ACIT 4(2), MUMBAI V. PRSHANT J PATEL, MUMBAI

ITA 4953/MUM/2014

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 2124 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 2 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-10-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 09-05-2016
• Assessment Year: 2010-2011
• Appeal Filed On: 30-07-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: PRADEEP KUMAR SINGH
• Assessee Lawyers: V G GINDE
• Keywords: Business income

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, BENCH C,MUM BAI BEFORE SHRI R.C.SHARMA, ACCOUNTANT MEMBER AND SHRI PAWAN SINGH, JUDICIAL MEMBER ITA NO.4953/MUM/2014 (ASSESSMENT YEAR : 2010-11) THE DCIT-4(2), ROOM NO. 642, 6 TH FLOOR, AAYAKAR BHAVAN, M.K. ROAD, MUMBAI-400020. VS. M/S. PRASHANT J. PATEL, 3,3A, 1 ST FLOOR, CHURCHGATE HOUSE, VEER NARIMAN ROAD, FORT, MUMBAI-400001. PAN: AABPP2156M (APPELLANT) (RESPONDENT) REVENUE BY : SHRI PRADEEP KUMAR SINGH (DR) ASSESSEE BY : SHRI V.G.GINDE (AR ) DATE OF HEARING : 11.08.2016 DATE OF PRONOUNCEMENT : 28.10.2016 O R D E R PER PAWAN SINGH, JM: 1. THE PRESENT APPEAL U/S 253 OF THE INCOME TAX ACT ( CT) IS DIRECTED BY THE REVENUE AGAINST THE ORDER OF CIT(A)-17, MUMBAI DATED 27.07. 2014 (CORRECTED VIDE CORRIGENDUM DT 08.08.2014), ARISING OUT OF PENALTY ORDER LEVIED U/S 271(1)(C) OF THE ACT DATED 29.08.2013 IN RESPECT OF ASSESSMENT YEAR (AY) 2010-11. 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE FILED RETURN OF INCOME ON 13.10.2010 DECLARING TOTAL INCOME OF RS. 3,83,87,463/-. THE CA SE WAS SELECTED FOR SCRUTINY. THE AO WHILE MAKING THE ASSESSMENT BESIDES THE OTHER A DDITION/DISALLOWANCE TREATED THE SHORT TERM CAPITAL GAIN (STCG) ON SHARE OF RS. 33,56,796/- AS A INCOME FROM BUSINESS. AGGRIEVED BY THE ORDER OF AO, THE ASSESSE E FILED APPEAL BEFORE THE LD. CIT(A). THE LD. CIT(A) ACCEPTED THE APPEAL OF THE A SSESSEE AND ACCEPTED THE INCOME FROM STCG INSTEAD OF BUSINESS INCOME. THUS, AGGRIEVED BY THE ORDER OF THE 2 ITA NO. 4953/M/2014 M/S. PRASHANT J. PATEL LD. CIT(A) THE REVENUE HAS FILED THE PRESENT APPEAL BEFORE US. RAISING THE FOLLOWING GROUNDS OF APPEAL: 1. 'ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW, THE LD. CIT(A) ERRED IN TREATING THE ASSESSEE AS INVESTOR INSTEAD OF TRADER EVEN THOUGH THE ASSESSEE HAS STATED IN MORE THAN 41 SCRIPS AND ENTE RED INTO MORE THAN 165 TRANSACTIONS IN THE YEAR. THE ANALYSIS OF THE HOLDI NG PERIOD REFLECTS THAT IN MORE THAN 100 TRANSACTIONS THE HOLDING PERIOD IS LESS TH AN A MONTH, IN MORE THAN 60 TRANSACTIONS THE HOLDING PERIOD IS LESS THAN 6 MONT HS.' 2. 'ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW, THE LD. CIT(A) ERRED IN RELYING UPON THE EARLIER YEAR'S ORDER IN T HE ASSESSEE'S OWN CASE WHEREAS THE FACTS OF THE CASE ARE NOT IDENTICAL TO THE EARL IER YEARS. IN EARLIER YEAR, INCOME FROM INVESTMENT ACTIVITY WAS VERY NEGLIGIBLE HOWEVE R IN THE PRESENT YEAR INCOME FROM INVESTMENT IS SUBSTANTIAL.' 3. 'ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW, THE LD. CIT(A) WAS NOT JUSTIFIED THAT THEORY OF CONSISTENCY IS NOT APPLICABLE IN THIS CASE BECAUSE FACTS ARE VERY DIFFERENT FROM THE EARLIER YEAR I.E. 2006-07 AND 2007-08. IN THOSE YEARS INCOME FROM INVESTMENT WAS VERY LESS AND TRAN SACTIONS IN CAPITAL GAIN WERE VERY LESS. IN PRESENT YEAR TRANSACTION IN INVE STMENT ARE VERY FREQUENT AND HOLDING PERIOD OF SHARE IS LESS THAN A MONTH IN MAJ ORITY. 3. WE HAVE HEARD THE LD. AUTHORISED REPRESENTATIVE (AR ) OF THE ASSESSEE AND DEPARTMENTAL REPRESENTATIVE (DR) FOR THE PARTIES AN D PERUSED THE MATERIAL AVAILABLE ON RECORD. THE LD. DR FOR THE REVENUE ARGUED THAT T HE CIT(A) WRONGLY TREATED THE BUSINESS INCOME OF THE ASSESSEE AS STCG. THE LD. DR FOR REVENUE ARGUED THAT CASE OF EACH YEAR HAS TO BE EXAMINED ON THE BASIS OF ITS FACTS. ON THE OTHER HAND, LD. AR OF THE ASSESSEE ARGUED THAT HIS CASE IS SQUARELY CO VERED IN HIS FAVOUR. AS IN PREVIOUS YEARS AS WELL AS SUBSEQUENT YEARS THE ASSESSEE WAS ALLOWED STCG . THE LD. AR OF THE ASSESSEE FURTHER ARGUED THAT THE CIT(A) ON THE BASIS OF DECISION OF ITAT IN ASSESSEES OWN CASE FOR AY 2008-09 ALLOWED THE SIMI LAR RELIEF IN HIS FAVOUR. 4. WE HAVE CONSIDERED THE RIVAL CONTENTIONS OF THE PAR TIES AND GONE THROUGH THE RECORDS OF THE CASE. THE AO WHILE FRAMING THE ASSES SMENT ASKED THE ASSESSEE AS TO WHY THE STCG BE NOT RELATED AS INCOME FROM BUSINESS , THE ASSESSEE REPLIED THE SHOW CAUSE NOTICE ISSUED BY AO AND CONTENDED THEREI N THAT ASSESSEE IS MAINTAINING TWO SEPARATE PORTFOLIO THAT ONE FOR INVESTMENT AND OTHER FOR TRADING, IN THE PAST DEPARTMENT HAS ASSESSED THE ASSESSEE AS INVESTOR AN D THERE IS NO CHANGE IN THE MODUS OPERANDI OF SHARE TRANSACTION FROM YEAR TO YEAR. THE ASSESS EE HAS EARNED SUBSTANTIAL DIVIDEND ON INVESTMENT, ASSESSEE HAS NO T UTILIZED BORROWED FUNDS FOR 3 ITA NO. 4953/M/2014 M/S. PRASHANT J. PATEL PURCHASE OF SHARE. IT WAS FURTHER CONTENDED THAT TH E FREQUENCY OF TRANSACTION IN CASE OF ASSESSEE IS NOT FREQUENT, THE ASSESSEE SOLD THE SHARE MORE IN THE MONTH OF APRIL, MAY, AUGUST, SEPTEMBER 2009 AND JANUARY AND FEBRUAR Y 2010. THERE IS NO REGULAR SALE TRANSACTION IN OTHER MONTHS. IN THE BOOKS OF A CCOUNTS REGULARLY MAINTAINED BY THE ASSESSEE, THE SHARE FORMING PART OF TRADING POR TFOLIO ARE SHOWN AS STOCK-IN-TRADE AND THOSE FORMS PART OF INVESTMENT ARE SHOWN AS INV ESTMENT. THE CONTENTION OF THE ASSESSEE WAS NOT ACCEPTED BY AO AND HOLDING THAT AS SESSEE ENTERED INTO 165 TRANSACTIONS AND THE ANALYSIS OF THE HOLDING PERIOD REFLECTS THAT IN 100 TRANSACTIONS, THE HOLDING PERIOD IS LESS THAN ONE MONTH AND IN 16 TRANSACTION HOLDING PERIOD IS LESS THAN SIX MONTH. LD. CIT(A) WHILE CONSIDERING T HE CONTENTION OF THE ASSESSEE AND RELIED UPON THE DECISION OF ITAT IN ASSESSEES OWN CASE FOR AY 2008-09 IN ITA NO. 3546/MUM/2012 AND ITA NO. 6033/MUM/2012 FOR AY 2009-10 AND ALLOWED THE APPEAL OF THE ASSESSEE. 5. WE HAVE FURTHER SEEN THAT THE AO ALLOWED THE SIMILA R RELIEF TO THE ASSESSEE FOR AY 2013-14, COPY OF WHICH IS PLACED ON RECORD ALONG WI TH COMPUTATION OF INCOME SHOWING THE CAPITAL GAIN. IN VIEW OF THE ABOVE OBSE RVATION AND THE DECISIONS OF CO- ORDINATE BENCH OF ITAT, WHEREIN THE SIMILAR INCOME WAS ACCEPTED AS A STCG, THUS, WE DO NOT FIND ANY ILLEGALITY OR INFIRMITY IN THE O RDER PASSED BY LD. CIT(A). 6. IN THE RESULT, APPEAL OF THE REVENUE IS DISMISSED. ORDER PRONOUNCED IN OPEN COURT ON 28 TH OCTOBER, 2016 SD/- SD/- (R.C.SHARMA) (PAWAN SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI; DATED 28/10/2016 S.K.PS COPY OF THE ORDER FORWARDED TO : BY ORDER, (ASSTT.REGISTRAR) ITAT, MUMBAI 1. THE APPELLANT 2. THE RESPONDENT. 3. THE CIT(A), MUMBAI. 4. CIT 5. DR, ITAT, MUMBAI 6. GUARD FILE. //TRUE COPY/