DCIT 24(2), MUMBAI V. PURVI NIRAV VAKHARIA, MUMBAI

ITA 6421/MUM/2011

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 78889 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 8 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-05-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 26-12-2013
• Assessment Year: 2008-2009
• Appeal Filed On: 20-09-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: J R BHATT; SHASHIKANT JAIN
• Keywords: Business income; Income from undisclosed sources
• Section: 143(3)

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH, MUMBAI BEFORE S/SHRI P.M.JAGTAP (AM) AND DR. S. T. M.PAVALAN (JM) ./I.T.A.NO.6421/MUM/2011 ( / ASSESSMENT YEAR: 2008-09) DY. C OMMISSIONER OF INCOME TAX-24(2), C-13, 6TH FLOOR, PRATYAKSHAKAR BHAVAN, BANDRA-KURLA COMPLEX, BANDRA (E), MUMBAI-400051. / VS. PURVI NIRAV VAKHARIA 101, INDRAPRASTHA-III, JITENDRA ROAD, MALAD (E), MUMBAI-400051 ( / APPELLANT) ( / RESPONDENT) ./ ./PAN/GIR NO. : AAGPV1295A / APPELLANT BY : SHRI SANJEEV JAIN /RESPONDENT BY S/SHRI J R BHATT AND SHASHIKANT JAIN # / DATE OF HEARING : 10.4.2014 # /DATE OF PRONOUNCEMENT : 22.5.2014 / O R D E R PER P.M.JAGTAP,AM: THIS APPEAL IS PREFERRED BY THE REVENUE AGAINST TH E ORDER OF LD. CIT(A)- 34, MUMBAI DATED 22.7.2011 AND THE GROUNDS RAISED THEREIN ARE AS UNDER : 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW, THE LD. CIT(A) ERRED IN DELETING THE ADDITION OF UNACC OUNTED PURCHASES, IGNORING THE FACTS THAT THE ASSESSEE FAILED TO PROV E THE GENUINENESS OF THE TRANSACTIONS IN SPITE OF SUFFICIENT OPPORTUNITY ACC ORDED TO HIM. MOREOVER, THE BROKERS WERE ALSO RELUCTANT TO SAY ANYTHING IN AFFIRMATIVE DURING THE COURSE OF ASSESSMENT PROCEEDINGS; 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW, THE LD. CIT(A) ERRED IN DIRECTING THE AO TO TREAT THE I NCOME AS SHORT TERM CAPITAL GAIN AS AGAINST INCOME FROM BUSINESS AS ASS ESSED BY THE AO. THE CASE IS COVERED THE DECISION OF ITAT IN THE CASE OF SMT. SADHANA NABERA V/S ACIT (ITA NO.2586/MUM/2009), JAYSHREE P SHAH V/S ACIT (ITA NO.3608/MUM/2007) AND IN THE CASE OF ACIT V/S V NAGESH (ITA NO.5410/MUM/2008) I.T.A.NO.6421/MUM/2011 2 2. APROPOS GROUND NO.1, THE RELEVANT FACTS ARE THAT THE ASSESSEE IN THE PRESENT CASE, WHO IS AN INDIVIDUAL, FILED HER RETUR N OF INCOME FOR THE YEAR UNDER CONSIDERATION ON 30.7.2009 DECLARING TOTAL INCOME OF RS.1,05,06,771/-. THE INCOME SO DECLARED WAS COMPRISING OF INCOME FROM SP ECULATION, INCOME FROM SHORT TERM CAPITAL GAIN (STCG), INCOME FROM LONG T ERM CAPITAL GAIN (LTCG) AND INCOME FROM OTHER SOURCES. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, IT WAS NOTICED BY THE AO FROM THE RELEVANT DETAILS OF SHARES TRANSACTIONS FURNISHED BY THE ASSESSEE THAT THE ASSESSEE HAD CLA IMED TO HAVE PURCHASED 8000 AND 6000 SHARES OF M/S ORBIT CORPORATION TH ROUGH THE BROKERS M/S PRIYASHA MEVEN FINANCE LTD AND M/S JALAN SECURITIES PVT.LTD ON 22.5.2007 AND 21.5.2007 FOR RS.231.40 AND RS.225.19 PER SHARE RE SPECTIVELY. IN ORDER TO VERIFY THE EXACT DATE OF PURCHASE OF SHARES , INQUI RY WAS DIRECTLY MADE BY AO WITH BOMBAY STOCK EXCHANGE AND NATIONAL STOCK EXCH ANGE WHICH REVEALED THAT THERE WERE NO SUCH PURCHASES MADE IN THE NAME OF T HE ASSESSEE DURING THE FINANCIAL YEAR 2007-08 THE ASSESSEE WAS ALSO FO UND TO HAVE MADE PAYMENT AGAINST THE PURCHASES OF THESE SHARES IN THE MONTH OF DECEMBER, 2007. ACCORDING TO THE AO 14,000 SHARES OF M/S ORBIT C ORPORATION THUS WERE PURCHASED BY THE ASSESSEE ONLY IN THE MONTH OF DEC EMBER, 2007 AND NOT IN THE MONTH OF MAY 2007 AS CLAIMED BY THE ASSESSEE. HE HELD THAT THE PRICE OF SHARES OF M/S ORBIT CORPORATION IN THE MONTH OF MA Y, 2007 WAS LOWER AND IN ORDER TO TAKE ADVANTAGE OF THE SAID LOWER PRICE , THE SHARES PURCHASED IN THE MONTH OF DECEMBER, 2007 AT THE PREVAILING HIGH PRIC E WERE SHOWN TO HAVE BEEN PURCHASED AT LOWER RATE IN THE MONTH OF MAY 2007. ACCORDINGLY, THE DIFFERENCE IN THE PURCHASE VALUE OF SHARES AS WORKED OUT BY HIM AT RS.84,24,629/- WAS I.T.A.NO.6421/MUM/2011 3 TREATED BY THE AO AS THE PAYMENT MADE BY THE ASSES SEE FOR PURCHASE OF SHARES FROM HER UNACCOUNTED INCOME AND THE SAID AMOUNT WA S ADDED BY HIM TO THE TOTAL INCOME OF THE ASSESSEE UNDER THE HEAD INCOME FROM OTHER SOURCES IN THE ASSESSMENT COMPLETED U/S 143(3) VIDE ORDER DATED 13 .12.2010 3. AGAINST THE ORDER PASSED BY THE AO U/S 143(3) O F THE INCOME TAX ACT, 1961 (THE ACT), APPEAL WAS PREFERRED BY THE ASSESS EE BEFORE THE LD. CIT(A) DISPUTING INTER-ALIA THE ADDITION OF RS.84,24,629/- MADE BY THE AO ON ACCOUNT OF ALLEGED UNACCOUNTED INCOME INVESTED IN PURCHASE O F SHARES AND AFTER CONSIDERING THE ELABORATE SUBMISSIONS MADE ON BEHAL F OF THE ASSESSEE AS WELL AS MATERIAL AVAILABLE ON RECORD, THE LD. CIT(A) DELET ED THE ADDITION MADE BY AO ON THIS ISSUE FOR THE FOLLOWING REASONS GIVEN IN PARAS 2.3 OF HIS IMPUGNED ORDER: 2.3 I HAVE GONE THROUGH THE CONTENTS OF THE IMPUG NED ASSESSMENT ORDER, STATEMENT OF FACTS, SUBMISSIONS OF THE APPEL LANT ALONG WITH THE MATERIAL AVAILABLE ON RECORD. I FIND THAT THERE IS NO DISPUTE ABOUT THE TRANSACTIONS TO BE OFF MARKET ON 21.5.2007 AND 22.5 .2007 RESPECTIVELY AS FOUND BY THE AO IN HER IMPUGNED ORDER. THE OBJECTIO NS OF THE AO APPEAR TO BE REGARDING THE IRREGULARITIES W.R.T. THESE TRA NSACTIONS IN NOT REPORTING WITHIN 7 DAYS OR SO TO BSE AND NSE AND ALSO THAT THE TRANSACTED SHARES KEPT STANDING IN THE NAMES OF THE BROKERS ONLY TIL L THESE WERE TRANSFERRED TO THE APPELLANTS DEMAT ACCOUNT IN THE MONTH OF DECEMBER, 2007. APART FROM THIS, THE AO OFFICER ALSO DOUBTED THAT THESE P URCHASE IN THE MONTH OF MAY 2007, WERE NOT ON BEHALF OF THE APPELLANT BY TH E BROKERS AS THE SHARES WERE STOOD IN BROKERS NAMES AND CODES RESPE CTIVELY. I AM UNABLE TO AGREE WITH THE AO ON THIS ISSUE AS THERE IS NO B AR TO HAVE TRANSACTIONS TO BE OFF MARKET. EVEN IF, THERE ARE IRREGULARITIES BY BROKERS OR APPELLANT W.R.T. THESE TRANSACTIONS, I DO NOT FIND ANY ADVERS E MATERIAL ON RECORD TO SUGGEST THAT EITHER BSE AND/OR NSE HAD EVER TAKEN A PUNITIVE ACTION AGAINST THE BROKERS OR APPELLANT. I FURTHER FIND TH IS AO HAS ALSO NOT TREATED THE EXISTENCE OR GENUINENESS OF THESE TR ANSACTIONS IN THE MONTH OF MAY 2007 TO BE IN DOUBT BUT SHE HAD REFUSED TO T REAT THESE PURCHASES TO HAVE BEEN MADE ON BEHALF OF THE APPELLANT BY THE BROKERS. FIRST OF ALL, ONE HAS TO UNDERSTAND THAT UNLESS, THESE TRANSACTIO NS WERE MADE BY BROKERS TO TRANSFER TO APPELLANT AS THE PURCHASE AR E ON APPELLANTS BEHALF IN THE MONTH OF MAY 2007, NO BROKER IS GOING TO TRA NSFER IT ON THE SAME I.T.A.NO.6421/MUM/2011 4 PURCHASE PRICE OF MAY 2007 IN THE MONTH OF DECEMBE R 2007. THIS PHENOMENON IS NOT IN DISPUTE AS AO HAS ALSO OBSERVE D THE FACT THAT SHARES ARE TRANSFERRED TO APPELLANT IN DECEMBER AT THE ORIGINAL PURCHASE PRICE OF THE SHARES IN MAY 2007 BUT INFERENCE DRAWN BY THE AO IS INCORRECT AND BASELESS BEING DEVOID OF ANY SUPPORTI VE ADVERSE MATERIAL ON RECORD. THE BROKERS HAVE NEVER SAID THAT THESE PU RCHASES WERE NOT MADE IN THE MONTH OF MAY 2007 FOR APPELLANT , THO UGH, FOR SOME REASON OR THE OTHER, THE TRANSFER OF SHARES AND PAYMENT TH ERETO HAD TAKEN PLACE IN DECEMBER, 2007 AS MENTIONED ABOVE. THERE IS NO FURTHER MATERIAL AVAILABLE ON RECORD TO SUGGEST THAT EITHER THE BRO KERS HAVE RECEIVED THE DIFFERENTIAL AMOUNT OF RS.84,24,629/- OUTSIDE OF TH EIR BOOKS OF ACCOUNTS OR THE APPELLANT HAS MADE A PAYMENT TO THIS EXTENT OU TSIDE OF HER BOOKS OF ACCOUNTS. HENCE, I DO NOT FIND ANY JUSTIFICATION OF THE IMPUGNED ADDITION OF DIFFERENTIAL AMOUNT ON NOTIONAL BASIS WHICH ACTU ALLY IS ON SURMISES AND CONJECTURES ONLY. THUS, I FIND FORCE IN THE ARGUM ENTS AND SUBMISSIONS OF THE LD. AUTHORIZED REPRESENTATIVE THAT IN VIEW OF V ARIOUS DECISIONS RELIED UPON BY HIM (SUPRA), THE IMPUGNED ADDITION CANNOT B E UPHELD IN THE EYES OF LAW. ACCORDINGLY, THE IMPUGNED ADDITION IS DELE TED IN THE FACTS AND CIRCUMSTANCE OF THE INSTANT CASE AND IN VIEW OF THE ABOVE DISCUSSIONS. 4. THE LD. DR SUBMITTED THAT 14000 SHARES OF M/S O RBIT CORPORATION WERE NOT ONLY TRANSFERRED TO THE D-MAT ACCOUNT OF THE A SSESSEE IN THE MONTH OF DECEMBER, 2007 BUT EVEN THE PAYMENT AGAINST THE SA ID SHARES WAS MADE BY THE ASSESSEE ONLY IN THE MONTH OF DECEMBER, 2007. HE C ONTENDED THAT SINCE MARKET PRICE OF THE SAID SHARES WAS LOWER IN THE MONTH OF MAY 2007, AN ATTEMPT WAS MADE BY THE ASSESSEE TO CLAIM THE SAID PURCHASES AS HAVING BEEN MADE IN THE MONTH OF MAY 2007 SO THAT THE DIFFERENCE COULD BE PAID IN CASH FROM HER UNACCOUNTED MONEY AND MORE CAPITAL GAIN COULD BE S HOWN ON SALE OF THE SAID SHARES TO TAKE THE BENEFIT OF LOW RATE OF TAX APPL ICABLE TO THE CAPITAL GAIN. HE CONTENDED THAT THIS ATTEMPT OF THE ASSESSEE WAS D ULY THWARTED BY THE AO BY MAKING THE NECESSARY INQUIRIES WHICH REVEALED THAT THE SHARES WERE PURCHASED BY THE ASSESSEE ONLY IN THE MONTH OF DECEMBER, 2007 AT HIGHER PRICE THAN THAT SHOWN BY THE ASSESSEE. HE CONTENDED THAT THIS DIFF ERENCE IN PURCHASE VALUE OF SHARES PAID BY THE ASSESSEE FROM UNACCOUNTED MON EY WAS RIGHTLY TREATED BY I.T.A.NO.6421/MUM/2011 5 AO AS UNDISCLOSED INCOME OF THE ASSESSEE AND THE LD . CIT(A) WAS NOT JUSTIFIED IN DELETING THE ADDITION MADE BY AO ON THIS ISSUE I GNORING THE SPECIFIC FINDINGS RECORDED BY AO WHICH WERE SUFFICIENT TO SHOW THAT T HE SHARES WERE PURCHASED BY ASSESSEE IN THE MONTH OF DECEMBER, 2007 AT HIG HER VALUE. RELYING THE DECISIONS OF HONBLE SUPREME COURT IN THE CASE OF COMMISSIONER OF INCOME-TAX V DURGA PRASAD MORE [1971] 82 ITR 540 (SC) AND SUMA TI DAYAL V/S COMMISSIONER OF INCOME-TAX 214 ITR 801(SC), HE CONT ENDED THAT PREPONDERANCE OF PROBABILITY IS REQUIRED TO BE SEEN TO DECIDE THE EXACT PERIOD OF PURCHASES OF SHARES BY THE ASSESSEE. 5. THE LD. COUNSEL FOR THE ASSESSEE, ON THE OTHER H AND, SUBMITTED THAT THE GENUINENESS OF PURCHASE OF SHARES OF M/S ORBIT COR PORATION BY THE ASSESSEE WAS NEVER DISPUTED BY THE AO AND THE CASE OF AO ON TH E ISSUE WAS BASED ON THE DISPUTE RAISED REGARDING THE EXACT DATE OF PURCHASE OF THESE SHARES. HE SUBMITTED THAT ALTHOUGH 14000 SHARES OF M/S ORBIT CORPORATION WERE PURCHASED BY THE ASSESSEE IN THE MONTH OF MAY 2007, THE BROKE RS WHO HAD PURCHASED THE SAID SHARES ON BEHALF OF THE ASSESSEE MADE THE EN TRIES REGARDING THE SAID PURCHASES IN THEIR OWN ACCOUNT. HE SUBMITTED THAT THE ASSESSEE THEREFORE DID NOT GET CREDIT FOR THE SAID SHARES IN HER OWN D-M AT ACCOUNT AND THEREFORE NO PAYMENT WAS ALSO MADE AGAINST THE SAID SHARES BY TH E ASSESSEE. HE SUBMITTED THAT THE CONTRACT NOTES, HOWEVER, WERE ISSUED BY T HE BROKERS IN THE MONTH OF MAY 2007 ITSELF AND INVITED OUR ATTENTION TO THE C OPIES OF THE SAID CONTRACT NOTES PLACED AT PAGES 26 TO 34 OF THE PAPER BOOK TO SHOW THAT THE SHARES WERE PURCHASED BY THE BROKERS ON BEHALF OF THE ASSESSEE IN THE MONTH OF MAY 2007 ITSELF. HE CONTENDED THAT THIS ISSUE WAS FINALLY SO RTED OUT IN THE MONTH OF I.T.A.NO.6421/MUM/2011 6 DECEMBER, 2007 WHEN THE MISTAKE IN RECORDING THE S HARES PURCHASED ON BEHALF OF THE ASSESSEE IN THE NAME OF BROKERS WAS DETECT ED AND IMMEDIATELY THEREAFTER THE SHARES WERE TRANSFERRED BY THE BROKE RS TO THE D-MAT ACCOUNT OF THE ASSESSEE AND PAYMENT AGAINST THE SAME WAS ALS O MADE BY THE ASSESSEE. HE INVITED OUR ATTENTION TO THE LETTER ISSUED BY O NE OF THE BROKERS VIZ M/S JALAN SECURITIES PVT.LTD PLACED AT PAGE 35 OF THE PAPER BOOK AND POINTED OUT THAT THE MISTAKE IN PUNCHING THE RELEVANT SHARE TRANSACT IONS INITIALLY IN THEIR OWN ACCOUNT WAS CONFIRMED BY THE SAID BROKER. 6. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND ALS O PERUSED THE RELEVANT MATERIAL ON RECORD. IT IS OBSERVED THAT THE GENU INENESS OF THE CLAIM OF THE ASSESSEE OF HAVING PURCHASED 14000 SHARES OF M/S ORBIT CORPORATION HAS NOT BEEN DISPUTED EITHER BY AO IN THE ASSESSMENT ORDER OR EVEN BY THE LD. DR AT THE TIME OF HEARING BEFORE US. THE ONLY DISPUTE IS REG ARDING THE EXACT PERIOD IN WHICH THE SAID SHARES WERE PURCHASED BY THE ASSES SEE. THE CLAIM OF THE ASSESSEE RIGHT FROM THE BEGINNING WAS THAT THE SAID SHARES WERE PURCHASED BY HER IN THE MONTH OF MAY 2007 AND THE SAME WAS DUL Y SUPPORTED BY THE RELEVANT CONTRACT NOTES ISSUED BY THE CONCERNED BR OKERS, A COPY OF WHICH IS DULY PLACED ON RECORD BEFORE US. THE SAID SHARES, HOWEVER, WERE FOUND TO BE TRANSFERRED TO THE D-MAT ACCOUNT OF THE ASSESSEE ONLY IN THE MONTH OF DECEMBER, 2007 AND SINCE THE PREVAILING PRICE OF TH E SHARES IN THE MONTH OF DECEMBER, 2007, WAS INCIDENTALLY HIGHER THAN THE P REVAILING PRICE IN THE MONTH OF MAY 2007, THE AO ENTERTAINED THE DOUBT REGARD ING THE EXACT DATE OF PURCHASE OF SHARES AND MADE FURTHER INQUIRIES IN TH E MATTER WHICH REVEALED THAT EVEN THE PAYMENT AGAINST THE PURCHASES OF SHARES WA S MADE BY THE ASSESSEE IN THE MONTH OF DECEMBER, 2007. HE, THEREFORE, PRESU MED THAT THE SHARES WERE I.T.A.NO.6421/MUM/2011 7 PURCHASED BY THE ASSESSEE IN THE MONTH OF DECEMBER , 2007 AT HIGHER VALUE THAN SHOWN IN THE BOOKS OF ACCOUNTS. THIS PRESUMPT IONS OF THE AO, HOWEVER, WAS SUCCESSFULLY REBUTTED BY THE ASSESSEE BY POINTI NG OUT BEFORE THE LD. CIT(A) THAT ALTHOUGH THE TRANSFER OF SHARES IN THE NAME OF ASSESSEE WAS FINALLY DONE IN THE MONTH OF DECEMBER 2007, THE SHARES WERE ACTUA LLY PURCHASED ON BEHALF OF THE ASSESSEE BY THE CONCERNED BROKERS IN THE MONTH OF MAY 2007 ITSELF. IN THIS REGARD, THE LD. COUNSEL FOR THE ASSESSEE HAS TAKEN US THROUGH THE RELEVANT DOCUMENTARY EVIDENCE PLACED IN THE PAPER BOOK TO PO INT OUT THAT THE SHARES PURCHASED ON BEHALF OF THE ASSESSEE IN THE MONTH OF MAY 2007 WERE WRONGLY BUNCHED BY THE CONCERNED BROKERS AS THEIR OWN TRAN SACTIONS AND THE SAME THEREFORE WERE NOT TRANSFERRED IN THE NAME OF THE ASSESSEE IMMEDIATELY IN THE MONTH OF MAY 2007. THE CONTRACT NOTES, HOWEVER, W ERE ISSUED BY THE CONCERNED BROKERS IN THE NAME OF THE ASSESSEE TO SHOW THAT THE SAID SHARES WERE PURCHASED BY THEM ON BEHALF OF THE ASSESSEE IN THE MONTH OF MAY 2007 ITSELF. SINCE THE SAID SHARES WERE NOT TRANSFERRE D TO THE D-MAT ACCOUNT OF THE ASSESSEE, THE ASSESSEE DID NOT MAKE ANY PAYMENT TO THE CONCERNED BROKERS AND WHEN THIS MATTER WAS FINALLY SORTED OUT AND THE SHA RES WERE TRANSFERRED TO THE D-MAT ACCOUNT OF THE ASSESSEE BY THE CONCERNED BR OKERS IN THE MONTH OF DECEMBER, 2007, THE ASSESSEE MADE THE PAYMENT AGAIN ST THE SAID SHARES IMMEDIATELY THEREAFTER. THE DOCUMENTARY EVIDENCE P LACED ON THE RECORD BY THE LD. COUNSEL FOR THE ASSESSEE THUS CLEARLY ESTABLISH ED THAT THE SHARES WERE PURCHASED BY THE ASSESSEE IN THE MONTH OF MAY 2007 ITSELF AT THE PREVAILING MARKET RATE AND IT WAS NOT A CASE OF PURCHASE OF SH ARES BY THE ASSESSEE IN THE MONTH OF DECEMBER 2007 AS ALLEGED BY THE AO. IT APPEARS THAT THIS ALLEGATION OF THE AO WAS MAINLY BASED ON THE FACT THAT THE MAR KET PRICE OF THE SHARES I.T.A.NO.6421/MUM/2011 8 INCIDENTALLY HAD INCREASED IN THE MONTH OF DECEMBER , 2007 THAN THE MARKET PRICE IN THE MONTH OF MAY 2007. THIS ALLEGATION, HOWEVE R, WAS DISLODGED BY THE ASSESSEE ON THE BASIS OF DOCUMENTARY EVIDENCE WHICH CLEARLY ESTABLISHED THAT THE SHARES WERE ACTUALLY PURCHASED BY THE ASSESSEE IN THE MONTH OF MAY 2007 AT THE THEN PREVAILING RATES AND THIS POSITION WAS AGAIN CONFIRMED BY THE CONCERNED BROKERS IN WRITING. IT IS ALSO PERTINENT TO NOTE HERE THAT THERE WAS NOT AN IOTA OF EVIDENCE BROUGHT ON RECORD BY THE AO T O SHOW THAT ANY CONSIDERATION FOR THE PURCHASE OF SAID SHARES OVER AND ABOVE WH AT WAS SHOWN BY THE ASSESSEE IN HER BOOKS OF ACCOUNT WAS PAID BY THE AS SESSEE AND THE ALLEGATION OF THE AO THAT THE ASSESSEE HAD PAID SUCH CONSIDERATI ON OUTSIDE THE BOOKS OF ACCOUNT WAS BASED PURELY ON SURMISES AND CONJECTUR E AS RIGHTLY HELD BY THE LD. CIT(A). WE, THEREFORE, FIND NO INFIRMITY IN THE IM PUGNED ORDER OF LD. CIT(A) DELETING THE ADDITION MADE BY AO TO THE TOTAL INCO ME OF THE ASSESSEE ON THIS ISSUE AND UPHOLDING THE SAME, WE DISMISS GROUND NO .1 OF REVENUES APPEAL. 7. IN GROUND NO.2, THE REVENUE HAS CHALLENGED THE ACTION OF THE LD. CIT(A) IN DIRECTING THE AO TO TREAT THE PROFIT EARNED BY THE ASSESSEE FROM THE TRANSACTIONS IN SHARES AS SHORT TERM CAPITAL GA IN (STCG) AS AGAINST INCOME FROM BUSINESS AS ASSESSED BY THE AO. 8. IN HER RETURN OF INCOME, THE ASSESSEE HAD SHOW N PROFIT DERIVED FROM THE SHARE TRANSACTIONS AS SPECULATION PROFIT TO THE EXT ENT OF RS.1364, STCG TO THE EXTENT OF RS.1,01,83,082/- AND LTCG TO THE EXTENT OF RS.16,314/-. WHILE DOING SO, THE ASSESSEE HAD TAKEN ALL INTRA-DAY TRANSACT IONS AS HER BUSINESS TRANSACTIONS AND ALL DELIVERY BASED TRANSACTIONS A S INVESTMENT TRANSACTIONS. THIS TREATMENT GIVEN BY THE ASSESSEE TO THE SHARE T RANSACTIONS IN THE BOOKS OF I.T.A.NO.6421/MUM/2011 9 ACCOUNT WAS NOT FOUND ACCEPTABLE BY THE AO. HE FO UND THAT THE ASSESSEE HAD ENTERED INTO SHARE TRANSACTIONS ON MORE THAN 45 DA YS DURING THE YEAR UNDER CONSIDERATION AND HAD TRANSACTED IN AS MANY AS 24 SCRIPS. HE ALSO FOUND THAT IN CASE OF SOME OF THE SCRIPS, THE HOLDING PERIOD WAS LESS THAN 15 DAYS. HE FURTHER FOUND THAT THE SHARES ALLOTTED TO THE ASSESSEE THR OUGH IPOS WERE IMMEDIATELY SOLD BY THE ASSESSEE AT PROFIT. HAVING REGARD TO A LL THESE FACTS, THE AO WAS OF THE OPINION THAT THE MOTIVE OF THE ASSESSEE WAS CLE ARLY TO TRADE IN SHARES AND EARN PROFIT AND NOT TO HOLD THE SHARES AS INVESTME NT. HE, THEREFORE, TREATED THE ASSESSEE AS DEALER IN SHARES AND BROUGHT TO TAX THE PROFIT DERIVED FROM THE TRANSACTIONS IN SHARES AS BUSINESS INCOME IN THE HA NDS OF THE ASSESSEE INSTEAD OF STCG AND LTCG AS DECLARED BY THE ASSESSEE. 9. THE TREATMENT GIVEN BY THE AO TO THE PROFIT DE RIVED FROM THE SHARES TRANSACTIONS AS BUSINESS INCOME INSTEAD OF STCG AND LTCG WAS DISPUTED BY THE ASSESSEE IN AN APPEAL FILED BEFORE THE LD. CIT(A). IT WAS SUBMITTED ON BEHALF OF THE ASSESSEE BEFORE THE LD.CIT(A) THAT THAT THERE WAS DUAL PORTFOLIO MAINTAINED BY THE ASSESSEE AND ALL THE DELIVERY BASED TRANSAC TIONS IN SHARES WERE TREATED AS INVESTMENT TRANSACTIONS. IT WAS SUBMITTED THAT THIS TREATMENT GIVEN BY THE ASSESSEE WAS ACCEPTED BY THE AO IN THE EARLIER Y EARS AND THERE WAS NO JUSTIFIABLE REASONS TO TAKE A DIFFERENT VIEW DURIN G THE YEAR UNDER CONSIDERATION. THE REASONS FOR SELLING THE SHARES ALLOTTED THROUGH IPOS IMMEDIATELY AFTER ALLOTMENT WERE ALSO EXPLAINED BY THE ASSESSEE BEFOR E THE LD. CIT(A). AFTER CONSIDERING THE SUBMISSIONS MADE ON BEHALF OF THE ASSESSEE AS WELL AS THE MATERIAL AVAILABLE ON RECORD, THE LD. CIT(A) DIREC TED THE AO TO TREAT THE PROFIT DERIVED BY THE ASSESSEE FROM THE TRANSACTIONS IN S HARES AS CAPITAL GAINS AND NOT I.T.A.NO.6421/MUM/2011 10 BUSINESS INCOME FOR THE FOLLOWING REASONS GIVEN IN PARA 3.3 OF HIS IMPUGNED ORDER : 3.3 I HAVE GONE THROUGH THE CONTENTS OF THE IMPU GNED ASSESSMENT ORDER, STATEMENT OF FACTS, SUBMISSIONS OF THE APPEL LANT ALONG WITH THE MATERIAL AVAILABLE ON RECORD. I FIND THAT AOS AC TION IN TREATING CAPITAL GAINS TO BE BUSINESS INCOME IS AGAINST THE LAW LAID DOWN BY HONBLE HIGH COURT IN THE CASE OF GOPAL PUROHIT 228 CTR 582 (B OM) THAT HAD ALSO BEEN UPHELD BY HONBLE SUPREME COURT RECENTLY. TH E APPELLANT HAD SHOWN IMPUGNED SHARES AS INVESTMENT IN HER BOOKS OF ACCOUNTS AND NOT AS STOCK-IN-TRADE. THE VERY FACT THAT SHE PERS ISTED THE BROKERS TO TRANSFER THE IMPUGNED SHARES THAT WERE PURCHASED BY THEM FOR HER, TO HER ACCOUNT AND THE TRANSFER TOOK PLACE AFTER SOME UNUS UAL TIME PERIOD, ITSELF PROVES THAT THE APPELLANT IS INVESTOR AS NO PRUDENT BUSINESS PERSON WOULD LIKE TO KEEP HER SHARES STANDING IN OTHER PERSONS ACCOUNT NAMELY, BROKERS AND THAT TOO, OFF THE MARKET, AS HELD AND F OUND BY THE AO HERSELF. HENCE, I FIND THAT APPELLANTS CASE IS SQU ARELY COVERED BY GOPAL PUROHIT (SUPRA) AND THE ACTION OF THE AO BASED ON S URMISES AND CONJECTURES, CANNOT BE UPHELD IN THE FACTS AND CIRC UMSTANCES OF THE INSTANT CASE. ACCORDINGLY, THE AO IS DIRECTED TO T REAT THE IMPUGNED CAPITAL GAINS AS CAPITAL GAINS AND NOT BUSINESS INCOME. 10. THE LD. DR SUBMITTED THAT THE PROFIT DERIVED F ROM THE TRANSACTIONS IN SHARES DECLARED BY ASSESSEE AS CAPITAL GAIN WAS TRE ATED BY THE AO AS BUSINESS INCOME OF THE ASSESSEE ON THE BASIS OF FINDINGS OF FACTS SPECIFICALLY RECORDED IN THE ASSESSMENT ORDER. HE POINTED OUT THAT THE SHA RES WERE GENERALLY HELD BY THE ASSESSEE FOR A SHORT PERIOD AND EVEN THE SHARES ALLOTTED THROUGH IPOS WERE IMMEDIATELY SOLD BY THE ASSESSEE SHOWING HER CLEAR INTENTION TO TRADE IN THE SHARES IN ORDER TO EARN PROFIT AND NOT TO HOLD THE SAME AS INVESTMENT. HE CONTENDED THAT THE LD. CIT(A), HOWEVER, OVERLOOKED ALL THESE ADVERSE FINDINGS RECORDED BY THE AO AND ACCEPTED THE TREATMENT GIVEN BY THE ASSESSEE TO THE PROFIT DERIVED FROM THE SHARE TRANSACTIONS AS CAPI TAL GAIN RELYING SIMPLY ON THE DECISION OF THE HONBLE BOMBAY HIGH COURT IN THE CA SE OF CIT VS. GOPAL PUROHIT, 228 CTR 582(BOM) AS UPHELD BY THE HONBLE SUPREME C OURT. I.T.A.NO.6421/MUM/2011 11 11. THE LD. COUNSEL FOR THE ASSESSEE, ON THE OTHER HAND, STRONGLY SUPPORTED THE IMPUGNED ORDER OF THE LD. CIT(A) ACCEPTING THE TREATMENT GIVEN BY THE ASSESSEE TO THE PROFIT DERIVED FROM THE TRANSACTION S IN SHARES AS CAPITAL GAINS. HE SUBMITTED THAT THERE WERE NO REPETITIVE TRANSAC TIONS MADE BY THE ASSESSEE IN THE SAME SCRIP AS ALLEGED BY THE AO AND EVEN THE S HARES ALLOTTED THROUGH IPOS WERE IMMEDIATELY SOLD BY THE ASSESSEE AS THE LOTS OF SHARES SO ALLOTTED WERE ODD AND THE ASSESSEE GOT A BETTER PRICE EVEN FOR SUCH ODD LOTS. HE SUBMITTED THAT EVEN THE FREQUENCY OF SHARE TRANSACTIONS WAS V ERY LOW AND THE ENTIRE INVESTMENT MADE IN SHARES WAS MADE BY THE ASSESSEE OUT OF HER OWN FUNDS. 12. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND ALSO PERUSED THE RELEVANT MATERIALS ON RECORD. IT IS OBSERVED THAT THE ASS ESSEE HAD TRANSACTED ONLY IN 24 SCRIPS DURING THE YEAR CONSIDERATION OUT OF WHICH 1 2 SCRIPS WERE ALLOTTED TO HER THROUGH IPOS. IT, THEREFORE, CAN NOT BE SAID THA T THE FREQUENCY OF TRANSACTIONS IN SHARES OF THE ASSESSEE WAS HIGH. EVEN THE REAS ONS FOR IMMEDIATE SALE OF THE SHARES ALLOTTED THROUGH IPOS WERE SATISFACTORILY E XPLAINED BY THE ASSESSEE. THERE WERE NO REPETITIVE TRANSACTIONS ENTERED INTO BY THE ASSESSEE IN THE SAME SCRIPS AND THE ENTIRE INVESTMENT IN SHARES WAS MA DE BY THE ASSESSEE OUT OF HER OWN FUNDS. THE TRANSACTIONS IN ALL THE DELIVER Y BASED SHARES WERE CONSISTENTLY TREATED BY ASSESSEE AS INVESTMENT TRA NSACTIONS AND THIS TREATMENT GIVEN BY ASSESSEE IN THE BOOKS OF ACCOUNT WAS ACC EPTED BY AO IN THE EARLIER YEARS. HAVING REGARD TO ALL THESE FACTS OF THE CASE, WE ARE OF THE VIEW THE LD. CIT(A) WAS FULLY JUSTIFIED IN DIRECTING THE AO TO TREAT THE PROFIT DERIVED BY THE ASSESSEE FROM THE DELIVERY BASED TRANSACTION AS CA PITAL GAIN RELYING ON THE DECISION OF THE HONBLE BOMBAY HIGH COURT IN THE C ASE OF GOPAL PUROHIT (SUPRA) WHICH HAS BEEN SUBSEQUENTLY UPHELD BY THE HONBLE SUPREME COURT. WE, I.T.A.NO.6421/MUM/2011 12 THEREFORE, FIND NO REASON TO INTERFERE WITH THE IM PUGNED ORDER OF LD. CIT(A) GIVING RELIEF TO THE ASSESSEE ON THIS ISSUE AND U PHOLDING THE SAME, WE DISMISS GROUND NO.2 OF THE REVENUES APPEAL. 13. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 22 ND MAY, 2014 ( * + 22ND MAY, 2014 SD SD ( DR. S. T. M.PAVALAN) (P .M.JAGTAP) ( / JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI: ON THIS 22ND DAY OF MAY, 2014 . . ./ SRL , SR. PS ! / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT /APPLICANT 2. / THE RESPONDENT. 3. 0 ( ) / THE CIT(A)- 4. 0 / CIT 5. 1 3 , # 3 , / DR, ITAT, MUMBAI 6. / GUARD FILE. / BY ORDER, TRUE COPY (ASSTT. REGISTRAR) # 3 , /ITAT, MUMBAI