ACIT 10(1), MUMBAI V. HARI SANAKARAN, MUMBAI

ITA 4721/MUM/2012

• Counselvise Citation: 472119914 RSA 2012
• Duration Of Justice: 3 year(s) 2 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-09-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: H
• Next Hearing Date: 03-09-2015
• Assessment Year: 2006-2007
• Appeal Filed On: 16-07-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: D V LAKHANI
• Keywords: Reopening of assessment; Business income; Difference of opinion; Change of opinion
• Section: 143(3)

Judgement Text

, , , IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES H, MUMBAI , , , BEFORE SHRI JOGINDER SINGH, JUDICIAL MEMBER, AND SHRI RAMIT KOCHAR, ACCOUNTANT MEMBER ITA NO.4721/MUM/2012 ASSESSMENT YEAR: 2006-07 DCIT-10(1), 455, AAYAKAR BHAVAN, 4 TH FLOOR, M.K.ROAD, MUMBAI-400020 / VS. SHRI HARI SANAKARAN, 29-B, CARTER ROAD, BANDRA (WEST), MUMBAI-400050 ( / REVENUE) ( ! ' # /ASSESSEE) P.A. NO. AGOPS2721C / REVENUE BY SHRI DR. SUMAN RATNAM DARSI-DR !' # / ASSESSEE BY SHRI D. V. LAKHANI $ % & # ' / DATE OF HEARING : 03/09/2015 & # ' / DATE OF ORDER: 23/09/2015 / O R D E R PER JOGINDER SINGH (JUDICIAL MEMBER) THE REVENUE IS AGGRIEVED BY THE IMPUGNED ORDER DAT ED 04/04/2012 OF THE LD. FIRST APPELLATE AUTHORITY, MU MBAI. THE ONLY GROUND RAISED IN THIS APPEAL PERTAINS TO V ALIDITY OF REOPENING OF ASSESSMENT U/S 147/148 OF THE INCOME T AX ACT, 1961 (HEREINAFTER THE ACT). HARI SANA KARAN ITA NO.4721/MUM/2012 2 2. DURING HEARING OF THIS APPEAL, THE CRUX OF ARGU MENT ADVANCED BY DR. SUMAN RATNAM DARSI, LD. DR, IS THAT THE LD. COMMISSIONER OF INCOME TAX (APPEALS) IS NOT JUSTIFI ED IN HOLDING THAT THE ASSESSING OFFICER WAS NOT HAVING A NY NEW MATERIAL FOR FORMING AN OPINION THAT TRADING IN SHA RES WAS REQUIRED TO BE TREATED AS BUSINESS INCOME AND FURTH ER ALLOWING ADDITIONAL GROUND AND HOLDING THAT THE ASS ESSMENT MADE ON THE BASIS OF REOPENING U/S 147/148 OF THE A CT IS INVALID. ON THE OTHER HAND, THE LD. COUNSEL FOR THE ASSESSEE, SHRI D.V. LAKHANI, CONTENDED THAT ORIGINAL ASSESSME NT WAS FRAMED U/S 143(3) OF THE ACT, WHEREIN, TRUE DISCLOS URE WAS MADE BY THE ASSESSEE. OUR ATTENTION WAS INVITED TO PAGES 1, 2 AND 4 OF THE PAPER BOOK, BY SUBMITTING THAT THE A SSESSEE ONLY DEALT IN TWO SCRIPS. 2.1. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. THE FACTS , IN BRIEF, ARE THAT THE ASSESSEE CLAIMED SHORT TERM CAPITAL GA IN OF RS.28,56,321/-, WHICH WAS EARNED ON PURCHASE OF SHA RES OF M/S BALLARY STEEL COMPANY LTD. AND M/S NOIDA TOLL B RIDGE COMPANY LTD. THE ASSESSEE DULY ATTACHED THE DETAILS OF THESE TWO COMPANIES, QUANTITY AND DATE OF SHARE PURCHASED , PURCHASE VALUE, SALE DATE AND SALE VALUE, WHILE FIL ING THE RETURN. IT IS ALSO NOTED THAT DURING ASSESSMENT PRO CEEDINGS ALSO, THE ASSESSING OFFICER ASKED THE ASSESSEE WITH RESPECT TO THESE DETAILS AND THEREAFTER ASSESSMENT ORDER WAS P ASSED U/S 143(3) OF THE ACT ON 24/10/2008, ACCEPTING THE SHORT TERM CAPITAL GAIN. THE ASSESSING OFFICER RECORDED T HE REASONS HARI SANA KARAN ITA NO.4721/MUM/2012 3 AND REOPENED THE ASSESSMENT U/S 147/148 BY CONTENDI NG THAT TRADING IN SHARES SHOULD HAVE BEEN TREATED AS BUSINESS VENTURE AND RESULTANT PROFIT ALSO SHOULD HAVE BEEN TAXED AS BUSINESS INCOME. WE ALSO NOTE THAT THERE WERE SCRI PS OF ONLY TWO COMPANIES AND THE QUANTITY PURCHASE VALUE, DATE OF PURCHASE/SALE, SALE VALUE WERE ALREADY AVAILABLE WI TH THE ASSESSING OFFICER. THUS, THE CONTENTION OF THE ASS ESSING OFFICER THAT THE ASSESSEE TRADED IN SHARES, DERIVIN G BUSINESS INCOME, FROM SALE OF SUCH SHARES. IN VIEW OF THESE FACTS, WE ARE IN AGREEMENT WITH THE CONCLUSION DRAWN BY THE L D. COMMISSIONER OF INCOME TAX (APPEALS) THAT THE REASO NS WERE NOT SUFFICIENT TO REOPEN THE ASSESSMENT, MEANING TH EREBY, REOPENING WAS MADE ON IMPROPER/INCORRECT BELIEF/REA SONS, MORE SPECIFICALLY, WHEN ALL THE DETAILS WERE ALREAD Y MADE AVAILABLE TO THE ASSESSING OFFICER ALONG WITH THE R ETURN. ON THE BASIS OF SAME SET OF FACTS, HOW THE ASSESSING O FFICER CAN SAY THAT THE PROFIT EARNED ON SALE OF SUCH SHARES W ERE ASSESSABLE AS BUSINESS INCOME. IT IS ALSO NOTED THA T THE LATER ASSESSING OFFICER HAS NOT PIN POINTED AS TO HOW THE EARLIER ASSESSING OFFICER COMMITTED A MISTAKE IN ASSESSING THE PROFIT AS SHORT TERM CAPITAL GAIN. THE DECISION FROM HONB LE APEX COURT IN KELVINATOR OF INDIA LTD. 320 ITR 561 (SC) HOLDING THAT REOPENING IS NOT PERMISSIBLE ON THE BASIS OF C HANGE OF OPINION, SUPPORTS OUR VIEW, MORE SPECIFICALLY WHEN, THERE WAS NO FRESH MATERIAL AVAILABLE WITH THE LATER ASSESSIN G OFFICER, EVEN ON MERIT, IT IS NOTED THAT THERE WERE THREE T RANSACTIONS OF TWO COMPANIES AND THE HOLDING PERIOD IS OF 126 D AYS, WITHOUT CORROBORATING MATERIAL, CANNOT BE SAID TO B E TRADING HARI SANA KARAN ITA NO.4721/MUM/2012 4 IN SHARES, THUS, ON THE BASIS OF CHANGE OF OPINION WAS RIGHTLY QUASHED BY THE LD. COMMISSIONER OF INCOME TAX (APPE ALS). FINALLY, THE APPEAL OF THE REVENUE IS HAVING NO MER IT, THEREFORE, DISMISSED. THIS ORDER WAS PRONOUNCED IN THE OPEN COURT IN THE PRESENCE OF LD. REPRESENTATIVES FROM BOTH SIDES AT THE CONCLUSION OF THE HEARING ON 03/09/2015. SD/ - (RAMIT KOCHAR) SD/ - (JOGINDER SINGH) '# / ACCOUNTANT MEMBER $# / JUDICIAL MEMBER $ % MUMBAI; ) DATED : 23/09/2015 F{X~{T? P.S/. .. %$&'()(*& / COPY OF THE ORDER FORWARDED TO : 1. +,-. / THE APPELLANT 2. /0-. / THE RESPONDENT. 3. 1 1 $ 2# ( +, ) / THE CIT, MUMBAI. 4. 1 1 $ 2# / CIT(A)- , MUMBAI 5. 45 /# , 1 +,' + 6 , $ % / DR, ITAT, MUMBAI 6. 7! 8% / GUARD FILE. / BY ORDER, 04,# /# //TRUE COPY// / (DY./ASSTT. REGISTRAR) , $ % / ITAT, MUMBAI