SARAH FAISAL HAWA, MUMBAI V. ASST CIT 21(3), MUMBAI

ITA 589/MUM/2017

• Counselvise Citation: [2017] 126 COUNSELVISE.COM (IT) 9740 (ITAT-MUMBAI)
• Duration Of Justice: 7 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-09-2017
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: C
• Assessment Year: 2005-2006
• Appeal Filed On: 25-01-2017
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Keywords: Unexplained cash credit; Gift; Business income; Opportunity of being heard; Rule of consistency; Onus to prove; Reassessment proceedings
• Section: 45(2); 143(3); 147; 131; 68; 148; 263; 11

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, BENCH C, M UMBAI BEFORE SH. P.K. BANSAL VICE PRESIDENT AND SHRI PAWAN SINGH, JUDICIAL MEMBER ITA NO. 589/MUM/2017 (ASSESSMENT YEAR- 2005-06) ITA NO. 590/MUM/2017 (ASSESSMENT YEAR- 2006-07) ITA NO. 591/MUM/2017 (ASSESSMENT YEAR- 2008-09) ITA NO. 592/MUM/2017 (ASSESSMENT YEAR- 2009-10) SMT. SARAH FAISAL HAWA 24, CENTRAL COURT, MOTALIBAI STREET, AGRIPADA 2, MUMBAI -400011 PAN: AAIPH0012P VS. ACIT-21(3), 6 TH FLOOR, PIRAMAL CHAMBERS, PAREL, MUMBAI-40012 (APPELLANT) (RESPONDENT) ASSESSEE REPRESENTED BY : SH. K. GOPAL/JITENDRA SINGH (AR) REVENUE REPRESENTED BY : SH. RAJAT MITTAL (DR) DATE OF HEARING : 08.08.2017 DATE OF ORDER : 11.09.2017 ORDER UNDER SECTION 254(1) OF INCOME-TAX ACT PER BENCH; 1. THIS SET OF FOUR APPEALS BY ASSESSEE UNDER SECTION 253 OF THE INCOME TAX ACT ARE DIRECTED AGAINST THE CONSOLIDATED ORDER OF LD. CIT(A)-33, MUMBAI DATED 02.11.2016 FOR ASSESSMENT YEAR (AY) 2005-06, 2006-07, 2008-09 & 2009-10. THE LD. CIT(A) DECIDED THE APPEAL OF ASSES SEE FOR AY2005-06, 2006-07, 2008-09 & 2009-10 BY A CONSOLIDATED ORDER, THE ASSESSEE HAS RAISED SOME COMMON GROUNDS OF APPEAL. THUS, ALL THE APPEALS WERE HEARD ITA NO. 589 TO 592/M/2017- SMT. SARAH FAISAL HAWA 2 TOGETHER AND ARE DECIDED BY COMMON ORDER TO AVOID T HE CONFLICTING DECISION. 2. FOR APPRECIATION OF FACTS, WE ARE REFERRING THE FAC T FOR AY 2005-06 IN ITA NO. 589/MUM/2017. THE ASSESSEE HAS RAISED THE FOLLO WING GROUNDS OF APPEAL: 1. THE LD. COMMISSIONER OF INCOME-TAX (APPEALS)-33, MU MBAI [HEREINAFTER REFERRED TO AS 'LD. CIT(A)'] ERRED IN PASSING THE ORDER DAT ED 02.11.2016 UPHOLDING THE ORDER PASSED BY LD. A. O. DATED 31.03.2015 UNDER SE CTION 143(3) R.W.S. 254 OF THE INCOME TAX ACT, 1961 ['OF THE ACT' FOR SHORT 1 DETE RMINING TOTAL INCOME OF THE APPELLANT AT RS.1,70,34,120/- AS AGAINST RETURNED I NCOME OF RS.1,10,70,840/- WITHOUT APPRECIATING THE FACTS AND CIRCUMSTANCES OF THE CASE. THE APPELLANT, THEREFORE, PRAYS THAT THE ORDER DATED 02.11.2016 PA SSED BY LD. CIT(A) IS BAD IN LAW AND THE SAME MAY BE QUASHED. 2. TREATING 'SHORT TERM CAPITAL GAIN' AS 'BUSINESS INC OME' UNJUSTIFIED - RS.76,36,602/- I. THE LD. CIT(A) ERRED IN UPHOLDING THE ACTION OF THE LD. A.O. IN TREATING THE 'SHORT TERM CAPITAL GAIN' AS 'BUSINESS INCOME' WITH OUT APPRECIATING THE FACT THAT THE APPELLANT IS AN INVESTOR IN THE SHARES AND MUTUAL FUNDS AND ALSO HAS SHOWN THE SAME AS INVESTMENTS IN HER BALANCE SHEET, HENCE, THE ADDITION OF RS.76,36,602/- MADE UNDER THE HEAD 'BUSINESS INCOME ' IS NOT AT ALL JUSTIFIED AND THE SAME MAY BE DELETED. II. WITHOUT PREJUDICE TO THE ABOVE, THE LD. CIT(A) ERRE D IN NOT DIRECTING THE LD. A.O. TO ALLOW THE BENEFIT AVAILABLE TO THE APPELLAN T UNDER SECTION 45(2) OF THE ACT WHILE TREATING THE 'SHORT TERM CAPITAL GAIN' AS 'BUSINESS INCOME' OF THE APPELLANT. WITHOUT HENCE, THE APPELLANT PRAYS THAT THE BENEFIT OF PROVISIONS OF SECTION 45(2) MAY BE GRANTED TO THE APPELLANT. 3. TREATING 'LONG TERM CAPITAL GAIN' AS 'BUSINESS INCO ME' UNJUSTIFIED - RS.64,37,452/- I. THE LD. CIT(A) ERRED IN UPHOLDING THE ACTION OF THE LD. A.O. IN TREATING THE 'LONG TERM CAPITAL GAIN' AS 'BUSINESS INCOME' WITHO UT APPRECIATING THE FACT THAT THE APPELLANT IS AN INVESTOR IN THE SHARES AND ALSO HAS SHOWN THE SAME AS INVESTMENTS IN HER BALANCE SHEET. HENCE, THE ADDITI ON OF RS.64,37,452/- MADE ITA NO. 589 TO 592/M/2017- SMT. SARAH FAISAL HAWA 3 UNDER THE HEAD 'BUSINESS INCOME' IS NOT AT ALL JUST IFIED AND THE SAME MAY BE DELETED. II. WITHOUT PREJUDICE TO THE ABOVE, THE LD. CIT(A) ERRED IN NOT DIRECTING THE LD. A.O. TO ALLOW THE BENEFIT AVAILABLE TO THE APPELLAN T UNDER SECTION 45(2) OF THE ACT WHILE TREATING THE 'LONG TERM CAPITAL GAIN' AS 'BUSINESS INCOME' OF THE APPELLANT. WITHOUT HENCE, THE APPELLANT PRAYS THAT THE BENEFIT OF PROVISIONS OF SECTION 45(2) MAY BE GRANTED TO THE APPELLANT. 4. ADDITION ON ACCOUNT OF GIFTS TREATING THE SAME AS U NEXPLAINED CASH CREDIT UNDER SECTION 68 OF THE ACT UNJUSTIFIED 21,50,000 /- I. THE LD. CIT(A) ERRED IN UPHOLDING THE ACTION OF THE LD. A.O. IN TREATING THE GIFTS AS UNEXPLAINED CASH CREDIT UNDER SECTION 68 OF THE ACT WITHOUT APPRECIATING THAT THE APPELLANT HAS FURNISHED RELEVANT DETAILS TO DIS CHARGE THE PRIMARY ONUS CAST UPON HER TO PROVE THE IDENTITY, CAPACITY AND GENUIN ENESS OF GIFTS. HENCE, GIFT RECEIVED AMOUNTING TO RS.21,50,000/- AS UNEXPLAINED CASH CREDIT UNDER SECTION 68 OF THE ACT IS UNJUSTIFIED AND THE SAME MAY BE DE LETED. 5. ADDITION ON ACCOUNT LOW WITHDRAWALS UNJUSTIFIED- RS .1,50,000 /- I. THE LD. CIT(A) ERRED IN CONFIRMING THE ACTION OF LD . A.O. IN MAKING ADDITION OF RS.1,50,000/- ON ACCOUNT OF LOW WITHDRAWALS WITH OUT APPRECIATING THE FACTS AND CIRCUMSTANCES OF THE CASE. THE APPELLANT, THERE FORE, PRAYS THAT THE ADDITION OF RS.1,50,000/- ON ACCOUNT OF LOW WITHDRAWAL IS UN JUSTIFIED AND THE SAME MAY BE DELETED. 3. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE FIELD RETURN OF INCOME FOR RELEVANT AY ON 08.08.2005 DECLARING TOTAL INCOME AT RS. 1,10,70,840/-. IN THE RETURN OF INCOME, THE ASSESSEE CLAIMED SHORT TE RM CAPITAL GAIN (STCG) OF RS.56,49,475/- AND LONG TERM CAPITAL GAIN OF RS. 28,61,567/. THE ASSESSEE CLAIMED LTCG EXEMPTION U/S 10(38) OF R S. 35,75,885/-. THE RETURN WAS PROCESSED U/S 143(1) AND WAS ACCEPTED. T HE ASSESSING OFFICER (AO) WHILE MAKING SCRUTINY OF ASSESSMENT FOR AY 200 7-08 OBSERVED THAT ITA NO. 589 TO 592/M/2017- SMT. SARAH FAISAL HAWA 4 ASSESSEE IS ENGAGED IN THE BUSINESS OF VENTURE OF T RADING IN SHARES AND TREATED THE STCG AND LTCG AS BUSINESS INCOME. AFT ER TREATING THE STCG AND LTCG AS BUSINESS INCOME FOR AY 2007-08, TH E ASSESSMENT FOR AY 2005-06, 2006-07,2008-09 &2009-10 WAS RE-OPENED UNDER SECTION 147 OF THE ACT. THE NOTICE U/S 148 WAS ISSUED TO TH E ASSESSEE. THE ASSESSEE CONTESTED THE RE-OPENING PROCEEDING. THE AO PASSED THE ASSESSMENT ORDER U/S 143(3) R.W.S. 147 OF THE ACT AND ACCEPTED THE R ETURN OF INCOME OF RS.1,10,70,840/-, WITHOUT ANY VARIATION. SUBSEQUENT LY, PROCEEDING U/S 263 WAS INITIATED BY PRINCIPLE COMMISSIONER OF INCOME-T AX (PCIT) ON THE GROUND THAT ORDER PASSED BY AO U/S 143(3) R.W.S. 14 7 WAS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF REVENUE. WHILE DOING SO THE LD. PCIT HELD THAT FACT FOR THE AY 2005-06 WAS SIMILAR TO THE FAC TS OF AY 2007-08 WHEREIN THE ACTIVITY OF ASSESSEE OF TRADING IN SHAR ES WAS HELD BUSINESS ACTIVITY AND ACCORDINGLY LTCG AND STCG WAS BROUGHT TO TAX AS BUSINESS INCOME VIDE ORDER DATED 12.11.2012 PASSED U/S 263 OF THE ACT. THE ASSESSEE FILED APPEAL AGAINST THE ORDER DATED 12.11 .2012 PASSED U/S. 263 BEFORE THE TRIBUNAL. THE ASSESSEE SIMULTANEOUS FILE D APPEAL AGAINST THE SIMILAR TREATMENT FOR AY 2006-07, 2008-09 AND 2009- 10. BEFORE THE TRIBUNAL. THE TRIBUNAL RESTORED ALL THE APPEALS OF THE ASSESSEE BY COMPOSITE ORDER, VIDE ORDER DATED 25.09.2013 IN IT A NO.(S) 1963- 1970/M/2013 TO THE FILE OF AO WITH THE FOLLOWING DI RECTION: ITA NO. 589 TO 592/M/2017- SMT. SARAH FAISAL HAWA 5 'THEREFORE WE ARE OF THE CONSIDERED OPINION THAT TH E LD. CIT(A)'S ACTION U/S.263 IS JUSTIFIED AS THE ACTION OF THE AO IN DRO PPING THE PROCEEDINGS INITIATED ULS.147 ACCEPTING THE RETURNED INCOME DURING THE YE AR UNDER CONSIDERATION IS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF REVENU E. NO DOUBT THAT THE ID. CIT(A) IS COMPETENT AND EMPOWERED U/S263 TO PASS SU CH ORDERS ENHANCING OR MODIFYING THE ASSESSMENT, HOWEVER, 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 O F DECIDING THE ISSUES ON MERIT GIVING A DIRECTION TO THE AO FOR MAKING THE I MPUGNED ADDITIONS, HE OUGHT TO HAVE REFERRED THE MATTER TO THE FILE OF THE AO F OR MAKING A FRESH ASSESSMENT 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 20 07-08. IN VIEW OF THAT MATTER, THE ORDER OF THE ID. CIT(A) TO THE EXTENT THAT THE RE- ASSESSMENT ORDER PASSED BY THE AO IS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE IS UPHELD AND THE ORDER TO THE EXTEN T OF THE DIRECTION GIVEN BY HIM TO MAKE IMPUGNED ADDITIONS IS SET ASIDE. ACCORD INGLY, WE DIRECT THE AO TO MAKE A FRESH ASSESSMENT U/S. 143(3) READ WITH SECTI ON 263 ON THE IMPUGNED ADDITIONAL DISALLOWANCES MADE/ENHANCED BY THE LD. C IT(A) KEEPING IN VIEW OF THE SCOPE OF REASSESSMENT PROCEEDINGS AND AFTER GIV ING REASONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE.' 4. THE AO IN COMPLIANCE OF THE DIRECTION OF THE TRIBUN AL PASSED THE ASSESSMENT ORDER U/S 143(3) R.W.S. 254 OF THE ACT O N 31.03.2015. THE AO WHILE TREATED THE LTCG AND STCG AS BUSINESS INCOME . THE AO MADE THE ADDITION OF RS. 21,50,000/- U/S 68 AND FURTHER ADDITION OF RS. 1,50,000/- ON ACCOUNT OF LOW WITHDRAWAL. ON FURTHER APPEAL BEF ORE THE LD. CIT(A), THE TREATMENT OF STCG AND LTCG AS BUSINESS INCOME . T HE ADDITION U/S 68 AND ADDITION ON ACCOUNT OF LAW WITHDRAWAL WAS CONFI RMED. THUS, FURTHER AGGRIEVED BY THE ORDER OF LD. CIT(A), THE ASSESSEE HAS FILED THE PRESENT APPEAL BEFORE THE TRIBUNAL. 5. WE HAVE HEARD THE LD. AUTHORIZED REPRESENTATIVE (AR ) OF THE ASSESSEE AND LD. DEPARTMENTAL REPRESENTATIVE (DR) FOR THE REVENU E AND PERUSED THE ITA NO. 589 TO 592/M/2017- SMT. SARAH FAISAL HAWA 6 MATERIAL AVAILABLE ON RECORD. GROUND NO.1 IS GENERA L IN NATURE AND NEED NO SPECIFIC ADJUDICATION. HENCE, DISMISSED. 6. GROUND NO. 2 & 3 RELATES TO TREATING THE STCG AND L TCG AS BUSINESS INCOME. THE LD. AR OF THE ASSESSEE ARGUED THAT THE AO MADE THE RE- OPENING ON THE BASIS OF STCG AND LTCG TREATING THEM AS BUSINESS INCOME IN AY 2007-08. HOWEVER, AFTER HEARING THE A SSESSEE, THE AO ALLOWED THE LTCG AND STCG IN THE ORDER PASSED U/S 1 43(3) R.W.S. 147 DATED 30.11.2011. THE LD. PCIT REVISED THE ASSESSM ENT ON 12.11.2011 ON THE BASIS OF OBSERVATIONS OF FACTS FOR AY 2007-08 W HEREIN THE CAPITAL GAIN OF THE ASSESSEE WAS TREATED AS BUSINESS INCOME. I T WAS FURTHER ARGUED THAT FOR AY 2007-08, THE AO TREATED THE STCG AND LT CG AS BUSINESS INCOME IN ASSESSMENT ORDER DATED 22.12.2009 PASSED UNDER SECTION 143(3). HOWEVER, ON APPEAL BEFORE THE LD. CIT(A), T HE ACTION OF AO WAS REVERSED VIDE ORDER DATED 14/052010 IN CIT(A)-29/RG /-17/180/09-10. THUS, THE ASSESSEE WAS ALLOWED CAPITAL GAIN. 7. IT WAS ARGUED THAT AGAINST THE ORDER OF CIT(A) DATE D 14/05/201 THE REVENUE FILED APPEAL BEFORE THE TRIBUNAL VIDE ITA N O. 5883/MUM/2010. THE ASSESSEE ALSO FILED CROSS OBJECTION THEREIN. TH E APPEAL OF THE REVENUE WAS DISMISSED BY THE TRIBUNAL ON 06.02.2015. THE TR IBUNAL CONFIRMED THE ORDER OF LD. CIT(A). IT WAS FURTHER ARGUED THAT TH E ASSESSMENT WAS REVISED ON THE BASIS OF TREATMENT OF CAPITAL GAIN AS BUSIN ESS INCOME ON THE BASIS ITA NO. 589 TO 592/M/2017- SMT. SARAH FAISAL HAWA 7 OF OBSERVATION OF THE AO FOR AY 2007-08, WHEREIN TH E ACTION OF AO WAS REVERSED BY LD. CIT(A) AND WHICH WAS AFFIRMED BY TH E TRIBUNAL. THUS, THE INCOME EARNED BY ASSESSEE ON ACCOUNT OF CAPITAL GAI N SHOULD BE TREATED AS STCG AND LTCG AS THE CASE MAY BE AND NOT AS BUSINE SS INCOME. ON THE SIMILAR FACTS, THE ASSESSEE WAS ALLOWED THE CAP ITAL GAIN FOR AY 2004- 05 IN THE ASSESSMENT ORDER PASSED U/S 143(3) OF THE ACT. AND AGAIN FOR AY 2014-15 IN THE ASSESSMENT ORDER WAS PASSED U/S 143( 3) ON 22.11.2016, COPY OF WHICH IS PLACED ON RECORD. ON THE OTHER HAN D, THE LD. DR FOR THE REVENUE SUPPORTED THE ORDER OF AUTHORITIES BELOW. I T WAS ARGUED THAT FACTS OF EACH YEAR HAVE TO BE CONSIDERED SEPARATELY AS TH E PRINCIPAL OF RESJUDICATA IS NOT APPLICABLE IN THE INCOME TAX PROCEEDINGS. 8. WE HAVE CONSIDERED THE RIVAL SUBMISSION OF THE PART IES AND HAVE GONE THROUGH THE ORDERS OF AUTHORITIES BELOW. UNDISPUTED LY, THE ASSESSMENT WAS REVISED BY LD. PCIT ON THE BASIS OF FACTS FOR AY 20 07-08 VIDE HIS ORDER DATED 12.11.2011. THE TREATMENT OF CAPITAL GAIN AS BUSINESS INCOME FOR AY 2007-08 HAS BEEN SET-ASIDE BY LD. CIT(A). THE OR DER OF LD. CIT(A) HAS BEEN AFFIRMED BY THE CO-ORDINATE BENCH OF TRIBUNAL VIDE ORDER DATED 06.02.2015 IN ITA NO. 5884/MUM/2010 FOR AY 2007-09. THE TRIBUNAL PASSED THE FOLLOWING ORDER: 5. WE HAVE CONSIDERED RIVAL CONTENTIONS, GONE THROU GH THE ORDERS OF LOWER AUTHORITIES AND DELIBERATED ON THE JUDICIAL PRONOUN CEMENTS CITED BY LD. A.R. AND LD. D.R. AS WELL AS DISCUSSED BY LOWER AUTHORIT IES IN THEIR RESPECTIVE ITA NO. 589 TO 592/M/2017- SMT. SARAH FAISAL HAWA 8 ORDERS. FROM THE RECORD WE FOUND THAT S INCE MANY YEARS THE SHARES ARE BEING PURCHASED BY ASSESSEE WITH THE INTENTION TO I NVEST AND HAVE BEEN CONSISTENTLY HELD AND SHOWN AS INVESTMENTS IN THE B OOKS OF ACCOUNT AND THE POSITION THAT SUCH SHARES REPRESENTED INVESTMENTS W AS ALWAYS ACCEPTED BY DEPARTMENT IN ALL PREVIOUS ASSESSMENT YEARS UP TO A ND INCLUDING A .Y. 2006-07. SHARES AT THE YEAR AND WERE ALWAYS VALUED 'AT COST' AND NOT 'AT COST OR MARKET VALUE, WHICHEVER IS LOWER' AS PER AS -2 OF ICAI AS APPLICABLE TO STOCK IN TRADE. WE ALSO FOUND THAT P ROFIT ON SALE OF SHARES SO HELD HAS ALWAYS BEEN OFFERED AND TAXED AS CAPITAL G AINS IN ALL PREVIOUS YEARS AND THE SAID OFFERING HAS BEEN ACCEPTED IN EA RLIER ASSESSMENT YEARS INCLUDING AND UP TO AY 2006-07 BY SPEAKING ORDER AN D THERE WAS NO CHANGE OF CIRCUMSTANCES FOR THE YEAR AS COMPARED TO EARLIER ASSESSMENT 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. SUB STANTIAL DIVIDEND INCOME OF RS.12,85,694/- ON SHARES WAS EARNED DURIN G THE SAID ASSESSMENT YEAR ON ENTIRE SHARES INVESTMENT. IT IS ALSO EVIDEN T FROM RECORD THAT INVESTMENT WAS ALWAYS MADE BY ASSESSEE OUT OF AFTER TAX SURPLUS GENERATED. CONTENTION OF A.O. THAT THE ASSESSEE HAD BORROWED F UNDS WAS FOUND FALSE BY LD. CIT(A). IT IS ALSO NOT IN DISPUTE THAT BOTH SALE AND PURCHASE TRANSACTIONS TOOK PLACE THROUGH ACCOUNT PAYEE CROSS ED CHEQUE ONLY AND THERE WAS NO RUNNING ACCOUNT WITH THE BROKER AS IS IN THE CASE OF BUSINESSMEN. FURTHERMORE IT HAS ALWAYS BEEN THE INT ENTION OF THE ASSESSEE TO EARN DIVIDEND INCOME FROM SUCH INVESTMENTS IN SH ARES 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 PR ODUCED BEFORE THE A.O. IT IS ALSO NOT IN DISPUTE THAT THE ASSESSEE H AS 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 H OLD THE SAME FOR TAX FREE INTEREST INCOME AND MANY CASES FOR 24 MONTHS. 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 GAINS. A TRADER WOULD NOT HOLD SHARES FOR SUCH A LONG TIME BUT WOUL D SELL THE SHARES WITHIN ITA NO. 589 TO 592/M/2017- SMT. SARAH FAISAL HAWA 9 A VERY SHORT TIME OF LESS THAN A MONTH. IN COMPARI SON 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 S.T.C.G. INVESTMENT DIVIDEND 2007-08 1,97,65,876 11,63,45,872 12,85,6 94 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. ACITI7(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 ALWAY S TAKEN AND THE SAME WERE ALWAYS HELD IN A DEMAT ACCOUNT. FURTHERMORE PU RCHASE AND SALE OF SHARES HAVE BEEN LIABLE TO SECURITIES TRANSACTION T AX. 6. THE DETAIL FINDINGS RECORDED BY THE LD. CIT(A) W ITH 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 LD. D.R. HAS NOT BROUGHT ON RECORD ANY POSITIVE MATERIAL TO CONTROVERT THE FINDINGS RECORD ED BY THE LD. CIT(A). ACCORDINGLY, WE DO NOT FIND ANY REASON TO INTERFERE WITH THE ORDER OF LD. CIT(A) SO FAR AS THE HE DIRECTED THE A.O. TO TREAT THE CAPITAL GAIN OFFERED BY THE ASSESSEE AS LONG TERM AND SHORT TERM CAPITAL GA IN. 9. CONSIDERING THE FACT, THE ASSESSEE IS ALLOWED CAPIT AL GAIN FOR AY 2007-08, ON THE BASIS OF WHICH LD. PCIT REVISED THE ASSESSME NT PASSED UNDER SECTION 143(3) RWS 147 ORDER FOR DIRECTING THE AO TO TREAT THE CAPITAL GAIN AS BUSINESS INCOME. FURTHER, THE AO ALLOWED CAPITAL GA IN FOR AY 2014-15IN ASSESSMENT ORDER PASSED UNDER SECTION 143(3) DATED 26.11.2016. THUS, RESPECTFULLY FOLLOWING THE DECISION OF THE COORDINA TE BENCH OF THE TRIBUNAL AND THE PRINCIPLE OF CONSISTENCY THE GROUND NO. 2 & 3 ARE ALLOWED. ITA NO. 589 TO 592/M/2017- SMT. SARAH FAISAL HAWA 10 10. GROUND NO.4 RELATED TO ADDITION U/S 68 OF THE ACT O F RS. 21,50,000/-. THE LD. AR OF THE ASSESSEE ARGUED THAT DURING THE ASSES SMENT PROCEEDING, THE ASSESSEE PROVIDED ALL THE DETAILS ABOUT THE GIFT RE CEIVED BY THE ASSESSEE. ALL THE GIFTS WERE RECEIVED THROUGH THE CHEQUES. THE AS SESSEE HAS PROVED THE IDENTITY AND CAPACITY OF PERSONS AND GENUINENITY O F THE TRANSACTION. THE AO INSTEAD OF BRINGING ANY CONTRARY MATERIAL ON REC ORD TREATED ALL THE GIFTS AS UNEXPLAINED CASH CREDIT U/F 68 OF THE ACT. ON TH E OTHER HAND, THE LD. DR FOR THE REVENUE SUPPORTED THE ORDER OF AUTHORITIES BELOW. IT WAS ARGUED THAT THE ASSESSEE WAS UNABLE TO DISCHARGE THE ONUS TO PROVE THE GENUINENITY OF THE TRANSACTION DESPITE THE SUFFICIENT OPPORTUNI TY. 11. WE HAVE CONSIDERED THE RIVAL SUBMISSION OF THE PART IES AND HAVE GONE THROUGH THE ORDERS OF AUTHORITIES BELOW. WE HAVE SE EN THAT DURING THE ASSESSMENT PROCEEDING, THE ASSESSEE HAS CLAIMED TO HAVE RECEIVED THE GIFT FROM 14 PARTIES TOTALING OF RS. 21,50,000/-. THE AS SESSEE WAS ASKED TO PRODUCE THE EVIDENCE IN SUPPORT OF CLAIM OF GIFT. T HE ASSESSEE FURNISHED THE CONFIRMATION OF ALL THE DONORS ALONG WITH THEIR INCOME-TAX RETURNS (ITR) AND COPY OF PASSBOOKS. THE CONFIRMATION FILED BY ASSESSEE WAS NOT ACCEPTED BY THE AO HOLDING THAT ALL THE GIFT-DEEDS ARE STEREO-TYPED AND ARE PREPARED BY ASSESSEE IN THE SAME FORMAT AND IS SIGN ED BY THE RESPECTIVE PERSON. THE AO ALSO RELIED UPON THE STATEMENT OF AS SESSEE DURING THE REVISION PROCEEDING BY PCIT. THE AO CONCLUDED THAT DURING THE ITA NO. 589 TO 592/M/2017- SMT. SARAH FAISAL HAWA 11 PROCEEDING U/S 263, THE ASSESSEE HAS NOT BEEN ABLE TO DISCHARGE HER ONUS TO PROVE THE GENUINENESS OF THE GIFT. THE ASSESSEE ALS O NOT BEEN ABLE TO DISCHARGE HER ONUS TO ESTABLISH THE GENUINENESS OF TRANSACTION IN SETTING- ASIDE THE PROCEEDING BEFORE THE AO. 12. WE HAVE NOTED THAT THE AO INSTEAD OF IDENTIFYING TH E DISCREPANCY IN THE CONFIRMATION OF GIFTS CONCLUDED THAT ASSESSEE HAS N OT BEEN ABLE TO DISCHARGE HER ONUS. THE ASSESSEE FILED COPY OF CONF IRMATIONS, COPY OF ITR RETURNS AND THE DETAILS OF TRANSACTION THROUGH BANK ING CHANNELS. WE HAVE NOTED THAT THE ASSESSES HAS DISCHARGED HER PRIMARY ONUS TO PROVE THE IDENTITY, CAPACITY AND GENUINITY OF TRANSACTION. CO NSIDERING THE FACTS THAT THE ASSESSEE HAS DISCHARGED ITS PRIMARY ONUS LIE UP ON HER. THE AO HAS NOT DISPUTED THE IDENTITY OF THE PERSON OR THE CAPACITY OF THE DONOR. THE AO HAS NOT BROUGHT ANY MATERIAL ON RECORD. THUS, THIS GROUND OF APPEAL IS ALLOWED. 13. GROUND NO.5 RELATES TO ADDITION OF RS. 1,50,000/- O N ACCOUNT OF LOW WITHDRAWAL. THE LD. AR OF THE ASSESSEE NOT ARGUED I N SUPPORT OF THIS GROUND OF APPEAL. HOWEVER, THE LD. AR OF THE ASSESS EE SUBMITS THAT HE LEFT THIS ISSUE ON THE DISCRETION OF THE TRIBUNAL. ON TH E OTHER HAND, THE LD. DR FOR THE REVENUE SUBMITS THAT THE ASSESSEE HAS NOT A RGUED ANYTHING. THUS, THIS GROUND OF APPEAL MAY BE DISMISSED. ITA NO. 589 TO 592/M/2017- SMT. SARAH FAISAL HAWA 12 14. WE HAVE CONSIDERED THE RIVAL SUBMISSION OF THE PART IES AND HAVE GONE THROUGH THE ORDERS OF AUTHORITIES BELOW. WE HAVE NO TED THAT DURING THE SETA-SIDE PROCEEDINGS THE AO OBSERVED THAT DURING P ROCEEDINGS UNDER SECTION 263 THE ASSESSEE WAS ASKED TO FURNISH THE D ETAILS OF WITHDRAWAL BY ASSESSEE AND HER FAMILY MEMBERS AND THAT NO DETAILS WAS FURNISHED BY ASSESSEE. THE AO OBSERVED THAT NO DETAILS WERE FIL ED BY ASSESSEE. ON THE BASIS OF PROCEEDING BEFORE THE PCIT U/S 263 OF THE ACT. THE AO ADDED RS. 1,50,000/- IN THE TOTAL INCOME OF ASSESSEE. WE HAVE SEEN THAT THE ADDITION IS MADE BY AO WITHOUT GIVING ANY SPECIFIC OPPORTUNI TY DURING THE SE-ASIDE PROCEEDINGS, BEFORE MAKING THE ADDITION. THE CONTEN TION OF THE ASSESSEE THROUGHOUT THE PROCEEDINGS BEFORE PCIT WAS THAT THE ASSESSEE WAS NOT THE HEAD OF THE FAMILY AND THE AGGREGATE EXPENDITURE OF THE FAMILY WAS COMMENSURATE WITH THE LIFE STYLE OF THE FAMILY. THE AO MADE AD-HOCK ADDITIONS WITHOUT ANY EVIDENCE. THE AO HAS NOT MADE ANY INQUIRY NOR BROUGHT ANY MATERIAL OR RECORD. CONSIDERING THE PEC ULIARITY OF THE FACTS THE ADDITION OF RS.1,50,000/- IS DELETED. 15. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED. ITA NO. 590/MUM/2017 AY 2006-07 16. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF AP PEAL: 1. THE LD. COMMISSIONER OF INCOME-TAX (APPEALS)-33, MUMBAI [HEREINAFTER REFERRED TO AS 'LD. CIT(A)'] ERRED IN PASSING THE O RDER DATED 02.11.2016 UPHOLDING THE ORDER PASSED BY LD. A. O. DATED 31.03 .2015 UNDER SECTION ITA NO. 589 TO 592/M/2017- SMT. SARAH FAISAL HAWA 13 143(3) R.W.S. 254 OF THE INCOME TAX ACT, 1961 ['OF THE ACT' FOR SHORT] DETERMINING TOTAL INCOME OF THE APPELLANT AT RS 4,9 5,70,750/- AS AGAINST RETURNED INCOME OF RS.2,13,99,470/- WITHOUT APPRECI ATING THE FACTS AND CIRCUMSTANCES OF THE CASE. THE APPELLANT, THEREFORE , PRAYS THAT THE ORDER DATED 02.11.2016 PASSED BY LD. CIT(A) IS BAD IN LAW AND T HE SAME MAY BE QUASHED. 2. TREATING 'SHORT TERM CAPITAL GAIN' AS 'BUSINESS INCOME' UNJUSTIFIED - RS.2,07,36,968/- I. THE LD. CIT(A) ERRED IN UPHOLDING THE ACTION OF THE LD. A.O. IN TREATING THE 'SHORT TERM CAPITAL GAIN' AS 'BUSINESS INCOME' WITH OUT APPRECIATING THE FACT THAT THE APPELLANT IS AN INVESTOR IN THE SHARES AND MUTUAL FUNDS AND ALSO HAS SHOWN THE SAME AS INVESTMENTS IN HER BALANCE SHEET. HENCE, THE ADDITION OF RS.2,07,36,968/- MADE UNDER THE HEAD 'BUSINESS INCO ME' IS NOT AT ALL JUSTIFIED AND THE SAME MAY BE DELETED. II. WITHOUT PREJUDICE TO THE ABOVE, THE LD. CIT(A) ERRED IN NOT DIRECTING THE LD. A.O. TO ALLOW THE BENEFIT AVAILABLE TO THE APPE LLANT UNDER SECTION 45(2) OF THE ACT WHILE TREATING THE 'SHORT TERM CAPITAL GAIN ' AS 'BUSINESS INCOME' OF THE APPELLANT. WITHOUT HENCE, THE APPELLANT PRAYS T HAT THE BENEFIT OF PROVISIONS OF SECTION 45(2) MAY BE GRANTED TO THE A PPELLANT. 3. TREATING 'LONG TERM CAPITAL GAIN' AS 'BUSINESS INCO ME' UNJUSTIFIED - RS.2,78,91,619/- I. THE LD. CIT(A) ERRED IN UPHOLDING THE ACTION OF THE LD. A.O. IN TREATING THE 'LONG TERM CAPITAL GAIN' AS 'BUSINESS INCOME' WITHO UT APPRECIATING THE FACT THAT THE APPELLANT IS AN INVESTOR IN THE SHARES AND ALSO HAS SHOWN THE SAME AS INVESTMENTS IN HER BALANCE SHEET. HENCE, THE ADDITI ON OF RS.2,78,91,619/- MADE UNDER THE HEAD 'BUSINESS INCOME' IS NOT AT ALL JUSTIFIED AND THE SAME MAY BE DELETED. II. WITHOUT PREJUDICE TO THE ABOVE, THE LD. CIT(A) ERRED IN NOT DIRECTING THE LD. A.O. TO ALLOW THE BENEFIT AVAILABLE TO THE APPE LLANT UNDER SECTION 45(2) OF THE ACT WHILE TREATING THE 'LONG TERM CAPITAL GAIN' AS 'BUSINESS INCOME' OF THE APPELLANT. WITHOUT HENCE, THE APPELLANT PRAYS T HAT THE BENEFIT OF PROVISIONS OF SECTION 45(2) MAY BE GRANTED TO THE A PPELLANT. 4. DENYING THE BENEFIT OF SET OFF OF SHORT TERM CAPITA L GAIN AGAINST SHORT TERM CAPITAL GAIN UNJUSTIFIED- RS. 1,29,665/- 1. THE LD. CIT(A) FURTHER ERRED IN CONFIRMING THE A CTION OF THE LD. A.O. IN DENYING THE BENEFIT OF SET OFF OF SHORT TERM CAPITA L LOSS AMOUNTING TO ITA NO. 589 TO 592/M/2017- SMT. SARAH FAISAL HAWA 14 RS.1,29,665/ - AGAINST THE SHORT TERM CAPITAL GAIN EARNED DURING THE YEAR WITHOUT APPRECIATING THE FACT THAT THE APPELLANT HA S FURNISHED ALL RELEVANT EVIDENCE TO PROVE THE GENUINENESS OF LOSS SUFFERED BY THE APPELLANT IN THE SHARE TRANSACTIONS. HENCE, DISALLOWANCE OF SHORT TE RM CAPITAL LOSS AGAINST THE SHORT TERM CAPITAL GAIN IS UNJUSTIFIED AND THE SAME MAY BE DELETED 5. ADDITION ON ACCOUNT LOW WITHDRAWALS UNJUSTIFIED- RS .1,50,000/- I. THE LD. CIT(A) ERRED IN CONFIRMING THE ACTION OF LD. A.O. IN MAKING ADDITION OF RS.1,50,000/- ON ACCOUNT OF LOW WITHDRA WALS WITHOUT APPRECIATING THE FACTS AND CIRCUMSTANCES OF THE CASE. THE APPELL ANT, THEREFORE, PRAYS THAT THE ADDITION OF RS.1,50,000/- ON ACCOUNT OF LOW WIT HDRAWAL IS UNJUSTIFIED AND THE SAME MAY BE DELETED . 17. GROUND NO.1 IS GENERAL IN NATURE AND NEED NO SPECIF IC ADJUDICATION. HENCE, DISMISSED. GROUND NO.2 & 3 RELATES TO TREATMENT OF STCG AND LTCG AS BUSINESS INCOME. THIS GROUND OF APPEAL IS IDENTICAL TO THE GROUND NO.2 OF ITA NO. 589/MUM/2017 WHICH WE HAVE ALLOWED IN PARA 9 & 10 ABOVE IN APPEAL FOR AY 2005-06. CONSIDERING THE SIMILARITY O F THE FACT AND FOLLOWING THE PRINCIPLE OF CONSISTENCY, THIS GROUND OF APPEAL IS ALLOWED IN FAVOUR OF ASSESSEE. 18. GROUND NO.4 RELATES TO DENYING THE BENEFIT OF SET O FF OF SHORT TERM CAPITAL LOSS (STCL) AGAINST LTCG. OF RS. 1,29,665/-. THE LD . AR OF THE ASSESSEE ARGUED THAT THE ASSESSEE IS AN INVESTOR AND IS ENTI TLED FOR SETTING OFF OF LOSS ON STCL AGAINST STCG IN ACCORDANCE WITH SECTION 74 OF THE ACT . ON THE OTHER HAND, THE LD. DR FOR THE REVENUE SUPPORTED TH E ORDER OF AUTHORITIES BELOW. ITA NO. 589 TO 592/M/2017- SMT. SARAH FAISAL HAWA 15 19. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS OF THE PAR TIES AND HAVE GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW. THE LD . CIT(A) UPHELD THE DENIAL OF STCL AGAINST STCG HOLDING THAT DURING THE APPELLATE PROCEEDING NEITHER ORAL ARGUMENT WERE MADE NOR ANY WRITTEN SUB MISSIONS WERE FILED. CONSIDERING THE FACTS THAT WE HAVE ALLOWED THE APPE AL OF THE ASSESSEE AND ALLOWED THE GAIN ON SALE OF SHARE AS STCG OR LTCG A S THE CASE MAY BE INSTEAD OF BUSINESS INCOME. THUS, THE AO IS DIRECTE D TO VERIFY THE LOSS AND SET OFF OF THE CLAIM IN ACCORDANCE WITH LAW. THUS, THIS GROUND OF APPEAL IS ALLOWED FOR STATISTICAL PURPOSE. 20. GROUND NO.5 RELATES TO ADDITION ON ACCOUNT OF LOW W ITHDRAWAL. THIS GROUND OF APPEAL IS IDENTICAL TO THE GROUND NO. 5 O F APPEAL FOR AY 2005-06. WE HAVE ALREADY ALLOWED THE SIMILAR GROUND OF APPE AL IN AY 2005-06. THUS, THIS GROUND OF APPEAL IS ALSO SIMILAR OBSERVA TIONS. ITA NO. 591/MUM/2017 AY-2008-09 21. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF AP PEAL: 1. THE LD. COMMISSIONER OF INCOME-TAX (APPEALS)-33, MUMBAI [HEREINAFTER REFERRED TO AS 'LD. CIT(A)'] ERRED IN PASSING THE O RDER DATED 02.11.2016 UPHOLDING THE ORDER -PASSED BY LD. A. O. DATED 31.0 3.2015 UNDER SECTION 143(3) R.W.S. 254 OF THE INCOME TAX ACT, 1961 ['OF THE ACT' FOR SHORT ] DETERMINING TOTAL INCOME OF THE APPELLANT AT RS.10, 46,09,000/- AS AGAINST RETURNED INCOME OF RS. 2,63,94,060/- WITHOUT APPREC IATING THE FACTS AND CIRCUMSTANCES OF THE CASE. THE APPELLANT, THEREFORE , PRAYS THAT THE ORDER DATED 02.11.2016 PASSED BY LD. CIT(A) IS BAD IN LAW AND T HE SAME MAY BE QUASHED. 2. TREATING 'SHORT TERM CAPITAL GAIN' AS 'BUSINESS INC OME' UNJUSTIFIED - RS.2,45, 79, 767/- ITA NO. 589 TO 592/M/2017- SMT. SARAH FAISAL HAWA 16 I. THE LD. CIT(A) ERRED IN UPHOLDING THE ACTION OF THE LD. A.O. IN TREATING THE 'SHORT TERM CAPITAL GAIN' AS 'BUSINESS INCOME' WITH OUT APPRECIATING THE FACT THAT THE APPELLANT IS AN INVESTOR IN THE SHARES AND MUTUAL FUNDS AND ALSO HAS SHOWN THE SAME AS INVESTMENTS IN HER BALANCE SHEET. HENCE, THE ADDITION OF RS.2,45,79,767/- MADE UNDER THE HEAD 'BUSINESS INCO ME' IS NOT AT ALL JUSTIFIED AND THE SAME MAY BE DELETED. II. WITHOUT PREJUDICE TO THE ABOVE, THE LD. CIT(A) ERRED IN NOT DIRECTING THE LD. A.O. TO ALLOW THE BENEFIT AVAILABLE TO THE APPELLAN T UNDER SECTION 45(2) OF THE ACT WHILE TREATING THE 'SHORT TERM CAPITAL GAIN' AS 'BUSINESS INCOME' OF THE APPELLANT. WITHOUT HENCE, THE APPELLANT PRAYS THAT THE BENEFIT OF PROVISIONS OF SECTION 45(2) MAY BE GRANTED TO THE APPELLANT. 3. TREATING 'LONG TERM CAPITAL GAIN' AS 'BUSINESS I NCOME' UNJUSTIFIED - RS.7,40,19,132/- I. THE LD. CIT(A) ERRED IN UPHOLDING THE ACTION OF THE LD. A.O. IN TREATING THE 'LONG TERM CAPITAL GAIN' AS 'BUSINESS INCOME' WITHO UT APPRECIATING THE FACT THAT THE APPELLANT IS AN INVESTOR IN THE SHARES AND ALSO HAS SHOWN THE SAME AS INVESTMENTS IN HER BALANCE SHEET. HENCE, THE ADDITI ON OF RS.7,40,19,132/- MADE UNDER THE HEAD 'BUSINESS INCOME' IS NOT AT ALL JUSTIFIED AND THE SAME MAY BE DELETED. II WITHOUT PREJUDICE TO THE ABOVE, THE LD. CIT(A) ERRED IN NOT DIRECTING THE LD. A.O. TO ALLOW THE BENEFIT AVAILABLE TO THE APPELLAN T UNDER SECTION 45(2) OF THE ACT WHILE TREATING THE 'LONG TERM CAPITAL GAIN' AS 'BUSINESS INCOME' OF THE APPELLANT. WITHOUT HENCE, THE APPELLANT PRAYS THAT THE BENEFIT OF PROVISIONS OF SECTION 45(2) MAY BE GRANTED TO THE APPELLANT. 4. ADDITION ON ACCOUNT OF DIVIDEND STRIPPING UNDER SECTION 94(7) OF THE ACT UNJUSTIFIED- RS.20,799/- I. THE LD. CIT(A) ERRED IN UPHOLDING THE ACTION OF THE LD. A.O. IN MAKING ADDITION OF RS.20,799/- INVOKING THE PROVISIONS OF SECTION 94(7) OF THE ACT WITHOUT APPRECIATING THE FACT AND CIRCUMSTANCES OF THE CASE. THE APPELLANT, THEREFORE, PRAYS THAT THE ADDITION OF RS.20,799/- U NDER SECTION 94(7) IS UNJUSTIFIED AND THE SAME MAY BE DELETED. 5. ADDITION UNDER SECTION 68 OF THE ACT TREATING TH E ADVANCE RECEIVED FROM FRIEND AS UNEXPLAINED CASH CREDITS UNJUSTIFIED - RS .40,00,000/- I. THE LD. CIT(A) ERRED IN UPHOLDING THE ACTION OF LD. A.O. IN MAKING ADDITION OF RS.40,00,000/- UNDER SECTION 68 OF THE ACT BEING ADVANCE RECEIVED ITA NO. 589 TO 592/M/2017- SMT. SARAH FAISAL HAWA 17 FROM FRIEND FOR PURCHASE OF SHARES AS UNEXPLAINED C ASH CREDIT OF THE APPELLANT. THE APPELLANT, THEREFORE, PRAYS THAT THE ADDITION O F RS.40,00,000/-IS UNJUSTIFIED AND THE SAME MAY BE DELETED. II. THE LD. CIT(A) FAILED TO APPRECIATE THAT THE AP PELLANT HAS FURNISHED RELEVANT EVIDENCE TO PROVE THE IDENTITY, CAPACITY AND GENUIN ENESS OF ADVANCE RECEIVED. HENCE, THE PRIMARY ONUS CAST UPON THE APPELLANT STA NDS DISCHARGED. THE APPELLANT, THEREFORE, PRAYS THAT ADDITION OF RS.40, 00,000/- UNDER SECTION 68 OF THE ACT IS WITHOUT ANY BASIS AND THE SAME MAY BE DE LETED. 6. ADDITION ON ACCOUNT LOW WITHDRAWALS UNJUSTIFIED- RS.1,75,000/. I. THE LD. CIT(A) ERRED IN CONFIRMING THE ACTION OF LD. A.O. IN MAKING ADDITION OF RS.1,75,000/- ON ACCOUNT OF LOW WITHDRA WALS WITHOUT APPRECIATING THE FACTS AND CIRCUMSTANCES OF THE CASE. THE APPELL ANT, THEREFORE, PRAYS THAT THE ADDITION OF RS.1,75,000/- ON ACCOUNT OF LOW WITHDRA WAL IS UNJUSTIFIED AND THE SAME MAY BE DELETED. 22. GROUND NO.1 IS GENERAL IN NATURE AND NEED NO SPECIF IC ADJUDICATION. HENCE, DISMISSED. 23. GROUND NO.2 & 3 RELATES TO TREATMENT OF STCG AND LT CG AS BUSINESS INCOME OF THE ASSESSEE. THIS GROUND OF APPEAL IS SI MILAR TO THE GROUND OF APPEAL NO. 2 & 3 OF ITA NO. 589/MUM/201. WE HAVE AL READY ALLOWED THE SIMILAR GROUND OF APPEAL IN FAVOUR OF ASSESSEE FOR AY 2005-06 AND FOR AY 2006-07. HENCE, FOLLOWING THE PRINCIPLE OF CONSISTE NCY BOTH THE GROUNDS OF APPEAL ARE ALLOWED IN FAVOUR OF ASSESSEE. 24. GROUND NO.4 RELATES TO ADDITION ON ACCOUNT OF DIVID END STRIPPING U/S 94(7) OF THE ACT. THE LD. AR OF THE ASSESSEE ARGUED THAT THE LD. CIT (A) ERRED IN UPHOLDING THE ACTION OF AO IN MAKING THE ADDITION O F RS. 20,799/- BY INVOKING THE PROVISIONS OF SECTION 94(7) OF THE ACT . IT WAS ARGUED THAT THE ITA NO. 589 TO 592/M/2017- SMT. SARAH FAISAL HAWA 18 DISALLOWANCE WAS MADE BY AO WITHOUT VERIFYING THE F ACTS. ON THE OTHER HAND, THE LD. DR FOR THE REVENUE SUPPORTED THE ORDE R OF AUTHORITIES BELOW. 25. WE HAVE CONSIDERED THE RIVAL SUBMISSION OF THE PART IES AND HAVE GONE THROUGH THE ORDERS OF AUTHORITIES BELOW. DURING THE ASSESSMENT PROCEEDING, THE AO OBSERVED THAT THE ASSESSEE RECEIVED DIVIDEND DURING THE YEAR UNDER CONSIDERATION. THE ASSESSEE WAS ASKED TO EXPLAIN WH ETHER THE PROVISION OF SECTION 94(7) OF THE ACT IS APPLICABLE AND ANY LOSS TO THE EXTENT OF INCOME TO BE IGNORED. THE ASSESSEE FILED ITS REPLY AND SUB MITTED THE DETAILS OF DIVIDEND WHICH IS LIABLE FOR DISALLOWANCE U/S 94(7) OF THE ACT IN RESPECT OF M/S HEMADRI CHEMICALS AND M/S KAMALA DIALS FOR RS. 5,620/- AND 15,179/- RESPECTIVELY. THE AO ON THE BASIS OF OBSER VATION OF LD PCT DURING THE PROCEEDING U/S 263 OF THE ACT MADE THE D ISALLOWANCE OF RS. 15,179/- BEING THE DIVIDEND ON SHARE IN RESPECT OF M/S KAMALA DIALS. THE AO ALSO DISALLOWED DIVIDEND OF RS. 5,620/- ON SHARE OF M/S HEMADRI CHEMICALS. THE LD. CIT(A) OBSERVED THAT DURING THE PROCEEDING U/S 263 OF THE ACT, THE LD. PCIT HAS ANALYZED THE STRIPPING AN D CONFIRMED THE DISALLOWANCE. WE HAVE SEEN THAT THE AO DISALLOWED T HE DIVIDEND WITHOUT VERIFYING THE FACT. THE AO MADE THE ADDITION ONLY O N THE OBSERVATION OF LD PCIT. BEFORE US, THE LD. AR OF THE ASSESSEE HAS PLA CED ON RECORD THE COPY OF STATEMENT SHOWING THE RECORD AND DATE OF SCRIPTS (PAGE NO. 47-49) CONSIDERING THE FACT THAT THE ASSESSEE HAS PROVIDED THE SPECIFIC DETAILS OF ITA NO. 589 TO 592/M/2017- SMT. SARAH FAISAL HAWA 19 SHARES OF M/S KAMALA DIALS AND M/S HEMADRI CHEMICAL S BEFORE THE AO. HENCE, THIS GROUND OF APPEAL IS RESTORED TO THE FIL E OF AO TO VERIFY THE FACTS AND PASS THE ORDER IN ACCORDANCE WITH LAW. NEEDLESS , TO SAY THAT THE AO SHALL PROVIDE OPPORTUNITY TO THE ASSESSEE BEFORE PA SSING THE ORDER. IN THE RESULT THIS GROUND OF APPEAL IS ALLOWED FOR STATIST ICAL PURPOSE. 26. GROUND NO.5 RELATES TO ADDITION OF RS. 40,00,000/- UNDER SECTION 68 OF THE ACT. THE LD. AR FOR THE ASSESSEE ARGUED THAT THE AS SESSEE HAS FURNISHED ALL THE EVIDENCES TO PROVE THE IDENTITY, CAPACITY AND G ENUINENESS OF THE ADVANCES RECEIVED. THE ASSESSEE HAS DISCHARGED PRIM ARY ONUS LIE UPON THE ASSESSEE. ON THE OTHER HAND THE LD DR FOR THE REVEN UE ARGUED THAT THE ASSESSEE HAS NOT PROVED THE GENUINITY OF THE ADVANC E. THE LD PCIT EXAMINED THE PARTIES AND THEY GAVE INCONSISTENT STA TEMENT, WHICH DO NOT CONFIRM THE CONTENTION OF THE ASSESSEE. THE LD DR F OR THE REVENUE PRAYED FOR DISMISSAL OF THE GROUND. 27. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS OF THE LD REPRESENTATIVES OF THE PARTIES AND HAVE GONE THROUGH THE ORDERS OF THE AUT HORITIES BELOW. WE HAVE SEEN THAT THE AO MADE THE ADDITIONS ON THE BASIS OF OBSERVATION AND THE QUERIES RAISED BY LD PCIT DURING THE PROCEEDINGS UN DER SECTION 263. THE LD CIT(A) CONFIRMED THE ACTION OF AO ON THE BASIS OF O BSERVATION OF LD PCIT. WE HAVE SEEN THAT BEFORE US, THE ASSESSEE HAS PLACE D THE COPY OF LEDGER ACCOUNT, CONFIRMATION OF ACCOUNT, BANK STATEMENT AN D STATEMENT RECORDED ITA NO. 589 TO 592/M/2017- SMT. SARAH FAISAL HAWA 20 UNDER SECTION 131 OF AESHA ASHOK CHEDDA, NIKHIL CHO PRA AND M/S DREAMJINNI CONSULTANCY. THE ASSESSEE HAS GIVEN A CE RTIFICATE THAT THESE DOCUMENTS WERE FILED BEFORE THE AO. THE AO HAS NOT MADE ANY VERIFICATION OF THESE DOCUMENTS. THE AO WHILE PASSI NG THE ORDER OBSERVED THAT THE ASSESSEE HAS NOT ANY SUBMISSION NOR FILED EVIDENCES. CONSIDERING THE FACTS THAT THE AO HAS NEITHER CONSIDERED THE EV IDENCES FILED BY ASSESSEE NOR VERIFIED THE FACTS BEFORE MAKING THE ADDITION. HENCE, WE DEEM IT APPROPRIATE TO RESTORE THIS GROUND OF APPEAL TO THE FILE OF AO TO CONSIDERED THE FACTS AFRESH AND PASS THE ORDER AFTER VERIFICAT ION OF THE EVIDENCES FURNISHED BY THE ASSESSEE IN ACCORDANCE WITH LAW. N EEDLESS TO SAY THAT THE AO SHALL PROVIDE OPPORTUNITY TO THE ASSESSEE BEFORE PASSING THE ORDER. IN THE RESULT THIS GROUND OF APPEAL IS ALLOWED FOR STA TISTICAL PURPOSE. 28. GROUND NO.6 RELATES TO THE ADDITION ON ACCOUNT OF L OW WITHDRAWAL. WE HAVE SEEN THAT THIS GROUND OF APPEAL IS IDENTICAL T O THE GROUND NO. 5 OF APPEAL FOR AY 2005-06, WHICH WE HAVE ALREADY ALLOWE D. HENCE, THIS GROUND OF APPEAL IS ALSO SIMILAR OBSERVATIONS. 29. IN THE RESULT THE APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. ITA NO. 592/MUM/2017 AY-2009-10 30. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF AP PEAL: 1. THE LD. COMMISSIONER OF INCOME-TAX (APPEALS)-33, MUMBAI [HEREINAFTER REFERRED TO AS 'LD. CIT(A)'] ERRED IN PASSING THE O RDER DATED 02.11.2016 UPHOLDING THE ORDER PASSED BY LD. A. O. DATED 31.03 .2015 UNDER SECTION 143(3) R.W.S. 254 OF THE INCOME TAX ACT, 1961 ['OF THE ACT ' FOR SHORT] DETERMINING TOTAL INCOME OF THE APPELLANT AT RS.58,57,290/- AS AGAINS T RETURNED INCOME OF RS. ITA NO. 589 TO 592/M/2017- SMT. SARAH FAISAL HAWA 21 1,00,900/- WITHOUT APPRECIATING THE FACTS AND CIRCU MSTANCES OF THE CASE. THE APPELLANT, THEREFORE, PRAYS THAT THE ORDER DATED 02 .11.2016 PASSED BY LD. CIT(A) IS BAD IN LAW AND THE SAME MAY BE QUASHED. 2. TREATING 'SHORT TERM CAPITAL LOSS' AS 'BUSINESS LOS S' UNJUSTIFIED - RS.2,92,04, 577/- I. THE LD. CIT(A) ERRED IN UPHOLDING THE ACTION OF THE LD. A.O. IN TREATING THE 'SHORT TERM CAPITAL LOSS' AS 'BUSINESS LOSS' WITHOU T APPRECIATING THE FACT THAT THE APPELLANT IS AN INVESTOR IN THE SHARES AND MUTU AL FUNDS AND ALSO HAS SHOWN THE SAME AS INVESTMENTS IN HER BALANCE SHEET. HENCE , TREATING THE SHORT TERM CAPITAL LOSS OF RS. 2,92,04,577/- AS 'BUSINESS LOS S' IS NOT AT ALL JUSTIFIED AND THE SAME MAY BE DELETED. II. WITHOUT PREJUDICE TO THE ABOVE, THE LD. CIT(A) ERRED IN NOT DIRECTING THE LD. A.O. TO ALLOW THE BENEFIT AVAILABLE TO THE APPELLAN T UNDER SECTION 45(2) OF THE ACT WHILE TREATING THE 'SHORT TERM CAPITAL GAIN' AS 'BUSINESS INCOME' OF THE APPELLANT. WITHOUT HENCE, THE APPELLANT PRAYS THAT THE BENEFIT OF PROVISIONS OF SECTION 45(2) MAY BE GRANTED TO THE APPELLANT. 3. TREATING 'LONG TERM CAPITAL GAIN' AS 'BUSINESS I NCOME' UNJUSTIFIED - RS.3,47,14,538/- I. THE LD. CIT(A) ERRED IN UPHOLDING THE ACTION OF THE LD. A.O. IN TREATING THE 'LONG TERM CAPITAL GAIN' AS 'BUSINESS INCOME' WITHO UT APPRECIATING THE FACT THAT THE APPELLANT IS AN INVESTOR IN THE SHARES AND ALSO HAS SHOWN THE SAME AS INVESTMENTS IN HER BALANCE SHEET. HENCE, THE ADDITI ON OF RS. 3,47,14,538/- MADE UNDER THE HEAD 'BUSINESS INCOME' IS NOT AT ALL JUSTIFIED AND THE SAME MAY BE DELETED. II WITHOUT PREJUDICE TO THE ABOVE, THE LD. CIT(A) ERRED IN NOT DIRECTING THE LD. A.O. TO ALLOW THE BENEFIT AVAILABLE TO THE APPELLAN T UNDER SECTION 45(2) OF THE ACT WHILE TREATING THE 'LONG TERM CAPITAL GAIN' AS 'BUSINESS INCOME' OF THE APPELLANT. WITHOUT HENCE, THE APPELLANT PRAYS THAT THE BENEFIT OF PROVISIONS OF SECTION 45(2) MAY BE GRANTED TO THE APPELLANT. 4. ADDITION ON ACCOUNT OF DIVIDEND STRIPPING UNDER SECTION 94(7) OF THE ACT UNJUSTIFIED- RS.18,929/- I. THE LD. CIT(A) ERRED IN UPHOLDING THE ACTION OF THE LD. A.O. IN MAKING ADDITION OF RS.18,929/- INVOKING THE PROVISIONS OF SECTION 94(7) OF THE ACT WITHOUT APPRECIATING THE FACT AND CIRCUMSTANCES OF THE CASE. THE APPELLANT, THEREFORE, PRAYS THAT THE ADDITION OF RS.18,929/- U NDER SECTION 94(7) IS UNJUSTIFIED AND THE SAME MAY BE DELETED. 5. ADDITION ON ACCOUNT LOW WITHDRAWALS UNJUSTIFIED- RS.2,25,000/. I. THE LD. CIT(A) ERRED IN CONFIRMING THE ACTION OF LD. A.O. IN MAKING ADDITION OF RS.2,25,000/- ON ACCOUNT OF LOW WITHDRA WALS WITHOUT APPRECIATING THE FACTS AND CIRCUMSTANCES OF THE CASE. THE APPELL ANT, THEREFORE, PRAYS THAT THE ADDITION OF RS.2,25,000/- ON ACCOUNT OF LOW WITHDRA WAL IS UNJUSTIFIED AND THE SAME MAY BE DELETED. 31. GROUND NO.1 IS GENERAL IN NATURE AND NEED NO SPECIF IC ADJUDICATION. HENCE, DISMISSED. ITA NO. 589 TO 592/M/2017- SMT. SARAH FAISAL HAWA 22 32. GROUND NO.2 & 3 RELATES TO TREATMENT OF STCG AND LT CG AS BUSINESS INCOME OF THE ASSESSEE. THIS GROUND OF APPEAL IS SI MILAR TO THE GROUND OF APPEAL NO. 2 & 3 OF ITA NO. 589/MUM/201. WE HAVE AL READY ALLOWED THE SIMILAR GROUND OF APPEAL IN FAVOUR OF ASSESSEE FOR AY 2005-06, FOR AY 2006-07 AND FOR AY 2008-09. HENCE, FOLLOWING THE PR INCIPLE OF CONSISTENCY BOTH THE GROUNDS OF APPEAL ARE ALLOWED IN FAVOUR OF ASSESSEE. 33. GROUND NO. 4 RELATES TO ADDITION ON ACCOUNT OF DIV IDEND STRIPING UNDER SECTION 94(7). THIS GROUND OF APPEAL IS IDENTICAL T O THE GROUND NO. 4 OF APPEAL FOR AY 2008-09, WHICH WE HAVE ALREADY RESTOR ED TO THE FILE OF AO. HENCE, THIS GROUND OF APPEAL IS ALSO RESTORED TO TH E FILE OF AO WITH SIMILAR DIRECTIONS. 34. GROUND NO. 5 RELATES TO ADDITIONS ON ACCOUNT OF LOW WITHDRAWAL. WE HAVE SEEN THAT THIS GROUND OF APPEAL IS IDENTICAL TO THE GROUND NO. 5 OF APPEAL FOR AY 2005-06, WHICH WE HAVE ALREADY ALLOWED. HENCE, T HIS GROUND OF APPEAL ALSO ALLOWED WITH SIMILAR OBSERVATIONS. 35. IN THE RESULT THE APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 11 TH DAY OF SEPTEMBER 2017. SD/- SD/- /- (P.K. BANSAL) (PAWAN SINGH) VICE-PRESIDENT JUDICIAL MEMBER MUMBAI; DATED 11/09/2017 S.K.PS COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT. ITA NO. 589 TO 592/M/2017- SMT. SARAH FAISAL HAWA 23 BY ORDER, ( ASSTT.REGISTRAR) ITA T, MUMBAI 3. THE CIT(A), MUMBAI. 4. CIT 5. DR, ITAT, MUMBAI 6. GUARD FILE. //TRUE COPY/