Shri Sunil Manakchand Kotecha, Jalgaon V. Addl. CIT, Range-1, Jalgaon

ITA 691/PUN/2013

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 9465 (ITAT-PUNE)
• Duration Of Justice: 4 year(s) 9 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-01-2018
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Next Hearing Date: 14-12-2017
• Assessment Year: 2006-2007
• Appeal Filed On: 18-03-2013
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Assessee Lawyers: HARI KRISHAN
• Keywords: Capital asset; Business income; Opportunity of being heard; Principle of natural justice; Rule of consistency
• Section: 143(3); 6; 12; 10; 11

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH A, PUNE . , , BEFORE SHRI D.KARUNAKARA RAO, AM AND SHRI VIKAS AWASTHY, JM . / ITA NO.691/PUN/2013 / ASSESSMENT YEAR : 2006-07 SHRI SUNIL MANAKCHAND KOTECHA, PROP. OF M/S. SIDDHART CONSTRUCTIONS, 41, NAVIPETH, JALGAON -1, PAN : ABPPK2141Q . /APPELLANT VS. ACIT, RANGE-1, JALGAON . / RESPONDENT . / ITA NO.692/PUN/2013 AND ITA NO.2008/PUN/2014 / ASSESSMENT YEARS : 2006-07 & 2007-08 SMT. MADHURI SUNIL KOTECHA, 4, VARDHMAN NAGAR, NEAR SAGAR PARK, JALGAON 1 PAN : AHMPK6577H . /APPELLANT VS. ACIT, RANGE-1, JALGAON . / RESPONDENT / APPELLANT BY : SHRI HARI KRISHAN / RESPONDENT BY : SHRI ACHAL SHARMA, ADDL.CIT / DATE OF HEARING : 22.12.2017 / DATE OF PRONOUNCEMENT: 12.01.2018 / ORDER PER D. KARUNAKARA RAO, AM : THERE ARE 3 APPEALS UNDER CONSIDERATION INVOLVING ASSESS MENT YEARS 2006-07 AND 2007-08. THE APPEALS ITA NOS. 692/P UN/2013 AND ITA NO.2008/PUN/2014 FILED BY SMT. MADHURI S. KOTECHA FOR A.YRS. 2006-07 & 2007-08 ARE AGAINST THE 2 DIFFERENT ORDERS OF CIT(A)-2, NASHIK DATED 14-01-2013 AND 26-09-2014 WHEREAS THE A PPEAL ITA NO. ITA NOS.691 AND 692/PUN/2013 & ITA NO.2008/PUN/2014 SHRI SUNIL M. KOTECHA & SMT. MADHURI S. KOTECHA 2 691/PUN/2013 FILED BY SHRI SUNIL M. KOTECHA FOR A.Y. 2006-07 . THERE IS NO APPEAL OF THIS ASSESSEE FOR A.Y. 2007-08. 2. SINCE IDENTICAL GROUNDS HAVE BEEN RAISED BY BOTH THE ASSESSEES, WE PROCEED TO REFER THE FACTS AND ISSUES IN ITA NO.691/P UN/2013 IN RESPECT OF SHRI SUNIL M. KOTECHA FOR A.Y. 2006-07. ITA NO.691/PUN/2013 - SHRI SUNIL M. KOTECHA) A.Y. 2006-07 3. IN THIS APPEAL, ASSESSEE RAISED THE SOLITARY ISSUE OF TA XING OF SHORT TERM CAPITAL GAINS EARNED ON SALE OF SHARES AS BUSINESS IN COME OF THE ASSESSEE. IN THE GROUNDS, ASSESSEE ARGUES THAT THE C IT(A) FAILED TO COMPLY WITH THE DIRECTION OF THE ITAT IN THE FIRST GROUND O F THE APPELLATE PROCEEDINGS RELATING TO PRINCIPLE OF CONSISTENCY THAT EM ERGED FROM THE JUDGMENT OF HONBLE BOMBAY HIGH COURT IN THE CASE OF CIT VS. GOPAL PUROHIT 373 ITR 287 (BOM.). FURTHER, LR. AR ARGUED THAT THE REVENUE AUTHORITIES IGNORED THEIR OWN FINDING/CONCLUSIONS, I.E. ACCEPTIN G THE ASSESSEES CLAIM AS SHORT TERM CAPITAL GAIN IN EARLIER AND LATER ASSESSMENT YEARS. ASSESSEE ALSO ARGUES IN THE GROUNDS THAT THE OFFICERS IGNORED THE ENTRIES IN THE BOOKS OF ACCOUNT WHERE THE S HARES WERE SHOWN AS INVESTMENTS AND THEREFORE THE EARNINGS ARE IN THE CAPITAL NATURE. THERE IS NO DISPUTE ABOUT TAXING OF ANY LONG TERM CAPITAL GAIN S. 4. RELEVANT FACTS OF THIS ISSUE OF TREATING THE SHORT TER M CAPITAL GAINS AS BUSINESS INCOME INCLUDE THAT THE ASSESSEE OWNS SHAR ES AND THEY WERE SHOWN AS INVESTMENTS UNDISPUTEDLY IN THE BOOKS O F ACCOUNT UNDISPUTEDLY. DURING THE YEAR, SOME OF THE SHARES WERE SOLD AND EARNED SHORT TERM CAPITAL GAINS OF RS.16,29,913/-. IT IS UN DISPUTED FACT THAT ASSESSEE REPEATEDLY DEALT WITH A SINGLE SHARE FOR E ARNING THE ITA NOS.691 AND 692/PUN/2013 & ITA NO.2008/PUN/2014 SHRI SUNIL M. KOTECHA & SMT. MADHURI S. KOTECHA 3 PROFITS/GAINS. IT IS ON RECORD THAT THE ASSESSEE DEALT W ITH AROUND 100 SCRIPS IN TOTO THIS PROCESS. ASSESSEE HAS BEEN DOING TH IS ACTIVITY CONSISTENTLY FOR THE PAST 4 TO 5 YEARS AND CLAIMING THE GAINS AS SHORT TERM CAPITAL GAINS. AO ACCEPTED THE SAID CLAIM AND DID NO T DISTURB THE SAME IN THE PAST. IT IS THE CLAIM OF THE ASSESSEE THAT N O BORROWED FUNDS WERE DIVERTED FOR BUYING THE SAID SHARES IN WHICH CASE TH E ACTIVITY OF BUYING AND SELLING OF SHARES FALLS IN THE SCOPE OF BUSINESS A CTIVITY. IN THE BALANCE SHEET, ASSESSEE REFLECTED THE INVESTMENT IN S HARES TO THE EXTENT OF RS.66.61 LAKHS ON ACCOUNT OF SHARES. ASSESSEE ALSO INVESTED IN EQUITY BASED MUTUAL FUNDS. AS PER THE FINANCIAL STATEMEN TS, THE ASSESSEE BORROWED LOANS OF RS.1.41 CRORES AND ALSO OTHER LOANS AMOUNTING TO RS.1.04 CRORES. ALL THESE INVESTMENT OF PURC HASE AND SALE OF SHARES WAS DONE FROM THE SAME PREMISES OF HIS OFFICE INVO LVING COMMON STAFF MEANT FOR CONSTRUCTION BUSINESS OF THE ASSE SSEE. CONSIDERING THE BORROWAL OF LOANS, NUMBER OF TRANSACTIONS, REPEATED ENTRY INTO THE SAME SCRIP ETC., THE AO CAME TO THE CON CLUSION THAT THESE ACTIVITIES CONSTITUTE BUSINESS ACTIVITY. THEREFORE, THE SAID GAIN OF RS.16,29,913/- IS TAXED IN THE ASSESSMENT AS BUSINESS INC OME OF THE ASSESSEE. 5. IN THE FIRST ROUND, THE CIT(A) CONFIRMED THE SAID ADDITIO N. HOWEVER, DURING THE PROCEEDINGS BEFORE THE TRIBUNAL, ON FIND ING THE PRINCIPLE OF CONSISTENCY WAS NOT PROPERLY APPRECIATED BY THE LOWER AUTHORITIES, THE MATTER WAS REMANDED TO THE FILE OF CIT(A) AS PER THE DIRECTION GIVEN IN PARA NO.5 OF THE ORDER AND THE SAME IS EXTRACTED HERE AS UNDER : 5. I HAVE CAREFULLY CONSIDERED APPELLANTS ORAL A RGUMENTS, WRITTEN SUBMISSIONS, JUDICIAL DECISIONS RELIED UPON BY THE APPELLANT AND ALSO THE REMAND REPORT OF THE ACIT, SO ALSO THE COUNTER COMM ENT OF THE APPELLANT ON THE REMAND REPORT. A PERUSAL OF CHART (ANNEXURE -I) SHOWING TRADING ITA NOS.691 AND 692/PUN/2013 & ITA NO.2008/PUN/2014 SHRI SUNIL M. KOTECHA & SMT. MADHURI S. KOTECHA 4 OF SHARES DURING THE AY UNDER APPEAL REVEALS THAT T HE APPELLANT HAD TRADED IN AS MANY AS 100 SCRIPS. WHILE TOTAL PURCH ASES ARE TO THE TUNE OF RS.2.17 CRORE, TOTAL SALES AMOUNTED TO RS.2.41 CROR E. THERE ARE 117 PURCHASES TRANSACTIONS AS AGAINST 133 SALE TRANSACT IONS. THERE ARE INSTANCES OF SELLING THE SCRIP ON THE SAME DAY WHIC H IT WAS PURCHASED. THERE ARE ALSO INSTANCES WHERE THE SAME SCRIP WAS P URCHASED REPEATEDLY DURING A DAY OR WITHIN AN INTERVAL OF FEW DAYS. IN VIEW OF THE ABOVE, IT IS ESTABLISHED THAT THE APPELLANTS INTENTION WAS NOT TO KEEP THE SHARES AS INVESTMENT THOUGH HE HAS SHOWN THE SHARES AS INVEST MENT IN HIS BALANCE SHEET. IT IS A WELL SETTLED MATTER THAT MERE ENTRI ES IN THE BOOKS OF ACCOUNT ALONE WILL NOT DECIDE THE NATURE OF TRANSACTIONS. THE HONBLE HIGH COURT OF MUMBAI IN THE CASE OF GOPAL PUROHIT, CITED BY TH E APPELLANT HAS INTERALIA SAID THAT THERE CANNOT BE ANY DISPUTE ABO UT THE BASIC PROPOSITION THAT ENTRIES IN THE BOOKS OF ACCOUNT AL ONE ARE NOT CONCLUSIVE IN DETERMINING THE NATURE OF INCOME. THE APPELLANTS R ETURNS FOR AYRS 2004- 05 AND 2005-06 WERE ASSESSED U/S.143(1) OF THE ACT. OVER THE YEARS THE APPELLANT HAD MADE HUGE PURCHASES OF SHARES EG. IN AY 2007-08 RS.58.98 LAC; AY 2006-07 RS.58.13 LAC AND AY 2005 -06 RS.61.2 LAC. THE APPELLANT WAS ALSO ENGAGED IN F & O TRADING IN AYS 2007-08 AND 2006-07. IN AY 2005-06 THE APPELLANT HAD SPECULATI ON PROFIT OF RS.11,64,514/- ON ACCOUNT OF SALE OF SHARES. DETAI LS OF INVESTMENT IN SHARES, DIVIDEND RECEIVED AND STCG SHOWN FOR VARIOU S ASSESSMENT YEARS ARE AS FOLLOWS : AY INVESTMENTS IN SHARES (RS.) DIVIDEND (RS.) STCG/LOSS (RS.) LTCG 2003-04 11,32,069 20,205 -- -- 2004-05 8,97,304 1,16,459 (-)53,494 -- 2005-06 69,71,213 17,843 2,67,763 -- 2006-07 66,61,671 1,00,952 16,29,913 -- 2007-08 67,46,620 1,55,897 1,49,821 5,02,625 A PERUSAL OF PATTERN OF TRADING OF SHARES IN AY 20 06-07 READ WITH THE PATTERN OF INVESTMENT IN SHARES DURING AYS 2005-06, 2006-07 AND 2007- 08 CLEARLY REVEALS THAT THE INTENTION OF THE APPELL ANT WAS NOT THAT OF INVESTMENT. 6. THUS, THE CIT(A) PASSED FRESH ORDER DATED 15-01-2013 AND THE SAME IS THE SUBJECT MATTER OF THIS LITIGATION. IN HIS ORDE R, THE CIT(A) EXPLAINED THE BACKGROUND FACTS/EVENTS OF THE CASE/EVENT S OCCURRED UPTO THE STAGE OF REMANDING OF THE ISSUE TO HIS FILE, AND S OUGHT THE CLARIFICATION FROM THE ASSESSEE. ASSESSEE REPLIED AND FILED WR ITTEN SUBMISSIONS, WHICH ARE EXTRACTED IN PARA NO.3 OF HIS ORDE R. ACCORDINGLY, THE ASSESSEE PLEADED FOR ALLOWING THE CLAIM OF THE ASSESSEE AS CAPITAL GAINS AND RELIED ON VARIOUS DECISIONS IN SUPPORT OF THE SAME. THE SAID OBJECTIONS WERE SUPPLIED TO THE AO AND CALLED FOR A REMAND ITA NOS.691 AND 692/PUN/2013 & ITA NO.2008/PUN/2014 SHRI SUNIL M. KOTECHA & SMT. MADHURI S. KOTECHA 5 REPORT OF THE AO. AOS REPORT WAS AGAIN SUPPLIED TO T HE ASSESSEE VIDE LETTER DATED 17-09-2012 FOR THE COMMENTS OF THE ASSESS EE. THE ASSESSEE FILED COUNTER COMMENTS AND THE SAME WERE ALSO EXTRACTED IN PARA 4 OF HIS ORDER. IN THE SAID COUNTER COMMENTS, THE ASSESSEE HIGHLIGHTED THE DIRECTION OF THE TRIBUNAL THAT REVOLVES THE APPLICABILITY OF PRINCIPLE OF CONSISTENCY QUA THE JUDGMENT THE CASE OF CIT VS. GOPAL PUROHIT (SUPRA). FURTHER, ASSESSEE HIGHLIGHTED THE CIT(A)S FAILURE IN COMPLYING WITH THE DIRECTION OF THE TRIBUNAL QUA THE SAID P RINCIPLE OF CONSISTENCY. ASSESSEE ALLEGES THAT THE CIT(A) FAILED TO DISC USS THE INAPPLICABILITY OF THE SAID DECISION TO THE FACTS OF THE PRESEN T CASE BEFORE DISMISSING THE ASSESSEES APPEAL. IN THE OPERATIONAL PAR AGRAPH, THE CIT(A) REITERATED HIS DECISION AGAINST THE ASSESSEE AND HE LD THE SURPLUS ON SALE OF SHARES CONSTITUTES BUSINESS INCOME. WHILE COM ING TO THE SAID CONCLUSION, IN PARA NO.5 OF HIS ORDER, THE CIT(A) DISCUSS ED THE ABOVE REFERRED FACTS REGARDING THE NUMBER OF TRANSACTION S, NUMBER OF SCRIPS, NUMBER OF PURCHASES, NUMBER OF SALES, REPEATED ENT RY IN THE SAME SCRIP, HOLDING PERIOD DETAILS ETC. REGARDING THE JUDGM ENT IN THE CASE OF CIT VS. GOPAL PUROHIT (SUPRA) HE ONLY MENTIONED CO NVENIENTLY ABOUT THE OBITER DICTUM LEAVING BEHIND THE RATIO RELATING T O THE PRINCIPLE OF CONSISTENCY. AS SUCH, THERE IS NO DISCUSSION ABOUT THE SIMILARITY OF THE FACTS QUA THE CLAIM OF THE ASSESSEE IN A.YRS. 2005-06, 2006-07 AND 2007-08 WHERE THE CLAIM OF THE ASSESSEE REGARDING APPLICA BILITY OF GAINS AS SHORT TERM CAPITAL GAINS WAS ACCEPTED. 7. AGGRIEVED WITH THE SAID DECISION OF THE CIT(A) THE ASSES SEE IS IN APPEAL BEFORE US WITH THE GROUNDS SUMMARIZED ABOVE. 8. BEFORE US, LD. AR FOR THE ASSESSEE NARRATED THE ABOV E FACTS OF THE CASE AND SUBMITTED REPEATEDLY THE APPLICABILITY OF PRINCIPLE OF ITA NOS.691 AND 692/PUN/2013 & ITA NO.2008/PUN/2014 SHRI SUNIL M. KOTECHA & SMT. MADHURI S. KOTECHA 6 CONSISTENCY TO THE FACTS OF THIS ORDER QUA THE APPLICABILITY OF THE JUDGMENT IN THE CASE OF CIT VS. GOPAL PUROHIT (SUPRA). HE FAIRLY SUBMITTED THAT THE ASSESSMENT MADE ARE NOT UNDER THE PROVISIONS OF SECTION 143(3) OF THE ACT AS THEY WERE SUMMARY ASSESSME NTS. BUT WHEN IT COMES TO THE FACTS, THEY ARE IDENTICAL TO THAT OF THE PRESENT CASE AND DESPITE THE SAME, THE CLAIM OF THE ASSESSEE STANDS D ISTURBED FOR THE FIRST TIME THIS YEAR. WITHOUT PREJUDICE, LD. AR FOR THE ASSE SSEE SUBMITTED THAT SO FAR AS THE PROFITS/GAINS EARNED BY THE ASSESSEE BY REPEATED ENTRY IN THE SAME SCRIP, THE SAME CAN BE TAXE D AS BUSINESS INCOME OF THE ASSESSEE. FURTHER, RELYING ON THE ORDER OF THE TRIBUNAL OF THIS BENCH IN THE CASE OF JAWAHARLAL P. MEHTA VS. DCIT IN I TA NO.1463/PUN/2008 DATED 29-11-2013 AND ANOTHER DECISION OF MUMBAI BENCH OF THE TRIBUNAL IN THE CASE OF ASHA ASHAR VS. ITO (2 017) 81 TAXMANN.COM 441 (MUMBAI-TRIB.) DATED 01-02-2016, THE PR OFITS/GAINS EARNED BY THE ASSESSEE IN RESPECT OF THE SHARES HELD B Y THE ASSESSEE UPTO A PERIOD OF ONE MONTH MAY ALSO BE CONSIDERED AS B USINESS INCOME. OTHERWISE, LD. AR FOR THE ASSESSEE RELIED ON THE DECISION OF PUNE BENCH OF THE TRIBUNAL IN THE CASE OF SURESH BABULAL S HAH (HUF) VS. DCIT (2016) 75 TAXMANN.COM 105 (PUNE-TRIB.) WHICH IS RELEV ANT FOR THE PROPOSITION THAT WHERE ASSESSEE REFLECTED THE SHARE S AS INVESTMENT IN THE BALANCE SHEET, THE RELEVANT GAINS ARE REQUIRED TO BE TAXED AS CAPITAL GAINS. HE ALSO BROUGHT OUR ATTENTION TO THE ANOT HER DECISION OF THIS BENCH IN THE CASE OF PRAMOD TRIMBAK KORGAONKAR VS. ACIT IN ITA NO.2000/PN/2012 ORDER DATED 22-07-2016 TO THE PROPOS ITION THAT THE PROFITS AND GAINS EARNED BY THE ASSESSEE ON SALE OF SHA RES HELD BY HIM FOR THE PERIOD OF 6 MONTHS MAY BE TREATED AS BUSINESS IN COME (WHERE ONE OF US (JM) IS PARTY TO THE SAID ORDER). OTHERWISE, IT IS THE ITA NOS.691 AND 692/PUN/2013 & ITA NO.2008/PUN/2014 SHRI SUNIL M. KOTECHA & SMT. MADHURI S. KOTECHA 7 SUBMISSION OF LD. AR FOR THE ASSESSEE THAT CLAIM OF THE ASS ESSEE MAY BE UPHELD IN TOTO. 9. THE ASSESSEE FILED WRITTEN SUBMISSIONS IN A NOTE FORM WH EREIN HE MENTIONED AGAINST SL.NO.5 THAT SOME OF THE ASSESSMENTS A.Y RS. 2001-02 AND 2005-06 WERE SCRUTINIZED U/S.143(3) OF THE ACT AND TH E CLAIM OF THE ASSESSEE WITH REGARD TO SHORT TERM CAPITAL GAINS WAS AC CEPTED BY THE REVENUE. HE ALSO SUBMITTED THAT THE FACTS ARE IDENTICAL AND THEREFORE THE PRINCIPLE OF CONSISTENCY APPLIES IF NOT TO ENTIRE CLAIM OF CAPITAL GAINS, SUBJECT TO THE RESERVATIONS RELATING TO THE REPEATED T RANSACTIONS AND OTHERS AS DISCUSSED IN THE PRECEDING PARAGRAPHS OF THIS ORDER. IN SUPPORT OF THE SAME, ASSESSEE FILED THE COPIES OF THE SCR UTINY ASSESSMENT ORDERS FOR THE SAID ASSESSMENT YEARS 2001 -02 AND 2005-06 AND THEY ARE PLACED IN PAPER BOOK NO.2 AT PAGES 138 AN D 153 RESPECTIVELY. 10. ON THE CONTRARY, LD. DR FOR THE REVENUE RELIED HEAVIL Y ON THE ORDER OF THE TRIBUNAL IN THE CASE OF ACIT VS. VEENA S. KALR A (2013) 37 TAXMANN.COM 208 (MUMBAI-TRIB.) DATED 10-07-2013 WHICH IS RELEVANT FOR THE PROPOSITION THAT, WHERE NUMBER OF SCRIPS, TRANSACT IONS OF PURCHASE AND SALES, STOCK TURNOVER RATIO AND HOLDING P ERIOD SUGGESTED THE ASSESSEES INTENTION TO QUICKLY REALIZE PROFITS AND N OT TO WAIT FOR DIVIDEND OR CAPITAL APPRECIATION, THE GAIN ON SUCH TRANSACT ION WOULD BE ASSESSED AS BUSINESS INCOME AND NOT AS SHORT TERM CAPITAL GAINS. THEY ALSO RELIED ON VARIOUS DECISIONS TO SUPPORT THAT THE PROFITS EARNED FROM TRADING OF THE SCRIPS WHERE ASSESSEE REPEATEDLY EN TERED INTO THE SAID SCRIP AND THE SAME CONSTITUTES BUSINESS INCOME OF THE ASSESSE E. ITA NOS.691 AND 692/PUN/2013 & ITA NO.2008/PUN/2014 SHRI SUNIL M. KOTECHA & SMT. MADHURI S. KOTECHA 8 11. WE HEARD BOTH THE PARTIES ON THIS ISSUE OF APPLICABILITY OF PRINCIPLE OF CONSISTENCY AND APPLICABILITY OF THE GAINS EARNED ON SALE OF THE SCRIPS ON THE FACTS DESCRIBED ABOVE. REGARDING OUR DIRECTION IN THE FIRST ROUND, NOT MUCH HAS COME OUT ON THE FACTUAL MATRIX FRONT. THE ORDER OF CIT(A) IS NOT CONTAINED FROM THIS PERSPECTIVE. HOW EVER, THE INFORMATION GATHERED BY US DURING THE HEARING PROCEEDINGS SUGGESTED THAT IT IS A FACT THAT ASSESSEE CLAIMED SUCH GAINS AS TAX ABLE UNDER THE SUB-HEAD SHORT TERM CAPITAL GAINS AND THE SAME WAS FO UND ACCEPTED IN THOSE YEARS. THIS IS THE FIRST TIME IN THIS ASSESSMENT Y EAR AO TOOK A DIFFERENT STAND IN THE SCRUTINY ASSESSMENT. HOWEVER, WE H AVE NO FACTS ON RECORD TO NOTE THE NUMBER OF TRANSACTIONS, DETAILS OF SCRIPS, HOLDING PERIOD, TURNOVER OF SALES/PURCHASE DETAILS, DIVIDEND EARNED ON THE SAID SCRIPS, REPEATED NATURE OF TRANSACTIONS ETC. IN THOSE YE ARS CONSIDERING THE FAILURE OF THE ASSESSEE IN SUPPLYING OF SUCH INFORMATION EITHER BEFORE THE CIT(A) OR BEFORE US, WE HAVE TO HOLD THE PRINCIPLE OF CO NSISTENCY AS ENUNCIATED BY THE HONBLE BOMBAY HIGH COURT IN THE CASE OF CIT VS. GOPAL PUROHIT (SUPRA) CANNOT BE DECIDED EITHER WAY. 12. REGARDING THE REPEATED ENTRY OF THE ASSESSEE INT O THE SAME SCRIP, IT IS AN ADMITTED POSITION THAT THE ASSESSEE FACTUALLY DEALT WITH THE S AME SCRIP AND EARNED PROFITS. ON THE TAXABILITY OF SUCH PROFITS, WE CONSIDERED THE SUBMISSIONS OF THE ASSESSEES COUNSEL AND HELD SUCH PROFITS ARE REQUIRED TO BE TAXED AS BUSINESS INCOME OF TH E ASSESSEE ONLY. WHEN ASSESSEE ENTERS INTO SAME SCRIP FOR TRADING THERE IS OBVIOUS BUSINESS MOTIVE. IT IS UNDISPUTED THAT THE ASSESSEES CONDUCT IN ENTERING INTO THE SAME SCRIP EITHER THROUGH INTRA-DAY TR ANSACTION OR INTER-DAY TRANSACTIONS, THE MOTIVE BEHIND THE SAME IS TO MAXIMIZE THE PROFITS AND NOT TO MAXIMIZE THE CAPITAL WORTHINESS OF THE I NVESTMENTS. ITA NOS.691 AND 692/PUN/2013 & ITA NO.2008/PUN/2014 SHRI SUNIL M. KOTECHA & SMT. MADHURI S. KOTECHA 9 THEREFORE, WE ARE OF THE VIEW THAT SUCH PROFITS ARE REQU IRED TO BE TAXED AS BUSINESS INCOME OF THE ASSESSEE. THEREFORE, THE AO IS D IRECTED TO UNDERTAKE THE REQUISITE INVESTIGATION INTO THE DETAILS OF S UCH REPEATED ENTRIES INTO THE SAME SCRIP AFTER GIVING REASONABLE OPPORT UNITY OF BEING HEARD TO THE ASSESSEE AND QUANTIFY THE PROFITS OUT OF T HE SAID CLAIM OF RS.16,29,913/- FOR TAXING AS BUSINESS PROFITS. 13. REGARDING HOLDING PERIOD BASED DECISIONS OF THE TRIBU NAL FOR CATEGORIZING THE BUSINESS INCOME ORIENTED TRANSACTIONS OR SHORT TERM CAPITAL GAINS ORIENTED ONES, WE FIND THERE ARE NUMBER OF DE CISIONS IN THIS REGARD. SOME OF THEM WERE ALREADY DISCUSSED ABOVE. THE DECISION OF PUNE BENCH OF THE TRIBUNAL IN THE CASE OF JAWAHARLAL P. ME HTA VS. DCIT IN ITA NO.1463/PUN/2008 DATED 29-11-2013 AND THE DECISION OF MUMBAI BENCH OF THE TRIBUNAL IN THE CASE OF ASHA ASHAR VS . ITO (2017) 81 TAXMANN.COM 441 (MUMBAI-TRIB.) DATED 01-02-2016 SUPPO RT FOR TAXING THE GAINS EARNED ON SALE OF SHARES HELD FOR A PERIO D OF ONE MONTH AS BUSINESS INCOME. THERE ARE OTHER DECISIONS IN FAVOUR OF SHARES HELD FOR A PERIOD OF SIX MONTHS AS BUSINESS INCO ME. IN ANY CASE, THERE IS REQUIREMENT OF EXAMINING THE FACTS OF THIS CASE UNINFLUENCED BY THE EXISTING DECISIONS BY THE AO FOR A FRESH DECISION. IN THE REMAND PROCEEDINGS, AO SHOULD ALSO CONSIDER THE FA CT ABOUT THE DECISION OF THE TRIBUNAL IN THE CASE OF ACIT VS. VEENA S. KA LRA (SUPRA) WHERE ONE OF US IS A PARTY (AM). 14. REGARDING THE EXISTENCE OF BORROWED FUNDS ON RECORD SUGGEST THAT THE ASSESSEE BORROWED RS.1.41 CRORES (AS PER THE FINAN CIAL STATEMENTS) AND ANOTHER SUM OF RS.1.04 CRORES FROM OTHERS. IT IS THE CLAIM OF ASSESSEE THAT INVESTMENTS ARE NOT MADE OUT OF THE SAID BORROWED FUNDS BUT OUT OF SOME SURPLUS FUNDS AVAILABLE TO THE ASSESSEE. ASSESSEES ITA NOS.691 AND 692/PUN/2013 & ITA NO.2008/PUN/2014 SHRI SUNIL M. KOTECHA & SMT. MADHURI S. KOTECHA 10 RELIANCE THAT EXCESS FUNDS WERE UTILIZED FOR SUCH NON BUS INESS INVESTMENT. IT IS A MATTER OF FACT THAT THERE IS NO FINDING OF THE LOWER AUTHORITIES ON THE SOURCE OF INVESTMENT/SHORT TERM CAP ITAL ASSETS/SHARES. THEREFORE, WE ARE OF THE CONSIDERED VIEW THAT THE AO IS REQUIRED TO RE-EXAMINE ALL THESE ISSUES AND RE-WORK THE EXTENT OF GAINS AND ITS TAXABILITY OF PROFITS AND GAINS FROM BUSINESS OR PRO FESSION. AO IS REQUIRED TO GRANT REASONABLE OPPORTUNITY TO THE ASSE SSEE IN ACCORDANCE WITH THE SET PRINCIPLES OF NATURAL JUSTICE. ACC ORDINGLY, ALL THE GROUNDS RAISED BY THE ASSESSEE ARE REMANDED TO T HE FILE OF AO FOR FRESH DECISION IN THE LIGHT OF THE DISCUSSION ABOVE. 15. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED FOR S TATISTICAL PURPOSES. ITA NO.692/PUN/2013 SMT. MADHURI SUNIL KOTECHA) A.Y. 2006-07 16. THE FACTS, ISSUES, GROUNDS AND ARGUMENTS OF THE COU NSELS IN THIS APPEAL ARE IDENTICAL TO THAT OF APPEAL OF SHRI SUNIL M. KOTECH A FOR A.Y. 2006-07 WHERE THE ISSUES PERTAINING TO THE SHORT TERM CAPITAL GAINS HAVE BEEN REMANDED TO THE FILE OF AO WITH CERTAIN DIRECTION S. THEREFORE, WITH IDENTICAL DIRECTIONS, WE REMAND ALL THE ISSUES RAISED BY THIS ASSESSEE TO THE FILE OF AO. 17. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED FOR S TATISTICAL PURPOSES. ITA NO.2008/PUN/2014 SMT. MADHURI SUNIL KOTECHA) A.Y. 2007-08 18. GROUNDS RAISED BY THE ASSESSEE READ AS UNDER : 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW, THE LEARNED CIT(A), HAS NOT AT ALL ADJUDICATED THE DISP UTED ISSUE OF ITA NOS.691 AND 692/PUN/2013 & ITA NO.2008/PUN/2014 SHRI SUNIL M. KOTECHA & SMT. MADHURI S. KOTECHA 11 APPLICABILITY AND EXISTENCE OF PRINCIPLE OF CONSIS TENCY IN THE CASE OF APPELLANT, FOR WHICH THE APPELLATE ORDER OF THE CIT (A), WAS SET ASIDE. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW, THE LEARNED CIT(A), WITHOUT RECORDING HIS OWN FINDINGS AND ONLY BY REPRODUCING PARA 6 OF THE APPELLATE ORDER PASSED BY HIS PREDECESSOR FOR AY. 2006-07 MERELY FORMED THE OPINION THAT THE ENTI RE PROFITS ARISING OUT OF SALE/PURCHASE OF SHARES ARE INCOME FROM BUSINES S AS AGAINST STCG/LTCG. 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW, THE LEARNED CIT(A), DID NOT EXERCISE ITS INHERENT JURIS DICTION. IT WAS MANDATE TO PASS A SPEAKING ORDER ON THE APPLICABILITY OF TH E ISSUE OF PRINCIPLES OF CONSISTENCY IN THE LIGHT OF JUDICIAL DECISION MENT IONED BY THE HONBLE ITAT. THE DOCTRINE OF BINDING PRECEDENT HAS THE MER ITS OF PROMOTING CERTAINTY AND CONSISTENCY IN JUDICIAL DECISIONS WHI CH THE LEARNED CIT(A) FAILED TO TAKE INTO ACCOUNT. 4. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW, THE LEARNED CIT(A), ERRED IN TREATING THE SURPLUS ON SA LE OF SHARES AS BUSINESS INCOME INSTEAD OF STCG, IGNORING THE DIR ECTIONS OF THE HONBLE ITAT. 5. THE IMPUGNED ORDER OF THE CIT(A), IS WITHOUT FOL LOWING DIRECTION OF HONBLE ITAT GIVEN WHILE SETTING ASIDE THE ORDER OF THE CIT(A), FOR CONSIDERATION OF ' PRINCIPLE OF CONSISTENCY' IN THE LIGHT OF THE JUDGE MENT OF THE APEX COURT IN THE CASE OF CIT VS . GOPAL PUROHIT. 6. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW THE LEARNED CIT(A) , FAILED TO CONSIDER THAT THE APPELLANT HAS FOLLOWED A CONSISTENT PRACTISE IN REGARD TO THE NATURE OF THE ACTIVITIES , THE MANNER OF KEEPING RECORDS AND PRESENTATION OF SHARES AS INVES TMENT AT THE END OF THE YEAR IN ALL THE YEARS AND SUBSEQUENT YEARS. THU S , THE ORDER OF THE CIT(A) IS PASSED , BYPASSING THE DIRECTIONS OF THE HON'BLE ITAT. 7. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW THE LEARNED CIT(A), FAILED TO TAKE INTO CONSIDERATION T HE SUBMISSIONS OF THE APPELLANT , WHEREIN APPELLANT HAD RELIED UPON NUMBER OF JUDICIA L DECISIONS ON THE SUBJECT FOR WHICH THE HON ' BLE ITAT SET ASIDE THE ORDER OF THE CIT(A). THE JUDICIAL DISCIPLINE REQUIRES THE LOWER AUTHORIT Y TO FOLLOW THE DECLARATION OF LAW BY HIGHER APPELLATE FORUM . 8. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW THE LEARNED CIT(A) , FAILED TO CONSIDER THAT THE QUANTUM OF TRANSACTION AND PROFIT ELEMENTS CANNOT CHANGE THE NATURE OF THE TRA NSACTION. 19. REGARDING THE LONG TERM CAPITAL GAINS, ASSESSEE RELIED HEAVILY ON THE CBDT CIRCULAR NO.6/2016 DATED 29-02-2016 AND BROUG HT OUR ATTENTION TO PARA NO.3(B) AND SUBMITTED THAT THE CLAIM MAD E BY THE ASSESSEE CONSISTENTLY SHOULD NOT BE DISTURBED ONCE THE ASSESSEE TAKES THE STAND OF TRADING A PARTICULAR ASSET AS A LONG TERM CAPITAL ASSET . THIS ITA NOS.691 AND 692/PUN/2013 & ITA NO.2008/PUN/2014 SHRI SUNIL M. KOTECHA & SMT. MADHURI S. KOTECHA 12 CIRCULAR WAS NOT AVAILABLE TO THE CIT(A) AT THE RELEVANT PO INT OF TIME AS THE ORDER WAS FINALIZED ON 26-09-2014. 20. WE HEARD BOTH THE SIDES AND PERUSED THE ORDERS OF REVENUE. ON CONSIDERING THE FACTS OF THE CASE, WE FIND IT RELEVANT TO E XTRACT THE CONTENTS OF THE CBDT CIRCULAR NO.6/2016 DT. 29-02-2016 (S UPRA) AND THE SAME READS AS UNDER : (B) IN RESPECT OF LISTED SHARES AND SECURITIES H E LD FOR A PERIOD OF MORE THAN 12 MONTHS IMMEDIATELY PRECEDING THE DATE OF IT S TRANSFER, IF THE ASSESSEE DESIRES TO TREAT THE INCOME ARISING FROM T HE TRANSFER THEREOF AS CAPITAL GAIN , THE SAME SHALL NOT BE PUT TO DISPUTE BY THE ASSESSI NG OFFICER. HOWEVER , THIS STAND , ONCE TAKEN BY THE ASSESSEE IN A PARTICULAR ASSESSMENT YEAR, SHALL REMAIN APPLICABLE IN SUBSEQU ENT ASSESSMENT YEARS ALSO AND THE TAXPAYERS SHALL NOT BE ALLOWED T O ADOPT A DIFFERENT / CONTRARY STAND IN THIS REGARD IN SUBSEQUENT YEARS; 21. FROM THE ABOVE CONTENTS OF THE CIRCULAR, IT IS CLEAR TH AT THE CLAIM OF THE ASSESSEE BEING LONG TERM CAPITAL GAINS CONSISTENTL Y, AO IS REQUIRED TO HONOUR THE SAID CLAIM OF THE ASSESSEE AND GR ANT REQUISITE RELIEF ON THIS ISSUE. THEREFORE, TAKING INTO COGNIZANCE THE FACT THAT THE SAID CIRCULAR WAS NOT AVAILABLE TO THE CIT(A), WE ARE OF THE VIEW THAT THE MATTER SHOULD BE REMANDED TO THE FILE OF AO. AO IS REQUIR ED TO EXAMINE WHETHER THE CONTENTS OF THE SAID CBDT CIRCULAR APPLIES TO THE CASE OF ASSESSEE. AO SHALL GRANT REASONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE IN ACCORDANCE WITH THE SET PRINCIPLES OF NATURAL JUSTICE. ACCORDINGLY, THE GROUNDS RELATING TO LONG TERM CAPITAL GAIN S STAND ALLOWED AS ABOVE. 22. REGARDING THE CLAIM RELATING TO SHORT TERM CAPITAL GAINS , IT IS THE SUBMISSION OF BOTH THE PARTIES THAT THE DECISION OF THE TR IBUNAL IN THE CASE OF CLAIMS MADE IN THE ASSESSMENT YEAR 2006-07 IN RE SPECT OF SHRI SUNIL M. KOTECHA AND SMT. MADHURI SUNIL KOTECHA ARE APPLICAB LE TO THE ISSUES UNDER CONSIDERATION. SINCE WE HAVE ALREADY REMAND ED THIS ISSUE ITA NOS.691 AND 692/PUN/2013 & ITA NO.2008/PUN/2014 SHRI SUNIL M. KOTECHA & SMT. MADHURI S. KOTECHA 13 IN THESE CASES TO THE FILE OF AO WITH CERTAIN DIRECTIONS, WE REMAND THIS ISSUE RELATING TO THE CLAIM OF SHORT TERM CAPITAL GAINS TO T HE FILE OF AO WITH IDENTICAL DIRECTIONS. ACCORDINGLY, GROUNDS OF APPEAL RELA TING TO SHORT TERM CAPITAL GAINS ARE ALLOWED FOR STATISTICAL PURPOSES. 23. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PARTLY A LLOWED FOR STATISTICAL PURPOSES. 24. TO SUM UP, THE APPEALS OF BOTH THE ASSESSEES ARE PA RTLY ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 12 TH DAY OF JANUARY, 2018. SD/- SD/- (VIKAS AWASTHY) (D. KARUNAKARA RAO) /JUDICIAL MEMBER / ACCOUNTANT MEMBER PUNE; DATED : 12 TH JANUARY, 2018 / COPY OF THE ORDER FORWARDED TO : / BY ORDER, //TRUE COPY// //TRUE COPY// SENIOR PRI VATE SECRETARY , / ITAT, PUNE 1. / THE APPELLANT 2. / THE RESPONDENT 3. THE CIT(A)-2, NASHIK 4. CIT-2, NASHIK 5. , , A BENCH PUNE; 6. / GUARD FILE.