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

ITA 770/MUM/2010

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 48761 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 3 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-05-2011
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: B
• Next Hearing Date: 05-05-2011
• Assessment Year: 2006-2007
• Appeal Filed On: 01-02-2010
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: S K SINGH
• Keywords: Business income; Opportunity of being heard
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES, B, MUMBAI BEFORE S/SHRI D.K.AGARWAL (JM) AND T.R.SOOD(A.M ) ITA NO.767/MUM/2010 (ASSESSMENT YEAR : 2006-07) DCIT.22(3), 3 RD FLOOR, TOWER NO.6, VASHI RLY.STATION COMPLEX, VASHI, NAVI MUMBAI SHRI MOHANLAL DAGA(HUF) D-02, PLOT NO.137/146, SECTOR-21, NERUL, NAVI MUMBAI PAN: AAEHM4723Q APPELLANT V/S RESPONDENT ITA NO.768/MUM/2010 (ASSESSMENT YEAR : 2006-07) DCIT.22(3), 3 RD FLOOR, TOWER NO.6, VASHI RLY.STATION COMPLEX, VASHI, NAVI MUMBAI SHRI MOHANLAL DAGA D-02, PLOT NO.137/146, SECTOR-21, NERUL, NAVI MUMBAI PAN: ADTPD8060B APPELLANT V/S RESPONDENT ITA NO.770/MUM/2010 (ASSESSMENT YEAR : 2006-07) DCIT.22(3), 3 RD FLOOR, TOWER NO.6, VASHI RLY.STATION COMPLEX, VASHI, NAVI MUMBAI SMT.NIRMALA M.DAGA D-02, PLOT NO.137/146, SECTOR-21, NERUL, NAVI MUMBAI PAN: AFVPD1917R APPELLANT V/S RESPONDENT REVENUE BY : SHRI S K SIN GH RESPONDENT BY : SHRI VIJAY ME HTA. ITA NO.767/MUM/2010 ITA NO.768/MUM/2010 ITA NO.770/MUM/2010 (ASSESSMENT YEAR : 2006-07) 2 O R D E R PER BENCH ALL THESE APPEALS PREFERRED BY THE REVENUE ARE DIRECTED AGAINST THE SEPARATE ORDERS PASSED BY THE LEARNED COMMISSIONER OF INCOME TAX (A) IN THE CASE OF SHRI MOHANLAL DAGA (HUF) DATED 23.11.2009, SHRI MOHANLAL DAGA DA TED 27.11.2009 AND SMT.NIRMALA M DAGA DATED 23.11.2009 FOR THE ASSESSMENT YEAR 2006-07. SINCE THE FACTS ARE I DENTICAL, THE ISSUE INVOLVED IS COMMON, ALL THESE APPEALS AR E DISPOSED OF BY THIS ORDER FOR THE SAKE OF CONVEYAN CE. ITA NO.767/MUM/2010 (SHRI MOHANLAL DAGA-HUF (AY-2006-07) 2. BRIEFLY STATED FACTS OF THE CASE ARE THAT THE ASSESSEE- HUF DERIVES INCOME FROM DEALING IN SHARES AND DEBE NTURES, FILED RETURN SHOWING AN INCOME OF RS.52,93,261/-. DURING THE COURSE OF ASSESSMENT, THE AO NOTED THAT THE ASSESSE E HAS OFFERED THE INCOME ARISING OUT OF BUYING AND SELLI NG OF SHARES AS SHORT TERM CAPITAL GAINS AND HAS ALSO PAID TAXES AS APPLICABLE TO SHORT TERM CAPITAL GAINS. FROM THE VARIOUS DETAILS AND EXPLANATION OFFERED BY THE ASSESSEE DUR ING THE COURSE OF ASSESSMENT PROCEEDINGS, THE AO CAME TO TH E CONCLUSION THAT BUYING AND SELLING OF SHARES IS AN INVESTMENT ACTIVITY CANNOT BE ACCEPTED FOR THE FOLLOWING REAS ONS : ITA NO.767/MUM/2010 ITA NO.768/MUM/2010 ITA NO.770/MUM/2010 (ASSESSMENT YEAR : 2006-07) 3 (I) MONEY HAS BEEN BORROWED FOR BUYING AND SELLING SHARES; (II) REPEATED AND FREQUENT BUYING AND SELLING SHARE S; (III) EARLIER YEARS TREATMENT OF THIS INCOME; (IV) SUBMISSION OF A TAX AUDIT REPORT CERTIFYING A CTIVITY; (V) ADMISSION OF CONDUCTING TRADING ACTIVITY (VI) OTHER MEMBERS OF THE FAMILY ALSO HAVING SIMILA R INCOMES AND ACTIVITIES; (VII) NON SUBMISSION OF EXPLANATION FOR REFUTING TH E TREATMENT AS BUSINESS INCOME; (VIII) NO LONG TERM HOLDING IN ANY SCRIPT AND (IX) COUPLED WITH THE SALE OF BUSINESS ASSETS DURI NG THE YEAR IN QUESTION. ACCORDINGLY, HE TREATED THE GAINS EARNED BOTH ON AC COUNT OF LONG TERM CAPITAL GAINS AND /OR SHORT TERM CAPIT AL GAINS AS BUSINESS INCOME AND THEREBY COMPLETED THE ASSESSM ENT AT AN INCOME OF RS.48,09,246/- VIDE ORDER DATED 30.12 .2008 PASSED UNDER SECTION 143(3) OF THE INCOME TAX ACT, 1961 (THE ACT). ON APPEAL, THE LEARNED COMMISSIONER OF I NCOME TAX (A) RELYING ON THE DECISION OF THE TRIBUNAL IN THE CASE OF GOPAL PUROHIT VS. JCIT REPORTED IN (2009) 20 DTR (MUMBAI)(TRIB) 99 AND OTHER DECISIONS HELD THAT THE PROFIT ITA NO.767/MUM/2010 ITA NO.768/MUM/2010 ITA NO.770/MUM/2010 (ASSESSMENT YEAR : 2006-07) 4 DERIVED BY THE ASSESSEE ON SALE OF SHARES AMOUNTS TO SHORT TERM CAPITAL GAINS AS DECLARED BY THE ASSE SSEE. 3. AGGRIEVED BY THE ORDER OF THE LEARNED COMMISSION ER OF INCOME TAX (A), THE REVENUE IS IN APPEAL BEFORE US CHALLENGING IN ALL THE GROUNDS THE RELIEF ALLOWED BY THE LEARNED COMMISSIONER OF INCOME TAX (A) IN DIRECTIN G THE AO TO TREAT THE BUSINESS INCOME OF RS.52,93,261/- AS SHORT TERM CAPITAL GAINS AS AGAINST BUSINESS INCOME HELD BY THE AO. 4. AT THE TIME OF HEARING, BOTH PARTIES HAVE AGREE D THAT IN THE GROUP CASE IN DCIT V/S GAYATRIDEVI M.DAGA I N ITA NO.766/MUM/2010 FOR ASSESSMENT YEAR 2006-07 ORDER D ATED 20.4.2011, THE TRIBUNAL ON THE SIMILAR FACTS AND CIRCUMSTANCES OF THE CASE HAS REMANDED THE MATTER B ACK TO THE FILE OF THE AO FOR FRESH ADJUDICATION, THEREFO RE, FOLLOWING THE SAME, THE ISSUE MAY BE SET ASIDE TO THE FILE O F THE ASSESSING OFFICER. 5. HAVING CAREFULLY HEARD THE SUBMISSIONS OF THE RI VAL PARTIES AND PERUSING THE MATERIAL AVAILABLE ON REC ORD, WE FIND MERIT IN THE PLEA OF THE PARTIES THAT THE T RIBUNAL IN THE GROUP CASE OF THE ASSESSEE I.E. IN THE CASE OF GA YATRIDEVI M.DAGA ON THE SIMILAR FACTS AND CIRCUMSTANCES HAS SET ASIDE THE ISSUE TO THE FILE OF THE AO VIDE FINDING RECOR DED IN ITA NO.767/MUM/2010 ITA NO.768/MUM/2010 ITA NO.770/MUM/2010 (ASSESSMENT YEAR : 2006-07) 5 PARAGRAPH 6 OF THE TRIBUNAL ORDER WHICH IS REPRODUC ED AS UNDER : 6. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS MADE BY BOTH THE SIDES, PERUSED THE ORDERS OF THE ASSESS ING OFFICER AND THE CIT(A) AND THE PAPER BOOK FILED ON BEHALF OF THE ASSESSEE. IN OUR OPINION, AND IN VIEW OF THE SUBMISSIONS OF THE LD COUNSEL FOR THE ASSESSEE THAT THE MATTER SHOULD BE REMANDED TO THE FILE OF THE ASSESS ING OFFICER FOR FRESH ADJUDICATION DUE TO CERTAIN CONTRADICTIONS IN THE COMPUTATION OF INCOME AND THE AUDIT REPORT AND IN VIEW OF NO OBJECTION BY THE LD DR, WE , IN THE INTEREST OF JUSTICE, DEEM IT PROPER TO RESTORE THE MATTER BACK TO THE FILE OF THE ASSESSING OFFICER FO R FRESH ADJUDICATION. THE ASSESSING OFFICER SHALL DECIDE TH E ISSUE AFRESH AND IN ACCORDANCE WITH LAW AFTER GIVIN G DUE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. WE HOLD AND DIRECT ACCORDINGLY. THE GROUNDS TAKEN BY THE REVENU E ARE ACCORDINGLY ALLOWED FOR STATISTICAL PURPOSE . IN THE ABSENCE OF ANY DISTINGUISHING FEATURES BROUG HT ON RECORD BY THE PARTIES, WE FOR THE SAME REASONS, RE SPECTFULLY FOLLOWING THE ORDER OF THE TRIBUNAL (SUPRA) SET AS IDE THE ORDERS PASSED BY THE REVENUE AUTHORITIES ON THIS A CCOUNT AND SEND BACK THE MATTER TO THE FILE OF THE AO T O DECIDE THE SAME AFRESH IN THE LIGHT OF THE DIRECTION GIVEN IN THE SAID ORDER OF THE TRIBUNAL AND IN ACCORDANCE WITH LAW AF TER PROVIDING A REASONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. THE GROUNDS TAKEN BY THE REVENUE ARE THE REFORE PARTLY ALLOWED FOR STATISTICAL PURPOSES. ITA NO.767/MUM/2010 ITA NO.768/MUM/2010 ITA NO.770/MUM/2010 (ASSESSMENT YEAR : 2006-07) 6 ITA NO.768/MUM/2010 (SHRI MOHANLAL DAGA) AND ITA NO.770/MUM/2010 (SMT.NIRMALA M.DAGA)(AY-2006-07) 6. AT THE TIME OF HEARING, IT HAS BEEN AGREED BY TH E PARTIES THAT THE FACTS OF THE PRESENT CASE AND THE ISSUE INVOLVED ARE SIMILAR, THEREFORE, THE PLEA TAKEN IN THE APPEAL IN ITA NO.767/MUM/2010 MAY BE CONSIDERED WHILE DECI DING THE ABOVE APPEALS. 7. AFTER HEARING RIVAL PARTIES AND PERUSING THE M ATERIAL AVAILABLE ON RECORD AND IN THE ABSENCE OF ANY DISTI NGUISHING FEATURES BROUGHT ON RECORD, WE FOLLOWING OUR ABO VE FINDING RECORDED IN REVENUES APPEAL IN SHRI MOHANLAL DAGA IN ITA NO.767/MUM/2010 FOR ASSESSMENT YEAR 2006-07 SET ASI DE THE ORDERS PASSED BY THE REVENUE AUTHORITIES ON THIS AC COUNT AND SEND BACK THE MATTER TO THE FILE OF THE AO TO DECIDE THE SAME AFRESH IN THE LIGHT OF THE DIRECTIONS GIVEN H EREINABOVE AND ACCORDING TO LAW AFTER PROVIDING REASONABLE OPP ORTUNITY OF BEING HEARD TO THE ASSESSEE. THE COMMON GROUNDS TAKEN BY THE REVENUE ARE THEREFORE PARTLY ALLOWED FOR STA TISTICAL PURPOSES. ITA NO.767/MUM/2010 ITA NO.768/MUM/2010 ITA NO.770/MUM/2010 (ASSESSMENT YEAR : 2006-07) 7 8. IN THE RESULT, REVENUES APPEAL STAND PARTLY ALL OWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 11TH MAY,20 11. SD SD (T.R.SOOD) (D.K.AGARWAL) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI, DATED 11 TH MAY 2011 SRL:5511 COPY TO: 1. APPELLANT 2. RESPONDENT 3. CIT CONCERNED 4. LEARNED CIT(A) CONCERNED 5. DR CONCERNED BENCH 6. GUARD FILED. BY ORDER TRUE COPY ASSTT. REGISTRAR, ITAT, MUMBAI