THE LEARNED CIT(A)-30, MUMBAI DATED 25.03.2011 IN R ELATION TO ASSESSMENT ORDER UNDER SECTION 143(3) OF THE INCOME TAX ACT, 1961 FOR ASSE SSMENT YEAR 2006-07. 2. THIS APPEAL IS DIRECTED BY RAISING 5 GROUNDS OF APP EALS . GROUND NOS 1 AND 5 ARE OF GENERAL IN NATURE AND REQUIRE NO ADJUDICATION. B Y GROUND NO.2 THE APPELLANT HAS ASSAILED THE ORDER OF THE LD CIT [ A ] FOR NON AD JUDICATION ON THE MATTER OF THE STATUS OF THE APPELLANT AND BY GROUNDS NOS 3 & 4 , THE APPELLANT HAS QUESTIONED THE ADDITIONS ON ACCOUNT OF INVESTMENTS IN SHARES AS BE ING TREATED AS BUSINESS PROFITS. 3. GROUND NO. 2 DESERVES TO BE DECIDED FIRST BECAUSE STATUS OF THE ASSESSEE IS THE STARTING POINT FOR THE TAXABILITY OR NON TAXA BILITY OF INCOME UNDER DIFFERENT HEADS OF INCOME UNDER THE INCOME TAX ACT, 1961 . 4. BRIEFLY STATED, THE FACTS OF THE CASE ARE THAT THE APPELLANT FILED HIS RETURN OF INCOME FOR THE YEAR UNDER CONSIDERATION ON 1 ST FEBRUARY, 2007 DECLARING INCOME OF RS. 33,00,380 /- CONSISTING OF RENT RS.60000 /-, LONG T ERM CAPITAL GAINS RS.18,18,184 /- AND SHORT TERM CAPITAL GAINS RS 33,76,145 /-, BESIDES H AVING BAND INTEREST OF RS.92541 / - DIVIDEND INCOME OF RS.452829 /- UNDER THE RESIDEN TIAL STATUS AS NON RESIDENT. ITA 4184/M/2011 2 5. THE ABOVE SAID RETURN OF INCOME WAS SELECTED FOR SC RUTINY ASSESSMENT AND ACCORDINGLY NOTICES U/S 142 [ 1 ] AND 143 [ 2 ] OF THE ACT , WERE ISSUED AND SERVED UPON THE ASSESSEE . DURING THE COURSE OF THE ASSESS MENT PROCEEDINGS THE ASSESSEE WAS CALLED UPON TO ANSWER VARIOUS QUERIES RAISED BY THE ASSESSING OFFICER . THE WHOLE ASSESSMENT ORDER REVOLVES AROUND THE TAXABILITY OF SHARE TRANSACTIONS AS SHORT TERM CAPITAL GAINS VIS A~ - VIS BUSINESS INCOME, AS TH E ASSESSEE HAS RETURNED THE GAINS UNDER THE HEAD SHORT TERM CAPITAL GAINS WHERE AS TH E ASSESSING OFFICER WANT TO TAX THE INCOME UNDER THE HEAD BUSINESS INCOME . 6. WHILE THE ASSESSING OFFICER HAS ELABORATELY DISCUSS ED THE NATURE AND THE VOLUME OF TRANSACTIONS IN SHARES DONE BY THE ASSESSEE DURI NG THE YEAR UNDER CONSIDERATION AND HAS ALSO DISCUSSED VARIOUS DECISIONS OF THE HONBLE SUPREME COURT AND HIGH COURTS, BUT IN THIS WHOLE EXERCISE, THE AO FORGOT TO DECIDE ON THE STATUS OF THE ASSESSEE AND IN FACT ASSESSED THE APPELLANT AS RESIDENT IN STARK CON TRADICTION TO THE STATUS WHAT THE APPELLANT HAS SHOWN IN HIS RETURN OF INCOME , I.E., NON RESIDENT, AND WHEN ON TO COMPLETE THE ASSESSMENT BY TREATING THE SHORT TERM CAPITAL GAINS AS RETURNED BY THE APPELLANT TO THE TUNE OF RS.3376145.00 AS BUSINESS INCOME AND ADDED RS. 3191560.00 AFTER GIVING ALLOWANCE TO BANK CHARGES AND INTEREST AT RS.184585.00 . 7. AGGRIEVED BY THIS ORDER OF THE AO , THE ASSESSEE WE NT IN APPEAL BEFORE THE CIT [ A ] FOR RELIEF AND ALONG WITH OTHER GROUNDS OF APP EAL , PRAYED THAT HIS STATUS IS THAT OF A NON RESIDENT , AND THERE FORE HE SHOULD BE ASSESS ED AS A NON RESIDENT , AND THERE AFTER THE NATURE OF HIS INCOME / GAINS SHOULD TESTE D AS PER THE PROVISIONS OF THE ACT . 8. BUT THE LD CIT [ A ] FELL IN TO THE SAME ERROR AS T HAT OF THE LD AO AND WENT ON DECIDE THE APPEAL AND CONFIRMED THE ORDER THE AO. 9. ONCE AGAIN AGGRIEVED , THE APPELLANT IS BEFORE US I N THIS APPEAL . 10. AT THE VERY OUTSET THE COUNSEL APPEARING FOR THE AP PELLANT STRESSED THAT THE CIT [ A ] SHOULD BE DIRECTED TO FIRST DECIDE ON THE ISSU E OF THE STATUS OF THE APPELLANT AS THAT WOULD DECIDE THE NATURE AND TAXABILITY OF HIS INCOMES AND TO SUBSTANTIATE HIS CLAIM THE LD AR DREW OUR ATTENTION TO PAGE NO. 1 OF THE P APER BOOK FILED BY HIM BEFORE US AND ITA 4184/M/2011 3 POINTED OUT THAT IN THE COMPUTATION OF INCOME UNDER THE HEAD STATUS THE APPELLANT HAS RETURNED : INDIVIDUAL / NON RESIDENT, AND WH EREAS HE HAS BEEN ASSESSED UNDER THE STATUS INDIVIDUAL / RESIDENT . THE LD COUNSE L FOR THE APPELLANT FURTHER POINTED OUT THAT THIS ISSUE WAS RAISED BEFORE THE CIT [ A ] BY TAKING A SPECIFIC GROUND OF APPEAL BUT THE CIT [ A ] HAS NOT ADJUDICATED ON THIS ISSUE AN D HAS CONFIRMED THE ORDER OF THE AO . 11. WE HAVE GONE THROUGH THE ORDERS OF THE LOWER AUTHOR ITIES AND ALSO THE COMPUTATION OF INCOME FILED BY THE APPELLANT AND AL SO THE GROUNDS RAISED BEFORE THE CIT [ A ] . UNDOUBTEDLY , THE ASSESSING OFFICER HAS COMMITTED AN ERROR IN TAXING THE APPELLANT AS A RESIDENT WHEN THE ASSESSEE HAS F ILED THE RETURN OF HIS INCOME WITH THE STATUS NON RESIDENT . THE CIT [ A ] BY CONFIR MING THE ORDER OF THE AO , WITHOUT ADJUDICATING ON THE GRIEVANCE OF THE ASSESSEE IN SO FAR AS HIS RESIDENTIAL STATUS IS CONCERNED , MADE HIS OWN ORDER ERRONEOUS . 12. WE THEREFORE DEEM IT FIT TO RESTORE THIS ISSUE BACK TO THE FILES OF THE LD. CIT [ A ] 30 MUMBAI . LD CIT [ A ] IS DIRECTED TO DECIDE TH E ISSUE OF THE RESIDENTIAL STATUS OF THE ASSESSEE FIRST. 13. SINCE OTHER GROUNDS TAKEN IN THIS APPEAL ARE DIRECT LY RELATED WITH THE ADJUDICATION ON THE RESIDENTIAL STATUS OF THE APPELLANT , O THER GROUNDS ARE ALSO RESTORED BACK TO THE FILES OF THE CIT [A]-30 , MUMBAI FOR FRESH ADJU DICATION , AFTER GIVING DUE OPPORTUNITY TO THE ASSESSEE . 14. IN THE RESULT APPEAL FILED BY THE ASSESSEE IS ALLOW ED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 28 TH DAY OF MARCH, 2012. SD/- SD/- (D.K. AGARWAL) (N.K. BIL LAIYA) JUDICIAL MEMBER ACCOUNTANT MEMBER DATE : 28.03.2012 AT :MUMBAI ITA 4184/M/2011 4 COPY TO : 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A), MUMBAI CONCERNED 4. THE CIT, MUMBAI CITY CONCERNED 5. THE DR A BENCH, ITAT, MUMBAI // TRUE COPY// BY ORDER ASSISTANT REGISTRAR ITAT, MUMBAI BENCHES, MUMBAI