BUNKIM FINANCE u INVESTMENTS P. LTD, MUMBAI V. ITO 10(3)(1), MUMBAI

ITA 6936/MUM/2010

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 59701 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 3 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-01-2012
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 19-03-2012
• Assessment Year: 2006-2007
• Appeal Filed On: 05-10-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RAUMUAN PAITE
• Keywords: Capital asset; Business income; Application of stay; Additional evidence; Question of law; Cost of acquisition
• Section: 234B; 14A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH B MUMBAI BEFORE SHRI G.E. VEERABHADRAPPA, PRESIDENT SHRI B.R. MITTAL (JUDICIAL MEMBER) ITA NO. 6936/MUM/2010 A N D S.A. NO. 65/MUM/2012 ASSESSMENT YEAR- 2006-07 M/S.. BUNKIM FINANCE & INVESTMENTS PVT. LTD., DURGA SMRUTI BLDG., 2 ND FLOOR, BLOCK NO. 15, G.V. SCHEME, ROAD NO.2, MULUND (EAST), MUMBAI-400 081 PAN-AAACB 2974K VS. THE ITO 10(3)(1), MUMBAI (APPELLANT) (RESPONDENT) ASSESSEE BY: SHRI RAJEEV KHANDELWAL RESPONDENT BY: SHRI RAUMUAN PAITE DATE OF HEARING :27.01.2012 DATE OF PRONOUNCEMENT:27.01.2012 O R D E R PER B.R. MITTAL, JM : THE ASSESSEE HAS FILED THIS APPEAL FOR ASSESSMENT YEAR 2006-07 AGAINST ORDER OF LD. CIT(A) DT. 21 ST JULY, 2010 ON FOLLOWING GROUNDS: 1. THE LD. CIT(A) ERRED IN UPHOLDING THE ACTION OF ITO- 10(3)(1), MUMBAI IN DISALLOWING A SUM OF RS. 7,93,8 02/- U/S. 14A OF THE ACT. THE APPELLANTS CONTEND THAT ON THE FACTS AND IN TH E CIRCUMSTANCES OF THE CASE AND IN LAW, THE CIT(A) OU GHT NOT TO HAVE UPHELD THE IMPUGNED DISALLOWANCE OF RS. 7,93,8 02/- AS THERE IS NO EXPENDITURE INCURRED IN RELATION TO EAR NING THE INCOME NOT FORMING PART OF THE TOTAL INCOME AND AS SUCH, NO DISALLOWANCE CAN BE MADE U/S. 14A. WITHOUT PREJUDICE, THE APPELLANTS CONTEND THAT THE CALCULATION OF PROPORTIONATE EXPENSES ALLOCATED TO THE EARNING OF EXEMPT ITA NO. 6936/M/2010 S.A. NO. 65/M/2012 2 INCOME IS NOT IN CONSONANCE WITH THE PROVISIONS OF LAW AND HENCE, NEEDS TO BE CALCULATED AS PER LAW. 2. THE CIT(A) ERRED IN UPHOLDING THE ACTION OF THE AO IN TREATING LONG-TERM CAPITAL GAINS OF RS. 16,56,89,57 3/- AS BUSINESS INCOME. THE APPELLANTS CONTEND THAT ON THE FACTS AND IN TH E CIRCUMSTANCES OF THE CASE AND IN LAW, THE CIT(A) O UGHT NOT TO HAVE UPHELD THE ACTION OF AO IN CONSIDERING THE CAP ITAL GAINS ARISING ON SALE OF LONG TERM CAPITAL ASSETS AS BUSI NESS INCOME. THE APPELLANTS FURTHER CONTENDED THAT THE CIT(A) E RRED IN NOT ADMITTING THE ADDITIONAL EVIDENCE AND THE REASONS A SSIGNED BY HIM FOR THE SAME ARE VAGUE AND ERRONEOUS. 3. THE CIT(A) ERRED IN NOT ADJUDICATING THE FOLLOW ING ADDITIONAL GROUND OF APPEAL RAISED BEFORE HIM. THAT THE LD. ITO OUGHT TO HAVE CONSIDERED THE SHO RT-TERM CAPITAL GAINS CLAIMED BY THE ASSESSEE. THAT THE LD. ITO HAS TREATED SHORT TERM CAPITAL GA INS OF RS. 53,27,430 AS A BUSINESS INCOME WITHOUT GIVING ANY R EASON WHICH IS QUITE ILLEGAL, ARBITRARY, UNWARRANTED, UNJ USTIFIED AND BAD IN LAW. THE APPELLANTS CONTEND THAT ON THE FACTS AND IN TH E CIRCUMSTANCES OF THE CASE AND IN LAW, THE CIT(A) OU GHT TO HAVE ADJUDICATED THE AFORESAID GROUND OF APPEAL. 4. THE AO ERRED IN CHARGING INTEREST OF RS. 1,90,2 1,523 AND RS. 26,903 U/S. 234B AND 234C OF THE ACT, RESPECTIV ELY. THE APPELLANTS CONTENDED THAT THE AO OUGHT NOT TO HAVE CHARGED INTEREST U/S. 234B INASMUCH AS THE APPELLAN TS, IN TERMS OF SEC. 208, WERE NOT LIABLE TO PAY ADVANCE TAX. THE APPELLANTS FURTHER, CONTEND THAT THE AO OUGHT NOT TO HAVE CHARGED INTEREST U/S. 234B AND 234C INASMUCH AS (A) THE AO HAS NOT GIVEN AN OPPORTUNITY TO THE APPELLAN TS BEFORE CHARGING THE SAID INTEREST AS REQUIRED BY TH E PRINCIPLES OF NATURE JUSTICE, (B) THE CHARGING OF INTEREST IS NOT IN ACCORDANCE WITH LAW. 5. THE APPELLANTS FURTHER, CONTEND THAT THE IMPUGNE D ORDER IS BAD IN LAW AND HENCE, REQUIRES TO BE QUASHED. ITA NO. 6936/M/2010 S.A. NO. 65/M/2012 3 2. THE ASSESSEE HAS ALSO FILED STAY APPLICATION PRA YING TO STAY THE OUTSTANDING DEMAND OF RS. 7,14,49,142/- OUT OF TOTA L DEMAND OF RS. 7,61,19,405/- INCLUDING INTEREST OF RS. 1,90,48,426 /-. THE SAID STAY APPLICATION IS FIXED FOR HEARING ON 27.1.2012. 3. DURING THE COURSE OF HEARING OF STAY APPLICATION , LD. REPRESENTATIVES OF BOTH PARTIES CONCEDED THAT APPEAL ITSELF BE HEARD A ND DECIDED ON MERITS. IN VIEW OF ABOVE, WE HAVE HEARD LD. REPRESENTATIVES OF BOTH PARTIES ON MERITS IN RESPECT OF GROUNDS OF APPEAL TAKEN BY ASSESSEE. HEN CE, THIS ORDER DISPOSES OFF THE APPEAL ON MERITS AND CONSEQUENTLY STAY APPL ICATION WILL BECOME INFRUCTUOUS. 4. THE RELEVANT FACTS GIVING RISE TO THIS APPEAL AR E THAT ASSESSEE IS ENGAGED IN THE BUSINESS OF TRADING AND INVESTMENT I N SHARES AND SECURITIES. THE ASSESSEE FILED ITS RETURN ON 30.11.2006 DECLAR ING NIL INCOME. HOWEVER, ASSESSING OFFICER COMPLETED THE ASSESSMENT VIDE ORD ER DT. 31.12.2008 ASSESSING TOTAL INCOME AT RS. 17,13,64,780/- BY (I) MAKING DISALLOWANCE U/S. 14A OF I.T. ACT AS PER FORMULA PRESCRIBED UNDER RULE 8D OF I.T. ACT OF RS. 7,93,802/- (II) TO DISALLOW CLAIM OF ASSESSEE OF LO NG TERM CAPITAL GAIN OF RS. 16,56,89,573/- AND TREATED IT AS BUSINESS INCOME AN D CONSEQUENTLY TO REJECT THE EXEMPTION CLAIMED BY ASSESSEE U/S. 10(38) OF I. T. ACT ON PURCHASE AND SALE OF SHARES AND (III) TO TREAT SHORT TERM CAPITA L GAIN OF RS. 53,27,430/- AS BUSINESS INCOME. 5. BEING AGGRIEVED, ASSESSEE FILED APPEAL BEFORE FI RST APPELLATE AUTHORITY. LD. CIT(A) VIDE HIS IMPUGNED ORDER DT. 21.7.2010, D ISMISSED APPEAL OF ASSESSEE. HENCE, ASSESSEE IS IN APPEAL BEFORE TRIB UNAL. 6. IN RESPECT OF GROUND NO. 1 OF APPEAL, LD. AR SUBM ITTED THAT AO MADE DISALLOWANCE U/S. 14A OF THE I.T. ACT BY APPLYING RU LE 8D OF I.T. RULES AND LD. CIT(A) HAS CONFIRMED THE ACTION OF AO. HE SUBMITTE D THAT IN VIEW OF DECISION OF HONBLE BOMBAY HIGH COURT IN THE CASE OF GODREJ & BOYCE MFG. CO. LTD. VS ITA NO. 6936/M/2010 S.A. NO. 65/M/2012 4 DCIT 328 ITR 81; RULE 8D WHICH HAS BEEN INSERTED WI TH EFFECT FROM 24.3.2008 BY INCOME TAX (FIFTH AMENDMENT) RULES 200 8 IS PROSPECTIVE IN NATURE AND IS APPLICABLE FROM ASSESSMENT YEAR 2008- 09 AND NOT TO THE ASSESSMENT YEAR UNDER CONSIDERATION. THE DISALLOWA NCE HAVE TO BE REWORKED BY RESTORING THE ISSUE TO AO. THE LD. DEPARTMENTAL REPRESENTATIVE HAS NOT DISPUTED ABOVE SUBMISSION OF LD. AR SAVE AND EXCEPT RELYING ON THE ORDERS OF AUTHORITIES BELOW. 7. WE HAVE CONSIDERED SUBMISSIONS OF LD. REPRESENTA TIVES OF PARTIES AND ORDERS OF AUTHORITIES BELOW. WE AGREE WITH LD. AR THAT RULE 8D IS NOT APPLICABLE TO THE ASSESSMENT YEAR UNDER CONSIDERATI ON AS IT IS PROSPECTIVE IN NATURE AND IS APPLICABLE FROM ASSESSMENT YEAR 2008- 09 AS HELD BY HONBLE BOMBAY HIGH COURT IN THE CASE OF GODREJ & BOYCE MFG . CO. LTD. VS DCIT(SUPRA). HENCE, WE SET ASIDE THE ORDERS OF AUTH ORITIES BELOW AND RESTORE THIS ISSUE TO THE FILE OF LD. CIT(A) WITH A DIRECTI ON TO DECIDE THE DISALLOWANCE TO BE MADE U/S. 14A OF THE ACT AFTER GIVING DUE OPP ORTUNITY OF HEARING TO THE PARTIES. HENCE GROUND NO. 1 OF THE APPEAL TAKEN BY ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. 8. IN GROUND NO. 2 OF APPEAL ASSESSEE HAS DISPUTED T HE CONFIRMATION OF ACTION OF AO TO TREAT CLAIM OF ASSESSEE OF LONG TER M CAPITAL GAIN OF RS. 16,56,89,573/- AS BUSINESS INCOME. 9. THE AO HAS STATED THAT A QUESTIONNAIRE WAS ISSUE D TO ASSESSEE ON 31.7.2008, REQUESTING TO FILE DETAILS OF SALE AND P URCHASE AND OTHER RELEVANT DETAILS OF SHARE TRANSACTIONS. THAT THE ASSESSEE F ILED PART DETAILS VIDE LETTERS DT.5.9.2008 AND 17.11.2008. THE AO HAS STATED THAT SUMMONS U/S. 131 OF THE I.T. ACT WAS ISSUED ON 12.12.2008 TO THE ASSESS EE ASKING DETAILS OF SHARES AND CONTENTS OF IT ARE MENTIONED BY HIM IN PARA 5.1 OF ASSESSMENT ORDER. HE HAS STATED THAT ASSESSEE VIDE LETTER DT. 22.12.2008 GAVE PART DETAILS. HOWEVER, NO DETAILS OF PURCHASE OF SHARES WERE FILE D, NOR ANY EVIDENCE TO PROVE OWNERSHIP AND HOLDING OF SHARES WAS FILED. A O HAS STATED THAT SUBMISSION OF ASSESSEE WAS SILENT ON THE FOLLOWING ISSUES: ITA NO. 6936/M/2010 S.A. NO. 65/M/2012 5 I) COPIES OF DEMAT ACCOUNT NOT PROVIDED TO SHOW THE DA TE OR PURCHASE QUANTITY. II) DIRECTORS WERE NOT PRODUCED FOR RECORDING STATEMENT III) SOURCES OF INVESTMENT NOT PROPERLY EXPLAINED IV) DISALLOWANCE U/S. 14A NOT CALCULATED V) CLOSING STOCK OF INVENTORY/INVESTMENT IN EARLIER YE ARS NOT EXPLAINED. VI) IT IS OBSERVED FROM DEMAT ACCOUNT THAT THE ASSESSEE HAS DEMATERIALIZED 1,60,00,000 SHARES ON 16.6.2005 WHIC H WERE SOLD DURING F.Y. 2005-06 RELEVANT TO A.Y. 2006-07. THE ASSESSEE HAS NOT EXPLAINED DATE OF ACQUISITION OF THESE SHARES S O AS TO PROVE THE PROCEEDS ON SALE OF THESE SHARES ARE L.T.C.G. THAT ASSESSEE WAS ASKED TO BRING BOOKS OF ACCOUNT FOR VERIFICATION. HOWEVER, ASSESSEE PRODUCED COMPUTERIZED BOOKS OF AC COUNT AND FEW SALE BILLS/BROKERS NOTES FOR TEST-CHECK BUT NO DETAILS OF PURCHASE/ACQUISITION OF SHARES WERE PRODUCED. THE AO STATED THAT SUMMONS W AS ALSO ISSUED U/S. 131 OF I.T. ACT ON 26.12.2008 TO AXIS BANK FOR VERIF ICATION OF DEMAT ACCOUNT AND POSSESSION OF SHARES BY THE ASSESSEE. THAT SAI D BANK SUBMITTED THE STATEMENT ON 31.12.2008. AO HAS STATED THAT, IT IS OBSERVED THAT ASSESSEE HAD CLOSING BALANCE OF 36,593 SHARES OF RUCHI SOYA AND 10,552 SHARES OF RUCHI INFRASTRUCTURE AS ON 31.3.2004. HE HAS STATE D THAT IN THE ABSENCE OF SUBSTANTIAL EVIDENCE WITH REGARD TO ACQUISITION AND HOLDING OF SHARES, THE GAIN ON SALE OF SHARES CANNOT BE CONSIDERED AS LONG TERM CAPITAL GAIN. HE HAS FURTHER STATED THAT ASSESSEE IS ACTUALLY INVOLVED I N TRADING OF SHARES RATHER THAN INVESTMENT, LOOKING TO THE VOLUME FREQUENCY, C ONTINUITY AND REGULARITY OF TRANSACTION OF PURCHASE AND SALES IN SHARES. THEREF ORE, AO STATED THAT IT COULD NOT BE CONSIDERED AS CAPITAL GAIN TO THE ASSESSEE A ND CHARGED THE AMOUNT UNDER THE HEAD BUSINESS INCOME. 10. BEING AGGRIEVED, ASSESSEE FILED APPEAL BEFORE F IRST APPELLATE AUTHORITY. ITA NO. 6936/M/2010 S.A. NO. 65/M/2012 6 11. ON BEHALF OF ASSESSEE, IT WAS SUBMITTED THAT SH ARES OF RUCHI SOYA INDUSTRIES LTD. AND RUCHI INFRASTRUCTURE LTD. WERE H ELD SINCE FINANCIAL YEAR 2002-03 AND 2003-04 AND THE SAME WERE SOLD FOR RS. 16,56,89,573/- ON WHICH LONG TERM CAPITAL GAIN WAS CLAIMED AS EXEMPT U/S. 10(38) OF THE ACT. IT WAS SUBMITTED THAT THERE WAS NO REGULAR SALE OR P URCHASE OF SHARES OF RUCHI SOYA INDUSTRIES LTD. AND RUCHI INFRASTRUCTURE LTD. AND THE INVESTMENT WERE THUS LONG TERM INVESTMENTS. IT WAS STATED THAT DIMINUTION IN MARKET VALUE OF SHARES WAS NEVER PROVIDED IN THE BOOKS OF ACCOUNT AND THE SAID SHARES HAD BEEN SHOWN IN THE BALANCE SHEET AS LONG TERM AND NON-TRADE INVESTMENTS. IT WAS ALSO STATED THAT SHARES WERE LY ING WITH THE ASSESSEE IN PHYSICAL FORM. FURTHER ASSESSEE ALSO STATED BEFORE LD. CIT(A) TO ALLOW TO FILE ADDITIONAL EVIDENCES GIVING DETAILS OF PURCHASE OF SHARES ETC. AND FILED A LETTER DT. 22.5.2009 BEFORE HIM, A COPY OF WHICH IS PLACED AT PAGE 233 AND 234 OF PAPER BOOK. 12. HOWEVER, LD. CIT(A) DID NOT ACCEPT SUBMISSION O F ASSESSEE AND ACCORDINGLY DID NOT ALLOW TO FILE ADDITIONAL EVIDEN CES BY ASSESSEE ON THE GROUND THAT ASSESSEE WAS NOT PREVENTED BY ANY SUFFI CIENT CAUSE UNDER RULE 46A OF I.T. RULES TO FILE THE DETAILS OF SHARES BEF ORE AO. HENCE, LD. CIT(A) CONFIRMED THE ACTION OF AO THAT INCOME OF THE ASSES SEE IS CHARGEABLE UNDER THE HEAD BUSINESS INCOME AND NOT CAPITAL GAIN. BEI NG AGGRIEVED, ASSESSEE IS IN FURTHER APPEAL BEFORE TRIBUNAL. 13. ON BEHALF OF ASSESSEE, LD. AR SUBMITTED BEFORE US THAT AO ASKED DETAILS OF EVIDENCES TO PURCHASE OF SHARES AT FAG E ND AND ASSESSEE COULD NOT GIVE DETAILS OF DEMAT ACCOUNTS, PURCHASE BILLS FOR PURCHASE OF SHARES ETC. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, ASSESS EE WAS NOT HAVING A PERMANENT ACCOUNTANT AND SUFFICIENT STAFF TO FIND O UT THE DETAILS FROM ITS RECORDS. LD. AR REFERRED PAGES 233-34 OF PAPER BOO K AND SUBMITTED THAT ASSESSEE VIDE ITS LETTER DT. 22.5.2009 STATED BEFO RE LD. CIT(A) THE REASONS FOR NOT ABLE TO FURNISH REQUISITE DETAILS OF PURCHASE O F SHARES BEFORE AO. HE SUBMITTED THAT ASSESSEE FILED THESE DETAILS OF PURC HASE OF SHARES AND DEMAT ACCOUNTS BEFORE LD. CIT(A). BUT LD. CIT(A) REFUSED TO ADMIT THE SAID ITA NO. 6936/M/2010 S.A. NO. 65/M/2012 7 DOCUMENTS EVEN THOUGH THOSE DOCUMENTS GO TO THE RO OT OF THE ISSUE TO DECIDE AS TO WHETHER SAID SHARES WERE HELD AS INVE STMENT OR NOT. LD. AR RELYING ON DECISION OF HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF SMT. PRABHAVATI S. SHAH V. CIT 231 ITR 01 SUBMITTED THAT THE APPELLATE AUTHORITY HAS TO EXERCISE HIS DISCRETION JUDICIALLY AND TO AD MIT ADDITIONAL EVIDENCES TO MAKE ENQUIRY WHERE THE FACTS AND CIRCUMSTANCES SO D EMAND. THE LD. AR ALSO REFERRED THE DECISION OF HONBLE JURISDICTIONAL HI GH COURT, NAGPUR BENCH IN THE CASE OF COMMISSIONER OF INCOME-TAX V. SURETECH HOSPITAL AND RESEARCH CENTRE LTD. 293 ITR 53 AND SUBMITTED THAT HONBLE H IGH COURT WHILE CONFIRMING ORDER OF TRIBUNAL HELD THAT WHERE THE TR IBUNAL FOUND THE DOCUMENTS PRODUCED WAS NECESSARY FOR DISPOSAL OF TH E APPEAL ON MERIT, THE SAID ADDITIONAL DOCUMENTS SHOULD BE CONSIDERED TO D ECIDE THE MATTER. LD. AR SUBMITTED THAT IN THE PRECEDING ASSESSMENT YEARS, I .E. ASSESSMENT YEARS 2003-04, 2005-06 AND 2008-09, DEPARTMENT ACCEPTED L ONG TERM CAPITAL GAIN IN RESPECT OF SHARES SOLD BY ASSESSEE. HE SUBMITTE D THAT IF ADDITIONAL DOCUMENTS PROPOSED TO BE FILED BY ASSESSEE VIDE ITS LETTER DT. 22.5.2009 (COPY PLACED AT PAGE 232-234) HAD BEEN ACCEPTED, ORDER OF LD. CIT(A) WOULD HAVE BEEN DIFFERENT. LD. AR FURTHER SUBMITTED THAT A PAR T OF SHARES WHICH ARE UNDER CONSIDERATION WERE ALSO SOLD BY ASSESSEE IN EARLIER YEAR AND DEPARTMENT ACCEPTED THE CAPITAL GAIN AS DISCLOSED BY ASSESSEE. LD. AR SUBMITTED THAT MATTER SHOULD BE RESTORED BACK TO DECIDE IT AFRESH AFTER CONSIDERING THE ADDITIONAL EVIDENCES, FILED BEFORE LD. CIT(A). 14. ON THE OTHER HAND, LD. DEPARTMENTAL REPRESENTAT IVES RELIED ON THE ORDERS OF AUTHORITIES BELOW AND SUBMITTED THAT LD. CIT(A) HAS RIGHTLY REJECTED ADDITIONAL DOCUMENTS PROPOSED TO BE FILED BY ASSESS EE AS ASSESSEE FAILED TO PRODUCE SAID DOCUMENTS BEFORE AO INSPITE OF GIVING ADEQUATE OPPORTUNITY. 15. WE HAVE CAREFULLY CONSIDERED THE ORDERS OF AUTH ORITIES BELOW AND SUBMISSIONS OF LD. REPRESENTATIVES OF PARTIES. WE OBSERVE THAT AO VIDE SUMMONS U/S. 131 OF THE ACT DT. 12.12.2008 ASKED C ERTAIN DOCUMENTS FROM ASSESSEE, DETAILS OF WHICH ARE GIVEN IN PARA 5.1 O F ASSESSMENT ORDER. WE OBSERVE THAT ASSESSEE FURNISHED CERTAIN DETAILS IN RESPECT OF SHARES ON WHICH ITA NO. 6936/M/2010 S.A. NO. 65/M/2012 8 ASSESSEE DISCLOSED LONG TERM CAPITAL GAIN AND CLAIM ED EXEMPTION U/S. 10(38) OF I.T. ACT. IT IS A FACTS THAT ASSESSEE COU LD NOT FURNISH CERTAIN DETAILS BEFORE AO, DETAILS OF WHICH ARE STATED BY AO AT PAR A 5.4 OF ASSESSMENT ORDER AND HAVE ALSO BEEN MENTIONED HEREIN ABOVE AT PARA-9 . WE OBSERVE THAT ASSESSEE VIDE ITS LETTER DT. 22.2.2005, COPY PLACED AT PAGES 233-234 AND ADDRESSED TO LD. CIT(A) FILED DETAILS OF PURCHASE O F SHARES, DEMAT ACCOUNTS AND ALSO EXPLAINED THAT SAID SHARES WERE HELD EARLI ER BY ASSESSEE IN PHYSICAL FORM. ASSESSEE ALSO EXPLAINED IN SAID LETTER AS TO WHY ASSESSEE COULD NOT FURNISH DETAILS BEFORE AO AND STATED THAT ON ACCOUN T OF FREQUENT CHANGES IN STAFF, DETAILS COULD NOT BE RETRIEVED FROM OLD RECO RDS. THE ASSESSEE ALSO STATED IN THE SAID LETTER THAT ALL THE DETAILS LIKE DATE O F PURCHASE ,COST OF ACQUISITION ETC. REGARDING PURCHASE OF SHARES ON WHICH ASSESSEE CLAIMED LONG TERM AND SHORT TERM CAPITAL GAIN WERE FILED BEFORE AO. 16. WE OBSERVE THAT ASSESSEE REQUESTED BEFORE LD. CIT(A) TO ADMIT ADDITIONAL EVIDENCES IN TERMS OF RULE 46A OF I.T. RU LES. HOWEVER, WE OBSERVE THAT LD. CIT(A) VIDE PARA 5.1 AND 5.2 HAS STATED TH AT ASSESSEE WAS NOT PREVENTED BY ANY CAUSE TO PRODUCE SAID DOCUMENTS BE FORE AO AND THEREFORE DID NOT ADMIT SAID DOCUMENTS. DURING THE COURSE OF HEARING, LD. DR HAS NOT DISPUTED THE FACT THAT SAID DOCUMENTS GO TO THE RO OT OF THE ISSUE INVOLVED. WE ALSO OBSERVE FROM PAGES 195 TO 198 OF PAPER BOOK R.W. PAGES 199-200 THAT ASSESSEE CLAIMED CAPITAL GAIN IN ASSESSMENT YE AR 2005-06 AND THE DEPARTMENT ACCEPTED THE CAPITAL GAIN DISCLOSED BY A SSESSEE. SIMILARLY FOR ASSESSMENT YEAR 2008-09, COPY PLACED AT PAGES 356 - 377 R.W. PAGES 358 OF PAPER BOOK, ASSESSEE DISCLOSED CAPITAL GAIN AND SAM E WAS ALLOWED BY THE DEPARTMENT. THE HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF SMT. PRABHAVATI S. SHAH V. CIT (SUPRA) HAS HELD THAT THE APPELLATE AUTHORITY SHOULD NOT REFUSE TO MAKE ENQUIRY IN THE CASE WHERE FACTS AND CIRCUMSTANCES SO DEMAND. WE OBSERVE THAT DOCUMENTS PROPOSED TO BE F ILED BY ASSESSEE ARE RELEVANT AND NECESSARY TO BE CONSIDERED TO DECIDE T HE ISSUE AS TO WHETHER SHARES WERE HELD BY ASSESSEE AS INVESTMENT OR STOCK -IN-TRADE. IT IS RELEVANT TO STATE THAT HONBLE APEX COURT HAS HELD IN THE CASE OF CIT VS PRABHU DAYAL 82 ITA NO. 6936/M/2010 S.A. NO. 65/M/2012 9 ITR 804 THAT QUESTION AS TO WHETHER RECEIPT IS A CA PITAL RECEIPT OF INCOME, HAS TO BE JUDGED FROM THE FACTS OF EACH CASE AND QUESTI ON OF LAW CAN BE DRAWN SUCH FACTS. THE HONBLE APEX COURT IN THE CASE OF CIT VS. H. HOLCK LARSEN 160 ITR 67 ALSO HELD THAT WHETHER TRANSACTION OF SA LE AND PURCHASE OF SHARE IS A TRADING TRANSACTION OR IN THE NATURE OF INVEST MENT, IS A MIXED QUESTION OF LAW AND FACTS. THEREFORE TO DECIDE THE QUESTION AS TO WHETHER ASSESSEE HAS TO BE TREATED AS INVESTOR IN SHARE OR A TRADER OR S HARES IS TO BE CONSIDERED, CONSIDERING TOTALITIES OF ALL FACTS. IN VIEW THERE OF, IT IS NECESSARY THAT LD. CIT(A) SHOULD HAVE CONSIDERED THE EVIDENCES PROPOSE D TO BE FILED BY ASSESSEE TO DECIDE THE ISSUE FAIRLY AND JUDICIOUSLY . 17. IN VIEW THEREOF, WE, IN THE INTEREST OF JUSTICE, SET ASIDE THE ORDER OF LD. CIT(A) AND RESTORE THE ISSUE TO HIS FILE WITH A DIR ECTION THAT HE SHOULD DECIDE IT AFRESH AFTER MAKING PROPER ENQUIRY AND CONSIDER ING SUCH EVIDENCES AS MAY BE FILED BY ASSESSEE BEFORE HIM. NEEDLESS TO STATE THAT LD. CIT(A) WILL GIVE DUE OPPORTUNITY OF HEARING TO THE PARTIES IN ACCORD ANCE WITH LAW. HENCE GROUND NO. 2 OF APPEAL IS ALLOWED FOR STATISTICAL P URPOSES BY RESTORING THE ISSUE TO LD. CIT(A) FOR HIS FRESH ADJUDICATION . 18. IN GROUND NO. 3 OF APPEAL, LD. AR SUBMITTED THAT AO WITHOUT GIVING ANY REASON HAS CONSIDERED SHORT TERM CAPITAL GAIN D ISCLOSED BY ASSESSEE AS BUSINESS INCOME. 19. LD. AR REFERRED TO PAGE 165 OF PAPER BOOK AND S UBMITTED THAT ASSESSEE TOOK AN ADDITIONAL GROUND BEFORE LD. CIT(A ) VIDE LETTER DT. 24.11.2009 THAT AO TREATED SHORT TERM CAPITAL GAIN OF RS. 53,27,430/- AS BUSINESS INCOME WITHOUT GIVING ANY REASON. THE LD. CIT(A) HAS NOT ADJUDICATED THE SAID GROUND WHILE DECIDING THE APPE AL OF ASSESSEE. HE SUBMITTED THAT ISSUE MAY BE RESTORED TO LD. CIT(A) TO DECIDE THE ABOVE GROUND BY A REASONED ORDER. THE LD. DEPARTMENTAL REPRESENTATIVE HAS NOT DISPUTED ABOVE SUBMISSION OF LD. AR. ITA NO. 6936/M/2010 S.A. NO. 65/M/2012 10 20. WE HAVE CONSIDERED SUBMISSIONS OF LD. REPRESENT ATIVES OF PARTIES AND HAVE CAREFULLY PERUSED ORDER OF AUTHORITIES BELOW A S WELL AS PAGE 165 TO 166 OF PAPER BOOK. WE OBSERVE THAT AO HAS NOT GIVEN AN Y REASON WHILE CONSIDERING SHORT TERM CAPITAL GAIN, DISCLOSED BY A SSESSEE AS BUSINESS INCOME. WE ALSO OBSERVE THAT ASSESSEE TOOK AN ADDI TIONAL GROUND VIDE LETTER DT. 24.11.2009 BEFORE LD. CIT(A), COPY PLACED AT PA GES 165 TO 166 OF PAPER BOOK. WE AGREE WITH LD.CIT(A) THAT WHILE DISPOSING OF APPEAL OF ASSESSEE HAS NOT OBJECTED THIS GROUND THOUGH AT PAGE-3 OF HI S ORDER, HE HAS STATED THAT ASSESSEE SUBMITTED BEFORE HIM THAT AO HAS TREA TED SHORT TERM CAPITAL GAIN OF RS. 53,27,430/- AS BUSINESS INCOME WITHOUT GIVING ANY REASON IN THE ASSESSMENT ORDER. SINCE LD. CIT(A) HAS NOT ADJUDIC ATED THE ABOVE GROUND, WE, RESTORE THIS GROUND TO LD. CIT(A) WITH A DIRECT ION TO DECIDE THE SAME BY A SPEAKING ORDER AFTER GIVING DUE OPPORTUNITY OF HEAR ING TO THE PARTIES AND ALSO CONSIDERING SUCH EVIDENCES AS MAY BE FILED BEFORE H IM IN ACCORDANCE WITH LAW. HENCE, GROUND NO. 3 OF THE APPEAL TAKEN BY ASS ESSEE IS ALLOWED FOR STATISTICAL PURPOSES. 21. IN GROUND NO. 4 OF APPEAL, THE ASSESSEE HAS DISP UTED LEVY OF INTEREST U/S. 234B AND 234C OF I.T. ACT. 22. SINCE LEVY OF INTEREST IS CONSEQUENTIAL, NO SPE CIFIC ADJUDICATION IS CALLED FOR. 23. IN VIEW OF ABOVE, APPEAL OF ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. 24. SINCE, WE HAVE DISPOSED OFF THE APPEAL OF ASSES SEE ON MERITS, STAY APPLICATION FILED BY ASSESSEE BECOMES INFRUCTUOUS A ND SAME IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT AT THE TIME OF HEARING I.E. ON 27 TH JANUARY, 2012 SD/- SD/- (G.E. VEERABHADRAPPA) (B.R. MITTAL ) PRESIDENT JUDICIAL MEMBER MUMBAI, DATED 27 TH JANUARY, 2012 RJ ITA NO. 6936/M/2010 S.A. NO. 65/M/2012 11 COPY TO : 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT-CONCERNED 4. THE CIT(A)-CONCERNED 5. THE DR B BENCH TRUE COPY BY ORDER ASSTT. REGISTRAR, I.T.A.T, MUMBAI