ITO 16(3)(2), MUMBAI V. MURLI AGARWAL(HUF), MUMBAI

ITA 4455/MUM/2012

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 79417 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-07-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2005-2006
• Appeal Filed On: 02-07-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: V K AGARWAL
• Assessee Lawyers: PRADIP KEDIA
• Keywords: Business income
• Section: 143(3); 147

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCH B, MUMBAI BEFORE SHRI SANJAY ARORA, ACCOUNTANT MEMBER AND DR. S.T.M. PAVALAN, JUDICIAL MEMBER ITA NO. 4455/MUM/2012 ASSESSMENT YEAR: 2005-06 ITO 16(3)(2) MATRU MANDIR MUMBAI 400 007 VS. SMT. MURLY AGARWAL (HUF) 30, PRASAD CHAMBERS, GROUND FLOOR, OPERA HOUSE, MUMBAI 400 004 (APPELLANT) (RESPONDENT) PERMANENT ACCOUNT NO. :-AAEHM 2090 Q ASSESSEE BY : SHRI PRADIP KEDIA REVENUE BY : SHRI V. K. AGARWAL DATE OF HEARING : 18.06.2014 DATE OF PRONOUNCEMENT : 25.07.2014 O R D E R PER DR. S.T.M. PAVALAN, JM: THIS APPEAL FILED BY THE REVENUE IS DIRECTED AGAINS T THE ORDER OF THE LD.CIT(A)-27, MUMBAI DATED 03.04.2012 FOR THE ASSES SMENT YEAR 2005-06. 2. IN THIS APPEAL, THE REVENUE HAS AGITATED THE DEC ISION OF THE LD.CIT(A) DIRECTING THE AO TO TREAT THE TRANSACTION OF PURCHA SE AND SALE OF SHARES AS BUSINESS INCOME (SIC) (SHOULD HAVE BEEN SHORT TERM CAPITAL GAIN) AS AG AINST THE SAME TREATED BY THE AO AS BUSINESS INCOME. 3. THE ASSESSEE, A HUF, IN THE RETURN OF INCOME, H AD DECLARED A TOTAL LOSS AT RS.2,04,800/- AFTER CONSIDERING AN INCOME OF RS.12, 63,639/- AS SHORT TERM CAPITAL GAIN. THE ORIGINAL ASSESSMENT WAS COMPLETED BY THE AO U/S 143(3) OF THE INCOME TAX ACT. HOWEVER, THE AO HAD REOPENED THE ASSESSMEN T AFTER RECORDING REASONS THAT THE SHORT TERM CAPITAL GAIN IS LIABLE TO BE TAXED @ 10% AND CONSIDERING THE NATURE OF THE TRANSACTION THE SAME HAD TO BE TREATED AS BUSIN ESS INCOME TO BE TAXED @ 30%. IN THE ASSESSMENT COMPLETED U/S 143(3) READ WITH SE CTION 147 OF THE ACT, THE AO TREATED THE SAID INCOME AS BUSINESS INCOME. ON APPE AL, THE LD.CIT(A) HAS QUASHED THE REOPENING PROCEEDINGS AND THE CONSEQUENT ASSESS MENT ON THE REASON THAT THE ITA NO. 4455/MUM/2012 SMT. MURLY AGARWAL ASSESSMENT YEAR: 2005-06 2 AO HAD NOT BROUGHT ANY NEW MATERIAL ON RECORD TO TA KE A DIFFERENT VIEW NECESSITATING THE REOPENING OF THE ASSESSMENT MADE U/S 143(3) OF THE ACT. THE LD.CIT(A) WAS OF THE VIEW THAT THE AO HAD MERELY MA DE A BALD STATEMENT THAT CONSIDERING THE NATURE OF THE TRANSACTIONS SHORT TE RM CAPITAL GAIN HAD TO BE TREATED AS BUSINESS INCOME. ON MERITS, THE LD.CIT(A) FURTHE R HELD THAT THERE WAS NO MERIT IN TREATING THE SHORT TERM CAPITAL GAIN CLAIMED BY THE ASSESSEE AS BUSINESS INCOME. ACCORDINGLY, THE LD.CIT(A) DIRECTED THE AO TO ACCEP T THE SHORT TERM CAPITAL GAIN OFFERED BY THE ASSESSEE. AGGRIEVED BY THE IMPUGNED ORDER, THE REVENUE IS IN APPEAL BEFORE US. 4. HAVING HEARD BOTH THE SIDES AND PERUSED THE MATE RIAL ON RECORD IT IS PERTINENT TO MENTION THAT THE REVENUE HAS NOT TAKEN ANY GROUN D IN THE APPEAL CHALLENGING THE DECISION OF THE LD.CIT(A) QUASHING THE REOPENING PR OCEEDINGS AND THE CONSEQUENT ASSESSMENT MADE BY THE AO. ALSO, IN THE GROUNDS OF APPEAL, INSTEAD OF CHALLENGING THE DECISION OF THE LD.CIT(A) TREATING THE TRANSACT ION OF PURCHASE AND SALE OF SHARES AS SHORT TERM CAPITAL GAIN, IT HAS BEEN MISTAKENL Y STATED AS IF THE LD.CIT(A) HAS DIRECTED THE AO TO TREAT THE TRANSACTION OF PURCHAS E AND SALE OF SHARES AS BUSINESS INCOME. IN THIS REGARD, IT IS RELEVANT TO STATE TH AT WITHOUT CHALLENGING THE DECISION OF THE LD.CIT(A) QUASHING THE REOPENING PROCEEDING AND CONSEQUENT ASSESSMENT ORDER, MERELY CHALLENGING THE ADJUDICATING OF THE LD.CIT(A ) ON MERIT DOES NOT SURVIVE. THIS APART, IT IS RELEVANT TO STATE THAT REASONS PROVIDE D BY THE LD.CIT(A) FOR QUASHING THE REOPENING AND THE FURTHER DECISION PERTAINING TO TH E TREATMENT OF INCOME, IN OUR VIEW, ARE JUSTIFIED FOR THE REASONS STATED BY THE L D.CIT(A) IN PARA 5.1 AND 5.2 OF THE ORDER OF THE LD.CIT(A). THEREFORE, WE DO NOT FIND A NY MERIT IN THE APPEAL FILED BY THE REVENUE AND HENCE THE ORDER OF THE LD.CIT(A) DESERV ES TO BE SUSTAINED AND UPHELD. 5. IN THE RESULT, THE APPEAL FILED BY THE REVENUE IS DISMISSED . ORDER PRONOUNCED IN THE OPEN COURT ON THIS 25 TH DAY OF JULY, 2014. SD/- SD/- (SANJAY ARORA) (DR. S.T.M. PAVALAN) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI, DATED: 25.07.2014. *SRIVASTAVA ITA NO. 4455/MUM/2012 SMT. MURLY AGARWAL ASSESSMENT YEAR: 2005-06 3 COPY TO: THE APPELLANT THE RESPONDENT THE CIT, CONCERNED, MUMBAI THE CIT(A) CONCERNED, MUMBAI THE DR B BENCH //TRUE COPY// BY ORDER DY/ASSTT. REGISTRAR, ITAT, MUMBAI.