DCIT 22(3), NAVI MUMBAI V. GAYATRIDEVI M DAGA, NAVI MUMBAI

ITA 766/MUM/2010

• Counselvise Citation: 76619914 RSA 2010
• Duration Of Justice: 1 year(s) 2 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-04-2011
• Appeal Filed By: Department
• Bench Allotted: G
• Next Hearing Date: 07-04-2011
• Assessment Year: 2006-2007
• Appeal Filed On: 01-02-2010
• Court: TRIBUNAL
• Department Lawyers: A K NAYAK PER R K
• Keywords: Business income; Opportunity of being heard

Judgement Text

1 ITA NO. 766MUM/2010 (ASST YEAR 2006-07 IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI MUMBAI MUMBAI MUMBAI G GG G BENCH BENCH BENCH BENCH MUMBAI BENCHES, MUMBAI MUMBAI BENCHES, MUMBAI MUMBAI BENCHES, MUMBAI MUMBAI BENCHES, MUMBAI BEFORE BEFORE BEFORE BEFORE SHRI D MANMOHAN, VP & SHRI D MANMOHAN, VP & SHRI D MANMOHAN, VP & SHRI D MANMOHAN, VP &SHRI R K PANDA, AM SHRI R K PANDA, AM SHRI R K PANDA, AM SHRI R K PANDA, AM ITA NO. 766MUM/2010 ITA NO. 766MUM/2010 ITA NO. 766MUM/2010 ITA NO. 766MUM/2010 (ASST YEAR 2006 (ASST YEAR 2006 (ASST YEAR 2006 (ASST YEAR 2006- -- -07 0707 07 THE DYCOMMR OF INCOME TAX 22(3), MUMBAI VS GAYATRIDEVI M DAGA D-02 PLOT NO.137/146 SECOTR 21 NERUL NAVI MUMBA ( (( (APPELLANT APPELLANT APPELLANT APPELLANT) )) ) (RESPONDENT) (RESPONDENT) (RESPONDENT) (RESPONDENT) PAN NO. PAN NO. PAN NO. PAN NO. ADUPD6440Q ADUPD6440Q ADUPD6440Q ADUPD6440Q A SSESSEE BY SHRI VIJAY MEHTA REVENUE BY SHRI A K NAYAK PER R K PANDA, AM PER R K PANDA, AM PER R K PANDA, AM PER R K PANDA, AM THIS APPEAL FILED BY THE REVENUE IS DIRECTED AGAI NST THE ORDER DATED 23.11.2009 OF THE CIT(A) 33, MUMBAI RELATING TO ASS ESSMENT YEAR 2006-07. 2 FACTS OF THE CASE, IN BRIEF, ARE THAT THE ASSESSE E IS AN INDIVIDUAL ENGAGED IN THE BUSINESS OF SHARE INVESTMENTS. DURING THE CO URSE OF ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER NOTED THAT THE ASSESSEE HAS OFFERED THE INCOME ARISING OUT OF BUYING AND SELLING OF SHARES AS SHORT TERM CAPITAL GAINS AND HAS PAID TAXES AS APPLICABLE TO SHORT TERM CAP ITAL GAINS. FROM THE VARIOUS DETAILS AND EXPLANATIONS OFFERED BY THE ASSESSEE DU RING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER CAME TO THE CONCLUSION THAT MONEY HAS BEEN BORROWED FOR BUYING AND SELLING OF S HARES. THERE IS REPEATED AND FREQUENT BUYING AND SELLING OF SHARES. FURTHER , THE AUDITORS IN THE TAX AUDIT 2 ITA NO. 766MUM/2010 (ASST YEAR 2006-07 REPORT HAD CERTIFIED THAT THE ASSESSEE IS ENGAGED I N THE BUSINESS OF DEALING IN SHARES AND DEBENTURE. THE OTHER MEMBERS OF THE FAMI LY ARE ALSO HAVING SIMILAR INCOME AND ACTIVITY AND IN THE PAST ALSO THE ASSESS EE WAS TREATING THE INCOME AS BUSINESS INCOME. REJECTING THE VARIOUS EXPLANATI ONS GIVEN BY THE ASSESSEE, THE ASSESSING OFFICER TREATED THE CAPITAL GAIN DECLARED BY THE ASSESSEE AS BUSINESS INCOME. 3 IN APPEAL THE CIT(A) RELYING ON THE DECISION OF T HE TRIBUNAL IN THE CASE OF GOPAL PUROHIT VS JCIT REPORTED IN 20 DTR 99 AND F EW OTHER DECISIONS HELD THAT THE PROFIT DERIVED BY THE ASSESSEE ON SALE OF SHARE S AMOUNTS TO SHORT TERM CAPITAL GAIN AS DECLARED BY THE ASSESSEE. 4 AGGRIEVED BY SUCH ORDER OF THE CIT(A), THE REVENU E IS IN APPEAL HERE BEFORE US WITH THE FOLLOWING GROUNDS: I) ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN L AW, THE LD CIT(A) HAS ERRED IN DIRECTING THE ASSESSING OFFICER TO TR EAT THE BUSINESS INCOME OF RS. 62,93,097/- AS SHORT TERM CAPITAL GAI N AS SHOWN BY THE ASSESSEE WITHOUT APPRECIATING THE FACT THAT THE ASSESSEE IS IN THE BUSINESS OF DEALING IN SHARES AND HAS BEEN INCL UDING IN FREQUENT SALE AND PURCHASE OF SHARES AND THE TAX AUDIT REPOR T CLEARLY MENTIONS THE NATURE OF BUSINESS OF THE ASSESSEE AS DEALING IN SHARES AND DEBENTURE. II) ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN L AW, THE LD CIT(A) HAS FAILED TO APPRECIATE THE FACT THAT THE VOLUME A ND FREQUENCY OF TRANSACTION OF SHARE CLEARLY SHOWS THAT THE BUSINES S ACTIVITY AND THE SHARE TRANSACTION DONE BY THE ASSESSEE WERE WITH TH E INTENTION OF EARNING BUSINESS PROFIT AND THE ASSESSING OFFICER RIGHTLY TREATED THE SHORT TERM CAPITAL GAINS AS BUSINESS INCOME OF THE ASSESSEE III) ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN L AW, THE LD CIT(A) FAILED TO APPRECIATE THE FACT THAT MONEY HAS BEEN B ORROWED BY THE ASSESSEE FOR BUYING AND SELLING OF SHARES AND THE A SSESSING OFFICER HAS RIGHTLY TREATED THE SHORT TERM CAPITAL GAINS SH OWN AS BUSINESS INCOME OF THE ASSESSEE. IV) ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN L AW, THE LD CIT(A) FAILED TO APPRECIATE THE FACT THAT THE ASSESSEE HAS CHOSEN TO OFFER THE INCOME UNDER THE HEAD CAPITAL GAINS SO AS TO BE ABLE TO REDUCE THE TAX OUTGO ON ACCOUNT OF CHANGE IN THE TAX LAW B Y WHICH CONCESSIONAL RATE OF TAXES HAS BEEN PRESCRIBED FOR STCG. 3 ITA NO. 766MUM/2010 (ASST YEAR 2006-07 V) THE APPELLANT PRAYS THAT THE ORDER OF THE CIT(A) ON THE ABOVE GROUNDS BE REVERSED AND THAT OF THE ASSESSING OFFIC ER BE RESTORED. 5 THE LD COUNSEL FOR THE ASSESSEE, AT THE OUTSET, S UBMITTED THAT ALTHOUGH THE CIT(A) HAS ALLOWED THE APPEAL IN FAVOUR OF THE ASSE SSEE, STILL IT HAS TO BE RESTORED TO THE FILE OF THE ASSESSING OFFICER FOR FRESH AD JUDICATION SINCE THERE ARE CERTAIN INCONSISTENCIES AND CONTRADICTIONS BETWEEN THE COMP UTATION OF INCOME AND TAX AUDIT REPORT. REFERRING TO PAGE 1 OF THE ASSESSMEN T ORDER, THE LD COUNSEL FOR THE ASSESSEE, DREW THE ATTENTION OF THE BENCH TO CERTAI N OBSERVATIONS OF THE ASSESSING OFFICER, WHICH ACCORDING TO HIM, ARE FACT UALLY INCORRECT. HE SUBMITTED THAT THE ASSESSEE HAS NEVER VALUED HER SHARES AT CO ST OR MARKET PRICE, WHICHEVER IS LESS. THE SAME HAS BEEN VALUED AT COST. HE SUBM ITTED THAT A DIRECTION MAY BE GIVEN TO THE ASSESSING OFFICER THAT IN CASE THE A CTIVITY OF THE ASSESSEE IS TREATED AS BUSINESS, THEN THE VALUE OF SHARE HAS TO BE TAKE N AT COST OR MARKET PRICE, WHICHEVER IS LESS. 5.1 THE LD DR, ON THE OTHER HAND WHILE SUPPORTING T HE ORDER OF THE ASSESSING OFFICER FAIRLY CONCEDED THAT HE HAS NO OBJECTION, I F THE MATTER IS RESTORED TO THE FILE OF THE AO. 6 WE HAVE CONSIDERED THE RIVAL SUBMISSIONS MADE BY BOTH THE SIDES, PERUSED THE ORDERS OF THE ASSESSING OFFICER AND THE CIT(A) AND THE PAPER BOOK FILED ON BEHALF OF THE ASSESSEE. IN OUR OPINION, A ND IN VIEW OF THE SUBMISSIONS OF THE LD COUNSEL FOR THE ASSESSEE THAT THE MATTER SHO ULD BE REMANDED TO THE FILE OF THE ASSESSING OFFICER FOR FRESH ADJUDICATION DUE TO CERTAIN CONTRADICTIONS IN THE COMPUTATION OF INCOME AND THE AUDIT REPORT AND IN V IEW OF NO OBJECTION BY THE LD DR, WE, IN THE INTEREST OF JUSTICE, DEEM IT PROPER TO RESTORE THE MATTER BACK TO 4 ITA NO. 766MUM/2010 (ASST YEAR 2006-07 THE FILE OF THE ASSESSING OFFICER FOR FRESH ADJUDIC ATION. THE ASSESSING OFFICER SHALL DECIDE THE ISSUE AFRESH AND IN ACCORDANCE WITH LAW AFTER GIVING DUE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. WE HOLD AND DIRECT ACCORDINGLY. THE GROUNDS TAKEN BY THE REVENUE ARE ACCORDINGLY ALLOWED FOR ST ATISTICAL PURPOSE. 7 IN THE RESULT, THE APPEAL FILED BY THE REVENUE IS ALLOWED FOR STATISTICAL PURPOSE. ORDER PRONOUNCED ON THE 20 TH , DAY OF APRIL 2011. SD/- SD/- ( (( ( D MANMOHAN D MANMOHAN D MANMOHAN D MANMOHAN ) )) ) VICE PRESIDENT ( (( ( R K PANDA R K PANDA R K PANDA R K PANDA ) )) ) ACCOUNTANT MEMBER PLACE: MUMBAI : DATED: 20 TH , APRIL 2011 RAJ* COPY FORWARDED TO: 1 APPELLANT 2 RESPONDENT 3 CIT 4 CIT(A) 5 DR /TRUE COPY/ BY ORDER DY /AR, ITAT, MUMBAI