CAVIM REALTY P. LTD, MUMBAI V. DCIT RG 3(1), MUMBAI

ITA 6614/MUM/2010

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 3637 (ITAT-MUMBAI)
• Duration Of Justice: 5 year(s) 8 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-05-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Next Hearing Date: 16-12-2015
• Assessment Year: misc
• Appeal Filed On: 13-09-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: V C SHAH
• Keywords: Reopening of assessment; Business income; Speculation loss
• Section: 147

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCH C, MUMBAI BEFORE SHRI SANJAY GARG, JUDICIAL MEMBER AND SHRI RAJESH KUMAR, ACCOUNTANT MEMBER ITA NO.6614/M/2010 ASSESSMENT YEAR: 2003-04 M/S. CAVIM REALTY PVT. LTD., 78/A, NARIMAN BHAVAN, NARIMAN POINT, MUMBAI 400 020 PAN: AABCC 2922K VS. ASST. CIT 10(3), AAYAKAR BHAVAN, M.K. ROAD, MUMBAI - 400020 (APPELLANT) (RESPONDENT) PRESENT FOR: ASSESSEE BY : SHRI V.C. SHAH, A.R. REVENUE BY : DR. S. PANDIAN, D.R. DATE OF HEARING : 23.03.2016 DATE OF PRONOUNCEMENT : 13.05.2016 O R D E R PER SANJAY GARG, JUDICIAL MEMBER: THE PRESENT APPEAL HAS BEEN PREFERRED BY THE ASSESS EE AGAINST THE ORDER DATED 30.04.2010 OF THE COMMISSIONER OF INCOME TAX (APPEALS) [HEREINAFTER REFERRED TO AS THE CIT(A)] RELEVANT TO ASSESSMENT Y EAR 2003-04. 2. THE ASSESSEE IS AGGRIEVED BY THE ACTION OF THE L OWER AUTHORITIES IN TREATING THE LOSS INCURRED BY THE ASSESSEE IN RELAT ION TO THE SHARES HELD AS STOCK IN TRADE AS SPECULATIVE LOSS AS AGAINST BUSINESS LO SS OFFERED BY THE ASSESSEE. APART FROM CHALLENGING THE ADDITIONS ON MERITS, THE ASSESSEE HAS ALSO AGITATED THE VERY REOPENING OF THE ASSESSMENT. 3. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSI NG OFFICER (HEREINAFTER REFERRED TO AS THE AO) REOPENED THE ASSESSMENT PROC EEDINGS UNDER SECTION 147 OF THE ACT OBSERVING THAT THE ASSESSEE HAD SUFFERED LOSSES OF RS.9,85,975/- ON ACCOUNT OF SHARES HELD AS STOCK IN TRADE AND THAT T HE ASSESSEE HAD ADJUSTED THIS ITA NO.6614/M/2010 M/S. CAVIM REALTY PVT. LTD. 2 LOSS AGAINST THE NORMAL BUSINESS INCOME AND HAD NOT TREATED THE LOSS AS SPECULATIVE LOSS AS PER THE PROVISIONS OF EXPLANATI ON TO SECTION 73 OF THE INCOME TAX ACT. THE AO, THEREAFTER, OBSERVED THAT THE ASSESSEE HAD SUO-MOTO DISALLOWED AND ADDED LOSS IN SALE OF SHARES OF RS.7 ,59,826/-. HOWEVER, THE OTHER LOSS AMOUNTING TO RS.46,11,706/- HAD BEEN CLA IMED AS NORMAL BUSINESS LOSS BUT THE SAME WAS REQUIRED TO BE TREATED AS SPE CULATIVE LOSS. HE, THEREFORE, ADDED THE SAID AMOUNT OF RS.46,11,706/- INTO THE IN COME OF THE ASSESSEE BUT ALLOWED THE SAID LOSS TO BE CARRIED FORWARD AS SPEC ULATIVE LOSS. 4. THE LD. CIT(A) CONFIRMED THE ABOVE DISALLOWANCE MADE BY THE AO. BEING AGGRIEVED BY THE ABOVE ACTION OF THE LOWER AU THORITIES THE ASSESSEE HAS COME IN APPEAL BEFORE US. 5. WE HAVE HEARD THE RIVAL CONTENTIONS AND HAVE ALS O GONE THROUGH THE RECORDS. AT THE OUTSET, THE LD. A.R. OF THE ASSESS EE HAS BROUGHT OUR ATTENTION TO THE ASSESSMENT ORDER TO SHOW THAT THE AO IN THE ASS ESSMENT ORDER HAS MENTIONED THAT THE RETURN OF INCOME WAS FILED ON 31 .10.02. IT HAS ALSO BEEN MENTIONED THAT THE RETURN WAS PROCESSED UNDER SECTI ON 143(1) OF THE ACT ON 18.02.03. HE HAS FURTHER BROUGHT OUR ATTENTION THA T IN THE REASONS RECORDED FOR REOPENING OF ASSESSMENT, THE AO HAS MENTIONED THAT THE ASSESSEE HAD SUFFERED LOSS IN SHARE TRANSACTIONS AMOUNTING TO RS.9,85,975 /-. THE LD. A.R. THEREAFTER HAS STRONGLY CONTENDED THAT THE DATES MENTIONED IN THE ASSESSMENT ORDER SHOWS THAT THE AO REFERRED TO A.Y. 2002-03 AND NOT TO A.Y . 2003-04. THE AMOUNT OF THE LOSS OF RS.9,85,975/- MENTIONED BY THE AO PERTA INED TO A.Y. 2002-03 AND NOT A.Y. 2003-04. HE HAS THEREFORE CONTENDED THAT THE AO HAD NOT APPLIED HIS MIND TO THE FACTS OF THE YEAR UNDER CONSIDERATION F OR A.Y. 2003-04. THE ASSESSMENT FOR THE YEAR UNDER CONSIDERATION I.E. A. Y. 2003-04 HAS BEEN REOPENED BY THE AO TAKING INTO CONSIDERATION AND RE FERRING TO THE FACTS AND CIRCUMSTANCES OF A.Y. 2002-03 ONLY. THE LD. A.R. H AS FURTHER INVITED OUR ATTENTION TO THE APPELLATE ORDER OF THE LD. CIT(A) DATED 13.05.10 IN RESPECT OF A.Y. 2002-03, THE ASSESSMENT WAS REOPENED FOR THAT YEAR ALSO, BUT THE LD. ITA NO.6614/M/2010 M/S. CAVIM REALTY PVT. LTD. 3 CIT(A) HAS DELETED THE ADDITION OF AMOUNT OF RS.9,8 5,975/- WHICH WAS ADDED BY THE AO TREATING THE SAID LOSS AS SPECULATIVE LOS S. A PERUSAL OF THE ASSESSMENT ORDER WHEN CONSIDERED WITH THE ABOVE CON TENTIONS OF THE LD. A.R. REVEALS BEYOND DOUBT THAT THE ASSESSMENT IN THIS AP PEAL HAS BEEN REOPENED BY THE AO TAKING THE FACT AND CIRCUMSTANCES OF A.Y. 20 02-03. THE AO HAS NOT APPLIED HIS MIND TO THE FACTS AND CIRCUMSTANCES FOR A.Y. 2003-04 WHILE REOPENING OF THE ASSESSMENT. THE REASONS RECORDED BY THE AO, THUS, DO NOT PERTAIN FOR THE ASSESSMENT YEAR UNDER CONSIDERATION I.E. A.Y. 2003-04. THE REOPENING FOR THE ASSESSMENT YEAR 2003-04, THUS, IS BAD IN LAW AND THE SAME IS ACCORDINGLY SET ASIDE. THE ADDITIONS MADE BY THE A O IN CONSEQUENCE OF REASSESSMENT THUS HAVE NO LEGS TO STAND AND THE SAM E ARE THEREFORE ORDERED TO BE DELETED. 6. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS HER EBY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 13.05.2016. SD/- SD/- (RAJESH KUMAR) (SANJAY GARG) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI, DATED: 13.05.2016. * KISHORE, SR. P.S. COPY TO: THE APPELLANT THE RESPONDENT THE CIT, CONCERNED, MUMBAI THE CIT (A) CONCERNED, MUMBAI THE DR CONCERNED BENCH //TRUE COPY// [ BY ORD ER DY/ASSTT. REGISTRAR, ITAT, MUMBAI.