The ITO, Ward-7(1),, Ahmedabad v. Shri Jaideep Ravindra Agrawal, Ahmedabad

ITA 2498/AHD/2009 | 2006-2007
Pronouncement Date: 30-03-2012 | Result: Dismissed

Appeal Details

RSA Number 249820514 RSA 2009
Assessee PAN AGMPA5249D
Bench Ahmedabad
Appeal Number ITA 2498/AHD/2009
Duration Of Justice 2 year(s) 7 month(s) 2 day(s)
Appellant The ITO, Ward-7(1),, Ahmedabad
Respondent Shri Jaideep Ravindra Agrawal, Ahmedabad
Appeal Type Income Tax Appeal
Pronouncement Date 30-03-2012
Appeal Filed By Department
Order Result Dismissed
Bench Allotted A
Tribunal Order Date 30-03-2012
Date Of Final Hearing 05-03-2012
Next Hearing Date 05-03-2012
Assessment Year 2006-2007
Appeal Filed On 28-08-2009
Judgment Text
ITA NO.2 498/AHD/2009 WITH C.O. NO. 227/AHD/2009 ASSESSME NT YEAR 2006- 07 . 1 IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH A HMEDABAD (BEFORE SHRI G.C.GUPTA V. P.& SHRI ANIL CHATURVEDI A.M.) I.T.A. NO. 2498/AHD/2009 (ASSESSMENT YEAR: 2006 - 07 ) THE INCOME TAX OFFICER WARD 7(1) PRATYAKSHA BHAVAN PANJARA POLE AMBAWADI AHMEDABAD. (APPELLANT) VS. SHRI JAIDEEP RAVINDRA AGRAWA L 70 VASANT BAHAR COLONY BOPAL AHMEDABAD. (RESPONDENT) C. O. N O. 227/AHD/2009 ( ARISING OUT OF I.T.A. NO. 2498/AHD/2009) (ASSESSMENT YEAR: 2006 - 07) SHRI JAIDEEP RAVINDRA AGRAWA L 70 VASANT BAHAR COLONY BOPAL AHMEDABAD. (APPELLANT) VS. THE INCOME TAX OFFICER WARD 7(1) PRATYAKSHA BHAVAN PANJARA POLE AMBAWADI AHMEDABAD. (RESPONDENT) PAN: AGMPA 5249 D APPELLANT BY : SHRI RAHUL KMUMAR SR D.R. RESPONDENT BY : MS.URVASHI SHODHAN. ( )/ ORDER DATE OF HEARING : 5-3-2012 DATE OF PRONOUNCEMENT : 30-3-2012 ITA NO.2 498/AHD/2009 WITH C.O. NO. 227/AHD/2009 ASSESSME NT YEAR 2006- 07 . 2 PER BENCH. THIS APPEAL IS FILED BY THE REVENUE AGAINST THE ORD ER OF THE LD. CIT (A)- III AHMEDABAD VIDE HIS ORDER NO. CIT (A)-III/81/CC 2(2)/08-09 DATED 20-5- 2009 FOR THE ASSESSMENT YEAR 2006-07. 2. IN THIS APPEAL THE REVENUE HAS RAISED THE FOLLO WING GROUNDS OF APPEAL:- 1. THE LD. COMMISSIONER OF INCOME TAX (A)-III AHME DABAD HAS ERRED IN LAW AND ON FACTS IN CONSIDERING THE RESULT OF SHARE TRANSACTION OF RS. 92 77 928/- AS CAPITAL GAIN BY DELETING THE ADDITION MADE BY THE ASSESSING OFFICER WHO HAD TAXED THE SAME AS BUSINE SS INCOME. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E THE LD. COMMISSIONER OF INCOME TAX (A)-III AHMEDABAD OUGHT TO HAVE UPHELD THE ORDER OF THE ASSESSING OFFICER. 3. IT IS THEREFORE PRAYED THAT THE ORDER OF THE LD . COMMISSIONER OF INCOME TAX (A)-III AHMEDABAD MAY BE SET ASIDE AND THAT OF THE ASSESSING OFFICER BE RESTORED. 3. THE BRIEF FACTS OF THE CASE ARE THAT RETURN OF I NCOME WAS FILED BY THE ASSESSEE ON 31-12-2006 DECLARING TOTAL INCOME AT RS .64 96 380/- DISCLOSING INCOME FROM INTEREST AND CAPITAL GAINS. THE ASSESSI NG OFFICER (A.O.) OBSERVED THAT SAID SHRI RAVINDRA AGARWAL HAD BEEN SUBJECTED TO ACTION U/S. 132 OF THE ACT ON 29-11-2004. IN THE ASSESSMENT OF SHRI RAVIND RA AGARWAL THE A.O. HAS NOTED THAT HE HAD CARRIED OUT THE TRANSACTIONS IN T HE NAME OF THE FAMILY MEMBERS INCLUDING THAT OF THE APPELLANT. THERE WER E CONTINUOUS SALES AND ITA NO.2 498/AHD/2009 WITH C.O. NO. 227/AHD/2009 ASSESSME NT YEAR 2006- 07 . 3 PURCHASE OF SHARES IN VARIOUS NAMES AND THIS ACTIVI TY WAS CARRIED OUT FOR NUMBER OF YEARS. HE FURTHER OBSERVED THAT THE PROFI T ON PURCHASING AND SELLING THE SHARES WAS SEVERAL TIMES HIGHER THAN TH E DIVIDEND INCOME EARNED BY THE ASSESSEE. HE FURTHER OBSERVED THAT SALE PROC EEDINGS IN THE NAME OF ONE PERSON HAS BEEN DISTRIBUTED IN THE BANK ACCOUNTS OF OTHER PERSONS IN THE GROUP AND PURCHASES IN NAME OF A PERSON HAVE ALSO B EEN MADE FROM FUNDS OF OTHER MEMBERS. HE FURTHER OBSERVED THAT THE ASSESS EE HAD CARRIED OUT SUBSTANTIAL TRANSACTIONS IN SHARES THROUGH A PORTFO LIO MANAGER. THE ASSESSEE HAD ALSO DEDUCTED/REDUCED THE INCOME BY CLAIMING TH E FEES PAID TO PORTFOLIO MANAGER AMOUNTING TO RS. 2 01 396/-. FURTHER IN T HE COMPUTATION OF TOTAL INCOME THE ASSESSEE HAD CLAIMED EXPENSES LIKE D-MA T DELIVERY CHARGES STT SERVICE TAX ETC. AND ON POINTING OUT THE SAME IT WAS WITHDRAWN BY THE ASSESSEE. IN VIEW OF THE AFORESAID FACTS THE A.O. HELD THE ASSESSEE TO BE A TRADER OF SHARES AND THEREFORE THE ACTIVITIES OF S HARE TRANSACTIONS TO BE IN THE NATURE OF TRADING/ADVENTURE IN THE NATURE OF TRADE. ACCORDINGLY HE TAXED THE PROFIT FROM SHARE TRANSACTIONS AMOUNTING TO RS.92 7 7 928/- AS BUSINESS INCOME INSTEAD OF CAPITAL GAINS. 4. AGGRIEVED BY THE ACTION OF THE A.O. IN TREATING RS.92 77 928/- AS BUSINESS INCOME INSTEAD OF CAPITAL GAINS THE A SSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE CIT (A). CIT (A) CONSIDERED T HE FACTUAL POSITION/EXPLANATION/REBUTTAL FURNISHED BY THE APPE LLANT IN RESPECT OF THE PREMISES ADOPTED BY THE A. O. FOR REACHING AT HIS C ONCLUSION. ON THE BASIS OF SUBMISSIONS CIT (A) HELD THAT THE SALE/PURCHASE OF SECURITIES WAS APPARENTLY AN INDEPENDENT ACTIVITY AND DID NOT FORM THE ONLY S OURCE OF SHARE TRADING. THE LOW RATIO BETWEEN PURCHASES AND SALES AND HOLDI NG THE PURCHASE OF LISTED ITA NO.2 498/AHD/2009 WITH C.O. NO. 227/AHD/2009 ASSESSME NT YEAR 2006- 07 . 4 SECURITIES OF INDEPENDENT COMPANIES AND NOT AS PROM OTERS THE DELIVERY BASED TRANSACTIONS AND THE ACTUAL PAYMENT/RECEIPTS AND NO T MERE BOOK ENTRIES ABSENCE OF LACK OF INTRA DAY TRADING AND OF REPEATE D TRANSACTIONS OF SOME SCRIPS ETC. WERE THE FACTORS BASED ON WHICH HE CON CLUDED THAT THE ASSESSEE WAS AN INVESTOR. THUS AFTER CONSIDERING THE DETAILED S UBMISSIONS FACTS ON RECORD THE BOARDS CIRCULARS ETC. HE CONCLUDED THAT ASSES SING OFFICER WAS NOT JUSTIFIED IN HOLDING THE APPELLANT AS A TRADER AND DIRECTED THE ASSESSING OFFICER TO TREAT THE APPELLANT AS AN INVESTOR AND T REAT THE PROFIT ON SALE OF SHARES AS CAPITAL GAINS INSTEAD OF BUSINESS INCOM E AND ACCORDINGLY ALLOWED THE APPEAL OF THE ASSESSEE. 5. THE REVENUE IS NOW IN APPEAL BEFORE US AGAINST THE AFORESAID FINDING OF THE LEARNED CIT (A). 6. THE LD. DR RELIED ON THE ORDER OF ASSESSING OFFI CER. THE LD. AR FOR THE ASSESSEE ON THE OTHER HAND STATED THAT THE ISSU E IN QUESTION HAS ALREADY BEEN DECIDED BY THE TRIBUNAL VIDE ITS ORDER IN APPE AL NO. 2115 & 2161/AHD/2008 FOR THE ASSESSMENT YEARS 2004-05 AND 2005-06 RESPECTIVELY BY ORDER DATED 28-1-2011 BY HOLDING AS UNDER:- 13..IT IS A SETTLED LAW THAT TO DETERMINE WHETHE R THE ASSESSEE IS A TRADER OR INVESTOR IN SHARES NO SINGLE TEST IS CONCLUSIVE BUT CUMULATIVE EFFECT OF ALL THE FACTS ARE TO BE SEEN. IN THE CASE OF THE AS SESSEE ONE FACT I.E. FREQUENT PURCHASE/SALE OF SHARES CAN BE SAID TO BE AGAINST THE ASSESSEE BUT ALL OTHER FACTS WHICH CAN BE SUMMARIZED AS UNDER AR E IN FAVOUR OF THE ASSESSEE: I) SHRI RAVINDRA AGRAWAL IS A QUALIFIED PROFESSIONAL B EING CHARTERED ACCOUNTANT COMPAY SECRETARY AND COST ACCOUNTANT; ITA NO.2 498/AHD/2009 WITH C.O. NO. 227/AHD/2009 ASSESSME NT YEAR 2006- 07 . 5 II) SHRI AGRAWAL WAS FULL TIME DIRECTOR OF A PUBLIC LIM ITED COMPANY AT THE RELEVANT TIME POSTED AT PORBANDAR III) SHARES WERE ACQUIRED WITH OWN MONEY AND THERE WAS N O BORROWING BY SHRI RAVINDRA AGRAWAL OR ANY OTHER FAMILY MEM BE R IV) NO OFFICE OR ANY STAFF WAS MAINTAINED FOR LOOKING A FTER PURCHASE AND SALE OF SHARES; V) THERE WAS SUBSTANTIAL DIVIDEND INCOME; - VI) HIS SOURCE OF INCOME WAS INCOME FROM SALARY CAPITA L GAIN DIVIDEND AND INTEREST AND HE WAS NOT HAVING ANY BUSINESS INC OME; VII) IN THE ORIGINAL RETURN OF INCOME FURNISHED FROM TIM E TO TIME INCOME FROM SALE OF SHARES WAS DISCLOSED UNDER THE HEAD CAPITAL GAIN AND WAS ACCEPTED BY REVENUE AS SUCH UNDER SECTION 143(1 ). WHEN TOTALITY OF ALL THE ABOVE FACTS ARE CONSIDERED THE INFERENCE DRAWN BY THE CIT (A) THAT THE ASSESSEE IS AN INVESTOR IN SH ARES APPEARS TO BE CORRECT. APART FROM THE ABOVE ON THE PRINCIPLE OF CONSISTENCY ALSO ORDER OF THE CIT (A) ON THIS POINT DESERVES TO BE UPHELD BEC AUSE IN THE ORIGINAL RETURNS INCOME FROM SALE OF SHARES WAS DISCLOSED UN DER THE HEAD CAPITAL GAIN AND THE SAME WAS ACCEPTED BY THE REVENUE. ITA T MUMBAI BENCH IN THE CASE OF GOPAL PUROHIT (SUPRA) HELD THAT THOU GH IN INCOME TAX PROCEEDINGS THE RULE OF RES JUDICATA DOES NOT APPLY BUT THERE SHOULD BE UNIFORMITY IN TREATMENT AND CONSISTENCY UNDER THE S AME FACTS AND CIRCUMSTANCES. THIS DECISION IS UPHELD BY THE HONB LE MUMBAI HIGH COURT IN CIT VS. GOPAL PUROHIT 228 CTR 582 (BOM.). THESE DECISIONS WOULD BE SQUARELY APPLICABLE TO THE CASES OF THE AS SESSEE UNDER APPEAL BECAUSE IN THESE CASES NOT ONLY IN EARLIER YEAR BUT IN THE YEARS UNDER APPEAL ALSO IN ORIGINAL PROCEEDINGS TRANSACTION OF PURCHASE ADDITION SALE OF SHARES SHOWN AS CAPITAL GAIN WAS ACCEPTED BY THE REVENUE MERELY BECAUSE THERE WAS SEARCH AT THE ASSESSEES PREMISE S THE NATURE OF TRANSACTION WOULD NOT CHANGE. IN VIEW OF THE ABOVE AFTER CONSIDERING THE TOTALITY OF THE FACTS AND CIRCUMSTANCES OF THE CASE AND VARIOUS JUDICIAL PRONOUNCEMENT REFERRED ABOVE WE FIND NO JUSTIFICAT ION TO INTERFERE WITH ITA NO.2 498/AHD/2009 WITH C.O. NO. 227/AHD/2009 ASSESSME NT YEAR 2006- 07 . 6 THE ORDER OF THE CIT (A) ON THIS POINT. THE SAME IS UPHELD AND THE REVENUES APPEALS ARE DISMISSED. 7. WE FIND THAT THERE IS NO CHANGE IN THE FACTS IN THE CURRENT YEAR AS COMPARED TO THOSE OF EARLIER YEARS AND ACCORDINGLY THE ASSESSEES CASE IS COVERED BY THE DECISION OF THE CO-ORDINATE BENCH IN EARLIER YEARS. RESPECTFULLY FOLLOWING ABOVE DECISION OF THE CO-ORDINATE BENCH IN ASSESSEES OWN CASE WE DISMISS THE APPEAL FILED BY THE REVENUE. 8. AS REGARDS THE CROSS OBJECTION FILED BY THE ASSE SSEE BECAUSE IT IS CONSEQUENTIAL IN NATURE THE ASSESSEE HAS NOT PRESS ED THE CROSS OBJECTION FILED AND HENCE THE SAME IS DISMISSED. 9. IN THE RESULT THE APPEAL FILED BY THE REVENUE I S DISMISSED AND THE CROSS OBJECTION FILED BY THE ASSESSEE IS ALSO DISMISSED. ORDER PRONOUNCED IN OPEN COURT ON 30 - 3 - 20 12. SD/- SD/- (G.C.GUPTA) (ANIL CHATURVEDI) VICE PRESIDENT ACCOUNTANT MEMBER AHMEDABAD. S.A.PATKI. ITA NO.2 498/AHD/2009 WITH C.O. NO. 227/AHD/2009 ASSESSME NT YEAR 2006- 07 . 7 COPY OF THE ORDER FORWARDED TO: - 1. THE APPELLANT. 2. THE RESPONDENT. 3. THE CIT (APPEALS) III AHMEDABAD. 4. THE CIT CONCERNED. 5. THE DR. ITAT AHMEDABAD. 6. GUARD FILE. BY ORDER DEPUTY/ASSTT.REGISTRAR ITAT AHMEDABAD. 1.DATE OF DICTATION 15 - 3 -2012 2.DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE TH E DICTATING 22 / 3 / 2012 MEMBER.OTHER MEMBER. 3.DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR. P.S./P.S - -2012. 4.DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE DICTATING MEMBER FOR PRONOUNCEMENT - -2012 5.DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR .P.S./P.S - -2012 6.DATE ON WHICH THE FILE GOES TO THE BENCH CLERK - -2012. 7.DATE ON WHICH THE FILE GOES TO THE HEAD CLERK . 8.THE DATE ON WHICH THE FILE GOES TO THE ASSTT. REG ISTRAR FOR SIGNATURE ON THE ORDER 9.DATE OF DESPATCH OF THE ORDER..