Shri Purshottamdas Shankarlal Prajapati, Ahmedabad V. The CIT-I, Ahmedabad

MA 211/AHD/2013

• Counselvise Citation: [2014] 124 COUNSELVISE.COM (IT) 1768 (ITAT-AHMEDABAD)
• Duration Of Justice: 4 month(s) 5 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 11-04-2014
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: D
• Next Hearing Date: 07-03-2014
• Assessment Year: 2008-2009
• Appeal Filed On: 06-12-2013
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: R K DHANESTA SRDR
• Assessee Lawyers: MANISH M RAJVAIDYA
• Keywords: Business income; Opportunity of being heard; Principle of natural justice
• Section: 263

Judgement Text

, , , , , , , , IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH D BENCH, AHMEDABAD .., ! '# '# '# '# $ %&, ! BEFORE SHRI N.S. SAINI, ACCOUNTANT MEMBER AND SHRI KUL BHARAT, JUDICIAL MEMBER MA NO.211/AHD/2013 - AY 2008-09 ( IN #./ IN I.T.A. NO.877/AHD/2013) ( ( ')( ( ')( ( ')( ( ')( / / / / ASSESSMENT YEAR : 2008-09) SHRI PURSHOTTAMDAS SHANKARLAL PRAJAPATI 8, MALAY VILLA SCIENCE CITY ROAD OPP. SOLA GAM NR.MURIDHAR PARTY PLOT AHMEDABAD 380 060 / VS. THE CIT-I AHMEDABAD !* #./+, #./ PAN/GIR NO. : AHNPP 1739 M ( APPLICANT ) .. ( -.*/ / RESPONDENT ) ASSESSEE BY : SHRI MANISH M.RAJVAIDYA, A.R. REVENUE BY : SHRI R.K. DHANESTA, SR.D.R. $'0 1 & / / / / DATE OF HEARING : 07/03/2014 23) 1 & / DATE OF PRONOUNCEMENT : 11/04/2014 4 / O R D E R PER SHRI KUL BHARAT, JUDICIAL MEMBER : THROUGH THIS MISCELLANEOUS APPLICATION FILED ON 1 3/12/2013, THE ASSESSEE SOUGHT RECTIFICATION OF THE TRIBUNALS ORD ER (ITAT D BENCH AHMEDABAD) PASSED IN ITA NO.877/AHD/2013 FOR ASST.Y EAR 2008-09, DATED 13/09/2013. 2. BEFORE US, THE LD.COUNSEL FOR THE ASSESSEE REITE RATED THE SUBMISSIONS MADE IN THE MISCELLANEOUS APPLICATION. HE SUBMITTE D THAT THERE IS AN ERROR IN THE ORDER OF THE TRIBUNAL WHICH REQUIRES TO BE RECT IFIED. MA NO.211/AHD/2013 (IN ITA NO.877/AHD/2013) SHRI PURSHOTTAMDAS SHANKARLAL PRAJAPATI VS. CIT ASST.YEAR 2008-09 - 2 - 3. ON THE CONTRARY, LD.SR.DR HAS OPPOSED THE APPLI CATION AND SUBMITTED THAT IF THE SUBMISSIONS OF THE ASSESSEE ARE ACCEPTE D, THEN IT WOULD AMOUNT TO REVIEW OF THE ORDER. 4. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. THE TRIBUNAL VIDE ITS ORDER DATED 13/0 9/2013(SUPRA) HAS DECIDED THIS APPEAL AS UNDER:- 4. WE HAVE HEARD THE RIVAL SUBMISSIONS, PERUSED TH E MATERIAL AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF THE AUTHOR ITIES BELOW. THE LD.CIT PASSED THE ORDER U/S.263 ON THE BASIS THAT CONSIDER ING THE QUANTUM OF SHARE TRANSACTIONS AND THE NUMBER OF SCRIPS (130) IN WHIC H PURCHASE/SALE WAS CARRIED OUT, THE PROFITS DERIVED FROM SHARE TRADING IS REQUIRED TO BE TREATED AS BUSINESS INCOME AND NOT SHORT TERM CAPITAL GAINS AS CLAIMED IN THE RETURN OF INCOME. MOST OF THESE SHARES WERE SOLD WITHIN A SP AN OF 1-2 MONTHS AND THERE WAS NO BUSINESS ACTIVITY AS FAR AS BRICK BUSINESS I S CONCERNED. THERE IS NOTHING ON RECORD TO INDICATE THAT THE SHARES WERE PURCHASED FOR THE PURPOSE OF INVESTMENT AND NOT IN THE COURSE OF BUSINESS. H OWEVER, THE AO, ON THE OTHER HAND IN HIS ORDER HAS OBSERVED THAT THE ASSES SEE IS DERIVING INCOME FROM BRICK BUSINESS AND ALSO DERIVED INCOME FROM CA PITAL GAINS & INTEREST INCOME AND AFTER VERIFICATION OF THE DETAILS AND SU BMISSIONS MADE AVAILABLE BY THE ASSESSEE, THE RETURN INCOME OF THE ASSESSEE IS TAKEN TO BE THE ASSESSED INCOME. AS PER SECTION 263 OF THE ACT, THE COMM ISSIONER IS EMPOWER TO CALL FOR AND EXAMINE THE PROCEEDINGS UNDER THE ACT AND I F HE CONSIDERS THAT IF ANY ORDER PASSED THEREIN BY THE AO IS ERRONEOUS IN SO F AR AS IT IS PREJUDICIAL TO THE INTERESTS OF THE REVENUE, HE MAY AFTER GIVING T HE ASSESSEE AN OPPORTUNITY OF BEING HEARD AND AFTER MAKING OR CAUSING TO BE MADE SUCH INQUIRY AS HE DEEMS NECESSARY, PASS SUCH ORDER THEREON AS THE CIRCUMSTA NCES OF THE CASE JUSTIFY, INCLUDING AN ORDER ENHANCING OR MODIFYING THE ASSES SMENT, OR CANCELING THE ASSESSMENT AND DIRECTING A FRESH ASSESSMENT. IN THE CASE IN HAND, THE LD.CIT AFTER CONSIDERING THE SUBMISSIONS MADE BY THE ASSES SEE CANCELLED THE ASSESSMENT AND DIRECTED THE AO TO MAKE FRESH ASSESS MENT. THIS ORDER OF THE LD.CIT IS CHALLENGED BY THE ASSESSEE ON THE BASIS T HAT THERE IS NO ERROR IN THE ORDER OF AO AND IT IS NOT PREJUDICIAL TO THE INTERE STS OF THE REVENUE. IT IS THE CONTENTION OF THE ASSESSEE THAT ALL DETAILS WERE MA DE AVAILABLE BEFORE THE AO AND HE HAS APPLIED HIS MIND ON THE DETAILS SO FUR NISHED AND AFTER APPLYING HIS MIND THE AO ACCEPTED THE CLAIM OF THE ASSESSEE , THEREFORE THERE IS NO ERROR IN THE ORDER OF THE AO. LD.CIT IS NOT JUSTIF IED FOR REVISING THE ORDER U/S.263 OF THE ACT. WE DO NOT FIND ANY MERIT IN THE CONTENTION OF THE ASSESSEE AS FROM THE ASSESSMENT ORDER IT CANNOT BE INFERRED THAT THE AO HAS APPLIED HIS MA NO.211/AHD/2013 (IN ITA NO.877/AHD/2013) SHRI PURSHOTTAMDAS SHANKARLAL PRAJAPATI VS. CIT ASST.YEAR 2008-09 - 3 - MIND AND MORE PARTICULARLY THE ASSESSEE HAS NOT PLA CED ANYTHING ON RECORD SUGGESTING THAT THE AO ON THE BASIS OF DETAILS SUBM ITTED BY THE ASSESSEE EMBARKED UPON THE ENQUIRY QUA TRANSACTIONS EFFECTED BY THE ASSESSEE. THE QUESTION IS WHETHER A PARTICULAR TRANSACTION OR A N UMBER OF TRANSACTIONS IS IN THE NATURE OF INVESTMENT OR BUSINESS ACTIVITY IN TE RMS OF CBDT CIRCULAR NO.4/2007 DATED 16/06/2007 AND THE JUDICIAL PRONOUN CEMENTS. AS PER THE SAID CIRCULAR ISSUED BY THE CBDT, THE AO HAS TO FIN D OUT WHETHER THE BORROWED FUND WAS APPLIED OR THE TRANSACTIONS WERE EFFECTED BY OWN FUND, THE VOLUME AND FREQUENCY OF THE TRANSACTIONS AND THE PE RIOD OF HOLDING, ETC. IN THE INSTANT CASE, THE LD.CIT IN THE ORDER PASSED U/ S.263 HAS GIVEN A FINDING THAT THE AO HAS NOT MADE ANY ENQUIRY AND NOT APPLIE D HIS MIND ON THE TRANSACTIONS IN THE LIGHT OF BOARDS CIRCULAR NO.4/ 2007 DATED 16/6/2007 AS WELL AS THE PRINCIPLES LAID DOWN IN THE JUDICIAL PR ONOUNCEMENTS. THE LD.COUNSEL FOR THE ASSESSEE HAS NOT POINTED OUT ANY THING FROM THE ORDER OF THE AO OR ANY DETAILS SUBMITTED IN THE PAPER-BOOK THAT THE AO MADE ANY ENQUIRY ABOUT THE TRANSACTIONS EFFECTED BY THE ASSESSEE TO CONTROVERT THE FINDING OF LD.CIT. THEREFORE, IN OUR CONSIDERED VIEW, THE AO HAS NOT MADE ANY ENQUIRY AND NOT APPLIED HIS MIND. THE HONBLE APEX COURT IN THE CASE OF MALABAR INDUSTRIAL CO.LTD.(SUPRA) HAS HELD THAT THERE CAN BE NO DOUBT THAT THE PROVISION CANNOT BE INVOKED TO CORRECT EACH AND EVE RY TYPE OF MISTAKE OR ERROR COMMITTED BY THE ASSESSING OFFICER, IT IS ONL Y WHEN AN ORDER IS ERRONEOUS THEN THE SECTION WILL BE ATTRACTED. AN I NCORRECT ASSUMPTION OF FACTS OR AN INCORRECT APPLICATION OF LAW WILL SATISFY THE REQUIREMENT OF THE ORDER BEING ERRONEOUS. IN THE SAME CATEGORY FALL ORDERS PASSED WITHOUT APPLYING THE PRINCIPLES OF NATURAL JUSTICE OR WITHOUT APPLIC ATION OF MIND. IN THE INSTANT CASE, THE ASSESSEE HAS MADE HUGE TRANSACTIO NS IN SHARES AND SECURITIES AND THE VOLUME OF TRANSACTION IS MORE THAN THE OTHE R BUSINESS ACTIVITY DECLARED BY THE ASSESSEE. THE AO HAS ALSO NOT GIVE N ANY SPECIFIC FINDING WHETHER HE MADE AN ENQUIRY IN RESPECT OF TRANSACTIO NS AND APPLIED HIS MIND IN THE LIGHT OF THE CBDT CIRCULAR NO.4/2007 DATED 1 6/6/2007. IN VIEW OF THE FACT THAT THE ASSESSEE HAS NOT PLACED ANYTHING ON RECORD SUGGESTING THAT THE AO HAS MADE ENQUIRY AND APPLIED HIS MIND ON THE TRANSACTIONS EFFECTED BY THE ASSESSEE. MERELY PLACING THE DETAILS ON RECORD WOULD NOT SATISFY THE REQUIREMENT OF LAW. THE AO OUGHT TO HAVE MADE ENQU IRY AND DECIDED THE ISSUE IN THE LIGHT OF THE GUIDELINES ISSUED BY THE CBDT CIRCULAR NO.4/2007. THEREFORE, IN OUR CONSIDERED VIEW, NON-APPLICATION OF MIND AND NON- CONDUCTING OF THE ENQUIRY BY THE AO TANTAMOUNT TO O RDER PASSED AS ERRONEOUS AND PREJUDICIAL TO THE INTERESTS OF THE R EVENUE. HOWEVER, IN THE INTEREST OF JUSTICE WHILE DECIDING THE ISSUE AFRESH THE AO WOULD AFFORD REASONABLE OPPORTUNITY TO THE ASSESSEE AND DECIDE T HE ISSUE BY APPLYING HIS MIND ON THE FACTS AND LAW. THE DIRECTION CONTAINED IN IMPUGNED ORDER IS MODIFIED AS INDICATED HEREINBEFORE. THEREFORE, THIS GROUND OF ASSESSEES APPEAL IS PARTLY ALLOWED AS INDICATED HEREINBEFORE. MA NO.211/AHD/2013 (IN ITA NO.877/AHD/2013) SHRI PURSHOTTAMDAS SHANKARLAL PRAJAPATI VS. CIT ASST.YEAR 2008-09 - 4 - 4.1. IT IS PERTINENT TO NOTE THAT THE LD.CIT HAD IN VOKED THE PROVISIONS OF SECTION 263 OF THE ACT AGAINST THE ASSESSMENT ORDER PASSED U/S.143(3) OF THE ACT. WE FIND THAT THE ASSESSMENT ORDER IS CONTAINI NG ONLY TWO PAGES THAT ARE REPRODUCED HEREINBELOW:- ASSESSMENT ORDER THE RETURN OF INCOME WAS FILED BY THE ASSESSEE ON 0 3.10.2008 DECLARING TOTAL INCOME OF RS.38,52,350/-. THE RETURN WAS PRO CESSED U/S.143(1) OF THE I.T. ACT. SINCE THE CASE WAS SELECTED FOR SCRU TINY, NOTICE U/S.143(2) OF THE I.T. ACT WAS ISSUED ON 17.08.2009, WHICH WAS SERVED UPON THE ASSESSEE ON 22.08.2009 BY RPAD. IN RESPONSE, THE REPRESENTATIVE OF THE ASSESSEE, SH RI PRADIP J.SHAH, C.A., ATTENDED FROM TIME TO TIME AND CASE WAS DISCU SSED WITH HIM. THE ASSESSEE IS DERIVING INCOME FROM BRICK BUSINESS AND ALSO DERIVED INCOME FROM CAPITAL GAINS & INTEREST INCOME. ON VERIFICATION OF THE CAPITAL ACCOUNT, IT IS SEEN THAT THE ASSESSEE HAS MADE WITHDRAWAL FOR THE HOUSEHOLD EXPENSES AMOUNTIN G TO RS.1,04,000/-. DURING THE COURSE OF ASSESSMENT PRO CEEDINGS, IT IS EXPLAINED BY THE AR OF THE ASSESSEE THAT THERE ARE ONLY TWO MEMBERS IN THE FAMILY. BOTH THE HUSBAND AND WIFE ARE OF THE O LD AGE AND LIVING IN SIMPLE MANNER. HOWEVER, LOOKING TO THE STANDARD OF LIVING AN ADDITION OF RS.25,000/- IS BEING MADE FOR LOW HOUSEHOLD WITH DRAWALS. THE AR OF THE ASSESSEE AGREED FOR THE ABOVE PROPOSED ADDITION . [ ADDITION OF RS.25,000/-] AFTER VERIFICATION OF THE DETAILS AND SUBMISSIONS M ADE AVAILABLE BY THE ASSESSEE, THE RETURN INCOME OF THE ASSESSEE IS TAKE N TO BE THE ASSESSED INCOME. BUSINESS INCOME AS PER STATEMENT (-) RS.1,43,703/- LESS : ADDITION FOR HOUSEHOLD EXP. RS. 25,00 0/- (-) RS.1,18,703/- INCOME FROM STCG (TAXED 10%) RS.39,90,659/- INCOME FROM OTHER SOURCE RS. 5,394/- TOTAL RS.38,77,350/- AGRICULTURE INCOME TO BE INCLUDED FOR THE PURPOSE RS. 48,860/- TOTAL INCOME RS.39,26,210/- ASSESSED U/S.143(3) OF THE IT ACT, 1961. CHARGE IN TEREST U/S.234A, 234B, 234C AND 234D AS APPLICABLE. ISSUE DEMAND NO TICE AFTER GIVING CREDIT FOR PREPAID TAXES. MA NO.211/AHD/2013 (IN ITA NO.877/AHD/2013) SHRI PURSHOTTAMDAS SHANKARLAL PRAJAPATI VS. CIT ASST.YEAR 2008-09 - 5 - 4.2. FROM THE ABOVE FINDINGS OF THE AO, IT IS EVIDE NT THAT HE HAS NOT GIVEN ANY FINDING IN RESPECT OF THE TRANSACTIONS WHICH WE RE EFFECTED BY THE ASSESSEE. UNDISPUTEDLY, THE ASSESSEE HAS EFFECTED TRANSACTION S IN 130 SCRIPS, THERE IS NOTHING ON RECORD SUGGESTING THAT THE AO HAD MADE E NQUIRY WITH REGARD TO NATURE OF SUCH TRANSACTIONS. MOREOVER, LD.CIT(A) H AS GIVEN FINDING ON FACT IN RESPECT OF VOLUME AND FREQUENCY OF TRANSACTIONS. H E HAS ALSO OBSERVED THAT THERE IS NO ACTIVITY AS FAR AS BRICK BUSINESS IS CO NCERNED. 4.3. THE ASSESSEE HAS MADE AN APPLICATION FOR RECTI FICATION OF MISTAKE RUNNING INTO 14 PAGES. THE ASSESSEE HAS, IN FACT, REPRODUCED THE SUBMISSIONS AS WERE MADE BEFORE THE LD.CIT(A). ON A QUERY FROM THE BENCH TO THE LD.COUNSEL FOR THE ASSESSEE, COULD NOT POINT OUT AN Y MISTAKE OR ERROR IN THE ORDER OF THE TRIBUNAL DATED 13/09/2013(SUPRA), HE M ERELY REITERATED THE SUBMISSIONS AS MADE IN APPLICATION. IF WE ACCEPT T HE SUBMISSIONS OF THE ASSESSEE, IT WILL AMOUNT TO REVIEWING OF OUR ORDER WHICH IS BEYOND THE SCOPE OF SECTION 254(2) OF THE ACT. THEREFORE, MISCELLANEOU S APPLICATION FILED BY THE ASSESSEE IS HEREBY REJECTED. 5. IN THE RESULT, MISCELLANEOUS APPLICATION FILED B Y THE ASSESSEE IS DISMISSED. ORDER PRONOUNCED IN COURT ON THE DATE MENTIONED HER EINABOVE AT CAPTION PAGE SD/- SD/- ( .. ) ($ %&) ! ! ( N.S. SAINI ) ( KUL BHARAT ) ACCOUNTANT MEMBER JUDI CIAL MEMBER AHMEDABAD; DATED 11/ 04 /2014 7.., '.../ T.C. NAIR, SR. PS MA NO.211/AHD/2013 (IN ITA NO.877/AHD/2013) SHRI PURSHOTTAMDAS SHANKARLAL PRAJAPATI VS. CIT ASST.YEAR 2008-09 - 6 - 4 1 -&8 98)& 4 1 -&8 98)& 4 1 -&8 98)& 4 1 -&8 98)&/ COPY OF THE ORDER FORWARDED TO : 1. */ / THE APPLICANT. 2. -.*/ / THE RESPONDENT. 3. ## & $: / CONCERNED CIT-I, AHMEDABAD 4. $:() / THE CIT(A)-CONCERNED 5. 8'%; -& , , / DR, ITAT, AHMEDABAD 6. ;( <0 / GUARD FILE. 4$ 4$ 4$ 4$ / BY ORDER, .8& -& //TRUE COPY// = == =/ // / #+ #+ #+ #+ ( DY./ASSTT.REGISTRAR) , , , , / ITAT, AHMEDABAD 1. DATE OF DICTATION .. 7.4.14(DICTATION-PAD 4-PA GES ATTACHED AT THE END OF THIS FILE) 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER 7.4.14 3. DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR.P. S./P.S.. 4. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE D ICTATING MEMBER FOR PRONOUNCEMENT 5. DATE ON WHICH FAIR ORDER PLACED BEFORE OTHER MEMBER 6. DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR.P .S./P.S 11.4.14 7. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK 11.4.14 8. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK ... 9. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT RE GISTRAR FOR SIGNATURE ON THE ORDER.. 10. DATE OF DESPATCH OF THE ORDER