SARAH FAISAL HAWA, MUMBAI V. DCIT 17(3), MUMBAI

ITA 4751/MUM/2013

• Counselvise Citation: [2015] 134 COUNSELVISE.COM (IT) 1743 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 6 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-12-2015
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: E
• Next Hearing Date: 16-04-2015
• Assessment Year: 2008-2009
• Appeal Filed On: 19-06-2013
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: M M UTTARE
• Assessee Lawyers: JITENDRA SINGH
• Keywords: Business income; Rectification of order; Transactions in derivatives; Cost of acquisition; Reassessment proceedings
• Section: 143(3); 147; 148; 263

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL E BENCH, MUMBAI BEFORE SHRI RAJENDRA (AM) & SHRI SANDEEP GOSAIN (JM) , , , , {APPEALS AGAINST ORDER U/S. 271(1)(C)} . I.T.A. NO. 47 49 /MUM/20 13 (ASSESSMENT YEAR 2005 - 0 6 ) I.T.A. NO. 47 50 /MUM/20 13 (ASSESSMENT YEAR 200 6 - 0 7 ) I.T.A. NO. 4751/MUM/2013 (ASSESSMENT YEAR 2008 - 09) I.T.A. NO. 4752/MUM/2013 (ASSESSMENT YEAR 2009 - 10) {APPEALS AGAINST ORDER U/S. 271B) I.T.A. NO. 4753/MUM/2013 (ASSESSMENT YEAR 2005 - 06) I.T.A. NO. 4754/MUM/2013 (ASSESSMENT YEAR 2006 - 07) I.T.A. NO. 4755/MUM/2013 (ASSESSMENT YEAR 2008 - 09) I.T.A. NO. 4756/MUM/2013 (ASSESSMENT YEAR 2009 - 10) SMT.SARAH F AISAL HAWA 24, CENTRAL COURT MOTALIBAI STREET AGRIPADA - 2 MUMBAI - 400 011. VS. DCIT - 17(3) 4 TH FLOOR PIRAMAL CHAMBERS PAREL MUMBAI - 400 012. ( APPELLANT ) .. ( RESPONDENT ) PAN NO. AAIPH0012P APPELLANT BY SHRI K. GOPAL & SHRI JITENDRA SINGH RESPONDENT BY SHRI M.M. UTTARE DATE OF HEARING : 4 .1 1 . 201 5 DATE OF PRONOUNCEMEN T : 30 .1 2 . 201 5 O R D E R PER SANDEEP GOSAIN, JM : - SMT. SARAH FAISAL HAWA 2 ALL THESE APPEALS FILED BY THE ASSESSEE AND FOR THE SAKE OF CONVENIENCE THEY WERE HEARD TOGETHER AND DISPOSE OF BY THIS COMBINED ORDER. 2. FIRST WE TAKE UP ITA NOS. 4753, 4754, 4755 & 4756/MUM /2013. 3. THE ASSESSEE HAS ALSO MOVED AN APPLICATION FOR FILING ADDITIONAL GROUND OF APPEAL. AS PER THE CONTENTS OF THE APPLICATION THE ASSESSEE WANTS TO TAKE FOLLOWING ADDITIONAL GROUNDS : - 1) THE COMMISSIONER OF INCOME TAX - 17, MUMBAI (HEREINAFTER REF ERRED TO AS THE LD. CIT) ERRED IN PASSING THE PENALTY ORDER DATED 10.5.2013 UNDER SECTION 271B OF THE ACT WITHOUT HAVING JURISDICTION. HENCE, THE ORDER DATED 10.5.2013 IS BAD IN LAW AND THE SAME MAY BE QUASHED AND SET ASIDE. 2) THE APPELLANT CRAVES, LEAVE O F YOUR HONOURS TO ADD, AMEND, MODIFY, DELETE OR RESCIND ANY OF THE GROUND MENTIONED HEREIN ABOVE. 4 . S INCE AFOREMENTIONED ADDITIONAL GROUNDS ARE PURELY LEGAL AND FACTUAL IN NATURE AND TOUCHING THE JURISDICTIONAL OF LEARNED CIT(A) WHILE PASSING PENALTY OR DER DATED 10.5.2013 THEREFORE IN THE INTEREST OF JUSTICE AND IN VIEW OF THE FACT THAT THE ADDITIONAL GROUNDS ARE PURELY OF LEGAL NATURE, WE ADMIT THE SAME. SINCE THE AFOREMENTIONED LEGAL GROUND GOES TO THE ROOT OF THE CASE AND TOUCHES JURISDICTION OF THE L EARNED CIT(A)S PENALTY ORDER DATED 10.5.2013 THEREFORE THE SAME IS BEING TAKEN FIRST. AR REPRESENTING THE ASSESSEE DRAWN OUR ATTENTION TO SECTION 271B OF THE ACT WHICH READS AS UNDER : - IF ANY PERSON FAILS TO GET HIS ACCOUNTS AUDITED IN RESPECT OF ANY P REVIOUS YEAR OR YEARS RELEVANT TO AN ASSESSMENT YEAR OR FURNISHING A REPORT OF SUCH AUDIT AS REQUIRED UNDER SECTION 44AB, THE ASSESSING OFFICER MAY DIRECT THAT SUCH PERSON SHALL PAY, BY WAY OF PENALTY, A SUM EQUAL TO ONE HALF PERCENT OF THE TOTAL SALES, TU RNOVER OR GROSS RECEIPTS, AS THE CASE MAY BE, IN BUSINESS, OR OF THE GROSS RECEIPTS IN PROFESSION, IN SUCH PREVIOUS YEAR OR YEARS OR A SUM OF ONE HUNDRED THOUSAND RUPEES, WHICHEVER IS LESS . 5. LEARNED AR FURTHER SUBMITTED THAT AS PER THE AFOREMENTIONED PROVISION ONLY THE ASSESSING OFFICER IS COMPETENT TO PASS THE PENALTY ORDER AND AS PER SECTION 2(7A) DEFINITION OF ASSESSING OFFICER THE ASSISTANT COMMISSIONER (OR DEPUTY COMMISSIONER) (OR ASSISTANT DIRECTOR) (OR DEPUTY DIRECTOR) OR THE INCOME SMT. SARAH FAISAL HAWA 3 TAX OFFICE R WHO IS VESTED WITH THE RELEVANT JURISDICTION BY VIRTUE OF DIRECTIONS OR ORDERS ISSUED UNDER SUB - SECTION (1) OR SUB - SECTION (2) OF SECTION 120 OR ANY OTHER PROVISIONS OF THIS ACT, AND THE (ADDITIONAL COMMISSIONER OR)( A DDITIONAL DIRECTOR OR) (JOINT COMMIS SIONER OR JOINT DIRECTOR) WHO IS DIRECTED UNDER CLAUSE (B) OF SUB - SECTION (4) OF THAT SECTION TO EXERCISE OR PERFORM ALL OR ANY OF THE POWERS AND FUNCTIONS CONFERRED ON, OR ASSIGNED TO, AN ASSESSING OFFICER UNDER THIS ACT . 6. L ASTLY AR SUBMITTED THAT SI NCE THE IMPUGNED ORDER OF PENALTY HAS BEEN PASSED BY LEARNED CIT(A) DOES NOT FALL WITHIN THE DEFINITION OF THE ASSESSING OFFICER AS DEFINED UNDER SECTION 2(7A) THEREFORE PENALTY ORDER PASSED BY LEARNED CIT(A) U/S. 271B IS WITHOUT JURISDICTION AND BAD IN LAW. 7. ON THE OTHER HAND LEARNED DR RELIED UPON THE ORDER PASSED BY THE LOWER AUTHORITIES. 8. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. WE HAVE ALSO CAREFULLY PERUSED THE PROVISIONS OF SECTION 271B, WHERE IT HAS BEEN C ATEGORICALLY MENTIONED THAT THE COMPETENT OFFICIAL HAS BEEN MENTIONED AS ASSESSING OFFICER AND THE NAME OF THE ASSESSING OFFICER WAS SUBSTITUTED BY AMENDMENT WITH EFFECT FROM 1.4.1988 AND COGENT READING OF SECTION 2(7A) WHERE DEFINITION OF THE ASSESSING OFFICER IS DEFINED, IT IS IMPLIEDLY CLEAR THAT THE COMMISSIONER OF INCOME TAX IS NOT AMPLY MENTIONED AS THE ASSESSING OFFICER AS PER SECTION 2(7A) OF THE INCOME TAX ACT, 1961 AND IN THE PRESENT CASE PENALTY ORDER U/S. 271B HAS BEEN PASSED BY THE LEARNED CI T(A) WHO DOES NOT FALL WITHIN THE DEFINITION OF THE ASSESSING OFFICER WHICH CONTEND IN SECTION 271B READ WITH SECTION 2(7A) OF THE INCOME TAX ACT. THEREFORE WE ARE OF THE CONSIDERED OPINION THAT LEARNED CIT(A) IS NOT COMPETENT PERSON TO PASS THE PENALTY OR DER U/S. 271B AND IMPUGNED ORDER LEVYING PENALTY U/S. 271B DATED 10.5.2013 IN THE PRESENT CASE HAS BEEN PASSED BY LEARNED CIT(A). THEREFORE THE ORDER OF LEARNED CIT(A) IS IN GROSS VIOLATION OF THE MANDATORY PROVISIONS OF LAW AND HENCE THE SAME IS NOT SUSTA INABLE IN LAW BEING BAD IN LAW. SINCE LEARNED CIT(A) HAS GOT NO JURISDICTION TO PASS THE PENALTY ORDER U/S. SMT. SARAH FAISAL HAWA 4 271B THEREFORE THE IMPUGNED ORDER DATED 10.5.2013 IS WITHOUT JURISDICTION AND THEREFORE THE PENALTY LEVIED UPON THE ASSESSEE THROUGH THE IMPUGNED OR DER IS NOT SUSTAINABLE HENCE DELETED. 9. SINCE PENALTY ORDER PASSED BY LEARNED CIT(A) ORDER U/S. 271B IS DELETED THEREFORE GROUNDS OF APPEAL TAKEN BY THE ASSESSEE DO NOT REQUIRE ADJUDICATION. 10. IN THE RESULT, APPEAL IN ITA NOS. 4753, 4754, 4755 & 4756/MUM/2013 ARE ALLOWED. 11. NOW WE TAKE UP ITA NOS. 4749, 4750, 4751 & 4752/MUM/2013 . 12. THE MAIN ISSUE IS WITH REGARD TO LEVY OF CONCEALMENT PENALTY U/S. 271(1)(C) OF THE ACT TREATING AS BUSINESS INCOME. 13. FACTS IN BRIEF ARE THAT THE AS SESSEE IS AN INDIVIDUAL ENGAGED IN THE BUSINESS VENTURE OF TRADING IN SHARES. SHE FILED RETURN OF INCOME FOR A.Y. 2005 - 06 ON 8.8.2005 DECLARING TOTAL INCOME AT RS.1,10,70,840/ - BY CLAIMING SHORT TERM CAPITAL GAIN OF RS. 56,49,475/ - AND LONG TERM CAPITAL GA IN OF RS. 28,61,567/ - AND EXEMPT LONG TERM CAPITAL GAIN AT RS. 35,75,885/ - U/S. 10(38) OF THE ACT. THE ASSESSING OFFICER PASSED THE ASSESSMENT ORDER ON 2.12.2009 U/S. 143(3) OF THE ACT BY TREATING THE SHORT /LONG TERM CAPITAL GAIN S AS BUSINESS INCOME OF THE ASSESSEE. 14. AGGRIEVED BY THE ASSESSMENT ORDER THE ASSESSEE FILED AN APPEAL BEFORE THE FIRST APPELLATE AUTHORITY. LEARNED CIT(A) DELETED THE ADDITIONS MADE BY THE ASSESSING OFFICER . AGAINST THE ORDER PASSED BY LEARNED CIT(A) THE REVENUE HAS FILED THE A PPEAL BEFORE THE ITAT AND THE TRIBUNAL HAS UPHELD THE ORDER OF LEARNED CIT(A). 15. LEARNED CIT(A) U/S. 263 IS PENDING THE ASSESSING OFFICER HAS ISSUED NOTICE U/S. 148 DATED 2.6.2010 TO EXAMINE THE ISSUE OF TAXABILITY OF SHARE TRANSACTION IN VIEW OF THE ASSESSMENT ORDER PASSED FOR A.Y. 2007 - 08. THE ASSESSEE IN RESPONSE TO THE NOTICE ISSUED U/S. 148 OF THE ACT FILED HER RETURN OF SMT. SARAH FAISAL HAWA 5 INCOME DECLARING THE SAME INCOME AS PER THE ORIGINAL RETURNS. THE ASSESSING OFFICER AFTER EXAMINING THE CLAIM OF THE ASSESSEE DR OPPED THE PROCEEDINGS INITIATED U/S. 148 OF THE ACT. LEARNED CIT(A) HOWEVER, PASSED THE ORDER DATED 12.11.2012 U/S. 263 OF THE ACT TREATING THE ACTION OF THE ASSESSING OFFICER IN DROPPING THE PROCEEDINGS INITIATED U/S.148 OF THE ACT AS ERRONEOUS AND HIGHL Y PREJUDICIAL TO THE INTEREST OF THE REVENUE. 16. LEARNED CIT(A) IN ORDER PASSED U/S. 263 OF THE ACT TREATED THE SHORT TERM CAPITAL GAIN AND LONG TERM CAPITAL GAIN DECLARED BY THE ASSESSEE AS BUSINESS INCOME IN VIEW OF THE ASSESSMENT ORDER PASSED BY THE ASSESSING OFFICER FOR A.Y. 2007 - 08. THE ASSESSEE CHALLENGED THE ORDER PASSED U/S. 263 OF THE ACT BEFORE THE ITAT AND ITAT AFTER CONSIDERING THE EXPLANATION OF THE ASSESSEE SET ASIDE THE DIRECTION OF LEARNED CIT(A) AND RESTORED THE MATTER BACK TO THE FILE O F THE ASSESSING OFFICER TO MAKE A FRESH ASSESSMENT U/S. 143(3) R.W.S. 263 OF THE ACT. IN THE MEANTIME WHEN THE ASSESSEE CHALLENGED THE ORDER U/S. 263 BEFORE THE ITAT THE LEARNED CIT(A) LEVIED PENALTY U/S. 271(1)(C) OF THE ACT. 17. AGGRIEVED BY THE ORDER P ASSED BY LEARNED CIT(A) U/S. 271(1)(C) THE ASSESSEE PREFERRED THE PRESENT APPEAL BEFORE THE TRIBUNAL. 18. LEARNED AR APPEARING FOR THE ASSESSEE SUBMITTED THAT ASSESSEE HAS FURNISHED ALL THE DETAILS OF CAPITAL GAINS IN HER RETURN OF INCOME. HENCE LEVY OF CONCEALMENT PENALTY BY TREATING THE CAPITAL GAINS AS BUSINESS INCOME IS UNJUSTIFIED AND THE SAME MAY BE DELETED. LEARNED AR FURTHER SUBMITTED THAT THE APPEAL AGAINST THE ORDER PASSED BY THE ASSESSING OFFICER U/S.143(3) FOR A.Y. 2007 - 08 HAS ALREADY BEEN DISMISSED BY THE ITAT AND AS THE QUANTUM APPEAL IS REJECTED THE PENALTY SHOULD BE DELETED. HE PLACED RELIANCE UPON THE FOLLOWING DECISIONS CIT VS. RELIANCE PETRO PRODUCTS PVT. LTD. (2010) 322 ITR 158 (SC) CIT VS. ADITYA BIRLA NOVA LTD. (2012) TIOL - 692 - H C - MUM - IT CIT VS. NALIN P. SHAH HUF (2013) 40 TAXMANN.COM 86(BOM) SMT. SARAH FAISAL HAWA 6 19. LEARNED DEPARTMENTAL REPRESENTATIVE SUPPORTED THE PENALTY ORDER. 20. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE RECORD. WE OBSERVED THAT THE ORDER PASSED BY LEARNED CIT(A) U/S. 263 WAS CHALLENGED BEFORE THE ITAT AND SIMILARLY ORDER PASSED BY THE ASSESSING OFFICER U/S. 143(3) WAS ALSO CHALLENGED BEFORE THE ITAT, F BENCH FOR A.Y. 2007 - 08 . OPERATIVE PARA READS AS UNDER : - 5. WE HAVE CONSIDERED RIVAL CONTENTIONS, GONE THROU GH THE ORDERS OF LOWER AUTHORITIES AND DELIBERATED ON THE JUDICIAL PRONOUNCEMENTS CITED BY ID. A.R. AND ID. D.R. AS WELL AS DISC USSED BY LOWER AUTHORITIES IN THEIR RESPECTIVE ORDERS FROM THE RECO RD WE FOUND THAT SINCE MANY YEARS THE SHARES ARE BEING PURCHA SED BY ASSESSEE WITH THE INTEN TION TO INVEST AND HAVE BEEN CON SISTENTLY HELD AND SHOWN AS INVESTMENTS IN THE BOOKS OF ACCOUNT AND THE POSITION THAT SUCH SHARES REPRESENTED INVESTMENTS WAS ALWAYS ACCEPTED BY DEPARTMENT IN ALL PREVIOUS ASSESSMENT YEARS UPTO AND INCLUDING A Y. 2006 - 07. SHARES AT THE YEAR END WERE ALWAYS VALUED 'AT COST' AND NOT 'AT COST OR MARKET VALUE, WHICHEVER IS LOWER' AS PER AS - 2 OF [CAI AS APPLICABLE TO STOCK IN TRADE. WE ALSO FOUND THAT PROFIT ON SALE OF SHARES SO HELD HAS ALWAYS BEEN O FFERED AND TAXED AS CAPITAL GAINS IN ALL PREVIOUS YEARS AND THE SAID OFFERING HAS BEEN ACCEPTED IN EARLIER ASSESSMENT YEARS INCLUDING AND UP TO AY 2006 - 07 BY SPEAKING ORDER AND THERE WAS NO CHANGE OF CIRCUMSTANCES FOR THE YEAR AS COMPARED TO EARLIER ASSESS MENT YEARS. WITH REGARD TO PERIOD OF HOLDING OF SHARES, WE FOUND THAT LONG TERM SHARES WERE HELD FOR 14 TO 24 MONTHS AND SHORT TERM SHARES WERE HELD FOR A FAIRLY LONGER PERIOD BEFORE THE SAME WERE SOLD. SUBSTANTIAL DIVIDEND INCOME OF RS,12,85,694/ - ON SH ARES WAS EARNED DURING THE SAID ASSESSMENT YEAR ON ENTIRE SHARES INVESTMENT. IT IS ALSO EVIDENT FROM RECORD THAT INVESTMENT WAS ALWAYS MADE BY ASSESSEE OUT OF AFTER TAX SURPLUS GENERATED. CONTENTION OF A.O. THAT THE ASSESSEE HAD BORROWED FUNDS WAS FOUND FA LSE BY ID. CIT(A). IT IS ALSO NOT IN DISPUTE THAT BOTH SALE AND PURCHASE TRANSACTIONS TOOK PLACE THROUGH ACCOUNT PAYEE CROSSED CHEQUE ONLY AND THERE WAS NO RUNNING ACCOUNT WITH THE BROKER AS IS IN THE CASE OF BUSINESSMEN. FURTHERMORE IT HAS ALWAYS BEEN THE INTENTION OF THE ASSESSEE TO EARN DIVIDEND INCOME FROM SUCH INVESTMENTS IN SHARES AND THE SAME IS REFLECTED IN THE DIVIDEND INCOME OF RS.12,85,694/ - AND INTENTION WAS DULY SUPPORTED BY BOOKS OF ACCOUNTS AND BALANCE SHEET PRODUCED BEFORE THE A.O. IT IS AL SO NOT IN DISPUTE THAT THE ASSESSEE HAS INVESTED THE SURPLUS FUNDS NOT JUST IN SHARES BUT ALSO IN TAX FREE BONDS LIKE AN INVESTOR. A TRADER WILL NOT INVEST IN TAX FREE BONDS AND CONTINUE TO HOLD THE SAME FOR TAX FREE INTEREST INCOME AND MANY CASES FOR 24 M ONTHS. FROM THE RECORD WE FOUND THAT THE SHARES WERE HELD FOR AT LEAST 14 MONTHS IN CASE OF LONG TERM CAPITAL GAINS AND FAIRLY LONG PERIOD FOR SHORT TERM CAPITAL SMT. SARAH FAISAL HAWA 7 GAINS. A TRADER WOULD NOT HOLD SHARES FOR SUCH A LONG TIME BUT WOULD SELL THE SHARES WITHIN A VERY SHORT TIME OF LESS THAN A MONTH. IN COMPARISON TO THE IMMEDIATELY PRECEDING PREVIOUS YEAR I.E. A Y.2006 - 07. THE SHORT TERM CAPITAL GAINS OF THE ASSESSEE HAS REDUCED WHEREAS THERE HAS BEEN AN INCREASE IN THE INVESTMENT MADE AND DIVIDEND INCOME EARNED ASSESSMENT YEAR STCG INVESTMENT DIVIDEND 2007 - 08 1,97,65,876 11,63,45,872 12,85,694 2006 - 07 2,07,36,968 7,26,74,939 7,35,848 IT IS ALSO NOT IN DISPUTE THAT IN A.Y. 2006 - 07 THE LD. ACIT17(3) IN HIS ORDER HAS ACCEPTED THE SHORT TERM CAPITAL GAINS AS SHORT TERM CAPITAL GAINS ONLY. WE ALSO FOUND THAT THE DELIVERY OF SHARES WAS ALWAYS TAKEN AND THE SAME WERE ALWAYS HELD IN A DEMAT ACCOUNT. FURTHERMORE PURCHASE AND SALE OF SHARES HAVE BEEN LIABLE TO SECURITIES TRANSACTION TAX. 6. THE DETAIL FINDINGS REC ORDED BY THE ID. CIT(A) WITH REGARD TO THE CAPITAL GAIN EARNED BY THE ASSESSEE AMOUNTING TO RS. 1.97 CRORES AS SHORT TERM CAPITAL GAIN AND RS. 3.82 CRORES AS LONG TERM CAPITAL GAIN ARE AS PER THE MATERIAL AVAILABLE ON RECORD. THE ID. D.R. HAS NOT BROUGHT O N RECORD ANY POSITIVE MATERIAL TO CONTROVERT THE FINDINGS RECORDED BY THE ID. C1T(A). ACCORDINGLY, WE DO NOT FIND ANY REASON TO INTERFERE WITH THE ORDER OF ID. CIT(A) SO FAR AS THE HE DIRECTED THE A.O. TO TREAT THE CAPITAL GAIN OFFERED BY THE ASSESSEE AS L ONG TERM AND SHORT TERM CAPITAL GAIN. 21. RELEVANT PARAS OF THE ORDER OF ITAT, H, BENCH READ AS UNDER : - 4. WE HAVE HEARD BOTH THE SIDES AND PERUSED THE MATERIAL ON RECORD. IT IS BY NOW WELL SETTLED THAT THE SCOPE OF REASSESSMENT PROCEEDINGS IS TO BRIN G TO TAX THE INCOME OF THE ASSESSEE WHICH HAS ESCAPED ASSESSMENT AND SUCH INCOME ESCAPING ASSESSMENT WOULD BE AS NOTICED BY THE AC WHILE RECORDING THE REASONS FOR ISSUING NOTICE UNDER S. 148 AND/OR AS COMING TO HIS NOTICE DURING THE COURSE OF REASSESSMENT PROCEEDINGS. IT IS PERTINENT TO NOTE THAT THE SCOPE OF REASSESSMENT PROCEEDINGS IS LIMITED TO BRING TO TAX SUCH ESCAPED INCOME OF THE ASSESSEE. ALSO, THE POSITION OF LAW IS VERY CLEAR THAT THE ASSESSMENT ORDER PASSED BY THE AO DURING THE COURSE OF ASSESSME NT PROCEEDINGS UNDER S. 147/148 CAN BE REVISED BY THE CI T EXERCISING THE POWERS CONFERRED UPON HIM UNDER S. 263 IF THE SAME IS FOUND TO BE ERRONEOUS AS WELL AS PREJUDICIAL TO THE INTERESTS OF THE REVENUE. 4.1 FOR THE PURPOSES OF EXAMINING THE VALIDITY OF THE ORDER OF THE LD.CIT(A), IT IS IMPORTANT TO , SEE THE REASONS STATED BY THE LD.CIT(A) FOR, HIS ACTION U/S 263 OF THE INCOME TAX ACT, WHICH READS AS UNDER: '5. I HAVE CAREFULLY CONSIDERED THE RELEVANT FACTS AND PROVISIONS OF LAW WITH REGARD TO THE ISSUE S INVOLVED. I HAVE ALSO CAREFULLY CONSIDERED THE SMT. SARAH FAISAL HAWA 8 ARGUMENTS PUT FORTH BY THE LEARNED COUNSELS FOR THE ASSESSEE. 5.1 DURING THE PERIOD RELEVANT TO A. Y. 2007 - 08 THE ASSESSEE CLAIMED LONG TERM CAPITAL GAIN OF RS.3. 82 CORES AS EXEMPT U/S. 10(38) AND SHORT TE RM CAPITA1 GAIN OF RS. 1.97 CRORES, TAXABLE @10% U/S 111A. THE CLAIM OF THE 'ASSESSEE WAS THAT SHE HAD MADE INVESTMENT FOR LONG TERM APPRECIATION AND EARNING DIVIDEND THAT NO SHAR ES WERE TRADED BY HER AS STOCK - I N - TRADE. THE ASSESSING OFFICER, HOWEVER, D ID NOT FIND ANY MERIT IN THIS CLAIM OF THE ASSESSEE AND HELD THAT THE ASSESSEE WAS ENGAGED IN THE BUSINESS OF TRADING OF SHARES AND THE WHOLE OF LONG TERM CAPITAL GAIN AND SHORT TERM CAPITAL GAIN DECLARED BY THE ASSESSEE WAS TREATED AS BUSINESS INCOME OF T HE ASSESSEE. THE ASSESSING OFFICER ARRIVED AT THE ABOVE CONCLUSION ON THE BASIS OF THE FOLLOWING FACTS, PECULIAR TO THE CASE OF THE ASSESSEE: (A) THE ONLY ACTIVITY IN WHICH ASSESSEE WAS ENGAGED WAS PURCHASE AND SALE OF SHARES ON REGULAR BASIS WITH A MOTIVE TO MAXIMIZE PROFITS FROM SUCH TRADING ACTIVITY. (B) THE ASSESSEE PURCHASED 4,46,675 SHARES AND SOLD 11,66,435 SHARES AND ALSO TRADED IN 32 SCRIPTS AND ENTERED INTO 188 TRADING TRANSACTIONS WHICH WAS A CONCLUSIVE EVIDENCE OF TRADING ACTIVITY OF THE ASSESSEE IN S HARES. (C) THE ASSESSEE UTILISED SUBSTANTIAL BORROWED FUNDS FOR TRADING IN SHARES. IN THIS REGARD, THE ASSESSING OFFICER RELIED UPON THE DECISION OF APEX COURT IN THE CASE OF SARDAR INDRA SINGH & SONS LTD. V/S CIT (1953) 24 ITR 514 (SC). D) THE ASSESSEES T RADING ACTIVITY IN 52 SCRIPTS AND 188 TRANSACTIONS IN THE RELEVANT PREVIOUS YEAR WAS ENOUGH FREQUENCY OF TRADING IN SHARES TO CONCLUDE THAT ASSESSEE WAS ENGAGED IN BUSINESS ACTIVITY OF TRADING IN SHARES. FOR THE PURPOSE, THE ASSESSING OFFICER RELIED UPON T HE DECISION OF APEX COURT IN THE CASE CIT V/S SUTLEJ COTTON MILLS SUPPLY AGENCIES LTD. (1975) 100 1TR 706 (SC). THE ASSESSING OFFICER FURTHER HELD THAT THE MANNER IN WHICH ASSESSEE WAS REFLECTING STOCK OF SHARES AS INVESTMENT IN HER BOOKS OF ACCOUNTS WAS N OT ENOUGH EVIDENCE TO CONCLUDE THAT ASSESSEE WAS AN INVESTOR ONLY. FOR THE PURPOSE, THE ASSESSING OFFICER RELIED UPON THE DECISION OF APEX COURT IN THE CASE OF KEDARNATH JUTE MFG. CO. LTD V/S CIT (1971) 82 !TR 363 (SC) AND CIT V/S SUTLEJ COTTON MILLS SUPPL Y AGENCIES LTD (1975) 100 ITR 706 (SC). (E) THE PERIOD OF HOLDING, DELIVERY BASE TRADING AND THE CLAIM THAT ASSESSEE WAS INVESTING ONLY IN LISTED SHARE ACTIVITIES WAS NOT RELEVANT BECAUSE THE DECISION OF HOLDING THE SHARES UP TO A PARTICULAR TIME WAS PUR ELY A BUSINESS DECISION WITH AN INTENT TO MAXIMIZE PROFITS FROM SUCH SMT. SARAH FAISAL HAWA 9 SHARE TRADING ACTIVITY. (F) THE ASSESSEE WAS NOT MAINTAINING TWO PORTFOLIOS, ONE FOR INVESTMENT AND ANOTHER FOR TRADING. IN FACT THE ASSESSEE WAS FREQUENTLY TRADING IN SPECIFIC SCRIPT AND CLAIMING THE SAME ALSO TO BE INVESTMENT ACTIVITY. 5.2 THE ASSESSING OFFICER AFTER CONSIDERING THE VOLUME, FREQUENCY AND REGULARITY OF TRADING ACTIVITY IN SHARES, VARIOUS JUDICIAL PRONOUNCEMENTS AND CBOT CIRCULAR NO. 4/2007, HELD THE ACTIVITY OF THE ASSE SSEE TO BE TRADING IN SHARES AND THE PROT7T EARNED FROM SUCH ACTIVITY WAS BROUGHT TO TAX BY THE ASSESSING OFFICER AS INCOME FROM BUSINESS. 5.3 THE LD.CIT(A), HOWEVER DID NOT UPHOLD THE FINDINGS OF THE ASSESSING OFFICER BY RELYING ON THE DECISIONS OF THE HON BLE ITA T, MUMBAI, IN THE CASE OF GOPAL PUROHIT 122 771 433 AND BASED HIS DECISION ON THE FOLLOWING: (A) THE ASSESSEE WAS SHOWING SHARE INVESTMENT IN THE BALANCE SHEET IN EARLIER YEARS ALSO ASSESSEE'S CLAIM WAS ACCEPTED IN EARLIER YEARS. (B) THE ASSES SEE HAD NO ORGANIZED BUSINESS ACTIVITY IN SHARES. (C) MAJOR LONG TERM CAPITAL GAIN WAS IN RESPECT OF ONLY SHARES OF 9 COMPANIES. (D) MOST OF THE TRANSACTIONS WERE DELIVERY BASED. (E) THERE WAS NO BORROWING. (F) THERE WAS HUGE DIVIDEND INCOME. (G) MAGNITUDE OF TRANSA CTION WAS NOT OF MUCH RELEVANCE. (H) SCRIPS OF ASSESSEE WERE NOT HELD AS STOCK - IN - TRADE. 5.4 THE DECISION OF LD. CIT(A) WAS NOT ACCEPTED BY THE DEPARTMENT AND A SECOND APPEAL WAS PREFERRED TO THE ]TAT, AS THE DECISION OF CJT (A) DID NOT CONSIDER THE RELEVANT FACTS PECULIAR TO THE CASE OF THE ASSES S EE A ND THE CORRECT POSITION OF LAW AS APPLICABLE TO THE FACTS OF THE ASSESSEE AND IN THE PARTICULAR ON THE FOLLOWING GROUNDS: (A) THE LD. CIT(A) DID NOT APPRECIATE THAT THE CASE OF THE ASSESSEE WAS DEARLY DISTINGUI SHABLE ON FACTS FROM THE CASE OF GOPAL PUROHIT 122 ITR 433. (B) THE JUDICIAL PRONOUNCEMENTS RELIED UPON BY THE ASSESSING OFFICER IN THE ASSESSMENT ORDER WERE NOT DULY CONSIDERED AND DISTINGUISHED. (C) THE PRINCIPLE OF RES - JUDICATA DID NOT APPLY TO INCOME TAX PROCEEDINGS. (D) THE FOLLOWING DECISIONS OF JURISDICTIONAL ITAT WERE NOT CONSIDERED BY LD. CIT(A): (1) V. NAGESH V/S A CTT 1721 NO. 54101MUM/2008 (2) SMT. SADHANA NAVERA V/S ACJT25(3) IN 1721 NO. 25861MURN/2009 (E) THE DECISION OF HONBLE ITAT, AHMEDABAD IN THE CASE OF SUGAMCHAND C. SHAT V/S ACIT REPORTED IN 37 DTR 345 WAS ALSO NOT CONSIDERED BY THE LD. CIT(A). (F) THE OBSERVATIONS THAT THE ASSESSEE EARNED HUGE DIVIDEND INCOME WAS NOT SMT. SARAH FAISAL HAWA 10 FACTUALLY CORRECT FOR THE REASON THAT EARNING OF DIVIDEND F&O 12.85 LAKHS WAS ONLY INCIDENTAL TO SHARE HOLDINGS OF THE ASSESSEE, WHICH IS VALUED AT COST TO BE RS. 11.63 CRORES. THE DIVIDEND ON SUCH HOLDINGS WORKS OUT TO BE EVEN LESS THAN 1% OF THE PURCHASE COST OF SHARES. (G) THE OBSERVATIONS THAT NO BORROWED FUNDS WERE UTILIZE D BY THE ASSESSEE IS ALSO FACTUALLY INCORRECT FOR THE REASON THAT AT THE BEGINNING OF THE YEAR THE ASSESSEE HAD BORROWED FUNDS TO THE TUNE OF RS. 32. 66 LAKHS FROM HDFC BANK AND AFTER DAY - TO - DAY DEBITS AND CREDITS, AT THE YEAR END THE ASSESSEE HAD CREDIT B ALANCE IN THIS BANK OF RS. 52,000. IN A SIMILAR MANNER, THE ASSESSEE MAINTAINED CURRENT ACCOUNT WITH S.G. HAWA & CO. WHEREIN THE CREDIT BALANCE OF THE ASSESSEE IN THIS FIRM FLUCTUATED FROM 32.96 LAKHS TO RS. 1.88 CRORES. THIS INDICATED THAT THE ASSESSEE UT ILIZED FUNDS BORROWED FROM HDFC BANK AND FUNDS WITHDRAWN FROM HER ACCOUNT WITH H. G. HAWA & CO. ON LARGE NUMBER OF OCCASIONS FOR PURCHASE OF SHARES AND TO EARN PROFITS FROM TRADING ACTIVITY IN SHARES. 6. WITH THE ABOVE FACTS ON RECORD AND THE FACT THAT TH E ASSESSEE'S SHARE TRADING ACTIVITY WAS TREATED AS BUSINESS ACTIVITY IN A. Y. 2007 - 08 AND THE ISSUE WAS THE SUBJECT MATTER OF APPEAL BEFORE HONBLE ITAT, THE ACTION OF THE ASSESSING OFFICER IN DROPPING THE PROCEEDING INITIATED U/S 147 AND ACCEPTING RETUNED IMPALE WAS GROSSLY ERRONEOUS AND HIGHLY PREJUDICIAL TO THE INTEREST OF REVENUE. 7. AN ACTION U/S 263 WAS FULLY JUSTIFIED IN SUCH CASES AS HELD IN JUDICIAL PRONOUNCEMENTS REFERRED TO IN NOTICE U/S 263 REPRODUCED ABOVE AND IN VARIOUS JUDICIAL PRONOUNCEMENT ' AS UNDER: A) IN INCOME - TAX OFFICER VS VANAZ ENGINEERS (P) LTD. 70177) 525 - PUNE. THE HONOURABLE ITAT PUNE HELD THAT EVEN WHEN ASSESSING OFFICER FOLLOWED THE LINE AS PER DECISION OF CIT(A) IN ANOTHER YEAR, THE CIT WAS JUSTIFIED TO INVOKE REVISION U/S 263 IF THE VIEW HELD BY CTT(A), IN ANOTHER ASSESSMENT YEAR WAS NOT ACCEPTABLE TO THE DEPARTMENT AND AN APPEAL WAS PREFERRED TO ITAT. IN THIS DECISION, THE HONBLE TRIBUNAL OBSERVED AS UNDER: 'THE FACT THAT ORDER OF CIT(A) WAS SUBJECT - MATTER OF FURTHER APPEAL BEFORE THE TRIBUNAL WAS VERY MUCH AVAILABLE BEFORE THE CIT AND THEREFORE, THE CIT BEING REPRESENTATIVE OF THE REVENUE WAS BOUND TO CONSIDER THE ERROR COMMITTED BY THE ASSESSING OFFICER WITHOUT BEING INFLUENCED BY THE ORDER OF CIT(A).' B) IN THE FOLLOWING JUDICIAL PRONOUNCEMENTS IT WAS HELD THAT WHEN PROCEEDINGS INITIATED U/S 147 WERE DROPPED THE CIT COULD INVOKE REVISION U/S 263: 1. P.K. FABRICS VS. ACIT.(ITAT, ASR) 67 ITD 326 SMT. SARAH FAISAL HAWA 11 2. EXPORTS INDIA VS. CIT (DEL) 246 ITR 1 3. NEW JAGAT TEXTILE MILLS P. LTD. VS CIT (GUJ) 282 ITR 399 C) IN THE FOLLOWING JUDICIAL PRONOUNCEMENTS IT WAS FURTHER HELD THAT CIT WAS JUSTIFIED IN INVOKING PROVISIONS OF SECTION 263 EVEN ON DEBATABLE ISSUES: 1. JEHANNUMA PALACE HOTEL (P) LTD. VS. CIT (I7217; INDORE) 70 ITD 552 2. D & H SECHERON ELECTORDE S LTD. VS. DCIT (I7217; INC/ORE) 70 ITD 214 3. MALABAR INDUSTRIAL CO. LTD VS. CIT (5C) 243 ITR 83 D) IN THE FOLLOWING JUDICIAL PRONOUNCEMENTS IT WAS HELD THAT AN ASSESSMENT MADE WITHOUT CONDUCTING PROPER ENQUIRIES WAS AN ERRONEOUS ASSESSMENT AND WAS ALSO PRE JUDICIAL TO THE INTEREST OF REVENUE AND CIT WAS JUSTIFIED TO REVISE THE SAME BY INVOKING PROVISIONS OF SECTION 263: 1. CIT VS. PUSHPA DEW' (PATNA) 173177? 495 2. ADDL. CIT VS. MUKUR CORPORATION (GUJ) 111 ITR 312 3. SWAMP VEGETABLE PRODUCTS INDUSTRIES LTD. VS. CIT (ALL) 187 ITR 412 4. THALLBAL JAIN & OTHERS VS. ITO & ANR (KAR) 101 ITR 1 5. TEJINDER SINGH MAKKER VS. ACTT (174 T, MUM - TM) 61 ITD 57 6. RAMPYARI DEVI SAROOGI VS. CIT (SC) 67 ITR 84 CIT VS. MCMILLAN& CO. (SC) 33 ITR 182. 8. LASA VAT/ SINGHAL VS. C1T (ALL) 226 ITR 527 9. GEE VEE ENTERPRISES VS. ADDL. C1T & ORS(DEL) 99 ITR 375 10. D&H SECHERON ELECTONLES LTD. VS. DOT (ITAT, INDORE) 70 ITD 214 11. JAIN BHARAT TANNERS VS. CIT (MAD) 264 ITR 673 12. ASHOK LEYLAND LTD. VS. CIT(MAD) 260 ITR 599 13. ARVEE INTERNATIONAL VS. ADDL. CIT (ITAT, MUM) 101 ITD 495 14. COLOR CRAFT KASHMLRA CERAMIC COMPOUND VS. ITO (ITAT, MUM) 105 ITD 59915. E) HONBLE DELHI HIGH COURT IN THE CASE OF DUGGAL & CO. V. C1T (1996) 220 ITR 456 (DE/) HELD AS UNDER: 'AN ASSESSING OFFICER IS NOT ONLY AN ADJUDICATOR BUT ALSO AN INVE STIGATOR. HE CANNOT REMAIN PASSIVE IN THE FACE OF A RETURN WHICH IS APPARENTLY IN ORDER BUT CALLS FOR FURTHER ENQUIRY. IT IS INCUMBENT ON THE ASSESSING OFFICER TO FURTHER INVESTIGATE THE FACT STATED IN THE RETURN, WHEN CIRCUMSTANCES WOULD MAKE SUCH AN ENQU IRY PRUDENT, THE WORD' ERRONEOUS' IN SEC. 263 OF THE ACT, INCLUDES THE FAILURE TO MAKE SUCH AN ENQUIRY. THE ORDER BECOMES ERRONEOUS BECAUSE SUCH AN INQUIRY HAS NOT BEEN MADE AND NOT BECAUSE THERE IS ANYTHING WRONG WITH THE ORDER, IF ALL THE FACTS STATED THEREIN ARE ASSUMED TO BE CORRECT,' F) HONBLE MADHYA PRADESH HIGH COURT IN THE CASE OF CIT V. KOHINOOR TOBACCO PRODUCTS P. LTD. [1998] 148 CM (MP) 563 HELD AS UNDER. - SMT. SARAH FAISAL HAWA 12 'ASSESSMENT ORDER WAS PASSED BY THE ASSESSING OFFICER WITHOUT MAKING PROPER ENQUIRY. SUCH O RDER WAS ERRONEOUS AND ALSO PREJUDICIAL TO THE INTERESTS OF THE REVENUE IN AS MUCH AS THE ASSESSING OFFICER MADE NO ENQUIRY AT ALL TO ASCERTAIN WHETHER THE INCOME RECEIVED FROM LETTING OUT OF THE PROPERTIES WERE ASSESSABLE AS INCOME FROM BUSINESS OR AS INC OME FROM HOUSE PROPERTY' G) HON'BLE GUJARAT HIGH COURT IN THE CASE OF C1T V. N.M. KHAMBHATWALA [1992] 198 ITR 144 (GUJ) HELD AS UNDER - 'POWERS CAN BE EXERCISED EVEN IF THE ISSUE IS DEBATABLE. REVISIONAL POWER UNDER SECTION 263 IS NOT COMPARABLE WITH THE P OWER OF RECTIFICATION OF MISTAKE UNDER SECTION 154.' IN VIEW OF THE ABOVE AND FACTS AND ISSUES INVOLVED IN THE CASE OF THE ASSESSEE. I HOLD THAT THERE WERE NO MERITS IN THE ARGUMENTS PUT FORTH BY THE ASSESSEE AND THE PROVISIONS OF SECTION 263 WERE CLEARLY APPLICABLE IN THE CASE OF THE ASSESSEE TO ENSURE PROPER ASSESSMENT IN ACCORDANCE WITH PROVISIONS OF LAW.' THE REASONS STATED BY THE LD.CIT(A), IN CRUX, INDICATES THAT THE REOPENING AND THE CONSEQUENT ACTION OF THE LD.CIT(A) ' U/S 263 IS MAINLY BASED ON THE FACTS EMERGED IN THE ASSESSMENT PROCEEDINGS FOR THE YEAR 2007 - 08 IN WHICH IT HAS BEEN FOUND BY THE AO THAT THE ASSESSEE WAS DEALING IN PURCHASE AND SALE OF SHARES WITH PROFIT MOTIVE AND INCOME THEREFROM WAS ASSESSABLE AS BUSINESS INCOME WHICH IS SEPARATEL Y CONTESTED BY THE DEPARTMENT BEFORE THE ITAT AGAINST THE RELIEF GIVEN BY THE LD.CIT(A) AGAINST THE ORDER OF THE AO. THE PERUSAL OF THE REASSESSMENT ORDER PASSED BY THE AO REVEALS THAT HE HAS SIMPLY RELIED/ACCEPTED THE REPLY OF THE ASSESSEE IN RESPONSE TO THE NOTICE GIVEN BY THE AO DURING THE REASSESSMENT PROCEEDINGS AND PROCEEDED TO COMPLETE THE ASSESSMENT THEREBY ACCEPTING THE RETURNED INCOME OF THE ASSESSEE. THE AO HAS NOT MADE DUE ENQUIRY IN THE LINE OF THE ASSESSMENT COMPLETED DURING THE A.Y.2007 - 08, W HEN THE FACT BEING THAT THE REOPENING HAS BEEN DONE ON THE BASIS OF THE SAID A.Y. 2007 - 08. THEREFORE, WE ARE OF THE CONSIDERED OPINION THAT THE LD.CIT(A)'S ACTION U/S 263 IS JUSTIFIED AS THE ACTION THE AO IN DROPPINGS THE PROCEEDINGS INITIATED U/S 147 AND ACCEPTING THE RETURNED INCOME DURING THE YEAR UNDER CONSIDERATION IS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE. NO DOUBT THAT THE LD. CIT(A) IS COMPETENT AND EMPOWERED U/S 263 TO PASS SUCH ORDERS ENHANCING OR MODIFYING THE ASSESSMENT, HOWEVE R, CONSIDERING THE FACT THAT THE AO HAS MADE DUE ENQUIRY DURING THE ASSESSMENT COMPLETED DURING THE A.Y.2007 - 08, WHILE PASSING THE ORDER U/S 263, THE LD.CIT(A), INSTEAD OF DECIDING THE ISSUES ON MERIT GIVING A DIRECTION TO THE AO FOR MAKING THE IMPUGNED AD DITIONS, HE OUGHT TO HAVE REFERRED THE MATTER TO THE FILE OF THE AO FOR MAKING A FRESH ASSESSMENT SMT. SARAH FAISAL HAWA 13 SO THAT THE AO COULD HAVE MADE A DUE ENQUIRY IN THE FRESH ASSESSMENT ON THE BASIS OF THE ASSESSMENT ORDER PASSED IN THE YEAR 2007 - 08. IN VIEW OF THAT MATTER , THE ORDER OF THE LD.CIT(A) TO THE EXTENT THAT THE REASSESSMENT ORDER PASSED BY THE AO IS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE IS UPHELD AND THE ORDER TO THE EXTENT OF THE DIRECTION GIVEN BY HIM TO MAKE THE IMPUGNED ADDITIONS IS SET AS IDE. ACCORDINGLY, WE DIRECT THE AO TO MAKE A FRESH ASSESSMENT U/S 143(3) READ WITH SECTION 263 ON THE IMPUGNED ADDITIONS/DISALLOWANCES MADE/ENHANCED BY THE LD.CIT(A) KEEPING IN VIEW OF THE SCOPE OF REASSESSMENT PROCEEDINGS AND AFTER GIVING A REASONABLE OPP ORTUNITY OF BEING HEARD TO THE ASSESSEE. NEEDLESS TO EMPHASIS THAT THE AO WILL MAKE THE FRESH ASSESSMENT ON MERIT WITHOUT BEING INFLUENCED BY THE DECISION AND DIRECTION OF THE LD.CIT(A) TO MAKE THE ADDITIONS/DISALLOWANCES. WE ORDER AND DIRECT ACCORDINGLY . 22. S INCE IN THE PRESENT CASE ADDITIONS MADE THROUGH THE ORDER PASSED U/S. 263 WERE ALREADY SET ASIDE BY THE TRIBUNAL F BENCH ( ITA NO. 5884/MUM/2010 DATED 6.2.2015 FOR A.Y. 2007 - 08 ) , WHICH IS REVENUES APPEAL AGAINST THE ORDER OF LEARNED CIT(A) DELET ING THE ADDITIONS WERE ALSO DISMISSED AND IT WAS ULTIMATELY HELD THAT THE INCOME OF THE ASSESSEE TO BE TAKEN INSTEAD OF BUSINESS INCOME AS SHORT TERM CAPITAL GAINS AND LONG TERM CAPITAL GAINS AND ALSO ADDITIONS MADE U/S. 143(3) READ WITH SECTION 263 WERE DELETED AND SET ASIDE BY THE ITAT H BENCH ( ITA NOS. 1963 TO 1970/MUM/2013 FOR A.YS. 2005 - 06 TO 2009 - 10 DATED 25.9.2013) . SINCE IN BOTH ORDERS I.E. U/S. 263 ADDITIONS MADE WERE DELETED BY THE TRIBUNAL AS WELL THE ORDER U/S. 143(3) READ WITH 263 ADD ITIONS MADE BY THE ASSESSING OFFICER WERE SET ASIDE BY DISMISSING THE APPEAL FILED BY THE REVENUE BY THE TRIBUNAL. SINCE THE PENALTY PROCEEDINGS WERE ARISEN FROM THE ORDER PASSED BY THE ASSESSING OFFICER IN A.Y. 2007 - 08 AND SINCE THAT A.Y. 2007 - 08 HAS ALRE ADY BEEN SET ASIDE THEREFORE NO PENALTY IS SUSTAINABLE AND SINCE IN THE PRESENT CASE CONTROVERSY IS WITH REGARD TO A.Y. 2005 - 06 REGARDING WHICH QUANTUM APPEAL IS STILL PENDING BEFORE LEARNED CIT(A). HOWEVER WHEN ONCE ITAT B BENCH HAS ALREADY DELETED THE ADDITIONS MADE U/S. 263 AND ITAT F BENCH HAS ALREADY UPHELD THE ORDER PASSED BY LEARNED CIT(A) THEREBY DELETING THE ADDITIONS MADE BY THE ASSESSING OFFICER FOR A.Y. 2007 - 08 THEREFORE NO PENALTY PROCEEDINGS ARE WARRANTED IN THE SMT. SARAH FAISAL HAWA 14 AFOREMENTIONED CIRCUMSTANC ES. WE ARE OF THE CONSIDERED VIEW THAT THE LEVIED BY THE ASSESSING OFFICER IS PENALTY 23. IN THE RESULT, ALL APPEALS OF THE ASSESSEE ARE ALLOWED. ORDER HAS BEEN PRO NOUNCED IN THE OPEN COURT ON 30 .1 2 .2015. SD/ - SD/ - (RAJENDRA ) (SANDEEP GO SAIN ) ACCOUNTANT MEMBER JUDICIAL MEMBER , , MUMBAI ; DATED : 30 / 1 2 /20 15 COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A) 4. CIT 5. DR, ITAT, M UMBAI 6. GUARD FILE. BY ORDER, //TRUE COPY// ( DY./ASSTT. REGISTRAR) ITAT, MUMBAI PS